Date of Report (Date of earliest event reported):  October 1, 2009

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

     The undersigned Registrant previously reported the completed merger of Peachtree Acquisition Corporation, a wholly owned subsidiary of the Registrant ("Merger Sub") with and into Goldleaf Financial Solutions, Inc. ("Goldleaf") (the "Merger") in accordance with the Agreement and Plan of Merger, dated as of August 16, 2009, among the Registrant, Merger Sub and Goldleaf, on its Current Report on Form 8-K filed on October 1, 2009 (the "Initial 8-K"). This Amendment Number 1 to Current Report on Form 8-K/A (this "Form 8-K/A") amends the Initial 8-K to include the financial statements and pro forma financial information required to be filed in connection with the Merger pursuant to Item 9.01(a) and (b) of Form 8-K. The information previously reported under Item 2.01 in the Initial 8-K is hereby incorporated by reference into this Form 8-K/A.

(a)      Financial statements of businesses acquired.

     The following historical audited financial statements of Goldleaf Financial Solutions, Inc. included in Goldleaf's Annual Report on Form 10-K filed on March 31, 2009 are filed as Exhibit 99.2 and are hereby incorporated herein by reference:

The following historical unaudited financial statements of Goldleaf included in Goldleaf's Quarterly Report on Form 10Q filed on August 19, 2009 are filed as Exhibit 99.3 and are hereby incorporated herein by reference:

(b)      Pro Forma Financial Information.

     The following unaudited pro forma financial statements, including notes thereto, of Jack Henry & Associates, Inc. ("Jack Henry") are filed as Exhibit 99.4 and are hereby incorporated herein by reference:

(d)     Exhibits

Date:  December 11, 2009

/s/ Ernst & Young LLP

Atlanta, Georgia
December 11, 2009

        We have audited the accompanying consolidated balance sheets of Goldleaf Financial Solutions, Inc. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the two years in the period ended December 31, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Goldleaf Financial Solutions, Inc. and subsidiaries at December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

/s/ERNST & YOUNG LLP

Atlanta, Georgia

March 30, 2009

GOLDLEAF FINANCIAL SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2008 and 2007

(in thousands, except share data)

The accompanying notes are an integral part of these consolidated financial statements.

GOLDLEAF FINANCIAL SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2008 and 2007

(in thousands, except per share data)

The accompanying notes are an integral part of these consolidated financial statements.

GOLDLEAF FINANCIAL SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Years Ended December 31, 2008 and 2007

(in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

GOLDLEAF FINANCIAL SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2008 and 2007

(in thousands)

– continued –

The accompanying notes are an integral part of these consolidated financial statements.

GOLDLEAF FINANCIAL SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

For the years ended December 31, 2008 and 2007

(in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

GOLDLEAF FINANCIAL SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization

        Goldleaf Financial Solutions, Inc. (the "Company" or "Goldleaf"), was incorporated under the laws of the state of Tennessee on December 26, 1990 for the purpose of marketing a solution to help financial institutions market and manage accounts receivable financing. Goldleaf operates primarily in the United States although it does have some international presence and its customers consist of financial institutions of various sizes.

        The Company owns three wholly owned subsidiaries, Towne Services, Inc. ("Towne"), Goldleaf Technologies, Inc. ("GTI"), and Goldleaf Enterprise Payments, Inc. ("GEP" or "Alogent"). Towne owns Forseon Corporation (d/b/a RMSA), Private Business Insurance, LLC ("Insurance") and KVI Capital, LLC ("KVI"). KVI was acquired in August 2005 and provided a leasing solution for financial institutions who wanted to offer a leasing option to their commercial customers. GTI was acquired in January 2006 and provided automated clearing house ("ACH") origination and processing services, remote capture processing services, and financial institution website design and hosting services. During 2007 the Company acquired the assets of Community Banking Systems, Ltd. ("CBS") and DataTrade, LLC to complement our existing core, data and imaging processing services. In January 2008, Goldleaf acquired Alogent adding deposit automation and back-office item processing solutions for Tier I and Tier II financial institutions. Tier I financial institutions are defined by Goldleaf as having greater than $50 billion in assets and Tier II financial institutions are defined by Goldleaf as having between $5 billion and $50 billion in assets. On December 31, 2008 we entered into an asset purchase agreement to sell all the assets comprising of Goldleaf's core processing product, WinTELLER product, and its outsourced processing center in Denver, Colorado in an effort to increase the organization's focus on leveraging its position in the payments technology sector.

Principles of Consolidation

        The consolidated financial statements include the accounts of Goldleaf Financial Solutions, Inc. and its wholly owned subsidiaries. All significant intercompany transactions and accounts have been eliminated.

Cash and Cash Equivalents

        The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of December 31, 2008, the Company is exposed to credit risks related to its cash balances at financial institutions in excess of the limits of the Federal Deposit Insurance Corporation ("FDIC").

Restricted Cash

        The Company maintains a custodial cash account that is used for the processing and clearance of ACH transactions for some of its customers. The cash is restricted and offset by a customer deposit account included in current liabilities in the accompanying consolidated balance sheets as of December 31, 2008 and 2007.

Unbilled Accounts Receivable

        The Company invoices for certain revenues in arrears following the month in which the revenues were earned. Therefore, at each period-end, the Company includes unbilled accounts receivable in its trade accounts receivable balance in the accompanying consolidated balance sheets. As of December 31, 2008 and 2007, the Company's unbilled accounts receivable totaled approximately $0.6 million and $0.3 million, respectively.

Allowance for Doubtful Accounts

        The Company estimates its allowance for doubtful accounts on a case-by-case basis, considering the facts and circumstances surrounding each potentially uncollectible receivable. The Company does not require collateral to extend credit to customers. An allowance is also maintained for expected billing adjustments and for accounts that are not specifically reviewed that may become uncollectible in the future. Uncollectible receivables are written-off in the period management believes it has exhausted every effort to collect payment from the customer. The Company considers trade accounts receivables in excess of sixty days past due to be delinquent and thus subject to consideration for the allowance for doubtful accounts.

Inventory

        The Company maintains limited quantities of hardware equipment in stock related primarily to its remote deposit product. The Company also maintains small quantities of incidental inventory items related to other product lines. The Company values inventories at the lower of cost or market at each period, with cost determined by the first-in, first-out ("FIFO") costing method.

Property and Equipment

        Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight line method based on the estimated useful lives of the assets which consists of three years for purchased software, the shorter of the estimated useful life or the life of the lease for all leasehold improvements, and three to seven years for furniture and equipment. Expenditures for maintenance and repairs are charged to expense as incurred, whereas expenditures for renewals and betterments are capitalized. The Company evaluates the carrying value of property and equipment whenever events or circumstances indicate that the carrying value may have been impaired in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets , issued by the Financial Accounting Standards Board ("FASB"). As of December 31, 2008, the Company believes no impairment to long-lived assets existed.

        Operating lease equipment related to our leasing business is carried at cost and is depreciated to the individual equipment's net realizable value. Depreciation is calculated using the straight-line method over the shorter of the life of the lease or the estimated useful life of the equipment, typically five to seven years.

Software Development Costs

        Development costs incurred in the research and development of new software products and significant enhancements to existing software products are expensed as incurred until technological feasibility has been established. After such time, any additional costs are capitalized in accordance with SFAS No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed. Capitalized software development costs are amortized on a straight-line basis over the estimated life of the product or enhancement, typically 2 to 7 years.

        Also, the Company capitalizes costs of internally used software when application development begins in accordance with Statement of Position ("SOP") No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, issued by the American Institute of Certified Public Accounts ("AICPA"). This is generally defined as the point when research and development have been completed, the project feasibility is established, and management has approved a development plan. Many of the costs capitalized for internally used software are related to upgrades or enhancements of existing systems. These costs are only capitalized if the development costs will result in specific additional functionality of the existing system, and are capitalized at the point that application development begins.

        Interest is capitalized under SFAS No. 34, Capitalization of Interest Costs using the weighted average interest rate on debt. Interest capitalization ends when the new product or enhancement is released.

Goodwill, Intangibles and Other Assets

        SFAS No. 142, Goodwill and Other Intangible Assets, addresses how intangible assets and goodwill should be accounted for after acquisition. Specifically, goodwill and intangible assets with indefinite useful lives are not amortized, but are subject to impairment tests based on their estimated fair value.

        Goodwill consists of the excess of purchase price over the fair value of the identifiable assets and liabilities acquired. Intangible and other assets include identified intangibles, such as non-compete agreements, customer lists, trade names and trademarks, and technology acquired in acquisitions. Also included in intangible and other assets are debt issuance costs that are amortized using the effective interest method over the respective terms of the financial institution loans. As of December 31, 2008 and 2007, the Company believes no impairment to the identifiable intangibles and other assets existed.

        On an annual basis, our goodwill is tested for impairment or when events and circumstances indicate an impairment may exist. In accordance with SFAS 142, we have determined that our reporting units are the reportable segments based on our organizational structure and the financial information that is provided to and reviewed by management. Our segments defined as reporting units include financial institution services ("FIS") and retail management services ("RMSA").

        Impairment testing of goodwill is performed in two steps. First, the carrying value of the reporting unit is compared to the estimated fair value of the reporting unit. Our step one goodwill impairment test involves the following activities to ascertain a potential goodwill impairment:

•

estimating the fair value of total invested capital of the reporting unit, which consists of the value of interest bearing debt plus equity; and

•

comparing the estimated fair value of equity (net of interest bearing debt) to the reporting unit's recorded book value.

To determine fair value in step one; we utilize approaches which focus on our ability to produce income and the estimated consideration which we would receive if there were to be a sale of the reporting units. Consideration is given to our discounted projected future cash flows, our market capitalization, and market multiples of comparable companies within the industry. If the carrying value is less than the fair value, no goodwill impairment is recorded. However, should the carrying amount for the reporting unit exceed its fair value, we then proceed to the second step of the goodwill impairment testing.

        The second step of the impairment test, used to measure the amount of impairment loss, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of the goodwill, the impairment loss shall be recognized as an operating expense in an amount equal to that excess. Step two testing includes the following activities:

•

identifying and determining the fair value of the assets and liabilities of the reporting unit;



•

determining the fair value of the goodwill based upon the residual of the hypothetical purchase consideration determined in step one over the fair value of the subject assets; and



•

determining the magnitude of goodwill impairment based on a comparison of the fair value of the residual goodwill to its book value.

        Our annual impairment review requires extensive use of accounting judgment and financial estimates, including projections about our business, our financial performance, and the performance of the market and overall economy. Application of alternative assumptions and definitions could produce significantly different results. Because of the significance of the judgments and estimation processes, it is likely that materially different amounts could be recorded if we used different assumptions or if the underlying circumstances were to change.

Revenue Recognition

The Company has the following primary sources of revenue:

•

Financial institution services includes software licenses, participation or per transactions fees, support and maintenance fees, leasing revenue and professional services.



•

Retail inventory management services includes fees and services.



•

Other products and services mainly includes hardware sales.

        The Company accounts for software revenues in accordance with SOP 97-2, Software Revenue Recognition. Further, the Company has adopted the provisions of SOP 98-9, Modification of SOP 97-2, Software Revenue Recognition With Respect to Certain Transactions, which supersedes and clarifies certain provisions of SOP 97-2. The Company also follows guidance provided by the Emerging Issues Task Force EITF No. 00-3, Application of AICPA SOP 97-2, "Software Revenue Recognition," to Arrangements That Include the Right to Use Software Stored on another Entity's Hardware and EITF No. 00-21 Revenue Arrangements with Multiple Deliverables, and AICPA Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts.

Financial Institution Services

Software licenses

        The Company licenses software on a perpetual basis, which allows the licensees use of the software for the term of the agreement and each renewal period. Initial license fees are recognized when a contract exists, the fee is fixed or determinable, software delivery has occurred and collection of the receivable is deemed probable, provided that vendor-specific objective evidence or VSOE has been established for each element undelivered.

Participation or per transaction fees

        The Company charges various types of participation or per transactions fees for its various product offerings. Participation fees are charged in conjunction with the Company's lending solution software, BusinessManager®. Lending solutions allow our financial institution customer to finance their commercial customer's receivables. The participation fees are to be paid for all receivables financed by financial institutions. These fees are recognized as earned based on the volume of receivables purchased by customers.

        Our ACH and remote deposit agreements are typically automatically renewing agreements. We generate revenue from per transaction fees and user fees for each financial institution. Per transaction fees and user fees are recognized when the transaction occurs.

Support and maintenance fees

        The Company's license agreements typically contain automatic renewal clauses for fees for post contract customer support, or PCS. PCS can cover customer training costs, marketing assistance, phone support, and any and all software enhancements and upgrades. The Company defers PCS and recognizes it over the term of the maintenance period, typically twelve months. The Company has established VSOE for its PCS services, therefore the portion of the up-front fee not attributable to PCS relates to the software license and possibly to all other services provided during the initial term of the agreement, including installation, training, and marketing services.

Lease Accounting

        The Company is an equipment lessor. As such, the Company accounts for its leasing business in accordance with SFAS No. 13, Accounting for Leases ("SFAS 13"). SFAS 13 requires lessors to evaluate each lease transaction and determine whether it qualifies as a sales-type, direct financing, leveraged, or operating lease. The Company's leases fall into two of those catagories: direct financing and operating leases.

        The investment in direct financing leases consists of the sum of the minimum lease payments due during the remaining term of the lease and the unguaranteed residual value of the leased asset. The difference between the investment in direct financing leases and the cost of the leased asset is then recorded as unearned income. Unearned income is amortized to income over the lease term as to produce a constant periodic rate of return on the net investment in the lease.

        For leases classified as operating leases, lease payments are recorded as rent income during the period earned.

Professional Services

        The Company offers consulting, customization, installation and training services to financial institutions, and these are recognized based on the fair value when the service is delivered.

        We also have professional service contracts where we implement software applications under contractual agreements with terms ranging from three months to two years. There are two types of contracts that we generate revenue from and they include fixed-price contracts and time and material contracts. Revenue from fixed price contracts is recognized using the percentage of completion method. Fixed price contracts use total hours incurred compared to total estimated hours to recognize revenue. Contract costs include all direct and certain indirect costs. Time and material contracts recognize revenue when services are performed. Losses on contracts are charged to the statement of operations when such losses are determined.

        The Company offers financial institution website design services as well as hosting and support services for the website once design is complete. The Company charges an up-front fee for the design services and charges a monthly website hosting and support fee each month of the contract, which is typically five years. Typically included in the monthly hosting and support fee is a limited amount of website maintenance hours each month. Any maintenance work exceeding the designated number of hours included in the monthly hosting fee and support is billed at an agreed upon hourly rate as the services are rendered. The Company accounts for the website design and hosting services in accordance with EITF No. 00-21 Revenue Arrangements with Multiple Deliverables. Monthly hosting and maintenance revenues are recognized on a monthly basis as earned.

        The Company offered core data and image processing services on an outsourced basis through our service bureau. Revenues from outsourced item and data processing are derived from monthly usage fees typically under multi-year contracts with our customers and are recorded as revenue in the month the services are performed. The core and image processing services were sold in December 2008.

Retail Inventory Management Services

        We generate retail inventory management services revenue from fees we charge to specialty retail stores primarily for providing inventory merchandising and forecasting information using proprietary software to process sales and inventory transactions.

        Retail planning services revenue is recognized when the services are performed.

Other Products and Services

        We generate revenues from scanner equipment and printer sales, charges for our deposit acquisition direct mail program, hardware used with our document imaging and report management products, sales of standard business forms used in our BusinessManager® solution and statement rendering and mailing.

Advertising Costs

        The Company expenses all advertising costs as incurred. Total advertising expense, which includes conventions and tradeshows, for December 31, 2008 and 2007, was $0.4 million and $0.6 million, respectively.

Foreign Currency Translation

        The Company accounts for service contracts denominated in foreign currency according to FASB No. 52 (as amended) Foreign Currency Translation ("SFAS 52"). SFAS 52 defines an entity's functional currency as the currency in the primary economic environment. Transaction gains or losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency. SFAS 52 requires transaction gains or losses to be included in net income in the period the gain or loss occurs. The Company had foreign exchange rate losses of approximately $0.4 million for the year ended December 31, 2008. The Company has not utilized derivative instruments to manage foreign currency exchange rate risk.

Income Taxes

        The Company accounts for income taxes under SFAS No. 109, Accounting for Income Taxes. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. As of December 31, 2008, the Company believes that it is more likely than not that the Company will not be able to generate sufficient taxable income in future years in order to realize the deferred tax assets that are recorded, with certain exceptions. As such a valuation allowance of $4.7 million and $0.1 million has been provided against the Company's federal and state deferred tax assets as of December 31, 2008 and 2007, respectively.

        On January 1, 2007, the Company adopted the FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"), which is an interpretation of SFAS No. 109, Accounting for Income Taxes . FIN 48 requires a company to evaluate all uncertain tax positions and assess whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Adoption of FIN 48 resulted in an accrual related to an uncertain tax position, which was previously accrued as a contingent liability; thus, there was no cumulative adjustment to retained earnings.

        The Company has elected to classify interest associated with uncertain tax positions as interest expense in the accompanying consolidated statements of operations. Additionally, penalties associated with uncertain tax positions will be classified as income tax expense in the accompanying consolidated statements of operations. There were no penalties and interest paid in the current year or accrued as of December 31, 2008 and 2007. These uncertain tax positions, if recognized, would not have an effect on the effective tax rate.

Concentration of Revenues

        The Company has a large percentage of its revenue generated from financial institutions. For 2008 and 2007 the percentages of financial institution revenue compared to total revenue was 85% and 78%, respectively.

Income or Loss Per Share

        The Company applies the provisions of SFAS No. 128, Earnings per Share, which establishes standards for both the computation and presentation of basic and diluted EPS on the face of the consolidated statements of operations. Basic income or loss per share is computed by dividing net income or loss by the weighted average number of common shares outstanding during each year presented. Diluted income per common share is computed by dividing net loss by the weighted average number of common shares outstanding plus the dilutive effect of options and other common stock equivalents outstanding during the applicable periods. Options and other common stock equivalents are excluded from the calculation of diluted loss per common share to the extent that they are anti-dilutive.

Stock Based Compensation

        The Company adopted SFAS No. 123R, Share-Based Payment, which replaces SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123R requires the cost of employee services received in exchange for equity instruments awarded or liabilities incurred to be recognized in the financial statements. Under this method, compensation cost includes the portion vesting in the period for (1) all share-based payments granted prior to, but not vested as of December 31, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (2) all share-based payments granted subsequent to December 31, 2005, based on the grant date fair value estimated using the Black-Scholes option pricing model.

        Under the Black-Scholes option-pricing model, the Company estimated volatility using its historical share price performance over the expected life of the option. Results of prior periods do not reflect any restated amounts, and the Company had no cumulative effect adjustment upon adoption of SFAS No. 123R under the modified prospective method. The Company's policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award. Additionally, the Company's policy is to issue new shares of common stock to satisfy stock option exercises or grants of restricted shares. The Company has determined that it has two pools of employees for the purpose of calculating the estimated compensation cost: executive officers' pool and non-executive officers' pool. These two pools properly segregate our employees that have similar historical exercise and forfeiture behavior.

Derivative Instruments

        The Company does not enter into derivatives or other financial instruments for trading or speculative purposes; however, in order to manage its exposure to interest rate risk from the Company's existing credit facility, on January 30, 2008 the Company entered into an interest rate swap (the "Swap") with a notional amount of $20.0 million, receiving a one month LIBOR interest rate while paying a fixed rate of 2.95% over the period beginning February 8, 2008 and ending November 30, 2009. The effect of the Swap is to lock the LIBOR component interest rate on $20.0 million of one-month floating rate LIBOR debt at 2.95%. As of December 31, 2008 the Swap had an estimated negative fair value equal to $405,000 as classified under other current liabilities in the consolidated balance sheets. We recorded a $405,000 unrealized loss for the year ended December 31, 2008 which was recorded as a increase to interest expense, net in the consolidated statements of operations, in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"). The estimated fair value of the Swap may rise and fall over the life of the Swap as market expectations of future floating LIBOR interest rates change in relation to the fixed rate of 2.95%.

Fair Value of Financial Instruments

        Effective January 1, 2008, we adopted SFAS No. 157, Fair Value Measurements ("SFAS 157"), as it applies to our financial instruments, and SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115 ("SFAS 159").

        SFAS 157 defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements. SFAS 159 permits companies to irrevocably choose to measure certain financial instruments and other items at fair value. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparison between entities that choose different measurement attributes for similar types of assets and liabilities.

        Under SFAS 157, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. SFAS 157 establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data. Except for those assets and liabilities which are required by authoritative accounting guidance to be recorded at fair value in our consolidated balance sheets, we have elected not to record any other assets or liabilities at fair value, as permitted by SFAS 159.

        The following table provides information on the assets and liabilities we measure at fair value on a recurring basis.

        We determined the fair value of the derivative instrument shown in the table above by using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows. The analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs.

        To meet the reporting requirements of SFAS No. 107, Disclosures About Fair Value of Financial Instruments, the Company estimates the fair value of financial instruments. At December 31, 2008 and 2007, there were no material differences in the book values of the Company's financial instruments and their related fair values due to their short term nature. Financial instruments primarily consist of cash, accounts receivable, accounts payable and debt instruments.

Comprehensive Income (Loss)

        The Company applies the provisions of SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130 requires that the changes in the amounts of certain items, including gains and losses on certain securities, be shown in the financial statements as a component of comprehensive income (loss). The Company reports comprehensive income (loss) as a part of the consolidated statements of stockholders' equity.

Segment Disclosures

        The Company applies the provisions of SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. SFAS No. 131 establishes standards for the method that business enterprises report information about operating segments in annual and interim financial statements. SFAS No. 131 also establishes standards for related disclosures about products and services, geographic area and major customers. The Company operates in two reportable segments, financial institution services and retail inventory management services. Note 21 of these consolidated financial statements discloses the Company's reportable segment results.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Reclassifications

        Certain prior year amounts have been reclassified to conform to current year classifications.

Recent Accounting Pronouncements

        In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations ("SFAS 141(R)"), which replaces SFAS No. 141, Business Combinations. SFAS 141(R) generally retains the underlying concepts of SFAS 141 because it requires all business combinations to be accounted for at fair value under the acquisition method of accounting, but it changes how the acquisition method of accounting is applied in a number of significant aspects. Acquisition costs will be expensed as incurred; contingent consideration will be recorded at fair value on the date of acquisition; restructuring costs associated with a business combination will be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date will affect the income tax provision. SFAS 141(R) is effective on a prospective basis for all of the Company's business combinations with an acquisition date on or after January 1, 2009, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. Early adoption is not permitted.

        In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 ("SFAS 160"). SFAS 160 is effective for our Company as of January 1, 2009. SFAS No. 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It requires that ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled, and presented within equity, but separate from the parent's equity, in the consolidated statement of financial position. It also requires that consolidated net income be reported including the amounts attributable to both the parent and the noncontrolling interest and that the amounts of consolidated net income attributable to the parent and to the noncontrolling interest be disclosed on the face of the consolidated statement of income. Based on the Company's initial analysis, SFAS No. 160 will not have a material effect on its consolidated financial statements.

        In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (as amendment of FASB Statement No. 133) ("SFAS 161"), which requires enhanced disclosures for derivative and hedging activities. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Early application is encouraged. SFAS 161 will become effective in 2009 and we are currently evaluating the impact of this standard on our consolidated financial statements.

        In April 2008, the FASB issued Staff Position No. FAS 142-3, The Determination of the Useful Life of Intangible Assets ("FAS 142-3"), which amends the factors that should be considered in developing renewal or extension assumptions used to determine useful life of a recognized intangible asset under FASB 142. The intent is to improve the consistency between the useful life of a recognized intangible asset under FASB 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R), and other U.S. generally accepted accounting principles. FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and early adoption is prohibited. We are currently evaluating the impact of this standard on our consolidated financial statements.

2. ACQUISITIONS AND DISPOSITIONS OF ASSETS

Assets of Alogent

        On January 17, 2008, the Company completed an acquisition by merger of Alogent Corporation ("Alogent") for an aggregate purchase price of $43.7 million. The acquisition of Alogent broadened our product offerings, adding software licenses that provided remote capture, teller capture, image exchange and services associated with maintenance and support and implementation of these products. The price of our common stock issued to the former Alogent shareholders on the day of closing was $1.47 per share, which was the average closing price of our common stock over the 15 days ending on the day prior to the day of closing. For purchase price accounting reflected in the table below, the common shares were valued at $1.40 per share, calculated as the average closing price of the Company's shares for two days before and after the closing date. The operating results of Alogent are included with those of the Company beginning January 17, 2008 and are included in our financial institution services segment. The transaction was accounted for in accordance with SFAS No. 141, Business Combinations.

        The purchase price allocation is as follows (in thousands, except per share data):

        The following pro-forma results assume the inclusion of Alogent as if the acquisition was completed at the beginning of the period (in thousands, except per share data).

Assets of DataTrade, LLC

        On May 1, 2007, the Company acquired certain operating assets and liabilities of DataTrade, LLC ("DataTrade"), a Missouri limited liability company, for total cash consideration of approximately $5.8 million, which was funded by the Company's revolving line of credit. In addition to the consideration at closing, the selling shareholders may be entitled to additional consideration or an earn out based on the financial performance of the acquired business during the next twenty-four months. In August 2008, Goldleaf paid $2.2 million of this earn out which added to the purchase price. This acquisition complements our existing product offering to community banks and their customers. The operating results of DataTrade are included with those of the Company beginning May 1, 2007. Pro forma financial results of DataTrade are not required due to the size of the transaction. The transaction was accounted for in accordance with SFAS No. 141, Business Combinations.

        The purchase price allocation is as follows (in thousands):

Assets of Community Banking Systems, Ltd.

        On March 14, 2007, the Company executed an asset purchase agreement to acquire certain operating assets and liabilities from Community Banking Systems, Ltd. ("CBS"), in exchange for cash consideration of $4.8 million. This acquisition added in-house item and image processing services, document imaging and a payment exchange platform for correspondent financial institutions. In addition to the cash consideration at closing, the selling shareholders may be entitled to additional consideration based on the financial performance of the business during the next twenty four months. Simultaneous with the execution of the asset purchase agreement, the Company entered into two-year employment agreements with two of the principal officers of CBS. The operating results of CBS are included with those of the Company beginning March 14, 2007. Pro forma financial results of CBS are not required due to the size of the transaction. The transaction was accounted for in accordance with SFAS No. 141, Business Combinations.

        The purchase price allocation is as follows (in thousands):

Sale of core processing and WinTELLER

        On December 31, 2008, the Company entered into an asset purchase agreement with Integrated Bank Technology, Inc. ("IBT") to sell substantially all of the assets comprising Goldleaf's business related to its core processing product, its WinTELLER product, its outsourced item processing center located in Denver, Colorado, and certain other assets. The core processing and WinTeller products were product lines within the Company's product offering to generate financial institution services revenue. The assets related to core and WinTELLER are not components of an entity as defined in SFAS 144: Accounting for the Impairment or Disposal of Long-Lived Assets, therefore the loss recognized on this group of assets has been included in operating income under the caption other operating expenses.

        In addition to the cash consideration received at closing, Goldleaf may be entitled to additional consideration based on the future gross revenues of the business in the next four years ending December 31, 2012.

        The loss consists of the following for the year ended December 31, 2008 (in thousands):

3. TRADE ACCOUNTS RECEIVABLE

        Trade accounts receivable is as follows as of December 31, (in thousands):

4. NET INVESTMENT IN DIRECT FINANCING LEASES

        The following lists the components of the net investment in direct financing leases as of December 31, respectively (in thousands):

        All leased assets are pledged as security against the non-recourse lease notes payable discussed in Note 13.

        At December 31, 2008, minimum lease payments for each of the next five years are as follows (in thousands):

5. PROPERTY AND EQUIPMENT

        Property and equipment as of December 31, are classified as follows (in thousands):

        Depreciation expense was approximately $2.0 million and $1.8 million, for the years ended December 31, 2008 and 2007, respectively. The portion of depreciation expense above included in cost of revenues totaled $371,000 and $362,000 for the years ended December 31, 2008 and 2007, respectively.

        Depreciation expense related to property and equipment subject to capital lease arrangements totaled $361,000 and $366,000, for the years ended December 31, 2008 and 2007, respectively.

6. OPERATING LEASE PROPERTY

        The following schedule provides an analysis of the Company's investment in property for our leasing business leased under operating leases by major classes as follows (in thousands):

        The following is a schedule by years of minimum future rentals on noncancelable operating leases as of December 31, 2008:

        Depreciation expense on operating lease property was $12,000 and $27,000 for the years ended December 31, 2008 and 2007, respectively.

7. SOFTWARE DEVELOPMENT COSTS

        Software development costs as of December 31, consisted of the following (in thousands):

        In 2008, the Company wrote off $2.1 million in accumulated amortization related to software that was no longer being used by the Company along with $262,000 related to the sale of core and WinTELLER assets.

8. INTANGIBLE AND OTHER ASSETS

        Intangible assets, as of December 31, 2008, consisted of the following (in thousands):

        Intangible assets, as of December 31, 2007, consisted of the following (in thousands):

        Amortization expense of identified intangible assets during the years ended December 31, 2008 and 2007 was approximately $5.6 million, of which $0.8 million is included in research and development, and $2.3 million, respectively.

        The estimated amortization expense of intangible assets during the next five years is as follows (in thousands):

        Intangibles that are not included in the estimated amortization for future years include a $0.9 million non-compete agreement, $9.2 million in trade names which have an indefinite life, and $0.2 million of other assets which mainly consist of deposits and capitalized web development.

9. GOODWILL

        Goodwill relates to the excess of cost over the fair value of net assets resulting from an acquisition. On an annual basis, our goodwill is tested for impairment or when events and circumstances indicate an impairment may exist. In accordance with SFAS 142, Goodwill and Other Intangible Assets, we have determined that our reporting units are the reportable segments based on our organizational structure and the financial information that is provided to and reviewed by management. Our segments, defined as reporting units, include financial institution services ("FIS") and retail inventory management services ("RMSA").

        Impairment testing is a two step process. For purposes of step one, to determine our fair value we utilized approaches that focused on our ability to produce income (the "Income Approach") utilizing a discounted cash flow methodology and our estimated consideration which we would receive if there were a sale of reporting units (the "Market Approach"). The key assumptions utilized in the determination of fair value in step one of the testing included:

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A forecast of operating results for 2009 through 2013 including projected revenues, operating expenses, projected margins, and income taxes. Given the economic decline and uncertainties in the global economy, we assumed no significant revenue growth.



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Forecasts of working capital and capital expenditure requirements to support our revenue growth. These assumptions were based on historical requirements. Our forecasts assumed we would make some investments to support our innovations but also stayed consistent with our cost cutting efforts.



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The per-share price of our common stock and our overall market capitalization was considered in the fair value analysis along with a control premium and an estimate of the fair value of any liabilities outstanding.



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For the FIS reporting unit, we relied upon a weighted average of the enterprise value conclusions reached by the discounted cash flow method (40%), internal market pricing method (40%), and publicly traded guideline company method (20%). The publicly traded guideline company method was given less weighting due to size and operational differences between Goldleaf and the public peer group.



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For the RMSA reporting unit, we weighted the discounted cash flow method (50%) and the internal market pricing method (50%). We assumed the absence of a meaningful sample of publicly traded companies for the RMSA reporting unit which led to our exclusion of this appraisal methodology.

        As of December 31, 2007 we concluded the estimated fair value of our reporting units was greater than the carrying value so no impairment was recorded. As of December 31, 2008 we concluded that in step one the carrying value exceeded the estimated fair value of each reporting unit as a result of increased weighted cost of capital estimates, market pricing multiple declines, and general economic downturns.

        For purposes of step two, we included estimations of the fair value of the financial institution and retail management assets and liabilities, including previously unrecognized intangible assets. In our step two analysis, we utilized multiple appraisal methodologies depending on the specific identifiable intangible asset that was selected. Specifically, the multi-period excess earnings method (an income-based approach) was utilized to value the FIS and RMSA reporting unit's customer relationships. The relief from royalty method (a hybrid income-based and market-based approach) was utilized to value the FIS reporting unit's trademarks and trade names and internally developed technology and software. The discounted cash flow method (an income-based approach) was selected as the appraisal methodology for valuing the subject non-compete agreements. As a result of step two we concluded that goodwill exceeded the allocated fair value and we recorded impairment charges of $36.5 million and $1.6 million for our financial institution segment and our retail management segment, respectively, for the year ended December 31, 2008.

        The weighted average cost of capital used for the FIS and RMSA reporting unit was 18.9% and 19.9%, respectively.

        Our annual impairment review requires extensive use of accounting judgment and financial estimates, including projections about our business, our financial performance and the performance of the market and overall economy. Application of alternative assumptions and definitions could produce significantly different results. Because of the significance of the judgments and estimation processes, it is likely that materially different amounts could be recorded if we used different assumptions or if the underlying circumstances were to change.

        The changes in the carrying amount of goodwill for 2008 and 2007 are as follows (in thousands):