2.Acquisitions

In accordance with ASC Topic 805, “Business Combinations”, we account 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. In October 2016, we finalized a settlement with the previous owner of Coord3, who was terminated in connection with the financial improvement plan announced in the third quarter of fiscal 2016. This settlement resolved all open claims between the parties related to our acquisitions of NMS and Coord3, as well as his claims for severance payments.

The accompanying Consolidated Statement of Operations for the fiscal year ended June 30, 2015, the year in which the acquisition occurred, includes revenue of $5,639,000 and a net loss of $532,000 related to the operations of NMS and Coord3 subsequent to the dates each acquisition closed.

NMS

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

The total consideration payable in the acquisition of NMS was €2,150,000 (equivalent to approximately $2,445,000). We paid €1,800,000 (equivalent to approximately $2,050,000) on January 29, 2015, €250,000 (equivalent to approximately $282,000) on February 27, 2015 and €100,000 (equivalent to approximately $113,000) on February 1, 2016.

Coord3

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

The total consideration paid in the acquisition of Coord3 was €1,759,200 (equivalent to approximately $2,007,000). We paid €1,659,200 (equivalent to approximately $1,893,000) on February 27, 2015 and in October 2016, we finalized a settlement with the previous owner, who was terminated in connection with the financial improvement plan announced in the third quarter of fiscal 2016. As part of the settlement, we agreed to a final cash payment of €100,000 (equivalent to approximately $114,000), and wrote off receivables due from an entity under his control which resolved all open claims between the parties related to our acquisitions of NMS and Coord3, as well as his claims for severance payments.

We acquired current and long-term taxes payable as part of the purchase of Coord3. The tax liabilities represent income and payroll related taxes that are payable in accordance with government authorized installment payment plans. These installment plans require varying monthly payments through January 2021.

Other long-term liabilities include $614,000 of long-term contractual and statutory severance liabilities acquired as part of the purchase of Coord3 that represent amounts that will be payable to employees upon termination of employment.

Pro forma Information

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



		2015
Revenue	$	84,091
Net Income (Loss)	$	(470)

Income (Loss) Per Common Share
Basic	$	(0.05)
Diluted	$	(0.05)

As of June 30, 2015, the year in which the acquisitions occurred, we incurred acquisition related costs of approximately $1,600,000 for legal, accounting and valuation consulting fees which are included in “Selling, general and administrative expenses” on our Consolidated Statement of Operations.

These pro forma results of operations have been prepared for comparative purposes only and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred on the date indicated or that may result in the future.