Business Combinations

RadioPulse, Inc.

May 1, 2015,

we acquired RadioPulse, Inc., or RadioPulse, for a total consideration of

$15.7

million. Based in South Korea, RadioPulse is a fabless semiconductor company that develops, manufactures and sells wireless network technology solutions based on the ZigBee® protocol, which combines microcontrollers and radio frequency devices. RadioPulse’s solutions are designed to enable a broad range of power-sensitive applications in the industrial, medical, consumer, smart grid and Internet of Things, or IoT, markets. RadioPulse offers a product portfolio complementary to our product lines. The consideration included cash consideration paid at closing of

$14.7

million and

$1.0

million related to an adjustment to eliminate debt owed to us for funds advanced prior to closing. The acquisition also included potential earnout payments aggregating up to

$6.0

million based on certain financial thresholds related to net revenues, gross profit and net income in calendar years

2015,

2016

and

2017.

Based on our valuation, the fair value of the liability for the earnout payment at the acquisition date was estimated to be

nil.

The fair value of the liability for the earnout payment has

not

changed since the initial valuation. In connection with the acquisition, we incurred and expensed

$248,000

in legal and consulting costs and

$249,000

in acquisition-related compensation costs during fiscal

2016.

The following table summarizes the values of the assets acquired and liabilities assumed at the acquisition date (in thousands):

	Purchase Consideration Allocation
Cash and cash equivalents and restricted cash	$	196
Accounts receivable		1,497
Inventories		534
Property, plant and equipment		24
Prepaid expenses and other current assets		547
Identifiable intangible assets		2,867
Short-term borrowings		(2,354	)
Accounts payable		(614	)
Accruals and other liabilities		(1,926	)
Total identifiable net liabilities		771
Goodwill		14,887
Total purchase consideration	$	15,658

Identified intangible assets resulting from the RadioPulse acquisition consisted of the following (in thousands):

			Amortization	Estimated
	Fair Value		Method	Useful Life
	(In thousands)			(In months)
Developed intellectual property	$	1,005	Accelerated		60
In-process research and development expenses (1)		1,188	Straight-line		60
Customer relationships		500	Accelerated		36
Contract backlog		174	Straight-line		6
Total	$	2,867

(

) Amortization started in the quarter ended

December 31, 2016

upon the completion of the research and development activities of the corresponding projects.

The value reflected in the table represents the purchase price allocation. The valuation of the acquired intangibles was classified as a level

measurement under the fair value measurement guidance because the valuation was based on significant unobservable inputs and involved management judgment and assumptions about market participants and pricing. We did

not

recognize any liability with respect to the contingent consideration based upon our analysis.

In determining the fair value of the acquired intangible assets, we determined the appropriate unit of measure, the exit market and the highest and best use for the assets. The income approach was used to estimate the fair value. The income approach indicates the fair value of an asset based on the value of the cash flows that the asset can be expected to generate in the future through a discounted cash flow method. The income approach was used to determine the fair values of developed intellectual property, in-process research and development expenses, contract backlog and customer relationships. The goodwill arising from the acquisition was largely attributable to the synergies expected to be realized after our acquisition and integration of RadioPulse and to the workforce acquired in the transaction. The goodwill is

not

deductible for tax purposes.

During the quarter ended

December 31, 2016,

the intangible assets resulting from the RadioPulse acquisition were determined to be fully impaired and an impairment charge of

$1.4

million was recognized. See Note

“Goodwill and Intangible Assets” for further discussion of the impairment analysis of goodwill and intangible assets and the related charges recorded.

RadioPulse contributed net revenues of

$4.1

million, from the date of purchase,

May 1, 2015

to our consolidated statements of operations for the fiscal year ended

March 31, 2016.

The net loss of RadioPulse included in our operating results for the year ended

March 31, 2016

was

$3.6

million, based on the purchase consideration valuation. The results of operations and financial position of RadioPulse were immaterial compared to our financial statements and therefore pro-forma financial statements have

not

been separately presented.

Other Acquisition

In the quarter ended

June 30, 2014,

we completed a business acquisition for a cash consideration of

$2.3

million, net of cash acquired of approximately

$204,000.

The acquisition resulted in a goodwill of

$2.8

million and we assumed debt of

$723,000.

March 31, 2017,

this goodwill balance reflected a cumulative reduction of

$605,000

caused by changes in the foreign exchange translation rate. This acquisition was

not

significant to our consolidated financial statements.