Annual report pursuant to Section 13 and 15(d)

Acquisition

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Acquisition
 12 Months Ended
Dec. 31, 2012
Acquisition [Abstract]  
Acquisition

NOTE 5 – ACQUISITION

 

On July 27, 2011, the Company acquired Patapsco Designs Limited of the UK (“Patapsco”). The purchase price totals $5,094,000, with cash acquired totaling $862,000.  The purchase price included initial consideration of $3,271,000, deferred consideration of $466,000 to be paid out no later than 18 months from the acquisition date, $656,000 in working capital adjustments, and $701,000 in contingent consideration.  The Company agreed to pay consideration up to $818,000 contingent upon the Patapsco business meeting gross margin and other non-financial targets, with the consideration to be paid out no later than two years from the acquisition date.  Although the maximum contingent consideration was $818,000, the Company had recognized $701,000 as the estimated fair value of the contingent consideration at the date of acquisition.  This contingent consideration was calculated based on the exchange rate at the date of acquisition and actual payments may differ based on fluctuations in the exchange rate between the dollar and the pound. At December 31,  2012, the Company has estimated liabilities of $770,000 related to outstanding consideration payments.