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If our security measures, or those of our third-party data center hosting facilities, cloud computing platform providers or third-party service partners are compromised or breached, or if personal information of our clients or their employees is accessed or obtained, our services and HCM solution may be perceived as not being secure, our brand could be damaged, our services may be disrupted, and customers may curtail or stop using our services, all of which could reduce our revenue and earnings, increase our expenses, and expose us to legal claims and regulatory actions.
−Removed: Our solution involves the collection, storage and transmission of clients’ and their employees’ confidential and proprietary information, including personal identifying information such as social security numbers and HIPAA data with respect to our consumer health care administration services, as well as financial and payroll data.
+Added: Our solution involves the collection, storage and transmission of clients’ and their employees’ confidential and proprietary information, including personal identifying information such as social security numbers and data protected by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) with respect to our consumer health care administration services, as well as financial and payroll data.
This type of data is highly sensitive and is regulated by laws in all jurisdictions governing the security and privacy of personal information.
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Any actual or perceived breach of our security could damage our reputation, cause existing clients and resellers to terminate our services, prevent future clients from doing business with us and result in regulatory liability and third-party liability, any of which could adversely affect our business and results of operations.
−Removed: We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future, fail to remediate the identified material weakness, or otherwise fail to maintain an effective system of internal control, all of which, if they occur, may result in material misstatements of our financial statements.
−Removed: In connection with the preparation of our Annual Report for the year ended December 31, 2024, we have identified a material weakness in our internal controls over financial reporting.
−Removed: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: Controls and Procedures included in Item II of this Annual Report for more information about the identified material weakness.
−Removed: We are in the process of designing and implementing measures to improve our internal controls over financial reporting and remediate the identified material weakness.
−Removed: However, we cannot predict the success of these measures nor give assurance that these measures will remediate the material weakness or prevent additional material weaknesses or significant deficiencies in our internal controls over financial reporting from occuring.
−Removed: If our remediation measures are insufficient to address the material weakness or additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, we may not detect errors in a timely manner, our financial statements could be misstated, we could face a loss of confidence by stakeholders, or we could be subject to regulatory scrutiny, sanctions, or litigation, any of which could harm our business, financial condition, results of operations, or the market price of our securities.
We have a history of losses, and we cannot be certain that we will achieve or sustain profitability.
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We cannot be certain that we will be able to achieve or sustain profitability on a quarterly or annual basis.
−Removed: Privacy concerns and laws and other regulations may limit the effectiveness of our applications and adversely affect our business.
−Removed: Our products are subject to various complex laws and regulations on the federal, state and local levels, including those governing data security and privacy.
−Removed: The regulatory framework for privacy issues is rapidly evolving and will remain uncertain as more jurisdictions adopt laws and regulations regarding the collection, processing, storage and disposal of personal information.
−Removed: In the United States, the laws include regulations promulgated by the Federal Trade Commission, the Health Insurance Portability and Accountability Act of 1996, state data breach notification laws, and state security and privacy laws such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act, (the “CCPA”) and the Illinois Biometric Information Privacy Act (“IBIPA”) governing biometric data.
−Removed: Some of these laws, such as the CCPA and IBIPA, grant consumers private right of actions for data breaches or violations as applicable.
−Removed: Additionally, new privacy legislation became effective throughout 2023 in many other states in which we operate.
−Removed: These laws track significant portions of existing laws but include differences that may or may not increase our compliance burden.
−Removed: Additional states may adopt privacy laws in the future that may increase our compliance burden.
−Removed: Further, because some of our Reseller clients have clients in the European Union utilizing Asure’s Time and Attendance product, the GDPR may impact our processing of certain client and client employee information.
−Removed: Failure to comply with laws, including security and privacy laws, could subject us to liability, fines, lawsuits and could require us to change our applications in order to comply.
−Removed: In addition to governmental regulation, self-regulatory standards may place additional burdens on us.
−Removed: Many of our customers expect us to meet voluntary certification or other standards established by third parties as well as other audited measures and controls.
−Removed: If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutions to certain customers and could harm our business.
−Removed: Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our products or services, and could limit adoption of our cloud-based solutions.
−Removed: Furthermore, certain of our products use client data to provide value to our solutions, aid in efficiency and reduce human error.
−Removed: Evolving privacy requirements and privacy concerns could restrict our ability to store and process data, which may impact our ability to offer our services thereby reducing demand.
−Removed: Enforcement actions and investigations could also impact us through increased costs, regulatory penalties, or restrictions on our business.
+Added: We may need additional capital to support business growth or to make scheduled payments on or refinance our existing indebtedness.
+Added: Such additional capital may have restrictions that could adversely affect our financial condition and our ability to respond to changes in our business or may be prevented entirely by our existing restrictive covenants.
+Added: We intend to continue to make investments, including the acquisition of complementary businesses, to support our business growth and may need to respond to business challenges, including the need to develop new features or enhance our existing products, improve our operating infrastructure or acquire complementary businesses and technologies.
+Added: However, our business may not generate cash flow from operations in the future sufficient to service our debt and support our growth strategies.
+Added: Our future performance is subject to economic, financial, competitive, and other factors beyond our control.
+Added: If we are unable to generate sufficient cash flow, we may be required to pursue one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, restructuring debt, or obtaining additional equity or debt financing.
+Added: If we raise additional funds through issuances of equity securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
+Added: If we incur debt to raise additional fund, we may not be able to do so on desirable terms.
+Added: New indebtedness may adversely affect our financial condition and ability to respond to changes may be impaired by vulnerability to adverse economic conditions, limitations to decision flexibility and cash flow, competitive disadvantage caused by new scheduled payments or covenant restrictions.
+Added: Our Credit, Security, and Guaranty Agreement with MidCap Financial Trust may further restrict our cash flow and business flexibility, as well as potentially restricting other debt financing from occurring at all.
+Added: Our agreement contains restrictive covenants, including restrictions on our ability to pay dividends to stockholders, as well as requirements to comply with certain leverage ratios and other financial maintenance tests and stringent requirements around regulatory compliance.
+Added: These restrictive covenants and requirements limit the amount of borrowings that are available to us.
+Added: The agreement covenants may also affect our ability to obtain future financing and to pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions.
+Added: In addition, if for any reason we are unable to meet our debt service and repayment obligations, we would be in default under the terms of the agreement, which would allow our creditors at that time to declare all outstanding indebtedness to be due and payable.
+Added: Under these circumstances, our lenders could compel us to apply all of our available cash to repay our indebtedness.
+Added: Volatility and weakness in bank and capital markets may adversely affect credit availability and related financing costs for us.
+Added: Banking and capital markets have recently and may in the future experience periods of volatility and disruption.
+Added: If the disruption in these markets is prolonged, our ability to refinance, and the related cost of refinancing, some or all of our debt could be adversely affected.
+Added: Although we currently can access the bank and capital markets, there is no assurance that such markets will continue to be a reliable source of financing for us.
+Added: These factors, including the tightening of credit markets, could adversely affect our ability to obtain cost effective financing.
+Added: Increased volatility and disruptions in the financial markets also could make it more difficult and more expensive for us to refinance outstanding indebtedness and to obtain financing.
+Added: In addition, the adoption of new statutes and regulations, the implementation of recently enacted laws, or new interpretations or the enforcement of older laws and regulations applicable to the financial markets or the financial services industry could result in a reduction in the amount of available credit or an increase in the cost of credit.
+Added: Disruptions in the financial markets can also adversely affect our lenders, insurers, customers, and other counterparties.
+Added: Any of these results could have a material adverse effect on our business, financial condition, and results of operations.
We have acquired and plan to continue to acquire from time to time our Reseller Partners’ businesses that have licensed our proprietary software and other complementary businesses either through stock acquisition or through an asset purchase of their client service agreements and related assets.
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If we finance acquisitions by issuing equity or convertible or other debt securities or loans, or issue equity as consideration for an acquisition, our existing stockholders may be diluted, or we could face constraints related to the terms of, and repayment obligations related to, the incurrence of indebtedness.
−Removed: Our failure to comply with existing laws and regulations may result in adverse effects on our business, service and financial condition and failure to comply with licensing requirements or changing laws and regulations through modifications, developments, and enhancements to our products and services could have a material adverse effect on our business and results of operations.
−Removed: Our services are subject to various laws and regulations including COBRA, HIPAA, laws and regulations promulgated by state wage and hour authorities, anti-money laundering regulations, and licensure requirements.
−Removed: Failure to comply with the multiple laws and regulations that impact us may result in civil liability from our clients for noncompliance, regulatory fines, and loss of reputation in the event of a public regulatory investigation or consent order or civil lawsuit.
−Removed: Moreover, many of our solutions are designed to assist our clients with their compliance with myriad government regulations and laws that continually change.
−Removed: For example, regulatory changes in 2020 in response to the COVID-19 pandemic necessitated multiple product modifications to accommodate changes relevant to the collection and remittance of payroll tax, including payroll tax deferments.
−Removed: The introduction of new regulatory requirements or changes in interpretation of existing laws or regulations could increase our cost of doing business.
−Removed: As with the development changes necessitated with new regulations in response to COVID-19, changing regulatory requirements may require the introduction of new applications or enhancements, or may make new modifications or new applications more expensive or could prevent the introduction of new applications.
−Removed: Changes in laws could also impact applications under development, rendering them in applicable or obsolete mid-development which could result in wasted time and development money.
−Removed: Furthermore, we could fail to renew expiring licenses or have active licenses suspended or revoked for noncompliance with rules or regulations issued by the licensing bodies.
−Removed: Any failure to anticipate and respond to these legal regulations and changes and provide tools and applications to solve for these changes in a timely fashion could adversely affect our reputation and affect our business and results of operations.
+Added: Privacy concerns and laws and other regulations may limit the effectiveness of our applications and adversely affect our business.
+Added: Our products and services are subject to various complex laws and regulations on the federal, state and local levels, including those governing data security, privacy, payroll, benefits administration, insurance brokerage, and other regulated service offerings.
+Added: As a provider of human capital management solutions and insurance brokerage services, we process sensitive employee and client data, including personal, financial, biometric, and health-related information, which subjects us to an extensive and evolving regulatory landscape that creates significant ongoing compliance obligations.
+Added: The regulatory framework for privacy and data security is rapidly evolving and will remain uncertain as more jurisdictions adopt laws and regulations regarding the collection, processing, storage and disposal of personal information.
+Added: In the United States, these laws include regulations promulgated by the Federal Trade Commission, HIPAA, and state security and privacy laws such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act (the "CCPA"), and the Illinois Biometric Information Privacy Act ("IBIPA") governing biometric data.
+Added: Additional states have enacted comprehensive privacy laws in recent years, including Virginia, Colorado, Connecticut, Texas, and Oregon, among others, and further states may adopt similar legislation in the future.
+Added: These laws frequently track significant portions of existing frameworks but include differences that may increase our compliance burden.
+Added: Some of these laws, such as the CCPA and IBIPA, also grant consumers private rights of action for data breaches or violations, as applicable.
+Added: Beyond privacy, our services are subject to a broad range of additional federal and state laws and regulations, including the Fair Labor Standards Act, the Employee Retirement Income Security Act, COBRA, state wage and hour laws, IRS payroll tax regulations, anti-money laundering regulations, federal and state laws governing prepaid and payroll card products, and state insurance laws and regulations governing our insurance brokerage and third-party administrator ("TPA") activities.
+Added: We maintain insurance producer licenses in all 50 states and the District of Columbia, and TPA licenses in states where such licensure is required, and our ability to operate these lines of business depends on maintaining those licenses in good standing across each applicable jurisdiction.
+Added: Our insurance brokerage and TPA operations are subject to oversight by state departments of insurance in each jurisdiction in which we operate.
+Added: Because many of our solutions are designed to help clients manage their own compliance obligations, changes in applicable laws could simultaneously increase our own compliance burden while requiring us to rapidly update the tools and applications we provide to clients.
+Added: Changes in laws could also impact applications under development, rendering them inapplicable or obsolete mid-development and resulting in wasted time and development costs.
+Added: Certain of our product offerings are provided in partnership with or through third-party program managers, and any regulatory non-compliance or adverse regulatory action involving those third parties could disrupt our ability to offer such products and adversely affect our business and results of operations.
+Added: Our failure to comply with existing laws and regulations, or to anticipate and respond to regulatory changes in a timely fashion, may result in civil liability from our clients for noncompliance, regulatory fines, loss of reputation, and a material adverse effect on our business, financial condition, and results of operations.
+Added: Furthermore, we could fail to renew expiring licenses or have active licenses suspended or revoked for noncompliance with rules or regulations issued by licensing bodies, including state departments of insurance.
+Added: Any such failure could adversely affect our ability to offer certain services, damage client relationships, and harm our business and results of operations.
+Added: The adoption of new or interpretation of existing money service business statutes and money transmitter statutes at the federal and state level could subject us to additional regulation and related expense and necessitate changes to our business model.
+Added: As part of our payroll processing services, we impound funds from employer clients and remit payments to employees, taxing authorities, and designated third parties on their behalf.
+Added: This money movement activity subjects us to federal and state laws and regulations governing money service businesses and money transmitters, the application of which to payroll processors continues to evolve across jurisdictions.
+Added: The adoption of new money transmitter or money service business statutes in new jurisdictions, changes in regulators' interpretations of existing statutes, or disagreement by regulators with our interpretation of such statutes or regulations could require additional registrations or licensing, limit certain of our business activities until we are properly licensed, and expose us to financial penalties.
+Added: These occurrences could also require changes to the manner in which we conduct some aspects of our money movement business or our overall business strategy.
+Added: At the federal level, the Financial Crimes Enforcement Network (“FinCEN”) has not declared payroll processing to constitute money transmission.
+Added: Nonetheless, out of an abundance of caution, we have proactively registered with FinCEN and maintain a comprehensive Anti-Money Laundering ("AML") Policy and compliance program designed to mitigate the risk of our services being utilized for illegal purposes, including money laundering, and to assist in detecting fraud.
+Added: At the state level, we currently hold money transmission licenses or payroll processor licenses in all jurisdictions in which we believe such licensure is required.
+Added: Maintaining these licenses entails significant ongoing costs, including surety bond premiums, examination fees, and other compliance expenditures.
+Added: These costs may increase as regulatory requirements evolve, as bonding authorities reassess our risk profile, or as the volume of funds we process grows.
+Added: Due to the constantly evolving regulatory landscape, we continuously monitor state legislative developments and shifting regulatory interpretations, proactively seeking licensure in any jurisdiction where new requirements may apply.
+Added: Our money transmitter and payroll processor licenses subject us to routine examinations by the regulatory agencies overseeing those licenses.
+Added: If such examinations reveal violations that cannot be remediated, we may be subject to civil and criminal fines and penalties and could lose our license to provide services in the affected jurisdictions, any of which could have a material adverse effect on our business and results of operations.
+Added: Further, should states or other jurisdictions where we are not currently licensed determine that we are a money service business or money transmitter, we could be subject to civil and criminal fines and penalties, registration fees, surety bond requirements, reputational damage, and other negative consequences that could have a material adverse effect on our financial condition and results of operations.
Our software and solutions may not function adequately, which could damage our reputation and give rise to claims against us, which could harm our business and operating results.
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Moreover, some of our agreements include performance guarantees and service level standards that obligate us to provide credits, refunds or termination rights in the event of a significant disruption in our SaaS hosting network infrastructure or other technical problems that relate to the functionality or design of our software.
−Removed: We may be required to incur debt to meet future capital requirements of our business.
−Removed: Should we be required to incur debt, the restrictions imposed by the terms of such debt could adversely affect our financial condition and our ability to respond to changes in our business.
−Removed: If we incur debt, we may be subject to the following risks:
−Removed: • our vulnerability to adverse economic conditions may be heightened;
−Removed: • our flexibility in planning for, or reacting to, changes in our business may be limited;
−Removed: • our debt covenants may affect our flexibility in planning for, and reacting to, changes in the economy and in our industry;
−Removed: • higher levels of debt may place us at a competitive disadvantage compared to our competitors or prevent us from pursuing opportunities;
−Removed: • covenants contained in the agreements governing our indebtedness may limit our ability to borrow additional funds and make certain investments;
−Removed: • a significant portion of our cash flow could be used to service our indebtedness;
−Removed: • our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes may be impaired.
−Removed: We cannot assure you that our leverage and such restrictions will not materially and adversely affect our ability to finance our future operations or capital needs or to engage in other business activities.
−Removed: Volatility and weakness in bank and capital markets may adversely affect credit availability and related financing costs for us.
−Removed: Banking and capital markets have recently and may in the future experience periods of volatility and disruption.
−Removed: If the disruption in these markets is prolonged, our ability to refinance, and the related cost of refinancing, some or all of our debt could be adversely affected.
−Removed: Although we currently can access the bank and capital markets, there is no assurance that such markets will continue to be a reliable source of financing for us.
−Removed: These factors, including the tightening of credit markets, could adversely affect our ability to obtain cost effective financing.
−Removed: Increased volatility and disruptions in the financial markets also could make it more difficult and more expensive for us to refinance outstanding indebtedness and to obtain financing.
−Removed: In addition, the adoption of new statutes and regulations, the implementation of recently enacted laws, or new interpretations or the enforcement of older laws and regulations applicable to the financial markets or the financial services industry could result in a reduction in the amount of available credit or an increase in the cost of credit.
−Removed: Disruptions in the financial markets can also adversely affect our lenders, insurers, customers, and other counterparties.
−Removed: Any of these results could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: We may require additional capital to support business growth, and this capital may not be available on acceptable terms, or at all.
−Removed: We intend to continue to make investments, including the acquisition of complementary businesses, to support our business growth and may seek additional funds to respond to business challenges, including the need to develop new features or enhance our existing products, improve our operating infrastructure or acquire complementary businesses and technologies.
−Removed: Accordingly, we may need to engage in equity or debt financings to secure additional funds.
−Removed: If we raise additional funds through issuances of equity or debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
−Removed: In addition, we may not be able to obtain additional financing on terms favorable to us, if at all.
−Removed: If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired.
−Removed: Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
−Removed: Our business may not generate cash flow from operations in the future sufficient to satisfy our obligations under the notes and any future indebtedness we may incur and to make necessary capital expenditures.
−Removed: If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive.
−Removed: Our ability to refinance future indebtedness will depend on the capital markets and our financial condition at such time.
−Removed: We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on the notes or future indebtedness.
We incur significant costs as a result of operating as a public company, and our management will devote substantial time to new compliance initiatives, including incremental requirements as a result in a change of filer status.
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Any changes we make to comply with these obligations may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis, or at all.
−Removed: A portion of our accounts receivable is related tax processing services to that enabled businesses to file for Employee Retention Tax Credits under the CARES Act.
−Removed: Such regulations were originally expected to expire in 2024 and 2025, which, following their expiration, will adversely impact our revenues on a comparative basis.
−Removed: Further, abuses of this program may require government intervention that could adversely affect the timing of our cash collections.
−Removed: Since the introduction of the Employee Retention Tax Credits in 2021, we have received a significant portion of our tax processing revenues from the support we provide our customers as a tax processor in filing for Employee Retention Tax Credits.
−Removed: Employee Retention Tax Credits were originally expected to expire during 2024 and 2025;
−Removed: however, it is possible that the government could make changes to or revoke the program prior to its scheduled expiration.
−Removed: In January 2024, the United States House of Representatives passed the Tax Relief for American Families and Workers Act of 2024, which sets an expiration date of January 31, 2024, on additional claims for ERTC that can potentially apply retroactively.
−Removed: The bill also includes various enforcement provisions related to ERTC, including extending the statute of limitation on assessment for the credit, and increasing certain penalties and reporting requirements for those who are considered COVID-ERTC promoters.
−Removed: The Senate must also pass an identical version of the bill that must then be signed by the President before it becomes law.
−Removed: On September 14, 2023, the IRS announced a moratorium on processing new ERTC claims until at least December 31, 2023, to handle the increased number of fraudulent ERTC claims filed.
−Removed: While the IRS is not pausing the processing of ERTC claims filed before September 14, 2023, and eligible taxpayers retain the right to continue to file legitimate ERTC claims, the moratorium will likely adversely affect revenues earned from support provided to customers who would otherwise undergo ERTC claim processing.
−Removed: Given this, investors should not expect our tax processing revenues from ERTC filings to continue beyond 2024, and any earlier expiration or revocation of the ERTC program, including the moratorium described above, will have an adverse effect on our financial condition and results of operation.
−Removed: Further, we have entered into deferred payment arrangements with some customers and referral partners whereby collections from the customer are expected to be received upon the customer’s future receipt of their tax credit.
−Removed: Given the deferred nature of such receipts there is risk pertaining to our ability to collect such amounts in the future.
−Removed: In certain situations, the tax authorities could have the ability to challenge the validity of a business’ filing or could challenge our calculations or find other deficiencies in our filings that could expose us to uncertain penalties or damages.
+Added: Some of our key components are procured from a single or limited number of suppliers.
+Added: Thus, we are at risk of shortages, price increases, tariffs, changes in international trade policies or treaties, delays, or discontinuation of key components, which could disrupt and materially and adversely affect our business.
+Added: Some of the key components used to manufacture our Time and Attendance products come from limited or single sources of supply.
+Added: We do not have contractual commitments or guaranteed supply arrangements with our suppliers.
+Added: As a result, we are subject to the risk of shortages and long lead times in the supply of our components or products.
+Added: Further, recent increase in tariffs and the impositions of new trade restrictions by the United States and other countries have created uncertainty and volatility in global markets, particularly those affecting key manufacturing regions.
+Added: Other factors which may affect our suppliers’ ability or willingness to supply components to us include internal management or reorganizational issues, such as roll-out of new equipment which may delay or disrupt supply of previously forecasted components, or industry consolidation and divestitures, which may result in changed business and product priorities among certain suppliers.
+Added: It could be difficult, costly and time-consuming to obtain alternative sources for these components, or to change product designs to make use of alternative components.
+Added: In addition, difficulties in transitioning from an existing supplier to a new supplier could create delays in component availability that would have a significant impact on our ability to fulfill orders for our products.
+Added: We have previously identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future, fail to remediate the identified material weakness, or otherwise fail to maintain an effective system of internal control, all of which, if they occur, may result in material misstatements of our financial statements.
+Added: In connection with the preparation of our Annual Report for the year ended December 31, 2024, we identified a material weakness in our internal controls over financial reporting.
+Added: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
+Added: Controls and Procedures included in Item II of this Annual Report for more information about the identified material weakness and its remediation.
+Added: While we have implemented measures and remediated the identified material weakness, we cannot give assurance that these measures will prevent additional material weaknesses or significant deficiencies in our internal controls over financial reporting from occurring.
+Added: If additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, we may not detect errors in a timely manner, our financial statements could be misstated, we could face a loss of confidence by stakeholders, or we could be subject to regulatory scrutiny, sanctions, or litigation, any of which could harm our business, financial condition, results of operations, or the market price of our securities.
If we are unable to release timely updates to reflect changes in wage and hour laws, tax, privacy, benefit and other laws and regulations that our products help our clients address, the market acceptance of our products may be adversely affected and our revenues could decline.
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The market for payroll and HCM solutions is fragmented, highly competitive and rapidly changing.
−Removed: Our competitors vary, and include (i) our main competitors, such as ADP, Paychex, UKG, Paylocity, Paycor, Paycom, Ceridian, isolved, and Gusto, (ii) competitors to Asure Time & Attendance, such as UKG, Paychex, ADP and Time Simplicity and (iii) primary competitors to our tax management solutions, such as Ceridian and ADP.
+Added: Our competitors vary, and include (i) our main competitors, such as ADP, Paychex, UKG, Paylocity, Paycom, Ceridian, isolved, and Gusto, (ii) competitors to Asure Time & Attendance, such as UKG, Paychex, and ADP and (iii) primary competitors to our tax management solutions, such as Ceridian and ADP.
Several of our competitors are larger, have greater name recognition, longer operating histories, larger marketing budgets and significantly greater resources than we do, and are able to devote greater resources to the development, promotion and sale of their products and services.
66 unchanged sentences
It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines and penalties that could adversely affect our business, financial condition and results of operations.
−Removed: Issues in the use of artificial intelligence (“AI”) in our HCM products and services may result in reputational harm or liability to us.
−Removed: We are enhancing our products and technologies through the integration of artificial intelligence (“AI”), anticipating its increasing role in our business offerings.
−Removed: Like any developing technology, AI brings inherent risks and challenges that may impact its development, adoption, and use, consequently affecting the reliability of our business and product offerings.
−Removed: AI algorithms may have flaws, and datasets may be insufficient, of poor quality, or contain biased information.
−Removed: While our goal is to use AI to assist customers in data collection, there is a risk that the information produced by AI applications may be perceived as deficient or inaccurate, potentially resulting in competitive harm, legal liability, and damage to our brand or reputation.
−Removed: In addition, our use of AI technology may subject us to financial or regulatory risks.
−Removed: Evolving rules, regulations, and industry standards governing AI may require us to expend significant resources to modify, maintain, or align our business practices or products to comply with US and non-US rules and regulations, the nature of which cannot be determined at this time.
−Removed: Several jurisdictions around the globe, including the EU and certain US states, have already proposed or enacted laws governing AI.
−Removed: US federal agencies are likely to release AI regulations in the near future in light of the Biden administration’s October 30, 2023 Executive Order on AI.
−Removed: The regulatory environment surrounding the impact of the implementation of AI on our products and services may adversely affect our ability to produce and export products and as a result may cause harm to our reputation and financial liability.
−Removed: Despite our efforts to mitigate these risks through sound business practices, the ability to generate data-driven insights for our customers using AI in our HCM technology may be constrained by existing and future regulatory requirements.
−Removed: These regulations could limit our innovative use of data to support the evolving needs of our customers.
+Added: Advancements and adoption of AI, either in our industry or those of our clients, could reduce demand for our solutions, which could have a material adverse effect on our business, operating results, and financial results.
+Added: Our recurring revenues depend in part on the number of employees our customers manage using our solutions.
+Added: Many emerging AI and automation technologies have the potential to reduce workforce sizes across a wide range of industries.
+Added: If our customers reduce headcount as a result of adopting AI-based automation, the volume of employees supported by our solutions may decrease.
+Added: Such reductions would negatively impact our recurring revenues, particularly for our solutions that are priced based on employee or transaction count, active users, or payroll volume.
+Added: In addition, advancements in AI may materially impact the HCM industry and offer an alternative to our solutions.
+Added: AI-driven tools that are capable of performing or automating core functions of our HCM suite may reduce the need for traditional HCM software solutions such as ours.
+Added: If customers adopt AI-native platforms or develop their own internal AI capabilities that replicate or replace the functionality of our products, demand for our solutions could decline.
+Added: If such a decline occurs, our business, financial condition, and results of operations could be adversely affected.
+Added: Issues in the use of AI in our HCM products and services may result in reputational harm or liability to us, and our business, operating results, and financial results may be adversely affected.
+Added: We are actively integrating AI technologies across our HCM platform and internal operations to enhance automation, analytics, customer experience, and operational efficiency.
+Added: As we expand the use of AI-enabled capabilities, we are exposed to risks inherent in the development and deployment of emerging technologies.
+Added: AI systems may generate inaccurate, biased, incomplete, or unintended outputs due to limitations in algorithms, data quality, model design, or oversight.
+Added: If AI-enabled features fail to perform as intended or are perceived as unreliable, we could experience reputational harm, customer dissatisfaction, competitive disadvantage, or legal exposure.
+Added: Certain AI capabilities rely on third-party service providers, cloud infrastructure, or external models.
+Added: Disruptions, security incidents, pricing changes, contractual restrictions, or termination of such services could impair the availability or performance of AI-enhanced features and increase our costs.
+Added: The regulatory framework governing AI, data privacy, and automated decision-making is evolving in the United States and internationally.
+Added: New or expanded legal requirements may require product modifications, increased compliance expenditures, or limitations on certain AI-driven functionality.
+Added: Our AI-enabled features process sensitive customer and employee data.
+Added: Any failure to maintain appropriate safeguards, governance controls, or oversight could result in regulatory scrutiny, litigation, or reputational harm.
+Added: We have implemented governance frameworks, human oversight, security controls, and monitoring processes designed to manage risks associated with AI-enabled capabilities.
+Added: However, these measures may not be sufficient to prevent errors, misuse, security incidents, or regulatory non-compliance.
+Added: If our risk management efforts are ineffective, our business, financial condition, and results of operations could be adversely affected.
Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported operating results.
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These service interruptions could diminish the overall attractiveness of our products to existing and potential users and could cause demand for our products to suffer.
−Removed: The adoption of new or interpretation of existing money service business statutes and money transmitter statutes at the federal and state level could subject us to additional regulation and related expense and necessitate changes to our business model.
−Removed: The adoption of new money transmitter or money service business statutes in new jurisdictions, changes in regulators’ interpretations of existing statutes, or disagreement by regulators of our interpretation of such statutes or regulations could require additional registrations or licensing, limit certain of our business activities until we are properly licensed and expose us to financial penalties.
−Removed: These occurrences could also require change to the manner in which we conduct some aspects of our money movement business, client funds investment strategy or our overall business strategy.
−Removed: Although we maintain that we are not a money service business or money transmitter at the federal level, we proactively registered with FinCEN and adopted an Anti-Money Laundering Policy and compliance program designed to mitigate the risk of our services and application being utilized for illegal purposes including money laundering and to assist in detecting fraud.
−Removed: We are licensed in any jurisdiction that requires a payroll processor to be licensed under state money transmission laws.
−Removed: Due to the constantly evolving regulatory landscape, we continuously monitor state legislative developments and shifting interpretations of transmission laws, proactively seeking licensure where required.
−Removed: The statutes governing our money transmitter licenses subject us to routine examinations from the regulatory agencies overseeing these licenses.
−Removed: If these examinations reveal violations of the money transmitter license and those violations cannot be remediated, we may be subject to civil and criminal fines and penalties and we could lose our license to provide our services in those jurisdictions, all of which could have a material adverse effect on our business.
−Removed: Further, should states or jurisdictions where we are not licensed or pursuing licenses determine that that we are a money service business or money transmitter, we could be subject to civil and criminal fines, penalties, registration fees, cost of surety bonds or other security, reputational damage and other negative consequences that may have an adverse effect on our financial condition.
+Added: A portion of our accounts receivable is related to tax processing services that enabled businesses to file for Employee Retention Tax Credits under the CARES Act.
+Added: Since the introduction of and subsequent expiration of the Employee Retention Tax Credits, we have a significant amount of accounts receivable from prior processing revenues for the support we provided our customers as a tax processor in filing for Employee Retention Tax Credits.
+Added: We entered into deferred payment arrangements with some customers and referral partners whereby collections from the customer are expected to be received upon the customer’s future receipt of their tax credit.
+Added: Given the deferred nature of these receipts, there is risk pertaining to our ability to collect these amounts in the future.
+Added: In certain situations, the IRS could have the ability to challenge the validity of a business’ filing or could challenge our calculations or find other deficiencies in our filings that could expose us to uncertain penalties or damages.
If we lose key personnel, including key management personnel, or are unable to attract and retain additional personnel as needed in the future, it could disrupt the operation of our business, delay our product development, harm our growth efforts and have a material adverse effect on our business.
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The loss of one or more of our key management or technical personnel could have a material and adverse effect on our business, operating results and financial condition.
−Removed: Some of our key components are procured from a single or limited number of suppliers.
−Removed: Thus, we are at risk of shortage, price increases, tariffs, changes, delay, or discontinuation of key components, which could disrupt and materially and adversely affect our business.
−Removed: Some of the key components used to manufacture our products, such as the AsureForce® time clocks and air clocks, come from limited or single sources of supply.
−Removed: We do not have contractual commitments or guaranteed supply arrangements with our suppliers.
−Removed: As a result, we are subject to the risk of shortages and long lead times in the supply of our components or products.
−Removed: Further, our suppliers may experience financial or other difficulties as a result of uncertain and weak worldwide economic conditions.
−Removed: Other factors which may affect our suppliers’ ability or willingness to supply components to us include internal management or reorganizational issues, such as roll-out of new equipment which may delay or disrupt supply of previously forecasted components, or industry consolidation and divestitures, which may result in changed business and product priorities among certain suppliers.
−Removed: It could be difficult, costly and time consuming to obtain alternative sources for these components, or to change product designs to make use of alternative components.
−Removed: In addition, difficulties in transitioning from an existing supplier to a new supplier could create delays in component availability that would have a significant impact on our ability to fulfill orders for our products.
Adverse tax laws or regulations could be enacted, or existing laws could be applied to us or our clients, which could increase the costs of our services and adversely impact our business.
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• technological innovations or new products and services developed by us or our competitors;
+Added: • advancements and market perception of AI and its capabilities within our and other industries;
• changes in domestic or foreign laws and regulations affecting our industry;
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The Rights are not exercisable until the Distribution Date referred to below.
−Removed: The description and terms of the Rights are set forth in the Third Amended and Restated Rights Agreement between the Company and American Stock Transfer & Trust Company LLC, dated as of October 28, 2022, which extended the expiration date of the Rights to October 28, 2025.
−Removed: The Third Amended and Restated Rights Agreement imposes a significant penalty upon any person or group that acquires 4.9% or more (but less than 50%) of our then-outstanding common stock without the prior approval of the board of directors.
−Removed: Stockholders who own 4.9% or more of our then-outstanding common stock as of the close of business on the Record Date will not trigger the Third Amended and Restated Rights Agreement so long as they do not increase their ownership of the common stock after the Record Date by more than one-half of 1% of the then-outstanding common stock.
+Added: The description and terms of the Rights are set forth in the Fourth Amended and Restated Rights Agreement between the Company and American Stock Transfer & Trust Company LLC, dated as of October 28, 2025, which extended the expiration date of the Rights to October 28, 2028.
+Added: The Fourth Amended and Restated Rights Agreement imposes a significant penalty upon any person or group that acquires 4.9% or more (but less than 50%) of our then-outstanding common stock without the prior approval of the board of directors.
+Added: Stockholders who own 4.9% or more of our then-outstanding common stock as of the close of business on the Record Date will not trigger the Fourth Amended and Restated Rights Agreement so long as they do not increase their ownership of the common stock after the Record Date by more than one-half of 1% of the then-outstanding common stock.
A person or group that acquires shares of our common stock in excess of the above-mentioned applicable threshold, subject to certain limited exceptions, is called an “Acquiring Person.” Any rights held by an Acquiring Person are void and may not be exercised.
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In addition, if a person or group becomes an Acquiring Person after the Distribution Date or already is an Acquiring Person and acquires more shares after the Distribution Date, all holders of Rights, except the Acquiring Person, may exercise their rights to purchase a number of shares of the common stock (in lieu of Preferred Stock) with a market value of twice the Exercise Price, upon payment of the purchase price.
−Removed: The Rights will expire on the earliest of (a) October 28, 2025, (b) the exchange or redemption of the Rights, (c) consummation of a merger or consolidation or sale of assets resulting in expiration of the Rights, (d) the consummation of a reorganization transaction entered that the board of directors determines will help prevent an “Ownership Change,” as defined in Section 382 of the Code and protect our net operating losses, (e) the repeal of Section 382 of the Internal Revenue Code or any successor statute, or any other change, if the board of directors determines the Third Amended and Restated Rights Agreement is no longer necessary for the preservation of tax benefits, or (f) the beginning of a taxable year to which the board of directors determines that no tax benefits may be carried forward.
+Added: The Rights will expire on the earliest of (a) October 28, 2028, (b) the exchange or redemption of the Rights, (c) consummation of a merger or consolidation or sale of assets resulting in expiration of the Rights, (d) the consummation of a reorganization transaction entered that the board of directors determines will help prevent an “Ownership Change,” as defined in Section 382 of the Code and protect our net operating losses, (e) the repeal of Section 382 of the Internal Revenue Code or any successor statute, or any other change, if the board of directors determines the Fourth Amended and Restated Rights Agreement is no longer necessary for the preservation of tax benefits, or (f) the beginning of a taxable year to which the board of directors determines that no tax benefits may be carried forward.
We may, at our option and with the approval of the board of directors, at any time prior to the close of business on the earlier of (i) the tenth day following the first date of public announcement by us or an Acquiring Person that an Acquiring Person has become such or such later date as may be determined by action of a majority of the members of the board of directors then in office and publicly announced by us or (ii) October 28, 2028, redeem all but not less than all the then outstanding Rights at a redemption price of $0.067 per Right (such redemption price being herein referred to as the “Redemption Price”).
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On the other hand, the Rights should not interfere with any merger or other business combination approved by the board of directors since the Rights may be redeemed by us at the Redemption Price prior to the date ten days after the public announcement that a person or group has become the beneficial owner of 4.9% or more of the common stock, and any securities which a person or any of such person’s affiliates may be deemed to have the right to acquire pursuant to any merger or other acquisition agreement between us and such person may be excluded from the calculation of their beneficial ownership if such agreement has been approved by the board of directors prior to them becoming an Acquiring Person.
−Removed: Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of our management and board of directors.
+Added: Provisions in our charter documents, our stockholder rights plan, and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of our management and board of directors.
Our restated certificate of incorporation, as amended, and third amended and restated bylaws, as amended, contain provisions that could have the effect of delaying or preventing changes in control or changes in our management or our board of directors.
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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.