ACQUISITION OF REPOSITRAK

12 Months Ended

Jun. 30, 2016

Acquisition Of Repositrak

ACQUISITION OF REPOSITRAK

On June 30, 2015, the Company consummated the acquisition of 100% of the outstanding capital stock of ReposiTrak, Inc.   The accompanying audited consolidated financial statements of the Company as of and for the year ended June 30, 2015 contain the results of operations of ReposiTrak from June 30, 2015.  We issued 873,438 shares of our common stock in connection with this acquisition.

We have accounted for the acquisition as the purchase of a business.  The assets acquired and the liabilities assumed of ReposiTrak have been recorded at their respective fair values.  The excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill.  Goodwill is attributed to buyer-specific value resulting from expected synergies, including long-term cost savings, as well as industry relationships that are not included in the fair values of assets.  Goodwill will not be amortized, but tested annually for impairment.

The purchase price consisted of the 873,438 shares of our common stock.  The fair value of the shares issued was $10,821,897 and was determined using the closing price of our common stock on June 30, 2015.  The price paid to acquire ReposiTrak was $10,830,897, approximately $9,000 of which was for direct transaction costs associated with the issuance of equity.    The net acquisition cost of $10,799,778 which excludes $31,119 of cash acquired from ReposiTrak were allocated based on their estimated fair value of the assets acquired and liabilities assumed, as follows:

Receivables	$	152,340
Prepaid expense		17,500
Customer relationships		1,314,000
Goodwill		16,077,953
Accounts payable		(128,126	)
Deferred revenue		(598,232	)
Net assets acquired		16,835,435
Common stock issued		10,821,897
Receivables eliminated in consolidation		6,035,657
Cash received in acquisition	$	22,119

Unaudited pro-forma results of operations for the twelve months ended June 30, 2015 and 2014, as though ReposiTrak had been acquired as of July 1, 2013, are as follows:

	Three Months Ended
	Sep 30, 2014		Dec 31, 2014			Mar 31, 2015			Jun 30, 2015		Year Ended 2015			Year Ended 2014
Revenue	$	2,826,813	$	2,932,825		$	2,870,646		$	2,941,511	$	11,571,795		$	9,777,431
Loss from Operations		(1,046,986)		(1,290,524)			(1,302,437)			(3,222,538)		(6,862,485	)		(5,232,552	)
Net Loss		(1,049,834)		(1,317,510)			(1,317,858)			(3,241,545)		(6,926,747	)		(5,303,773	)
Net Loss Applicable to Common Shareholders		(1,204,307)		(1,471,983)			(3,595,537)			(3,365,721)		(9,637,548	)		(5,921,664	)
Basic and Diluted EPS		(0.07)		(0.08	)		(0.20	)		(0.18)		(0.53	)		(0.34	)