Price | 6.59 | EPS | -1 | |
Shares | 16 | P/E | -9 | |
MCap | 103 | P/FCF | 26 | |
Net Debt | 107 | EBIT | -2 | |
TEV | 210 | TEV/EBIT | -114 | TTM 2019-09-30, in MM, except price, ratios |
10-Q | 2020-09-30 | Filed 2020-11-09 |
10-Q | 2020-06-30 | Filed 2020-08-10 |
10-Q | 2020-03-31 | Filed 2020-05-11 |
10-K | 2019-12-31 | Filed 2020-03-16 |
10-Q | 2019-09-30 | Filed 2019-11-12 |
10-Q | 2019-06-30 | Filed 2019-08-09 |
10-Q | 2019-03-31 | Filed 2019-05-10 |
10-K | 2018-12-31 | Filed 2019-03-19 |
10-Q | 2018-09-30 | Filed 2018-11-09 |
10-Q | 2018-06-30 | Filed 2018-08-09 |
10-Q | 2018-03-31 | Filed 2018-05-10 |
10-K | 2017-12-31 | Filed 2018-03-16 |
10-Q | 2017-09-30 | Filed 2017-11-13 |
10-Q | 2017-06-30 | Filed 2017-08-14 |
10-Q | 2017-03-31 | Filed 2017-05-11 |
10-K | 2016-12-31 | Filed 2017-03-20 |
10-Q | 2016-09-30 | Filed 2016-11-14 |
10-Q | 2016-06-30 | Filed 2016-08-15 |
10-Q | 2016-03-31 | Filed 2016-05-12 |
10-K | 2015-12-31 | Filed 2016-03-30 |
10-Q | 2015-09-30 | Filed 2015-11-16 |
10-Q | 2015-06-30 | Filed 2015-08-12 |
10-Q | 2015-03-31 | Filed 2015-05-13 |
10-K | 2014-12-31 | Filed 2015-03-27 |
10-Q | 2014-09-30 | Filed 2014-11-12 |
10-Q | 2014-06-30 | Filed 2014-08-13 |
10-Q | 2014-03-31 | Filed 2014-05-14 |
10-K | 2013-12-31 | Filed 2014-03-27 |
10-Q | 2013-09-30 | Filed 2013-11-13 |
10-Q | 2013-06-30 | Filed 2013-08-14 |
10-Q | 2013-03-31 | Filed 2013-05-15 |
10-K | 2012-12-31 | Filed 2013-04-01 |
10-Q | 2012-09-30 | Filed 2012-11-19 |
10-Q | 2012-06-30 | Filed 2012-08-14 |
10-Q | 2012-03-31 | Filed 2012-05-15 |
10-K | 2011-12-31 | Filed 2012-03-30 |
10-Q | 2011-09-30 | Filed 2011-11-14 |
10-Q | 2011-06-30 | Filed 2011-08-11 |
10-Q | 2011-03-31 | Filed 2011-05-13 |
10-K | 2010-12-31 | Filed 2011-03-31 |
10-Q | 2010-09-30 | Filed 2010-11-10 |
10-Q | 2010-06-30 | Filed 2010-08-12 |
10-Q | 2010-03-31 | Filed 2010-05-17 |
10-Q | 2009-12-31 | Filed 2010-02-16 |
8-K | 2020-11-09 | Earnings, Other Events, Exhibits |
8-K | 2020-08-10 | Officers, Other Events |
8-K | 2020-08-10 | Earnings, Other Events, Exhibits |
8-K | 2020-07-14 | Other Events |
8-K | 2020-07-07 | M&A, Off-BS Arrangement, Exhibits |
8-K | 2020-05-27 | |
8-K | 2020-05-07 | |
8-K | 2020-04-15 | |
8-K | 2020-04-08 | |
8-K | 2020-03-31 | |
8-K | 2020-03-12 | |
8-K | 2019-12-31 | |
8-K | 2019-12-02 | |
8-K | 2019-11-12 | |
8-K | 2019-10-07 | |
8-K | 2019-08-22 | |
8-K | 2019-08-08 | |
8-K | 2019-07-03 | |
8-K | 2019-06-05 | |
8-K | 2019-05-31 | |
8-K | 2019-05-29 | |
8-K | 2019-05-09 | |
8-K | 2019-04-15 | |
8-K | 2019-03-14 | |
8-K | 2019-01-07 | |
8-K | 2019-01-01 | |
8-K | 2018-11-09 | |
8-K | 2018-08-08 | |
8-K | 2018-07-01 | |
8-K | 2018-06-18 | |
8-K | 2018-06-14 | |
8-K | 2018-06-13 | |
8-K | 2018-05-16 | |
8-K | 2018-05-09 | |
8-K | 2018-04-09 | |
8-K | 2018-04-06 | |
8-K | 2018-03-29 | |
8-K | 2018-03-27 | |
8-K | 2018-03-15 | |
8-K | 2018-03-09 | |
8-K | 2018-01-02 |
Part I - Financial Information |
Item 1. Financial Statements |
Note 1 - The Company and Basis of Presentation |
Note 2 - Significant Accounting Policies |
Note 3 - Investments and Fair Value Measurements |
Note 4 - Goodwill and Other Intangible Assets |
Note 5 - Notes Payable |
Note 6 - Stockholders' Equity |
Note 7 - Contracts with Customers and Revenue Concentration |
Note 8 - Leases |
Note 9 - Share - Based Compensation |
Note 11 - Net Loss per Share |
Note 12 - Subsequent Events |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
Item 4. Controls and Procedures |
Part II - Other Information |
Item 1. Legal Proceedings |
Item 1A. Risk Factors |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. Defaults Upon Senior Securities |
Item 5. Other Information |
Item 6. Exhibits |
EX-10.1 | ex_212783.htm |
EX-31.1 | ex_212308.htm |
EX-32.1 | ex_212310.htm |
Balance Sheet | Income Statement | Cash Flow |
---|---|---|
Assets, Equity
|
Rev, G Profit, Net Income
|
Ops, Inv, Fin
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
(Exact Name of Registrant as Specified in its Charter)
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incorporation or organization) |
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(Address of Principal Executive Offices) |
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(Registrant’s Telephone Number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | | ☒ | Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company | |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of November 6, 2020,
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION | ||
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Item 1. |
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| Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 | 3 |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 |
Item 3. | 28 | |
Item 4. | 28 | |
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PART II - OTHER INFORMATION | ||
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Item 1. | 29 | |
Item 1A. | 29 | |
Item 2. | 29 | |
Item 3. | 30 | |
Item 5. | 30 | |
Item 6. | 31 | |
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32 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
September 30, 2020 (unaudited) | December 31, 2019 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||
Inventory | ||||||||
Prepaid expenses and other current assets | ||||||||
Total current assets before funds held for clients | ||||||||
Funds held for clients | ||||||||
Total current assets | ||||||||
Property and equipment, net | ||||||||
Goodwill | ||||||||
Intangible assets, net | ||||||||
Operating lease assets, net | ||||||||
Other assets, net | ||||||||
Total assets | $ | $ | ||||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Current portion of notes payable | $ | $ | ||||||
Accounts payable | ||||||||
Accrued compensation and benefits | ||||||||
Operating lease liabilities, current | ||||||||
Other accrued liabilities | ||||||||
Deferred revenue | ||||||||
Total current liabilities before client fund obligations | ||||||||
Client fund obligations | ||||||||
Total current liabilities | ||||||||
Long-term liabilities: | ||||||||
Deferred revenue | ||||||||
Deferred tax liability | ||||||||
Notes payable, net of current portion | ||||||||
Contingent purchase consideration | ||||||||
Operating lease liabilities, noncurrent | ||||||||
Other liabilities | ||||||||
Total long-term liabilities | ||||||||
Total liabilities | ||||||||
Commitments | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $ | ||||||||
Common stock, $ | ||||||||
Treasury stock at cost, | ( | ) | ( | ) | ||||
Additional paid-in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Accumulated other comprehensive income (loss) | ( | ) | ||||||
Total stockholders’ equity | ||||||||
Total liabilities and stockholders’ equity | $ | $ |
The accompanying notes are an integral part of these condensed consolidated financial statements.
ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands, except share and per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenue: | ||||||||||||||||
Recurring | $ | $ | $ | $ | ||||||||||||
Professional services, hardware and other | ||||||||||||||||
Total revenue | ||||||||||||||||
Cost of Sales | ||||||||||||||||
Gross profit | ||||||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | ||||||||||||||||
General and administrative | ||||||||||||||||
Research and development | ||||||||||||||||
Amortization of intangible assets | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Interest (expense) income and other, net | ( | ) | ( | ) | ( | ) | ||||||||||
Loss from continuing operations before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Income tax (benefit) expense | ( | ) | ( | ) | ||||||||||||
Loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Discontinued operations | ||||||||||||||||
Income from operations of discontinued operations | ||||||||||||||||
Income tax benefit | ( | ) | ( | ) | ||||||||||||
Gain on discontinued operations, net of taxes | ||||||||||||||||
Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other comprehensive income: | ||||||||||||||||
Unrealized gain on marketable securities | ( | ) | ||||||||||||||
Foreign currency translation loss | ( | ) | ( | ) | ||||||||||||
Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Basic and diluted loss per share from continuing operations | ||||||||||||||||
Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Basic and diluted loss per share | ||||||||||||||||
Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Weighted average basic and diluted shares | ||||||||||||||||
Basic | ||||||||||||||||
Diluted |
The accompanying notes are an integral part of these condensed consolidated financial statements.
ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Amounts in thousands)
(Unaudited)
Common Stock Outstanding | Common Stock Amount | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Stock issued upon option exercise and vesting of restricted stock units | - | - | - | - | ||||||||||||||||||||||||
Share based compensation | - | - | - | - | - | |||||||||||||||||||||||
Net loss | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
Other comprehensive income | - | - | - | - | - | |||||||||||||||||||||||
Balance at March 31, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||
Stock issued upon option exercise and vesting of restricted stock units | - | - | - | |||||||||||||||||||||||||
Stock issued, ESPP | - | - | - | - | ||||||||||||||||||||||||
Share based compensation | - | - | - | - | - | |||||||||||||||||||||||
Net loss | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
Other comprehensive income | - | - | - | - | - | |||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||
Stock issued upon option exercise and vesting of restricted stock units | - | - | - | |||||||||||||||||||||||||
Share based compensation | - | - | - | - | - | |||||||||||||||||||||||
Net loss | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
Other comprehensive income | - | - | - | - | - | |||||||||||||||||||||||
Balance at September 30, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ |
The accompanying notes are an integral part of these condensed consolidated financial statements.
ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Amounts in thousands)
(Unaudited)
Common Stock Outstanding | Common Stock Amount | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Stock issued upon acquisition | - | - | - | |||||||||||||||||||||||||
Share based compensation | - | - | - | - | - | |||||||||||||||||||||||
Net loss | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
Other comprehensive income | - | - | - | - | - | |||||||||||||||||||||||
Balance at March 31, 2019 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Stock issued, ESPP | - | - | - | - | ||||||||||||||||||||||||
Stock issued upon option exercise and vesting of restricted stock units | - | - | - | |||||||||||||||||||||||||
Share based compensation | - | - | - | - | - | |||||||||||||||||||||||
Net loss | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
Balance at June 30, 2019 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
Stock issued, ESPP | - | - | - | - | - | - | - | |||||||||||||||||||||
Stock issued upon option exercise and vesting of restricted stock units | - | - | - | |||||||||||||||||||||||||
Share based compensation | - | - | - | - | - | |||||||||||||||||||||||
Net loss | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
Balance at September 30, 2019 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ |
The accompanying notes are an integral part of these condensed consolidated financial statements.
ASURE SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile loss to net cash (used in) provided by operations: | ||||||||
Depreciation and amortization | ||||||||
Amortization of debt financing costs and discount | ||||||||
Provision for (recovery of) doubtful accounts | ( | ) | ||||||
Provision for deferred income taxes | ||||||||
Gain on modification of debt | ( | ) | ||||||
Share-based compensation | ||||||||
Loss on disposals of fixed assets | ||||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | ||||||||
Inventory | ( | ) | ||||||
Prepaid expenses and other assets | ( | ) | ||||||
Accounts payable | ( | ) | ( | ) | ||||
Accrued expenses and other long-term obligations | ( | ) | ||||||
Operating lease liabilities | ( | ) | ||||||
Deferred revenue | ( | ) | ||||||
Net cash (used in) provided by operating activities | ( | ) | ||||||
Cash flows from investing activities: | ||||||||
Acquisitions, net of cash acquired | ( | ) | ( | ) | ||||
Acquisition of intangible asset | ( | ) | ||||||
Purchases of property and equipment | ( | ) | ( | ) | ||||
Software capitalization costs | ( | ) | ( | ) | ||||
Net change in funds held for clients | ( | ) | ||||||
Net cash (used in) provided by investing activities | ( | ) | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from notes payable | ||||||||
Payments of notes payable | ( | ) | ( | ) | ||||
Proceeds from revolving line of credit | ||||||||
Payments of revolving line of credit | ( | ) | ||||||
Debt financing fees | ( | ) | ( | ) | ||||
Payments of finance leases | ( | ) | ||||||
Net proceeds from issuance of common stock | ||||||||
Net change in client fund obligations | ( | ) | ||||||
Net cash provided by (used in) financing activities | ( | ) | ||||||
Effect of foreign exchange rates | ( | ) | ||||||
Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||
Cash and cash equivalents at beginning of period | ||||||||
Cash and cash equivalents at end of period | $ | $ | ||||||
Supplemental information: | ||||||||
Cash paid for: | ||||||||
Interest | $ | $ | ||||||
Income taxes | ||||||||
Non-cash Investing and Financing Activities: | ||||||||
Subordinated notes payable –acquisitions | $ | $ | ||||||
Equity issued in connection with acquisitions |
The accompanying notes are an integral part of these condensed consolidated financial statements.
ASURE SOFTWARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data unless otherwise noted)
NOTE 1 – THE COMPANY AND BASIS OF PRESENTATION
Asure Software, Inc., (“Asure”, the “Company”, “we” and “our”), a Delaware Corporation, is a leading provider of Human Capital Management (“HCM”). Asure facilitates the growth of small and mid-sized companies by helping them (i) build better teams with skills that get them to the next level, (ii) stay compliant with ever changing federal, state, and local tax jurisdictions and labor laws, and (iii) allocate more resources to support growth rather than back-office overhead that suffocates growth. Asure’s HCM suite, named AsureHCM, includes cloud-based Payroll & Tax, Human Resources ("HR"), and Time & Attendance software as well as HR Services ranging from HR projects to completely outsourcing payroll and HR staff. We develop, market, sell and support our offerings across North America through our principal office in Austin, Texas and from our processing hubs in California, Tennessee, Nebraska, New York, Florida, Vermont, and Washington.
In December 2019, we completed the sale of the assets of our Workspace Management business for an aggregate purchase price of approximately $
In July 2020, we acquired certain assets of a payroll tax business. The initial Purchase price for the assets was $
We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with the rules and regulations of the Securities and Exchange Commission and accordingly, they do not include all information and footnotes required under U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements. Certain reclassifications were made to conform to the current period presentation in the condensed consolidated statements of comprehensive loss. These reclassifications include a change in the presentation of revenues.
In the opinion of management, these interim financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation of our financial position as of September 30, 2020 and the results of operations, statements of changes in stockholders' equity for the three and nine months ended September 30, 2020 and September 30, 2019, and our statements of cash flows for the nine months ended September 30, 2020 and September 30, 2019.
These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto filed with the Securities and Exchange Commission in our annual report on Form 10-K for the fiscal year ended December 31, 2019. The results for the interim periods are not necessarily indicative of results for a full fiscal year.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
ASURE SOFTWARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data unless otherwise noted)
SIGNIFICANT RISKS AND UNCERTAINTIES
The COVID-19 pandemic has resulted in a global economic slowdown and disruptions that have and could continue to negatively impact our business. The pandemic and numerous measures implemented to contain the virus such as business shutdowns, shelter-in-place orders and travel bans and restrictions have caused businesses, especially small and medium sized businesses some of whom are our customers, to reduce headcount or cease operations as customer demand decreased. Given the economic slowdown and other risks and uncertainties associated with the pandemic, we expect that our business, financial condition, results of operations and growth prospects will be adversely affected in the future. Our business is impacted by employment levels as we have contracts that charge clients on a per-employee basis. In addition, the conditions caused by the COVID-19 pandemic could adversely affect our customers’ ability or willingness to purchase our offerings, delay prospective customers’ purchasing decisions, delay the provisioning of our offerings, lengthen payment terms, reduce the value or duration of customer subscription contracts, or affect attrition rates, all of which could adversely affect our future sales, operating results and overall financial performance.
The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, partners and vendors. If we are not able to respond to and manage the impact of such events effectively, our business will be harmed.
RECENT ACCOUNTING PRONOUNCEMENTS
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820). The new guidance modifies disclosure requirements related to fair value measurement. We adopted the standard on January 1, 2020. The adoption of this standard did not have an impact on our financial statements and disclosures.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40). The new guidance reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). We adopted the standard on January 1, 2020 prospectively to all implementation costs incurred after the date of adoption. The effects of this standard on our financial position, results of operations and cash flows were not material.
Standards Yet to Be Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. ASU 2016-13 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. As we are a smaller reporting company, ASU 2016-13 is effective for us beginning January 1, 2023. We are currently evaluating the impact, if any, the adoption will have on our financial position and results of operations.
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. ASU 2019-12 eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. We are currently evaluating the impact, if any, the adoption will have on our financial position and results of operations.
CONTINGENCIES
Although we have been, and in the future may be, the defendant or plaintiff in various actions arising in the normal course of business, as of September 30, 2020, we were not a party to any pending legal proceedings that are material to our business.
ASURE SOFTWARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data unless otherwise noted)
NOTE 3 – INVESTMENTS AND FAIR VALUE MEASUREMENTS
As of September 30, 2020, and December 31, 2019, funds held for clients invested in available-for-sale securities consisting of government and commercial bonds, including mortgage-backed securities, amounted to $
Investments classified as available-for-sale consisted of the following:
September 30, 2020 | ||||||||||||||||
Amortized | Gross | Gross | Aggregate | |||||||||||||
Funds Held for Clients (2) | ||||||||||||||||
Certificates of deposit | $ | $ | $ | $ | ||||||||||||
Corporate debt securities | ||||||||||||||||
Municipal bonds | ( | ) | ||||||||||||||
US Government agency securities | ||||||||||||||||
Asset-backed securities | ||||||||||||||||
Total | $ | $ | $ | ( | ) | $ |
December 31, 2019 | ||||||||||||||||
Amortized | Gross | Gross | Aggregate | |||||||||||||
Funds Held for Clients (2) | ||||||||||||||||
Certificates of deposit | $ | $ | $ | $ | ||||||||||||
Corporate debt securities | ( | ) | ||||||||||||||
Municipal bonds | ( | ) | ||||||||||||||
US Government agency securities | ||||||||||||||||
Asset-backed securities | ( | ) | ||||||||||||||
Total | $ | $ | $ | ( | ) | $ |
| (1) | |
| (2) | |
Expected maturities of available-for-sale securities as of September 30, 2020 are as follows:
Expected Maturities | Amount | |||
One year or less | $ | |||
After one year through five years | ||||
After five years through 10 years | ||||
After 10 years | ||||
$ |
ASURE SOFTWARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data unless otherwise noted)
In July 2020, we acquired certain assets of a payroll tax business. The initial Purchase price for the assets was $
Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value in U.S. generally accepted accounting principles and expands disclosures about fair value measurements.
ASC 820 establishes a three-tier fair value hierarchy, which is based on the reliability of the inputs used in measuring fair values. These tiers include:
| Level 1: | Quoted prices in active markets for identical assets or liabilities; |
| Level 2: | Quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active for identical or similar assets or liabilities; and model-driven valuations whose significant inputs are observable; and |
| Level 3: | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The following table presents the fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, respectively:
September 30, 2020 | ||||||||||||||||
Total Carrying Value | Quoted Prices in Active Market | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||
Assets: | ||||||||||||||||
Cash equivalents | ||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||
Funds held for clients | ||||||||||||||||
Money market funds | ||||||||||||||||
Available-for-sale securities | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
Liabilities: | ||||||||||||||||
Contingent purchase consideration | $ | $ | $ | $ | ||||||||||||
Total | $ | $ | $ | $ |
December 31, 2019 | ||||||||||||||||
Total Carrying Value | Quoted Prices in Active Market | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||
Assets: | ||||||||||||||||
Funds held for clients | ||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||
Available-for-sale securities | ||||||||||||||||
Total | $ | $ | $ | $ |
ASURE SOFTWARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data unless otherwise noted)
NOTE 4 – GOODWILL AND OTHER INTANGIBLE ASSETS
As of September 30, 2020 and December 31, 2019, goodwill was $
The following table summarizes the changes in our goodwill:
Balance at December 31, 2019 | $ | |||
Acquisition | ||||
Balance at September 30, 2020 | $ |
The gross carrying amount and accumulated amortization of our intangible assets as of September 30, 2020 and December 31, 2019 are as follows:
September 30, 2020 | ||||||||||||||||
Intangible Assets | Weighted Average | Gross | Accumulated | Net | ||||||||||||
Customer relationships | $ | $ | ( | ) | $ | |||||||||||
Developed technology | ( | ) | ||||||||||||||
Reseller relationships | ( | ) | ||||||||||||||
Trade names | ( | ) | ||||||||||||||
Noncompete agreements | ( | ) | ||||||||||||||
$ | $ | ( | ) | $ |
December 31, 2019 | ||||||||||||||||
Intangible Assets | Weighted Average | Gross | Accumulated | Net | ||||||||||||
Customer relationships | $ | $ | ( | ) | $ | |||||||||||
Developed technology | ( | ) | ||||||||||||||
Reseller relationships | ( | ) | ||||||||||||||
Trade names | ( | ) | ||||||||||||||
Noncompete agreements | ( | ) | ||||||||||||||
$ | $ | ( | ) | $ |
We record amortization expenses using the
Amortization expenses recorded in Operating Expenses were $
ASURE SOFTWARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data unless otherwise noted)
The following table summarizes the future estimated amortization expense relating to our intangible assets as of September 30, 2020:
Calendar Years | Amount | |||
2020 (September to December) | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
$ |
NOTE 5 – NOTES PAYABLE
Maturity | Stated Interest Rate | September 30, 2020 | December 31, 2019 | ||||||||||
Subordinated Notes Payable – acquisitions | | % | $ | $ | |||||||||
PPP Loan – Pinnacle Bank | | % | |||||||||||
Term Loan – Wells Fargo Syndicate Partner | | % | |||||||||||
Total Notes Payable | $ | $ | |||||||||||
Short-term Notes Payable | |||||||||||||
Long-term Notes Payable | $ | $ |
(1) | Information presented in this table, the table that immediately follows and the last table in this footnote includes principal and interest due under the terms of a promissory note with Pinnacle Bank. This loan was issued to us in connection with the Paycheck Protection Program pursuant to Title I of the Coronavirus Aid, Relief and Economic Security Act. Under the terms of the Paycheck Protection Program, the principal balance and interest due under the promissory note will be forgiven if we meet certain conditions related to the use of the loan proceeds. Under the terms of our promissory note with Pinnacle Bank, we would begin making payments on this promissory note in November 2020; however, the Small Business Administration has issued guidance that defers all payments that would be owed on this loan until after the Small Business Administration makes a decision on our loan forgiveness application. While we expect that the entire loan will be forgiven, we cannot be certain that the Small Business Administration will grant forgiveness of our entire loan. If we do not receive forgiveness of our entire loan, we will be obligated to start making payments on the portion of the principal and interest that is not forgiven so that it will be fully repaid no later than April 15, 2022, unless we are able to negotiate new payment terms with Pinnacle Bank. |
The following table summarizes the debt issuance costs as of the dates indicated:
September 30, 2020 | ||||||||||||
Gross Notes Payable | Debt Issuance Costs and Debt Discount | Net Notes Payable | ||||||||||
Notes payable, current portion1 | $ | $ | ( | ) | $ | |||||||
Notes payable, net of current portion2 | ( | ) | ||||||||||
Total | $ | $ | ( | ) | $ |
(1) | Net Notes Payable includes $ |
(2) | Net Notes Payable, includes $ |
ASURE SOFTWARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data unless otherwise noted)
December 31, 2019 | ||||||||||||
Gross Notes Payable | Debt Issuance Costs and Debt Discount | Net Notes Payable | ||||||||||
Notes payable, current portion | $ | $ | ( | ) | $ | |||||||
Notes payable, net of current portion | ( | ) | ||||||||||
Total | $ | $ | ( | ) | $ |
The following table summarizes the future principal payments related to our outstanding debt as of September 30, 2020:
Year Ending | Amount | |||
2020 1 | $ | |||
2021 1 | ||||
2022 1 | ||||
2023 | ||||
2024 | ||||
Total | $ |
(1) | |
Senior Credit Facility with Wells Fargo N.A.
In March 2014, we entered into a credit agreement (the “Credit Agreement”) with Wells Fargo, as administrative agent, and the lenders that are party thereto. The Credit Agreement contains customary events of default, including, among others, payment defaults, covenant defaults, judgment defaults, bankruptcy and insolvency events, cross defaults to certain indebtedness, incorrect representations or warranties, and change of control. In some cases, the defaults are subject to customary notice and grace period provisions. In March 2014 and in connection with the Credit Agreement, we and our wholly owned active subsidiaries entered into a Guaranty and Security Agreement with Wells Fargo Bank. Under the Guaranty and Security Agreement, we and each of our wholly owned active subsidiaries have guaranteed all obligations under the Credit Agreement and granted a security interest in substantially all of our and our subsidiaries’ assets. The Credit Agreement has been amended and restated multiple times, with the most recent amendment and restatement effective December 31, 2019. As described below, the Credit Agreement was also amended, but not restated, on August 10, 2020.
Following the amendment and restatement on December 31, 2019, the Credit Agreement provided for $
On July 7, 2020, our senior lender identified certain events of default under our Credit Agreement and reserved their rights to pursue their remedies as a result of the events of default. Then, on July 10, 2020, our senior lender issued a reservation of rights letter related to these events of default. The primary event of default that triggered the reservation of rights letter was our failure to achieve Minimum EBITDA of $3,750 for the first quarter ending March 31, 2020, as required under Section 7 of the Credit Agreement, which failure was a result of impacts to our business driven primarily by COVID-19. This covenant was set in December 31, 2019, before the Covid-19 pandemic and its possible effects on our business were known to our senior lender or us. The other events of default our lender identified were technical defaults resulting from the fact that we were either unaware that our senior lender was considering the failure to achieve Minimum EBITDA an event of default as of May 11, 2020 or because we were unaware that the senior lender was still requiring that we provide certain requested documents in connection with our banking relationship. Under the reservation of rights letter, the senior lender began accruing default interest from May 11, 2020.
ASURE SOFTWARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data unless otherwise noted)
On August 10, 2020, we entered into a waiver and amendment to our Credit Agreement and our Amended and Restated Guaranty and Security Agreement (the “Amendment”). The Credit Agreement now provides for $
As of September 30, 2020, and December 31, 2019,
PPP Loan
In April 2020, Asure entered into a Promissory Note (the “PPP Note”) with Pinnacle Bank as the lender (the “Lender”), pursuant to which the Lender agreed to give us a loan under the Paycheck Protection Program (the "PPP Loan") offered by the U.S. Small Business Administration (the “SBA”) in a principal amount of $
The interest rate on the PPP Note is a fixed rate of
The PPP Note includes events of default. Upon the occurrence of an event of default, the Lender will have the right to exercise remedies against the Company, including the right to require immediate payment of all amounts due under the PPP Note.
NOTE 6 – STOCKHOLDERS’ EQUITY
Authorized Shares
On May 28, 2020, the Company amended its Restated Certificate of Incorporation to increase the total number of authorized shares of capital stock from
Share Repurchase Program
On March 10, 2020, our Board of Directors authorized a new stock repurchase program, under which we may repurchase up to $
Under this new 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. The repurchase program may be extended, suspended or discontinued at any time. We expect to finance the program from existing cash resources.
While the program remains in place, there have been no repurchases in 2020 and 2019.
ASURE SOFTWARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data unless otherwise noted)
Employee Stock Purchase Plan
Our Employee Stock Purchase Plan (“Purchase Plan”) was approved by the shareholders in June 2017. The Purchase Plan allows all eligible employees to purchase a limited number of shares of our common stock during pre-specified offering periods at a discount established by the Board of Directors, not to exceed
Accumulated Other Comprehensive Income (Loss)
As of September 30, 2020, and December 31, 2019, accumulated other comprehensive income (loss) consisted of net unrealized gains and losses on available-for-sale securities.
NOTE 7 – CONTRACTS WITH CUSTOMERS AND REVENUE CONCENTRATION
Receivables
Receivables from contracts with customers, net of allowance for doubtful accounts of $
Deferred Commissions
Deferred commission costs from contracts with customers were $
Deferred Revenue
During the three and nine months ended September 30, 2020, revenue of $
Transaction Price Allocated to the Remaining Performance Obligations
As of September 30, 2020, approximately $
Revenue Concentration
During the three and nine months ended September 30, 2020 and 2019, there were no customers that individually represented 10% or more of consolidated revenue.
NOTE 8 – LEASES
We have entered into office space lease agreements, which qualify as operating leases under Topic 842. Under such leases, the lessors receive annual minimum (base) rent. The leases have original terms (excluding extension options) ranging from
ASURE SOFTWARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data unless otherwise noted)
We record base rent expense under the straight-line method over the term of the lease. In the accompanying condensed consolidated statements of comprehensive loss, rent expense is included in operating expenses under selling, general and administrative expenses.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Operating lease cost | $ | $ | $ | $ | ||||||||||||
Sublease income | ( |