8. CONTINGENT PAYMENTS

12 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Contingent payments at June 30, 2016 and 2015 are as follows:

		2016		2015
Contingent land payment	$	672,700	$	653,900
Less current portion		-		(50,000)
Contingent payments, long-term	$	672,700	$	603,900

Contingent land payment represents the net present value of $800,000 of contingent land payments due under an agreement whereby Alanco Energy Services, Inc. (“AES”) acquired 160 acres of land known as Indian Mesa. The maximum total of $800,000 of contingent land payments is based upon 10% of quarterly revenues in excess of operating expenses up to $200,000 per quarter for activity at both the Deer Creek and the Indian Mesa locations. The payments were projected considering operating plans as approved by the Alanco Board of Directors, with the payments discounted at a rate of 3% per annum. During the fiscal year ended June 30, 2016 no contingent land payments were made while $8,600 was paid in fiscal year 2015. The Company will maintain the liability for contingent payments resulting from future revenues on the Indian Mesa land resulting from an eventual buyer’s operations. See Note 4 – Alanco Energy Services for additional discussion on AES operations.

TCO can also earn additional purchase price payments based upon a percentage of the net cumulative EBITDA (net of all related AES capital investments) over a period of approximately 10 years (contingent purchase price), approximately the initial term of the lease. As of June 30, 2016 and 2015, the Company had no liability recorded for the contingent purchase price based on the probability of the contingent payment being realized.

The significant unobservable inputs used in the fair value measurement of the Company’s fair value calculation for the contingent land payment and contingent purchase price include cash flow projections, the probability of the contingent payments being realized, the timing of when the payments are paid and the discount rate applied. Significant changes in any of those inputs in isolation would result in a significantly different fair value measurement. See Note 4 – Alanco Energy Services for additional discussion on AES operations.