Business Combinations

12 Months Ended

Dec. 31, 2011

Business Combinations

Business Combination Disclosure [Text Block]

On September 6, 2011, the Company acquired substantially all the assets of MagicBox, Inc. through an asset purchase agreement.

MagicBox’s content management and control technology, along with its industry-leading database integration software are the perfect complement to ClearOne's StreamNet™ systems. The combined expertise of the two companies brings to the market, the only complete, end-to-end digital signage content management and IP streaming solution. MagicBox and ClearOne have complementary products for a broad spectrum of applications. One of the single-most challenging requirements for any digital signage provider is the ability to distribute content over a LAN while maintaining control and scheduling alignment. StreamNet technology delivers low-latency HD distribution over IP which is a perfect fit with MagicBox's content creation, scheduling, database integration and digital signage domain expertise.

Pursuant to the asset purchase agreement, the Company paid Magic Box, Inc. $980 in cash.

The fair value of identified assets and liabilities acquired and goodwill was as follows:

Accounts Receivable	$     81
Inventories	117
Other current assets	12
Accrued expenses	(4)
Property and equipment	9
Proprietary software	179
In-process research and development	159
Intangibles	338
Goodwill	427
	$   980

The goodwill of $427 is composed of expected synergies in utilizing MagicBox technology in ClearOne product offerings, reduction in future combined research and development expenses, and intangible assets including acquired workforce that do not qualify for separate recognition.

The goodwill balance of $427 related to the MagicBox acquisition is deductible for tax purposes.

The Company incurred $167 towards acquisition related expenses, all of which are categorized under General and Administrative expenses in the Consolidated Statement of  Operations for the period ended December 31, 2011.

Supplemental Pro Forma information

1)Actual Revenue of MagicBox from September 6, 2011 to December 31, 2011 was $353.

2)It is impracticable to provide actual earnings of MagicBox from September 6, 2011 to December 31, 2011 because (a) MagicBox operations have been substantially integrated with the rest of the operations of the Company and (b) separate accounting records are not maintained for MagicBox.

3)Revenue and earnings of 2010 of the combined entity as though the business combination occurred as of January 1, 2010 was approximately $42,850 and $2,461, respectively.

There were no material, nonrecurring pro forma adjustments directly attributable to the acquisition included in this supplemental Pro Forma information.