ASURE SOFTWARE INC - FORM 8-K/A - EX-99.3 - September 24, 2012

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EXHIBIT 99.3
 
 
ASURE SOFTWARE, INC.
 
INDEX TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
 
 
 
 

INTRODUCTION TO ASURE SOFTWARE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
(Amounts in thousands, except per share data)
 
On July 1, 2012, Asure Software Inc., purchased all of the issued and outstanding shares of common stock ( the “shares”) of Meeting Maker – United States, Inc., a Delaware corporation (“Meeting Maker - US”), pursuant to a Stock purchase Agreement (the “Stock Purchase Agreement”) by and among Meeting Maker Holding BV, a besloten vennootschap organized under the laws of the Netherlands (“Seller”), PeopleCube Holding BV, a besloten vennootschap organized under the laws of the Netherlands, and us. The Stock Purchase Agreement contains certain customary representations, warranties, indemnities and covenants.
 
The aggregate consideration for the Shares consisted of (i) $10.00 million in cash, subject to a post-closing working capital adjustment of $0.20 million, (ii) 255,000 shares of our common stock, par value $0.01 per share, valued at $0.75 million and (iii) an additional $3.00 million seller’s note with a present value of $2.40 million that is due on October 31, 2014, subject to offset of any amounts owed by Seller under the indemnification provisions of the Stock Purchase Agreement.. As a result of the acquisition, Meeting Maker - US became our direct wholly-owned subsidiary.
 
The business combination was accounted for under ASC 805, “Business Combinations.”  The application of purchase accounting under ASC 805 requires the total purchase price to be allocated to the fair value of assets acquired and liabilities assumed based on their fair values at the acquisition date, with amounts exceeding fair value being recorded as goodwill.  The Company is currently in the process of assessing and finalizing the fair value of the assets acquired and the liabilities assumed.  The following table summarizes the preliminary estimated fair values of the assets and liabilities assumed (in thousands):
 
Assets Acquired
      
Cash
  
$
-
  
Accounts receivable
    
2,248
  
Fixed assets
    
117
  
Other assets
    
124
  
Goodwill
    
10,389
  
Intangibles
    
7,911
  
Total assets acquired
    
20,789
  
         
Liabilities assumed
        
Accounts payable
    
(882
) 
Accrued other liabilities
    
(438
)
Notes payable
    
(1,614
 ) 
Deferred revenue
    
(4,904
) 
Total liabilities assumed
    
(7,838
)
         
Net assets acquired
  
$
12,951
  
 
 
2
 

The following unaudited pro forma condensed combined balance sheet assumes the acquisition occurred on June 30, 2012 and the unaudited pro forma condensed combined statements of operations and notes thereto, assume that the Acquisition occurred at the beginning of the periods presented.  The unaudited pro forma condensed combined financial information is derived from, and should be read in conjunction with, the consolidated financial statements of Asure Software for the year ended December 31, 2011 filed on Form 10-K and PeopleCube Holding BV d/b/a PeopleCube (“PeopleCube”) for the year ended December 31, 2011 included herein and the unaudited interim consolidated financial statements of Asure Software for the Six months ended June 30, 2012 filed on Form 10-Q and PeopleCube for the Six months ended June 30, 2012 included herein. The unaudited pro forma condensed combined financial information includes unaudited pro forma adjustments that are factually supportable and directly attributable to the Acquisition. In addition, with respect to the unaudited pro forma condensed combined financial information, the unaudited pro forma adjustments are expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information was prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805 – Business Combinations. Certain amounts in the PeopleCube historical financial statements have been reclassified to conform to classifications used by Asure Software, Inc.
 
The unaudited pro forma condensed combined statements of operations do not include non-recurring transaction costs associated with the Acquisition that are no longer capitalized as part of the acquisition.
 
The following pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of (i) the results of operations and financial position that would have been achieved had the Acquisition taken place on the dates indicated or (ii) the future operations of the combined company. The following information should be relied on only for the limited purpose of presenting what the results of operations and financial position of the combined businesses of Asure Software and PeopleCube might have looked like had the Acquisition taken place at an earlier date.
 
The pro forma financial statements enclosed herein reflect the operations of PeopleCube Holding B.V. during the periods presented. The acquired entity, Meeting Maker United States Inc. and its subsidiaries conducted substantially all of the operations of PeopleCube Holding B.V., and held substantially all of the assets and liabilities of the consolidated entity during the periods presented.
 
 
3
 
 
Unaudited Pro Forma Condensed Balance Sheet
 (Amounts in thousands, except per share data)
 
  
  
Asure 06/30/12
    
PeopleCube 06/30/12
    
Pro Forma Combined Adjustments
    
Pro Forma Combined
6/30/12
  
ASSETS
                        
 Current Assets:
                        
   Cash and cash equivalents
    
1,493
      
-
    
  200
  
i 
1,693
  
   Accounts receivable trade, net
    
1,603
      
2,608
    
(360
)
a 
3,851
  
   Notes receivable
    
24
      
-
          
24
  
   Inventory
    
156
      
-
          
156
  
   Prepaid expenses and other current assets
    
263
      
47
          
310
  
Total Current Assets
    
3,539
      
2,655
    
(160
)
  
6,034
  
   Property and equipment, net
    
424
      
116
          
540
  
   Intangible assets, net
    
5,593
      
2,672
    
5,239
  
b 
13,504
  
   Goodwill
    
6,259
      
2,697
    
7,692
  
c 
16,648
  
   Other
    
18
      
77
    
-
    
95
  
     Total Assets
    
15,833
      
8,217
    
12,771
    
36,821
  
                             
LIABILITIES AND STOCKHOLDERS’EQUITY
                            
   Current Liabilities:
                            
Line of Credit
    
555
      
-
          
555
  
Current portion of Notes Payable
    
109
      
623
          
732
  
Related parties notes payable
    
-
      
565
          
565
  
Accounts payable
    
1,497
      
882
          
2,379
  
Accrued compensation and benefits
    
243
      
409
          
652
  
Other accrued Liabilities
    
641
      
21
          
662
  
Deferred Revenue
    
4,697
      
5,480
    
  (668
)
f
9,509
  
Total Current Liabilities
    
7,742
      
7,980
    
  (668
)
  
15,054
  
                             
Long-term deferred revenue
    
170
      
91
          
261
  
Deerpath Funding
    
-
      
-
    
10,000
  
h
10,000
  
Subordinated notes payable
    
4,375
      
427
    
2,400
  
d
7,202
  
Subordinated convertible notes payable
    
301
      
-
          
301
  
Deferred tax liability
    
-
      
291
    
  (291
)
g
-
  
Other long-term obligations
    
28
      
8
          
36
  
Total Liabilities
    
12,616
      
8,797
    
11,441
    
32,854
  
                             
Stockholders’ Equity:
                            
Preferred Stock
    
-
      
-
              
Common Stock
    
337
      
35
    
 (35
)
  
337
  
Treasury  Stock
    
(5,017
)
    
-
          
(5,017
)
Additional paid-in-capital
    
273,361
      
13,633
    
(12,883
)
e1
274,111
  
Accumulated deficit
    
(265,362
)
    
(14,483
)
  
  14,483
    
(265,362
)
Accumulated other comprehensive gain /(loss)
    
(102
)
    
235
    
  (235
)
  
(102
)
 Owner’s Equity
    
3,217
      
(580
)
  
1,330
  
e
3,967
 
Total Liabilities and Stockholders’ Equity
    
15,833
      
8,217
    
12,771
    
36,821
  
 
(The accompanying notes are an integral part of the Pro Forma consolidated financial information)
 
 
4
 
 
Unaudited Pro Forma Condensed Statement of Operations
 (Amounts in thousands, except per share data)
 
   
Asure
Twelve Months
Ended Dec-11
    
PeopleCube
Twelve Months
Ended Dec-11
    
Pro Forma
Combined
Adjustments
    
Pro Forma Combined
Twelve Months
Ended Dec-11
  
Revenues
                        
Revenues
    
10,941
      
9,096
      
-
      
20,037
  
Total Revenues
    
10,941
      
9,096
              
20,037
  
                                 
Cost of Sales
                                
Cost of sales
    
2,289
      
1,662
      
252
 
 a  
4,203
  
Total Cost of Sales
    
2,289
      
1,662
      
252
      
4,203
  
                                 
Gross Margin
    
8,652
      
7,434
      
(252
)
    
15,834
  
                                 
Operating Expense
                                
Selling, general and administrative expenses
    
6,203
      
7,438
      
-
      
13,641
  
Research and development
    
1,678
      
1,461
         -      
3,139
  
Amortization of intangibles
    
680
      
786
      
1,116
 
 a  
2,582
  
Total Operating Expenses
    
8,561
      
9,685
      
1,116
      
19,362
  
                                 
Income (Loss) from Operations
    
91
      
(2,251
)
    
(1,368
)
    
(3,528
)
                                 
Other Income and (Expenses)
                                
Interest income
    
10
      
-
              
10
  
Interest expense-amortization of OID and derivative
    
(604
)
    
-
      
(249
)
 c  
(853
)
Foreign currency translation (loss) gain
    
74
      
(113
 )             
(39
 ) 
Interest expenses and other
    
(148
)
    
(164
)
    
(1,399
)
 b  
(1,711
) 
Total Other Income and (Expense)
    
(668
)
    
(277
)
    
(1,648
 )    
(2,593
)
                                 
Income (Loss) From Operations, Before Income Taxes
    
(577
)
    
(2,528
)
    
(3,016
)
    
(6,121
)
Benefit (provision) for income taxes
    
(72
)
    
-
              
(72
)
Net Income (Loss)
  
$
(649
)
    
(2,528
)
    
(3,016
)
    
(6,193
)
                                 
Net income per common share:
                                
Basic
  
$
(0.14
)
       -         -      
 (1.27
) 
Diluted
  
$
(0.14
)
       -         -      
 (1.27
) 
                                 
Weighted-average common shares outstanding:
                                
Basic
    
4,628
      
255
         -      
4,883
  
Diluted
    
4,628
      
255
         -      
4,883
  
 
(The accompanying notes are an integral part of the Pro Forma consolidated financial information)
 
 
5
 
 
Unaudited Pro Forma Condensed Statement of Operations
 (Amounts in thousands, except per share data)
 
   
Asure
Six months
ended 06/30/12
    
PeopleCube
Six months
ended 06/30/12
    
Pro Forma
Combined
Adjustments
    
Pro Forma Combined
Six months
ended 6/30/12
  
Revenues
                        
Revenues
    
4,205
      
4,890
            
9,095
  
Total Revenues
    
4,205
      
4,890
            
9,095
  
                               
Cost of Sales
                              
Cost of sales
    
991
      
498
    
126
 
 a  
1,615
  
Total Cost of Sales
    
991
      
498
    
126
      
1,615
  
                               
Gross Margin
    
3,214
      
4,392
    
(126
)
    
7,480
  
                               
Operating Expense
                              
Selling, general and administrative expenses
    
2,334
      
3,740
    
-
      
 6,074
  
Research and development
    
591
      
706
            
1,297
  
Amortization of Intangibles
    
292
      
328
    
558
 
 a  
1,178
  
Total Operating Expenses
    
3,217
      
4,774
    
558
      
8,549
  
                               
(Loss) Income from Operations
    
(3
)
    
(382
)
  
(684
)
    
(1,069
) 
                               
Other Income and (Expenses)
                              
Interest income
    
1
                    
1
  
Foreign currency translation gain (loss)
    
(1
)
    
(56
 )           
(57
) 
(Loss) on disposal of assets
    
(26
)
                  
 (26
) 
Interest expense-amortization of OID and derivative
    
(56
)
          
 (121
)
c  
(177
) 
Interest expenses and other
    
(118
)
    
3
 
  
(716
)
b  
(831
)
Total Other Income and (Expense)
    
(200
)
    
(53
)
  
(837
)
    
(1,090
)
                               
(Loss) Income From Operations, Before Income Taxes
    
(203
)
    
(435
)
  
(1,521
)
    
(2,159
) 
Benefits (provision) for income taxes
    
(120
)
    
-
            
(120
)
Net (Loss) Income
  
$
(323
)
    
(435
)
  
(1,521
)
  
$
(2,279
) 
                               
Net (Loss) income per common share:
                              
Basic
  
$
(0.06
)
       -       -      
(0.44
) 
Diluted
  
$
(0.06
)
       -       -      
(0.44
) 
                               
Weighted-average common shares outstanding:
                              
Basic
    
4,982
      
255
       -      
5,237
  
Diluted
    
4,982
      
255
       -      
5,237
  
 
(The accompanying notes are an integral part of the Pro Forma consolidated financial information)
 
 
6
 
 
ASURE SOFTWARE, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME FOR TWELVE MONTHS ENDED 12/31/10
AND NINE MONTHS ENDED 09/30/11
(Amounts in thousands, except per share data)
 
Notes to Pro Forma Balance Sheet:
 
(a) Adjustment to AR reserves as per Asure policy    
(b) Estimated value of intangible assets acquired in acquisition    
(c) Estimated value of goodwill acquired in acquisition    
(d) Note payable to seller    
(e)
Eliminate PeopleCube equity at acquisition
    
(el) Common shares issued on acquisition    
(f) Estimated value of Deferred revenue at acquisition    
(g) Eliminate Deferred tax liability    
(h) Debt financing facility by Asure from Deerpath    
(i)
Working capital adjustments
    
 
 
Notes to Pro Forma Income Statement:
 
(a)
Reflects adjustments to the historical intangible amortization expense resulting from the effects of the preliminary purchase price associated with the acquisition of PeopleCube. The final allocation of the actual purchase price is subject to the final valuation of the acquired assets, but that allocation is not expected to differ materially from the preliminary allocation presented in this pro forma condensed combined financial information.
   
(b)
Reflects Interest expense on acquisition related debt
   
(c)
Interest accretion on sellers note for $3.0 million

 
 
7
 

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