Training-management software provider NetDimensions has been sold down so far that it is now trading for less than its cash, despite being on course to beat its forecasts for 2008.

Contract delays in the second half of 2007 saw the company dramatically miss its annual numbers, knocking the shares down 90% from their 62p issue price to 5.87p by this July. However, considering the Hong Kong-based concern is debt-free, generating cash and turned last time's loss into a pre-tax profit of $94,000 for the half to June, a market cap worth just 71% of its US$6.4m (£3.5m) net cash looks anomalous.

Led by affable American Jay Shaw, NetDimensions also lifted sales 37% to $2.9m, against what was its previously best-ever half-year, with 47 new clients varying from PricewaterhouseCoopers in Australia to the Miami Herald and the Yorkshire Housing Association. Furthermore, Shaw confirms that ‘we generally do 55-to-60% [of annual revenues] in the second half’, so the company is on course to beat its forecast $5.5m sales for the full year.

Shaw is more keen to point out that the software suite, which has traditionally focused on managing clients’ corporate training and assessment, has now proved to be a excellent method for companies to maintain regulatory compliance. With an increased emphasis on this element, and with a focus on the international ISO marks and Sarbannes-Oxley financial regulation, the company’s wares may move from being useful to ‘mission-critical’.

Other developments include a new product in development with a Singapore-listed IT firm and a partnership with an unnamed Fortune 100 company to sell NetDimension’s products to its own clients.

Even with all the risks of such a tiny company, NetDimensions is undervalued. Buy.

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