ACQUISITIONS


(a)	OmniMetrix, LLC.

On February 15, 2012, the Company entered into a definitive agreement pursuant to which it acquired, through its XYZ Holdings, Inc. wholly-owned Georgia subsidiary ("Holdings" which has been renamed OMX Holdings, Inc.), all of the issued and outstanding limited liability company membership interests (the "Interests") in OmniMetrix, LLC, a Georgia limited liability company ("OmniMetrix"). OmniMetrix is in the business of designing, manufacturing, marketing and selling (i) wireless remote systems that monitor standby power generation, backup power generators, remote powered equipment, cellular towers, emergency towered communications and remote tower sites (the "Power Generation Monitoring" segment - see Note 20), and (ii) cathodic protection products to monitor pipeline integrity (the "Cathodic Protection" segment - included in the Company's "Other" segment - see Note 20). Holdings purchased the Interests in OmniMetrix from its three individual holders (the "Sellers") in consideration for an aggregate cash payment of $8,500. The Company incurred approximately $300 of transaction costs in connection with the acquisition of OmniMetrix which are included in Selling, general and administrative expense in the Consolidated Statement of Operations. The acquisition of OmniMetrix adds to the Company's growing product lines of remote monitoring systems for aging energy infrastructure.

The transaction was accounted for as a purchase business combination. OmniMetrix's results from operations for the period from acquisition (February 15, 2012) to December 31, 2012 have been included in the Company’s Consolidated Statement of Operations. In the period since our acquisition, the Company recorded $661 of revenues and a net loss of $2,643 associated with OmniMetrix's activities.

In accordance with generally accepted accounting principles, the fair value of OmniMetrix is allocated to OmniMetrix's identifiable tangible and intangible assets and liabilities assumed based on their fair values as of the date of the transaction. Based upon a third-party valuation of intangible assets as of that date, the Company allocated the $8,500 consideration of the fair value to assets and liabilities as follows:



Cash	$	665
Accounts receivable	328
Inventory	234
Other current assets	10
Property and equipment	26
Intangible assets (see Note 11 for allocation to segments)	5,581
Goodwill (see Note 11 for allocation to segments)	1,930
Total assets acquired	8,774

Current liabilities	(274		)
Fair value of net assets acquired	$	8,500

Intangible assets with finite useful lives are amortized over their estimated useful lives. The intangible assets acquired and their weighted average estimated useful life in years is noted in the table below:



Intangible Asset Acquired	Estimated value		Weighted average estimated useful life in years
OmniMetrix technologies	$	2,319	10
Customer relationships	3,236		14
Non-compete agreements	26		6
	$	5,581

Goodwill is not amortized for financial statement purposes in accordance with generally accepted accounting principles and is expected to be deductible for tax purposes.


(b)	GridSense

(i) Acquisition of the Balance of GridSense

The final Share Sale Agreement was entered into by and among the Company, GridSense Pty Ltd. (“GridSense”), the GridSense stockholders and certain note holders of GridSense on May 12, 2010. Under the terms of the Share Sale Agreement, the Company acquired the outstanding GridSense shares that were not owned by it (approximately 70%). The total purchase price for the acquisition of the balance GPL was $4,406 (See Schedule D to the Consolidated Statements of Cash Flows).

In connection with the acquisition of GridSense, the Company recorded a gain of $1,327 on the step-up of the Company’s previous carrying value of its investment in GridSense to fair value in accordance with generally accepted accounting principles for step acquisitions.

Intangible assets with estimated useful lives are amortized over that period. The acquired intangible assets with useful lives include approximately $1,793 for the estimated market value of GridSense technologies, (weighted average estimated useful life of eleven years), $253 for the estimated market values of acquired customer relationships (estimated useful life of ten years), $187 for the estimated market value of the GridSense trade name (estimated useful life of fifteen years) and $81 for the estimated market value on non-compete agreements (estimated useful life of three years). The goodwill is not amortized for financial statement purposes in accordance with generally accepted accounting principles. The intangible assets and the goodwill acquired were assigned to the Company’s GridSense segment. See Note 11(a) with respect to the impairment of goodwill associated to GridSense recorded by the Company in 2010.

The transaction was accounted for as a purchase business combination. GridSense’s results from operations for the period from acquisition (May 12, 2010) to December 31, 2010 have been included in the Company’s Consolidated Statement of Operations.

(ii) Acquisition of OMI by GridSense

On May 20, 2010, GridSense acquired the assets of On-Line Monitoring Inc. (“OMI”), a manufacturer of on-line substation monitoring equipment based in Exton, PA. Under the terms of the Asset Purchase Agreement, GridSense acquired all the assets (including receivables, inventory, equipment and intellectual property) and assumed certain liabilities of OMI as defined. The net liabilities assumed by GridSense in the transaction were $352. In addition, GridSense agreed to pay to the seller of OMI an incremental sales payment estimated by the Company to be $50, and accordingly, the total purchase price of OMI was $402. No incremental sales payment was ultimately due and accordingly in the year ending December 31, 2011, the Company reduced its liability for the incremental sales payment to zero, with the credit being recorded to selling, general and administrative expense.

The transaction was accounted for as a purchase business combination. In accordance with generally accepted accounting principles, the purchase price of $402 of OMI was allocated to identifiable tangible and intangible assets and liabilities assumed based on their fair values as of the date of the completion of the transaction (See Schedule E to the Consolidated Statements of Cash Flows).

The acquired intangible assets with estimated useful lives is comprised of approximately $222 for the estimated fair market value of OMI’s intellectual property (estimated useful life of 5 years) and $100 for non-compete agreements to certain employees (estimated useful life of three years). The intangible assets acquired were assigned to the Company’s GridSense segment.


(c)	U.S. Seismic Systems, Inc. ("USSI")

As of December 31, 2010, the Company owned 1,155,160 shares of USSI’s common stock representing 65.6% of USSI’s capitalization after having invested $1,500 in USSI and paying $2,229 of the Company's common stock to acquire shares of USSI common stock held by non-employee stockholders.

On January 25, 2011 the Company exercised an option to increase its investment in USSI and transferred $250 to USSI. On February 9, 2011, the Company exercised additional options and transferred an additional $750 to USSI. Following these option exercises, the Company increased its holdings in USSI to 80.6%. The Company's final option to invest $1,500 in USSI and increase its holdings to 87.4% expired in May 2011. In the period from June to December 2011, the Company advanced USSI $2,000 in contemplation of a new investment agreement.

On February 6, 2012, the Company entered into a new Stock Purchase Agreement (the “USSI Purchase Agreement”) with USSI pursuant to which the Company converted previously advanced funds into additional shares of USSI common stock (“USSI Common Stock”) and shares of USSI's new Series A-1 Preferred Stock (“USSI Preferred Stock”). The Company also made a further payment to USSI of $2,250 on February 6, 2012 to purchase additional shares of USSI Preferred Stock. The USSI Preferred Stock provides that upon any future liquidation of USSI, to the extent funds are available for distribution to USSI's stockholders after the satisfaction of any USSI liabilities at that time, USSI would first repay the Company for the purchase price of its USSI Preferred Stock. Thereafter, the Company would receive a further payment for such shares ratably with all other USSI Common Stock holders as though the Company's shares of USSI Preferred Stock were the same number of shares of USSI Common Stock.

In April 2012, the Company conducted a second closing for the purchase of additional USSI Preferred Stock in accordance with the USSI Purchase Agreement and invested an additional $2,500 in USSI. Following this investment, the Company owned approximately 92% of USSI upon conversion of the USSI Preferred Stock.

On July 30, 2012, the Company entered into another Stock Purchase Agreement (the “Summer USSI Purchase Agreement”) with USSI pursuant to which the Company made a payment to USSI of $2,500 to purchase additional shares of USSI Preferred Stock. The USSI Preferred Stock is the same class of shares that the Company acquired earlier that year (see above). In connection with this investment, the Company also entered into a Second Amended and Restated Stockholders Agreement with USSI and its other stockholders providing for certain rights and obligations to purchase or sell our USSI securities and with regard to the management of USSI.

Following the July 30, 2012 payment to USSI, the Company owned approximately 93.6% of USSI upon conversion of the USSI Preferred Stock. The Summer USSI Purchase Agreement contemplated that the Company would make an additional investment of $2,500 later in 2012 in exchange for additional shares of USSI Preferred Stock. On November 1, 2012, the Company made this additional investment. Following the November 1, 2012 payment to USSI, the Company owned approximately 94.4% of USSI upon conversion of the USSI Preferred Stock (which amount would be diluted to approximately 85.1% if all options which could be awarded under USSI's 2012 Stock Purchase Plan were awarded and exercised).

In 2010, in accordance with generally accepted accounting principles, the Company recorded an adjustment of $2,224 to the non-controlling interests balance with respect to the Acorn investment in 2010. The non-controlling interest’s share of USSI’s loss in the year ended December 31, 2010 was $776.

In 2011, in accordance with generally accepted accounting principles, the Company recorded an adjustment of $600 to the non-controlling interests balance with respect to the Acorn investment in 2011. The non-controlling interest’s share of USSI’s loss in the year ended December 31, 2011 was $571.

In 2012, in accordance with generally accepted accounting principles, the Company recorded an adjustment of $1,067 to the non-controlling interests balance with respect to the Acorn investment in 2012.The non-controlling interest’s share of USSI’s loss in the year ended December 31, 2012 was $1,108.

The third-party valuation of intangible assets with finite lives are amortized over their estimated useful lives. The acquired intangible assets with finite lives are comprised of $2,565 for the estimated fair market value of USSI's sensor technologies (estimated useful life of 20 years). Neither the goodwill nor the intangibles resulting from the acquisition are deductible for income tax purposes. The goodwill is not amortized for financial statement purposes in accordance with applicable accounting principles. The intangible assets and the goodwill acquired were assigned to the Company’s USSI segment.