UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~Washington,~~WASHINGTON, D.C. 20549

FORM 10-Q

~~(Mark One)~~


☒			~~QUARTERLY REPORT PURSUANT TO SECTION~~Quarterly Report Pursuant to Section 13 ORor 15(d) ~~OF THE SECURITIES EXCHANGE ACT OF~~of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2024

~~For the quarterly period ended September 30, 2017~~


☐			~~TRANSITION REPORT PURSUANT TO SECTION~~Transition Report Pursuant to Section 13 ORor 15(d) ~~OF THE SECURITIES EXCHANGE ACT OF~~of the Securities Exchange Act of 1934 for the transition period from __ to __

~~For the transition period from~~ to


Commission File Number: 1-34522

~~Commission file number:~~ ~~0-20008~~

ASURE SOFTWARE, INC.

(Exact ~~Name~~name of ~~Registrant~~registrant as ~~Specified~~specified in its ~~Charter)~~charter)

Delaware

74-2415696

(State or other jurisdiction of incorporation)

(I.R.S. Employer Identification No.)

~~incorporation or organization)~~

405 Colorado Street, Suite 1800, Austin, Texas

~~Identification No.)~~

78701

~~3700 N. Capital of Texas Hwy #350~~

~~Austin, Texas~~

~~78746~~

(Address of ~~Principal Executive Offices)~~principal executive offices)

(Zip Code)

~~(512) 437-2700~~

~~(Registrant’s Telephone Number, including Area Code)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

~~Large accelerated filer~~ ☐	~~Accelerated filer~~ ☐	~~Non-accelerated filer~~ ☐
~~Smaller reporting company~~ ☒ 512-437-2700
~~Emerging growth company~~ ☐ (Registrant’s Telephone Number, including Area Code)
None
			(Former name, former address and former fiscal year, if changed since last report)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provideSecurities registered pursuant to Section ~~13(a)~~12(b) of the ~~Exchange Act.~~ ☐Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

ASUR

The Nasdaq Capital Market

Series A Junior Participating Preferred Share Purchase Rights

N/A

☒

Yes

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒

Yes

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐

Yes

☒

As of May 1, 2024, 25,813,067 shares of the ~~Exchange Act). Yes~~ ☐ No ☒

~~As of November 9, 2017, the registrant had outstanding~~ ~~12,466,820 shares of its~~registrant’s Common Stock, $0.01 par ~~value.~~value, were outstanding.

Table of Contents

TABLE OF CONTENTS


				Page
					~~Number~~ PART I. FINANCIAL INFORMATION
~~PART I - FINANCIAL INFORMATION~~

Item 1.	Financial Statements (Unaudited)		1
		Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~2023		3 1
		Condensed Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~ for the Three Months Ended March 31, 2024 and ~~Nine Months ended September 30, 2017 and 2016~~March 31, 2023		4 2
		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and March 31, 2023		3
		Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~March 31, 2023		5
		Notes to Condensed Consolidated Financial Statements		6 7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		20 17
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		25 24
Item 4.		Controls and Procedures		25 24

PART II - OTHER INFORMATION

Item 1.		Legal Proceedings		26 25
Item 1A.		Risk Factors		26 25
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		26 25
Item 3.		Defaults upon Senior Securities		26 25
Item 6.4.		~~Exhibits~~Mine Safety Disclosures		26 25
Item 5.		Other Information		25
Item 6.		Exhibits		26

		Signatures		27

Table of Contents

PART I ~~– FINANCIAL INFORMATION~~

ITEM 1. FINANCIAL STATEMENTS

ASURE SOFTWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(~~Amounts~~ in ~~thousands)~~thousands, except per share amounts)

(Unaudited)

		September 30, 2017 (Unaudited)			December 31, 2016
Assets
	March 31, 2024								March 31, 2024	December 31, 2023
ASSETS
Current assets:
Current assets:
Current assets:
Cash and cash equivalents		$	27,464		$	12,767
Accounts and note receivable, net of allowance for doubtful accounts of $592 and $338 at September 30, 2017 and December 31, 2016, respectively			13,887			8,108
Cash and cash equivalents
Cash and cash equivalents
Accounts receivable, net of allowance for credit losses of $5,108 and $4,787 at March 31, 2024 and December 31, 2023, respectively
Inventory			781			487
Prepaid expenses and other current assets			1,899			1,256
Total current assets before funds held for clients			44,031			22,618
Funds held for clients			23,217			22,981
Total current assets			67,248			45,599
Restricted cash			200			-
Property and equipment, net			2,763			1,878
Goodwill			75,855			26,259
Intangible assets, net			34,046			12,048
Other assets			2,225			39
Operating lease assets, net
Other assets, net
Total assets		$	182,337		$	85,823
Liabilities and stockholders’ equity
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of notes payable, net of debt issuance cost and debt discount		$	8,724		$	5,455
Current liabilities:
Current liabilities:
Current portion of notes payable
Current portion of notes payable
Current portion of notes payable
Accounts payable			1,581			1,576
Accrued compensation and benefits			1,812			1,192
Operating lease liabilities, current
Other accrued liabilities			1,115			936
Deferred revenue			12,065			9,252
Total current liabilities before client fund obligations			25,297			18,411
Client fund obligations			23,217			22,981
Total current liabilities			48,514			41,392
Long-term liabilities:
Deferred revenue			1,450			769
Notes payable, net of current portion of debt issuance cost and debt discount			66,980			24,581
Deferred revenue
Deferred revenue
Deferred tax liability
Notes payable, net of current portion
Operating lease liabilities, noncurrent
Other liabilities			1,009			835
Total long-term liabilities			69,439			26,185
Total liabilities			117,953			67,577
Stockholders’ equity:
Preferred stock, $.01 par value; 1,500 shares authorized; none issued or outstanding			-			-
Common stock, $.01 par value; 22,000 shares authorized; 12,805 and 8,901 shares issued, 12,421 and 8,517 shares outstanding at September 30, 2017 and December 31, 2016, respectively			128			89
Treasury stock at cost, 384 shares at September 30, 2017 and December 31, 2016			(5,017	)		(5,017	)
Preferred stock, $0.01 par value; 1,500 shares authorized; none issued or outstanding
Preferred stock, $0.01 par value; 1,500 shares authorized; none issued or outstanding
Preferred stock, $0.01 par value; 1,500 shares authorized; none issued or outstanding
Common stock, $0.01 par value; 44,000 shares authorized; 25,749 and 25,382 shares issued, 25,749 and 24,998 shares outstanding at March 31, 2024 and December 31, 2023, respectively
Treasury stock at cost, zero(1) and 384 shares at March 31, 2024 and December 31, 2023, respectively
Additional paid-in capital			345,383			295,044
Accumulated deficit			(276,052	)		(271,875	)
Accumulated other comprehensive (loss) income			(58	)		5
Accumulated other comprehensive loss
Total stockholders’ equity			64,384			18,246
Total liabilities and stockholders’ equity		$	182,337		$	85,823
(1) The aggregate Treasury stock of prior repurchases of the Company's own common stock was retired and subsequently issued effective January 1, 2024. See the Condensed								(1) The aggregate Treasury stock of prior repurchases of the Company's own common stock was retired and subsequently issued effective January 1, 2024. See the Condensed
Consolidated Statement of Changes in Stockholders' Equity for the impact of this transaction.								Consolidated Statement of Changes in Stockholders' Equity for the impact of this transaction.

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~

Condensed Consolidated Financial Statements.

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ASURE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~

(~~Amounts~~ in thousands, except ~~share and~~ per share ~~data)~~amounts)

(Unaudited)


	Three Months Ended March 31,
	2024		2023
Revenue:
Recurring	$	30,273	$	27,956
Professional services, hardware and other	1,379		5,108
Total revenue	31,652		33,064
Cost of Sales	9,045		8,664
Gross profit	22,607		24,400
Operating expenses:
Sales and marketing	7,767		7,200
General and administrative	10,063		9,956
Research and development	1,769		1,979
Amortization of intangible assets	3,449		3,302
Total operating expenses	23,048		22,437
(Loss) income from operations	(441)		1,963
Interest income	336		349
Interest expense	(180)		(2,293)
Other income, net	10		83
(Loss) income from operations before income taxes	(275)		102
Income tax expense (benefit)	33		(237)
Net (loss) income	(308)		339
Other comprehensive (loss) income:
Unrealized (loss) income on marketable securities	(244)		481
Comprehensive (loss) income	$	(552)	$	820

Basic and diluted (loss) income per share
Basic	$	(0.01)	$	0.02
Diluted	$	(0.01)	$	0.02

Weighted average basic and diluted shares
Basic	25,334		20,347
Diluted	25,334		21,041

FOR THE
THREE MONTHS ENDED
September 30,

FOR THE
NINE MONTHS ENDED
September 30,

2017 2016 2017 2016
Revenues:
Cloud revenue $ 11,062 $ 5,630 $ 27,724 $ 14,881
Hardware revenue 1,003 676 3,651 2,644
Maintenance and support revenue 1,178 1,078 3,276 3,509
On premise software license revenue 599 754 1,049 1,352
Professional services revenue 1,685 1,302 3,434 3,440
Total revenues 15,527 9,440 39,134 25,826
Cost of sales 3,396 2,026 8,660 5,932
Gross margin 12,131 7,414 30,474 19,894

Operating expenses
Selling, general and administrative 9,459 5,046 25,286 15,559
Research and development 883 761 2,488 2,217
Amortization of intangible assets 1,341 625 3,230 1,628
Total operating expenses 11,683 6,432 31,004 19,404

Income (loss) from operations 448 982 (530 ) 490

Other income (loss)
Interest expense and other (1,644 ) (620 ) (3,279 ) (1,460 )
Total other loss (1,644 ) (620 ) (3,279 ) (1,460 )

Income (loss) from operations before income taxes (1,196 ) 362 (3,809 ) (970 )
Income tax provision (85 ) (47 ) (368 ) (133 )
Net income (loss) $ (1,281 ) $ 315 $ (4,177 ) $ (1,103 )
Other comprehensive income (loss)
Foreign currency gain (loss) (6 ) 26 (63 ) 142
Other comprehensive income (loss) $ (1,287 ) 341 $ (4,240 ) $ (961 )

Basic and diluted net income (loss) per share
Basic $ (0.10 ) $ 0.05 $ (0.40 ) $ (0.17 )
Diluted $ (0.10 ) $ 0.05 $ (0.40 ) $ (0.17 )
Weighted average basic and diluted shares
Basic 12,418,000 6,534,000 10,355,000 6,383,000
Diluted 12,418,000 6,548,000 10,355,000 6,383,000

The accompanying notes are an integral part of these ~~condensed consolidated financial statements.~~

Condensed Consolidated Financial Statements.

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ASURE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~CHANGES IN STOCKHOLDERS’ EQUITY

(~~Amounts~~ in thousands)

(Unaudited)


	Common Stock Outstanding	Common Stock Amount		Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Other Comprehensive Loss		Total Stockholders’ Equity
Balance at December 31, 2023	24,998	$	254	$	(5,017)	$	487,973	$	(290,440)	$	(1,115)	$	191,655
Stock issued upon option exercise and vesting of restricted and performance stock units	301	3		—		173		—		—		176
Stock issued for acquisitions	450	5		—		4,489		—		—		4,494
Share based compensation	—	—		—		1,902		—		—		1,902
Retirement and reissuance of treasury shares	—	(4)		5,017		—		(5,013)		—		—
Net loss	—	—		—		—		(308)		—		(308)
Other comprehensive loss	—	—		—		—		—		(244)		(244)
Balance at March 31, 2024	25,749	$	258	$	—	$	494,537	$	(295,761)	$	(1,359)	$	197,675

FOR THE
NINE MONTHS ENDED
SEPTEMBER 30,

2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,177 ) $ (1,103 )
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization 4,344 2,686
Provision for doubtful accounts 320 50
Share-based compensation 363 166
Other - 94
Changes in operating assets and liabilities:
Accounts receivable (4,450 ) (1,678 )
Inventory (287 ) 169
Prepaid expenses and other assets (471 ) 124
Accounts payable (569 ) (189 )
Accrued expenses and other long-term obligations 881 951
Deferred revenue 1,963 (2,000 )
         Net cash used in operating activities (2,083 ) (730 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions net of cash acquired (45,472 ) (12,000 )
Purchases of property and equipment (942 ) (128 )
Software capitalization costs (804 ) -
Collection of note receivable - 223
Net change in funds held for clients 8,867 4,155
         Net cash used in investing activities (38,351 ) (7,750 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 45,777 16,823
Payments on notes payable (8,098 ) (5,173 )
Debt financing fees (1,433 ) (438 )
Payments on capital leases (131 ) (158 )
Net proceeds from issuance of common stock 27,820 561
Net change in client fund obligations (8,812 ) (4,155 )
        Net cash provided by financing activities 55,123 7,460

Effect of foreign exchange rates 8 151

Net increase (decrease) in cash and cash equivalents 14,697 (869 )
Cash and cash equivalents at beginning of period 12,767 1,158
Cash and cash equivalents at end of period $ 27,464 $ 289

SUPPLEMENTAL INFORMATION:
Cash paid for:
Interest $ 2,180 $ 817

Non-cash Investing and Financing Activities:
Subordinated notes payable –acquisitions 8,165 6,000
Equity issued in connection with acquisitions 21,825 -

The accompanying notes are an integral part of these ~~consolidated financial statements.~~ Condensed Consolidated Financial Statements.

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ASURE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)


	Common Stock Outstanding	Common Stock Amount		Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Other Comprehensive Loss		Total Stockholders’ Equity
Balance at December 31, 2022	20,244	$	206	$	(5,017)	$	433,586	$	(281,226)	$	(2,483)	$	145,066
Stock issued upon option exercise and vesting of restricted stock units	375	4		—		1,984		—		—		1,988
Share based compensation	—	—		—		1,337		—		—		1,337
Net income	—	—		—		—		339		—		339
Other comprehensive income	—	—		—		—		—		481		481
Balance at March 31, 2023	20,619	$	210	$	(5,017)	$	436,907	$	(280,887)	$	(2,002)	$	149,211

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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ASURE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net (loss) income	$	(308)	$	339
Adjustments to reconcile (loss) income to net cash (used) in provided by operations:
Depreciation and amortization	4,860		4,789
Amortization of operating lease assets	335		307
Amortization of debt financing costs and discount	142		169
Non-cash interest expense	—		982
Net accretion of discounts on available-for-sale securities	(78)		(14)
Provision for expected losses	46		652
Provision for (recovery of) deferred income taxes	24		(73)
Net realized gains on sales of available-for-sale securities	(652)		(453)
Share-based compensation	1,902		1,337
Loss on disposals of long-term assets	—		160
Change in fair value of contingent purchase consideration	—		(69)
Changes in operating assets and liabilities:
Accounts receivable	(919)		(3,290)
Inventory	(50)		33
Prepaid expenses and other assets	(473)		4,850
Operating lease right-of-use assets	30		—
Accounts payable	(960)		(450)
Accrued expenses and other long-term obligations	(2,665)		(123)
Operating lease liabilities	(141)		(219)
Deferred revenue	(5,040)		(4,339)
Net cash (used) in provided by operating activities	(3,947)		4,588
Cash flows from investing activities:
Acquisition of intangible asset	(710)		—
Purchases of property and equipment	(240)		(726)
Software capitalization costs	(2,435)		(1,158)
Purchases of available-for-sale securities	(3,516)		(10,189)
Proceeds from sales and maturities of available-for-sale securities	2,406		5,426
Net cash used in investing activities	(4,495)		(6,647)
Cash flows from financing activities:
Payments of notes payable	—		(232)
Payments made on amounts due for the acquisition of intangible assets	(236)		—
Net proceeds from issuance of common stock	176		1,988
Net change in client fund obligations	21,122		19,372
Net cash provided by financing activities	21,062		21,128
Net increase in cash and cash equivalents	12,620		19,069
Cash and cash equivalents, beginning of period	177,622		164,042
Cash and cash equivalents, end of period	$	190,242	$	183,111

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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ASURE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

(Unaudited)


	Three Months Ended March 31,
	2024		2023
Reconciliation of cash and cash equivalents to the Condensed Consolidated Balance Sheets
Cash and cash equivalents	$	23,166	$	21,438
Cash and cash equivalents included in funds held for clients	167,076		161,673
Total cash and cash equivalents	$	190,242	$	183,111

Supplemental information:
Cash paid for interest	$	—	$	1,038
Cash paid for income taxes	$	—	$	82

Non-cash investing and financing activities:
Acquisition of intangible assets	$	6,345	$	—
Notes payable issued for acquisitions	$	827	$	—
Shares issued for acquisitions	$	4,494	$	—

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except ~~share and~~ per share data unless otherwise noted)

NOTE 1 –- THE COMPANY AND BASIS OF PRESENTATION

Asure Software, Inc. (“Asure”, the “Company”, “we” and “our”), a Delaware corporation, is a provider of cloud-based ~~software-as-a-service~~Human Capital Management (“HCM”) software solutions delivered as Software-as-a-Service (“SaaS”) ~~time~~for small and medium-sized businesses (“SMBs”). We offer human resources (“HR”) tools necessary to build a thriving workforce, provide the resources to stay compliant with dynamic federal, state, and local tax jurisdictions and their respective labor ~~management~~laws, freeing cash flows so SMBs can spend their financial capital on growing their businesses rather than administrative overhead that can impede growth. Our solutions also provide new ways for employers to connect with their employees in order to enhance their relationships with their talent. Asure’s HCM suite (“Asure HCM”) includes Payroll & Tax solutions, HR compliance and ~~Agile Workplace management solutions~~services, Time & Attendance software and data integrations that enable ~~organizations~~employers and their employees to ~~manage~~enhance efficiencies and take advantage of value-added solutions, which we refer to as AsureMarketplace™. AsureMarketplace™ automates interactions between our HCM systems with third-party providers to enhance efficiency, improve accuracy and to extend the range of services offered to employers and their ~~office environments as well as their~~employees. Our approach to HR compliance services incorporates artificial intelligence technology to enhance scalability and efficiency while prioritizing client interactions. We offer our services directly and indirectly through our network of reseller partners.

We strive to be the most trusted HCM resource to SMBs. We target less densely populated U.S. metropolitan cities where fewer of our competitors have a presence. Our solutions solve three primary challenges that prevent businesses from growing: HR complexity, allocation of human ~~resource~~ and ~~payroll processes effectively~~financial capital, and ~~efficiently.~~the ability to build great teams. We have and will continue to invest in research and development to expand our solutions. Our solutions reduce the administrative burden on employers and increase employee productivity while managing the employment lifecycle. The Asure ~~develops, markets, sells~~HCM suite includes five product lines: Asure Payroll & Tax, Asure Tax Management Solutions, Asure Time & Attendance, Asure HR Compliance, and ~~supports its~~AsureMarketplace™.

We develop, market, sell and support our offerings ~~worldwide~~nationwide through ~~its~~our principal office in Austin, Texas and ~~through additional offices~~from our processing hubs in ~~Tampa,~~ Alabama, California, Florida, ~~Traverse City, Michigan, Vermont,~~New Jersey, New York, Tennessee, and ~~London, United Kingdom.~~Vermont.

We have prepared the accompanying unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accordingly, they do not include all information and footnotes required under U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements.

In the opinion of management, these interim financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation of our financial position as of ~~September 30, 2017, the results of operations~~March 31, 2024, comprehensive (loss) income and changes in stockholders’ equity for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~March 31, 2023, and ~~the~~ cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016.~~

~~You should read these condensed~~March 31, 2023. Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on the consolidated financial ~~statements~~position or consolidated results of operations of the Company.

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited ~~consolidated financial statements~~Consolidated Financial Statements and notes thereto filed with the ~~Securities and Exchange Commission~~SEC in our annual report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2023 (our “2023 Annual Report on Form 10-K”). The Company’s results for ~~the~~any interim ~~periods~~period are not necessarily indicative of results for a full fiscal year.

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NOTE 2 –- SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

Preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. These estimates are subjective in nature and involve judgments. The more significant estimates made by management include the valuation allowance for the gross deferred tax assets, the determination of the fair value of its long-lived assets, and the fair value of assets acquired, and liabilities assumed during acquisitions. We base our estimates on historical experience and on various other assumptions management believes reasonable under the given circumstances. These estimates could be materially different under different conditions and assumptions.

CASH AND CASH EQUIVALENTS

~~Cash and cash equivalents include cash deposits and~~We consider all highly liquid investments with an original maturity of ~~three months~~90 days or less ~~when purchased.~~

~~RESTRICTED CASH~~

~~Restricted~~at the time of purchase to be cash ~~represents a certificate of deposit held~~equivalents. Cash equivalents include investments in ~~a cash collateral account as required by our operating lease for iSystems, LLC,~~an institutional money market fund, which ~~we acquired~~invests in ~~May 2017. See Note 4- Acquisitions for further detail of the acquisition.~~

~~LIQUIDITY~~

~~As of September 30, 2017, Asure’s principal sources of liquidity consisted of approximately $27,464 of cash~~U.S. Treasury bills, notes and ~~cash equivalents, future cash generated from operations and $5,000 available for borrowing under our Wells Fargo revolver discussed in Note 6 – Notes Payable. We believe that we have~~bonds, and/or ~~will generate sufficient cash for our short- and long-term needs, including meeting~~repurchase agreements, backed by such obligations. Carrying value approximates fair value.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2023, the ~~requirements of our term loan, and the related debt covenant requirements. We continue~~FASB issued ASU No. 2023-09, Improvements to ~~seek reductions in our expenses as a percentage of revenue on an annual basis and thus may utilize our cash balances in the short-term~~Income Tax Disclosures (Topic 740), which requires companies to reduce long-term costs. Based on current internal projections, we believe that we have and/or will generate sufficient cash for our operational needs, including any required debt payments, for at least the next twelve months from the issuance of the condensed consolidated financial statements.

~~Management is focused on growing our existing product offering,~~disaggregate information about their effective tax rate reconciliation as well as ~~our customer base,~~information on income taxes paid. The standard applies to ~~increase our recurring revenues. We have made and will continue~~all entities subject to ~~explore additional strategic acquisitions. We expect to fund any future acquisitions with equity, available cash, future cash from operations, or debt from outside sources.~~

~~We cannot assure that we can grow our cash balances or limit our cash consumption and thus maintain sufficient cash balances~~income taxes. The standard becomes effective for our planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the future. However, we cannot assure that we will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that we have sufficient capital and liquidity to fund and cultivate the growth of our current and future operationspublic entities for at least the next twelve months from the issuance of these financial statements and to maintain compliance with the terms of our debt agreements and related covenants or to obtain compliance through debt repayments made with the available cash on hand or anticipated for receipt in the ordinary course of operations.

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data unless otherwise noted)~~

~~RECENT ACCOUNTING STANDARDS~~

~~Recently Adopted Standards~~

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-11, “Simplifying the Measurement of Inventory”. Inventory within the scope of this update is required to be measured at the lower of its cost or net realizable value, with net realizable value being the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective prospectively for fiscal years and interimannual periods beginning after December 15, ~~2016, with early adoption permitted.~~2024. We ~~adopted~~are currently evaluating this standard and the ~~provisions~~potential effects of ~~ASU 2015-11 on January 1, 2017. This adoption did not have any impact on~~these changes to our consolidated financial ~~statements.~~statements and will adopt this new standard in the fiscal year beginning January 1, 2025.

In ~~March 2016,~~November 2023, the FASB issued ASU ~~2016-09, “Compensation – Stock Compensation~~No. 2023-07, Segment Reporting (Topic ~~718)~~280): Improvements to ~~Employee Share-Based Payment Accounting.”.~~Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses for interim and annual periods. In addition, the standard requires public entities that have a single reportable segment to provide all the disclosures required by the standard and all existing segment disclosures in Topic 280. The purpose of ASU 2016-09 is to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification of such activity on the statement of cash flows. ASU 2016-09standard is effective for fiscal years beginning after December 15, ~~2016, including~~2023, and for interim periods within that year. Prospective, retrospective, or modified retrospective application may be used dependent on the specific requirements of the amendments within ASU 2016-09. Effective January 1, 2017, the Company adopted ASU 2016-09 on a prospective basis. As such, prior periods have not been adjusted.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment (Topic 350)”, which eliminates Step 2 from the goodwill impairment test. ASU 2017-04 is effective for annual and interim periods in fiscal years beginning after December 15, ~~2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be applied prospectively.~~2024. We ~~adopted the provisions of ASU 2017-04 on January 1, 2017. The adoption did not have any impact on our consolidated financial statements.~~

~~In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 806): Clarifying the Definition of a Business”, which provides guidance in~~are currently evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for public companies for fiscal years beginning after December 15, 2017. We adopted this standard ~~early as~~and the potential effects of ~~January 1, 2017 as permitted under the standard. The adoption did not have any impact on our consolidated financial statements.~~

~~Standards Yet To Be Adopted~~

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 supersedes a majority of existing revenue recognition guidance under US GAAP, and requires companiesthese changes to recognize revenue when it transfers goods or services to a customer in an amount that reflects the consideration to which a company expects to be entitled. Companies may need to apply more judgment and estimation techniques or methods while recognizing revenue, which could result in additional disclosures to the financial statements. In addition, in March 2016, April 2016, May 2016 and December 2016 the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”) and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”), respectively, to amend certain guidance in ASU 2014-09. Topic 606 allows for either a retrospective or cumulative effect transition method. ASU 2014-09 was originally effective for fiscal years beginning after December 15, 2016. In July 2015, the FASB approved a one-year deferral of ASU 2014-09 and all amendments to it, with a new effective date for fiscal years beginning after December 15, 2017 with early adoption permitted as of the original effective date.

We plan to adopt ASU 2014-09, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, on January 1, 2018. We have developed our plan for implementing the new standard, which includes, but is not limited to, identifying contract populations and “in scope” customer contracts, identifying performance obligations in those customer contracts, and evaluating any impact of variable consideration. The Company has evaluated the transition methods and will likely apply the modified retrospective transition method, which would result in an adjustment to retained earnings for the cumulative effect, if any, of applying the standard to contracts that are not completed at the date of initial application. Under this method, we would not restate the prior financial statements presented, therefore the new standard requires us to provide additional disclosures of the amount by which each financial statement line item is affected in the current reporting period during 2018, as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes, if any.

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data unless otherwise noted)~~

~~The impact that the new revenue recognition standard will have on~~ our consolidated financial statements and disclosures has not yet been fully assessed. However, we do not expect the provisions of the new standard to have a material effect on the timing or amount of revenue we recognize. Our assessment also includes determining the impact the new standard may have on the revenue reporting processes, including disclosures, ensuring internal controls will operate effectively with the new standard and performing gap analyses on collected data and determining the relative accounting positions where applicable. Included in our assessment of the new standard, is the potential impact on sales commissions and the term over which they will amortize.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. The core principle of the standard is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in its statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. We will be required to adopt ~~the~~this new standard in the ~~first quarter of 2019. We are currently evaluating the impact ASU 2016-02 will have on our consolidated financial statements.~~

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments” which eliminates the diversity in practice related to eight cash flow classification issues. This ASU is effective for onfiscal year beginning January 1, ~~2018 with early adoption permitted. We believe its adoption will not significantly impact our consolidated financial statements.~~2024.

~~In November 2016, the FASB issued ASU 2016-18, “Statement~~ACCUMULATED OTHER COMPREHENSIVE LOSS

As of ~~Cash Flows (Topic 230): Restricted Cash,” which requires the change in restricted cash or cash equivalents to be included with~~March 31, 2024 and December 31, 2023, accumulated other ~~changes in cash~~comprehensive loss consisted of net unrealized gains and cash equivalents in the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. We believe its adoption will not significantly impact our consolidated financial statements.losses on available-for-sale securities.

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting,” which clarifies when to account for a change in the terms or conditions of a share-based payment award as a modification. ASU 2017-09 requires modification accounting only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We do not expect the adoption of this accounting standard to have a material impact on our financial position, results of operations, cash flows, or presentation thereof.

~~CONTINGENCIES~~

Although Asure has been, and in the future may be, the defendant or plaintiff in various actions arising in the normal course of business, as of September 30, 2017, we were not party to any pending legal proceedings.

NOTE 3 –- BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

2024

Effective February 22, 2024, we acquired certain assets of a payroll processing and benefits brokerage servicer based in New Jersey. The aggregate purchase price paid for the acquisition of these assets was $6,000, consisting of $500 paid in cash on hand, 450 shares of Asure common stock, having an agreed value of $4,500, and the remaining $1,000 in the form of a promissory note. The acquired customer relationships are recorded as an intangible asset and are being amortized on a straight-line basis over eight years. As of March 31, 2024, the promissory note had an outstanding balance of $1,000 and matures on February 22, 2026.

2023

Effective October 1, 2023, we acquired certain assets of an Alabama based reseller partner, which were used to provide payroll processing services. The aggregate purchase price paid for these assets was $8,391, paid as follows: (i) $6,891 in cash of which $6,545 was paid at closing and (ii) the delivery of a promissory note in the amount of $1,500. The acquired customer relationships are recorded as an intangible asset and are being amortized on a straight-line basis over eight years. As of March 31, 2024, the promissory note had an outstanding balance of $1,500 and matures on October 1, 2025.

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NOTE 4 - INVESTMENTS AND FAIR VALUE MEASUREMENTS

Accounting Standards Codification ~~(“ASC”)~~(ASC) 820 ~~Fair~~“Fair Value ~~Measurements and Disclosures~~Measurement” (ASC 820) defines fair value, establishes a framework for measuring fair value inunder U.S. ~~generally accepted accounting principles~~GAAP and ~~expands~~enhances disclosures about fair value measurements.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 ~~establishes~~describes a ~~three-tier~~ fair value hierarchy ~~which is~~ based on the ~~reliability~~following three levels of inputs that may be used to measure fair value, of which the ~~inputs used in measuring fair values. These tiers include:~~first two are considered observable and the last unobservable:


Level 1:						Quoted prices in active markets for identical assets or liabilities;


Level 2:						Quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active for identical or similar assets or liabilities; and model-driven valuations whose significant inputs are observable; and


Level 3:						Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data unless otherwise noted)~~

The following table presents the fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis for the periods presented below (in thousands):


	Total Carrying Value		Level 1		Level 2		Level 3
March 31, 2024
Assets:
Funds held for clients
Money market funds	$	2,316	$	2,316	$	—	$	—
Available-for-sale securities	72,732		—		72,732		—
Total	$	75,048	$	2,316	$	72,732	$	—

December 31, 2023
Assets:
Funds held for clients
Money market funds	$	3,431	$	3,431	$	—	$	—
Available-for-sale securities	71,770		—		71,770		—
Total	$	75,201	$	3,431	$	71,770	$	—

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Cash equivalents and investments classified as available-for-sale within funds held for clients consisted of ~~September 30, 2017~~the following for the periods presented below (in thousands):


	Amortized Cost		Gross Unrealized Gains (1)		Gross Unrealized Losses (1)		Aggregate Estimated Fair Value
March 31, 2024
Cash equivalents	$	2,320	$	1	$	(4)	$	2,316
Available-for-sale securities:
Certificates of deposit	842		2		(1)		843
Corporate debt securities	66,607		130		(1,232)		65,505
Municipal bonds	4,241		—		(222)		4,019
U.S. Government agency securities	2,398		1		(34)		2,365
Total available-for-sale securities	74,088		133		(1,489)		72,732

Total(2)	$	76,408	$	134	$	(1,493)	$	75,048

December 31, 2023
Cash equivalents	$	3,447	$	—	$	(16)	$	3,431
Available-for-sale securities:
Certificates of deposit	845		2		(1)		846
Corporate debt securities	67,277		258		(1,090)		66,445
Municipal bonds	4,251		—		(239)		4,012
U.S. Government agency securities	500		—		(33)		467
Total available-for-sale securities	72,873		260		(1,363)		71,770

Total(2)	$	76,320	$	260	$	(1,379)	$	75,201

(1)Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss. As of March 31, 2024 and December 31, ~~2016, respectively:~~2023, there were 32 and 54 securities, respectively, in an unrealized gain position and there were 141 and 113 securities in an unrealized loss position, respectively. As of March 31, 2024, these unrealized losses were less than $60 individually and $1,489 in the aggregate. As of December 31, 2023, these unrealized losses were less than $61 individually and $1,363 in the aggregate. We invest in high quality securities with roughly 70% of our portfolio made up of A ratings and above with unrealized losses primarily attributable to macroeconomic factors rather than credit related. These securities have not been in a continuous unrealized gain or loss position for more than 12 months. We do not intend to sell these investments and we do not expect to sell these investments before recovery of their amortized cost basis, which may be at maturity. We review our investments to identify and evaluate investments that indicate possible credit losses. Factors considered in determining whether a loss is a credit loss include the length of time and extent to which fair value has been less than the cost basis, the credit rating of the investment, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

Fair Value Measure at September 30, 2017
Total Quoted Significant
Carrying Prices Other Significant
Value at in Active Observable Unobservable
September 30, Market Inputs Inputs
Description 2017 (Level 1) (Level 2) (Level 3)
Assets:
Cash and cash equivalents $ 27,464 $ 27,464 $ - $ -
Total $ 27,464 $ 27,464 $ - $ -

Fair Value Measure at December 31, 2016
Total Quoted Significant
Carrying Prices Other Significant
Value at in Active Observable Unobservable
December 31, Market Inputs Inputs
Description 2016 (Level 1) (Level 2) (Level 3)
Assets:
Cash and cash equivalents $ 12,767 $ 12,767 $ - $ -
Total $ 12,767 $ 12,767 $ - $ -

(2)At March 31, 2024 and December 31, 2023, none of these securities were classified as cash and cash equivalents on the accompanying Condensed Consolidated Balance Sheets.

~~NOTE 4 – ACQUISITIONS~~

~~2017 Acquisitions~~

~~In January 2017, we closed three strategic acquisitions: Personnel Management Systems, Inc., a provider~~Funds held for clients represent assets that the Company has classified for use solely for the purposes of ~~outsourced HR solutions; Corporate Payroll, Inc. (Payroll Division), a provider of~~satisfying the obligations to remit funds relating to the Company’s payroll ~~services;~~ and ~~Payroll Specialties NW, Inc., a provider of payroll services.~~

~~In May 2017, we closed two strategic acquisitions: iSystems, LLC and Compass HRM. iSystems LLC, through its flagship product, Evolution HCM, offers~~ payroll tax ~~management and HR software combined with comprehensive back-end service bureau tools to service providers across the United States. Tampa-based Compass HRM is a current reseller of~~filing services, which are classified as client funds obligations on our HCM offering (formerly Mangrove), which provides human resources solutions that enhance organizations, people, and profits through payroll and HR solutions. The acquisition of Compass HRM expands our reachCondensed Consolidated Balance Sheets.

Funds held for clients have been invested in the ~~Southeast, particularly Florida.~~

~~Stock Purchase Agreement~~

In January 2017, we closed on the acquisition of all of the outstanding shares of common stock (the “Shares”) of Personnel Management Systems, Inc., a Washington corporation (“PMSI”), pursuant to a Stock Purchase Agreement (the “Stock Purchase Agreement”), among us, PMSI, the sellers identified therein, and the stockholders’ representative named therein. The aggregate considerationfollowing categories for the Shares consisted of (i) $3,875 in cash and (ii) a subordinated promissory note (the “PMSI Note”) in the principal amount of $1,125 subject to adjustment as provided in the Stock Purchase Agreement. We funded the cash payment with proceeds from our recent underwritten public offering in June 2017. The PMSI Note bears interest at an annual rate of 2.0% and matures on April 30, 2018. The entire unpaid principal and all accrued interest under the PMSI Note is payable at maturity. The Stock Purchase Agreement contains certain customary representations, warranties, indemnities and covenants.periods presented below (in thousands):


	March 31, 2024		December 31, 2023
Cash and cash equivalents held to satisfy client funds obligations	$	167,076	$	147,305
Short-term marketable securities held to satisfy client funds obligations	13,881		10,042
Long-term marketable securities held to satisfy client funds obligations	58,851		61,728
Total funds held for clients	$	239,808	$	219,075

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except per share data unless otherwise noted)~~

~~Asset Purchase Agreement~~

~~In January 2017, we closed on the acquisition~~Expected maturities of substantially all the assets of Corporate Payroll, Inc., an Ohio corporation (“CPI”), relating to its payroll service bureau business, pursuant to an Asset Purchase Agreement (the “CPI Asset Purchase Agreement”). The aggregate considerationavailable-for-sale securities are as follows for the assets consisted of (i) $1,500 in cash, (ii) a subordinated promissory note (the “CPI Note”) in the principal amount of $500 and (iii) 112,166 shares of our common stock valued at $1,000, subject to adjustment as provided in the CPI Asset Purchase Agreement. We funded the cash payment with proceeds from our recent underwritten public offering in June 2017. The CPI Note bears no interest and matures on April 30, 2018. The entire unpaid principal under the CPI Note is payable at maturity. The recipient of the shares of our common stock entered into a six month lock-up agreement with us. The CPI Asset Purchase Agreement contains certainperiod presented below (in thousands):

~~customary representations, warranties, indemnities and covenants.~~


	March 31, 2024
One year or less	$	13,881
After one year through five years	58,851
Total	$	72,732

~~Asset Purchase Agreement~~

In January 2017, we closed on the acquisition of substantially all the assets of Payroll Specialties NW, Inc., an Oregon corporation (“PSNW”), pursuant to an Asset Purchase Agreement (the “PSNW Asset Purchase Agreement”). The aggregate consideration for the assets consisted of (i) $3,010 in cash and (ii) a subordinated promissory note (the “PSNW Note”) in the principal amount of $600, subject to adjustment as provided in the PSNW Asset Purchase Agreement. We funded the cash payment with proceeds from our recent underwritten public offering in June 2017. The PSNW Note bears interest at an annual rate of 2.0% and matures on April 30, 2018. The entire unpaid principal and all accrued interest under the PSNW Note is payable at maturity. The PSNW Asset Purchase Agreement contains certain customary representations, warranties, indemnities and covenants.

~~Equity Purchase Agreement~~

In May 2017, we entered into an equity purchase agreement (the “Equity Purchase Agreement”) with iSystems Holdings, LLC, a Delaware limited liability company (“Seller”), and iSystems Intermediate Holdco, Inc., a Delaware corporation (“iSystems”), pursuant to which we acquired 100% of the outstanding equity interests of iSystems for an aggregate purchase price of $55,000, subject to adjustment as provided in the Equity Purchase Agreement. The aggregate purchase price consists of (i) $32,000 in cash, subject to adjustment, (ii) a secured subordinated promissory note (“iSystems Note”) in the principal amount of $5,000, subject to adjustment, and (iii) 1,526,332 shares of unregistered common stock valued at $18,000 based on a volume-weighted average of the closing prices of our common stock during a 90-day period. The iSystems Note bears interest at an annual rate of 3.5% and matures on May 25, 2019. The unpaid principal and all accrued interest under the promissory note is payable in two installments of $2.5 million on May 25, 2018 and May 25, 2019, subject to adjustment. The Equity Purchase Agreement contains certain customary representations, warranties, indemnities and covenants.

To finance the iSystems acquisition, we amended and restated our existing credit agreement with Wells Fargo Bank, National Association, as administrative agent (the “Restated Credit Agreement”) to add an additional term loan in the amount of approximately $40,000, of which we borrowed approximately $32,000 to complete the iSystems acquisition. See Note 6- Notes Payable for further detail.

In connection with the iSystems acquisition, we also entered into an investor rights agreement (the “Investor Rights Agreement”) with the Seller. Pursuant to the terms of the Investor Rights Agreement, until May 2018, the holders of the registrable securities received in connection with the acquisition have agreed not to directly or indirectly transfer, sell, make any short sale or otherwise dispose of any of our equity securities and not to vote any of our equity securities or solicit proxies other than in favor of each director that our board recommends for election, against any director that our board has not nominated for election, and in accordance with the recommendation of our board on any other matters, subject to certain exceptions. In addition, under the Investor Rights Agreement, holders of the registrable securities have demand registration rights which allow a registration statement to be filed on or about March 31, 2018 and piggyback registration rights which become effective in May 2018. In addition, under the terms of the Investor Rights Agreement, such holders have the right to nominate one director to our board of directors until the first date that the holders of the registrable securities no longer hold more than the lesser of (x) 5% of our outstanding common stock (as equitably adjusted for any stock splits, stock combinations, reorganizations, exchanges, merger, recapitalizations or similar transaction after the date hereof) and (y) 90% of the shares of our common stock held by such holders as of May 25, 2017. The director nominee appointed by the holders is Daniel Gill. Our board appointed him to serve as a director on June 6, 2017. Mr. Gill is a founder and a co-managing partner of Silver Oak Services Partners, a private equity firm. In 2014 Silver Oak acquired iSystems, LLC (currently, a wholly owned subsidiary of iSystems) and Mr. Gill served on the board of directors of iSystems, LLC.

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data or otherwise noted)~~

~~Stock Purchase Agreement~~

In May 2017, we entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Compass HRM, Inc. (“Compass”) and the sellers and seller representative named therein, pursuant to which the sellers sold 100% of the outstanding shares of capital stock of Compass to us for an aggregate purchase price of $6,000, subject to adjustment as provided in the Stock Purchase Agreement. The aggregate purchase price consists of $4,500 in cash and a subordinated promissory note (“Compass Note”) in the principal amount of $1,500, subject to adjustment. The Compass Note bears interest at an annual rate of 2.0% and matures on May 25, 2022. The Compass Note is payable in five annual installments of $300 on the anniversary of the closing date, subject to adjustment. Compass is headquartered in Tampa, Florida, and provides cloud-based human resource management software, including payroll, benefits, time and attendance, and performance management.

To finance the Compass acquisition, we incurred approximately $4,500 of additional indebtedness pursuant to an additional term loan under our Restated Credit Agreement. See Note 6 –Notes Payable for further details.

~~Purchase Price Allocation~~

~~Following is the purchase price allocation for the 2017 acquisitions.~~ We based the preliminary fair value estimate for the assets acquired and liabilities assumed for these acquisitions upon preliminary calculations and valuations. Our estimates and assumptions for these acquisition are subject to change as we obtain additional information for our estimates during the respective measurement periods (up to one year from the acquisition date). The primary areas of those preliminary estimates that we have not yet finalized relate to certain tangible assets and liabilities acquired, and income and non-income based taxes.

We recorded the transactions using the acquisition method of accounting and recognized assets and liabilities assumed at their fair value as of the dates of acquisitions. The $24,628 of intangible assets subject to amortization consist of $21,505 allocated to Customer Relationships, $1,521 for Trade Names, $1,010 for Developed Technology, and $592 for Noncompete. To value the Trade Names, we employed the relief from royalty method under the market approach. For the Noncompetes, we employed a form of the income approach which analyzes the Company’s profitability with these assets in place, in contrast to the Company’s profitability without them. For the Customer Relationships and Developed Technology, we employed a form of the excess earnings method, which is a form of the income approach. The discount rate used in valuing these assets ranged from 14.0% to 17.0%, which reflects the risk associated with the intangible assets related to the other assets and the overall business operations to us. We estimated the fair values of the Trade Names using the relief from royalty method based upon a 1.7% royalty rate.

~~We believe significant synergies are expected to arise~~from these strategic acquisitions. This factor contributed to a purchase price that was in excess of the fair value of the net assets acquired and, as a result, we recorded goodwill for each acquisition. A portion of acquired goodwill will be deductible for tax purposes.

~~We based the allocations on fair values at the date of acquisition:~~

Assets Acquired CPI PMSI PSNW iSystems Compass Total
Cash & cash equivalents $ 126 131 53 211 207 $ 728
Accounts receivable 22 347 111 951 241 1,672
Restricted cash - - - 200 - 200
Fixed assets - 130 7 681 38 856
Other assets - 17 17 699 33 766
Funds held for clients 2,809 - 6,294 - - 9,103
Goodwill 1,190 2,247 1,579 42,253 2,049 49,318
Intangibles 1,563 2,646 1,879 15,070 3,470 24,628
Total assets acquired $ 5,710 5,518 9,940 60,065 6,038 $ 87,271

Liabilities assumed
Accounts payable 51 19 28 392 65 555
Accrued other liabilities - 191 40 791 45 1,067
Deferred revenue - 370 - 1,073 - 1,443
Client fund obligations 2,754 - 6,294 - - 9,048
Total liabilities assumed 2,805 580 6,362 2,256 110 12,113

Net assets acquired $ 2,905 4,938 3,578 57,809 5,928 $ 75,158

~~Table of Contents~~

~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data or otherwise noted)~~

~~The following is a reconciliation of the purchase price to the fair value of net assets acquired at the date of acquisition:~~

CPI PMSI PSNW iSystems Compass Total
Purchase price $ 3,000 5,000 3,610 55,000 6,000 $ 72,610
Working capital adjustment - - - 202 81 283
Adjustment to fair value of Asure’s stock issued (54 ) - - 2,880 - 2,826
Debt discount (41 ) (62 ) (32 ) (273 ) (153 ) (561 )
Fair value of net assets acquired $ 2,905 4,938 3,578 57,809 5,928 $ 75,158

~~Transaction costs for the 2017 acquisitions were $1,387 and were expensed as incurred and included in selling, general and administrative expenses.~~

~~2016 Acquisitions~~

Through the stock and asset purchases described below, we have entered into the human resource management, payroll processing and benefits administration services businesses, which we intend to integrate into our existing AsureForce® product line.

~~Stock Purchase Agreement~~

In March 2016, we acquired all of the issued and outstanding shares of common stock (the “Shares”) of Mangrove Employer Services, Inc. of Tampa, Florida (“Mangrove”). Pursuant to this stock purchase, we acquired the payroll division of Mangrove, which is engaged in the human resource management and payroll processing businesses. The aggregate consideration for the Shares consisted of (i) $11,348 in cash, a portion of which was used to pay certain obligations of Mangrove and (ii) a secured subordinated promissory note (the “Note”) in the principal amount of $6,000, subject to adjustment as provided in the Stock Purchase Agreement. We funded the cash payment with proceeds from our credit agreement with Wells Fargo. The Note was paid in full in the first quarter of 2017. The Stock Purchase Agreement contains certain customary representations, warranties, indemnities and covenants. Details regarding the financing of the acquisition are described under Note 6- Notes Payable. Transaction costs for this acquisition were $706 and we expensed them as incurred and included in selling, general and administrative expenses.

~~Asset Purchase Agreement~~

In March 2016, we also acquired substantially all the assets of Mangrove COBRAsource Inc., a benefits administration services business which then was a wholly owned subsidiary of Mangrove. The aggregate consideration for the assets was $1,036, which Mangrove COBRAsource applied to pay off certain loan balances. The Asset Purchase Agreement contains certain customary representations, warranties, indemnities and covenants.

~~Purchase Price Allocation~~

~~Following is the purchase price allocation for the acquisition of Mangrove.~~

We recorded the transaction using the acquisition method of accounting and recognized assets and liabilities assumed at their fair value as of the date of acquisition. The $8,700 of intangible assets subject to amortization consist of $1,200 allocated to Customer Relationships, $6,900 in Developed Technology and $600 for Trade Names. We estimated the fair value of the Customer Relationships and Developed Technology using the excess earnings method, a form of the income approach. We discounted cash flow projections using a rate of 18.1%, which reflects the risk associated with the intangible asset related to the other assets and the overall business operations to us. We estimated the fair value of the Trade Names using the relief from royalty method based upon a 1.2% royalty rate for the payroll division and 0.5% for the benefits administration services business.

~~We believe significant synergies are expected to arise~~from this strategic acquisition. This factor contributed to a purchase price that was in excess of the fair value of the net assets acquired and, as a result, we recorded goodwill. A portion of acquired goodwill will be deductible for tax purposes.

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data or otherwise noted)~~

~~We based the allocations on fair values at the date of acquisition:~~

Amount
Assets acquired
Accounts receivable $ 523
Funds held for clients 16,419
Fixed assets 258
Other assets 28
Goodwill 9,016
Intangibles 8,700
Total assets acquired $ 34,944

Liabilities assumed
Accounts payable 64
Accrued other liabilities 461
Client fund obligations 16,419
Total liabilities assumed $ 16,944
Net assets acquired $ 18,000

~~Unaudited Pro Forma Financial Information~~

The following unaudited summary of pro forma combined results of operations for the three and nine months ended September 30, 2017 and 2016 gives effect to the acquisitions of Mangrove, PMSI, iSystems and Compass and the acquisition of assets of COBRAsource, PSNW and CPI as if we had completed them on January 1, 2016. This pro forma summary does not reflect any operating efficiencies, cost savings or revenue enhancements that we may achieve by combining operations. In addition, we have not reflected certain non-recurring expenses, such as legal expenses and other transactions expenses for the first 12 months after the acquisition, in the pro forma summary. We present this pro forma summary for informational purposes only and it is not necessarily indicative of what our actual results of operations would have been had the acquisitions taken place as January 1, 2016, nor is it indicative of future consolidated results of operations.

FOR THE THREE
MONTHS ENDED

FOR THE THREE
MONTHS ENDED

SEPTEMBER 30, SEPTEMBER 30,
2017 2016
Revenues $ 15,527 $ 14,905
Net income (loss) $ (927 ) $ 185
Net income (loss) per common share:
Basic and diluted $ (0.07 ) $ 0.02

Weighted average shares outstanding:
Basic and diluted 12,418 8,186

FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,

FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,

2017 2016
Revenues $ 45,743 $ 45,416
Net loss $ (4,552 ) $ (4,221 )
Net loss per common share:
Basic and diluted $ (0.40 ) $ (0.53 )

Weighted average shares outstanding:
Basic and diluted $ 11,272 $ 8,021

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data or otherwise noted)~~

NOTE 5 – - GOODWILL AND OTHER INTANGIBLE ASSETS

~~Asure accounted for its historical~~


	December 31, 2023		Acquisitions		March 31, 2024
Goodwill	$	86,011	$	—	$	86,011

We believe significant synergies are expected to arise from our strategic acquisitions and their assembled work forces. This factor contributed to a purchase price that was in ~~accordance with ASC 805,~~ ~~Business Combinations. We recorded the amount exceeding~~excess of the fair value of the net assets acquired ~~at the date of acquisition~~and, as ~~goodwill. We~~a result, we recorded intangible assets apart from goodwill if the assets had contractual or other legal rights or if the assets could be separated and sold, transferred, licensed, rented or exchanged. Asure’s goodwill relates to the following acquisitions: ADI and Legiant in 2011, PeopleCube in 2012, FotoPunch and Roomtag in 2014, Mangrove in 2016, PMSI, CPI and PSNW in January 2017, and iSystems and Compass in May 2017.

As part of the acquisition of iSystems in May 2017, we acquired software development costs. We continue to invest in software development. We are developing products which we intend to offer utilizing software as-a-service (“SaaS”).We follow the guidance of ASC 350-40, ~~Intangibles- Goodwill and Other- Internal Use Software~~, for development costs related to these new products. Cost incurred in the planning stage are expensed as incurred while costs incurred in the application and infrastructure stage are capitalized, assuming such costs are deemed to be recoverable. Costs incurred in the operating stage are generally expensed as incurred except for significant upgrades and enhancements. Capitalized software costs are amortized over the software’s estimated useful life, which management has determined to be three years. During the three and nine months ended September 30, 2017, we capitalized $702 and $804, respectively, of software development costs. No software development costs were recorded in 2016.

~~In accordance with ASC 350,~~ ~~Intangibles-Goodwill and Other,~~ we review and evaluate our long-lived assets, including intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that we may not recover their net book value. We test goodwill for ~~impairment on an annual basis in the fourth fiscal quarter~~each acquisition. A portion of ~~each year, and between annual tests, if indicators~~acquired goodwill will be amortizable for tax purposes. As of ~~potential impairment exist, using a fair-value-based approach. There~~March 31, 2024, there has been no impairment of goodwill ~~for~~based on the ~~periods presented. We amortize intangible assets not considered to have an indefinite useful life using~~qualitative assessments performed by the straight-line method over their estimated period of benefit, which generally ranges from one to nine years. Each reporting period, we evaluate the estimated remaining useful life of intangible assets and assess whether events or changes in circumstances warrant a revision to the remaining period of amortization or indicate that impairment exists. We have not identified any impairments of finite-lived intangible assets during any of the periods presented. Company.

~~The following table summarizes the changes in our goodwill:~~


Gross Intangible Assets	December 31, 2023		Acquisitions		March 31, 2024
Customer relationships	$	127,843	$	12,376	$	140,219
Developed technology	12,001		—		12,001
Trade names	880		—		880
Non-compete agreements	1,032		—		1,032
Total	$	141,756	$	12,376	$	154,132

Balance at December 31, 2016 $ 26,259
Goodwill recognized upon acquisitions of PMSI, CPI, PSNW, iSystems and Compass 49,318
Adjustment to Goodwill associated with acquisition of Mangrove 272
Foreign exchange adjustment to goodwill 6
Balance at September 30, 2017 $ 75,855

The gross carrying amount and accumulated amortization of our intangible assets ~~as of September 30, 2017 and December 31, 2016~~ are as ~~follows:~~follows for the periods presented below (in thousands, except weighted average periods):

September 30, 2017
Intangible Assets
Weighted Average
Amortization
Period (in Years)
Gross
Accumulated
Amortization
Net

Developed Technology 11.8 $ 11,925 $ (4,585 ) $ 7,340
Customer Relationships 7.5 35,516 (12,354 ) 23,162
Reseller Relationships 7.0 853 (731 ) 122
Trade Names 14.8 2,815 (787 ) 2,028
Noncompete 2.9 592 (108 ) 484
Software development costs 3.0 919 (9 ) 910
8.7 $ 52,620 $ (18,574 ) $ 34,046


	Weighted Average Amortization Period (in Years)	Gross		Accumulated Amortization		Net
March 31, 2024
Customer relationships	8.6	$	140,219	$	(70,630)	$	69,589
Developed technology	6.9	12,001		(10,731)		1,270
Trade names	4.3	880		(880)		—
Non-compete agreements	5.2	1,032		(931)		101
	8.4	$	154,132	$	(83,172)	$	70,960

December 31, 2023
Customer relationships	8.5	$	127,843	$	(67,165)	$	60,678
Developed technology	6.9	12,001		(10,701)		1,300
Trade names	4.3	880		(880)		—
Non-compete agreements	5.2	1,032		(928)		104
	8.3	$	141,756	$	(79,674)	$	62,082

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data unless otherwise noted)~~

December 31, 2016
Intangible Assets
Weighted Average
Amortization
Period (in Years)
Gross
Accumulated
Amortization
Net

Developed Technology 12.7 $ 10,915 $ (3,408 ) $ 7,507
Customer Relationships 7.3 14,011 (10,270 ) 3,741
Reseller Relationships 7.0 853 (640 ) 213
Trade Names 14.5 1,294 (707 ) 587
9.8 $ 27,073 $ (15,025 ) $ 12,048

We record amortization ~~expense~~expenses using the straight-line method over the estimated useful lives of the intangible assets, as noted above. Amortization expenses recorded in Operating Expenses were $3,449 and $3,302 for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016 were $1,341 and $625, respectively, included in Operating Expenses.~~2023, respectively. Amortization expenses recorded in Cost of Sales were ~~$106~~$50 and ~~$106~~$268 for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, respectively. ~~Amortization expenses for~~There was no impairment of intangibles during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 based on the qualitative assessment performed by the Company. However, if market, political and ~~2016 were $3,230~~other conditions over which we have no control continue to affect the capital markets and ~~$1,628 included~~our stock price declines, we may experience an impairment of our intangibles in ~~Operating Expenses, and $319 and $319, respectively, included in Cost of Sales.~~future quarters.

The following table summarizes the future estimated amortization expense relating to our intangible assets ~~as of September 30, 2017:~~for the period presented below (in thousands):


	March 31, 2024
2024	$	12,047
2025	15,292
2026	12,177
2027	9,983
2028	8,537
2029	6,694
Thereafter	6,230
	$	70,960

Calendar Years
2017 (July to December) $ 1,438
2018 5,424
2019 4,650
2020 3,803
2021 3,848
Thereafter 14,079
Subtotal $ 33,242
Software development costs not yet placed in service 804
$ 34,046

NOTE 6 –- NOTES PAYABLE

The following table summarizes our outstanding debt as of the dates ~~indicated:~~indicated(in thousands):

Notes Payable Maturity
Stated Interest
Rate

Balance as of
September 30, 2017

Balance as of
December 31, 2016

Subordinated Notes Payable- Mangrove acquisition 3/18/2018 3.50 % $ - $ 6,000
Subordinated Notes Payable- PMSI acquisition 4/30/2018 2.00 % 1,125 -
Subordinated Notes Payable- CPI acquisition 4/30/2018 - % 500 -
Subordinated Notes Payable- PSNW acquisition 3/31/2018 2.00 % 600 -
Subordinated Notes Payable- iSystems acquisition 5/25/2019 3.50 % 5,000 -
Subordinated Notes Payable- Compass acquisition 5/25/2022 2.0 % 1,500 -
Term Loan – Wells Fargo Syndicate Partner 5/25/2022 9.53 % 34,562 -
Term Loan - Wells Fargo 5/25/2022 4.53 % 34,563 24,715
Total Notes Payable $ 77,850 $ 30,715
Short-term notes payable $ 8,869 $ 5,455
Long-term notes payable $ 68,981 $ 25,260


	Maturity	Cash Interest Rate	March 31, 2024		December 31, 2023
Subordinated Notes Payable – Acquisitions(1)	10/31/25 - 9/30/26	2.00% - 5.00%	$	6,700	$	5,700
Gross Notes Payable			$	6,700	$	5,700

(1)See Note 3 — Business Combinations and Asset Acquisitions and Subordinated Notes Payable - Acquisitions section below for further discussion regarding the notes payable related to acquisitions.

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data unless otherwise noted)~~

The following table summarizes the debt issuance costs as of the dates ~~indicated:~~indicated (in thousands):

Notes Payable
Gross Notes Payable at
September 30, 2017
Debt Issuance Costs and Debt Discount
Net Notes Payable at
September 30, 2017

Notes payable, current portion $ 8,869 $ (145 ) $ 8,724
Notes payable, net of current portion 68,981 (2,001 ) 66,980
Total Notes Payable $ 77,850 $ (2,146 ) $ 75,704

Notes Payable
Gross Notes Payable at
December 31, 2016
Debt Issuance Costs and Debt Discount
Net Notes Payable at
December 31, 2016

Notes payable, current portion $ 5,455 $ - $ 5,455
Notes payable, net of current portion 25,260 (679 ) 24,581
Total Notes Payable $ 30,715 $ (679 ) $ 30,036


	Gross Notes Payable		Debt Issuance Costs and Debt Discount		Net Notes Payable
March 31, 2024
Current portion of notes payable	$	420	$	(397)	$	23
Notes payable, net of current portion	6,280		(1,024)		5,256
Total	$	6,700	$	(1,421)	$	5,279

December 31, 2023
Current portion of notes payable	$	420	$	(393)	$	27
Notes payable, net of current portion	5,280		(998)		4,282
Total	$	5,700	$	(1,391)	$	4,309

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The following table summarizes the future principal payments related to our outstanding ~~debt:~~

Year Ended Gross Amount
December 31, 2017 (October to December) $ 875
December 31, 2018 8,525
December 31, 2019 6,300
December 31, 2020 3,800
December 31, 2021 3,800
Thereafter 54,550
Gross Notes Payable $ 77,850

~~Subordinated Notes Payable- PMSI Acquisition~~

In January 2017, we acquired all of the outstanding shares of common stock (the “Shares”) of Personnel Management Systems, Inc., a Washington corporation (“PMSI”), pursuant to a Stock Purchase Agreement (the “Stock Purchase Agreement”). The aggregate consideration debt for the Shares consisted of (i) $3,875 in cash and (ii) a subordinated promissory note (the “PMSI Note”) in the principal amount of $1,125 subject to adjustment as provided in the Stock Purchase Agreement. We funded the cash payment with proceeds from our recent public stock offering. The PMSI Note bears interest at an annual rate of 2.0% and matures on April 30, 2018. The entire unpaid principal and all accrued interest under the PMSI Note is payable at maturity.period presented below (in thousands):


	March 31, 2024
2024	$	420
2025	1,878
2026	4,402
Total	$	6,700

~~Subordinated Notes Payable- CPI Acquisition~~

In January 2017, we acquired substantially all the assets of Corporate Payroll, Inc., an Ohio corporation (“CPI”), relating to its payroll service bureau business, pursuant to an Asset Purchase Agreement (the “CPI Asset Purchase Agreement”). The aggregate consideration for the assets consisted of (i) $1,500 in cash, (ii) a subordinated promissory note (the “CPI Note”) in the principal amount of $500 and (iii) 112,166 shares of our common stock valued at $1,000, subject to adjustment as provided in the CPI Asset Purchase Agreement. We funded the cash payment with proceeds from our recent public stock offering. The CPI Note bears no interest and matures on April 30, 2018. The entire unpaid principal under the CPI Note is payable at maturity.

Subordinated Notes Payable ~~– PSNW Acquisition~~- Acquisitions

In ~~January 2017,~~February 2024, we acquired ~~substantially all the~~certain assets of ~~Payroll Specialties NW, Inc., an Oregon corporation (“PSNW”), pursuant to an Asset Purchase Agreement (the “PSNW Asset Purchase Agreement”). The aggregate consideration for~~a payroll processing and benefits brokerage servicer based in New Jersey. In connection with the ~~assets consisted of (i) $3,010 in cash and (ii)~~acquisition that took place, we delivered a ~~subordinated~~ promissory note ~~(the “PSNW Note”) in~~to the ~~principal amount~~seller. As of ~~$600, subject to adjustment as provided in~~March 31, 2024, the ~~PSNW Asset Purchase Agreement. We funded the cash payment with proceeds from our recent public stock offering. The PSNW Note bears interest at~~promissory note had an ~~annual rate~~outstanding balance of ~~2.0%~~$1,000 and matures on ~~April 30, 2018. The entire unpaid principal and all accrued interest under the PSNW Note is payable at maturity.~~February 22, 2026.

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data unless otherwise noted)~~

~~Subordinated Notes Payable- iSystems Acquisition~~

In ~~May 2017~~October 2023, we acquired ~~100%~~certain assets of an Alabama based reseller partner, which were used to provide payroll processing services. In connection with the ~~outstanding equity interests of iSystems Intermediate Holdco, Inc.,~~acquisition that took place, we delivered a Delaware corporation (“iSystems”), pursuant to an equity purchase agreement (the “Equity Purchase Agreement”). The aggregate purchase price consisted of (i) $32,000 in cash, subject to adjustment as provided in the Equity Purchase Agreement, (ii) a secured subordinated promissory note ~~(“iSystems Note”) in~~to the ~~principal amount~~seller. As of ~~$5,000, subject to adjustment as provided in~~March 31, 2024, the ~~Equity Purchase Agreement, and (iii) 1,526,332 shares~~promissory note had an outstanding balance of ~~unregistered common stock valued at $18,000. The iSystems Note bears interest at an annual rate of 3.5%~~$1,500 and matures on ~~May 25, 2019. The unpaid principal and all accrued interest under the promissory note is payable in two installments of $2.5 million on May 25, 2018 and May 25, 2019, subject to adjustment.~~October 1, 2025.

~~Subordinated Notes Payable- Compass Acquisition~~

In ~~May 2017,~~April 2023, we ~~acquired 100% of~~calculated the outstanding shares of capital stock of Compass HRM, Inc. (“Compass”) pursuant to a stock purchase agreement (the “Stock Purchase Agreement”). The aggregate purchase price consisted of $4,500 in cash and a subordinated promissory note (“Compass Note”) in the principal amount of $1,500, subject to adjustment as provided in the Stock Purchase Agreement. The Compass Note bears interest at an annual rate of 2.0% and matures on May 25, 2022. The Compass Note is payable in five annual installments of $300 on the anniversary of the closing date, subject to adjustment.

~~Subordinated Notes Payable- Mangrove Acquisition~~

~~In March 2016, we acquired all of the issued and outstanding shares of common stock (the “Shares”) of Mangrove. The aggregate~~final contingent consideration for the Shares consisted of (i) $11,348 in cash, a portion of which was used to pay certain obligations of Mangrove and (ii) a secured subordinated promissory note (the “Note”) in the principal amount of $6,000, subject to adjustment as provided in the Stock Purchase Agreement. We funded the cash payment with proceeds from the Credit Agreement with Wells Fargo. This note was paid in full in the first quarter of 2017.

~~Term Loan - Wells Fargo~~

In March 2014, we entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A., as administrative agent, and the lenders that are party thereto. The Credit Agreement contains customary events of default, including, among others, payment defaults, covenant defaults, judgment defaults, bankruptcy and insolvency events, cross defaults to certain indebtedness, incorrect representations or warranties, and change of control. In some cases, the defaults are subject to customary notice and grace period provisions. In March 2014 anddue in connection with the ~~Credit Agreement, we and our wholly-owned active subsidiaries entered into~~acquisition of a ~~Guaranty and Security Agreement with Wells Fargo Bank. Under~~payroll business in September 2021. As a result, the Guaranty and Security Agreement, we and each of our wholly-owned active subsidiaries have guaranteed all obligations under the Credit Agreement and granted a security interest in substantially all of our and our subsidiaries’ assets.

~~The Credit Agreement provided for a term loan in the amount of $15,000 maturing in March 2019.~~

~~The Credit Agreement also provided for a revolving loan commitment in the aggregate amount of up to $3,000. The outstanding principal amount~~fair value of the ~~revolving loan is~~contingent consideration of $587 was added as an increase to the principal balance due ~~and payable in March 2019.~~on the promissory note. As of ~~September 30, 2017 and December~~March 31, ~~2016, $0 was~~2024, the promissory note had an outstanding ~~and $5,000 was available for borrowing under the revolver. Additionally, the Credit Agreement provided for a $10,000 uncommitted incremental term loan facility to support permitted acquisitions.~~

balance of $4,200.

In ~~March 2017,~~January 2023, we ~~amended our Credit Agreement with Wells Fargo Bank, N.A to, among other things, obtain an additional term loan in~~resolved the ~~amount~~outstanding claims for indemnification for which we were withholding payment of ~~$5,000. In the first quarter of 2017, we used the proceeds of the additional term loan to repay~~ a ~~portion of all amounts outstanding under the secured~~ subordinated note wepayable issued in connection with the ~~Mangrove acquisition.~~purchase of a business acquired in 2020. Payment on the principal balance was withheld as security for outstanding claims for which we were entitled to indemnification under the purchase agreement. As a result of the resolution of those claims, the remaining balance of $232 was paid to the Seller ($182) and to the claimant ($50) in satisfaction of its claim. As of March 31, 2024, there are no further amounts due or owing under this subordinated promissory note.

~~Amended~~See Note 3 — Business Combinations for further discussion regarding the issuance of subordinated notes payable related to acquisitions.

Senior Credit Facility with Structural Capital Investments III, LP

On September 12, 2023, we terminated the Loan and ~~Restated Credit~~Security Agreement (the “Loan Agreement”), among the Company, Structural Capital Investments III, LP (“Structural” and together with the other lenders that were parties thereto, the “Lenders”), and Ocean II PLO LLC, as administrative and collateral agent for the Lender and repaid the outstanding balance on the secured promissory note issued under the Loan Agreement (the “Note”). In connection with the termination, the Company paid the Agent for the benefit of the Lenders an aggregate amount of $30,927 (the “Payoff Amount”) in full payment of our outstanding obligations under the Loan Agreement. The Payoff Amount represented $30,617 of outstanding principal and interest on the unpaid principal balance, a 1.0% prepayment fee in the amount of $306 and $5 for the accrued non-utilization fee and lender expenses associated with the extinguishment. As of March 31, 2024, there are no further amounts due or owing under the Facility.

~~In May 2017,~~On August 7, 2023, we entered into an ~~amended and restated credit agreement~~amendment to the Loan Agreement, whereby the Final Payment Fee (as defined in the Loan Agreement) was settled for $1,677 (the ~~“Restated Credit Agreement”~~“Settled Amount”) ~~with Wells Fargo Bank, N. A.~~, ~~as administrative agent, and the lenders that are parties thereto, amending and restating the terms~~which was paid on August 7, 2023. The Final Payment Fee was originally equal to 1.0% of the ~~Credit Agreement dated~~increase in our market capitalization since September 10, 2021, and was due upon payment in full of the obligations under the Loan Agreement. We also paid the Lenders a breakup fee equal to $250.

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NOTE 7 – CONTRACTS WITH CUSTOMERS AND REVENUE CONCENTRATION

Receivables

Receivables from contracts with customers, net of allowance for credit losses of $5,108, were $15,074 at March 31, 2024. Receivables from contracts with customers, net of allowance for credit losses of $4,787, were $14,202 at December 31, 2023. We had a provision for expected losses of $46, write-offs charged against the allowance for credit losses of $3, and recoveries on previously written off receivables of $279 during the three months ended March 31, 2024. No customer represented more than 10% of our net accounts receivable balance as of March ~~2014,~~31, 2024 and December 31, 2023, respectively.

Deferred Commissions

Deferred commission costs from contracts with customers were $10,378 and $10,302 at March 31, 2024 and December 31, 2023, respectively. The amount of amortization recognized for the three months ended March 31, 2024 and 2023 was $611 and $496, respectively. The increase in amortization during the three months ended March 31, 2024 is primarily due to an increased focus on sales of recurring revenue streams in the prior year that are now being amortized.

Deferred Revenue

During the three months ended March 31, 2024 and 2023, revenue of $5,118 and $5,613, respectively, was recognized from the deferred revenue balance at the beginning of each period.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2024, approximately $18,713 of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 76% of these remaining performance obligations over the next 12 months, with the balance recognized thereafter. These amounts exclude remaining performance obligations related to contracts for professional services for tax and payroll offerings whose remaining contractual term is less than one year as ~~amended.~~of March 31, 2024.

Revenue Concentration

During the three months ended March 31, 2024 and 2023, there were no customers that individually represented 10% or more of consolidated revenue.

NOTE 8 - LEASES

We have entered into office space lease agreements, which qualify as operating leases under ASU No. 2016-02, “Leases (Topic 842)”. Under such leases, the lessors receive annual minimum (base) rent. The leases have original terms (excluding extension options) ranging from one year to eight years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We record base rent expense under the straight-line method over the term of the lease. In the accompanying Condensed Consolidated Statements of Comprehensive (Loss) Income, rent expense is included in operating expenses under general and administrative expenses. The components of the rent expense are as follows for the periods presented below (in thousands):


	Three Months Ended March 31,
	2024		2023
Operating lease cost	$	446	$	531
Sublease income	(4)		(5)
Net rent expense	$	442	$	526

For purposes of calculating the operating lease assets and lease liabilities, extension options are not included in the lease term unless it is reasonably certain we will exercise the option, or the lessor has the sole ability to exercise the option. The weighted average discount rate of our operating leases is 10% as of March 31, 2024 and December 31, 2023. The weighted average remaining lease term is five years as of March 31, 2024 and December 31, 2023.

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Supplemental cash flow information related to operating leases are as follows for the periods presented below (in thousands):

~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~


	Three Months Ended March 31,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	500	$	494

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data unless otherwise noted)~~

~~The Restated Credit Agreement provides for an increase in the aggregate principal amount of total~~Future minimum commitments from approximately $32,714 to $75,000. This increase includes an additional term loan commitment of approximately $40,286 and an additional revolver commitment of $2,000. The term loan consists of a $35,000 “First Out Loan Obligation” funded by Wells Fargo as administrative agent, and a $35,000 “Last Out Loan Obligation” funded by Wells Fargo’s syndicate partner, Goldman Sachs.

~~The Restated Credit Agreement amends the applicable margin rates for determining the interest rate payable on outstanding First Out and Last Out loan obligations as follows:~~

~~Leverage Ratio~~	~~First Out Base~~ ~~Rate Margin~~	~~First Out LIBOR~~ ~~Rate Margin~~	~~Last Out Base~~ ~~Rate Margin~~	~~Last Out LIBOR~~ ~~Rate Margin~~
~~< 3.25:1~~	~~2.00 Percentage Points~~	~~3.00 Percentage Points~~	~~7.00 Percentage Points~~	~~8.00 Percentage Points~~
~~> 3.25:1~~	~~2.50 Percentage Points~~	~~3.50 Percentage Points~~	~~7.50 Percentage Points~~	~~8.50 Percentage Points~~

The outstanding principal amount of the term loan is payable in equal installments of $875 beginning on September 30, 2017 and the last day of each fiscal quarter thereafter. The outstanding principal balance and all accrued and unpaid interest on the term loan is due on May 25, 2022.

~~The Restated Credit Agreement also:~~

· ~~amends our leverage ratio covenant to increase the maximum ratio to 5.75:1 at June 30, 2017, stepping down to 3.25:1 at June 30, 2020 and each quarter-end thereafter;~~

· amends our fixed charge coverage ratio to be not less than 1.35:1 at June 30, 2017 and September 30, 2017, not less than 1.45:1 at December 31, 2017, and not less than 1.50:1 beginning with the quarter ending March 31, 2018 and each quarter-end thereafter; and

· adds a Trailing Twelve Months (“TTM”) recurring revenue covenant, requiring software-as-a-service, hardware-as-a-service and cloud subscription and maintenance support revenues to be at least $41,000 at June 30, 2017 and stepping up to $60,500 at June 30, 2022 and each quarter-end thereafter.

As of September 30, 2017, we were in compliance with all covenants and all payments remain current. We expect to be in compliance or be able to obtain compliance through debt repayments with available cash on hand or cash we expect to generate from the ordinary course of operations over the ~~next twelve months.~~ life of all operating leases, which exclude variable rent payments, are as follows for the period presented below (in thousands):


	March 31, 2024
2024	$	1,505
2025	1,679
2026	1,217
2027	1,000
2028	995
Thereafter	855
Total minimum lease payments	7,251
Less: imputed interest	(1,460)
Total lease liabilities	$	5,791

NOTE ~~7 – SHARE BASED~~9 - SHARE-BASED COMPENSATION

We have one active equity plan, the 2018 Incentive Award Plan (the “2018 Plan”). The 2018 Plan, approved by our stockholders, replaced our 2009 Equity Incentive Plan, as amended (the “2009 Plan”); however, the terms and conditions of the 2009 Plan will continue to govern any outstanding awards granted thereunder.

The number of shares reserved for issuance under the 2018 Plan is 4,350 shares. We have an aggregate of 2,612 options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) granted and outstanding pursuant to the 2018 Plan as of March 31, 2024. As of March 31, 2024, the number of shares available for future grant under the 2018 Plan is 1,040.

Share based compensation for our stock option plans for the three months ended ~~September 30, 2017~~March 31, 2024, and ~~2016 were $138~~March 31, 2023, was $1,902 and ~~$60, respectively, and $363 and $166 for the nine months ended September 30, 2017 and 2016,~~$1,337, respectively. We issued ~~51,000~~26 and 277 shares of common stock related to exercises of stock options ~~granted from our Stock Option Plan~~ for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~15,000~~2023, respectively. We issued 166 and 98 shares of common stock upon the vesting of restricted stock units for the three months ended ~~September 30, 2016,~~March 31, 2024 and 2023, respectively.

~~Asure has one active equity plan,~~ We issued 109 shares of common stock upon the ~~2009 Equity Plan (the “2009 Plan”). The 2009 Plan provides~~vesting of RSUs converted from PSUs for the ~~issuance~~three months ended March 31, 2024.

Effective January 1, 2023, the Compensation Committee of ~~non-qualified~~the Board of Directors (the “Compensation Committee”) approved the grant of performance stock units (“PSUs”) pursuant to a PSU Award Grant Notice and ~~incentive stock options~~PSU Award Agreement (the “2023 PSU Award Agreement”) under the 2018 Plan to our ~~employees and consultants. We generally grant stock options with exercise prices greater than or equal~~executive officers payable in the form of RSUs. The number of RSUs into which the PSUs converted for each executive officer was a sliding scale between 0% to 200% of the target amount based on the Company’s achievement of certain performance metrics tied to the ~~fair market value~~Company’s recurring revenue and gross profit for 2023. On February 26, 2024, the PSUs converted to RSUs at 200% of target based on the ~~time~~achievement of ~~grant.~~set performance metrics, and we paid out a total of 325 RSUs to our executive officers.

Effective January 1, 2024, the Compensation Committee approved the grant of PSUs pursuant to a PSU Award Grant Notice and PSU Award Agreement (the “2024 PSU Award Agreement”) under the 2018 Plan to our executive officers payable in the form of RSUs. The ~~options generally vest over three~~number of RSUs into which the PSUs convert for each executive officer is a sliding scale between 0% to ~~four years and are exercisable for a period~~200% of ~~five to ten years beginning with date~~the target amount based on the Company’s achievement of ~~grant. Our shareholders approved an amendment~~certain performance metrics tied to the ~~2009 Plan in June 2017 to increase the number of shares reserved under the plan from 1,400,000 to 1,700,000. We have 904,000 options granted~~Company’s recurring revenue and ~~outstanding and 176,000 available~~gross profit for ~~grant pursuant to the 2009 Plan as of September 30, 2017.~~

~~NOTE 8 – OTHER COMPREHENSIVE LOSS~~

Comprehensive income (loss) represents a measure of all changes in equity that result from recognized transactions and other economic events other than those resulting from investments by and distributions to shareholders. Our other comprehensive income (loss) includes foreign currency translation adjustments.

2024.

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~~ASURE SOFTWARE, INC.~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(Amounts in thousands, except share and per share data unless otherwise noted)~~

~~The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax:~~

Foreign Currency Items
Accumulated Other
Comprehensive Loss Items

Beginning balance, December 31, 2016 $ 5 $ 5
Other comprehensive loss before reclassifications (63 ) (63 )
Amounts reclassified from accumulated other comprehensive income (loss) — —
Net current-period other comprehensive loss (63 ) (63 )
Ending balance, September 30, 2017 $ (58 ) $ (58 )

~~The following table presents the tax benefit (expense) allocated to each component of other comprehensive income (loss):~~

Three Months Ended September 30, 2017
Before Tax Tax Benefit Net of Tax
Foreign currency translation adjustments $ (6 ) $ — $ (6 )

Other comprehensive loss $ (6 ) $ — $ (6 )

Nine Months Ended September 30, 2017
Before Tax Tax Benefit Net of Tax
Foreign currency translation adjustments $ (63 ) $ — $ (63 )

Other comprehensive loss $ (63 ) $ — $ (63 )

NOTE ~~9 –~~10 - NET LOSS PER SHARE

We compute net income or loss per share based on the weighted average number of common shares outstanding for the period. Diluted net ~~loss~~income per share reflects the maximum dilution that would have resulted from incremental common shares issuable upon the exercise of stock ~~options. We~~options or vesting of RSUs and in some cases PSUs. In periods of net income, we compute the ~~number~~adjustment to the denominator of ~~common~~our dilutive net earnings per share ~~equivalents, which includes~~calculation to include these stock options, RSUs, and PSUs, as applicable, using the treasury stock method. ~~We have excluded stock options to acquire 904,000 shares for the three and nine months ended September 30, 2017, and 452,000 shares for the nine months ended September 30, 2016 from the computation~~Regardless of the period resulting in net income or net loss, we exclude the adjustment to the denominator of our dilutive ~~stock options because~~net loss per share calculation to the ~~effect of including the stock options would have been~~extent that they are anti-dilutive.

The following table sets forth the computation of basic and diluted net ~~income (loss)~~loss per common share for the ~~three and nine months ended September 30, 2017 and 2016:~~ periods presented below (in thousands, except per share amounts):


	Three Months Ended March 31,
	2024		2023
Basic:
Net (loss) income	$	(308)	$	339
Weighted-average shares of common stock outstanding	25,334		20,347
Basic (loss) income per share	$	(0.01)	$	0.02

Diluted:
Net (loss) income	$	(308)	$	339
Weighted-average shares of common stock outstanding	25,334		21,041
Diluted (loss) income per share	$	(0.01)	$	0.02

For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2017 2016 2017 2016
Net income (loss) $ (1,281 ) $ 315 $ (4,177 ) $ (1,103 )

Weighted-average shares of common stock outstanding 12,418,000 6,534,000 10,355,000 6,383,000
Dilutive effect of employee stock options - 14,000 - -
Weighted average shares for diluted net income (loss) per share 12,418,000 6,548,000 10,355,000 6,383,000
Basic net (loss) income per share $ (0.10 ) $ 0.05 $ (0.40 ) $ (0.17 )
Diluted net (loss) income per share $ (0.10 ) $ 0.05 $ (0.40 ) $ (0.17 )

NOTE 1011 - SUBSEQUENT EVENTS

~~Effective October 1, 2017,~~On April 9, 2024, we ~~closed~~filed a universal shelf registration statement on Form S-3 with the ~~strategic~~Securities and Exchange Commission (“SEC”) to provide access to additional capital, if needed. Pursuant to the shelf registration statement, we may from time to time offer to sell in one or more offerings shares of our common stock or other securities having an aggregate value of up to $150,000 (which includes [1,480] of unsold securities that were previously registered on a prior registration statement effective at the time of the filing of our current S-3). The shelf registration statement relating to these securities became effective on April 19, 2024.

On April 9, 2024, we filed an acquisition shelf registration statement on Form S-4 with the SEC to allow for us to issue securities in future business combinations. Pursuant to the acquisition shelf registration statement, we may from time to time issue up to 12,500 shares of ~~Associated Data Services, Inc.,~~our common stock as consideration in future business combinations. The registration statement relating to these securities became effective on April 19, 2024.

On April 30, 2024, we acquired certain assets of a ~~leading regional human resources and~~reseller partner, which were used to provide payroll ~~services bureau~~processing services. The partner is located in Ohio. The aggregate purchase price that we paid for these assets was $3,000, consisting of $2,300 paid in cash on hand, $700 in the ~~Southeast~~form of a promissory note with the principal balance due on October 30, 2025, and ~~a current reseller~~50 shares of ~~our HCM solution, Evolution.~~Asure common stock.

Effective October 9, 2017, our headquarters moved locations in Austin, Texas. Our prior office lease terminated on the date the new lease commenced. The new office space is approximately 14,500 square feet for a period of 60 months. Future minimum payments total approximately $2,073.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

~~Certain~~This Quarterly Report on Form 10-Q contains certain statements ~~in this Report represent~~made by management that may constitute “forward-looking” statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements about our financial results may include expected or projected U.S GAAP and other operating and non-operating results. The words “believe,” “may,” “will,” “estimate,” “projects,” “anticipate,” “intend,” “expect,” “should,” “plan,” and similar expressions are intended to identify forward-looking statements. ~~These~~Examples of “forward-looking statements” include statements ~~involve known and unknown risks, uncertainties and other factors that may cause actual results of operations, levels of activity, economic~~we make regarding our operating performance, ~~financial condition or achievements to be materially different from~~ future results of operations ~~levels of activity, economic performance,~~and financial position, revenue growth, earnings or other projections. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. The achievement or ~~achievements as~~success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions, over many of which we have no control. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by ~~such forward-looking statements. Asure has attempted to identify these~~the forward-looking statements with the words “believes,” “estimates,” “plans,” “expects,” “anticipates,” “may,” “could” and other similar expressions. Although these forward-looking statements reflect management’s current plans and expectations, which we ~~believe are reasonable as of the filing date of this report, they inherently are subject to certain risks and uncertainties. These~~make. The risks and uncertainties ~~include —~~ referred to above include—but are not limited to— the expiration of major revenue streams such as Employee Retention Tax Credits (“ERTC”) and the impact of the Internal Revenue Service (“IRS”) recent measures regarding Employee Retention Tax Credits claims; risks associated with breaches of the Company’s security measures; risks associated with the Company’s rate of growth and anticipated revenue run rate, including impact of the current [economic] environment; the Company’s ability to ~~— adverse changes~~convert deferred revenue and unbilled deferred revenue into revenue and cash flow, and ability to maintain continued growth of deferred revenue and unbilled deferred revenue; privacy concerns and laws and other regulations may limit the effectiveness of our applications; money transmitter laws and anti-money laundering laws; the financial and other impact of any previous and future acquisitions; the Company’s ability to continue to release, gain customer acceptance of and provide support for new and improved versions of the Company’s services; successful customer deployment and utilization of the Company’s existing and future services; interruptions to supply chains and extended shut down of businesses; issues in the ~~economy, financial markets,~~use of artificial intelligence in our HCM products and ~~credit markets; delays or~~ services; political unrest, including the current issues between Russia and Ukraine and the ongoing conflict between Israel and Hamas; reductions in ~~information technology spending;~~employment and an increase in business failures, specifically among our clients; possible fluctuations in the ~~development~~Company’s financial and operating results; regulatory pressures on economic relief enacted as a result of the ~~market~~COVID-19 pandemic that change or cause different interpretations with respect to eligibility for ~~cloud based workplace applications; product development; market acceptance~~such programs; domestic and international regulatory developments, including changes to or applicability to our business of ~~new products~~privacy and ~~product improvements; our ability to retain or increase our customer base; security breaches; errors, disruptions~~data securities laws; technological developments; the nature of the Company’s business model; interest rates; competition; various financial aspects of the Company’s subscription model; impairment of intangible assets; interruptions or delays in our services; privacy concerns and laws; changes in our sales cycle; competition, including pricing pressures, entry of new competitors, and new technologies; intellectual property enforcement and litigation; ourthe Company’s services or the Company’s Web hosting; access to additional capital; the Company’s ability to hire, retain and motivate ~~employees; our~~employees and manage the Company’s growth; litigation and any related claims, negotiations and settlements, including with respect to intellectual property matters or industry-specific regulations; volatility and weakness in bank and capital markets; factors affecting the Company’s deferred tax assets and ability to ~~manage our growth; our ability to realize benefits from acquisitions; the level~~value and utilize them; volatility and low trading volume of our ~~indebtedness; changes in sales may not be immediately reflected in our operating results due to our subscription model; changes in laws~~common stock; collection of receivables; and ~~regulations; changes~~general developments in the ~~Internet infrastructure;~~economy, financial markets, credit markets and ~~changes~~the impact of current and future accounting pronouncements and other financial reporting standards.

Further information on these and other factors that could affect the Company’s financial results is included in ~~accounting standards.~~the reports on Forms 10-K, 10-Q and 8-K, and in other filings we make with the Securities and Exchange Commission (the “SEC”) from time to time. These documents are available on the SEC Filings section of the Investor Information section of the Company’s website at investor.asuresoftware.com. Asure ~~is under~~assumes no obligation and does not intend to update ~~any of the~~these forward-looking statements, ~~after the date of this Form 10-Q to conform such statements to actual results.~~except as required by law.

OVERVIEW

The following review of Asure’s financial position as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~2023, and ~~the~~ results of operations ~~and cash flows~~ for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 should be read in conjunction with our ~~2016~~2023 Annual Report on Form 10-K filed with the ~~Securities and Exchange Commission. Asure’s internet website address is http://www.asuresoftware.com.~~SEC on February 26, 2024. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available through the investor relations page of our internet website free of charge as soon as reasonably practicable after they are electronically filed, or furnished to, the ~~Securities and Exchange Commission.~~SEC. Asure’s internet website and the information contained ~~therein~~in our website or connected ~~thereto is~~to our website are not incorporated into this Quarterly Report on Form 10-Q. However, we do post information on the investor relations page of our website that we believe may be of interest to our investors. Asure’s internet website address is www.asuresoftware.com.

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~~Asure is~~

Our Business

We are a ~~leading global~~ provider of cloud-based ~~software-as-a-service~~Human Capital Management (“HCM”) software solutions delivered as Software-as-a-Service (“SaaS”) ~~time~~for small and medium-sized businesses (“SMBs”). We offer human resources (“HR”) tools necessary to build a thriving workforce, provide the resources to stay compliant with dynamic federal, state, and local tax jurisdictions and their respective labor ~~management~~laws, freeing cash flows so SMBs can spend their financial capital on growing their businesses rather than administrative overhead that can impede growth. Our solutions also provide new ways for employers to connect with their employees in order to enhance their relationships with their talent. Asure’s HCM suite (“Asure HCM”) includes Payroll & Tax solutions, HR compliance and ~~Agile Workplace management solutions~~services, Time & Attendance software and data integrations that enable ~~companies~~employers and their employees to enhance efficiencies and take advantage of ~~all sizes~~value-added solutions, which we refer to as AsureMarketplace™. AsureMarketplace™ automates interactions between our HCM systems with third-party providers to enhance efficiency, improve accuracy and ~~complexities~~ to ~~operate~~extend the range of services offered to employers and their employees. Our approach to HR compliance services incorporates artificial intelligence technology to enhance scalability and efficiency while prioritizing client interactions. We offer our services directly and indirectly through our network of reseller partners.

From recruitment to retirement, our solutions help more ~~efficiently~~than 100,000 SMBs across the United States. Approximately 15,000 of our clients are direct and ~~proactively manage costs associated~~the 85,000 remaining clients are indirect, as they have contracts with ~~their most expensive assets: real estate, labor and technology.~~reseller partners who white label our solutions.

We ~~currently offer two main product lines, AsureSpace™~~strive to be the most trusted HCM resource to SMBs and ~~AsureForce®.~~are focused on less densely populated U.S. metropolitan cities where fewer of our competitors have a presence. Our ~~AsureSpace™ Agile Workplace management~~ solutions ~~enable organizations to manage their office environments~~solve three primary challenges that prevent businesses from growing: HR complexity, allocation of human and optimize real estate utilization. Our AsureForce® time and labor management solutions help organizations optimize labor and labor administration costs and activities. With our acquisitions of Mangrove Employer Services, Inc.financial capital, and the ability to build great teams. We sell our solutions through both direct and partner channels. We supplement our direct sales efforts with partner programs that afford us access to opportunities in various geographic and industry niches. We have two types of partners: reseller partners that white label our products while providing value-added services to their clients (or indirect clients) and referral partners that provide us with SMB leads but do no resell our solutions. We have and will continue to invest in research and development to expand our solutions. Our solutions reduce the administrative burden on employers and increase employee productivity while managing the employment lifecycle.

Acquisitions

On April 30, 2024, we acquired certain assets of ~~Mangrove COBRAsource Inc.~~a reseller partner, which were used to provide payroll processing services. The partner is located in ~~March 2016,~~Ohio. The aggregate purchase price that we ~~have entered into~~paid for these assets was $3,000, consisting of $2,300 paid in cash on hand, $700 in the ~~human resource management,~~form of a promissory note with the principal balance due on October 30, 2025, and 50 shares of Asure common stock.

On February 22, 2024, we acquired certain assets of a payroll processing and benefits administration services businesses, which we are integrating into our existing AsureForce® product line. In January 2017, we closed three strategic acquisitions: Personnel Management Systems, Inc., a provider of outsourced HR solutions; Corporate Payroll, Inc. (Payroll Division), a provider of payroll services; and Payroll Specialties NW, Inc., a provider of payroll services. In May 2017, we closed two strategic acquisitions: iSystems, LLC and Compass HRM. iSystems LLC, through its flagship product, Evolution HCM, offers payroll, tax management and HR software combined with comprehensive back-end service bureau tools to service providers acrossbrokerage servicer based in New Jersey. The aggregate purchase price paid for the United States. Tampa-based Compass HRM is a current reseller of our HCM offering (formerly Mangrove), which provides human resources solutions that enhance organizations, people, and profits through payroll and HR solutions. The acquisition of ~~Compass HRM expands our reach~~these assets was $6,000, consisting of $500 paid in cash on hand, 450 shares of Asure common stock, having an agreed value of $4,500, and the remaining $1,000 in the ~~Southeast, particularly Florida.~~ form of a promissory note. As of March 31, 2024, the promissory note had an outstanding balance of $1,000 and matures on February 22, 2026.

~~For both product lines, support~~On October 1, 2023, we acquired certain assets of an Alabama based reseller partner, which were used to provide payroll processing services. The aggregate purchase price paid for these assets was $8,391, paid as follows: (i) $6,891 in cash of which $6,545 was paid at closing and ~~professional services are other key elements~~(ii) the delivery of ~~our software~~a promissory note in the amount of $1,500. As of March 31, 2024, the promissory note had an outstanding balance of $1,500 and services business. As an extension of our perpetual software product offerings, Asure offers our customers maintenance and support contracts that provide ready access to qualified support staff, software patches and upgrades to our software products. We also provide installation of and trainingmatures on ~~our products, add-on software customization and other professional services on a global scale.~~October 1, 2025.

We target our sales and marketing efforts to a wide range of audiences, from small to medium-sized businesses and divisions of enterprise organizations throughout the United States, Europe and Asia/Pacific. We generate sales of our solutions through our direct sales teams and indirectly through our channel partners. We are expanding our investment in our direct sales teams to continue to address our market opportunity.

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RESULTS OF OPERATIONS(in thousands)

The following table sets forth, for the fiscal periods indicated, the percentage of total ~~revenues~~revenue represented by certain items in ~~Asure’s~~the Company’s Condensed Consolidated Statements of Comprehensive ~~Income~~ (Loss): Income:

FOR THE THREE MONTHS ENDED
SEPTEMBER 30,

FOR THE NINE MONTHS ENDED
SEPTEMBER 30,

2017 2016 2017 2016
Revenues 100 % 100 % 100 % 100 %
Gross margin 78.1 78.5 77.9 77.0
Selling, general and administrative 60.9 53.5 64.6 60.2
Research and development 5.7 8.1 6.4 8.6
Amortization of intangible assets 8.6 6.6 8.3 6.3
Total operating expenses 75.2 68.1 79.2 75.1
Other loss, net (10.6 ) (6.6 ) (8.4 ) (5.7 )
Net income (loss) (8.3 ) 3.3 (10.7 ) (4.3 )


	Three Months Ended March 31,
	2024		2023
Revenue	100	%	100	%
Gross profit	71	%	74	%
Sales and marketing	25	%	22	%
General and administrative	32	%	30	%
Research and development	6	%	6	%
Amortization of intangible assets	11	%	10	%
Total operating expenses	73	%	68	%
Interest income	1	%	1	%
Interest expense	(1)	%	(7)	%
Other income, net	—	%	—	%
(Loss) income from operations before income taxes	(1)	%	—	%
Net (loss) income	(1)	%	1	%

~~THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (Amounts in thousands)~~

Revenue

Revenue is comprised of recurring revenue, professional services, hardware, and other revenue. We expect our revenue to increase as we introduce new applications, expand our client base and renew and expand relationships with existing clients. As a percentage of total revenue, we expect our mix of recurring revenue, and professional services, hardware and other revenue to remain relatively constant. While revenue mix varies by product, recurring revenue represented over 95% of total revenue in three months ended March 31, 2024, compared to 84% in three months ended March 31, 2023.

Our revenue was derived from the following ~~sources:~~sources (in thousands):

FOR THE THREE
MONTHS ENDED
September 30,

Increase (Decrease)

Revenue 2017 2016 %
Cloud revenue $ 11,062 $ 5,630 $ 5,432 96.5
Hardware revenue 1,003 676 327 48.4
Maintenance and support revenue 1,178 1,078 100 9.3
On premise software license revenue 599 754 (155 ) (20.6 )
Professional services revenue 1,685 1,302 383 29.4
Total revenue $ 15,527 $ 9,440 $ 6,087 64.5

FOR THE NINE
MONTHS ENDED
September 30,

Increase (Decrease)

Revenue 2017 2016 %
Cloud revenue $ 27,724 $ 14,881 $ 12,843 86.3
Hardware revenue 3,651 2,644 1,007 38.1
Maintenance and support revenue 3,276 3,509 (233 ) (6.6 )
On premise software license revenue 1,049 1,352 (303 ) (22.4 )
Professional services revenue 3,434 3,440 (6 ) .2
Total revenue $ 39,134 $ 25,826 $ 13,308 51.5


	Three Months Ended March 31,				Variance
	2024		2023		$		%
Recurring	$	30,273	$	27,956	$	2,317	8	%
Professional services, hardware and other	1,379		5,108		(3,729)		(73)	%
Total	$	31,652	$	33,064	$	(1,412)	(4)	%

Recurring Revenue ~~represents~~

Recurring revenue includes fees for our ~~consolidated~~payroll, payroll tax, tax management, time and labor management, HR compliance services, AsureMarketplace™ and other Asure solutions as well as fees charged for form filings and delivery of client payroll checks and reports. These revenues ~~including sales~~are derived from fixed amounts charged per billing period and sometimes an additional fee per employee or transaction processed. We do not require clients to enter into long-term contractual commitments for our services. Our billing period varies by client based on when each client pays its employees, which may be weekly, bi-weekly, semi-monthly or monthly. We also generate recurring revenue from our reseller partners that license our solutions. Because recurring revenue is based, in part, on fees for use of our ~~scheduling software, time~~applications and ~~attendance~~the delivery of checks and ~~human resource software, complementary~~reports that are levied on a per-employee basis, our recurring revenue increases as our clients hire more employees. Recurring revenue is recognized in the period services are rendered.

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Recurring revenue includes revenues relating to the annual processing of payroll forms, such as Form W-2 and Form 1099, and revenues from processing unscheduled payroll runs (such as bonuses) for our clients. Because payroll forms are typically processed in the first quarter of the year and many of our clients are subject to form filing requirements mandated by the Affordable Care Act (“ACA”), first quarter revenues and margins are generally higher than in subsequent quarters. We anticipate our revenues will continue to exhibit this seasonal pattern related to ACA form filings for so long as the ACA (or replacement legislation) includes employer reporting requirements. In addition, we often experience increased revenues during the fourth quarter due to unscheduled payroll runs for our clients that occur before the end of the year. We expect the seasonality of our revenue cycle to decrease to the extent clients utilize more of our non-payroll applications.

This revenue line also includes interest earned on funds held for clients. Interest earned is generated from funds we collect from clients in advance of either the applicable due date for payroll tax submissions or the applicable disbursement date for employee payment services. These collections from clients are typically disbursed from one to 30 days after receipt, with some funds being held for up to 120 days. We typically invest funds held for clients in money market funds, demand deposit accounts, commercial paper, fixed income securities and certificates of deposit until they are paid to the applicable tax or regulatory agencies or to client employees. The amount of interest we earn from the investment of client funds is also impacted by changes in interest rates.

Recurring revenue for the three months ended March 31, 2024 was $30,273, an increase of $2,317, or 8%, from $27,956 for the three months ended March 31, 2023. The increase is primarily due to an increase in HR compliance revenue, an increase in interest earned on funds held for clients, and an increase in revenue from AsureMarketplace™.

Professional Services, Hardware and Other Revenue

Professional services, hardware and other revenue represents implementation fees, one-time consulting projects, on-premise maintenance, hardware devices to enhance our software products ~~software maintenance~~as well as revenue generated for provisioning and ~~support~~filing for ERTC.

Professional services, ~~installation and training services~~hardware and other ~~professional services.~~

Our product offerings are categorized into AsureSpace™ and AsureForce®. AsureSpace™ offers workplace management solutions that enable organizations to manage their office environments and optimize real estate utilization, and AsureForce® offers time and labor management solutions which help organizations optimize labor and labor administration costs and activities. Both product groupings include cloud revenue hardware revenue, maintenance and support revenue, on premise software license revenue and professional services revenue. AsureSpace™ revenues include PeopleCube, Meeting Room Manager and Roomtag revenues. AsureForce® revenues include ADI, Legiant, iEmployee, FotoPunch, Mangrove, iSystems and Compass revenues.

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~~Revenue~~decreased $3,729, or 73%, for the three months ended ~~September 30, 2017 was $15,527, an increase of $6,087, or 64.5%,~~March 31, 2024 from the ~~$9,440 reported for the three months ended September 30, 2016. The largest increase was~~similar period in cloud revenue, which increased $5,432, or 96.5% from the third quarter of 2016. Cloud revenue increased due to our continued emphasis on selling integrated cloud based solutions, as well as cloud revenue primarily from 2017 acquisitions. iSystems and PMSI recognized $4,139 of cloud revenue in the three months ended September 30, 2017, representing 68.0% of the increase in the three months ended September 30, 2017. Hardware revenue, professional services revenue and maintenance and support revenue also increased as compared to the three months ended September 30, 2016. This was offset by a small decrease in on premise software license revenue of $155, or 20.6%, as compared to the three months ended September 30, 2016, which is consistent with our focus on cloud revenue.

~~Revenue for the nine months ended September 30, 2017 were $39,134, an increase of $13,308, or 51.5%, from the $25,826 reported for the nine months ended September 30, 2016. This increase was~~2023, primarily due to a decrease in non-recurring ERTC revenue. ERTC revenue was originally expected to expire during 2024 and 2025; however, it is possible that the government could make changes to or revoke the program prior to its scheduled expiration. For example, in January 2024, the United States House of Representatives passed the Tax Relief for American Families Act of 2024, which set an ~~increase in cloud and hardware revenue,~~expiration date of ~~$12,843, or 86.3%, and $1,007, or 38.1%, respectively. This was offset~~January 31, 2024, on additional claims for ERTC that can potentially apply retroactively. If approved by ~~smaller decreases in maintenance and support revenue,~~other branches of government, this will have an effect on ~~premise software license~~our ERTC revenue and ~~professional services revenue,~~cash collections. Additionally, in September 2023, the IRS announced a moratorium through the end of the year on processing new ERTC claims due to concerns over questionable or fraudulent claims. The moratorium may potentially delay the processing and collections of previously filed ERTC claims. Refer to “Risk Factors” previously disclosed in our Annual Report on Form 10-K, filed with the ~~largest decrease in~~SEC on ~~premise software license revenue of $303, or 22.4% from the nine months ended September 30, 2016, reflecting~~February 26, 2024, for more information about risks related to our ~~continued emphasis on selling cloud based solutions.~~ERTC business.

Although our total customer base is widely spread across industries, our sales are concentrated in ~~certain industry sectors, including corporate, education, healthcare, government, legal and non-profit.~~SMBs. We continue to target ~~small and medium sized businesses and divisions of larger enterprises in these same~~SMBs across industries as prospective customers. Geographically, we sell our products ~~worldwide, but sales are largely concentrated~~primarily in the United States, Canada and Europe. Additionally, we have a distribution partner in Australia. As the overall workforce management solutions market continues to experience significant growth related to SaaS products, we will continue to focus on sales of Meeting Room Manager, On Demand, PeopleCube and ADI SaaS products.States.

In addition to continuing to develop our workforce ~~and Agile Workplace management~~ solutions and release of new software updates and enhancements, we continue to actively explore other opportunities to acquire additional products or technologies to complement our current software and services. ~~Through acquisitions in 2011 of ADI~~

Gross Profit and Legiant, we expanded our cloud computing time and attendance software and management services business. The 2012 acquisition of PeopleCube gave us a product line that includes software to assist customers in driving integrated facility management of offices, conference rooms, video conferencing, events and training, alternative workspaces and lobby use. The 2014 acquisitions of FotoPunch and Roomtag support our vision to deliver innovative cloud-based Agile Workplace technologies. Our March 2016 acquisitions from Mangrove enable us to enter into the human resource management, payroll processing and benefits administration services businesses, which we are integrating into our existing AsureForce® product line. With respect to the three acquisitions closed in January 2017, PSNW and CPI are top regional service bureaus that resell our HCM products (formerly Mangrove) and integrate seamlessly into our business, while PMSI is a leading HCM service company that expands our solution, service, and implementation capabilities. Our May 2017 acquisition of iSystems, a leading national provider of HCM solutions, provides us with additional cross-sell revenue opportunities and cost synergies and our May 2017 acquisition of Compass HRM, an existing reseller of our HCM offerings, provides us with a regional HR and payroll service bureau in the Southeast.

Gross Margin

Consolidated gross ~~margin~~profit for the three months ended ~~September 30, 2017~~March 31, 2024, was ~~$12,131, an increase~~$22,607, a decrease of ~~$4,717,~~$1,793, or ~~63.6%~~7%, from ~~the $7,414 reported~~$24,400 for the three months ended ~~September 30, 2016.~~March 31, 2023. Gross margin as a percentage of ~~revenues~~revenue was ~~78.1% and 78.5%~~71% for the three months ended ~~September 30, 2017 and 2016, respectively. Consolidated gross margin~~March 31, 2024 as compared to 74% for the ~~nine~~three months ended ~~September 30, 2017 was $30,474, an increase~~March 31, 2023. The decrease is primarily attributable to the decrease in professional services, hardware and other revenue during the period.

Our cost of ~~$10,580 or 53.2%, from~~sales relates primarily to direct product costs, compensation for operations and related consulting expenses, hardware expenses, facilities and related expenses and the $19,894 reported for the nine months ended September 30, 2016. Gross margins as a percentage of revenues were 77.9% and 77.0% for the nine months ended September 30, 2017 and 2016, respectively. We attribute the increase in gross margin to a shift in the mixamortization of our ~~revenue between our higher margin~~purchased software development costs. We include intangible amortization related to developed and ~~lower margin product lines~~acquired technology within cost of sales.

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Sales and Marketing Expenses

Sales and marketing expenses primarily consist of salaries and related expenses for sales and marketing staff, including stock-based expenses, commissions, as well as ~~the addition of the acquisitions in 2017.~~marketing programs, which include events, corporate communications and product marketing activities.

~~Selling, General~~Sales and ~~Administrative Expenses~~

~~Selling, general and administrative (“SG&A”)~~marketing expenses for the three months ended ~~September 30, 2017~~March 31, 2024 were ~~$9,459,~~$7,767, an increase of ~~$4,413,~~$567, or ~~87.5%~~8%, from ~~the $5,046 reported~~$7,200 for the three months ended ~~September 30, 2016. SG&A~~March 31, 2023. The increase is primarily due to an increase in direct sales personnel, and an increase in marketing initiatives; partially offset by a decrease in referral fees and bad debt expense. Sales and marketing expenses as a percentage of ~~revenues were 60.9% and 53.5%~~revenue increased to 25% for the three months ended ~~September 30, 2017~~March 31, 2024 from 22% for the same period in 2023.

We expect to continue to expand and ~~2016, respectively.~~increase selling costs as we focus on hiring direct sales personnel, expanding recognition of our brand, and lead generation.

~~Selling, general~~General and Administrative Expenses

General and administrative ~~(“SG&A”)~~expenses primarily consist of salaries and related expenses, including stock-based expenses for finance and accounting, legal, internal audit, human resources and management information systems personnel, legal costs, professional fees, and other corporate expenses such as transaction costs for acquisitions.

General and administrative expenses for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 were ~~$25,286,~~$10,063, an increase of ~~$9,727,~~$107, or ~~62.5%~~1%, from ~~the $15,559 reported~~$9,956 for the ~~nine~~three months ended ~~September 30, 2016. SG&A~~March 31, 2023. The increase is primarily attributable to increased personnel and share-based compensation expenses, partially offset by a decrease in bonus expense in 2024. General and administrative expenses as a percentage of ~~revenues were 64.6% and 60.2%~~revenue increased to 32% for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~

~~SG&A expenses were higher in the three and nine months ended September 30, 2017 as compared to~~March 31, 2024 from 30% for the same ~~periods~~period in 2016 primarily due to the acquisition and integration expenses related to the acquisition in the first and second quarters of 2017. We continue to evaluate any unnecessary expenses and any increases in SG&A designed to enhance future revenue growth.2023.

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Research and Development Expenses

Research and development (“R&D”) expenses consist primarily of salaries and related expenses, including stock-based expenses for employees supporting our R&D activities.

R&D expenses for the three months ended ~~September 30, 2017~~March 31, 2024 were ~~$883, an increase~~$1,769, a decrease of ~~$122,~~$210, or ~~16.0%~~11%, from ~~the $761 reported~~$1,979 for the three months ended ~~September 30, 2016.~~March 31, 2023. The decrease is primarily attributable to an increase in capitalized software expenses driven by continued investments in the development of our products, partially offset by an increase in personnel costs. R&D expenses as a percentage of ~~revenues were 5.7% and 8.1%~~revenue remained flat at 6% for the three months ended ~~September 30, 2017 and 2016, respectively.~~ March 31, 2024 compared to the same period in 2023.

Research and development (“R&D”) expenses for the nine months ended September 30, 2017 were $2,488, an increase of $271, or 12.2%, from the $2,217 reported for the nine months ended September 30, 2016. R&D expenses as a percentage of revenues were 6.4% and 8.6% for the nine months ended September 30, 2017 and 2016, respectively.

We plan to continue to ~~improve~~enhance our products and technologies ~~through organic improvements as well as through acquired intellectual property.~~by leveraging the latest technology stack, Robotic Process Automation (“RPA”), and artificial intelligence (“AI”), and development partnerships. We ~~believe~~expect that our expanded investment in product, engineering, SaaS hosting, mobile and hardware technologies ~~lays~~will lay the ~~ground work~~groundwork for broader market opportunities and ~~represents~~represent a key aspect of our competitive differentiation. ~~Native mobile applications, QR Code~~We also plan to expand our technological resources through organic improvements and acquired intellectual property. We expect to continue to expand the breadth of integration ~~expanded web service integration~~between our solutions, allowing direct clients and ~~other technologies~~resellers the ability to easily add and implement components across our entire solution set. Our initiatives include providing our customers with more accurate and efficient automation powered by an informed knowledge base. Consistent with that effort, our engineering team utilizes an AI development copilot to increase their productivity and efficiency. Our operations team utilizes a digital assistant to allow for a more efficient and accurate way to automate repetitive tasks, which we believe will free up our time for more strategic work and reduce the risk of errors. We are ~~all part of our initiatives.~~committed to providing the best-in-class solutions.

Our development efforts for future releases and enhancements are driven by feedback received from our existing and potential customers and by gauging market trends. We believe we have the appropriate development team to design and ~~further improve~~enhance our ~~workforce management solutions.~~solution suite and integrated platform.

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Amortization of Intangible Assets

Amortization ~~expenses~~expense for the three months ended ~~September 30, 2017 were $1,341,~~March 31, 2024 was $3,449, an increase of ~~$716,~~$147, or ~~114.6%~~4%, from ~~the $625 reported~~$3,302 for the three months ended ~~September 30, 2016.~~March 31, 2023. Amortization ~~expenses~~expense as a percentage of ~~revenues were 8.6% and 6.6%~~revenue increased to 11% for the three months ended ~~September 30, 2017 and 2016, respectively. Amortization expenses~~March 31, 2024 from 10% for the ~~nine~~same period in 2023. The increase in amortization expense in the three months ended September 30, 2017 were $3,230, an increase of $1,602, or 98.4% compared to $1,628, reported for the nine months ended September 30, 2016. Amortization expenses as a percentage of revenues were 8.3% and 6.3% for the nine months ended September 30, 2017 and 2016, respectively. The increases areMarch 31, 2024 is primarily due to ~~the amortization recorded on the intangibles acquired~~new asset acquisitions in the ~~acquisitions during 2017.~~fourth quarter of 2023.

~~Other~~Interest Income and ~~Loss~~Expense

~~Other loss~~Interest income for the three months ended ~~September 30, 2017~~March 31, 2024 was ~~$1,644, an increase~~$336 compared to interest income of ~~$1,024, or 165.2%, from the $620 reported~~$349 for the three months ended ~~September 30, 2016. Other loss~~March 31, 2023. Interest income as a percentage of ~~revenues~~revenue was ~~10.6% and 6.6%~~1% for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016, respectively. Other loss~~2023. Interest expense for the three months ended March 31, 2024 was $180 compared to interest expense of $2,293 for the three months ended ~~September 30, 2017 and September 30, 2016 are composed primarily of interest expense on notes payable.~~

~~Other loss for the nine months ended September 30, 2017 was $3,279, an increase of $1,819, or 124.6%, from the $1,460 reported for the nine months ended September 30, 2016. Other~~March 31, 2023. Interest expense as a percentage of ~~revenues~~revenue was 8.4% and 5.7% for the nine months ended September 30, 2017 and 2016, respectively. Other loss for the nine months ended September 30, 2017 and 2016 are composed primarily of interest expense on notes payable.

Interest expense for the three and nine months ended September 30, 2017 increased due to the additional debt amount incurred in May 2017 through our amended and restated credit agreement we entered into with Wells Fargo and Goldman Sachs and a higher interest rate incurred on the debt held with Goldman Sachs.

~~Income Taxes~~

~~Provision for income tax expense was $85 and $47~~1% for the three months ended ~~September 30, 2017 and 2016, respectively, an increase~~March 31, 2024 compared to 7% for the three months ended March 31, 2023. The decrease in interest expense in the three months ended March 31, 2024 is primarily due to our payoff of ~~$38, or 80.9%,~~the outstanding debt under the credit facility with Structural Capital Investments II LP in the third quarter of 2023.

Other Income, Net

Other income, net for the three months ended March 31, 2024 was $10 compared to $83 for the three months ended March 31, 2023. Other income, net as a ~~result~~percentage of ~~additional tax deductible goodwill acquired in 2017.~~revenue was negligible for the three months ended March 31, 2024, and for the three months ended March 31, 2023.

~~Provision for~~Income Taxes

For the three months ended March 31, 2024 and 2023, we recorded income tax expense ~~for the nine months ended September 30, 2017 was $368,~~attributable to continuing operations of $33 and an ~~increase~~income tax benefit of ~~$235, or 176.7%, from the $133 reported for the nine months ended September 30, 2016,~~$237, respectively, as a ~~result~~decrease of ~~additional tax deductible goodwill acquired in 2017.~~$270.

Net (Loss) Income ~~(Loss)~~

We incurred a ~~net~~ loss of ~~$1,281,~~$308, or ~~$(0.10)~~$0.01 per share, during the three months ended ~~September 30, 2017,~~March 31, 2024, compared to ~~net~~ income of ~~$315,~~$339, or ~~$0.05~~$0.02 per share, during the three months ended ~~September 30, 2016. Net loss~~March 31, 2023. Loss and income as a percentage of total ~~revenues~~revenue was ~~8.3%~~1% and 1% for the three months ended ~~September 30, 2017 compared to net income of 3.3% of total revenues for the three months ended September 30, 2016.~~March 31, 2024 and 2023, respectively.

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We incurred a net loss of $4,177, or $(0.40) per share, during the nine months ended September 30, 2017, compared to a net loss of $1,103, or $(0.17) per share reported for the nine months ended September 30, 2016. Net loss as a percentage of total revenues was 10.7% for the nine months ended September 30, 2017 compared to net loss of 4.3% of total revenues for the nine months ended September 30, 2016.

We intend to continue to implement our corporate strategy for growing the software and services business by modestly investing in areas that directly generate revenue and positive cash flows for the Company. However, uncertainties and challenges remain and there can be no assurance that we can successfully grow our revenues or achieve profitability during the remainder of fiscal year 2017.

LIQUIDITY AND CAPITAL RESOURCES ~~(Amounts~~ (in thousands)

September 30, December 31,
2017 2016

Working capital $ 18,734 $ 4,207
Cash and cash equivalents 27,464 12,767

For the Nine Months Ended
September 30,
2017 2016

Net Cash used in operating activities $ (2,083 ) $ (730 )
Net Cash used in investing activities (38,351 ) (7,750 )
Net Cash provided by financing activities 55,123 7,460


	March 31, 2024		December 31, 2023
Cash and cash equivalents	$	23,166	$	30,317

(1)This balance excludes cash equivalents in funds held for clients.

Working Capital. We had working capital of ~~$18,734~~$24,040 at ~~September 30, 2017, an increase~~March 31, 2024, a decrease of ~~$14,527~~$1,840 from working capital of ~~$4,207~~$25,880 at December 31, ~~2016.~~2023. Working capital ~~at September 30, 2017~~as of March 31, 2024 and December 31, ~~2016~~2023 includes ~~$12,065~~$3,547 and ~~$9,252~~$6,853 of short-term deferred revenue, respectively. Deferred revenue is an obligation to perform future services. We expect that deferred revenue will convert to future revenue as we perform our services, but this does not represent future payments. Deferred revenue can vary based on seasonality, expiration of initial multi-year contracts and deals that are billed after implementation rather than in advance of service delivery. We attribute the increase in our working capital to the issuance of stock in an underwritten public offering and proceeds from notes payable, offset by the acquisitions of PMSI, CPI and PSNW in the first quarter of 2017 and the acquisitions of iSystems and Compass in the second quarter of 2017.

Operating Activities. Net cash used in operating activities ~~was $2,083~~of $3,947 for the ~~nine~~three months ended ~~September 30, 2017. The $2,083 of cash used in operating activities during the first nine months of 2017~~March 31, 2024 was primarily driven by anon-cash adjustments to our net loss of ~~$4,177, an increase in accounts receivable of $4,450, an increase in prepaids~~approximately $6,579, primarily due to depreciation and ~~other assets of $471,~~amortization and ~~a decrease in accounts payable of $569.~~share-based compensation. This was offset by ~~non-cash adjustments to net loss of $5,027, an increase in deferred revenue of $1,963, and an increase in accrued expenses and other long-term obligations of $881. The $730 of cash used~~changes in operating assets and liabilities, which resulted in a use of $10,218 in cash. Net cash provided by operating activities ~~during~~of $4,588 for the ~~first nine~~three months ~~of 2016~~ended March 31, 2023 was ~~primarily~~ driven ~~by a net loss of $1,103, an increase in accounts receivable of $1,678, a decrease in deferred revenue of $2,000, and a decrease in accounts payable of $189. This was offset~~ by non-cash adjustments to our net ~~loss~~income of ~~$2,996, an increase~~approximately $7,787, primarily due to depreciation and amortization and share-based compensation. For the three months ended March 31, 2023, changes in ~~accrued expenses~~operating assets and ~~other long-term obligations~~liabilities resulted in a use of ~~$951, a decrease~~$3,538 in ~~inventory of $169, and a decrease in prepaid expenses and other assets of $124.~~cash.

Investing Activities. Net cash used in investing activities ~~was $38,351 and $7,750~~of $4,495 for the ~~nine~~three months ended ~~September 30, 2017 and September 30, 2016, respectively. Cash used in investing for the nine months ended September 30, 2017~~March 31, 2024 is primarily due to ~~the acquisitions~~purchases of ~~PMSI, CPI~~available-for-sale securities and ~~PSNW in January 2017, and the acquisitions~~maturities of ~~iSystems and Compass in May 2017, partially~~$3,516, offset by ~~an increase in funds held for clients. The~~proceeds from sales and maturities of available-for-sale securities of $2,406. Net cash used in investing activities of $6,647 for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2023 is primarily due ~~primarily~~ to ~~the acquisition~~purchases of ~~Mangrove, offset by the increase in funds held for clients.~~available-for-sale securities and maturities of $10,189.

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Financing Activities. Net cash provided by financing activities was ~~$55,123~~$21,062 for the ~~nine~~three months ended ~~September 30, 2017. We recognized~~March 31, 2024, which primarily consisted of a net ~~proceeds from the issuance~~increase in client fund obligations of common stock of $27,820 in an underwritten public offering in June 2017, as well as incurred $45,777 of indebtedness in connection with the 2017 acquisitions. This was offset by payments on notes payable of $8,098 and debt financing fees of $1,433. In connection with the public offering, we issued 2,185,000 shares of common stock, including 285,000 shares of common stock pursuant to the exercise of the underwriters' over-allotment option, at the public offering price of $13.50 per share.$21,122. Net cash provided by financing activities was ~~$7,460~~$21,128 for the ~~nine~~three months ended ~~September 30, 2016. We incurred $16,823~~March 31, 2023, which primarily consisted of ~~debt, primarily due to the cash used in the acquisition of Mangrove, and proceeds from the exercise of options of $561. This was offset by payments on notes payable of $5,173, the decrease~~a net increase in client fund obligations of ~~$4,155~~$19,372.

We have an outstanding promissory note in connection with a payroll business acquired in September 2021 in the amount of $4,200 as of March 31, 2024. The outstanding promissory note matures on September 30, 2026.

We also have an outstanding promissory note in connection with a payroll business acquired in October 2023 in the amount of $1,500 as of March 31, 2024. The outstanding promissory note matures on October 1, 2025.

We also have an outstanding promissory note in connection with a payroll processing and ~~debt financing fees~~benefits brokerage servicer acquired in February 2024 in the amount of ~~$438.~~$1,000 as of March 31, 2024. The outstanding promissory note matures on February 22, 2026.

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Sources of Liquidity. As of ~~September 30, 2017, Asure’s~~March 31, 2024, the Company’s principal sources of liquidity consisted of approximately ~~$27,464~~$23,166 of cash ~~future~~and cash equivalents, together with cash generated from operations ~~and $5,000 under~~of our Restated Credit Agreement. We believe that we have and/or will generate sufficient cash for our short- and long-term needs. Based on current internal projections, we believe that we have and/or will generate sufficient cash for our operational needs, including any required debt payments, for at leastbusiness over the next twelve months. ~~We currently project that we can generate positive cash flows from our operating activities for at least the next twelve months.~~

Our management team is focused on growing our existing software operations and is also seeking additional strategic acquisitions for the near future. At present, we plan to fund any future acquisition with equity, existing cash and cash equivalents cash generated from future operations and/or cash or debt raised from outside sources.

We cannot ~~assure~~ensure that we can grow our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future ~~acquisitions.~~acquisitions; however, we do believe that we have sufficient liquidity to support our business operations for at least the next twelve months. Future business demands may lead to cash utilization at levels greater than recently ~~experienced.~~experienced or expected. We may need to raise additional capital in the future in order to grow our existing software operations and to seek additional strategic acquisitions in the near future. ~~However,~~Currently, we do not have a credit facility or access to a line of credit. Further, we cannot ~~assure~~ensure that we will be able to raise additional capital on acceptable terms, or at ~~all. Subject to~~all, or at the ~~foregoing, management believes that~~time we need it.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have ~~sufficient capital~~prepared our Condensed Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles and ~~liquidity to fund and cultivate~~included the ~~growth~~accounts of our ~~current~~wholly owned subsidiaries. We have eliminated all significant intercompany transactions and ~~future operations for~~balances in the consolidation. Preparation of the Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities at ~~least~~ the ~~next twelve months from~~date of the ~~issuance of these~~ financial statements and ~~to maintain compliance with~~ the ~~terms~~reported amounts of revenues and expenses during the reporting period. These estimates are subjective in nature and involve judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at fiscal year-end and the reported amounts of revenues and expenses during the fiscal year. The more significant estimates made by management include the valuation allowance for our gross deferred tax asset, the determination of the fair value of our ~~debt agreements~~long-lived assets. We base our estimates on historical experience and ~~related covenants or to obtain compliance through debt repayments made with our available cash~~ on ~~hand or anticipated for receipt~~various other assumptions that management believes are reasonable under the given circumstances. These estimates could be materially different under different conditions and assumptions. Additionally, the actual amounts could differ from the estimates made. Management periodically evaluates estimates used in the ~~ordinary course~~preparation of ~~operations.~~

~~Capital Resources. At September 30, 2017, we had $69,125 outstanding under~~ our ~~Restated Credit Agreement with Wells Fargo. Available funds were $5,000 under the revolving credit facility at September 30, 2017.~~financial statements for continued reasonableness. We prospectively apply appropriate adjustments, if any, to our estimates based upon our periodic evaluation. For ~~further discussion regarding our Restated Credit Agreement and debt financing arrangements, see Note 6 to the accompanying condensed consolidated financial statements.~~

~~CRITICAL ACCOUNTING POLICIES~~

~~There were no material changes to~~a description of our critical accounting policies, ~~and estimates since December 31, 2016. For additional information on critical accounting policies, refer to “Management’s~~see Management’s Discussion and ~~Analysis”~~Analysis in our ~~2016~~ Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2023.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~We are a smaller reporting company as defined by Rule 12b-2 under the Exchange Act and are not required~~There have been no material changes to ~~provide the information required under this item.~~our exposure from market risks from those disclosed in our 2023 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Control and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for us. Based on an evaluation under the supervision and with the participation of our management, our principal executive officer and principal financial officer have concluded that ourThe Company maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act ~~were effective as of as of September 30, 2017~~that are designed to ~~provide reasonable assurance~~ensure that information required to be disclosed in the reports filed or submitted by ~~us in reports that we file or submit under~~Asure to the ~~Exchange Act~~SEC is ~~(i)~~ recorded, processed, summarized, and reported, within the time periods specified inby the ~~Securities and Exchange Commission~~SEC’s rules and forms, and ~~(ii)~~is accumulated and communicated to ~~our~~ management including ~~our principal executive officer~~the Chief Executive Officer and ~~principal financial officer,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management, including the Chief Executive Officer and Chief Financial Officer, performed an evaluation to conclude with reasonable assurance that Asure’s disclosure controls and procedures were designed and operating effectively to report the information each company is required to disclose in the reports they file with the SEC on a timely basis. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer of Asure have concluded that as of March 31, 2024, disclosure controls and procedures were effective.

Change in Internal Controls over Financial Reporting

During the period ended ~~September 30, 2017,~~March 31, 2024, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~None~~We have been, and in the future may be, the defendant or plaintiff in various actions arising in the normal course of business. As of March 31, 2024, we were not party to any material legal proceedings.

ITEM 1A. RISK FACTORS

WeThere have been no material changes from the risk factors previously disclosed in the Company’s 2023 Annual Report on Form 10-K, filed with the SEC on February 26, 2024, and investors are ~~a smaller reporting company as defined by Rule 12b-2 of~~encouraged to review these risk factors prior to making an investment in the ~~Exchange Act and are not required to provide the information required under this item.~~Company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None~~On February 22, 2024, we issued 450 shares of our common stock to a payroll processing and benefits brokerage servicer based in New Jersey from whom we acquired certain of their assets. The shares were part of the purchase price consideration in connection with such purchase. The shares were valued at $10.01 per share, or an aggregate of $4,500. The issuance and sale of the shares of our common stock in connection with this acquisition are exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof and Rule 506(b) of Regulation D thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

~~None~~None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)The following documents are filed as a part of this Quarterly Report on Form 10-Q:

(1)Financial Statements:

The Financial Statements required by this item are submitted in Part II, Item 8 of this report.

(2)Financial Statement Schedules:

All schedules are omitted because they are not applicable, or the required information is shown in the Financial Statements or in the notes thereto.

(3)Exhibits:


EXHIBIT NUMBER						DESCRIPTION
31.1* 3.5						Amendment No. 2 to Third Amended and Restated Bylaws (Previously filed as an exhibit to the Company’s Annual Report on Form 10-K (File No. 1-34522), filed February 26, 2024).

10.6+						First Amendment to Executive Change in Control Severance Plan, dated January 1, 2024 (Previously filed as an exhibit to the Company’s Annual Report on Form 10-K (File No. 1-34522), filed February 26, 2024).

10.12+						Form of 2024 Performance Stock Unit Award Grant Notice and Performance Stock Unit Award Agreement under the Company’s 2018 Incentive Award Plan (Previously filed as an exhibit to the Company’s Annual Report on Form 10-K (File No. 1-34522), filed February 26, 2024).

31.1*						Certification pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002 (filed herewith).

31.2*						Certification pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002 (filed herewith).

32.1**						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002 (furnished herewith).

32.2* *						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002 (furnished herewith).
101*
101						The following materials from Asure Software, Inc.’s Condensed Quarterly Report on Form 10-Q for the ~~quarter~~three months ended ~~September 30, 2017,~~March 31, 2024, formatted in ~~XBRL (Extensible Business Reporting Language):~~Inline XBRL: (1) the Condensed Consolidated Balance Sheets, (2) the Condensed Consolidated Statements of Comprehensive Loss, (3) the Condensed Consolidated Statements of Changes in Stockholders’ Equity, (4) the Condensed Consolidated Statements of Cash Flows, and ~~(4)~~(5) Notes to Condensed Consolidated Financial ~~Statements.~~Statements (filed herewith).

104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted as Inline XBRL and contained in Exhibit 101 (filed herewith).

* Filed ~~herewith~~herewith.

** Furnished herewith.

+ Indicates management contract or compensatory plan, contract or arrangement in which directors or executive officers participate.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ASURE SOFTWARE, INC.

Date: May 2, 2024

By:

~~November 13, 2017~~

~~By:~~

/s/ PATRICK GOEPEL

Patrick Goepel

Chief Executive Officer

(Principal Executive Officer)

~~November 13, 2017~~

Date: May 2, 2024

By:

/s/ ~~KELYN BRANNON~~ JOHN PENCE

John Pence

~~Kelyn Brannon~~

Chief Financial Officer

(Principal Financial and Accounting Officer)

	FOR THE THREE MONTHS ENDED September 30,						FOR THE NINE MONTHS ENDED September 30,
	2017			2016			2017			2016
Revenues:
Cloud revenue	$	11,062		$	5,630		$	27,724		$	14,881
Hardware revenue		1,003			676			3,651			2,644
Maintenance and support revenue		1,178			1,078			3,276			3,509
On premise software license revenue		599			754			1,049			1,352
Professional services revenue		1,685			1,302			3,434			3,440
Total revenues		15,527			9,440			39,134			25,826
Cost of sales		3,396			2,026			8,660			5,932
Gross margin		12,131			7,414			30,474			19,894

Operating expenses
Selling, general and administrative		9,459			5,046			25,286			15,559
Research and development		883			761			2,488			2,217
Amortization of intangible assets		1,341			625			3,230			1,628
Total operating expenses		11,683			6,432			31,004			19,404

Income (loss) from operations		448			982			(530	)		490

Other income (loss)
Interest expense and other		(1,644	)		(620	)		(3,279	)		(1,460	)
Total other loss		(1,644	)		(620	)		(3,279	)		(1,460	)

Income (loss) from operations before income taxes		(1,196	)		362			(3,809	)		(970	)
Income tax provision		(85	)		(47	)		(368	)		(133	)
Net income (loss)	$	(1,281	)	$	315		$	(4,177	)	$	(1,103	)
Other comprehensive income (loss)
Foreign currency gain (loss)		(6	)		26			(63	)		142
Other comprehensive income (loss)	$	(1,287	)		341		$	(4,240	)	$	(961	)

Basic and diluted net income (loss) per share
Basic	$	(0.10	)	$	0.05		$	(0.40	)	$	(0.17	)
Diluted	$	(0.10	)	$	0.05		$	(0.40	)	$	(0.17	)
Weighted average basic and diluted shares
Basic		12,418,000			6,534,000			10,355,000			6,383,000
Diluted		12,418,000			6,548,000			10,355,000			6,383,000

			Fair Value Measure at September 30, 2017
	Total		Quoted		Significant
	Carrying		Prices		Other		Significant
	Value at		in Active		Observable		Unobservable
	September 30,		Market		Inputs		Inputs
Description	2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	27,464	$	27,464	$	-	$	-
Total	$	27,464	$	27,464	$	-	$	-

			Fair Value Measure at December 31, 2016
	Total		Quoted		Significant
	Carrying		Prices		Other		Significant
	Value at		in Active		Observable		Unobservable
	December 31,		Market		Inputs		Inputs
Description	2016		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and cash equivalents	$	12,767	$	12,767	$	-	$	-
Total	$	12,767	$	12,767	$	-	$	-

Assets Acquired	CPI		PMSI		PSNW		iSystems		Compass		Total
Cash & cash equivalents	$	126		131		53		211		207	$	728
Accounts receivable		22		347		111		951		241		1,672
Restricted cash		-		-		-		200		-		200
Fixed assets		-		130		7		681		38		856
Other assets		-		17		17		699		33		766
Funds held for clients		2,809		-		6,294		-		-		9,103
Goodwill		1,190		2,247		1,579		42,253		2,049		49,318
Intangibles		1,563		2,646		1,879		15,070		3,470		24,628
Total assets acquired	$	5,710		5,518		9,940		60,065		6,038	$	87,271

Liabilities assumed
Accounts payable		51		19		28		392		65		555
Accrued other liabilities		-		191		40		791		45		1,067
Deferred revenue		-		370		-		1,073		-		1,443
Client fund obligations		2,754		-		6,294		-		-		9,048
Total liabilities assumed		2,805		580		6,362		2,256		110		12,113

Net assets acquired	$	2,905		4,938		3,578		57,809		5,928	$	75,158

	Amount
Assets acquired
Accounts receivable	$	523
Funds held for clients		16,419
Fixed assets		258
Other assets		28
Goodwill		9,016
Intangibles		8,700
Total assets acquired	$	34,944

Liabilities assumed
Accounts payable		64
Accrued other liabilities		461
Client fund obligations		16,419
Total liabilities assumed	$	16,944
Net assets acquired	$	18,000

	FOR THE THREE MONTHS ENDED			FOR THE THREE MONTHS ENDED
	SEPTEMBER 30,			SEPTEMBER 30,
	2017			2016
Revenues	$	15,527		$	14,905
Net income (loss)	$	(927	)	$	185
Net income (loss) per common share:
Basic and diluted	$	(0.07	)	$	0.02

Weighted average shares outstanding:
Basic and diluted		12,418			8,186

	FOR THE NINE MONTHS ENDED SEPTEMBER 30,			FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2017			2016
Revenues	$	45,743		$	45,416
Net loss	$	(4,552	)	$	(4,221	)
Net loss per common share:
Basic and diluted	$	(0.40	)	$	(0.53	)

Weighted average shares outstanding:
Basic and diluted	$	11,272		$	8,021

Balance at December 31, 2016	$	26,259
Goodwill recognized upon acquisitions of PMSI, CPI, PSNW, iSystems and Compass		49,318
Adjustment to Goodwill associated with acquisition of Mangrove		272
Foreign exchange adjustment to goodwill		6
Balance at September 30, 2017	$	75,855

			September 30, 2017
Intangible Assets	Weighted Average Amortization Period (in Years)		Gross		Accumulated Amortization			Net

Developed Technology		11.8	$	11,925	$	(4,585	)	$	7,340
Customer Relationships		7.5		35,516		(12,354	)		23,162
Reseller Relationships		7.0		853		(731	)		122
Trade Names		14.8		2,815		(787	)		2,028
Noncompete		2.9		592		(108	)		484
Software development costs		3.0		919		(9	)		910
		8.7	$	52,620	$	(18,574	)	$	34,046

			December 31, 2016
Intangible Assets	Weighted Average Amortization Period (in Years)		Gross		Accumulated Amortization			Net

Developed Technology		12.7	$	10,915	$	(3,408	)	$	7,507
Customer Relationships		7.3		14,011		(10,270	)		3,741
Reseller Relationships		7.0		853		(640	)		213
Trade Names		14.5		1,294		(707	)		587
		9.8	$	27,073	$	(15,025	)	$	12,048

Calendar Years
2017 (July to December)	$	1,438
2018		5,424
2019		4,650
2020		3,803
2021		3,848
Thereafter		14,079
Subtotal	$	33,242
Software development costs not yet placed in service		804
	$	34,046

Notes Payable	Maturity	Stated Interest Rate			Balance as of September 30, 2017		Balance as of December 31, 2016
Subordinated Notes Payable- Mangrove acquisition	3/18/2018		3.50	%	$	-	$	6,000
Subordinated Notes Payable- PMSI acquisition	4/30/2018		2.00	%		1,125		-
Subordinated Notes Payable- CPI acquisition	4/30/2018		-	%		500		-
Subordinated Notes Payable- PSNW acquisition	3/31/2018		2.00	%		600		-
Subordinated Notes Payable- iSystems acquisition	5/25/2019		3.50	%		5,000		-
Subordinated Notes Payable- Compass acquisition	5/25/2022		2.0	%		1,500		-
Term Loan – Wells Fargo Syndicate Partner	5/25/2022		9.53	%		34,562		-
Term Loan - Wells Fargo	5/25/2022		4.53	%		34,563		24,715
Total Notes Payable					$	77,850	$	30,715
Short-term notes payable					$	8,869	$	5,455
Long-term notes payable					$	68,981	$	25,260

Notes Payable	Gross Notes Payable at September 30, 2017		Debt Issuance Costs and Debt Discount			Net Notes Payable at September 30, 2017
Notes payable, current portion	$	8,869	$	(145	)	$	8,724
Notes payable, net of current portion		68,981		(2,001	)		66,980
Total Notes Payable	$	77,850	$	(2,146	)	$	75,704

Notes Payable	Gross Notes Payable at December 31, 2016		Debt Issuance Costs and Debt Discount			Net Notes Payable at December 31, 2016
Notes payable, current portion	$	5,455	$	-		$	5,455
Notes payable, net of current portion		25,260		(679	)		24,581
Total Notes Payable	$	30,715	$	(679	)	$	30,036

Year Ended	Gross Amount
December 31, 2017 (October to December)	$	875
December 31, 2018		8,525
December 31, 2019		6,300
December 31, 2020		3,800
December 31, 2021		3,800
Thereafter		54,550
Gross Notes Payable	$	77,850

	Foreign Currency Items			Accumulated Other Comprehensive Loss Items
Beginning balance, December 31, 2016	$	5		$	5
Other comprehensive loss before reclassifications		(63	)		(63	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			—
Net current-period other comprehensive loss		(63	)		(63	)
Ending balance, September 30, 2017	$	(58	)	$	(58	)

	Three Months Ended September 30, 2017
	Before Tax			Tax Benefit		Net of Tax
Foreign currency translation adjustments	$	(6	)	$	—	$	(6	)

Other comprehensive loss	$	(6	)	$	—	$	(6	)

	Nine Months Ended September 30, 2017
	Before Tax			Tax Benefit		Net of Tax
Foreign currency translation adjustments	$	(63	)	$	—	$	(63	)

Other comprehensive loss	$	(63	)	$	—	$	(63	)

	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,
	2017			2016		2017			2016
Net income (loss)	$	(1,281	)	$	315	$	(4,177	)	$	(1,103	)

Weighted-average shares of common stock outstanding		12,418,000			6,534,000		10,355,000			6,383,000
Dilutive effect of employee stock options		-			14,000		-			-
Weighted average shares for diluted net income (loss) per share		12,418,000			6,548,000		10,355,000			6,383,000
Basic net (loss) income per share	$	(0.10	)	$	0.05	$	(0.40	)	$	(0.17	)
Diluted net (loss) income per share	$	(0.10	)	$	0.05	$	(0.40	)	$	(0.17	)

	FOR THE THREE MONTHS ENDED SEPTEMBER 30,						FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2017			2016			2017			2016
Revenues		100	%		100	%		100	%		100	%
Gross margin		78.1			78.5			77.9			77.0
Selling, general and administrative		60.9			53.5			64.6			60.2
Research and development		5.7			8.1			6.4			8.6
Amortization of intangible assets		8.6			6.6			8.3			6.3
Total operating expenses		75.2			68.1			79.2			75.1
Other loss, net		(10.6	)		(6.6	)		(8.4	)		(5.7	)
Net income (loss)		(8.3	)		3.3			(10.7	)		(4.3	)

	FOR THE THREE MONTHS ENDED September 30,				Increase (Decrease)
Revenue	2017		2016		Increase (Decrease)			%
Cloud revenue	$	11,062	$	5,630	$	5,432			96.5
Hardware revenue		1,003		676		327			48.4
Maintenance and support revenue		1,178		1,078		100			9.3
On premise software license revenue		599		754		(155	)		(20.6	)
Professional services revenue		1,685		1,302		383			29.4
Total revenue	$	15,527	$	9,440	$	6,087			64.5

	For the Nine Months Ended
	September 30,
	2017			2016

Net Cash used in operating activities	$	(2,083	)	$	(730	)
Net Cash used in investing activities		(38,351	)		(7,750	)
Net Cash provided by financing activities		55,123			7,460