SofTech’s reinvention continues

Welcome back! I love how quiet the world gets around the end of each year, with even junk email slowing to a trickle. Then the new year starts, full of bustle and purpose. A lot of news tends to get lost in that transition so I’ll try to get us all caught up over the next few weeks. Leading off, an update on SofTech. Recall that its board of directors brought in a new/old management team to turn the company around, recapitalize it and complete the steps needed to return the company to fully listed status. That process is just about complete as we enter 2012. Back in March 2011, SofTech brought back former CEO Joe Mullaney. Mr. Mullaney’s team created new relationships with banks and creditors to satisfy a $10.6 million debt and began the process of putting SofTech’s financial house in order. In April 2011 SofTech finally announced the completion of its audit for fiscal year 2010, which ended May 31, 2010. The delay was caused by the negotiations for and completion of March 2011 recapitalization but definitely did not meet US regulators’ criteria for timely release of information for publicly listed companies. SofTech spent the rest of 2011 getting its financial house in order, announcing quarterly results and filing a registration statement with the US Securities and Exchange Commission that allows the investors who took part in the recapitalization to resell their shares. SofTech doesn’t itself get any money from these transactions but benefits by having a thriving public market for its shares, making it a more attractive place to work and offering the possibility of future share sales to raise money for acquisitions or other purposes. On January 3, 2012, SofTech announced that the SEC “declared effective” the company’s registration statement, which means that SofTech must now comply with all of the reporting requirements that apply to a public company. The immediate effect is that the company’s share marketplace has been upgraded from the OTC (“Over-the-Counter”) Pink marketplace tier to the OTCQB tier. OTC is a private company that connects buyers and sellers for stocks from companies that have too small a share volume to trade on an exchange like the NASDAQ. OTC has been around since the early 1900s; its markets operate in tiers, originally called “pink sheets”, to designate levels of risk. The least risky is OTCQX ; next is OTCQB. OTC Pink is typically considered “speculative”, and was not a great place for SofTech’s shares to trade. The move to OTCQB  will create a better market for the company’s shares as well as making the company appear stronger and more solid for potential customers. If you want to watch the share, the new ticker symbol is OTCQB: SOFT. Mr. Mullaney said in a press release that “regaining our public status, upgrading our listing marketplace tier and getting current financial information about our company released in a timely manner, was one of the most important objectives of the new management team since the March 2011 recapitalization transaction. Another important objective that we have devoted considerable time and attention to since the transaction is enhancing our existing business by identifying profitable new revenue streams to complement it. We are making great progress against this goal and look forward to reporting our results.” SofTech will report second fiscal quarter (ended November 30, 2011) results by January 17, 2012 in a Form 10-Q filing with the SEC. Technology buyers want their vendors focused on innovation, product enhancements and bug fixes. But these are businesses that must pay salaries and taxes, raise funds for growth and ensure that they are operating profitably. With the steps Mr. Mullaney and his team have taken to put the company on a more sound financial foundation, they should be able to return their focus to meeting the needs of the 100,000 or so users the company says it has for its ProductCenter and CADRA brand products.