Company Quick10K Filing
Asure Software
Price6.59 EPS-1
Shares16 P/E-9
MCap103 P/FCF26
Net Debt107 EBIT-2
TEV210 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 2020-12-24 Other Events
8-K 2020-12-22 Other Events, Exhibits
8-K 2020-12-18 Enter Agreement, Other Events, Exhibits
8-K 2020-11-09
8-K 2020-08-10
8-K 2020-08-10
8-K 2020-07-14
8-K 2020-07-07
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

ASUR 10Q Quarterly Report

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

Asure Software Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
0.40.30.20.20.10.02012201420172020
Assets, Equity
0.10.10.0-0.0-0.1-0.12012201420172020
Rev, G Profit, Net Income
0.10.10.0-0.0-0.1-0.12012201420172020
Ops, Inv, Fin

asure20200930_10q.htm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 


 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2020

 

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: 1-34522

 

ASURE SOFTWARE, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

74-2415696

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

3700 N. Capital of Texas Hwy #350

 

 

Austin, Texas

 

78746

(Address of Principal Executive Offices)

 

(Zip Code)

 

(512) 437-2700

(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

Common Stock, $0.01 par value

ASUR

Nasdaq Capital Market

 

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.   Yes ☒     No ☐

 

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).   Yes ☒     No ☐

 

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

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

 

 

 

 

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 ☐  No

 

As of November 6, 2020, 15,907,302 shares of the registrant’s Common Stock were outstanding. 

 

 

 

 

TABLE OF CONTENTS

 

 

 

Page

 

 

Number

PART I - FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

3

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2020 and September 30, 2019

4

 

Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2020 and September 30, 2019

5

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and September 30, 2019

6

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

28

 

 

 

PART II - OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3.

Defaults upon Senior Securities

30

Item 5.

Other Information

30

Item 6.

Exhibits

31

 

 

 

Signatures

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

  $ 12,939     $ 28,826  

Accounts receivable, net of allowance for doubtful accounts of $885 and $904 at September 30, 2020 and December 31, 2019, respectively

    5,220       4,808  

Inventory

    408       656  

Prepaid expenses and other current assets

    2,558       12,218  

Total current assets before funds held for clients

    21,125       46,508  

Funds held for clients

    199,306       137,935  

Total current assets

    220,431       184,443  

Property and equipment, net

    8,275       7,867  

Goodwill

    71,289       68,697  

Intangible assets, net

    62,055       63,850  

Operating lease assets, net

    6,837       6,963  

Other assets, net

    3,839       3,224  

Total assets

  $ 372,726     $ 335,044  

Liabilities and stockholders’ equity

               

Current liabilities:

               

Current portion of notes payable

  $ 10,794     $ 2,571  

Accounts payable

    1,009       1,736  

Accrued compensation and benefits

    3,305       3,424  

Operating lease liabilities, current

    1,779       1,575  

Other accrued liabilities

    791       6,556  

Deferred revenue

    3,585       5,500  

Total current liabilities before client fund obligations

    21,263       21,362  

Client fund obligations

    198,691       145,227  

Total current liabilities

    219,954       166,589  

Long-term liabilities:

               

Deferred revenue

    161       322  

Deferred tax liability

    362       336  

Notes payable, net of current portion

    12,908       24,142  

Contingent purchase consideration

    2,745       -  

Operating lease liabilities, noncurrent

    5,844       5,937  

Other liabilities

    656       139  

Total long-term liabilities

    22,676       30,876  

Total liabilities

    242,630       197,465  

Commitments

               

Stockholders’ equity:

               

Preferred stock, $.01 par value; 1,500 shares authorized; none issued or outstanding

    -       -  

Common stock, $.01 par value; 44,000 and 22,000 shares authorized; 16,225 and 16,098 shares issued, 15,900 and 15,714 shares outstanding at September 30, 2020 and December 31, 2019, respectively

    163       161  

Treasury stock at cost, 384 shares at September 30, 2020 and December 31, 2019

    (5,017 )     (5,017 )

Additional paid-in capital

    398,449       396,102  

Accumulated deficit

    (264,112 )     (253,642 )

Accumulated other comprehensive income (loss)

    613       (25 )

Total stockholders’ equity

    130,096       137,579  

Total liabilities and stockholders’ equity

  $ 372,726     $ 335,044  

 

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
September 30,

   

Nine Months Ended
September 30,

 
   

2020

   

2019

   

2020

   

2019

 

Revenue:

                               

Recurring

  $ 15,273     $ 17,014     $ 47,442     $ 53,429  

Professional services, hardware and other

    742       840       1,634       2,109  

Total revenue

    16,015       17,854       49,076       55,538  

Cost of Sales

    6,942       7,086       20,807       20,399  

Gross profit

    9,073       10,768       28,269       35,139  

Operating expenses:

                               

Sales and marketing

    3,573       3,245       9,916       9,008  

General and administrative

    5,947       6,972       17,580       21,779  

Research and development

    1,805       1,271       4,356       3,561  

Amortization of intangible assets

    2,424       2,322       7,123       7,143  

Total operating expenses

    13,749       13,810       38,975       41,491  

Loss from operations

    (4,676 )     (3,042 )     (10,706 )     (6,352 )

Interest (expense) income and other, net

    (408 )     (2,712 )     302       (8,495 )

Loss from continuing operations before income taxes

    (5,084 )     (5,754 )     (10,404 )     (14,847 )

Income tax (benefit) expense

    (325 )     (130 )     71       512  

Loss from continuing operations

    (4,759 )     (5,624 )     (10,475 )     (15,359 )

Discontinued operations

                               

Income from operations of discontinued operations

    -       2,126       -       4,030  

Income tax benefit

    -       (142 )     -       (112 )

Gain on discontinued operations, net of taxes

    -       2,268       -       4,142  

Net loss

    (4,759 )     (3,356 )     (10,475 )     (11,217 )

Other comprehensive income:

                               

Unrealized gain on marketable securities

    16       (4 )     643       22  

Foreign currency translation loss

    -       (514 )     -       (560 )

Comprehensive loss

  $ (4,743 )   $ (3,874 )   $ (9,832 )   $ (11,755 )
                                 

Basic and diluted loss per share from continuing operations

                               

Basic

  $ (0.30 )   $ (0.36 )   $ (0.66 )   $ (0.99 )

Diluted

  $ (0.30 )   $ (0.36 )   $ (0.66 )   $ (0.99 )

Basic and diluted loss per share

                               

Basic

  $ (0.30 )   $ (0.22 )   $ (0.66 )   $ (0.72 )

Diluted

  $ (0.30 )   $ (0.22 )   $ (0.66 )   $ (0.72 )

Weighted average basic and diluted shares

                               

Basic

    15,873,000       15,565,000       15,793,000       15,472,000  

Diluted

    15,873,000       15,565,000       15,793,000       15,472,000  

 

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

    15,714     $ 161     $ (5,017 )   $ 396,102     $ (253,642 )   $ (25 )   $ 137,579  

Stock issued upon option exercise and vesting of restricted stock units

    29       -       -       106       -       -       106  

Share based compensation

    -       -       -       438       -       -       438  

Net loss

    -       -       -       -       (1,767 )     -       (1,767 )

Other comprehensive income

    -       -       -       -       -       65       65  

Balance at March 31, 2020

    15,743     $ 161     $ (5,017 )   $ 396,646     $ (255,409 )   $ 40     $ 136,421  
                                                         

Stock issued upon option exercise and vesting of restricted stock units

    66       1       -       301       -       -       302  

Stock issued, ESPP

    32       -       -       157       -       -       157  

Share based compensation

    -       -       -       588       -       -       588  

Net loss

    -       -       -       -       (3,944 )     -       (3,944 )

Other comprehensive income

    -       -       -       -       -       562       562  

Balance at June 30, 2020

    15,841     $ 162     $ (5,017 )   $ 397,692     $ (259,353 )   $ 602     $ 134,086  
                                                         

Stock issued upon option exercise and vesting of restricted stock units

    59       1       -       50       -       -       51  

Share based compensation

    -       -       -       707       -       -       707  

Net loss

    -       -       -       -       (4,759 )     -       (4,759 )

Other comprehensive income

    -       -       -       -       -       11       11  

Balance at September 30, 2020

    15,900     $ 163     $ (5,017 )   $ 398,449     $ (264,112 )   $ 613     $ 130,096  

 

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

    15,282     $ 157     $ (5,017 )   $ 391,927     $ (283,643 )   $ (906 )   $ 102,518  

Stock issued upon acquisition

    123       1       -       554       -       -       555  

Share based compensation

    -       -       -       611       -       -       611  

Net loss

    -       -       -       -       (2,894 )     -       (2,894 )

Other comprehensive income

    -       -       -       -       -       267       267  

Balance at March 31, 2019

    15,405     $ 158     $ (5,017 )   $ 393,092     $ (286,537 )   $ (639 )   $ 101,057  
                                                         

Stock issued, ESPP

    53       -       -       255       -       -       255  

Stock issued upon option exercise and vesting of restricted stock units

    93       1       -       466       -       -       467  

Share based compensation

    -       -       -       392       -       -       392  

Net loss

    -       -       -       -       (4,967 )     -       (4,967 )

Other comprehensive loss

    -       -       -       -       -       (287 )     (287 )

Balance at June 30, 2019

    15,551     $ 159     $ (5,017 )   $ 394,205     $ (291,504 )   $ (926 )   $ 96,917  
                                                         

Stock issued, ESPP

    -       -       -       -       -       -       -  

Stock issued upon option exercise and vesting of restricted stock units

    35       1       -       28       -       -       29  

Share based compensation

    -       -       -       577       -       -       577  

Net loss

    -       -       -       -       (3,356 )     -       (3,356 )

Other comprehensive loss

    -       -       -       -       -       (518 )     (518 )

Balance at September 30, 2019

    15,586     $ 160     $ (5,017 )   $ 394,810     $ (294,860 )   $ (1,444 )   $ 93,649  

 

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

  $ (10,475 )   $ (11,217 )

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

               

Depreciation and amortization

    12,046       11,594  

Amortization of debt financing costs and discount

    348       1,178  

Provision for (recovery of) doubtful accounts

    317       (414 )

Provision for deferred income taxes

    26       468  

Gain on modification of debt

    (123 )     -  

Share-based compensation

    1,733       1,580  

Loss on disposals of fixed assets

    55       83  

Changes in operating assets and liabilities:

               

Accounts receivable

    1,451       2,930  

Inventory

    137       (2,062 )

Prepaid expenses and other assets

    (766 )     16  

Accounts payable

    (726 )     (598 )

Accrued expenses and other long-term obligations

    (2,482 )     217  

Operating lease liabilities

    (1,182 )     -  

Deferred revenue

    (2,076 )     148  

Net cash (used in) provided by operating activities

    (1,717 )     3,923  

Cash flows from investing activities:

               

Acquisitions, net of cash acquired

    (6,994 )     (7,443 )

Acquisition of intangible asset

    (1,823 )     -  

Purchases of property and equipment

    (859 )     (1,159 )

Software capitalization costs

    (1,904 )     (3,207 )

Net change in funds held for clients

    (53,107 )     48,361  

Net cash (used in) provided by investing activities

    (64,687 )     36,552  

Cash flows from financing activities:

               

Proceeds from notes payable

    8,856       8,000  

Payments of notes payable

    (12,171 )     (4,638 )

Proceeds from revolving line of credit

    -       8,000  

Payments of revolving line of credit

    -       (4,000 )

Debt financing fees

    (249 )     (1,102 )

Payments of finance leases

    -       (102 )

Net proceeds from issuance of common stock

    616       496  

Net change in client fund obligations

    53,465       (49,964 )

Net cash provided by (used in) financing activities

    50,517       (43,310 )

Effect of foreign exchange rates

    -       (33 )

Net increase (decrease) in cash and cash equivalents

    (15,887 )     (2,868 )

Cash and cash equivalents at beginning of period

    28,826       15,444  

Cash and cash equivalents at end of period

  $ 12,939     $ 12,576  

Supplemental information:

               

Cash paid for:

               

Interest

  $ 967     $ 6,581  

Income taxes

    3,469       31  

Non-cash Investing and Financing Activities:

               

Subordinated notes payable –acquisitions

  $ -     $ 2,000  

Equity issued in connection with acquisitions

    -       555  

 

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 $121,500 in cash. We used the proceeds to pay down debt. In July 2020 we finalized our working capital adjustment and received escrow funds of $1,687. For further information regarding the transaction, see Note 10 to the accompanying consolidated financial statements.

 

In July 2020, we acquired certain assets of a payroll tax business. The initial Purchase price for the assets was $4.25 million, which we paid cash at closing. The seller will be paid additional consideration for the assets based on the trailing twelve-month revenue at each of April 30, 2021 and October 31, 2021. Contingent purchase consideration, if any, will generally be made by May 30, 2021 and December 30, 2021.

 

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

 

Preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are subjective in nature and involve judgments. The more significant estimates made by management include the valuation allowance for the gross deferred tax assets, useful lives of fixed assets, the determination of the fair value of its long-lived assets, and the fair value of assets acquired and liabilities assumed during acquisitions. We base our estimates on historical experience and on various other assumptions management believes reasonable under the given circumstances.  These estimates could be materially different under different conditions and assumptions.  Additionally, the actual amounts could differ from the estimates made. Management periodically evaluates estimates used in the preparation of the consolidated financial statements for continued reasonableness. We make appropriate adjustments, if any, to the estimates used prospectively based upon such periodic evaluation.

 

 

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 $26,958 and $24,136, respectively. As of September 30, 2020, and December 31, 2019, funds held for clients invested in money market funds and other cash equivalents amounted to $37,265 and $48,500, respectively. Additionally, as of September 30, 2020, we had $8,248 of operating funds in money market funds, classified as cash equivalents. Cash equivalents as of December 31, 2019 were not material.

 

Investments classified as available-for-sale consisted of the following:

 

   

September 30, 2020

 
   

Amortized
Cost

   

Gross
Unrealized
Gains (1)

   

Gross
Unrealized
Losses (1)

   

Aggregate
Estimated
Fair Value

 

Funds Held for Clients (2)

                               

Certificates of deposit

  $ 8,844     $ 233     $ -     $ 9,077  

Corporate debt securities

    9,438       288       -       9,726  

Municipal bonds

    7,561       101       (7 )     7,655  

US Government agency securities

    -       -       -       -  

Asset-backed securities

    498       2       -       500  

Total

  $ 26,341     $ 624     $ (7 )   $ 26,958  

 

   

December 31, 2019

 
   

Amortized
Cost

   

Gross
Unrealized
Gains (1)

   

Gross
Unrealized
Losses (1)

   

Aggregate
Estimated
Fair Value

 

Funds Held for Clients (2)

                               

Certificates of deposit

  $ 8,828     $ 11     $ -     $ 8,839  

Corporate debt securities

    6,883       6       (9 )     6,880  

Municipal bonds

    6,383       6       (7 )     6,382  

US Government agency securities

    1,000       -       -       1,000  

Asset-backed securities

    1,067       -       (32 )     1,035  

Total

  $ 24,161     $ 23     $ (48 )   $ 24,136  

 

 

(1)

Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss. As of September 30,  2020 and December 31, 2019, there were 74 and 53 securities, respectively, in an unrealized gain position and there were 1 and 18 securities, respectively, in an unrealized loss position. As of September 30, 2020, we had $7 in unrealized losses. As of December 31, 2019, these unrealized losses were less than $35 individually and $50 in the aggregate. These securities have not been in a continuous unrealized gain or loss position for more than 12 months. We do not intend to sell these investments and we do not expect to sell these investments before recovery of their amortized cost basis, which may be at maturity. We review our investments to identify and evaluate investments that indicate possible other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

 

(2)

At September 30, 2020 and December 31, 2019, none of these securities were classified as cash and cash equivalents on the accompanying condensed consolidated balance sheets.

 

Expected maturities of available-for-sale securities as of September 30, 2020 are as follows:

 

Expected Maturities

 

Amount

 
         

One year or less

  $ 5,695  

After one year through five years

    21,263  

After five years through 10 years

    -  

After 10 years

    -  
    $ 26,958  

 

 

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 $4.25 million, which we paid cash at closing. The seller will be paid additional consideration for the assets based on the trailing twelve-month revenue at each of April 30, 2021 and October 31, 2021. Contingent purchase consideration, if any, will generally be made by May 30, 2021 and December 30, 2021.  The payment of the contingent consideration paid will be contingent on certain thresholds set forth in the asset purchase agreement.  We utilized a Monte Carlo simulation to determine the fair value of the contingent consideration.  There was no adjustment to the fair value of the contingent consideration at September 30, 2020.

 

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
(Level 1)

   

Significant Other Observable Inputs
(Level 2)

   

Significant Unobservable Inputs
(Level 3)

 

Assets:

                               

Cash equivalents  

                               

Money market funds

  $ 8,248     $ 8,248     $ -     $ -  

Funds held for clients

                               

Money market funds

    37,265       37,265       -       -  

Available-for-sale securities

    26,958       -       26,958       -  

Total

  $ 72,471     $ 45,513     $ 26,958     $ -  
                                 

Liabilities:

                               

Contingent purchase consideration

  $ -     $ -     $ -     $ 2,745  
                                 

Total

  $ -     $ -     $ -     $ 2,745  

 

   

December 31, 2019

 
   

Total Carrying Value

   

Quoted Prices in Active Market
(Level 1)

   

Significant Other Observable Inputs
(Level 2)

   

Significant Unobservable Inputs
(Level 3)

 

Assets:

                               

Funds held for clients

                               

Money market funds

  $ 48,500     $ 48,500     $ -     $ -  

Available-for-sale securities

    24,136       -       24,136       -  

Total

  $ 72,636     $ 48,500     $ 24,136     $ -  

 

 

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 $71,289 and $68,697, respectively, which is net of the $35,060 impairment loss recognized in the fourth quarter of 2019. The Company evaluates the recoverability of goodwill annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. As of September 30, 2020, there has been no impairment of goodwill based on the quantitative assessments performed by the Company.

 

The following table summarizes the changes in our goodwill:

 

Balance at December 31, 2019

  $ 68,697  

Acquisition

    2,592  

Balance at September 30, 2020

  $ 71,289  

 

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
Amortization
Period (in Years)

   

Gross

   

Accumulated
Amortization

   

Net

 

Customer relationships

    8.9     $ 83,111     $ (26,575 )   $ 56,536  

Developed technology

    6.6       12,001       (7,230 )     4,771  

Reseller relationships

    7.0       853       (853 )     -  

Trade names

    3.0       780       (254 )     526  

Noncompete agreements

    5.2       1,032       (810 )     222  
      8.5     $ 97,777     $ (35,722 )   $ 62,055  

 

   

December 31, 2019

 

Intangible Assets

 

Weighted Average
Amortization
Period (in Years)

   

Gross

   

Accumulated
Amortization

   

Net

 

Customer relationships

    8.9     $ 78,558     $ (19,757

)

  $ 58,801  

Developed technology

    6.0       10,001       (6,004

)

    3,997  

Reseller relationships

    7.0       853       (853

)

    -  

Trade names

    3.0       780       (78

)

    702  

Noncompete agreements

    5.2       1,032       (682

)

    350  
      8.5     $ 91,224     $ (27,374

)

  $ 63,850  

 

We record amortization expenses using the straight-line method over the estimated useful lives of the intangible assets, as noted above.  Amortization expenses recorded in Operating Expenses were $2,424 and $2,322, for the three months ended September 30, 2020 and 2019, respectively. Amortization expenses recorded in Cost of Sales were $397 and $417 for the three months ended September 30, 2020 and 2019, respectively.

 

Amortization expenses recorded in Operating Expenses were $7,123 and $7,143, for the nine months ended September 30, 2020 and 2019, respectively. Amortization expenses recorded in Cost of Sales were $1,225 and $1,137 for the nine months ended September 30, 2020 and 2019, respectively. There is no impairment of intangibles during the nine months ended September 30, 2020 based on the qualitative assessment performed by the Company.

 

 

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)

  $ 2,803  

2021

    11,048  

2022

    10,514  

2023

    9,389  

2024

    9,162  

Thereafter

    19,139  
    $ 62,055  

 

NOTE 5 – NOTES PAYABLE

 

The following table summarizes our outstanding debt as of the dates indicated:1

 
 

Maturity

 

Stated Interest Rate

   

September 30, 2020

   

December 31, 2019

 

Subordinated Notes Payable – acquisitions

1/1/2021 – 7/1/2021

    2.00% - 3.00 %   $ 5,271     $ 7,185  

PPP Loan – Pinnacle Bank

4/15/2022

    1.00 %     8,856       -  

Term Loan – Wells Fargo Syndicate Partner

12/31/2024

    5.25 %     9,938       20,000  

Total Notes Payable

          $ 24,065     $ 27,185  

Short-term Notes Payable

            10,901       2,696  

Long-term Notes Payable

          $ 13,164     $ 24,489  

 

(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

  $ 10,901     $ (107 )   $ 10,794  

Notes payable, net of current portion2

    13,164       (256 )     12,908  

Total

  $ 24,065     $ (363 )   $ 23,702  

 

(1)

Net Notes Payable includes $5,379 of Gross Notes Payables and $0 Debt Issuance Cost and Debt Discount related to our PPP loan with Pinnacle Bank, all or a portion of which we expect will be forgiven and for which we are not obligated to make any payments until the Small Business Administration has made a decision regarding our application for loan forgiveness. 

(2)

Net Notes Payable, includes $3,477 of Gross Notes Payables and $0 Debt Issuance Cost and Debt Discount related to our PPP loan with Pinnacle Bank, all or a portion of which we expect will be forgiven and for which we are not obligated to make payments until the Small Business Administration has made a decision regarding our application for loan forgiveness.

 

 

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

  $ 2,696     $ (125

)

  $ 2,571  

Notes payable, net of current portion

    24,489       (347

)

    24,142  

Total

  $ 27,185     $ (472

)

  $ 26,713  

 

The following table summarizes the future principal payments related to our outstanding debt as of September 30, 2020:

 

Year Ending

 

Amount

 

2020

  $ 1,001  

2021 1

    11,450  

2022 1

    2,489  

2023

    500  

2024

    8,625  

Total

  $ 24,065  

 

(1)

Includes $8,856 of principal payments related to our PPP loan with Pinnacle Bank, all or a portion of which we expect will be forgiven and for which we are not obligated to make any payments until the Small Business Administration has made a decision regarding our application for loan forgiveness. We expect to make our forgiveness application in the fourth quarter of 2020. Given this, we expect that payments we may owe, if any, would not start until second quarter of 2021.

 

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 $20,000 in term loans and a $10,000 revolver and provided for new applicable margin rates for determining the interest payable on loans and amended certain of our financial covenants, including adding a covenant based on achieving EBITDA of at least $3,750 for the three months ended March 31, 2020, $4,850 for the six months ended June 30, 2020 and $5,950 for the nine months ended September 30, 2020, which covenant was in lieu of a leverage covenant calculated at March 31, 2020, June 30, 2020 and September 30, 2020.

 

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 $10,000 in term loans and a $5,000 revolver and required that we make a principal payment of $9,750 on our outstanding term loans and reduce future availability on our revolver by $5,000. The outstanding principal balance and all accrued and unpaid interest on the term loans is due on December 31, 2024. The Amendment provides for an accordion feature to our term loan that would allow us to borrow up to an additional $15,000 in term loans subject to certain conditions following the Covenant Conversion Date. The Amendment also reset our financial covenants. The Amendment does not require that we meet our fixed charge ratio or leverage ratio covenant until the Covenant Conversion Date. The Coverage Conversion Date is the earlier of August 10, 2022 or the date in which we have satisfied the fixed charge coverage ratio and leverage ratio for two consecutive reporting periods. Until such time, we are only obligated to comply with our minimum EBITDA and minimum recurring revenue covenants. We expect to be in compliance with these amended financial covenants over the next twelve months.  

 

As of September 30, 2020, and December 31, 2019, no amount was outstanding and $4,500 and $10,000, respectively, was available for borrowing under the revolver.

 

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 $8,856 pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).

 

The interest rate on the PPP Note is a fixed rate of 1% per annum. To the extent that the amounts owed under the PPP Loan, or a portion of them, are not forgiven, the Company will be required to make principal and interest payments in monthly installments beginning after the Small Business Administration makes a decision on our forgiveness application. Based on current guidance from the Small Business Administration and assuming we file our forgiveness application in the fourth quarter of 2020, we would not expect to have a decision on our loan forgiveness application from the Small Business Administration until second quarter of 2021. To the extent any portion of the PPP Loan is not forgiven, the PPP Note matures on April 15, 2022.

 

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 23,500,000 to 45,500,000 and the number of authorized shares of common stock from 22,000,000 to 44,000,000.

 

Share Repurchase Program

 

On March 10, 2020, our Board of Directors authorized a new stock repurchase program, under which we may repurchase up to $5,000 of our outstanding common stock. This new stock repurchase program is in addition to the approximately 66,000 shares available under our existing stock repurchase plan.

 

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 15% of the fair market value of the common stock, at the beginning or end of the offering period (whichever is lower). Under the ESPP, 225,000 shares were originally reserved for issuance. On May 27, 2020, our shareholders increased the number of shares reserved for issuance under the Purchase Plan by an additional 250,000 shares.

 

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 $885 were $5,220 at September 30, 2020.  Receivables from contracts with customers, net of allowance for doubtful accounts of $904 were $4,808 at December 31, 2019. As of September 30, 2020, one customer represented 3% of our net accounts receivable balance. No customers represented more than 10% of our net accounts receivable balance as of December 31, 2019.

 

Deferred Commissions

 

Deferred commission costs from contracts with customers were $3,530 and $2,697 at September 30, 2020 and December 31, 2019, respectively. The amount of amortization recognized for the three and nine months ended September 30, 2020 was $220 and $660, respectively and for the three and nine months ended September 30, 2019 was $428 and $1,018, respectively.

 

Deferred Revenue

 

During the three and nine months ended September 30, 2020, revenue of $259 and $3,652, respectively, and the three and nine months ended September 30, 2019, revenue of $429 and $2,643, respectively, was recognized from the deferred revenue balance at the beginning of each period.

 

Transaction Price Allocated to the Remaining Performance Obligations

 

As of September 30, 2020, approximately $24,537 of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 65% of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

 

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 one to ten years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 

 

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. The components of the rent expense for the three and nine months ended September 30, 2020 and 2019 were as follows:

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2020

   

2019

   

2020

   

2019

 

Operating lease cost

  $ 540     $ 552     $ 1,613     $