3.Acquisitions

In accordance with ASC Topic 805, “Business Combinations”, the Company accounts for acquisitions by applying the acquisition method of accounting. The acquisition method of accounting requires, among other things, that the assets acquired and liabilities assumed in a business combination be measured at their fair values as of the closing date of the acquisition.

The acquisitions of NMS and Coord3 have been accounted for as business combinations. The purchase prices were allocated to the acquired assets and liabilities based on their estimated fair values at the dates of acquisition. The preliminary measurements of fair value reflected below are subject to change. The Company expects to finalize the purchase price allocations as soon as practical, but no later than one year from the acquisition dates. The accompanying Consolidated Statements of Income for the quarter and nine months ended March 31, 2015 include revenue of $1.3 million and a net loss of $151,000 related to the operations of the acquisitions from the dates of closing.

Next Metrology Software

On January 29, 2015, the Company acquired 100% of the outstanding share capital of Next Metrology Software s.r.o. (“NMS”). NMS is a developer of coordinate measuring machines (“CMM”) operating software, based in Prague, Czech Republic. The primary reason for the acquisition was to expand and diversify the Company’s offerings in the industrial metrology market, and particularly in the scanning CMM market.

The total consideration payable in the acquisition of NMS is 2,250,000 euros (equivalent to approximately $2,560,425). The Company paid 1,800,000 euros (equivalent to approximately $2,050,560) on January 29, 2015, 250,000 euros (equivalent to approximately $282,025) on February 27, 2015 and 200,000 euros (equivalent to approximately ($227,840) is payable 12 months following the closing of the NMS purchase to the extent not used to cover indemnification obligations.

The following table summarizes the acquisition date fair values of the assets and liabilities acquired. The amounts listed below reflect provisional amounts that will be updated as information becomes available.



Cash	$	129
Receivables and other current assets		77,007
Intangible asset		391,296
Goodwill		2,269,604
Accounts payable and other current liabilities		(177,611)

Total identifiable net assets	$	2,560,425

The goodwill of $2,269,604 arising from the acquisition of NMS consists largely of the synergies expected from combining the existing research and development operations of the Company and NMS’s technical knowledge in developing CMM operating software. None of the goodwill is expected to be deductible for tax purposes.

Coord3

On February 27, 2015, the Company acquired 100% of the outstanding share capital of Coord 3 s.r.l., a subsidiary of Coord3 Industries s.r.l., (“Coord3”). Coord3 is an Italian-based supplier of a full range of CMMs with a global customer base. By combining the full range of Coord3's CMMs with the Company’s laser scanners and NMS’s CMM operating software, the Company is able to offer price competitive, fully integrated scanning CMM solutions worldwide.

The total consideration payable in the acquisition of Coord3 is 1,959,000 euros (equivalent to approximately $2,210,174). The Company paid 1,659,200 euros (equivalent to approximately $1,871,744) on February 27, 2015 and 300,000 euros (equivalent to approximately $338,430) is payable 18 months following the closing of the Coord3 purchase to the extent not used to cover indemnification obligations.



Cash	$	9,521
Accounts receivable		4,343,621
Inventories		3,092,826
Other assets		1,055,542
Goodwill		9,388,777
Accounts payable and other current liabilities		(5,225,261)
Taxes payable		(7,530,866)
Loans Payable		(2,108,658)
Other liabilities		(815,328)

Total identifiable net assets	$	2,210,174

The goodwill of $9,388,777 arising from the acquisition consists largely of the synergies expected from combining the operations of the Company and Coord3. None of the goodwill is expected to be deductible for tax purposes.

Proforma Information

The following pro forma information for fiscal 2015 and 2014 is based on the assumption that the acquisitions of NMS and Coord3 occurred on July 1, 2014 and July 1, 2013, respectively (in thousands, except per share amounts):



	Three Months Ended				Nine Months Ended
	March 31				March 31
		2015		2014		2015		2014
Revenue	$	18,281	$	20,773	$	60,651	$	55,448
Net Income (Loss)	$	(1,651)	$	1,656	$	(859)	$	987

Income (Loss) Per Common Share
Basic	$	(0.18)	$	0.18	$	(0.09)	$	0.11
Diluted		(0.18)		0.18		(0.09)		0.11

As a result of the acquisitions, the Company has incurred additional acquisition related costs of approximately $1.5 million for legal, accounting, and valuation consulting fees which are included in Selling, General and Administrative expenses.