Asure Software (ASUR) – Part 2 – Building A Business In The Face Of Losses And Delisting Threat

Asure received a Notice Of Delisting from Nasdaq on 8/31/2007. This is the second time in the last two years that the company came under such scrutiny. The first of these was on 8/11/2006 and the company came into compliance when the stock stayed above $1 for an extended period of time between November 2006 and March 2007. Delisting is a risk that needs to be managed and can be achieved by:

• Ensuring the stock stays above $1 for 10 consecutive trading days before February 25, 2008,
• Undergoing a Reverse Stock Split. This in essence decreases the number of shares by a factor while moving the share price upwards by that factor,
• Using the Nasdaq Appeals process by shifting to the Nasdaq Capital Market therby gaining an additional 180 days within which to achieve the minimum per share stock price.

Asure has achieved compliance as of Friday October 12 as its shares closed above $1 for 10 continuous days between October 1 and 12. Even though the immediate threat of delisting is at bay, the risk exists as long as the share price hovers just above the $1 level.

Asure has more than $6/share in tax-loss as a carry forward in its balance sheet. It has placed a valuation allowance against this and so this can potentially be viewed as a hidden asset from which value may be drawn under certain conditions. Acquiring companies with current earnings would work in its favor as that may allow it to tap into the tax-loss carryover. Further, this may allow the company to negotiate a better deal in an acquisition, as the company’s offer can be considered more lucrative when the tax benefit is taken into account.

The balance sheet is strong with $35M in cash and with no debt Asure has the opportunity to grow the new business organically and through acquisitions. To become a leader in the SaaS workspace management space and realize sustainable growth, it will have to gain critical mass as quickly as possible. It is evident the company will be pursuing more acquisitions. The competitive landscape is busy with prominent players like Microsoft, SalesForce.com, etc along with specialized vendors such as ClickSoftware Technologies Limited (CKSW).

The last part of this article will look at the Asure’s new SaaS workspace management software business and outlook going forward.

Asure Software Analysis:

1. Part 1 - Transforming A Classic Patent Troll.
2. Part 2 - Building A Business In The Face Of Losses & Delisting Threat.
3. Part 3 - Workspace Management - Can It Be The Holy Grail?