Attached files
file | filename |
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8-K/A - ASURE SOFTWARE INC | asuresoftware8ka091712.htm |
EX-99.3 - ASURE SOFTWARE INC | ex99-3.htm |
EX-99.1 - ASURE SOFTWARE INC | ex99-1.htm |
EXHIBIT 99.2
PeopleCube Holding BV
d/b/a PeopleCube
Table of Contents
Page
|
|
Consolidated Financial Statements:
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2
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3
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4
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5-15
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PeopleCube Holding BV d/b/a PeopleCube
Consolidated Balance Sheets
June 30, 2012
(Unaudited)
June 30,
2012 |
||||
Assets
|
||||
Current assets:
|
||||
Cash and cash equivalents
|
$
|
(19,886
|
) | |
Restricted Cash
|
-
|
|||
Accounts receivable, net
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2,607,858
|
|||
Prepaid expenses and other current assets
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46,661
|
|||
Total current assets
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2,634,633
|
|||
Property and equipment, net
|
116,550
|
|||
Goodwill
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2,696,616
|
|||
Intangible assets, net
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2,609,218
|
|||
Other assets
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77,006
|
|||
Total assets
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$
|
8,134,023
|
||
Liabilities and Stockholders' Equity
|
||||
Current liabilities:
|
||||
Accounts payable
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861,739
|
|||
Accrued expenses
|
409,345
|
|||
Capital leases
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21,461
|
|||
Related parties notes payable
|
-
|
|||
Notes payable
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1,187,469
|
|||
Deferred revenue
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5,480,481
|
|||
Total current liabilities
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7,960,495
|
|||
Long-term liabilities:
|
||||
Capital leases, net of current portion
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8,258
|
|||
Notes payable, net of current portion
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426,671
|
|||
Deferred revenue, net of current portion
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90,922
|
|||
Deferred tax liability
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321,621
|
|||
Total long-term liabilities
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847,472
|
|||
Stockholders' equity:
|
||||
Common stock, $.014 par value; 9,000,000 shares authorized; 2,472,550 shares issued, and outstanding at both December 31, 2011 and 2010, respectively
|
34,616
|
|||
Additional paid-in capital
|
13,936,829
|
|||
Accumulated deficit
|
(14,871,263
|
)
|
||
Accumulated other comprehensive income
|
225,873
|
|||
Total stockholders' equity(deficit)
|
(673,945
|
) | ||
$
|
8,134,022
|
The accompanying notes are an integral part of these consolidated financial statements.
2
PeopleCube Holding BV d/b/a PeopleCube
Consolidated Statements of Operations
For the six months ended June 30, 2012 and 2011
(Unaudited)
Six months ended
June 30, 2012
|
Six months ended
June 30, 2011
|
|||||||
Revenues
|
$
|
4,889,561
|
$
|
4,469,665
|
||||
Cost of sales
|
385,098
|
789,449
|
||||||
Gross Margin
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4,504,462
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3,680,216
|
||||||
Operating Expenses
|
||||||||
Sales and marketing
|
2,770,816
|
1,896,028
|
||||||
Research and development
|
882,323
|
729,449
|
||||||
General and administrative
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1,600,942
|
2,499,702
|
||||||
Total operating expenses
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5,254,081
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5,125,179
|
||||||
Loss from Operations
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(749,618
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) |
(1,444,964
|
) | ||||
Other expenses
|
||||||||
Other expense, net
|
32,292
|
(11,361
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) | |||||
Interest expense
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41,520
|
41,940
|
||||||
Net Loss
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$
|
(823,431
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)
|
$
|
(1,475,542
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) |
The accompanying notes are an integral part of these consolidated financial statements.
3
PeopleCube Holding BV d/b/a PeopleCube
Consolidated Statements of Cash Flows
For the Six months ended June 30, 2012 and 2011
(Unaudited)
Six months ended
June 30, 2012
|
Six months ended
June 30, 2011
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(823,431
|
)
|
$
|
(1,475,542
|
) | ||
Adjustments to reconcile net loss to net cash used in operations:
|
||||||||
Depreciation and amortization
|
542,879
|
523,305
|
||||||
Deferred tax liability
|
-
|
55,733
|
||||||
Changes in operating assets and liabilities:
|
||||||||
(Increase) decrease in assets:
|
||||||||
Accounts receivable
|
(260,550
|
) |
(768,128
|
) | ||||
Prepaid expenses and other current assets
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66,722
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147,604
|
||||||
Increase (decrease) in liabilities:
|
||||||||
Accounts payable
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501,083
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272,984
|
||||||
Accrued expenses
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(119,417
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) |
12,790
|
|||||
Deferred revenue
|
(12,046
|
) |
718,791
|
|||||
Net cash provided by /(used in) operating activities
|
(104,760
|
) |
(512,461
|
) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases of property and equipment
|
(8,744
|
) |
(32,009
|
)
|
||||
Acquisitions, net of cash acquired
|
(699,578
|
)
|
||||||
Net cash (used in)/provided by investing activities
|
(8,744
|
)
|
(731,587
|
) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Payments on capital leases
|
(13,382
|
) |
(17,640
|
) | ||||
Proceeds from on Term loan
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1,600,000
|
|||||||
Repayments on term loan
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(419,937
|
) | ||||||
Proceeds from related parties notes payable
|
-
|
|||||||
(Increase) decrease in restricted cash
|
386,325
|
(405,905
|
) | |||||
Repayments on acquisition note payable
|
(460,271
|
) |
(100,000
|
) | ||||
Net cash provided by/(used in) financing activities
|
(87,328
|
) |
656,517
|
|||||
Effect of exchange rates on cash
|
(53,533
|
(25,028
|
) | |||||
Net decrease in cash and equivalents
|
(254,365
|
) |
(612,559
|
) | ||||
Cash and equivalents at beginning of period
|
234,479
|
867,715
|
||||||
Cash and equivalents at end of period
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$
|
(19,886
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) |
$
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255,156
|
The accompanying notes are an integral part of these consolidated financial statements.
4
Notes to Unaudited Financial Statement
1.
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NATURE OF BUSINESS
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Meeting Maker United States, Inc., was incorporated under the laws of the state of Delaware on February 15, 2000, and acquired its subsidiary Meeting Maker Limited, incorporated under the laws of the United Kingdom on September 15, 2005. Meeting Maker United States Inc., Meeting Maker Limited, and Meeting Maker Limited’s wholly owned subsidiary BusinessSolve Ltd.(collectively, the Company) develop, market and sell software products and services. The Company is a leading provider of workplace, resource and energy management technology. The Company provides scheduling software to optimize space, resources and energy for a sustainable and cost effective workspace.
2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
The accompanying consolidated financial statements reflect the application of certain significant accounting policies, as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
Basis of Presentation
The financial statements have been prepared in accordance with accounting standards set by the Financial Accounting Standards Board ("FASB"). The FASB sets generally accepted accounting principles ("GAAP") to ensure financial condition, results of operations, and cash flows are consistently reported. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification ("ASC").
Principles of Consolidation
The accompanying unaudited financial statements include the results of operations of Meeting Maker United States, Inc., Meeting Maker Limited and Meeting Maker Limited’s wholly owned subsidiary BusinessSolve Ltd., which was acquired in February, 2011 (Note 3). All significant intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP in the United States requires management to make estimates and assumptions that affect 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 those estimates. The most significant estimates included in the financial statements pertain to revenue recognition, the allowance for doubtful accounts receivable, the valuation of long term assets including goodwill, intangibles and deferred tax assets.
Fair Value of Financial Instruments
The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and notes payable. The carrying value of these instruments approximates their fair value, principally because of the short term maturity of these items.
5
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents.
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for those accounts receivable considered to be uncollectible, based upon historical experience and management’s evaluation of the outstanding accounts receivable at the end of the year. Uncollectible amounts are written off against the allowance after all collection efforts have been exhausted. At June 30, 2012 and 2011, the allowance for doubtful accounts was $173,421 and $110,391, respectively.
Property and Equipment
Property and equipment are stated at cost. Assets acquired and improvements thereon are capitalized; ordinary repairs and maintenance are charged to expense as incurred. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets as follows:
Asset Classification
|
Useful Life
|
Computer equipment
|
3-5 years
|
Furniture and fixtures
|
7-10 years
|
Leasehold improvements
|
Shorter of estimated useful life of lease period or improvement
|
Intangible Assets
The Company’s intangible assets consist of a trademarks, a tradename, technology licenses, customer lists, and a non-compete agreement, all of which were acquired through the 2007 acquisition of Meeting Maker Holding BV and the 2011 acquisition of BusinessSolve, Ltd (see Note 3). Separable intangible assets that are deemed to have a finite life are amortized over their useful lives. Amortization is provided on a straight-line basis over the estimated useful lives of the assets as follows:
Asset Classification
|
Useful Life
|
Trademark and Tradename
|
8 years
|
Technology
|
10 years
|
Customer lists
|
5 years
|
Non-compete agreements
|
2 years
|
Long-Lived Assets
The Company accounts for its long-lived assets in accordance with ASC 360, Property, Plant and Equipment. This statement requires that long-lived assets and certain identifiable intangible assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to be generated by the asset. As of June 30, 2012 and 2011, the Company has not identified any impairment of its long-lived assets.
6
Goodwill
Goodwill is evaluated for impairment at least annually, or more frequently, if events or changes in circumstances indicate that an asset might be impaired. Evaluation is performed using a two-step process. The first step compares the book value of the Company’s reporting unit to its estimated fair value. The second step of the goodwill impairment test, which is only required when the net book value of the reporting unit exceeds the fair value, compares the implied fair value of goodwill to its book value to determine if an impairment is required.
Determining the fair value of a reporting unit is a judgment involving significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, and future economic and market conditions. The Company bases its fair value estimates on assumptions that management believes to be reasonable, however actual future results may differ from these estimates. There was no impairment of goodwill for the years ended June 30, 2012 and 2011, respectively.
Revenue Recognition
The Company generates revenue from the sale of perpetual software licenses, maintenance and support services, professional services and software subscription services. In general the Company recognizes revenue when all of the following criteria have been met; (a) persuasive evidence of an arrangement with the customer exists; (b) delivery has occurred or services have been rendered ; (c) the fees for the arrangement are fixed or determinable; and (d) collectability is reasonable assured.
Sales of perpetual software licenses are accounted for in accordance with ASC 985-605, Revenue Recognition – Software. Revenue from arrangements where multiple products or services are bundled together under one contract is allocated using the residual method, whereby revenue is attributed first to the undelivered elements (i.e. maintenance and support, and professional services) based on vendor-specific objective evidence (VSOE) of the fair value of the undelivered elements. The remainder of the total contract value is then attributed to the software license. VSOE is based upon the price charged when an element is sold separately. If VSOE does not exist for any of the undelivered elements, the entire arrangement fee is recognized upon delivery of all elements or over the period of the longest service commitment of the arrangement.
Revenue for professional services, including consulting, implementation of perpetual licenses and training, are typically recognized upon performance of the services. Revenue from maintenance and support agreements is recognized ratably over the period of the agreement, which is typically 1 to 3 years.
The Company also licenses its software pursuant to hosted software subscription agreements. Pursuant to these agreements, the customer does not have the contractual right to take possession of the software. Accordingly, in accordance with ASC 605-20, Revenue Recognition – Software, these arrangements are accounted for as subscriptions with the fee recognized as revenue ratably over the subscription period. When services are sold with a hosted transaction the Company accounts for the arrangement as one unit of accounting because the Company does not have VSOE for the hosted services. Implementation fees associated with subscription agreements are deferred and recognized over the longer of the contractual term or the estimated period that the customer will use the software.
7
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES...continued
|
Research and Development and Software Development Costs
Costs incurred in research and development are expensed as incurred. FASB ASC 985-20, Software - Costs of Software to be Sold, Leased, or Marketed, requires capitalization of certain computer software development costs incurred after technological feasibility is established and ceases when the product is available for general release. The establishment of technological feasibility and the ongoing assessment of recoverability of capitalized software development costs require considerable judgment by management concerning certain external factors including, but not limited to, technological feasibility, anticipated future gross revenue, estimated economic life, and changes in software and hardware technologies. There is generally a limited passage of time between achievement of technological feasibility and the availability of the Company’s product for general release. Because no significant costs have been incurred during this time, the Company has not capitalized any software development costs to date.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires the use of the asset and liability method of accounting for income taxes. The current or deferred tax consequences of a transaction are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable currently or in future years. Deferred tax assets and liabilities are determined based on the difference between the financial statements and tax basis of assets and liabilities and expected future tax consequences of events that have been included in the financial statements or tax returns using enacted tax rates in effect for the year in which the differences are expected to reverse. Under this method, a valuation allowance is used to offset deferred taxes if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets may not be realized. Management annually evaluates the recoverability of deferred taxes and the adequacy of the valuation allowance.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. ASC 718 requires all share-based payments to employees, including grants of employee stock options and modifications to existing stock options and restricted share plans, to be recognized in the statement of operations based on their fair values.
Under the fair-value method, stock-based compensation associated with stock awards is determined based on the estimated fair value of the award itself, measured using either current market data or an established option-pricing model. The Company utilizes the Black-Scholes option pricing model to determine the fair value of options granted and has elected the accrual method for recognizing compensation costs.
The determination of the fair value of stock-based payment awards utilizing the Black-Scholes model is affected by the stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The Company does not have a history of market prices of the common stock as it is not a public company, and as such volatility is estimated using historical volatilities of similar public entities. The expected life of the awards is estimated based on the simplified method. The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of our awards. The dividend yield assumption is based on history and expectation of paying no dividends. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures represent only the unvested portion of a surrendered option and the Company estimates forfeitures based on historical experience.
8
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES...continued
|
Stock –Based Compensation…continued
The fair value of stock options issued to employees was measured with the following weighted average assumptions for the periods ended June 30:
2011
|
2010
|
|||||||
Risk-free interest rate
|
1.5 | % | 1.8 | % | ||||
Expected dividend yield
|
0 | % | 0 | % | ||||
Expected volatility
|
85 | % | 75 | % | ||||
Expected life of option
|
4.75 years
|
4.75 years
|
The weighted-average fair value of stock options granted during the periods ended June 30, 2011 and 2010, under the Black-Scholes option pricing model was $2.71 per share, respectively. For the periods ended June 30, 2012 and 2012, the Company recorded stock-based compensation expense estimates of $145,182 and $145,182 respectively, in connection with share based payment awards. As of June 30, 2012, there was $0 of unrecognized compensation expense related to non-vested stock awards that is expected to be recognized in the future. The equity compensation plan associated with these options exists in the PeopleCube Holding BV and is no longer associated with the ongoing operations acquired by Asure.
Comprehensive Loss
ASC 220, Comprehensive Income, requires disclosure of all components of comprehensive income (loss). Comprehensive income (loss) is defined as the change in stockholders’ equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive losses for the periods ended June 30, 2012 and 2011 includes the reported net loss, and an estimate of the change in the cumulative translation adjustment account of $0 and $46,849, respectively.
Foreign Currency Translation
The Company’s functional currency is the U.S. dollar. The functional currency of the Company’s subsidiaries in the United Kingdom and the Netherlands is the local currency. The Company translates the financial statements of the subsidiaries in the United Kingdom and the Netherlands in accordance with ASC 830, Foreign Currency Matters. In translating the accounts of the foreign subsidiary into U.S. dollars, assets and liabilities are translated at the rate of exchange in effect at year end, while stockholders’ equity is translated at historical rates. Revenue and expense accounts are translated using the weighted-average exchange rate in effect during the year. Gains and losses from foreign currency translation are credited or charged to accumulated other comprehensive income, included in stockholders’ equity (deficit) in the accompanying consolidated balance sheets.
The transaction losses for the periods ended June 30, 2012 and 2011 were $53,533 and $25,028 respectively; these amounts are recorded in other expense, net, in the consolidated statements of operations for the years then ended.
9
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES...continued
Concentrations of Credit Risk and Significant Customers
Financial instruments that subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company’s cash equivalents are invested in accredited financial institutions and the Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant risk on cash and cash equivalents. Concentration of credit risk with respect to accounts receivable is limited to customers to whom the Company makes significant sales. To control credit risks, the Company performs regular credit evaluations of its customers’ financial condition, and maintains allowances for potential credit losses, but does not require collateral or other security to support customer receivables.
For the period ended June 30, 2012, the Company did not have any customer who represented at least 10% of revenue and did not have any customer who represented 10% of accounts receivable at period end.
For the period ended June 30, 2011 the Company did not have any customer who represented at least 10% of revenue or of accounts receivable at period end.
Advertising Costs
Advertising costs are expensed as incurred. Advertising expense was $29,493 and $70,735, respectively, for the fiscal periods ended June 30, 2012 and 2011.
3. ACQUISITION OF BUSINESSSOLVE LTD.
On February 14, 2011, the Company’s subsidiary Meeting Maker Limited acquired 100% of the outstanding equity of BusinessSolve, Ltd., a British competitor in the workplace and resource management scheduling software business.
The purchase agreement required a payment of 500,000 GBP ($800,050 as of February 14, 2011) at closing, plus 500,000 GBP ($800,050 as of February 14, 2011) to be paid in eight equal quarterly installments beginning April 1, 2011. The Company recorded the future purchase price as a note payable at its estimated fair value of $746,605, resulting in a $53,445 debt discount. The debt discount is being accreted to interest expense through the date of the last quarterly payment (see Note 6).
Acquisition related costs which are included in the accompanying consolidated statement of operations for the period ended June 30, 2011 were approximately $84,000. The purchase agreement also required the Company to fund an escrow account for 250,000 GBP ($405,905 as of June 30, 2011) to partially secure the future purchase price payments, which has been recorded as restricted cash in the accompanying consolidated balance sheet.
10
3. ACQUISITION OF BUSINESSSOLVE LTD....continued
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition and have been assigned to BusinessSolve, Ltd.
Cash
|
$ | 100,472 | ||
Accounts receivable
|
358,292 | |||
Prepaid expenses and other assets
|
11,182 | |||
Intangible assets
|
1,160,000 | |||
Goodwill
|
668,717 | |||
Accounts payable and accrued expenses
|
(28,514 | ) | ||
Deferred tax liability
|
(377,354 | ) | ||
Deferred revenue
|
(346,140 | ) | ||
Net assets acquired
|
$ | 1,546,655 |
Goodwill arising from the acquisition is largely due to the synergies and economies of scale expected as well as the expansion of the geographic distribution territory and additional product lines that can be distributed to the existing customer base.
The estimated values of current assets and liabilities, excluding deferred revenue, were based upon their historical carrying values on the date of acquisition due to their short-term nature. Deferred revenue was valued at the estimated cost to fulfill the assumed obligations, plus a reasonable profit margin. The Company determined the estimated fair value of the identifiable intangible assets after review and consideration of relevant information including discounted cash flow analyses, market data and management’s estimates. The value attributed to the identifiable intangible assets included $100,000 in a trade name, $720,000 in customer relationships, $230,000 in acquired technology and $110,000 in non-compete agreements. The intangible assets are being amortized over a range of two to eight years and a weighted average period of 6 years. Goodwill and identifiable intangibles from the acquisition are not deductible for tax purposes therefore a deferred tax liability of $377,354 was recorded as a component of the transaction.
4.
|
PROPERTY AND EQUIPMENT
|
Property and equipment consisted of the following at June 30:
2012
|
2011
|
|||||||
Computer equipment and software
|
$ | 1,090,598 | $ | 1,058,977 | ||||
Furniture and fixtures
|
54,342 | 51,486 | ||||||
Leasehold improvements
|
49,626 | 50,019 | ||||||
1,194,566 | 1,160,482 | |||||||
Less - accumulated depreciation and amortization
|
1,078,019 | 1,027,890 | ||||||
$ | 116,547 | $ | 132,592 |
Total depreciation expense for the ended June 30, 2012 and 2011 was $38,284 and $52,909 respectively.
11
5.
|
INTANGIBLE ASSETS AND GOODWILL
|
Intangible assets consisted of the following at June 30:
2012
|
2011
|
|||||||
Trademark
|
$ | 570,000 | $ | 570,000 | ||||
Tradename
|
1,330,000 | 1,330,000 | ||||||
Technology
|
2,260,000 | 2,260,000 | ||||||
Customer lists
|
2,600,000 | 2,600,000 | ||||||
Non-compete agreements
|
110,000 | 110,000 | ||||||
6,870,000 | 6,870,000 | |||||||
Less - accumulated amortization
|
3,756,188 | 2,747,000 | ||||||
$ | 3,618,406 | $ | 3,217,396 |
Total amortization expense for the period ended June 30, 2012 and 2011 was $504,594 and $470,396, respectively.
The change in goodwill during the period ended June 30, 2011 is as follows:
Balance at December 31, 2010
|
$ | 2,027,899 | ||
Acquisition of BusinessSolve (Note 3)
|
668,717 | |||
Balance at June 30, 2011
|
$ | 2,696,616 |
6.
|
DEBT
|
Lines of Credit
In July 2008, the Company entered into a revolving line of credit agreement with a bank that provided for up to $500,000 of borrowings based upon specified levels of qualified accounts receivable. Borrowings bore interest at the prime rate plus 1.0%. There was no outstanding balance on the line of credit at December 31, 2011, and the line of credit was closed on February 11, 2011.
Notes Payable
In June 2008, the Company entered into a Loan and Security Agreement with a bank for a $1,300,000 term loan, secured by the Company’s assets. The term loan carried interest at the greater of the prime rate, at the time of borrowing, plus 2.25% or 7.00%, and was due in 36 equal monthly installments. As of December 31, 2010, the Company had an outstanding balance on the term loan of $130,000 and on February 9, 2011 the outstanding balance was repaid in full with proceeds from the term loan entered into on February 8, 2011 that is described below.
In July 2009, the Company entered into a Loan and Security Agreement with a bank for a $400,000 term loan, secured by the Company’s assets. The term loan carried interest at the greater of the prime rate, at the time of borrowing, plus 2.25% or 6.00%, and was due in 36 equal monthly installments. As of December 31, 2010, the Company had an outstanding balance on the term loan of $288,889, and on February 9, 2011 the outstanding balance was repaid in full with proceeds from the term loan entered into on February 8, 2011 that is described below.
On February 8, 2011, the Company entered into a Loan and Security Agreement with another bank for a $1,600,000 term loan, secured by all of the Company’s assets. The proceeds of the loan were used to repay all then outstanding debt obligations and to fund the acquisition of BusinessSolve, Ltd., as discussed in Note 3. The term loan carries interest at the prime rate plus 3.00% (6.25% as of June 30, 2012), and is due in 30 equal monthly installments beginning on September 1, 2011. As of June 30, 2011, the Company had an outstanding balance on the term loan of $1,066,667.
12
The Company’s purchase agreement for BusinessSolve, Ltd. requires the Company to pay 500,000 GBP ($800,050 as of February 14, 2011) in eight equal quarterly installments beginning April 1, 2011. The payments have no stated interest rate however the Company estimated the fair value of the payments at their net present value of $746,605, resulting in a $53,445 debt discount. The debt discount is being accreted to interest expense through the date of the last quarterly payment using the effective interest rate method. As of June 30, 2012, the Company has paid off the full amount of the obligation in installments and accreted $53,445 of the debt discount as interest expense.
Related Parties Notes Payable
In October 2011, the Company entered into a Note Purchase Agreement with certain investors and executives of the Company for an aggregate amount of $547,500, secured by the Company’s assets; the Company received $532,500 as of December 31, 2011, and the remaining $15,000 was received in January 2012. The proceeds of the notes were used to fund working capital needs. Each note accrues interest at 12% and a premium of 30% of the principal balance will be paid on the earlier of a sale of substantially all of the Company’s stock or assets, or December 31, 2012. The Company is accreting the lenders premium through the stated maturity date of the agreement using the effective interest rate method. For the year ended December 31, 2011, the Company accreted $20,910 of the premium as additional interest expense and the carrying value of the debt is $553,410 and recorded as related parties notes payable on the accompanying consolidated balance sheets. The notes are subordinate to the February 8, 2011 term loan described above. As of July 9, 2012 these notes were paid off by Meeting Maker Holding BV as a condition of it obligations under the SPA entered into effective July 1, 2012
Related Parties Notes Payable...continued
Aggregate future maturities of the Company’s debt obligations are as follows as of June 30, 2012:
2012
|
$ | 1,237,100 | ||
2013
|
736,581 | |||
2014
|
106,640 | |||
$ | 2,080,321 |
7.
|
STOCK OPTION PLAN
|
In 2008, the Company adopted a stock option plan (the Plan) that provides for the granting of qualified (also known as incentive stock options) and nonqualified stock options to Company directors, officers, employees, and consultants. A total of 505,237 shares of the Company’s common stock were issuable under the Plan.
Employee stock option activity for the years ended December 31, 2011 and 2010 for the Plan was as follows:
Number of
Options
|
Exercise
Price Range
|
Weighted-
Average
Exercise Price
|
||||||||||
Outstanding at December 31, 2009
|
458,496 | $ | 2.97 – 5.08 | $ | 4.86 | |||||||
Granted
|
64,000 | 3.50 | 2.97 | |||||||||
Exercised
|
- | - | - | |||||||||
Forfeited/cancelled
|
(65,625 | ) | 3.50 – 5.08 | 4.98 | ||||||||
Outstanding at December 31, 2010
|
456,871 | 2.97 – 5.08 | 4.73 | |||||||||
Granted
|
43,000 | - | 4.12 | |||||||||
Exercised
|
- | - | - | |||||||||
Forfeited/cancelled
|
(12,500 | ) | 3.50 – 5.08 | 4.22 | ||||||||
Outstanding at December 31, 2011
|
487,371 | $ | 2.97 – 5.08 | $ | 4.84 | |||||||
Exercisable at December 31, 2011
|
327,428 | $ | 2.97 – 6.12 | $ | 4.84 |
No additional activity occurred during 2012, and the plan was retained by Meeting Maker Holding BV as its liability under the terms of the SPA entered into effective July 1, 2012.
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8.
|
COMMITMENTS AND CONTINGENCIES
|
Operating Leases
The Company leases certain office facilities under operating lease agreements that expire through December 2017. The following is the approximate future minimum lease payment under leases as of June 30, 2012:
2012
|
$ | 118,786 | ||
2013
|
225,709 | |||
2014
|
200,362 | |||
2015
|
53,704 | |||
2016
|
53,704 | |||
Thereafter
|
4,475 | |||
Total
|
$ | 656,740 |
Rent expense was $220,552 and $243,604 for the periods ended June 30, 2012 and 2011, respectively.
Capital Leases
The Company has various lease financing agreements with various lenders which are used to finance capital expenditures for equipment. During 2011, the Company entered into four additional capital lease agreements totaling $26,458. Interest expense related to the Company’s leases was $6,667 and $8,617 for the years ended December 31, 2011 and 2010, respectively.
The gross carrying amount of property and equipment under capital lease and related accumulated amortization has been included in property and equipment in the consolidated balance sheets. Amortization relating to capital leases has been included in depreciation expense.
Future minimum lease payments under capital leases at December 31, 2011 are as follows:
2012
|
$ | 14,070 | ||
2013
|
14,663 | |||
2014
|
4,458 | |||
33,191 | ||||
Less - amount representing interest
|
3,472 | |||
Present value of minimum capital lease payments
|
29,719 | |||
Less - current portion
|
9,015 | |||
Obligations under capital leases, excluding current portion
|
$ | 21,461 |
9.
|
401(k) PLAN
|
The Company maintains a 401(k) plan (the Plan) covering all eligible employees, as defined. The Plan allows eligible employees to make contributions up to 100% of their pretax annual compensation, as defined by the Plan, subject to certain IRS limitations. Under the Plan, the Company may make discretionary contributions at the end of each plan year. The Company made a contribution of $6,005 and $4,801 for the periods ended June 30, 2012 and 2011.
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10. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through September 17, 2012, the date on which the financial statements were available to be issued. No events, other than that described below, have occurred subsequent to June 30, 2012 that requires adjustment to or disclosure in these financial statements.
On July 1, 2012 Meeting Maker – United States, Inc.,was sold by its shareholder Meeting Maker Holding B.V. pursuant to a Stock Purchase Agreement with Asure Software, Inc. (“Asure”). The aggregate consideration received consisted of (i) $9.8 million in cash, subject to a post-closing working capital adjustment, (ii) 255,000 shares of Asure’s common stock, and (iii) an additional $3 million in cash that is due on October 31, 2014, subject to offset of any amounts owed under the indemnification provisions of the Stock Purchase Agreement.
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