(3) Acquisitions

On May 2, 2012, we entered into a definitive asset purchase agreement with CardServ, Inc., a Massachusetts corporation doing business as Flagship. Pursuant to the definitive agreement, one of our wholly owned subsidiaries agreed to purchase substantially all of the assets of Flagship for a purchase price of approximately $14.0 million We funded the acquisition of Flagship through revolver borrowings and cash on hand and completed this transaction on May 23, 2012.

In accordance with ASC 805, the Company determined that the acquisition of Flagship constituted an acquisition of a business, thus requiring all assets and liabilities assumed to be recorded at fair value. The following table presents the fair values of assets acquired and liabilities assumed and is based on information that was available to us as of the closing date and may be subject to additional adjustments that can be recorded during the “measurement period” (not to exceed one year as defined by ASC 805), with corresponding increases or decreases to goodwill:

As part of the purchase accounting for the Flagship acquisition, approximately $3.1 million was assigned to merchant portfolios and other intangible assets, $1.5 million was assigned to a trade name for “Flagship Merchant Services,” and $9.1 million was assigned to goodwill. The entire $9.1 million assigned to goodwill is expected to be deductible for tax purposes. In addition, we incurred approximately $0.1 million of acquisitions cost related to the Flagship acquisition primarily consisting of professional fees.

Our intangible assets are amortized over their estimated lives, except the “Flagship Merchant Services” trade name, which was determined to have an indefinite life as there are no legal, regulatory, contractual, economic or other factors that limit the useful life of the intangible asset to us, and we have no plans to cease using such name. We believe the trade name has an inherent value due to brand strength.

There were no acquisitions of businesses during the first six months of 2012, including the acquisition of Flagship, that were significant enough to require pro forma disclosure.

Other Acquisitions

In April 2012, we entered into a purchase and sale agreement with an existing ISG, whereby we acquired a portfolio of merchant accounts. Consideration at closing was $2.5 million in cash, which was funded at closing from borrowings under our revolving facility. The effect of the portfolio acquisition was included in our consolidated financial statements beginning April 1, 2012.

In April 2012, we entered into a purchase and sale agreement with an existing ISG, whereby we acquired a portfolio of merchant accounts. Consideration at closing was $2.6 million in cash, which was funded at closing from borrowings under our revolving facility. The effect of the portfolio acquisition was included in our consolidated financial statements beginning April 1, 2012.