SUPPLY AGREEMENT AND ACQUISITION

9 Months Ended

Nov. 30, 2012

Business Combinations [Abstract]

Supply Agreement and Acquisition Disclosure [Text Block]

NOTE 2 – SUPPLY AGREEMENT AND ACQUISITION

On May 7, 2012, the Company entered into a five-year supply agreement (the “Supply Agreement”) to provide at least $25 million of fleet tracking products to Navman Wireless, a privately held company (“Navman”). In conjunction with the Supply Agreement, the Company also entered into an asset purchase agreement on May 7, 2012 with Navman (the “Asset Purchase Agreement”) and established a research and development center in Auckland, New Zealand with an initial staff of 14 employees who transferred from Navman’s workforce.

The purchase price for the products and technologies acquired from Navman pursuant to the Asset Purchase Agreement was $4,902,000, comprised of $1,000,000 paid in cash at closing, a non-interest bearing note payable with a present value of $3,080,000 at the time of issuance, and the fair value of estimated contingent royalties consideration of $822,000 for sales by CalAmp during the first three years of certain products acquired from Navman under the Asset Purchase Agreement. The note payable has a face value of $4,000,000, and is payable in the form of a 15% rebate on certain products sold by the Company to Navman under the Supply Agreement.

The Company is accounting for this acquisition under FASB ASC Topic 805, “Business Combinations”, which provides guidance on the accounting and reporting for transactions that represent business combinations to be accounted for under the acquisition method. This method requires that, among other things, assets acquired and liabilities assumed be recorded at their fair values as of the acquisition date. The excess of the consideration transferred over those fair values is recorded as goodwill.

     Following is the purchase price allocation (in thousands):

Purchase Price				$	4,902
Fair value of net assets acquired:
Property and equipment	$	200
Supply Contract		2,220
Developed/core technology		500
Customer lists		710
Covenants not to compete		170
Assumed liabilities		(10	)
Total fair value of net assets acquired					3,790
Goodwill				$	1,112

The goodwill arising from this transaction is deductible for income tax purposes, and is assigned to the Company’s Wireless DataCom segment. This goodwill is primarily attributable to the benefit of having an assembled workforce in New Zealand and the value that the Company expects to receive from the Supply Agreement beyond its five year term.