What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-09 · 111 added, 86 removed, 362 unchanged (35% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets:

Cash, cash equivalents, and restricted cash $ 14,594 $ 13,427

Accounts receivable, net of allowance for doubtful accounts of $ 2,264 and $ 2,210 at March 31, 2022 and December 31, 2021, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 2,819 and $ 2,210 at June 30, 2022 and December 31, 2021, respectively

Inventory 289 246

36 unchanged sentences

44,000 shares authorized;

20,455 and 20,412 shares issued, 20,071 and 20,028 shares outstanding at March 31, 2022 and December 31, 2021, respectively

Treasury stock at cost, 384 shares at March 31, 2022 and December 31, 2021

20,455 and 20,412 shares issued, 20,141 and 20,028 shares outstanding at June 30, 2022 and December 31, 2021, respectively

Treasury stock at cost, 384 shares at June 30, 2022 and December 31, 2021

( 5,017 ) ( 5,017 )

1 unchanged sentence

Accumulated deficit ( 275,637 ) ( 266,760 )

Accumulated other comprehensive income ( 1,162 ) ( 99 )

Accumulated other comprehensive loss ( 1,658 ) ( 99 )

Total stockholders’ equity 149,540 158,240

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(unaudited) (unaudited)

Recurring $ 19,014 $ 16,072 $ 42,018 $ 35,314

10 unchanged sentences

Loss from operations ( 5,848 ) ( 4,369 ) ( 8,019 ) ( 5,638 )

Interest expense and other, net ( 816 ) ( 224 )

Loss from operations before income taxes ( 2,987 ) ( 1,493 )

Interest expense, net ( 1,085 ) ( 223 ) ( 1,901 ) ( 447 )

Other income, net 1,147 8,654 1,147 8,654

(Loss) Income from operations before income taxes ( 5,786 ) 4,062 ( 8,773 ) 2,569

Income tax expense 74 298 104 403

Net loss ( 3,017 ) ( 1,598 )

Net (loss) income ( 5,860 ) 3,764 ( 8,877 ) 2,166

Other comprehensive loss:

Unrealized loss on marketable securities ( 1,754 ) ( 69 ) ( 1,063 ) ( 208 )

Comprehensive loss $ ( 4,080 ) $ ( 1,737 )

Basic and diluted loss per share

Comprehensive (loss) income $ ( 7,614 ) $ 3,695 $ ( 9,940 ) $ 1,958

Basic and diluted (loss) earnings per share

Basic $ ( 0.29 ) $ 0.20 $ ( 0.44 ) $ 0.11

13 unchanged sentences

Other comprehensive loss — — — — — ( 1,063 ) ( 1,063 )

March 31, 2022 20,071 $ 205 $ ( 5,017 ) $ 430,641 $ ( 269,777 ) $ ( 1,162 ) $ 154,890

Balance at March 31, 2022 20,071 $ 205 $ ( 5,017 ) $ 430,641 $ ( 269,777 ) $ ( 1,162 ) $ 154,890

Stock issued upon option exercise and vesting of restricted stock units 33 — — — — — —

Stock issued, ESPP 38 — — 192 — — 192

Share based compensation — — — 814 — — 814

Share issuance costs — — — — — — —

Net loss — — — — ( 5,860 ) — ( 5,860 )

Other comprehensive loss — — — — — ( 496 ) ( 496 )

Balance at June 30, 2022 20,142 $ 205 $ ( 5,017 ) $ 431,647 $ ( 275,637 ) $ ( 1,658 ) $ 149,540

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)

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 loss — — — — — ( 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.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net loss $ ( 3,017 ) $ ( 1,598 )

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

Net (loss) income $ ( 8,877 ) $ 2,166

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

Depreciation and amortization 9,363 7,905

4 unchanged sentences

Provision for deferred income taxes 75 358

Gain on extinguishment of debt ( 180 ) ( 8,654 )

Net realized gains on sales of available-for-sale securities ( 406 ) ( 269 )

Share-based compensation 1,544 1,340

(Gain) loss on disposals of long-term assets 1 —

Loss (gain) on disposals of long-term assets 1 ( 21 )

Change in fair value of contingent purchase consideration ( 955 ) —

Changes in operating assets and liabilities:

17 unchanged sentences

Payments of notes payable — ( 3,090 )

Payments of contingent purchase consideration — ( 1,784 )

Net proceeds from issuance of common stock 192 468

Net change in client fund obligations ( 32,716 ) ( 113,251 )

Net cash provided by (used in) financing activities 21,296 ( 68,415 )

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents 17,107 ( 69,131 )

Net cash used in financing activities ( 32,524 ) ( 117,657 )

Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents ( 46,613 ) ( 114,375 )

Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period 198,743 324,985

4 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

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

4 unchanged sentences

Cash paid for interest $ 1,435 $ 449

Cash (refunded) paid for income taxes $ ( 14 ) $ 183

Cash paid for income taxes $ 175 $ 378

Non-cash investing and financing activities:

18 unchanged sentences

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 March 31, 2022 and the results of operations, statements of changes in stockholders’ equity for the three months ended March 31, 2022 and March 31, 2021, and our statements of cash flows for the three months ended March 31, 2022 and March 31, 2021.

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, 2022 and the results of operations, statements of changes in stockholders’ equity for the three and six months ended June 30, 2022 and June 30, 2021, and our statements of cash flows for the six months ended June 30, 2022 and June 30, 2021.

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, 2021 (our “2021 Annual Report on Form 10-K”).

14 unchanged sentences

Restricted cash consists of cash balances which are restricted as to withdrawal or usage.

As of March 31, 2022, the Company has $500 of restricted cash related to our agreement with Atlantic Capital Bank.

As of June 30, 2022, the Company has $500 of restricted cash related to our agreement with South State Bank.

RECENT ACCOUNTING PRONOUNCEMENTS

12 unchanged sentences

The Company is currently evaluating this standard and the potential effects of these changes to its consolidated financial statements and will adopt this new standard in the fiscal year beginning January 1, 2023.

RECLASSIFICATION

The Company reclassified its presentation of restricted cash and restricted cash equivalents included in funds held for clients as of March 31, 2021 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.

ACCUMULATED OTHER COMPREHENSIVE LOSS

As of March 31, 2022 and December 31, 2021, accumulated other comprehensive loss consisted of net unrealized gains and losses on available-for-sale securities.

As of June 30, 2022 and December 31, 2021, accumulated other comprehensive loss consisted of net unrealized gains and losses on available-for-sale securities.

NOTE 3 - BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

1 unchanged sentence

The aggregate purchase price that the Company paid for these assets was $ 14,750 , paid as follows:

(i) $ 10,325 in cash at closing, (ii) the delivery of a promissory note in the amount of $ 2,213 , and (iii) the delivery of 244 shares of the Company’s common stock, which the parties agreed had an aggregate value of $ 2,213 as of September 31, 2021.

(i) $ 10,325 in cash at closing, (ii) the delivery of 244 shares of the Company’s common stock, which the parties agreed had an aggregate value of $ 2,213 as of September 30, 2021, and (iii) the delivery of a promissory note in the amount of $ 2,213 .

The promissory note was adjusted to $2,223 to account for post close and working capital adjustments.

The Asset Purchase Agreement is subject to working capital adjustments to the purchase price.

Also in September 2021, we acquired certain assets of a payroll business (the “Second Asset Purchase Agreement”).

The initial purchase price for the assets was $ 24,150 , of which $ 15,000 was paid in cash at closing.

The Second Asset Purchase Agreement also included the delivery of 523 shares of the Company’s common stock, which both parties agreed had an aggregate value of $ 4,800 at closing.

Finally, the Second Asset Purchase Agreement set forth a promissory note initially valued at $ 4,350 and includes a contingent consideration, which is contingent on certain thresholds and will be based on the trailing twelve-month revenue at September 30, 2022, which we expect will be paid in the fourth quarter of 2022.

The promissory note was adjusted to $ 4,318 to account for an estimated shortfall in working capital when compared to the working capital target at closing of the transaction.

The Second Asset Purchase Agreement is subject to post-closing adjustments for working capital and purchase price.

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

Also in September 2021, we acquired certain assets of a payroll business (the “Second Asset Purchase Agreement”), which were used to provide payroll processing services.

The aggregated purchase price for these assets was $ 24,150 , paid as follows:

(i) $ 15,000 was paid in cash at closing, (ii) the delivery of 523 shares of the Company’s common stock which both parties agreed had an aggregate value of $ 4,800 at closing, and (iii) the delivery of a promissory note of $ 4,350 .

The promissory note also includes a contingent consideration, which is contingent on certain thresholds and will be based on the trailing twelve-month revenue at September 30, 2022, which we expect will be paid in the fourth quarter of 2022.

Additionally, we utilized a Monte Carlo simulation to determine the fair value of the contingent consideration.

For the year ended December 31, 2021, there was a measurement period adjustment to the fair value of the contingent consideration of $ 465 .

As of March 31, 2022, certain amounts of funds held for clients on our Condensed Consolidated Balance Sheets are in the process of being transferred to the Company’s legal possession, as stipulated by the respective transitional service agreements included as part of the Asset Purchase Agreement and Second Asset Purchase Agreement.

The Asset Purchase Agreement and Second Asset Purchase Agreement mentioned above were of privately held companies, whose historic cash basis financial statements were unaudited and not prepared under generally accepted accounting principles in the United States, including, but not limited to, differences in revenue recognition.

The disclosure of supplemental pro forma financial information suggested under ASC 805 for a public business entity has been deemed impracticable by management due to these reasons.

For the quarter ended June 30, 2022, there was a measurement period adjustment to the fair value of the contingent consideration of $1,350.

The promissory note was adjusted to $4,533 to account for post close and working capital adjustments.

Effective January 1, 2022, the Company acquired customer relationships of a payroll business for a cash payment of $ 1,970 , which included $ 31 of transaction costs, and the delivery of a promissory note in the amount of $ 411 .

11 unchanged sentences

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

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, 2022 and December 31, 2021, respectively (in thousands):

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, 2022 and December 31, 2021, respectively (in thousands):

Total Carrying Value Level 1 Level 2 Level 3

March 31, 2022

June 30, 2022

Funds held for clients

13 unchanged sentences

Total $ 4,329 $ — $ — $ 4,329

(1) See Note 2 — Business Combinations for further discussion regarding the contingent purchase consideration.

(1) See Note 3 — Business Combinations and Asset Acquisitions for further discussion regarding the contingent purchase consideration.

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

March 31, 2022

June 30, 2022

Restricted cash equivalents $ 2,600 $ — $ — $ 2,600

16 unchanged sentences

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

As of March 31, 2022 and December 31, 2021, there were 3 and 10 securities, respectively, in an unrealized gain position and there were 69 and 57 securities in an unrealized loss position, respectively.

As of March 31, 2022, these unrealized losses were less than $ 55 individually and $ 1,171 in the aggregate.

As of June 30, 2022 and December 31, 2021, there were 22 and 10 securities, respectively, in an unrealized gain position and there were 85 and 57 securities in an unrealized loss position, respectively.

As of June 30, 2022, these unrealized losses were less than $ 68 individually and $ 1,761 in the aggregate.

As of December 31, 2021, these unrealized losses were less than $ 11 individually and $ 114 in the aggregate.

3 unchanged sentences

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, 2022 and December 31, 2021, none of these securities were classified as cash and cash equivalents on the accompanying Condensed Consolidated Balance Sheets.

(2) At June 30, 2022 and December 31, 2021, 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.

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Restricted cash and cash equivalents held to satisfy client funds obligations $ 137,536 $ 185,316

2 unchanged sentences

Total funds held for clients $ 184,661 $ 217,376

Expected maturities of available-for-sale securities as of March 31, 2022 are as follows (in thousands):

Expected maturities of available-for-sale securities as of June 30, 2022 are as follows (in thousands):

One year or less $ 7,161

After one year through five years 39,964

Total $ 47,125

NOTE 5 - GOODWILL AND OTHER INTANGIBLE ASSETS

4 unchanged sentences

A portion of acquired goodwill will be amortizable for tax purposes.

As of March 31, 2022, there has been no impairment of goodwill based on the qualitative assessments performed by the Company.

As of June 30, 2022, there has been no impairment of goodwill based on the qualitative assessments performed by the Company.

Gross Intangible Assets 2021 Acquisitions 2022

5 unchanged sentences

$ 129,536 $ 2,460 $ 131,996

The gross carrying amount and accumulated amortization of our intangible assets as of March 31, 2022 are as follows (in thousands, except weighted average periods):

The gross carrying amount and accumulated amortization of our intangible assets as of June 30, 2022 are as follows (in thousands, except weighted average periods):

Weighted Average

1 unchanged sentence

Amortization Net

March 31, 2022

June 30, 2022

Customer relationships 8.7 $ 116,971 $ ( 46,158 ) $ 70,813

12 unchanged sentences

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 $ 3,432 and $ 2,528 for the three months ended March 31, 2022 and 2021, respectively.

Amortization expenses recorded in Cost of Sales were $ 296 and $ 379 for the three months ended March 31, 2022 and 2021, respectively.

There was no impairment of intangibles during the three months ended March 31, 2022 based on the qualitative assessment performed by the Company.

Amortization expenses recorded in Operating Expenses were $ 6,784 and $ 5,056 for the six months ended June 30, 2022 and 2021, respectively.

Amortization expenses recorded in Cost of Sales were $ 593 and $ 757 for the six months ended June 30, 2022 and 2021, respectively.

There was no impairment of intangibles during the six months ended June 30, 2022 based on the qualitative assessment performed by the Company.

However, if market, political and other conditions over which we have no control continue to affect the capital markets and our stock price declines, we may experience an impairment of our intangibles in future quarters.

The following table summarizes the future estimated amortization expense relating to our intangible assets as of March 31, 2022 (in thousands):

2022 $ 10,946

The following table summarizes the future estimated amortization expense relating to our intangible assets as of June 30, 2022 (in thousands):

Thereafter 10,364

1 unchanged sentence

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

Maturity Cash Interest Rate March 31, 2022 December 31, 2021

Maturity Cash Interest Rate June 30, 2022 December 31, 2021

Subordinated Notes Payable – Acquisitions (1)

3 unchanged sentences

Gross Notes Payable $ 38,880 $ 38,402

(1) See Note 2 — Business Combinations for further discussion regarding the notes payable related to acquisitions.

(1) See Note 3 — Business Combinations and Asset Acquisitions for further discussion regarding the notes payable related to acquisitions.

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

March 31, 2022

June 30, 2022

Current portion of notes payable $ 2,309 $ ( 362 ) $ 1,947

5 unchanged sentences

Total $ 38,402 $ ( 3,375 ) $ 35,027

The following table summarizes the future principal payments related to our outstanding debt as of March 31, 2022 (in thousands):

The following table summarizes the future principal payments related to our outstanding debt as of June 30, 2022 (in thousands):

Total $ 38,880

Subordinated Notes Payable - Acquisitions

There remains an outstanding principal balance on the subordinated note payable issued in connection with the purchase of a business we acquired in 2018, which note matured on July 1, 2021.

Payment on the principal balance was withheld as security for an outstanding claim for which we are entitled to indemnification under the purchase agreement.

We will make the payment, subject to our right of offset under the purchase agreement, when these claims are resolved.

Due to our rights under the purchase agreement and the terms of this note, we are not in default under the note.

See Note 2 — 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 10, 2021, the Company entered into a Loan and Security Agreement with Structural Capital Investments III, LP (“Structural” and together with the other lenders that are or become parties thereto, the “Lenders”), and Ocean II PLO LLC, as administrative and collateral agent for Structural and the Lenders (“Agent”), under the terms of which the Lenders have committed to lend us up to $ 50,000 in term loan financing to support our growth needs (the “Facility”) until June 30, 2022.

Of the amount committed by the Lenders, the company drew $30,000 in September 2021, at the closing and the remaining $20,000 has lapsed.

The Company also entered into a secured promissory note with the Agent evidencing our obligations under the Facility.

15 unchanged sentences

NOTE 7 – CONTRACTS WITH CUSTOMERS AND REVENUE CONCENTRATION

Receivables from contracts with customers, net of allowance for doubtful accounts of $ 2,264 , were $ 6,608 at March 31, 2022.

Receivables from contracts with customers, net of allowance for doubtful accounts of $ 2,819 , were $ 5,736 at June 30, 2022.

Receivables from contracts with customers, net of allowance for doubtful accounts of $ 2,210 , were $ 5,308 at December 31, 2021.

No customers represented more than 10% of our net accounts receivable balance as of March 31, 2022 and December 31, 2021, respectively.

No customers represented more than 10% of our net accounts receivable balance as of June 30, 2022 and December 31, 2021, respectively.

Deferred Commissions

Deferred commission costs from contracts with customers were $ 5,174 and $ 4,684 at March 31, 2022 and December 31, 2021, respectively.

The amount of amortization recognized for the three months ended March 31, 2022 and March 31, 2021 was $ 345 and $ 232 , respectively.

Deferred commission costs from contracts with customers were $ 5,467 and $ 4,684 at June 30, 2022 and December 31, 2021, respectively.

The amount of amortization recognized for the three and six months ended June 30, 2022 $ 435 and $ 780 , respectively, and for the three and six months ended June 30, 2021 was $ 307 and $ 539 , respectively.

Deferred Revenue

During the three months ended March 31, 2022 and March 31, 2021, revenue of $ 3,058 and $ 3,406 , respectively, was recognized from the deferred revenue balance at the beginning of each period.

During the three and six months ended June 30, 2022, revenue of $ 293 and $ 3,205 , and the three and six months ended June 30, 2021, revenue of $ 442 and $ 3,848 , 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, 2022, approximately $ 22,433 of revenue is expected to be recognized from remaining performance obligations.

As of June 30, 2022, approximately $ 26,340 of revenue is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 73 % of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

Revenue Concentration

During the three months ended March 31, 2022 and 2021, there were no customers that individually represented 10% or more of consolidated revenue.

During the three and six months ended June 30, 2022 and 2021, there were no customers that individually represented 10% or more of consolidated revenue.

NOTE 8 - LEASES

6 unchanged sentences

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 months ended March 31, 2022 and 2021 are as follows (in thousands):

Three Months Ended March 31,

The components of the rent expense for the six months ended June 30, 2022 and 2021 are as follows (in thousands):

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

2022 2021 2022 2021

Operating lease cost $ 576 $ 544 $ 1,142 $ 1,114

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 % as of March 31, 2022 and December 31, 2021, respectively.

The weighted average remaining lease term is five years and six years as of March 31, 2022 and December 31, 2021, respectively.

Supplemental cash flow information related to operating leases for the three months ended March 31 are as follows (in thousands):

Three Months Ended March 31,

The weighted average discount rate of our operating leases is 8 % as of June 30, 2022 and December 31, 2021, respectively.

The weighted average remaining lease term is five years and six years as of June 30, 2022 and December 31, 2021, respectively.

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

Six Months Ended June 30,

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

11 unchanged sentences

The number of shares available for issuance under the 2018 Plan is equal to the sum of (i) 4,350 shares, and (ii) any shares subject to issued and outstanding awards under the 2009 Plan as of the effective date of the 2018 Plan that expire, are canceled or otherwise terminate following the effective date of the 2018 Plan.

We have 2,334,289 options and RSUs granted and outstanding pursuant to the 2018 Plan as of March 31, 2022.

As of March 31, 2022, the number of shares available for issuance under the 2018 Plan is 197,622 .

Share based compensation for our stock option plans for the three months ended March 31, 2022 and March 31, 2021 was $ 729 and $ 626 .

We issued no common stock related to exercises of stock options for the three months ended March 31, 2022 and issued 19,709 shares of common stock related to exercises for the three months ended March 31, 2021.

We issued 42,667 and 34,920 shares of common stock upon the vesting of restricted stock units, net for the three months ended March 31, 2022 and 2021, respectively.

We have 2,312 options and RSUs granted and outstanding pursuant to the 2018 Plan as of June 30, 2022.

As of June 30, 2022, the number of shares available for issuance under the 2018 Plan is 1,535 .

Share based compensation for our stock option plans for the three months ended June 30, 2022 and June 30, 2021 was $ 814 and $ 714 , respectively and for the six months ended June 30, 2022 and June 30, 2021 $ 1,542 and $ 1,340 .

We issued no common stock related to exercises of stock options for the three months ended June 30, 2022 and issued 85 shares of common stock related to exercises for the three months ended June 30, 2021.

We issued 30 and 28 shares of common stock upon the vesting of restricted stock units, net for the three months ended June 30, 2022 and 2021, respectively.

NOTE 10 - NET LOSS PER SHARE

2 unchanged sentences

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 308,799 for the three months ended March 31, 2022 and 1,854,000 shares for the three months ended March 31, 2021 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 (in thousands, except per share amounts):

Three Months Ended March 31,

Net loss $ ( 3,017 ) $ ( 1,598 )

We have excluded stock options and restricted stock units of 2,312 and 2,172 for the three and six months ended June 30, 2022 and 2021, 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 and six months ended June 30 (in thousands, except per share amounts):

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

2022 2021 2022 2021

Net income (loss) $ ( 5,860 ) $ 3,764 $ ( 8,877 ) $ 2,166

Weighted-average shares of common stock outstanding 20,106 19,040 20,067 19,033

Basic loss per share $ ( 0.29 ) $ 0.20 $ ( 0.44 ) $ 0.11

Net loss $ ( 3,017 ) $ ( 1,598 )

Net income (loss) $ ( 5,860 ) $ 3,764 $ ( 8,877 ) $ 2,166

Weighted-average shares of common stock outstanding 20,106 19,203 20,067 19,198

Diluted loss per share $ ( 0.29 ) $ 0.20 $ ( 0.44 ) $ 0.11

NOTE 11 - SUBSEQUENT EVENTS

In July 2022, the Company reached an agreement with the holders of the subordinated note payable, issued in connection with the purchase of a business the Company acquired in 2018 to settle outstanding indemnification claims for $190, which reduced the outstanding balance of the subordinated note payable (including interest) to $600.

This note was adjusted to $600 as of June 30, 2022.

Also in July 2022, the Company agreed to the amount of the contingent consideration earned in connection with the acquisition of its payroll tax processing business in July 2020, and adjusted the amount of this contingent consideration as of June 30, 2022, to $2,229.

There remains an outstanding principal balance on the subordinated note payable issued in connection with the purchase of a business we acquired in 2020, which note matured on July 1, 2022.

$634 of the principal balance was paid on July 1, 2022.

A $232 payment on the principal balance was withheld as security for outstanding claims for which we are entitled to indemnification under the purchase agreement.

The Company will make payment, subject to its rights of set-off under the purchase agreement, when the claims are resolved.

Due to its rights under the purchase agreement and the terms of this note, the Company is not in default under the note.

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