5. ACQUISITION

On June 27, 2012, Group, LLC and optionsXpress Holdings, Inc., a subsidiary of The Charles Schwab Corporation, entered into a Stock Purchase Agreement whereby the Company acquired Paragon, which owns all membership interests of OEC, an online futures broker, for a purchase price of $12.0 million. This acquisition was made as part of the Company’s plan to offer additional products to its customers and diversify its revenue. The transaction was completed on August 31, 2012. In addition to the $12.0 million paid at the closing, there is an additional payment due in the fourth quarter of 2012 based on a contractual working capital adjustment. The numbers herein reflect a preliminary working capital adjustment of $2.6 million.

The preliminary purchase price of OEC was derived as follows (in thousands):


Cash paid	$	12,000
Preliminary working capital adjustment		2,593

Total purchase price	$	14,593

The preliminary purchase price of OEC was allocated to fair value of various assets and liabilities as follows (in thousands):


Cash and cash equivalents acquired		114,229
Receivables from brokers acquired		815
Other assets acquired		98

Total tangible assets acquired	$	115,142
Total liabilities assumed		(111,351	)

Identifiable intangible assets:
Trademark		200
Technology		1,120
Customer relationships		2,420
Goodwill		7,062

	$	14,593

The foregoing purchase price allocation is preliminary. The final allocation will be based on final analyses of identifiable intangible assets, property and equipment, contingent liabilities and income taxes, among other things, and will be finalized after the data necessary to complete the analyses of fair values of assets and liabilities is obtained and analyzed. Differences between preliminary and final allocations of the purchase price are not expected to have a material impact on the Company’s consolidated results of operations.

For the month of September 2012, revenues generated by OEC were $1.2 million and expenses were $1.3 million generating a loss before taxes of $0.1 million.

Pro Forma Information:

The following unaudited pro forma operating data are presented as if the acquisition of Paragon had occurred at the beginning of each period presented. The unaudited pro forma data is provided for informational purposes only and may not necessarily be indicative of future results of operations or what the results of operations would have been had the Company and Paragon operated as a combined entity for the periods presented. Unaudited pro forma revenues, net income and net income per share information for the three and nine months ended September 30, 2012 and 2011, were as follows (in thousands, except per share amounts):


	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Net revenue	$	41,777	$	57,497	$	126,459	$	160,043
Net income	$	3,259	$	7,449	$	5,744	$	18,994