6. Acquisitions

ComSource

The Company entered into an Agreement and Plan of Merger effective as of April 8, 2011 with ComSource. Pursuant to the agreement, a newly-formed subsidiary of the Company merged with and into ComSource in exchange for an initial cash purchase price of $19.9 million, funded through $1.9 million of existing cash and $18.0 million through the ComSource Acquisition Loan. To the extent that working capital at the effective date was less or more than $400,000, there may be a post-closing adjustment to the purchase price.

Former ComSource shareholders are also entitled to receive additional cash payments of up to an aggregate of $21.0 million, subject to an earn-out based upon the acquired business achieving certain earnings milestones within 24 months following the closing. The Company has estimated the fair value of the earn-out to be $10.1 million as of September 30, 2011. The Company recorded a $6.5 million gain (or $0.29 per diluted common share) and reduced the earn-out liability in the three months ended September 30, 2011 due to the unforeseen loss of funding on a program in September 2011 resulting in a reduction in forecasted results at ComSource for the earn-out period.

ComSource employs 50 staff and provides independent testing and evaluation of a variety of telecommunications equipment and related recurring long term application support, including new feature sets. Client testing includes basic performance, data assurance, reliability and system security. The acquisition of ComSource provided the Company with further entry into the growing wireless market.

The following unaudited pro forma information assumes that the acquisition of ComSource occurred on July 1, 2010, after giving effect to certain adjustments, including amortization of intangibles, increased interest expense on the ComSource Acquisition Loan, decreased interest income due to use of cash to partially fund the acquisition, and income tax adjustments. The pro forma results are not necessarily indicative of the results of operations that would actually have occurred had the transaction taken place on the date indicated or of the results that may occur in the future:


	Three months
	ended September
	30, 2010
	(in thousands,
	except per share
	data)
Revenues	$	56,859


Net income	$	2,209


Basic net income per common share	$	0.11

Diluted net income per common share	$	0.10

C2C and Evocomm

In July 2011, the Company paid $4.5 million to the former shareholders of C2C and Evocomm based on a settlement agreement reached in June 2011 with respect to the final earn-out period. At September 30, 2011, there was no liability remaining for the earn-out related to the acquisition of C2C and Evocomm.