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Contingencies
 9 Months Ended
Dec. 31, 2012
Contingencies  
Contingencies

Note 7 - Contingencies

 

As part of the Bios Acquisition, the Bios Agreement includes a provision for contingent consideration based on revenue growth over a three year earn-out period.  The contingent consideration arrangement requires us to pay Bios if the cumulative revenues from the acquisition for the three years subsequent to the acquisition exceed $22,127,000.  The potential undiscounted future payment that we could be required to make ranges from $0 to $6,710,000.  The fair value of the contingent consideration arrangement included in the purchase price was estimated based on the historic revenue growth of Bios.  We recorded a contingent consideration liability of $2,140,000 on the accompanying condensed balance sheet as of December 31, 2012.  Any changes to the contingent consideration ultimately paid would result in additional income or expense on the condensed statements of income.  There has been no material change to the contingent consideration liability as of December 31, 2012.  The contingent consideration is payable in the first quarter of our year ending March 31, 2016.

 

During the three months ended December 31, 2012, we determined that we have a potential liability for state sales taxes.  The ultimate amount due will depend upon a number of factors, including the amount of sales that were made to customers who already paid the tax or who are exempt, and any penalties and interest.  We recorded an estimate of $100,000, which is included in other accrued expenses on the accompanying condensed balance sheets, and general and administrative expense in the accompanying condensed statements of income.  This estimate may change as further analysis is completed and sales tax returns are filed.  During the three months ended December 31, 2011, we determined that we had a separate liability for state sales taxes and recorded an estimate of $250,000.  During the three months ended June 30, 2012, we settled the liability and determined that no additional liability was required.  We continue to evaluate our exposure in additional states, but at this time the amount of the potential liability, if any, is not estimable.