3. Acquisition

On August 15, 2011, the Company acquired 100% of the outstanding stock of InSysCo. InSysCo provides mission critical IT, software development and business analysis support services to its customers. The business combination provides multiple benefits for both companies and is a significant step in executing our strategy of growing the professional services component of our business. InSysCo’s results have been included in the Company’s consolidated financial statements from August 16, 2011 to September 30, 2011. Pro forma results are not provided because InSysCo’s results of operations are not material.

The aggregate purchase price that the Company paid for InSysCo is as follows (in thousands):


Cash paid	$	14,168
Estimated working capital deficit adjustment		(130	)

		14,038
Less: Cash acquired		(2,034	)

Total purchase price	$	12,004

The estimated working capital deficit adjustment represents the difference between the actual working capital and the target net working capital. In the event of deficit or excess, the purchase price will be adjusted accordingly. The net working capital adjustment will be finalized in accordance with the purchase agreement. In addition, approximately $0.3 million was incurred for acquisition-related costs and integration costs which are included in “Selling, General and Administrative” expenses in the accompanying unaudited condensed consolidated statement of operations.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):


Accounts receivable	$	2,846
Prepaid expenses and other assets		818
Property and equipment		224
Intangible Assets		4,490
Goodwill		7,718
Accounts payable and accrued expenses		(4,092	)

Total purchase price	$	12,004

Included in prepaid assets is $0.6 million for retention bonuses which the seller funded into an escrow bonus account. As of September 30, 2011, the Company recorded $0.5 million of expense related to these retention bonus programs.

The components and the initial estimated useful lives of the intangible assets listed in the above table as of the acquisition date are as follows (in thousands):


	Amount		Life
Customer relationships	$	4,490	10-12 years

Goodwill is primarily attributable to the benefits and synergies GTSI and InSysCo are expected to receive as a result of the business combination. The goodwill recorded in this transaction is not deductible for tax purposes.