What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-10 · 241 added, 217 removed, 272 unchanged (63% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

March 31, 2021 December 31, 2020

(in thousands, except per share amounts)

June 30, 2021 December 31, 2020

ASSETS (unaudited)

Current assets:

Cash and cash equivalents $ 20,292 $ 28,577

Accounts receivable, net of allowance for doubtful accounts of $ 1,909 and $ 2,194 at March 31, 2021 and December 31, 2020, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 2,411 and $ 2,194 at June 30, 2021 and December 31, 2020, respectively

Inventory 279 449

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Other accrued liabilities 1,319 1,380

Contingent purchase obligation 3,880 3,880

Contingent purchase consideration 2,096 3,880

Deferred revenue 1,279 4,343

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44,000 and 22,000 shares authorized;

19,405 and 19,354 shares issued, 19,021 and 18,970 shares outstanding at March 31, 2021 and December 31, 2020, respectively

Treasury stock at cost, 384 shares at March 31, 2021 and December 31, 2020

19,483 and 19,354 shares issued, 19,099 and 18,970 shares outstanding at June 30, 2021 and December 31, 2020, respectively

Treasury stock at cost, 384 shares at June 30, 2021 and December 31, 2020

( 5,017 ) ( 5,017 )

6 unchanged sentences

ASURE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share amounts)

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

(unaudited) (unaudited)

Recurring $ 16,072 $ 13,733 $ 35,314 $ 32,168

10 unchanged sentences

Loss from operations ( 4,369 ) ( 3,581 ) ( 5,638 ) ( 6,026 )

Interest expense and other, net ( 224 ) ( 235 )

Loss from operations before income taxes ( 1,493 ) ( 1,748 )

Income tax expense 105 19

Net loss ( 1,598 ) ( 1,767 )

Interest (expense) income and other, net ( 223 ) 14 ( 447 ) 710

Gain on extinguishment of debt 8,654 — 8,654 —

Income (loss) from operations before income taxes 4,062 ( 3,567 ) 2,569 ( 5,316 )

Income tax (benefit) expense 298 377 403 395

Net income (loss) 3,764 ( 3,944 ) 2,166 ( 5,711 )

Other comprehensive income:

Unrealized (loss) gain on marketable securities ( 139 ) 65

Comprehensive loss $ ( 1,737 ) $ ( 1,702 )

Basic and diluted net loss per share

Unrealized gain (loss) on marketable securities ( 69 ) 562 ( 208 ) 627

Comprehensive income (loss) $ 3,695 $ ( 3,382 ) $ 1,958 $ ( 5,084 )

Basic and diluted earnings (loss) per share

Basic $ 0.20 $ ( 0.25 ) $ 0.11 $ ( 0.36 )

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Amounts in thousands)

(in thousands)

Common Stock Outstanding Common Stock Amount Treasury Stock Additional Paid-in Capital Accumulated Deficit Other Comprehensive Income (Loss) Total Stockholders’ Equity

6 unchanged sentences

Balance at March 31, 2021 19,021 $ 194 $ ( 5,017 ) $ 420,561 $ ( 271,552 ) $ 465 $ 144,651

Stock issued upon option exercise and vesting of restricted stock units 49 1 — 188 — — 189

Stock issued, ESPP 29 — — 170 — — 170

Share based compensation — — — 714 — — 714

Net income — — — — 3,764 — 3,764

Other comprehensive income — — — — — ( 69 ) ( 69 )

Balance at June 30, 2021 19,099 $ 195 $ ( 5,017 ) $ 421,633 $ ( 267,788 ) $ 396 $ 149,419

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

ASURE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

Outstanding Common Stock Amount Treasury Stock Additional Paid-in

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Balance at March 31, 2020 15,743 $ 161 $ ( 5,017 ) $ 396,646 $ ( 255,409 ) $ 40 $ 136,421

Stock issued, ESPP 32 — — 157 — — 157

Stock issued upon option exercise and vesting of restricted stock units 66 1 — 301 — — 302

Share based compensation — — — 588 — — 588

Net loss — — — — ( 3,944 ) — ( 3,944 )

Other comprehensive income — — — — — 562 562

Balance at June 30, 2020 15,841 $ 162 $ ( 5,017 ) $ 397,692 $ ( 259,353 ) $ 602 $ 134,086

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

Three Months Ended March 31,

(in thousands)

Six Months Ended June 30,

Cash flows from operating activities:

Net loss $ ( 1,598 ) $ ( 1,767 )

Adjustments to reconcile loss to net cash (used in) provided by operations:

Net income (loss) $ 2,166 $ ( 5,711 )

Adjustments to reconcile income (loss) to net cash (used in) provided by operations:

Depreciation and amortization 7,905 7,033

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Amortization of debt financing costs and discount 60 170

Provision for (recovery of) doubtful accounts 1 75

Net amortization of premiums and accretion of discounts on available-for-sale securities 31 112

Provision for doubtful accounts 1 142

Provision for deferred income taxes 358 71

Gain on modification of debt — ( 134 )

Gain on extinguishment of debt ( 8,654 ) —

Net realized gains on sales of available-for-sale securities ( 269 ) ( 286 )

Share-based compensation 1,340 1,025

(Gain) loss on disposals of long-term assets ( 21 ) 52

Changes in operating assets and liabilities:

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Prepaid expenses and other assets ( 190 ) 2,278

Operating lease right-of-use assets ( 277 ) ( 1,051 )

Accounts payable ( 16 ) 426

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Software capitalization costs ( 2,311 ) ( 1,342 )

Net change in funds held for clients 66,439 27,714

Net cash provided by investing activities 65,158 24,806

Purchases of available-for-sale securities ( 236 ) ( 10,052 )

Proceeds from sales and maturities of available-for-sale securities 7,813 5,634

Net cash provided by (used in) investing activities 5,180 ( 8,130 )

Cash flows from financing activities:

Proceeds from notes payable — 8,856

Payments of notes payable ( 3,090 ) ( 2,359 )

Payments of contingent purchase consideration ( 1,784 ) —

Debt financing fees — ( 20 )

2 unchanged sentences

Net cash used in financing activities ( 117,657 ) ( 10,350 )

Net decrease in cash and cash equivalents ( 4,287 ) ( 8,046 )

Cash and cash equivalents at beginning of period 28,577 28,826

Cash and cash equivalents at end of period $ 24,290 $ 20,780

Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents ( 114,375 ) ( 18,830 )

Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period 324,985 134,060

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period $ 210,610 $ 115,230

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the Condensed Consolidated Balance Sheets

Cash and cash equivalents $ 20,292 $ 29,259

Restricted cash and restricted cash equivalents included in funds held for clients 190,318 85,971

Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 210,610 $ 115,230

Supplemental information:

Cash paid for:

Interest $ 219 $ 99

Income taxes 183 —

Cash paid for interest $ 449 $ 589

Cash paid for income taxes $ 378 $ 381

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

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(in thousands, except per share amounts)

NOTE 1 – THE COMPANY AND BASIS OF PRESENTATION

Asure Software, Inc., (“Asure”, the “Company”, “we” and “our”), a Delaware corporation, is a leading provider of cloud-based Human Capital Management (“HCM”) software solutions.

We help small and mid-sized companies grow by assisting them in building better teams with skills that reach the next level, stay compliant with ever-changing federal, state, and local tax jurisdictions and labor laws, and better allocate cash so they can spend their financial capital on growing their business rather than back-office overhead expenses.

Asure’s Human Capital Management suite, named Asure HCM, includes cloud-based Payroll, Tax Services, and Time & Attendance software as well as HR Services ranging from HR projects to completely outsourcing payroll and HR staff.

Asure Software, Inc., (“Asure”, the “Company”, “we” and “our”), a Delaware Corporation, is a leading provider of Human Capital Management (“HCM”) software solutions.

We help small- and medium-sized companies grow by assisting them in building better teams with skills to stay compliant with ever-changing federal, state, and local tax jurisdictions and labor laws, and better allocate cash so they can spend their financial capital on growing their business rather than back-office overhead expenses.

Asure’s Human Capital Management suite, named Asure HCM, includes cloud-based Payroll, Tax Services, and Time & Attendance software as well as human resources (“HR”) services ranging from HR projects to completely outsourcing payroll and HR staff.

We also offer these products and services through our network of reseller partners.

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Asure Payroll & Tax, Asure HR, Asure Time & Attendance, and Asure HRServices.

We develop, market, sell and support our offerings nationwide through our principal office in Austin, Texas and from our processing hubs in California, Tennessee, Nebraska, New York, Florida, Vermont, and Washington.

In May 2021, we closed our Washington office where we provided our HR consulting services as employees from that office now work remotely.

We have prepared the accompanying unaudited 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.

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GAAP”) for complete financial statements.

Certain reclassifications were made to conform to the current period presentation in the condensed consolidated statements of comprehensive loss.

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 March 31, 2021 and the results of operations, statements of changes in stockholders' equity for the three months ended March 31, 2021 and March 31, 2020, and our statements of cash flows for the three months ended March 31, 2021 and March 31, 2020.

These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto filed with the SEC in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (our "2020 Annual Report on Form 10-K").

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 June 30, 2021 and the results of operations, statements of changes in stockholders’ equity for the three and six months ended June 30, 2021 and June 30, 2020, and our statements of cash flows for the six months ended June 30, 2021 and June 30, 2020.

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes thereto filed with the SEC in our annual report on Form 10-K for the fiscal year ended December 31, 2020 (our “2020 Annual Report on Form 10-K”).

The results for the interim periods are not necessarily indicative of results for a full fiscal year.

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USE OF ESTIMATES

Preparation of the 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

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.

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Additionally, the actual amounts could differ from the estimates made.

Management periodically evaluates estimates used in the preparation of the consolidated financial statements for continued reasonableness.

Management periodically evaluates estimates used in the preparation of the Condensed Consolidated Financial Statements for continued reasonableness.

We make appropriate adjustments, if any, to the estimates used prospectively based upon such periodic evaluation.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(in thousands, except per share amounts)

CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents.

Cash equivalents include investments in an institutional money market fund, which invests in U.S.

Treasury bills, notes and bonds, and/or repurchase agreements, backed by such obligations.

Carrying value approximates fair value.

Cash and cash equivalents are deposited at various area banks, which at times may exceed federally insured limits.

The Company monitors the viability of the banking institutions carrying its assets on a regular basis, and has the ability to transfer cash to various institutions during times of risk.

The Company has not experienced any losses related to these cash balances, and believes its credit risk to be minimal.

SIGNIFICANT RISKS AND UNCERTAINTIES

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In addition, the conditions caused by the COVID-19 pandemic could adversely affect our customers’ ability or willingness to purchase our offerings, delay prospective customers’ purchasing decisions, delay the provisioning of our offerings, lengthen payment terms, reduce the value or duration of customer subscription contracts, or affect attrition rates, all of which could adversely affect our future sales, operating results and overall financial performance.

The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions, including the administration of vaccinations and the impact of these and other factors on our employees, customers, partners and vendors.

The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus and potential variants, the extent and effectiveness of containment actions, including the administration of vaccinations and the impact of these and other factors on our employees, customers, partners and vendors.

If we are not able to respond to and manage the impact of such events effectively, our business will be harmed.

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2018-13, Fair Value Measurement (Topic 820).

The new guidance modifies disclosure requirements related to fair value measurement.

We adopted the standard on January 1, 2020.

The adoption of this standard did not have an impact on our financial statements and disclosures.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40).

The new guidance reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

We adopted the standard on January 1, 2020 prospectively to all implementation costs incurred after the date of adoption.

The effects of this standard on our financial position, results of operations and cash flows were not material.

In December 2019, the FASB issued ASU No.

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The adoption of ASU 2019-12 resulted in no material impact to the Company’s financial statements.

CONTINGENCIES

Although 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, 2021, we were not a party to any pending legal proceedings that are material to our business.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

As of March 31, 2021 and December 31, 2020, accumulated other comprehensive income consisted of net unrealized gains and losses on available-for-sale securities.

RECLASSIFICATION

The Company reclassified its presentation of restricted cash and restricted cash equivalents included in funds held for clients as of June 30, 2020 in the Condensed Consolidated Statements of Cash Flows to conform to the current period presentation.

Such reclassification had no effect on the consolidated financial position or consolidated results of operations of the Company.

LEGAL PROCEEDINGS

Although 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 June 30, 2021, we were not a party to any pending legal proceedings that are material to our business.

ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(in thousands, except per share amounts)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

As of June 30, 2021 and December 31, 2020, accumulated other comprehensive income (loss) consisted of net unrealized gains and losses on available-for-sale securities.

NOTE 3 – INVESTMENTS AND FAIR VALUE MEASUREMENTS

As of March 31, 2021 and December 31, 2020, funds held for clients invested in available-for-sale securities consisting of government and commercial bonds, including mortgage-backed securities, amounted to $ 24,233 and $ 25,919 , respectively.

As of March 31, 2021, and December 31, 2020, funds held for clients invested in money market funds and other cash equivalents amounted to $ 1,082 and $ 63,999 , respectively.

Additionally, as of March 31, 2021 and December 31, 2020, we had $ 3,301 and $ 5,204 , respectively, of operating funds in money market funds, classified as cash equivalents.

Investments classified as available-for-sale consisted of the following:

March 31, 2021

Funds Held for Clients (2)

Certificates of deposit $ 7,119 $ 165 $ — $ 7,284

Corporate debt securities 8,894 213 ( 4 ) 9,103

Municipal bonds 7,254 99 — 7,353

US Government agency securities 500 — ( 7 ) 493

Asset-backed securities — — — —

Total $ 23,767 $ 477 $ ( 11 ) $ 24,233

December 31, 2020

Funds Held for Clients (2)

Certificates of deposit $ 7,370 $ 204 $ — $ 7,574

Corporate debt securities 9,415 297 ( 1 ) 9,711

Municipal bonds 7,531 103 ( 1 ) 7,633

US Government agency securities 500 1 — 501

Asset-backed securities 499 1 — 500

Total $ 25,315 $ 606 $ ( 2 ) $ 25,919

(1) Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss.

As of March 31, 2021 and December 31, 2020, there were 63 and 69 securities, respectively, in an unrealized gain position and there were 2 and 2 securities, respectively, in an unrealized loss position.

As of March 31, 2021, we had $( 11 ) in unrealized losses.

As of March 31, 2021, these unrealized losses were less than$( 7 ) individually and $( 11 ) in the aggregate.

As of December 31, 2020, these unrealized losses were less than $( 1 ) individually and $( 2 ) in the aggregate.

No securities have been in a continuous unrealized 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 other-than-temporary impairment.

Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

(2) At March 31, 2021 and December 31, 2020, none of these securities were classified as cash and cash equivalents on the accompanying condensed consolidated balance sheets.

ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Expected maturities of available-for-sale securities as of March 31, 2021 are as follows:

Expected Maturities Amount

One year or less $ 4,228

After one year through five years 20,005

After five years through 10 years —

After 10 years —

In July 2020, we acquired certain assets of a payroll tax business.

The initial purchase price for the assets was $ 4,250 , which we paid cash at closing.

The seller will be paid additional consideration for the assets based on the trailing twelve-month revenue at each of April 30, 2021 and October 31, 2021.

Contingent purchase consideration, if any, will generally be made by May 30, 2021 and December 30, 2021.

The payment of the contingent consideration paid will be contingent on certain thresholds set forth in the asset purchase agreement.

We utilized a Monte Carlo simulation to determine the fair value of the contingent consideration.

There was no adjustment to the fair value of the contingent consideration at March 31, 2021.

Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value in U.S.

GAAP and expands disclosures about fair value measurements.

ASC 820 establishes a three-tier fair value hierarchy, which is based on the reliability of the inputs used in measuring fair values.

These tiers include:

Accounting Standards Codification (ASC) 820 “Fair Value Measurement” (ASC 820) defines fair value, establishes a framework for measuring fair value under U.S.

GAAP and 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 describes a fair value hierarchy based on the following three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last unobservable:

Quoted prices in active markets for identical assets or liabilities;

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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 as of March 31, 2021 and December 31, 2020, respectively:

March 31, 2021

Total Carrying Value Quoted Prices in Active Market

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(in thousands, except per share amounts)

The following table presents the fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020, respectively (in thousands):

Total Carrying Value Level 1 Level 2 Level 3

June 30, 2021

Cash equivalents

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December 31, 2020

Total Carrying Value Quoted Prices in Active Market

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

Cash equivalents

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Total $ 3,880 $ — $ — $ 3,880

In July 2020, we acquired certain assets of a payroll tax business (the “Asset Purchase Agreement”).

The initial purchase price for the assets was $ 4,250 , which we paid in cash at closing.

The Asset Purchase Agreement set forth two subsequent purchase consideration payments, which are contingent on certain thresholds.

The first contingent purchase consideration of $ 1,975 , was offset by certain net amounts owed to us by the seller related to transition services in the amount of $ 191 , was paid in June 2021 (a total payment of $ 1,784 ).

The second and final contingent purchase consideration, will be based on the trailing twelve-month revenue at October 31, 2021, and will generally be made by April 30, 2022.

We utilized a Monte Carlo simulation to determine the fair value of the contingent consideration.

There was no adjustment to the fair value of the contingent consideration at June 30, 2021.

ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(in thousands, except per share amounts)

Restricted cash equivalents and i nvestments classified as available-for-sale within funds held for clients consisted of the following (in thousands):

June 30, 2021

Restricted cash equivalents $ 1,962 $ — $ — $ 1,962

Available-for-sale securities:

Certificates of deposit 5,399 137 — 5,536

Corporate debt securities 7,398 205 ( 9 ) 7,594

Municipal bonds 3,427 62 — 3,489

Government agency securities 500 — ( 5 ) 495

Total available-for-sale securities 16,724 404 ( 14 ) 17,114

$ 18,686 $ 404 $ ( 14 ) $ 19,076

December 31, 2020

Restricted cash equivalents $ 1,258 $ — $ — $ 1,258

Available-for-sale securities:

Certificates of deposit 7,370 204 — 7,574

Corporate debt securities 8,914 295 ( 1 ) 9,208

Municipal bonds 7,276 103 ( 1 ) 7,378

Government agency securities 500 1 — 501

Total available-for-sale securities 24,060 603 ( 2 ) 24,661

$ 25,318 $ 603 $ ( 2 ) $ 25,919

(1) Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss.

As of June 30, 2021 and December 31, 2020, there were 53 and 69 securities, respectively, in an unrealized gain position and there were 2 securities in an unrealized loss position for both periods.

As of June 30, 2021, these unrealized losses were less than $ 9 individually and $ 14 in the aggregate.

As of December 31, 2020, these unrealized losses were less than $ 2 individually and $ 2 in the aggregate.

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 other-than-temporary impairment.

(2) At June 30, 2021 and December 31, 2020, none of these securities were classified as cash and cash equivalents on the accompanying Condensed Consolidated Balance Sheets.

Funds held for clients represent assets that the Company has classified as restricted for use solely for the purposes of satisfying the obligations to remit funds relating to the Company’s payroll and payroll tax filing services, which are classified as client funds obligations on our Condensed Consolidated Balance Sheets.

ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

Funds held for clients have been invested in the following categories (in thousands):

June 30, 2021 December 31, 2020

Restricted cash and cash equivalents held to satisfy client funds obligations $ 190,318 $ 296,408

Restricted short-term marketable securities held to satisfy client funds obligations 2,027 4,249

Restricted long-term marketable securities held to satisfy client funds obligations 15,087 20,412

Total funds held for clients $ 207,432 $ 321,069

Expected maturities of available-for-sale securities as of June 30, 2021 are as follows (in thousands):

One year or less $ 3,487

After one year through five years 15,589

NOTE 4 – GOODWILL AND OTHER INTANGIBLE ASSETS

As of March 31, 2021 and December 31, 2020, goodwill was $ 73,958 .

The Company evaluates the recoverability of goodwill annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

As of March 31, 2021, there has been no impairment of goodwill based on the qualitative assessments performed by the Company.

The gross carrying amount and accumulated amortization of our intangible assets as of March 31, 2021 and December 31, 2020 are as follows:

March 31, 2021

Intangible Assets Weighted Average

As of June 30, 2021 and December 31, 2020, goodwill was $ 73,958 .

As of June 30, 2021, there has been no impairment of goodwill based on the qualitative assessments performed by the Company.

The gross carrying amount and accumulated amortization of our intangible assets as of June 30, 2021 and December 31, 2020 are as follows (in thousands, except weighted average periods):

Weighted Average

(in Years) Gross Accumulated

Amortization Net

June 30, 2021

Customer relationships 8.9 $ 88,310 $ ( 33,803 ) $ 54,507

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December 31, 2020

Intangible Assets Weighted Average

(in Years) Gross Accumulated

Amortization Net

Customer relationships 8.9 $ 88,310 $ ( 28,898 ) $ 59,412

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We record amortization 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 $ 2,528 and $ 2,349 for the three months ended March 31, 2021 and 2020, respectively.

Amortization expenses recorded in Cost of Sales were $ 379 and $ 431 for the three months ended March 31, 2021 and 2020, respectively.

There is no impairment of intangibles during the three months ended March 31, 2021 based on the qualitative assessment performed by the Company.

Amortization expenses recorded in Operating Expenses were $ 2,528 and $ 2,349 for the three months ended June 30, 2021 and 2020, respectively.

Amortization expenses recorded in Cost of Sales were $ 379 and $ 397 for the three months ended June 30, 2021 and 2020, respectively.

ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The following table summarizes the future estimated amortization expense relating to our intangible assets as of March 31, 2021:

Calendar Years Amount

2021 (April to December) $ 8,695

(in thousands, except per share amounts)

Amortization expenses recorded in Operating Expenses were $ 5,056 and $ 4,698 for the six months ended June 30, 2021 and 2020, respectively.

Amortization expenses recorded in Cost of Sales were $ 757 and $ 828 for the six months ended June 30, 2021 and 2020, respectively.

There was no impairment of intangibles during the six months ended June 30, 2021 based on the qualitative assessment performed by the Company.

The following table summarizes the future estimated amortization expense relating to our intangible assets as of June 30, 2021 (in thousands):

2021 (six months) $ 5,788

Thereafter 7,578

NOTE 5 – NOTES PAYABLE

The following table summarizes our outstanding debt as of the dates indicated:

Maturity Stated Interest Rate March 31, 2021 December 31, 2020

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

Maturity Stated Interest Rate June 30, 2021 December 31, 2020

Subordinated Notes Payable – acquisitions 7/1/2021 – 7/1/2022 2.00 % - 3.00 %

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Long-term Notes Payable $ 10,285 $ 12,525

(1) Information presented in each of the tables this Note 5 includes principal and interest due under the terms of a promissory note with Pinnacle Bank.

This loan was issued to us in connection with the Paycheck Protection Program pursuant to Title I of the Coronavirus Aid, Relief and Economic Security Act ("the PPP").

Under the terms of the PPP, the principal balance and interest due under the promissory note will be forgiven if we meet certain conditions related to the use of the loan proceeds.

Under the terms of our promissory note with Pinnacle Bank, we would have been required to make payments on this promissory note in November 2020;

however, the Small Business Administration ("the SBA") issued guidance, prior to that date, that deferred all payments that would be owed on this loan until after the SBA makes a decision on our loan forgiveness application.

While we expect that the entire loan will be forgiven, we cannot be certain that the SBA will grant forgiveness of our entire loan or a significant portion of the loan.

If we do not receive forgiveness of our entire loan, we will be obligated to start making payments on the portion of the principal and interest that is not forgiven so that it will be fully repaid no later than April 15, 2022, unless we are able to negotiate new payment terms with Pinnacle Bank.

We filed our initial application for forgiveness in December 2020, and completed our application in early February 2021.

ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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:

March 31, 2021

(1) See the PPP Loan section that follows in this Note 5 — Notes Payable.

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

Gross Notes Payable Debt Issuance Costs and Debt Discount Net Notes Payable

Notes payable, current portion 1

June 30, 2021

Current portion of notes payable (1)

$ 3,398 $ ( 121 ) $ 3,277

2 unchanged sentences

Total $ 13,683 $ ( 318 ) $ 13,365

(1) Net Notes Payable includes $ 8,358 of Gross Notes Payables and $ 0 Debt Issuance Cost and Debt Discount related to our PPP loan with Pinnacle Bank, all or a portion of which we expect will be forgiven and for which we are not obligated to make any payments until the Small Business Administration has made a decision regarding our application for loan forgiveness.

(2) Net Notes Payable, includes $ 498 of Gross Notes Payables and $ 0 Debt Issuance Cost and Debt Discount related to our PPP loan with Pinnacle Bank, all or a portion of which we expect will be forgiven and for which we are not obligated to make payments until the SBA has made a decision regarding our application for loan forgiveness.

December 31, 2020

Gross Notes Payable Debt Issuance Costs and Debt Discount Net Notes Payable

Notes payable, current portion 1

Current portion of notes payable (1)

$ 12,388 $ ( 78 ) $ 12,310

2 unchanged sentences

Total $ 24,913 $ ( 378 ) $ 24,535

(1) Net Notes Payable includes $ 6,866 of Gross Notes Payables and $ 0 Debt Issuance Cost and Debt Discount related to our PPP loan with Pinnacle Bank, all or a portion of which we expect will be forgiven and for which we are not obligated to make any payments until the SBA has made a decision regarding our application for loan forgiveness.

(2) Net Notes Payable, includes $ 1,989 of Gross Notes Payables and $ 0 Debt Issuance Cost and Debt Discount related to our PPP loan with Pinnacle Bank, all or a portion of which we expect will be forgiven and for which we are not obligated to make payments until the SBA has made a decision regarding our application for loan forgiveness.

The following table summarizes the future principal payments related to our outstanding debt as of March 31, 2021:

Year Ending Amount

2021 (remainder) $ 10,407

Total $ 22,932

(1) Current portion of notes payable includes $ 0 and $ 6,866 of Gross Notes Payables and $ 0 and $ 0 of Debt Issuance Cost and Debt Discount for the periods ended June 30, 2021 and December 31, 2020, respectively, related to our PPP loan with Pinnacle Bank.

See the PPP Loan section that follows in this Note 5 — Notes Payable.

ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(in thousands, except per share amounts)

(2) Notes Payable, net of current portion includes $ 0 and $ 1,989 of Gross Notes Payables and $ 0 and $ 0 Debt Issuance Cost and Debt Discount for the periods ended June 30, 2021 and December 31, 2020, respectively, related to our PPP loan with Pinnacle Bank.

See the PPP Loan section that follows in this Note 5 — Notes Payable.

The following table summarizes the future principal payments related to our outstanding debt as of June 30, 2021 (in thousands):

Year Ending Amount

2021 (six months) $ 3,148

Total $ 13,683

Senior Credit Facility with Wells Fargo N.A.

5 unchanged sentences

The Credit Agreement has been amended and restated multiple times, with the most recent amendment and restatement effective December 31, 2019.

As described below, the Credit Agreement was amended during 2020, with the most recent amendment effective August 10, 2020.

Following the amendment, the Credit Agreement provided for $ 10,000 in term loans and a $ 5,000 revolver and provided for new applicable margin rates for determining the interest payable on loans and amended certain of our financial covenants as described in our Form 10-K filed with the SEC on March 9, 2021.

The Credit Agreement was also amended, but not restated, on August 10, 2020.

We expect to be in compliance with these amended financial covenants over the next twelve months.

As of March 31, 2021 and December 31, 2020, no amount was outstanding and $ 4,500 , respectively, was available for borrowing under the revolver.

Due to the effects of COVID-19 on our business and the related need to support our operations, we applied for and received a loan from Pinnacle Bank under the PPP during the second quarter of 2020.

Under the terms of our note with Pinnacle Bank, principal payments would have begun in November 2020.

However, the SBA, which administers loans issued under the PPP, has issued guidance, deferring all payments that would be owed on this loan until the SBA makes a decision on our loan forgiveness application.

While we expect that the entire loan will be forgiven, we cannot be certain that the SBA will forgive our entire loan.

If we do not receive forgiveness of our entire loan, we will be obligated to begin repaying the portion of the principal and interest that is not forgiven such that it is fully paid no later than April 15, 2022, unless we are able to negotiate new payment terms with Pinnacle Bank.

Further, if the portion of the PPP Loan that is not forgiven (the “Unforgiven Debt”) exceeds $ 3,250 or requires monthly payments of principal and interest in excess of $ 185 , it is likely we will be in default under our Credit Agreement unless we obtain a waiver from our senior lender or are otherwise able to negotiate acceptable terms with our senior lender and Pinnacle Bank.

We filed our initial application for forgiveness of this loan in December 2020, and completed our application in early February 2021.

Given this timing, we expect that payments we may owe, if any, would not start until second or third quarter of 2021.

GAAP, we are required to report this entire loan as outstanding debt in our financial statements and further identify the current portion of this debt (e.g.

amounts which would be payable in the next 12 months) with reference to the actual terms of our note with Pinnacle Bank.

Notwithstanding how this loan is reported in our financial statements, we do not expect to make any payments on this note until at least second quarter of 2021, and then only to the extent that any portion of this note is not forgiven in accordance with the terms of the PPP.

For both periods ending June 30, 2021, and December 31, 2020, no amount was outstanding and $ 4,500 was available for borrowing under the revolver.

Due to the effects of COVID-19 on our business and the related need to support our operations, we received an unsecured Paycheck Protection Program loan in the amount of $ 8,856 (the “PPP Loan”) in April 2020 from Pinnacle Bank (the “Lender”) under the Coronavirus Aid, Relief and Economic Security Act.

In June 2021, we received notice from our Lender that the Small Business Administration (“SBA”) had approved our application for forgiveness of our PPP Loan.

The amount forgiven of $ 8,560 was the amount we requested in our forgiveness application but was less than the original principal balance due, in part, to changes in SBA guidance following the date of our original loan application.

Following the grant of forgiveness, we had an outstanding principal balance of $ 296 and an additional immaterial amount of accrued interest in our PPP Loan, both of which we paid in full in June 2021.

During the three months ended June 30, 2021 the Company recorded a gain on the forgiveness of the PPP Loan and accrued interest in the amount of $ 8,654 .

The gain on the forgiveness of the PPP Loan is reflected on our Condensed Consolidated Statements of Comprehensive Income, and is a non-taxable event.

NOTE 6 – CONTRACTS WITH CUSTOMERS AND REVENUE CONCENTRATION

Receivables from contracts with customers, net of allowance for doubtful accounts of $ 1,909 were $ 3,873 at March 31, 2021.

Receivables from contracts with customers, net of allowance for doubtful accounts of $ 2,411 , were $ 3,482 at June 30, 2021.

Receivables from contracts with customers, net of allowance for doubtful accounts of $ 2,194 , were $ 3,354 at December 31, 2020.

As of March 31, 2021, one customer represented 5 % of our net accounts receivable balance.

No customers represented more than 10% of our net accounts receivable balance as of December 31, 2020.

No customers represented more than 10% of our net accounts receivable balance as of June 30, 2021 and December 31, 2020, respectively.

ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(in thousands, except per share amounts)

Deferred Commissions

Deferred commission costs from contracts with customers were $ 4,128 and $ 3,792 at March 31, 2021 and December 31, 2020, respectively.

The amount of amortization recognized for the three months ended March 31, 2021 and for the three months ended March 31, 2020 was $ 232 and $ 249 , respectively.

Deferred commission costs from contracts with customers were $ 4,388 and $ 3,792 at June 30, 2021 and December 31, 2020, respectively.

The amount of amortization recognized for the three and six months ended June 30, 2021 was $ 307 and $ 539 , respectively, and for the three and six months ended June 30, 2020 was $ 190 and $ 471 , respectively.

Deferred Revenue

During the three months ended March 31, 2021 and 2020, revenue of $ 3,406 and $ 2,704 was recognized from the deferred revenue balance at the beginning of each period.

During the three and six months ended June 30, 2021, revenue of $ 442 and $ 3,848 , and the three and six months ended June 30, 2020, revenue of $ 689 and $ 3,393 , 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, 2021, approximately $ 24,563 of revenue is expected to be recognized from remaining performance obligations.

As of June 30, 2021, approximately $ 24,801 of revenue is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 71 % of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

Revenue Concentration

During the three months ended March 31, 2021 and 2020, there were no customers that individually represented 10% or more of consolidated revenue.

During the three and six months ended June 30, 2021 and 2020, there were no customers that individually represented 10% or more of consolidated revenue.

NOTE 7 – LEASES

2 unchanged sentences

Under such leases, the lessors receive annual minimum (base) rent.

The leases have original terms (excluding extension options) ranging from one to ten years .

The leases have original terms (excluding extension options) ranging from one year to ten 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, rent expense is included in operating expenses under selling, general and administrative expenses.

The components of the rent expense for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended March 31,

In the accompanying Condensed Consolidated Statements of Comprehensive Loss, rent expense is included in operating expenses under general and administrative expenses.

The components of the rent expense for the three and six months ended June 30, 2021 and 2020 were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Operating lease cost $ 544 $ 521 $ 1,114 $ 1,073

2 unchanged sentences

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 8 % and 9 % as of March 31, 2021 and December 31, 2020, respectively.

The weighted average remaining lease term is five and six years as of March 31, 2021 and December 31, 2020, respectively.

Supplemental cash flow information related to operating leases for the three months ended March 31, 2021 and 2020 follow:

The weighted average discount rate of our operating leases is 9 % as of June 30, 2021 and December 31, 2020, respectively.

The weighted average remaining lease term is five years and six years as of June 30, 2021 and December 31, 2020, respectively.

ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended March 31,

(in thousands, except per share amounts)

Supplemental cash flow information related to operating leases for the six months ended June 30, 2021 and 2020 are as follows (in thousands):

Six Months Ended June 30,

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Operating lease assets obtained in exchange for new operating lease liabilities $ 325 $ 1,052

Future minimum commitments over the life of all operating leases, which exclude variable rent payments, are as follows:

Year Ending December 31 Operating Leases

2021 (remainder) $ 1,854

Future minimum commitments over the life of all operating leases, which exclude variable rent payments, are as follows (in thousands):

Operating Leases

2021 (six months) $ 1,086

Thereafter 1,192

Total minimum lease payments 7,533

Less imputed interest ( 1,666 )

imputed interest ( 1,479 )

Total lease liabilities $ 6,054

4 unchanged sentences

We have outstanding options to purchase 1,910,803 shares at a weighted average exercise price of $ 7.95 .

During the three months ending March 31, 2021 we issued 307,500 of employee stock options.

The weighted average exercise price of these awards was $ 7.53 for the three months ended March 31, 2021.

During the three and six months ending June 30, 2021 we issued 596,000 and 903,500 of employee stock options, respectively.

The weighted average exercise price of these awards was $ 7.86 and $ 7.75 for the three and six months ended June 30, 2021, respectively.

These awards will vest over a three year period.

We also had 388,273 outstanding restricted stock units as of March 31, 2021.

As of March 31, 2021, we had 1,008,506 shares available for grant pursuant to the 2018 Plan.

Share based compensation for our stock option plans for the three months ended March 31, 2021 and March 31, 2020 were $ 626 and $ 438 , respectively.

We issued 19,709 and 19,317 shares of common stock related to exercises of stock options for the three months ended March 31, 2021 and 2020, respectively.

We issued 34,920 and 9,944 shares of common stock related to the issuance of vested restricted stock units for the three months ended March 31, 2021 and 2020, respectively.

NOTE 9 – NET LOSS PER SHARE

We compute net loss per share based on the weighted average number of common shares outstanding for the period.

Diluted net loss per share reflects the maximum dilution that would have resulted from incremental common shares issuable upon the exercise of stock options.

We compute the number of common share equivalents, which includes stock options, using the treasury stock method.

We have excluded stock options and restricted stock units of approximately 1,854,000

We also had 261,616 outstanding restricted stock units as of June 30, 2021.

As of June 30, 2021, we had 1,607,763 shares available for grant pursuant to the 2018 Plan.

Share based compensation for our stock option plans for the three months ended June 30, 2021 and June 30, 2020 was $ 714 and $ 587 , respectively and for the six months ended June 30, 2021 and June 30, 2020 was $ 1,340 and $ 1,025 , respectively.

We issued 84,829 and 58,479 shares of common stock related to exercises of stock options for the three months ended June 30, 2021 and 2020, respectively.

We issued 27,793 and 7,213 shares of common stock related to the issuance of vested restricted stock units for the three months ended June 30, 2021 and 2020, respectively.

ASURE SOFTWARE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

and 1,264,000 shares for the three months ended March 31, 2021 and 2020, respectively, from the computation of the diluted shares because the effect of including the stock options and restricted stock units would have been anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per common share for the three months ended March 31, 2021 and March 31, 2020:

Three Months Ended March 31,

Net loss $ ( 1,598 ) $ ( 1,767 )

Weighted-average shares of common stock outstanding, basic and diluted 19,007,000 15,727,000

Basic and diluted loss per share $ ( 0.08 ) $ ( 0.11 )

(in thousands, except per share amounts)

NOTE 9 – NET EARNINGS (LOSS) PER SHARE

We compute net earnings (loss) per share based on the weighted average number of common shares outstanding for the period.

Diluted net earnings (loss) per share reflects the maximum dilution that would have resulted from incremental common shares issuable upon the exercise of stock options.

We compute the number of common share equivalents, which includes stock options, using the treasury stock method.

We have excluded stock options and restricted stock units of approximately 2,172 and 2,172 shares for the three and six months ended June 30, 2021 and 2020, respectively, from the computation of the diluted shares because the effect of including the stock options and restricted stock units would have been anti-dilutive.

The following table sets forth the computation of basic and diluted net earnings (loss) per common share for the three and six months ended June 30, 2021 and June 30, 2020 (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income (loss) $ 3,764 $ ( 3,944 ) $ 2,166 $ ( 5,711 )

Weighted-average shares of common stock outstanding 19,040 15,779 19,033 15,753

Basic earnings (loss) per share $ 0.20 $ ( 0.25 ) $ 0.11 $ ( 0.36 )

Net income (loss) $ 3,764 $ ( 3,944 ) $ 2,166 $ ( 5,711 )

Weighted-average shares of common stock outstanding 19,203 15,779 19,198 15,753

Diluted earnings (loss) per share $ 0.20 $ ( 0.25 ) $ 0.11 $ ( 0.36 )

NOTE 10 – SUBSEQUENT EVENTS

We evaluated subsequent events through the date of the filing of this Quarterly Report on Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the condensed consolidated financial statements as of March 31, 2021, and events which occurred subsequent to March 31, 2021 but were not recognized in the condensed consolidated financial statements.

Based on this evaluation, we have determined there were no subsequent events to report.

On August 9, 2021, we entered into a commitment letter (the “Commitment Letter”) with Structural Capital Investments III, LP (“Structural”) pursuant to which Structural has agreed, subject to the conditions set forth in the Commitment Letter, to provide us up to $50 million in acquisition and term loan financing to support our growth needs (the “New Credit Facility”).

The Loan and Security Agreement and Ancillary Terms attached to the Commitment Letter provide the material terms and conditions of the New Credit Facility.

Subject to the satisfaction of certain closing conditions, the parties are expected to close and fund up to $25 million of the New Credit Facility on or around September 15, 2021;

however the closing may be extended to September 30, 2021 upon our request, and at Structural’s reasonable discretion.

If the closing conditions are not satisfied by September 30, 2021 (if the extension is granted), the Commitment Letter will expire.

The New Credit Facility would replace our existing facility with Wells Fargo N.A.

and on August 9, 2021, we provided Wells Fargo N.A.

with notice of our intent to terminate the existing facility.

We expect to pay off all of our outstanding obligations to Wells Fargo N.A.

in connection with the closing of the New Credit Facility.

Other Information for an expanded explanation of this event.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements