Note 2 – Acquisition of Intellectual Property

On March 30, 2012, the Company acquired the intellectual property underlying its Monarch Report Analytics platform pursuant to an Option Purchase Agreement dated as of April 29, 2004 by and among the Company, Personics Corporation, Raymond J. Huger and Math Strategies, as amended (the "Option Agreement"). Under the formula contained in the Option Agreement, the purchase price paid for the intellectual property assets was $8,541,000 which was calculated based on a multiple of the aggregate royalties paid to Math Strategies by the Company for the four fiscal quarters preceding the exercise of the option. The intellectual property assets will be amortized to cost of software licenses using the straight-line method over the estimated life of the asset, which is five years. Amortization expense related to the intellectual property assets was $9,000 during the three and six months ended March 31, 2012. The estimated future amortization expense related to the intellectual property is as follows (in thousands):


Fiscal Years Ended September 30,
Remainder of fiscal 2012	$	855
2013		1,708
2014		1,708
2015		1,708
2016		1,708
2017		845

Total estimated future amortization expense	$	8,532

The purchase was funded in part through the issuance by the Company of a $4.0 million subordinated note and warrants for 185,000 shares of Company common stock to Massachusetts Capital Resource Company ("MCRC"), pursuant to a Note and Warrant Purchase Agreement entered into with MCRC as of March 30, 2012, and through the borrowing of $1.5 million under a new $2.0 million revolving credit facility with Silicon Valley Bank ("SVB"), pursuant to a Loan and Security Agreement entered into with SVB as of March 30, 2012. See additional financing arrangement disclosures in Note 4 to the Company's condensed consolidated financial statements.