Good day ladies and gentlemen and welcome to the first quarter 2009 Asure Software earnings conference call. My name is [Camisha] and I will be your operator for today. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Sean Collins from CCG; please proceed sir.

Thank you, operator. Good morning everyone and welcome to Asure Software’s first quarter 2009 conference call. Before we begin I would like to mention that some of the statements made by management during this call may include projections, estimates and other forward-looking statements. This would include any discussion pertaining to the company’s business outlook. These forward-looking statements as well as statements made on this call that are not historical, are subject to a number of risks and uncertainties that could materially affect their outcome. Please also consider the risk factors relating to the company’s business that are contained in Asure Software’s latest 10-K on file with the SEC. These risk factors are important and they could cause actual results to differ materially from forward-looking statements made today. EBITDA as it may be cited in this conference call is a measure not in accordance with Generally Accepted Accounting Principles or GAAP. EBITDA is defined as net income or loss excluding the effects of interest, income taxes, depreciation and amortization expenses. EBITDA may not be similar to non-GAAP income measures used by other companies. This company believes that EBITDA provides useful information to investors about the company’s performance because it eliminates the effects of period to period changes in costs that management does not believe are reflective of the underlying performance of the company’s businesses operations. Management uses EBITDA in evaluating the company’s overall operating performance and believes that EBITDA provides investors with tools that are valuable when used in addition to GAAP metrics for evaluating the company’s core performance. While the GAAP results are more complete, the company provides investors with the supplemental metrics since with the reconciliation to GAAP. This may allow for greater incite into the company’s financial results. This call is being recorded on behalf of Asure Software and is considered copyrighted material. It may not be recorded, rebroadcast or redistributed in any way without the company’s expressed written permission. Your participation in this call implies your consent to be on the call and be recorded as well as your agreement to the terms regarding recording. Joining me on the call today are Mr. Richard Snyder, Chairman and Chief Executive Officer of Asure Software; Ms. Nancy Harris, Vice President and Chief Operating Officer; and Mr. Jay Peterson, Vice President and Chief Financial Officer. With those formalities out of the way, I’m now pleased to turn the call over to Richard Snyder, Chairman and Chief Executive Officer of Asure Software. Dick.

Thank you Sean for that very complete Safe Harbor statement and good morning everybody and thanks again to you all for joining us on this call today. When we last spoke with you in connection with our fourth quarter and fiscal year 2008 results, the current economic downturn was gaining momentum. Now it’s become a recession and has spread globally. We are not immune to this downturn and we saw some effect to our sales during the first quarter; however, the softening has been moderate and we continue to see a good pipeline for our products and services. In fact, I believe that Asure Software may be better positioned than many other companies in the face of this macro economic adversity. That’s because our customers whether they are businesses, government agencies or non-profit organizations are looking for new and improved ways to achieve operating efficiencies. Cost-effective workforce management can no longer be seen as discretionary, but a key to remaining competitive. In a difficult economy such as todays, the very survival of an enterprise may depend upon the urgency with which they operate more sufficiently. Our products and services are simple, easy to use and are designed to boost efficiency and productivity in any organization. Our leadership with NetSimplicity’s meeting room manager was further enhanced when we acquired iEmployee four quarters ago. We have transitioned to a full service provider of on-demand, workforce management software solutions under the brand Asure Software. During the last year we have dramatically increased software revenue, reduced costs, released many exciting new products and created a highly effective organization. As we look to the future, we are well-positioned to partner with our customers in achieving workforce management efficiencies and we are succeeding customer-by-customer. It is a timely and exciting mission with significant upside potential. Industry…

Thank you, Dick. For those of you who are new to the Asure Software story, I’d like to provide you a bit of context and background. Since we reinvented our business model and began the transition from Forgent Networks to Asure Software in early fiscal ’08. We’ve enhanced our NetSimplicity offerings, acquired a leading product line in iEmployee and unearthed important synergies to make our company more productive, more efficient and more profitable. Our acquisition of iEmployee and the continued growth of our MRM on-demand software, both of which are delivered under a software as a service or SAS model, led to a $4 million increase in our software subscription revenue for the year ended July 31, 2008. Today we are a leaner organization focused on empowering small and medium sized organizations and divisions of enterprises to operate more efficiently, increase worker productivity and reduce costs, but as Dick mentioned there is no way to ignore the effects of the economic crisis that continues to unfold and it did impede our progress slightly in the quarter ended October 31; even under our new, more recession resistant business model. Let me turn now to give you an update on progress against key objectives we outlined on our last call: First we said that we will grow the business over the course of the next fiscal year. We remain confident of achieving this longer term goal; however, we did record a slight decline in revenue in the first quarter. In light of what some other companies are facing and reporting these days, a 3% revenue decline can be seen as relatively good news, but it is still a setback to us. A silver lining on this for us is that our growth margins increased from 77.7% in the fourth quarter to 79.8%…

Thank you, Nancy. This morning I will comment on the financial highlights of the first fiscal quarter and then I will provide some high level guidance for our future reporting periods and I will then turn the call back over to Dick Snyder. First off, I would like to point out that sequentially, our software and services revenue decreased slightly by 3% to $2.8 million versus $2.9 million in the fourth quarter. Recurring revenues, that is revenue under either a SAS or a maintenance contract, improved to 65% of our total revenue this past quarter. In addition our deferred revenue grew slightly this past quarter by 2% to $1.9 million. Our overall gross margins grew to 80% this past quarter versus 78% in the prior quarter and 76% two quarters ago. This growth in gross margin percentage was due to a favorable mix of software and a decline in lower margin hardware business that we sell on a pass-through basis and I would like to also add that this 80% gross margin performance was our highest margin performance in the last four fiscal quarters. We saw a sequential increase in our operating expenses of approximately $275,000 in the quarter due to litigation with our landlord. Excluding the expenses relating to this litigation, our spending would have actually declined by over $100,000 in Q1. Our EBITDA loss in Q1 increased from last quarter’s loss of $900,000 to approximately $1.15 million and again excluding the spending relating to litigation, our EBITDA loss would have declined significantly this past quarter to approximately $550,000 versus the prior quarter. Once this lease assignment is finalized, we expect to save approximately $200,000 a quarter in reduced lease payments, plus forego the spending related to this litigation. Our annualized revenue per employee for the first quarter improved…

Thanks Jay. Well I guess what I’d like to do is just summarize a few key points for the call. These may be difficult economic times, but we are confident that our solutions offer our customers real opportunities to save money and that we feel will drive demand. Number two, we are already lien as an organization on our expenses, but we are confident that our existing or exiting our building lease as Jay has pointed out will be another breakthrough towards generating cash, so that will be significant. We also have a strong balance sheet as Jay points out which positions us well and may be significantly better than most competitors. So with that, I would like to thank you again for joining the call. I wish you all a Merry Christmas and a Happy New Year and I will turn it over for questions.

(Operator Instructions) Your first question comes from Richard West - Dutton Associates.

I wonder if you could just help me and summarize; the expenses in your SG&A were approximately $500,000 because of litigation expenses and beginning in January you will start saving $200,000 a quarter because of that lawsuit, am I correct?

Close. The savings will in fact amount to $200,000 a quarter once we assign this lease and as I said we anticipate that to occur in the month of January. In terms of the spending, there’s approximately $400,000 in the quarter that related to trial and litigation expenses. So those two in aggregate, will total approximately $200,000 Richard.

Okay, thank you. Because that explains to me at least why your SG&A was the $33.1 million plus. Thank you very much.

Your next question comes from Tony Tristani - Astro Capital.

At the end, I understand the expenses, so probably in the April quarter at the current revenue level we’ll see that EBITDA number $550,000 loss, all things kind of equal. I guess my question is on the growth for Nancy, the current issue is your churn picking up, can you talk about what your churn number is or is it your gross adds, new business that you’re adding, is that blow plan and if you talk about sales force productivity and how much that can improve etc. I guess what I’m trying to figure out is when you guys think you are going to start growing again and how do you get there? Is it reduction of churn, is it improved productivity, etc?

Hi Tony; yes, let me just take that a couple of points at a time. The first one being, is it related to churn and the answer to that is no, actually it’s not an attrition issue. It is softness in the market that we are seeing relative to new transaction being slightly slower if you will than what the plan was. Now that being said, the demand still continues to be quite healthy and we are optimistic that we will be able to see growth as I mentioned. We are continuing to use our traditional marketing methods, which is pay-per-click and search engines, but we are also mixing in some new marketing elements to drive demand and reach the corporate segment which is our highest growth segment for the business. So we believe from that perspective focusing on corporate and our traditional segment that we will begin to see an increase in rep productivity through garnering these bigger accounts in addition to our traditional mix and that’s where we are going to focus a lot of our marketing attention and our sales attention.

If you look at lead generation, is that up significantly, is it the issue with the current economy, is it your closing rate kind of a lot lower because of hesitation on purchasing agents etc to close that if we do get a turn in confidence in the economy maybe over the next six months, that your business should ramp up, can you kind of talk about those dynamics.

Absolutely; both are accurate as stated. One is that our traditional PPC marketing effort is producing slightly softer results and I think that’s a factor of the economy. There are fewer people if you will shopping on the internet and that is why we are mixing in some additional elements in the marketing mix to try to reach incremental prospects. Second, we are seeing a push or softness in people making decisions. Either budget freezes out right or a push, relative indecisiveness if you will and they aren’t definitely lost, but people are not making and championing new purchases at the rate that they once were. Therefore as the confidence in the economy and the confidence in companies come back, we believe we will be able to ride that wave and see a resurgence if you will, but we’ve seen all those symptoms in the market today.

What about the quality of your sales force, the training? What kind of churn are you seeing in the sales force? I mean what do you have, like 13 to 15 salespeople, I think quota people; is that right.

That’s right. We have 13 in total I believe. We have hired recently a new VP of sales and marketing who has a big focus on solutions selling training for our reps and getting them up to speed, especially in terms of selling in a tough economic environment through ROI, through talking about productivity enhancements of the workforce and so he will kick off those training sessions starting in January and so we are optimistic that he too will be a factor in helping increase our rep productivity.

So you think sales force at the right size is a matter of the economy and also the new programs that you’re implementing to have a significant boost in your gross, kind of gross ads. I’m just wondering if you’re the right size, I think a half a million quota a year roughly; I mean you think you’re sized right to have enough growth? You can start adding $200,000 or $300,000 of revenue a quarter when things turn. I’m just wondering if you have enough people, what’s your thought on the size of your current sales force once things turn?

Tony for today we think we are at the right size. We are seeing rep productivity increase and we saw it increase quarter-over-quarter this past quarter in fact. So we feel like we are the right size today, but to your point, as we see things loosen up a bit in the economy we believe we’ll need to add reps as that demand increases. So we have a plan in out quarters, providing things begin to pick up. In order to make the larger target numbers, we will add reps to carry that quota going forward.

Okay and I guess my last question is competitively for Dick or for you or what’s happening competitively? Are you going up, against bigger competitors now or are you smaller competitors falling by the wayside? Where are you competitively in this environment and will that be a plus or a minus, whenever the economy turns?

It’s Nancy here Tony. I would say roughly same competitors, but we do feel confident that we are in a good position to weather the storm and as Dick suggested in his comments, potentially better than some of our competitors. We continue to keep effectively our prices low and pride if you will the value plan in the market against our competitors and as you can imagine in a time like this, that’s a very solid strategy. So we continue to see a lot of wins against the competition. Nobody’s fallen by the wayside yet, but we do think we’re in a good position, vis-à-vis the competition.

Okay and last question, what about penetration rates. I mean who you’re talking to or are other companies talking to them, a lot of these Greenfield customers? I mean I know the market size etc and the macro level is pretty big, but what about kind of head room for your products? Are you just 10%, 5%, what kind of penetration rate you think is out there in the marketplace for your products?

We have a lot of opportunity; I don’t know, I haven’t ever measured definitively the Greenfield, but we see new prospects. Given the marketing model, we have a lot of brand new prospects coming into the funnel literally every day. So there’s still a lot of people out there that we find that we’re replacing what was previously a manual, paper based effort; either for a NetSimplicity software solutions and including iEmployee software solutions and they are moving to automation to streamline their operations and make their employees more productive. So if you think about it from that perspective, this notion of replacing previously manually intensive operations in this environment, a lot of these prospects are Greenfield and don’t have a solution today.

Are you seeing success in moving up market to bigger customers or is that just a plan?

No, absolutely we are. With the outlook playing specifically; on the NetSimplicity with outlook plug in for meeting room manager, we have penetrating a tremendous number of large corporate environments. It is our fastest growing segment in that part of our business and we believe that will continue as we look to further enhance that component. In addition we are seeing nice growth in a lot of mark key accounts in our international piece of the business and have landed some very big names there. So corporate is a big theme and I think we have a product that serves that market well.

Your next question comes from David Sandberg - Red Oak Partners.

Could you help me reconcile again the EBITDA or the EBIT loss of 1.7 versus how we get to 550? I heard the 600 combined between the lease assignment and the law based in legal, but I don’t get to 550. Is there something else I’m missing, accelerated depreciation versus prior quarters perhaps?

The actual EBITDA loss is $1.15 million for the quarter, the reconciliation is two items. Once we assign the building we will save approximately $200,000 a quarter and we will forego approximately $200,000 a quarter in legal expenses and that will get us down to 550.

Okay, so even if we don’t get the full impact of the lease assignment by the April quarter, essentially starting now, now that wild basin has at least been put aside, we should see an improvement at least by the 275 or so which would get us to maybe a 750’ish type of EBIT loss assuming if the business holds steady versus the prior quarter?

Yes, with one caveat we do have some tertiary if you will; expenses related this quarter to finalizing this assignment, but nothing to the magnitude that we experienced in Q1.

Okay and so if that occurs then and we are at the $550,000 to $700,000 loss per quarter that’s roughly a good cash loss do you think or do you think the actual cash losses might be different from the reported EBITDA?

These expenses were in fact cash carrying expenses, so that would be a good number.

I have a slightly different view than the prior caller, where he was talking about if we had enough employees here for growth. I guess my concerns for the contrary, it looks like in the 10-Q filed last night that there was a write-off of seven out of the $12 million from the deal cost and assuming that’s correct and that was done because of a view that the deal may be worthless or it’s not quite performing at that level, has there been any thoughts to a further cost rationalization? Again my view is even after all of these savings the lease assignments have made, the company is still burning cash. We have 13.7 now, but given two thirds of the business is recurring at a very higher margin, has there been thought to just cash flowing this thing given that we’re in a recession and who knows how long it will take to recover?

Let me take a cut at that. This is Dick Snyder and then I’ll turn it over to Jay. First of all, the note that you as a saw in the 10-Q was the impairment charge which we did discuss the last earnings call and this was purely from an accounting non-cash point of view based upon our market capitalization. So it really doesn’t reflect any indication about the value of the business at all. Number two, I can understand your concern with regard to expenses and that’s certainly something the management team continues to looks at, but if you look at our history of bringing the headcount down from a little over 200 less than a year ago to less than 100 today, I think it is give you some idea of the intensity we approached this with. We’ve also cut our expenses in a number of different areas. So, it is a balance now of making sure that we have enough to scale going forward as the previous caller mentioned and being responsible with regard to getting to cash flow positive as soon as possible. So we think we have the right plan to give us the capability of scaling as we go forward, but we continue to look at everything and make sure that we’re prudent in those choices.

Great and we are a small company. Small companies have one advantage and that they can be fairly nimble with their infrastructure and therefore change decisions at different points based on different data. If this ends up being a two, three year horrific recession, as some believe it is and a year later we’re a couple million latter on the balance sheet and not really seeing the daylight, is there an ability to pursue more headcount and cost rationalization or I think as Nancy had mentioned, this is already a leaner organization. Are you guys starting to hit a wall as to what you could potentially cut?

No, we think that there is always the opportunity to continue to scale smaller. Obviously the trade-offs there, you begin to eat your own muscle and the ability then to grow into something. Our vision is to have $100 million business in five years and we clearly would not be capable of doing that if we went too far. On the other hand we do have the capacity to do things like salary freezes which we are currently under. We are not increasing salaries for the foreseeable future. We look at other options and obviously the thing like getting out of the building lease was a significant breakthrough and we’ll continue to look for those kinds of items as well.

Okay and then lastly, last year the annual meeting was held in July as you guys finished I guess the details on the acquisition. This year you are working on the lease assignment which does involve some accounting and legal as well. Should we expect therefore that the annual meeting might be held around the similar time as to last year?

Yes, we believe it will be held some time in the next 90 to 120 days, maybe a little earlier than the prior year David.

Okay, so we’d be talking maybe April, May.

Yes, correct.

Your next question comes from the line of [David Rattler - Dorset Asset Management].

Mike, actually I only have one question, so I have kind of a follow-up of asked previously and I didn’t understand or I wasn’t clear if you answered it, but have you given a projection of when you expect to be cash flow positive or EBITDA positive, previously or on this call?

Yes David, on the last call we indicated that we were anticipating or planning to be EBITDA profitable in our July quarter of this year and I would tell you that we are still endeavoring to that goal; however, that will require us to increase our top line revenue in order to achieve that and our ability to do that is somewhat related to some external factors that we might not be able to have full control over, but that is still our goal, that is still the number one objective, number one financial objective for this company.

At this time there are no questions in queue. Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect and have a wonderful day.