What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-02 · 103 added, 77 removed, 160 unchanged (53% of the section changed)

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privacy concerns and laws and other regulations may limit the effectiveness of our applications;

money transmitter laws and anti-money laundering laws;

the financial and other impact of any previous and future acquisitions;

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possible fluctuations in the Company’s financial and operating results;

regulatory pressures on economic relief enacted as a result of the COVID-19 pandemic that change or cause different interpretations with respect to eligib ility for such programs;

domestic and international regulatory developments, including changes to or applicability to our business of privacy and data securities laws;

regulatory pressures on economic relief enacted as a result of the COVID-19 pandemic that change or cause different interpretations with respect to eligibility for such programs;

domestic and international regulatory developments, including changes to or applicability to our business of privacy and data securities laws, money transmitter laws and anti-money laundering laws;

technological developments;

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Asure assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

The following review of Asure’s financial position as of March 31, 2024 and December 31, 2023, and results of operations for the three months ended March 31, 2024 and 2023 should be read in conjunction with our 2023 Annual Report on Form 10-K filed with the SEC on February 26, 2024.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available through the investor relations page of our internet website free of charge as soon as reasonably practicable after they are electronically filed, or furnished to, the SEC.

The following review of Asure’s financial position as of June 30, 2024 and December 31, 2023, and results of operations for the three and six months ended June 30, 2024 and 2023 should be read in conjunction with our 2023 Annual Report on Form 10-K filed with the SEC on February 26, 2024.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are available through the investor relations page of our internet website free of charge as soon as reasonably practicable after they are electronically filed, or furnished to, the SEC.

Asure’s internet website and the information contained in our website or connected to our website are not incorporated into this Quarterly Report on Form 10-Q.

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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.

Our approach to HR compliance services leverages technology and on-demand content to enhance scalability and efficiency while prioritizing client interactions.

We offer our services directly and indirectly through our network of reseller partners.

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Our solutions reduce the administrative burden on employers and increase employee productivity while managing the employment lifecycle.

On July 11, 2024, we acquired certain assets of an applicant tracking technology company, which were used to provide hiring solutions to small and medium-sized businesses .

The aggregate purchase price that we paid for these assets was $15,250, consisting of $8,000 paid in cash on hand, 525 shares of Asure common stock, having an agreed value of $4,250, and the remaining $3,000 in the form of a promissory note with the principal balance due on July 1, 2029.

On April 30, 2024, we acquired certain assets of a reseller partner, which were used to provide payroll processing services.

The partner is located in Ohio.

The aggregate purchase price that we paid for these assets was $3,000, consisting of $2,300 paid in cash on hand, $700 in the form of a promissory note with the principal balance due on October 30, 2025, and 50 shares of Asure common stock.

The aggregate purchase price that we paid for these assets was $3,000, consisting of $2,300 paid in cash on hand, and $700 in the form of a promissory note, plus 50 shares of Asure common stock.

As of June 30, 2024, the promissory note had an outstanding principal balance of $700 and matures October 30, 2025.

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

The aggregate purchase price paid for the acquisition of these assets was $6,000, consisting of $500 paid in cash on hand, 450 shares of Asure common stock, having an agreed value of $4,500, and the remaining $1,000 in the form of a promissory note.

As of March 31, 2024, the promissory note had an outstanding balance of $1,000 and matures on February 22, 2026.

As of June 30, 2024, the promissory note had an outstanding principal balance of $963 and matures on February 22, 2026.

On October 1, 2023, we acquired certain assets of an Alabama based reseller partner, which were used to provide payroll processing services.

The aggregate purchase price paid for these assets was $8,391, paid as follows:

(i) $6,891 in cash of which $6,545 was paid at closing and (ii) the delivery of a promissory note in the amount of $1,500.

As of March 31, 2024, the promissory note had an outstanding balance of $1,500 and matures on October 1, 2025.

The aggregate purchase price paid for these assets was $8,391, consisting of $6,891 in cash of which $6,545 was paid at closing and the delivery of a promissory note in the amount of $1,500.

As of June 30, 2024, the promissory note had an outstanding principal balance of $1,500 and matures on October 1, 2025.

RESULTS OF OPERATIONS (in thousands)

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

Three Months Ended March 31,

Six Months Ended June 30,

Revenue 100 % 100 %

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Interest expense (1) % (6) %

Other income, net — % — %

(Loss) income from operations before income taxes (1) % — %

Net (loss) income (1) % 1 %

Other (expense) income, net — % — %

Loss from operations before income taxes (7) % (5) %

Net loss (8) % (5) %

Revenue is comprised of recurring revenue, professional services, hardware, and other revenue.

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As a percentage of total revenue, we expect our mix of recurring revenue, and professional services, hardware and other revenue to remain relatively constant.

While revenue mix varies by product, recurring revenue represented over 95% of total revenue in three months ended March 31, 2024, compared to 84% in three months ended March 31, 2023.

While revenue mix varies by product, recurring revenue represented over 96% of total revenue in six months ended June 30, 2024, compared to 80% in six months ended June 30, 2023.

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

Three Months Ended March 31, Variance

Three Months Ended June 30, Variance

2024 2023 $ %

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Total $ 28,044 $ 30,420 $ (2,376) (8) %

Six Months Ended June 30, Variance

2024 2023 $ %

Recurring $ 57,324 $ 50,916 $ 6,408 13 %

Professional services, hardware and other 2,372 12,568 (10,196) (81) %

Total $ 59,696 $ 63,484 $ (3,788) (6) %

Recurring Revenue

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The amount of interest we earn from the investment of client funds is also impacted by changes in interest rates.

Recurring revenue for the three months ended March 31, 2024 was $30,273, an increase of $2,317, or 8%, from $27,956 for the three months ended March 31, 2023.

The increase is primarily due to an increase in HR compliance revenue, an increase in interest earned on funds held for clients, and an increase in revenue from AsureMarketplace™.

Recurring revenue for the three months ended June 30, 2024 was $27,051, an increase of $4,091, or 18%, from $22,960 for the three months ended June 30, 2023.

The increase is primarily due to an increase in payroll and tax management revenue driven by clients obtained through acquisitions, as well as an increase in revenue from AsureMarketplace™, and an increase in interest earned on funds held for clients.

Recurring revenue for the six months ended June 30, 2024 was $57,324, an increase of $6,408, or 13%, from $50,916 for the six months ended June 30, 2023.

Recurring revenue increase is primarily due to an increase in payroll and tax management revenue driven by clients obtained through acquisitions, an increase in HR compliance revenue, an increase in revenue from AsureMarketplace™, and an increase in interest earned on funds held for clients.

Professional Services, Hardware and Other Revenue

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

Professional services, hardw are and other revenue decreased $3,729, or 73%, for the three months ended March 31, 2024 from the similar period in 2023, primarily due to a decrease in non-recurring ERTC revenue.

Professional services, hardw are and other revenue decreased $6,467, or 87%, for the three months ended June 30, 2024 from the similar period in 2023, primarily due to a decrease in non-recurring ERTC revenue.

Professional services, hardware, and other revenue decreased $10,196, or 81%, for the six months ended June 30, 2024 from the similar period in 2023 , primarily due to a decrease in non-recurring ERTC revenue.

ERTC revenue was originally expected to expire during 2024 and 2025;

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If approved by other branches of government, this will have an effect on our ERTC revenue and cash collections.

Additionally, in September 2023, the IRS announced a moratorium through the end of the year on processing new ERTC claims due to concerns over questionable or fraudulent claims.

Additionally, in September 2023, the IRS announced a moratorium through the end of 2023 on processing new ERTC claims due to concerns over questionable or fraudulent claims.

In June 2024, the IRS posted a news release stating that the agency continues its review of previously filed claims and that it will consult with Congress before making a final decision on the future of the moratorium.

The moratorium may potentially delay the processing and collections of previously filed ERTC claims.

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Gross Profit and Gross Margin

Consolidated gross profit for the three months ended March 31, 2024, was $22,607, a decrease of $1,793, or 7%, from $24,400 for the three months ended March 31, 2023.

Gross margin as a percentage of revenue was 71% for the three months ended March 31, 2024 as compared to 74% for the three months ended March 31, 2023.

The decrease is primarily attributable to the decrease in professional services, hardware and other revenue during the period.

Our cost of sales relates primarily to direct product costs, compensation for operations and related consulting expenses, hardware expenses, facilities and related expenses and the amortization of our purchased software development costs.

Consolidated gross profit for the three months ended June 30, 2024, was $18,868, a decrease of $3,150, or 14%, from $22,018 for the three months ended June 30, 2023.

Gross profit as a percentage of revenue was 67% for the three months ended June 30, 2024 as compared to 72% for the three months ended June 30, 2023.

The decrease is primarily attributable to the decrease in professional services revenue during the period.

Consolidated gross profit for the six months ended June 30, 2024, was $41,475, a decrease of $4,943, or 11%, from $46,418 for the six months ended June 30, 2023.

Gross profit as a percentage of revenue was 69% for the six months ended June 30, 2024 as compared to 73% for the six months ended June 30, 2023 .

The decrease is primarily attributable to the decrease in professional services revenue during the period.

Our cost of sales relates primarily to direct product costs, compensation for operations and related consulting expenses, hardware expenses, facilities, web hosting expenses and related expenses and the amortization of our purchased software development costs.

We include intangible amortization related to developed and acquired technology within cost of sales.

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

Sales and marketing expenses for the three months ended March 31, 2024 were $7,767, an increase of $567, or 8%, from $7,200 for the three months ended March 31, 2023.

The increase is primarily due to an increase in direct sales personnel, and an increase in marketing initiatives;

partially offset by a decrease in referral fees and bad debt expense.

Sales and marketing expenses as a percentage of revenue increased to 25% for the three months ended March 31, 2024 from 22% for the same period in 2023.

Sales and marketing expenses for the three months ended June 30, 2024 were $6,924, a decrease of $1,591, or 19%, from $8,515 for the three months ended June 30, 2023.

The decrease is primarily due to a decrease in referral fees associated with non-recurring ERTC revenue arrangements.

Sales and marketing expenses as a percentage of revenue decreased to 25% for the three months ended June 30, 2024 from 28% for the same period in 2023.

Sales and marketing expenses for the six months ended June 30, 2024 were $14,691, a decrease of $1,024, or 7%, from $15,715 for the six months ended June 30, 2023.

The decrease is primarily due to a decrease in referral fees associated with non-recurring ERTC revenue arrangements.

Sales and marketing expenses as a percentage of revenue remained flat at 25% for the six months ended June 30, 2024 compared to the same period in 2023.

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

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

General and administrative expenses for the three months ended March 31, 2024 were $10,063, an increase of $107, or 1%, from $9,956 for the three months ended March 31, 2023.

The increase is primarily attributable to increased personnel and share-based compensation expenses, partially offset by a decrease in bonus expense in 2024.

General and administrative expenses as a percentage of revenue increased to 32% for the three months ended March 31, 2024 from 30% for the same period in 2023.

General and administrative expenses for the three months ended June 30, 2024 were $10,118, a decrease of $218, or 2%, from $10,336 for the three months ended June 30, 2023.

The decrease is primarily attributable to a decrease in bonus expense in 2024 based on the performance towards the current year bonus plan, partially offset by increased personnel expenses driven by merit increases and higher employee insurance premiums.

General and administrative expenses as a percentage of revenue increased to 36% for the three months ended June 30, 2024 from 34% for the same period in 2023.

General and administrative expenses for the six months ended June 30, 2024 were $20,181, a decrease of $111, or 1%, from $20,292 for the six months ended June 30, 2023.

The decrease is primarily attributable to a decrease in bonus expense in 2024 based on the performance towards the current year bonus plan, and a decrease in facilities rent expense due to some office leases terminating in 2023 and early 2024.

These decreases were partially offset by increased personnel expenses driven by merit increases and higher employee insurance premiums.

General and administrative expenses as a percentage of revenue increased to 34% for the six months ended June 30, 2024 from 32% for the same period in 2023.

Research and Development Expenses

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

R&D expenses for the three months ended March 31, 2024 were $1,769, a decrease of $210, or 11%, from $1,979 for the three months ended March 31, 2023.

The decrease is primarily attributable to an increase in capitalized software expenses driven by continued investments in the development of our products, partially offset by an increase in personnel costs.

R&D expenses as a percentage of revenue remained flat at 6% for the three months ended March 31, 2024 compared to the same period in 2023.

We plan to continue to enhance our products and technologies by leveraging the latest technology stack, Robotic Process Automation (“RPA”), and artificial intelligence (“AI”), and development partnerships.

We expect that our expanded investment in product, engineering, SaaS hosting, mobile and hardware technologies will lay the groundwork for broader market opportunities and represent a key aspect of our competitive differentiation.

We also plan to expand our technological resources through organic improvements and acquired intellectual property.

We expect to continue to expand the breadth of integration between our solutions, allowing direct clients and resellers the ability to easily add and implement components across our entire solution set.

Our initiatives include providing our customers with more accurate and efficient automation powered by an informed knowledge base.

Consistent with that effort, our engineering team utilizes an AI development copilot to increase their productivity and efficiency.

Our operations team utilizes a digital assistant to allow for a more efficient and accurate way to automate repetitive tasks, which we believe will free up our time for more strategic work and reduce the risk of errors.

We are committed to providing the best-in-class solutions.

Our development efforts for future releases and enhancements are driven by feedback received from our existing and potential customers and by gauging market trends.

We believe we have the appropriate development team to design and enhance our solution suite and integrated platform.

R&D expenses for the three months ended June 30, 2024 were $1,962, an increase of $637, or 48%, from $1,325 for the three months ended June 30, 2023.

The increase is primarily attributable to an increase in personnel expenses due to increased headcount from the prior period, partially offset by an increase in capitalized software expenses driven by continued investments in the development of our products.

R&D expenses as a percentage of revenue increased to 7% for the three months ended June 30, 2024 from 4% for the same period in 2023.

R&D expenses for the six months ended June 30, 2024 were $3,731, an increase of $427, or 13%, from $3,304 for the six months ended June 30, 2023 .

R&D expenses as a percentage of revenue increased to 6% for the six months ended June 30, 2024 from 5% for the same period in 2023.

Amortization of Intangible Assets

Amortization expense for the three months ended March 31, 2024 was $3,449, an increase of $147, or 4%, from $3,302 for the three months ended March 31, 2023.

Amortization expense as a percentage of revenue increased to 11% for the three months ended March 31, 2024 from 10% for the same period in 2023.

The increase in amortization expense in the three months ended March 31, 2024 is primarily due to new asset acquisitions in the fourth quarter of 2023.

Amortization expense for the three months ended June 30, 2024 was $4,046, an increase of $752, or 23%, from $3,294 for the three months ended June 30, 2023.

Amortization expense as a percentage of revenue increased to 14% for the three months ended June 30, 2024 from 11% for the same period in 2023.

The increase in amortization expense in the three months ended June 30, 2024 is primarily due to new asset acquisitions in the fourth quarter of 2023 and in the second quarter of 2024.

Amortization expense for the six months ended June 30, 2024 was $7,495, an increase of $899, or 14%, from $6,596 for the six months ended June 30, 2023.

Amortization expense as a percentage of revenue increased to 13% for the six months ended June 30, 2024 from 10% for the same period in 2023 .

The increase in amortization expense in the six months ended June 30, 2024 is primarily due to new asset acquisitions in the fourth quarter of 2023 and in the first half of 2024.

Interest Income and Expense

Interest income for the three months ended March 31, 2024 was $336 compared to interest income of $349 for the three months ended March 31, 2023.

Interest income as a percentage of revenue was 1% for the three months ended March 31, 2024 and 2023 .

Interest expense for the three months ended March 31, 2024 was $180 compared to interest expense of $2,293 for the three months ended March 31, 2023.

Interest expense as a percentage of revenue was 1% for the three months ended March 31, 2024 compared to 7% for the three months ended March 31, 2023.

The decrease in interest expense in the three months ended March 31, 2024 is primarily due to our payoff of the outstanding debt under the credit facility with Structural Capital Investments II LP in the third quarter of 2023.

Other Income, Net

Other income, net for the three months ended March 31, 2024 was $10 compared to $83 for the three months ended March 31, 2023.

Other income, net as a percentage of revenue was negligible for the three months ended March 31, 2024, and for the three months ended March 31, 2023 .

For the three months ended March 31, 2024 and 2023, we recorded income tax expense attributable to continuing operations of $33 and an income tax benefit of $237, respectively, a decrease of $270.

Net (Loss) Income

We incurred a loss of $308, or $0.01 per share, during the three months ended March 31, 2024, compared to income of $339, or $0.02 per share, during the three months ended March 31, 2023.

Loss and income as a percentage of total revenue was 1% and 1% for the three months ended March 31, 2024 and 2023, respectively.

Interest income for the three months ended June 30, 2024 was $261 compared to interest income of $230 for the three months ended June 30, 2023.

Interest income as a percentage of revenue was 1% for the three months ended June 30, 2024 and 2023 .

Interest expense for the three months ended June 30, 2024 was $208 compared to interest expense of $1,823 for the three months ended June 30, 2023.

Interest expense as a percentage of revenue was 1% for the three months ended June 30, 2024 compared to 6% for the three months ended June 30, 2023.

The decrease in interest expense in the three months ended June 30, 2024 is primarily due to our payoff of the outstanding debt under the credit facility with Structural Capital Investments II LP (“Structural”) in the third quarter of 2023.

Interest income for the six months ended June 30, 2024 was $597 compared to interest income of $578 for the six months ended June 30, 2023.

Interest income as a percentage of revenue was 1% for the three months ended June 30, 2024 and 2023 .

Interest expense for the six months ended June 30, 2024 was $388 compared to interest expense of $4,116 for the six months ended June 30, 2023.

Interest expense as a percentage of revenue was 1% for the six months ended June 30, 2024 compared to 6% for the six months ended June 30, 2023.

The decrease in interest expense in the six months ended June 30, 2024 is primarily due to our payoff of the outstanding debt under the credit facility with Structural in the third quarter of 2023.

Other (Expense) Income, Net

Other (expense) income, net for the three months ended June 30, 2024 was $0 compared to an expense of $93 for the three months ended June 30, 2023.

Other (expense) income, net as a percentage of revenue was negligible for the three months ended June 30, 2024 and 2023 .

Other (expense) income, net for the six months ended June 30, 2024 was $10 compared to $(9) for the six months ended June 30, 2023.

Other (expense) income, net as a percentage of revenue was negligible for the six months ended June 30, 2024 and 2023.

For the three months ended June 30, 2024 and 2023, we recorded income tax expense attributable to continuing operations of $231 and $627, respectively, a decrease of $396.

For the six months ended June 30, 2024 and 2023, we recorded income tax expense attributable to continuing operations of $264 and $390, respectively, a decrease of $126.

We incurred a loss of $4,360, or $0.17 per share, during the three months ended June 30, 2024, compared to a loss of $3,765, or $0.18 per share, during the three months ended June 30, 2023.

Loss as a percentage of total revenue was 16% and 12% for the three months ended June 30, 2024 and 2023, respectively.

We incurred a loss of $4,668, or $0.18 per share, during the six months ended June 30, 2024, compared to a loss of $3,426, or $0.17 per share, during the six months ended June 30, 2023.

Loss as a percentage of total revenue was 8% and 5% for the six months ended June 30, 2024 and 2023, respectively.

LIQUIDITY AND CAPITAL RESOURCES (in thousands)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 20,736 $ 30,317

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Working Capital .

We had working capital of $24,040 at March 31, 2024, a decrease of $1,840 from working capital of $25,880 at December 31, 2023.

Working capital as of March 31, 2024 and December 31, 2023 includes $3,547 and $6,853 of short-term deferred revenue, respectively.

We had working capital of $23,663 at June 30, 2024, a decrease of $2,217 from working capital of $25,880 at December 31, 2023.

Working capital as of June 30, 2024 and December 31, 2023 includes $3,030 and $6,853 of short-term deferred revenue, respectively.

Deferred revenue is an obligation to perform future services.

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Operating Activities .

Net cash used in operating activities of $3,947 for the three months ended March 31, 2024 was primarily driven by non-cash adjustments to our net loss of approximately $6,579, primarily due to depreciation and amortization and share-based compensation.

This was offset by changes in operating assets and liabilities, which resulted in a use of $10,218 in cash.

Net cash provided by operating activities of $4,588 for the three months ended March 31, 2023 was driven by non-cash adjustments to our net income of approximately $7,787, primarily due to depreciation and amortization and share-based compensation.

For the three months ended March 31, 2023, changes in operating assets and liabilities resulted in a use of $3,538 in cash.

Net cash used in operating activities of $1,719 for the six months ended June 30, 2024 was primarily driven by changes in operating assets and liabilities, which resulted in a use of $10,677 in cash.

This was offset by non-cash adjustments to our net loss of approximately $13,626, primarily due to depreciation and amortization and share-based compensation.

Net cash provided by operating activities of $6,096 for the six months ended June 30, 2023 was driven by non-cash adjustments to our net loss of approximately $16,082, primarily due to depreciation and amortization and share-based compensation.

For the six months ended June 30, 2023, changes in operating assets and liabilities resulted in a use of $6,560 in cash.

Investing Activities .

Net cash used in investing activities of $4,495 for the three months ended March 31, 2024 is primarily due to purchases of available-for-sale securities and maturities of $3,516, offset by proceeds from sales and maturities of available-for-sale securities of $2,406.

Net cash used in investing activities of $6,647 for the three months ended March 31, 2023 is primarily due to purchases of available-for-sale securities and maturities of $10,189.

Net cash used in investing activities of $7,359 for the six months ended June 30, 2024 is primarily due to purchases of available-for-sale securities and maturities of $6,462 and software capitalization costs of $5,042, partially offset by proceeds from sales and maturities of available-for-sale securities of $8,617.

Net cash used in investing activities of $17,266 for the six months ended June 30, 2023 is primarily due to purchases of available-for-sale securities and maturities of $18,885.

Financing Activities .

Net cash provided by financing activities was $21,062 for the three months ended March 31, 2024, which primarily consisted of a net increase in client fund obligations of $21,122.

Net cash provided by financing activities was $21,128 for the three months ended March 31, 2023, which primarily consisted of a net increase in client fund obligations of $19,372.

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

The outstanding promissory note matures on September 30, 2026.

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

Net cash used in financing activities was $27,935 for the six months ended June 30, 2024, which primarily consisted of a net decrease in client fund obligations of $28,225.

Net cash used in financing activities was $15,602 for the six months ended June 30, 2023, which primarily consisted of a net decrease in client fund obligations of $17,225.

We have an outstanding promissory note in connection with a payroll business acquired in April 2024 in the amount of $700 as of June 30, 2024 .

The outstanding promissory note matures on October 30, 2025.

We also have an outstanding promissory note in connection with a payroll processing and benefits brokerage servicer acquired in February 2024 in the amount of $1,000 as of March 31, 2024 .

We also have an outstanding promissory note in connection with a payroll processing and benefits brokerage servicer acquired in February 2024 in the amount of $963 as of June 30, 2024 .

The outstanding promissory note matures on February 22, 2026.

We also have an outstanding promissory note in connection with a payroll business acquired in October 2023 in the amount of $1,500 as of June 30, 2024 .

The outstanding promissory note matures on October 1, 2025.

We also have an outstanding promissory note in connection with a payroll business acquired in September 2021 in the amount of $4,200 as of June 30, 2024.

The outstanding promissory note matures on September 30, 2026.

Sources of Liquidity .

As of March 31, 2024, the Company’s principal sources of liquidity consisted of approximately $23,166 of cash and cash equivalents, together with cash generated from operations of our business over the next twelve months.

As of June 30, 2024, the Company’s principal sources of liquidity consisted of approximately $20,736 of cash and cash equivalents, together with cash generated from operations of our business over the next twelve months.

We cannot ensure that we can grow our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future acquisitions;

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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 2. Management’s Discussion and Analysis