What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-27 · 227 added, 219 removed, 586 unchanged (43% of the section changed)

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Consolidated Balance Sheets

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Changes in Stockholders’ Equity

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Asure Software, Inc.

(the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters do not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the recoverability of the carrying value of goodwill and long-lived assets

As described in Note 1 to the financial statements, the Company performed a recoverability test of its long-lived assets by comparing the estimated future cash flows from its asset group to its carrying value.

As described in Note 5 to the financial statements, the Company performed its annual evaluation of goodwill for impairment by comparing the estimated fair value of the reporting unit to its carrying value.

The Company determined that as of the valuation date there was only one asset group and one reporting unit.

The Company used a discounted cash flow model to estimate the fair value of the reporting unit.

The Company’s cash flow model used to test the recoverability of its long-lived assets and evaluate goodwill for impairment requires management to make subjective estimates and assumptions, particularly related to the forecast of future revenues.

The principal considerations for our determination that performing procedures relating to evaluating the recoverability of the carrying value of goodwill and long-lived assets is a critical audit matter are that there is significant judgment by management in both the identification of the reporting unit and asset group, and in the estimation of future cash flows.

This in turn led to high degree of auditor judgment, subjectivity and effort in performing audit procedures in evaluating audit evidence related to management’s identification of reporting unit and asset group, and management’s estimates and assumptions used in the forecasts and discounted cash flow models, and the audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating evidence in connection with forming our overall audit opinion on the financial statements.

These procedures included, among others, (i) evaluating management’s determination of a single reporting unit;

(ii) evaluating management’s determination of a single asset group;

and (iii) testing management’s process of estimating forecasted cash flows by comparing the forecasts to historical results, internal communications to management and board of directors, forecast information included in analyst and industry reports for the Company, and other macroeconomic indicators.

In addition, our procedures to evaluate the recoverability of goodwill included a sensitivity analysis of the implied control premium by comparing the fair value determined by the Company against the market capitalization of the Company at the valuation date.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the fair value of the reporting unit

We determined that there are no critical audit matters.

/s/ Marcum LLP

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Cash, cash equivalents, and restricted cash $ 30,317 $ 17,010

Accounts receivable, net of allowance for doubtful accounts of $ 3,248 and $ 2,210 at December 31, 2022 and December 31, 2021, respectively

Accounts receivable, net of allowance for credit losses of $ 4,787 and $ 3,248 at December 31, 2023 and December 31, 2022, respectively

14,202 12,123

Inventory 155 251

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Operating lease liabilities, noncurrent 4,638 6,459

Contingent purchase consideration — 2,424

Other liabilities 209 114

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Accumulated deficit ( 290,440 ) ( 281,226 )

Accumulated other comprehensive income ( 2,483 ) ( 99 )

Accumulated other comprehensive loss ( 1,115 ) ( 2,483 )

Total stockholders’ equity 191,655 145,066

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ASURE SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, except per share amounts)

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Loss from operations ( 2,999 ) ( 11,307 )

Interest expense and other, net ( 4,438 ) ( 2,038 )

Gain on extinguishment of debt — 8,312

Employee retention tax credit — 10,533

Other income, net 1,391 150

(Loss) income from operations before income taxes ( 14,354 ) 3,995

Interest expense, net ( 4,297 ) ( 4,438 )

Loss on extinguishment of debt ( 1,517 ) —

Other (expense) income, net ( 292 ) 1,391

Loss from operations before income taxes ( 9,105 ) ( 14,354 )

Income tax expense 109 112

Net (loss) income ( 14,466 ) 3,193

Other comprehensive loss:

Unrealized loss on marketable securities ( 2,384 ) ( 703 )

Comprehensive (loss) income $ ( 16,850 ) $ 2,490

Basic and diluted (loss) earnings per share

Net loss ( 9,214 ) ( 14,466 )

Other comprehensive income (loss):

Unrealized income (loss) on marketable securities 1,368 ( 2,384 )

Comprehensive loss $ ( 7,846 ) $ ( 16,850 )

Basic and diluted loss per share

Basic $ ( 0.42 ) $ ( 0.72 )

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(in thousands)

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

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

Balance at December 31, 2021 20,028 $ 204 $ ( 5,017 ) $ 429,912 $ ( 266,760 ) $ ( 99 ) $ 158,240

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Stock issued, ESPP 80 1 — 406 — — 407

Stock issued — acquisitions 767 8 — 6,420 6,428

Share based compensation — — — 3,179 — — 3,179

Share issuance costs — — — ( 23 ) — — ( 23 )

Net income — — — — 3,193 — 3,193

Net loss — — — — ( 14,466 ) — ( 14,466 )

Other comprehensive loss — — — — — ( 2,384 ) ( 2,384 )

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Stock issued, ESPP 103 1 — 539 — — 540

Stock issued — acquisitions — — — — — — —

Shares issued, net of issuance costs 4,047 41 — 45,404 — — 45,445

Share based compensation — — — 5,430 — — 5,430

Share issuance costs — — — — — — —

Net loss — — — — ( 9,214 ) — ( 9,214 )

Other comprehensive loss — — — — — ( 2,384 ) ( 2,384 )

Other comprehensive income — — — — — 1,368 1,368

Balance at December 31, 2023 24,998 $ 254 $ ( 5,017 ) $ 487,973 $ ( 290,440 ) $ ( 1,115 ) $ 191,655

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Cash flows from operating activities:

Net (loss) income $ ( 14,466 ) $ 3,193

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

Net loss $ ( 9,214 ) $ ( 14,466 )

Adjustments to reconcile loss to net cash provided by operations:

Depreciation and amortization 19,135 18,708

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Amortization of debt financing costs and discount 820 718

Net amortization of premiums and accretion of discounts on available-for-sale securities 280 194

Provision for doubtful accounts 803 1

Provision for deferred income taxes ( 92 ) 707

Gain on extinguishment of debt — ( 8,312 )

Non-cash interest expense 1,471 —

Net accretion of discounts and amortization of premiums on available-for-sale securities ( 119 ) 280

Provision for expected losses 2,047 803

Provision for (recovery of) deferred income taxes 225 ( 92 )

Loss on extinguishment of debt 990 —

Net realized gains on sales of available-for-sale securities ( 2,257 ) ( 1,221 )

Share-based compensation 5,430 3,179

Loss (gain) on disposals of long-term assets 25 ( 32 )

Loss on disposals of long-term assets 132 25

Change in fair value of contingent purchase consideration 175 ( 1,245 )

Goodwill and intangible asset adjustment 18 —

Adjustment to intangibles — 18

Changes in operating assets and liabilities:

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Cash flows from investing activities:

Acquisition of intangible asset ( 2,289 ) ( 25,526 )

Acquisition of intangible assets ( 7,651 ) ( 2,289 )

Purchases of property and equipment ( 1,585 ) ( 2,318 )

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Cash flows from financing activities:

Proceeds from notes payable — 29,425

Payments of notes payable ( 35,627 ) ( 1,688 )

Debt extinguishment costs ( 250 ) —

Payments of contingent purchase consideration — ( 130 )

Debt financing fees — ( 878 )

Net proceeds from issuance of common stock 46,800 497

Capital raise fees ( 338 ) —

Payments made on amounts due for the acquisition of intangibles ( 311 ) —

Net change in client fund obligations 13,931 ( 11,055 )

Net cash used in financing activities ( 12,376 ) ( 90,650 )

Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents ( 34,701 ) ( 126,242 )

Net cash provided by (used) in financing activities 24,205 ( 12,376 )

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents 13,580 ( 34,701 )

Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period 164,042 198,743

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Cash paid for income taxes $ 432 $ 233

Net assets added from acquisitions $ — $ 763

Non-cash investing and financing activities:

Contingent purchase consideration issued for acquisitions $ — $ 2,574

Acquisition of intangible assets $ 357 $ —

Notes payable issued for acquisitions $ 1,209 $ 411

Stock issuance for acquisitions $ — $ 6,428

Shares issued to settle contingent consideration $ 2,543 $ —

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

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DESCRIPTION OF BUSINESS

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

We help small and medium-sized companies grow by helping them build more productive teams, providing the tools and resources that help them 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.

AsureMarketplace™ provides clients and their employees the benefits of secure verifications of employment and income through existing core HCM technology.

Our platform vision is to become the most trusted HCM resource to entrepreneurs everywhere by helping our clients grow their businesses.

Our product strategy is driven by three primary challenges that prevent businesses from growing:

HR complexity, allocation of both human and financial capital, and the ability to build great teams.

Asure Software, Inc.

(“Asure”, “we” and “our”), a Delaware corporation, is a provider of cloud-based Human Capital Management (“HCM”) software solutions delivered as Software-as-a-Service (“SaaS”) 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 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 and to differentiate themselves 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 services, Time & Attendance software and data integrations that enable employers and their employees to 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 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 and financial capital, and 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 HCM suite includes five product lines:

Asure Payroll & Tax, Asure HR, Asure Time & Attendance, Asure HR Services, and AsureMarketplace™.

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

Asure Payroll & Tax, Asure Tax Management Solutions, Asure Time & Attendance, Asure HR Compliance, and AsureMarketplace™.

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

PRINCIPLES OF CONSOLIDATION

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In December 2023, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The standard became effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted.

We adopted ASU 2019-12 during the quarter beginning January 1, 2021, using the prospective approach except for hybrid tax regimes, which we adopted using the modified retrospective approach.

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

2023-09, Improvements to Income Tax Disclosures (Topic 740), which requires companies to disaggregate information about their effective tax rate reconciliation as well as information on income taxes paid.

The standard applies to all entities subject to income taxes.

The standard becomes effective for public entities for annual periods beginning after December 15, 2024.

We are currently evaluating this standard and the potential effects of these changes to our consolidated financial statements and will adopt this new standard in the fiscal year beginning January 1, 2025.

In November 2023 , the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to 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 standard is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments — Credit Losses (Topic 326):

This update establishes a new approach to estimate credit losses on certain financial instruments.

2016-13, Financial Instruments — Credit Losses (Topic 326), which establishes a new approach to estimate credit losses on certain financial instruments.

The update requires financial assets measured at amortized cost to be presented at the net amount expected to be collected.

The amended guidance will also update the impairment model for available-for-sale debt securities, requiring entities to determine whether all or a portion of the unrealized loss on such securities is a credit loss.

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.

The standard became effective for interim and annual periods beginning after December 15, 2022.

Effective January 1, 2023, we adopted the provisions of ASU No.

2016-13 and determined that adoption did not have a material impact on our Consolidated Financial Statements.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

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.

We consider 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.

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

As of December 31, 2022, the Company ha s $500 of restricted cash related to collateralizing a letter of credit issued by South State Bank in connection with its money transmission licenses.

Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in accumulated other comprehensive income (loss).

As of December 31, 2023, we ha d no restricted cash.

Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in accumulated other comprehensive loss.

The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity.

The amortization of premiums and accretion of discounts is included in interest income.

Realized gains and losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are included in other income (expense).

Realized gains and losses and declines in value judged to be credit losses, if any, on available-for-sale securities are included in other income (expense), net.

The cost of securities sold is based on the specific identification method.

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FUNDS HELD FOR CLIENTS

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

Funds held for clients represent assets that are held for the purposes of satisfying the obligations to remit funds relating to our payroll and payroll tax filing services and are classified as client fund obligations on our Consolidated Balance Sheets.

Funds held for clients are held in demand deposit or brokerage accounts at financial institutions and are classified as a current asset on our Consolidated Balance Sheets.

Client fund obligations represent the Company’s contractual obligations to remit funds to satisfy clients’ payroll and tax payment obligations and are recorded on the Consolidated Balance Sheets at the time that the Company impounds funds from clients.

Client fund obligations represent our contractual obligations to remit funds to satisfy clients’ payroll and tax payment obligations and are recorded on the Consolidated Balance Sheets at the time that we impound funds from clients.

The client fund obligations represent liabilities that will be repaid within one year of the balance sheet date.

The Company has reported client fund obligations as a current liability on the Consolidated Balance Sheets.

As part of the material weakness identified in 2019 that was subsequently remediated, the Company recovered approximately $ 4,290 in funds and insurance proceeds.

The Company recognized $ 3,961 of these funds as receivables in other assets on the Consolidated Balance Sheets at December 31, 2019 with an offsetting liability in client fund obligations.

The Company collected the full $ 4,290 during the first quarter of 2020 and disbursed $ 482 of these funds resulting in a segregated $ 3,808 in funds held for clients with an offsetting liability in client fund obligations at December 31, 2020.

In 2021, the Company disbursed an additional $ 976 of these funds, resulting in a segregated $ 2,832 in funds held for clients with an offsetting liability in client fund obligations at December 31, 2021.

In 2022, the Company escheated $ 2,705 to the state of Delaware.

The residual balance of $ 127 is still in the process of being returned to the clients or will be escheated to the appropriate states.

We have reported client fund obligations as a current liability on the Consolidated Balance Sheets.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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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.

We monitor the viability of the banking institutions carrying our assets on a regular basis, and have the ability to transfer cash to various institutions during times of risk.

We have not experienced any losses related to these cash balances, and believes our credit risk to be minimal.

ACCOUNTS RECEIVABLE, NET

We grant credit to customers in the ordinary course of business.

We grant credit to customers in the ordinary course of business, exposing us to the credit risk of our customers.

In the course of our sales to customers, we may encounter difficulty collecting accounts receivable.

We limit concentrations of credit risk related to our trade accounts receivable due to our large number of customers, including third-party resellers, and their dispersion across several industries and geographic areas.

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We follow our credit policy consistently and routinely monitor our delinquent accounts for indications of collectability.

We maintain an allowance for doubtful accounts at an amount we estimate to be sufficient to provide adequate protection against losses resulting from extending credit to our customers.

We base this allowance, in the aggregate, on historical collection experience, age of receivables and general economic conditions.

The allowance for doubtful accounts also considers the need for specific customer reserves based on the customer’s payment experience, credit worthiness and age of receivable balances.

Our bad debts have not been material and have been within management expectations.

We maintain an allowance for credit losses, which was previously referred to as “allowance for doubtful accounts” prior to the adoption of ASU No.

2016-13, at an amount we estimate to be sufficient to provide adequate protection against credit losses resulting from extending credit to our customers.

We base this allowance and our expected credit loss estimates, in the aggregate, on historical collection experience, age of receivables, general economic conditions and reasonable and supportable forecasts concerning the future.

The allowance for credit losses also considers the need for specific customer reserves based on the customer’s payment experience, credit worthiness and age of receivable balances.

Our bad debts have been within management expectations.

Refer to Note 8 - Contracts with Customers and Revenue Concentration for details on our accounts receivable and allowance for credit losses.

PROPERTY AND EQUIPMENT

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We amortize intangible assets not considered to have an indefinite useful life using the straight-line method over their useful lives.

We currently amortize our acquired intangible assets with definite lives over periods ranging from one to nine years .

We currently amortize our acquired intangible assets with definite lives over periods ranging from two to fifteen 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.

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We recognize original issue discounts (“OID”), when incurred on the issuance of debt, as a reduction of the current loan obligations that we amortize to interest expense over the life of the related indebtedness using the effective interest rate method.

We record the amortization as interest expense – amortization of OID in the Consolidated Statements of Comprehensive Income (Loss).

At the time of any repurchases or retirements of related debt, we write off the remaining amount of net original issue discounts and include them in the calculation of gain or loss on extinguishment in the Consolidated Statements of Comprehensive Income (Loss).

We record the amortization as interest expense in the Consolidated Statements of Comprehensive Loss.

At the time of any repurchases or retirements of related debt, we write off the remaining amount of net original issue discounts and include them in the calculation of gain or loss on extinguishment of debt in the Consolidated Statements of Comprehensive Loss.

REVENUE RECOGNITION

Our revenue consists of software-as-a-service (“SaaS”) offerings and time-based software subscription license arrangements that also, typically, include hardware, maintenance/support, and professional services elements.

Our revenue primarily consists of software-as-a-service (“SaaS”) offerings and income from investments made from funds held for clients.

Collectively, the SaaS offerings are referred to as “Asure HCM”, consisting of Payroll & Tax solutions, HR compliance and services, Time & Attendance software and data integrations that enable employers and their employees to enhance efficiencies and take advantage of value-added solutions.

We also provide support for processing and filing Employee Retention Tax credits as part of our Tax solutions.

Furthermore, our Time & Attendance software can be provided in the form of a software subscription license arrangement, that typically includes hardware, maintenance/support, and professional services.

We recognize revenue on an output basis when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

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We determine standalone selling prices based on the amount that we believe the market is willing to pay determined through historical analysis of sales data as well as through use of the residual approach when we can estimate the standalone selling price for one or more, but not all, of the promised goods or services.

The terms of our contracts with customers range from month to month for some Asure HCM direct clients to longer terms ranging from one to three years, some of which are renewable for successive terms.

The terms of our contracts with customers range from month-to-month for some Asure HCM direct clients to longer terms ranging from one to three years, most of which are renewable for successive terms.

A typical SaaS/software subscription arrangement will also include hardware, setup and implementation services.

Revenue allocated to the SaaS/software subscription performance obligations are recognized on an output basis ratably as the service is provided over the non-cancellable term of the SaaS/subscription service and are reported as Recurring revenue on the Consolidated Statement of Comprehensive Income (Loss).

Revenue allocated to other performance obligations included in the arrangement is recognized as outlined in the paragraphs below.

Processing and filing support services for Employee Retention Tax credits are recognized at the time the applicable tax form is completed.

Fees associated with these services are offered at a flat fee and/or a fee that is based on estimated credits the customer will receive upon completion of the applicable tax form.

Revenue recognized from Employee Retention Tax credit services are reported as Professional services, hardware and other revenue on the Consolidated Statements of Comprehensive Loss.

Hardware devices sold to customers are sold as either a standard product sell arrangement where title to the hardware passes to the customer or under a hardware-as-a-service (“HaaS”) arrangement where the title to the hardware remains with Asure.

Revenue allocated to hardware sold as a standard product are recognized on an output basis when title passes to the customer, typically the date we ship the hardware.

Revenue allocated to hardware under a hardware-as-a-service arrangement are recognized on an output basis, recorded ratably as the service is provided over the non-cancellable term of the HaaS arrangement, typically one year.

Revenue recognized from hardware devices sold to customers via either of the two above types of arrangements are reported as Hardware revenue on the Consolidated Statement of Comprehensive Income (Loss).

Revenue allocated to hardware under a HaaS arrangement are recognized on an output basis, recorded ratably as the service is provided over the non-cancellable term of the HaaS arrangement, typically one year.

Revenue recognized from hardware devices sold to customers via either of the two above types of arrangements are reported as Hardware revenue on the Consolidated Statement of Comprehensive Loss.

Our professional services offerings typically include data migration, set up, training, and implementation services.

Set up and implementation services typically occur at the start of the software arrangement while certain other professional services, depending on the nature of the services and customer requirements, may occur several months later.

We can reasonably estimate professional services performed for a fixed fee and we recognize allocated revenue on an output basis on a proportional performance basis as the service is provided.

We recognize allocated revenue on an output basis for professional services engagements billed on a time and materials basis as the service is provided.

We recognize allocated revenue on an output basis on all other professional services engagements upon the earlier of the completion of the service’s deliverable or the expiration of the customer’s right to receive the service.

Revenue recognized from professional services offerings are reported as Professional service revenue on the Consolidated Statement of Comprehensive Income (Loss).

Revenue recognized from professional services offerings are reported as Professional services, hardware and other revenue on the Consolidated Statements of Comprehensive Loss.

We recognize allocated revenue for maintenance/support on an output basis ratably over the non-cancellable term of the support agreement.

Initial maintenance/support terms are typically one to three years and are renewable on an annual basis.

Revenue recognized from maintenance/support are reported as Recurring on the Consolidated Statement of Comprehensive Income (Loss).

Revenue recognized from maintenance/support are reported as recurring revenue on the Consolidated Statements of Comprehensive Loss.

We do not recognize revenue for agreements with rights of return, refundable fees, cancellation rights or substantive acceptance clauses until these return, refund or cancellation rights have expired or acceptance has occurred.

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Our payment terms vary by the type of customer and the customer’s payment history and the products or services offered.

Due to the current political climate related to ERTC, including pending and anticipated changes to ERTC, there is a risk that we may not collect on some of our outstanding percentage of recovery ERTC receivables.

The term between invoicing and when payment is due is not significant and as such our contracts do not include a significant financing component.

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We recognize deferred revenue when we complete the service and over the terms of the arrangements, primarily ranging from one to three years.

In addition, ERTC revenues that are generated under percentage of recovery arrangements with referral partners are deferred until the client collects the credit.

ADVERTISING COSTS

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Advertising expens es were $ 1,792 and $ 1,057 f or the years ended December 31, 2023 and 2022, respectively.

We recorded these expenses as part of sales and marketing expenses on our Consolidated Statements of Comprehensive Income (Loss).

We recorded these expenses as part of sales and marketing expenses on our Consolidated Statements of Comprehensive Loss.

LEASE OBLIGATIONS

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As our leases typically do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date taking into consideration necessary adjustments for collateral, depending on the facts and circumstances of the lessee and the leased asset, and term to match the lease term.

The operating lease asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred by the Company and excludes lease incentives.

The operating lease asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred by us and excludes lease incentives.

Operating lease assets and liabilities are shown separately in our Consolidated Balance Sheets.

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NOTE 2 - BUSINESS COMBINATIONS

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 primarily related to transition services in the amount of $ 191 , was paid in June 2021 (a total payment of $ 1,784 ).

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

The adjustment to the fair value of the contingent consideration as of December 31, 2022 was an increase of $ 394 .

The contingent purchase consideration of $2,299 was valued based on the trailing twelve-month revenue at October 31, 2021 and will be settled in 2023.

In September 2021, the Company acquired certain assets (the “Second Asset Purchase Agreement”) of a payroll business, which was used to provide payroll processing services.

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 $ 2,223 , and (iii) the delivery of 244 shares of the Company’s common stock as of December 31, 2022.

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

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

The Third 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 Third Asset Purchase Agreement set forth a promissory note valued at $ 4,080 and a contingent consideration estimate of $655 as of December 31, 2022.

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 .

Effective October 1, 2023, we acquired certain assets of a 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 six years.

Effective January 1, 2022, we 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 .

The acquired customer relationships are recorded as an intangible asset and are being amortized on a straight-line basis over eight years.

In May 2023, we paid the remaining balance of $ 422 on the promissory note, consisting of $ 411 in principal and $ 11 in accrued interest.

As of December 31, 2023, there are no further amounts due or owing under the subordinated promissory note.

2021 and 2020

In September 2021, we acquired certain assets of two payroll businesses, which were used to provide payroll processing services.

In connection with these acquisitions there were two outstanding promissory notes payable.

In September 2023, we paid the remaining balance of $ 2,312 on one of the promissory notes, consisting of $ 2,223 in principal and $ 89 in accrued interest.

The second promissory note also includes contingent consideration for which we calculated the final value to be $ 587 .

The contingent consideration was added as an increase to the principal balance due on the promissory note during the second quarter of 2023.

As of December 31, 2023, the second promissory note had an outstanding balance of $ 4,200 and matures on September 30, 2026.

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

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

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

The outstanding contingent purchase consideration of $ 2,299 was valued based on the trailing twelve-month revenue at October 31, 2021 and was paid in shares of our common stock in July 2023.

As a result, the outstanding contingent consideration of $ 2,299 was extinguished with the issuance of 214 shares of Asure common stock.

As of December 31, 2023, no further contingent purchase obligation remains.

NOTE 3 - INVESTMENTS AND FAIR VALUE MEASUREMENTS

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Total $ 75,201 $ 3,431 $ 71,770 $ —

Contingent purchase consideration (1)

$ 2,954 $ — $ — $ 2,954

Total $ 2,954 $ — $ — $ 2,954

December 31, 2022

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The contractual obligations and earn out provision are accounted for as a contingent liability and fair value is determined using Level 3 inputs, as estimating the fair value of these contingent liabilities require the use of significant and subjective inputs that may and are likely to change over the duration of the liabilities.

The following table discloses the change in the gross contingent purchase consideration on the Company’s Consolidated Balance Sheets as of December 31, 2022 (in thousands):

The following table discloses the change in the gross contingent purchase consideration on our Consolidated Balance Sheets as of December 31, 2023 (in thousands):

December 31, 2022 $ 2,954

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Change in fair value of contingent liability 175

Issued for acquisitions —

December 31, 2023 $ —

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$ 61,860 $ 5 $ ( 2,480 ) $ 59,385

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

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

As of December 31, 2023 and December 31, 2022, there were 54 and 3 securities, respectively, in an unrealized gain position and there were 113 and 124 securities in an unrealized loss position, respectively.

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As of December 31, 2022, these unrealized losses were less than $ 96 individually and $ 2,480 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 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.

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 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 December 31, 2023 and December 31, 2022, none of these securities were classified as cash and cash equivalents on the accompanying 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 Consolidated Balance Sheets.

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

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

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Property and equipment, net $ 14,517 $ 11,439

We record the amortization of our finance leases as depreciation expense on our Consolidated Statements of Comprehensive Income (Loss).

We record the depreciation and amortization of our property and equipment as depreciation expense on our Consolidated Statements of Comprehensive Loss.

We record depreciation expenses using the straight-line method over the estimated useful lives of the assets, as noted above.

Depreciation and amortization expenses relating to property and equipment were $ 5,094 and $ 4,044 for the years ended December 31, 2023 and 2022, respectively.

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

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

As of December 31, 2023, there has been no impairment of goodwill based on the qualitative assessments we have performed.

Gross Intangible Assets 2022 Acquisitions 2023

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Developed technology 12,001 — 12,001

Reseller relationships 1,012 332 1,344

Trade names 880 — 880

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$ 132,228 $ 9,528 $ 141,756

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

The gross carrying amount and accumulated amortization of our intangible assets as of December 31, 2023 and 2022 are as follows (in thousands, except weighted average periods):

Weighted Average

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Developed technology 6.9 12,001 ( 10,701 ) 1,300

Reseller relationships 6.9 1,344 ( 889 ) 455

Trade names 4.3 880 ( 880 ) —

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Developed technology 6.6 12,001 ( 10,283 ) 1,718

Reseller relationships 7.2 1,012 ( 864 ) 148

Trade names 3.0 880 ( 847 ) 33

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Amortization expenses recorded in cost of sales were $ 418 and $ 1,186 for the years ended December 31, 2023 and 2022, respectively.

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

There was no impairment of intangibles during the year ended December 31, 2023 based on the qualitative assessment we performed.

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.

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Subordinated Notes Payable - Acquisitions

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

Payment on the principal balance was withheld as security for outstanding claims for which the Company is entitled to indemnification under the purchase agreement.

The Company will make payment, subject to its right to offset 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 was not in default under the note.

See Note 13 - Subsequent Events for information related to the resolution of these outstanding claims and the outstanding principal balance on this subordinated note payable.

In January 2023, we resolved the outstanding claims for indemnification for which we were withholding payment of a subordinated note payable issued in connection with the 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 December 31, 2023, there are no further amounts due or owing under this subordinated promissory note.

In April 2023, we calculated the final contingent consideration due in connection with the acquisition of a payroll business in September 2021.

As a result, the fair value of the contingent consideration of $ 587 was added as an increase to the principal balance due on the promissory note.

As of December 31, 2023, the promissory note had an outstanding balance of $ 4,200 .

In May 2023, we paid the outstanding balance of a subordinated note payable in connection with the acquisition of customer relationships of a payroll business that took place in 2022.

As a result, we paid the remaining balance of $ 422 on the promissory note consisting of $ 411 in principal and $ 11 in accrued interest.

As of December 31, 2023, there are no further amounts due or owing under the subordinated note payable.

In September 2023, we paid the outstanding balance of a subordinated note payable in connection with the acquisition of certain assets of a payroll business that took place in 2021.

As a result, we paid the remaining balance of $ 2,312 on the promissory note consisting of $ 2,223 in principal and $ 89 in accrued interest.

As of December 31, 2023, there are no further amounts due or owing under the subordinated note payable.

See Note 2 — Business Combinations for further discussion regarding the issuance of subordinated notes payable related to acquisitions.

PPP Loan with Pinnacle Bank

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 were 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 Consolidated Statements of Comprehensive Income (Loss), and is a non-taxable event.

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 had 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.

The Company’s obligations are further guaranteed by each of our subsidiaries and secured by our

assets and the assets of our subsidiaries.

At the onset of the agreement, we paid to the Lenders an origination fee of $ 500 .

Interest accrues on any outstanding balance at a rate equal to the greater of 9.0% or the Prime Rate, plus 5.75% (the “Basic Rate”) and is payable in advance.

In addition, interest is paid in kind (“PIK”) at a rate of 1.00% or 1.25% based on our APR Ratio, measured on a quarterly basis.

The PIK interest is added to our outstanding balance and accrues interest at the Basic Rate.

Interest only payments are due until October 2023, with an option to extend until October 2024, dependent on certain financial or revenue metrics before the end of the first twenty-four months of the Facility.

Principal payments begin after the expiration of the interest only period, and are based on a five-year amortization schedule, with a balloon payment due in October 2025.

The table above in this Note 6 — Notes Payable summarizing future principal payments assumes the Company will not extend the period of interest only payments to October 2024.

Upon payment in full of the obligations under the Facility, we are to pay Lenders a final payment fee equal to 1.0% of the increase in our market capitalization since the onset of the agreement, at that time valued at $182,400.

The Company has agreed to provide the Lenders the right to participate in a future offering—whether public or private—on the same terms and conditions as other investors for an amount not to exceed $3,000.

There are no financial covenants if our net cash position is equal to or greater than zero.

If our net cash position is less than zero, the Company would be subject to the following financial covenants:

(i) unrestricted cash of no less than $5,000, (ii) maintain an APR ratio of no less than 0.70:1.00 through September 10, 2023, and (iii) maintain an APR ratio of no less than 0.60:1.00 from September 10, 2023 through the remainder of the term of the Facility.

The APR ratio would be the ratio of our tested debt to our annual recurring revenue and would be measured on a quarterly basis.

Our Tested Debt consists of our outstanding obligations under the Facility (exclusive of PIK interest) and any indebtedness issued or earnouts owed to sellers in connection with acquisitions.

On September 10, 2021, we entered into a Loan and Security Agreement (the “Loan 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 the Lender (“Agent”), under the terms of which the Lenders committed to lend us up to $ 50,000 in term loan financing to support our growth needs (the “Facility”).

Of the amount committed by the Lenders, we drew $ 30,000 in September 2021.

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

On August 7, 2023, we entered into an amendment to the Facility, whereby the Final Payment Fee (as defined in the Loan Agreement) was settled for $ 1,677 (the “Settled Amount”), which was paid on August 7, 2023.

The Final Payment Fee was originally equal to 1.0 % of the increase in our market capitalization since September 10, 2021, and was due upon payment in full of the obligations under the Senior Credit Facility.

We also paid the Lenders a fee equal to $ 250 to be credited against any reimbursable expenses owed to the Lenders in a future refinancing of the Facility if it occurs prior to December 31, 2024.

On September 12, 2023, we terminated the Loan Agreement and repaid the outstanding balance on the secured promissory note (the “Note”).

In connection with the termination, we 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 December 31, 2023, there are no further amounts due or owing under the Facility.

NOTE 7 - LEASES

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We record base rent expense under the straight-line method over the term of the lease.

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

In the accompanying 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 years ended December 31, 2023 and 2022, are as follows (in thousands):

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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 December 31, 2022 and December 31, 2021, respectively.

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

The weighted average discount rate of our operating leases is 10 % and 8 % as of December 31, 2023 and December 31, 2022, respectively.

The weighted average remaining lease term is five years as of December 31, 2023 and December 31, 2022.

Supplemental cash flow information related to operating leases for the years ended December 31, 2023 and 2022 are as follows (in thousands):

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Non-cash operating activities:

Operating lease assets obtained in exchange for new operating lease liabilities $ 1,317 $ 1,240

Operating lease assets obtained or removed in exchange for new, modified or terminated operating lease liabilities $ ( 546 ) $ 1,317

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

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NOTE 8 - CONTRACTS WITH CUSTOMERS AND REVENUE CONCENTRATION

Receivables from contracts with customers, net of allowance for doubtful accounts of $ 3,248 , were $ 12,123 at December 31, 2022.

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

Receivables from contracts with customers, net of allowance for credit losses of $ 4,787 , were $ 14,202 at December 31, 2023.

Receivables from contracts with customers, net of allowance for credit losses of $ 3,248 , were $ 12,123 at December 31, 2022.

We had a provision for expected losses of $ 2,047 , write-offs charged against the allowance for credit losses of $ 735 , and recoveries on previously written off receivables of $ 227 during the year ended December 31, 2023.

We had a provision for expected losses of $ 803 , write-offs charged against the allowance for credit losses of $ 99 , and recoveries on previously written off receivables of $ 334 during the year ended December 31, 2022.

The increase in the receivable balance during 2023 is primarily due to deferred payment terms on many of our Earned Retention Tax Credit (“ERTC”) commitments.

Due to the current political climate related to ERTC, including pending and anticipated changes to ERTC, there is a risk that we may not collect on some of our outstanding ERTC receivables.

No customers represented more than 10% of our net accounts receivable balance as of December 31, 2023 and December 31, 2022 , respectively.

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The amount of amortization recognized for the years ended December 31, 2023 and December 31, 2022 was $ 2,803 and $ 1,644 , respectively.

The increase in deferred commission costs during the year ended December 31, 2023 is primarily due to an increased focus on sales of our recurring revenue streams.

Deferred Revenue

During the years ended December 31, 2023 and December 31, 2022, revenue of $ 7,488 and $ 3,415 , respectively, was recognized from the deferred revenue balance at the beginning of each period.

The increase in deferred revenue recognized during the year ended December 31, 2023, is primarily due to increases in prices and customers for year-end related services collected in the fourth quarter of 2022, recognized in 2023, and generating $ 2,553 of the period over period increase.

Secondarily, an increase of $ 1,520 is due to up-front payments collected in 2022 for an AsureMarketplace™ arrangement, recognized in 2023, that was not present during the year ended December 31, 2021.

Transaction Price Allocated to the Remaining Performance Obligations

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Revenue Concentration

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

During the years ended December 31, 2023 and 2022, there were no customers that individually represented 10% or more of consolidated revenue.

NOTE 9 - STOCKHOLDERS’ EQUITY, EMPLOYEE BENEFIT PLANS AND SHARE-BASED COMPENSATION

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As of December 31, 2023, there is $ 104,000 available under the shelf registration statement.

Also in March 2021, 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 our common stock as consideration in future business combinations.

On August 16, 2023, we entered into an underwriting agreement (the “Underwriting Agreement”) with Stifel, Nicolaus & Company, Incorporated and Craig-Hallum Capital Group LLC, as representatives of the several underwriters named therein (collectively, the “Underwriters”), relating to a firm commitment offering of 3,333 newly issued shares of our common stock at a public offering price of $ 12.00 per share (the “2023 Offering”).

On August 21, 2023 , we completed the 2023 Offering, and realized net proceeds of $ 37,395 , after deducting underwriting discounts and offering expenses of $ 2,605 .

Additionally, on August 30, 2023, the Underwriters exercised their option to purchase an additional 500 shares of our common stock, and we realized net proceeds of $ 5,507 , after deducting underwriting discounts and offering expenses of $ 493 .

Also in March 2021, 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 our common stock as consideration in future business combinations.

The shelf registration statement relating to these securities became effective on April 21, 2021.

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Share Repurchase Program

On March 10, 2020, our Board of Directors authorized a stock repurchase plan, under which we may repurchase up to $ 5,000 of our outstanding common stock.

On March 10, 2020, our Board of Directors authorized a stock repurchase plan (the “Stock Repurchase Plan”), under which we may repurchase up to $ 5,000 of our outstanding common stock.

This stock repurchase program is in addition to 364 shares available under our stock repurchase plan existing prior to March 10, 2020.

Under this stock repurchase program, we may repurchase shares in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

The extent to which we repurchase our shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by our management.

On December 12, 2023, the Board of Directors amended and restated the Stock Repurchase Plan to authorize us to purchase up to $ 10,000 in shares of our common stock, but no more than $1,500 in shares of our common stock during any calendar quarter.

Share repurchases must occur during an open trading window under our insider trading policy and the number of shares that we can purchase on any trading day may not exceed 10% of the trading volume on such trading day.

The Stock Repurchase Plan sunsets on September 30, 2025.

Under the Stock Repurchase Plan, we may repurchase shares in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

The repurchase program may be extended, suspended or discontinued at any time.

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Employees and consultants of the Company, its subsidiaries and affiliates, as well as members of our board, are eligible to receive awards under the 2018 Plan.

The 2018 Plan provides for the grant of stock options, including incentive stock options (“ISOs”) and nonqualified stock options (“NQSOs”), stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance bonus awards, performance stock unit awards, other stock or cash-based awards and dividend equivalents to eligible individuals.

The 2018 Plan provides for the grant of stock options, including incentive stock options (“ISOs”) and nonqualified stock options (“NQSOs”), stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance bonus awards, performance stock unit awards (PSUs”), other stock or cash-based awards and dividend equivalents to eligible individuals.

We generally grant stock options with exercise prices equal to the fair market value at the time of grant.

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The number of shares available for issuance under the 2018 Plan is 4,350 shares.

We have 1,932 options and 281 RSUs granted and outstanding pursuant to the 2018 Plan as of December 31, 2022.

We have 1,397 options, 519 RSUs, and 304 PSUs granted and outstanding pursuant to the 2018 Plan as of December 31, 2023.

We use the Black-Scholes option valuation model to value employee stock awards.

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For stock-based compensation awards with graded vesting, we recognize compensation expense using the straight-line amortization method.

Total compensation expense recognized in the Consolidated Statements of Comprehensive Income (Loss) for stock based awards was $ 3,179 and $ 2,990 for 2022 and 2021, respectively.

Total compensation expense recognized in the Consolidated Statements of Comprehensive Loss for stock based awards was $ 5,430 and $ 3,179 for 2023 and 2022, respectively.

The following table summarizes the weighted average assumptions used to develop their fair value for the years ending December 31:

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Expected volatility 52 % 51 %

Expected life 2.88 years 3.99 years

Expected life (in years) 3.35 2.88

Dividend yield — —

As of December 31, 2023, we reserved shares of common stock for future issuance under the 2018 Plan as follows (in thousands):

Options and RSUs outstanding 2,216

Options, PSUs and RSUs outstanding 2,220

Shares available for future grant 1,733

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The total fair value of RSUs vested during the years ended December 31, 2023 and 2022 was $ 2,126 and $ 839 , respectively.

As of December 31, 2022, total compensation cost net yet recognized related to nonvested RSUs was $ 1,490 , which is expected to be recognized over a weighted average period of 1.87 years.

As of December 31, 2023, total compensation cost not yet recognized related to nonvested RSUs was $ 4,010 , which is expected to be recognized over a weighted average period of 1.90 years.

The following table summarizes activity related to PSUs during the year ended December 31, 2023 (in thousands, except for weighted average grant date fair value):

Shares Weighted Average Grant Date Fair Value

Outstanding, beginning of year — $ —

Granted 354 9.49

Forfeited ( 50 ) 9.49

Outstanding, end of year 304 $ 9.49

As of December 31, 2023, total compensation cost not yet recognized related to nonvested PSUs was $ 1,521 which is expected to be recognized over a weighted average period of 2.01 years.

As of December 31, 2023, we had 1,733 shares available for grant pursuant to the 2018 Plan.

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Our Board of Directors may amend or terminate the plan at any time.

We made a Safe Harbor non-elective contribution of $ 1,495 as of December 31, 2022.

We accrued matching contributions to the plan of $ 261 as of December 31, 2021.

We made a Safe Harbor non-elective contribution to the plan of $ 1,705 as of December 31, 2023, and a Safe Harbor non-elective contribution to the plan of $ 1,495 as of December 31, 2022.

Employee Stock Purchase Plan

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We qualified for the ERTC in the first three quarters of 2021.

During the quarter ended September 30, 2021, we recorded an aggregate benefit of $ 10,533 in our Consolidated Statements of Comprehensive Income (Loss) to reflect the ERTC payable to us for the first three quarters in 2021.

In 2022, the Company received cash of $3,457, reflecting a portion of our ERTC.

See Note 13 - Subsequent Events regarding activity related to ERTC payments occurring after December 31, 2022.

During the quarter ended September 30, 2021, we recorded an aggregate benefit of $ 10,533 in our Consolidated Statements of Comprehensive Loss and as a receivable in other current assets in the Consolidated Balance Sheets to reflect the ERTC payable to us for the first three quarters in 2021.

In 2022, we received cash of $ 3,457 , reflecting a portion of our ERTC.

In January and February 2023,we received the remaining cash balance of $ 7,076 for the ERTC benefit.

NOTE 11 - INCOME TAXES

The components of the provision (benefit) for income taxes attributable to continuing operations for the years ended December 31, 2023 and 2022 are as follows (in thousands):

Federal $ ( 57 ) $ —

State ( 59 ) 204

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Total deferred $ 225 $ ( 92 )

Gross tax provision $ 112 $ 802

Total tax provision $ 109 $ 112

Our provision for income taxes attributable to continuing operations for the years ended December 31, 2023 and 2022 differ from the expected tax expense (benefit) amount computed by applying the statutory federal income tax rate of 21% to income before income taxes as a result of the following:

1 unchanged sentence

State tax, net of federal benefit ( 686 ) ( 1,181 )

PPP loan forgiveness — ( 1,817 )

Permanent items and other 63 31

Stock compensation ( 428 ) ( 44 )

Credit carryforwards ( 800 ) 166

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Deferred tax assets

Net operating leases $ 11,462 $ 11,522

Net operating losses $ 11,643 $ 11,462

Research and development credit carryforwards 4,255 3,407

4 unchanged sentences

Lease liabilities 1,581 2,163

Acquired intangibles 857 —

Capitalized software 2,012 313

Gross deferred tax assets 23,420 20,294

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Fixed assets ( 167 ) ( 205 )

Capitalized software 313 ( 1,835 )

Deferred commissions ( 2,660 ) ( 1,732 )

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Net deferred tax liabilities $ ( 1,728 ) $ ( 1,503 )

At December 31, 2022, we had federal net operating loss carryforwards of $ 47,386 , research and development credit carryforwards of $ 3,520 .

The net operating loss and research and development credit carryforwards will expire in varying amounts from 2023 through 2042, if not utilized.

At December 31, 2023, we had federal net operating loss carryforwards of $ 49,240 and research and development credit carryforwards of $ 4,180 .

The net operating lo ss and research and development credit carryforwards will expire in varying amounts from 2024 through 2043, if not utilized.

Approximately $ 19,591 of the net operating loss carryforwards carry forward indefinitely, but can only offset up to 80% of taxable income.

1 unchanged sentence

The annual limitation may result in the expiration of net operating losses before utilization.

Due to the uncertainty surrounding the timing of realizing the benefits of our favorable tax attributes in future tax returns, we have placed a valuation allowance against our net deferred tax assets, exclusive of jurisdictions in which we have net deferred tax liabilities.

However, based on our analysis, we do not expect any material net operating losses to expire prior to utilization.

During the year ended December 31, 2023, the valuation allowance increased by $ 3,281 due primarily to operations.

15 unchanged sentences

As of December 31, 2023, we had $ 649 of unrecognized tax benefits, of which $ 28 would affect the effective tax rate if recognized.

Our assessment of our unrecognized tax benefits is subject to change as a function of our financial statement audit.

Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

Our practice is to recognize interest and/or penalties related to income tax matters in inco me tax expense.

During the twelve months ended December 31, 2023, we recognized $ 0 of interest and penalties in our income tax expense.

2 unchanged sentences

We are subject to U.S.

federal income tax examinations for years ending on or after December 31, 2018 and are subject to state and local income tax examinations by tax authorities for years ending on or after December 31, 2017.

federal income tax e xaminations for years ending on or after December 31, 2020 and are subject to state and local income tax examinations by tax authorities for years ending on or after December 31, 2019.

We are not currently under audit for any federal or state jurisdictions.

NOTE 12 - 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.

However, since we have net operating losses, the taxing authorities have the ability to review tax returns no longer subject to examination and make adjustments to these net operating loss carryforwards.

NOTE 12 - 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 or vesting of RSUs and in some cases PSUs.

In periods of net income, we compute the adjustment to the denominator of our dilutive net earnings per share calculation to include these stock options, RSUs, and PSUs, as applicable, using the treasury stock method.

Regardless of the period resulting in net income or net loss, we exclude the adjustment to the denominator of our dilutive net loss per share calculation to the extent that they are anti-dilutive.

We have excluded stock options and restricted stock units reflecting 15 shares for the year ended December 31, 2023 and 108 shares for the year ended December 31, 2022 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 years ended December 31 (in thousands, except per share amounts):

Net income (loss) $ ( 14,466 ) $ 3,193

The following table sets forth the computation of basic and diluted net loss per common share for the years ended December 31 (in thousands, except per share amounts):

Net loss $ ( 9,214 ) $ ( 14,466 )

Weighted-average shares of common stock outstanding 22,138 20,117

Basic earnings (loss) per share $ ( 0.72 ) $ 0.17

Net income (loss) $ ( 14,466 ) $ 3,193

Basic loss per share $ ( 0.42 ) $ ( 0.72 )

Net loss $ ( 9,214 ) $ ( 14,466 )

Weighted-average shares of common stock outstanding 22,138 20,117

Diluted earnings (loss) per share $ ( 0.72 ) $ 0.16

Diluted loss per share $ ( 0.42 ) $ ( 0.72 )

NOTE 13 - SUBSEQUENT EVENTS

In January 2023, the Company resolved the outstanding claims for indemnification for which it was holding back payment of the subordinated note payable as security for such claim.

As a result of the resolution of those claims, the remaining balance of $232 has been paid to the Seller ($182) and to the claimant ($50) in satisfaction of its claim.

There are no further amounts due or owing under this subordinated note payable.

As discussed in Note 10, the Company received the remaining balance of $7,076 for the ERTC benefit in January and February 2023.

On February 22, 2024 , we closed a strategic acquisition for certain assets of a payroll processing and benefits brokerage servicer based in New Jersey.

The total consideration for the acquisition 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 with the principal balance due in February 2026.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DOCUMENTS

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-K

Item 8. Financial Statements and Supplementary Data