A balance sheet stuffed with cash and a left-for-dead stock price make Peerless Systems Corp. (Nasdaq:PRLS) a microcap tech play worth investigating.

The past two years have not been kind to shareholders of the El Segundo, Calif.-based company. At a recent price of $1.93 a share, and a market cap under $34 million, Peerless has seen its stock price shrivel by nearly 75% since 2006. Founded over 25 years ago, Peerless enjoyed a solid niche for many years providing software-based imaging and networking technologies for providers of printers, copiers and multifunction products. However, in recent years, Peerless’ customers, such as Konica Minolta Holdings, Inc., Kyocera-Mita Corporation and Ricoh Company, Ltd., have increasingly developed more technology in-house, putting pressure on Peerless’ margins. Understandably, investors dumped the stock as Peerless’ prospects dimmed.

Last year, activist investor Timothy Brog tried to shake things up at Peerless. His proxy contest resulted in a settlement last June in which Peerless agreed to add Brog to the board, as well as name two new independent directors. With the resignation last week of the lone remaining long-time director on the Peerless board, all of its directors have joined the board in only the past year or so. Peerless CEO Richard Roll took the top spot in December 2006. In January of this year, Roll announced an agreement to sell substantially all of Peerless’ intellectual property and other assets to major customer Kyocera-Mita for $37 million in cash. As part of the deal, Kyocera-Mita issued to Peerless a non-exclusive, worldwide, perpetual and royalty-free license on the transferred technologies. At the start of this month, the transaction officially closed...

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