asur-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2024


☐			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 incorporation)

(I.R.S. Employer Identification No.)

405 Colorado Street, Suite 1800, Austin, Texas

78701

(Address of principal executive offices)

(Zip Code)


512-437-2700
(Registrant’s Telephone Number, including Area Code)
None
(Former name, former address and former fiscal year, if changed since last report)

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

The Nasdaq Capital Market

Series A Junior Participating Preferred Share Purchase Rights

N/A

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

☐

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

☐

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

☒

As of May 1, 2024, 25,813,067 shares of the registrant’s Common Stock, $0.01 par value, were outstanding.


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2024 and March 31, 2023	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and March 31, 2023	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and March 31, 2023	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26

	Signatures	27


	March 31, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	23,166	$	30,317
Accounts receivable, net of allowance for credit losses of $5,108 and $4,787 at March 31, 2024 and December 31, 2023, respectively	15,074		14,202
Inventory	205		155
Prepaid expenses and other current assets	4,187		3,471
Total current assets before funds held for clients	42,632		48,145
Funds held for clients	239,808		219,075
Total current assets	282,440		267,220
Property and equipment, net	15,822		14,517
Goodwill	86,011		86,011
Intangible assets, net	70,960		62,082
Operating lease assets, net	4,674		4,991
Other assets, net	9,431		9,047
Total assets	$	469,338	$	443,868
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of notes payable	$	23	$	27
Accounts payable	1,610		2,570
Accrued compensation and benefits	3,399		6,519
Operating lease liabilities, current	1,510		1,490
Other accrued liabilities	7,170		3,862
Deferred revenue	3,547		6,853
Total current liabilities before client fund obligations	17,259		21,321
Client fund obligations	241,141		220,019
Total current liabilities	258,400		241,340
Long-term liabilities:
Deferred revenue	960		16
Deferred tax liability	1,751		1,728
Notes payable, net of current portion	5,256		4,282
Operating lease liabilities, noncurrent	4,281		4,638
Other liabilities	1,015		209
Total long-term liabilities	13,263		10,873
Total liabilities	271,663		252,213
Stockholders’ equity:
Preferred stock, $0.01 par value; 1,500 shares authorized; none issued or outstanding	—		—
Common stock, $0.01 par value; 44,000 shares authorized; 25,749 and 25,382 shares issued, 25,749 and 24,998 shares outstanding at March 31, 2024 and December 31, 2023, respectively	258		254
Treasury stock at cost, zero(1) and 384 shares at March 31, 2024 and December 31, 2023, respectively	—		(5,017)
Additional paid-in capital	494,537		487,973
Accumulated deficit	(295,761)		(290,440)
Accumulated other comprehensive loss	(1,359)		(1,115)
Total stockholders’ equity	197,675		191,655
Total liabilities and stockholders’ equity	$	469,338	$	443,868
(1) The aggregate Treasury stock of prior repurchases of the Company's own common stock was retired and subsequently issued effective January 1, 2024. See the Condensed
Consolidated Statement of Changes in Stockholders' Equity for the impact of this transaction.


	Three Months Ended March 31,
	2024		2023
Revenue:
Recurring	$	30,273	$	27,956
Professional services, hardware and other	1,379		5,108
Total revenue	31,652		33,064
Cost of Sales	9,045		8,664
Gross profit	22,607		24,400
Operating expenses:
Sales and marketing	7,767		7,200
General and administrative	10,063		9,956
Research and development	1,769		1,979
Amortization of intangible assets	3,449		3,302
Total operating expenses	23,048		22,437
(Loss) income from operations	(441)		1,963
Interest income	336		349
Interest expense	(180)		(2,293)
Other income, net	10		83
(Loss) income from operations before income taxes	(275)		102
Income tax expense (benefit)	33		(237)
Net (loss) income	(308)		339
Other comprehensive (loss) income:
Unrealized (loss) income on marketable securities	(244)		481
Comprehensive (loss) income	$	(552)	$	820

Basic and diluted (loss) income per share
Basic	$	(0.01)	$	0.02
Diluted	$	(0.01)	$	0.02

Weighted average basic and diluted shares
Basic	25,334		20,347
Diluted	25,334		21,041


	Common Stock Outstanding	Common Stock Amount		Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Other Comprehensive Loss		Total Stockholders’ Equity
Balance at December 31, 2023	24,998	$	254	$	(5,017)	$	487,973	$	(290,440)	$	(1,115)	$	191,655
Stock issued upon option exercise and vesting of restricted and performance stock units	301	3		—		173		—		—		176
Stock issued for acquisitions	450	5		—		4,489		—		—		4,494
Share based compensation	—	—		—		1,902		—		—		1,902
Retirement and reissuance of treasury shares	—	(4)		5,017		—		(5,013)		—		—
Net loss	—	—		—		—		(308)		—		(308)
Other comprehensive loss	—	—		—		—		—		(244)		(244)
Balance at March 31, 2024	25,749	$	258	$	—	$	494,537	$	(295,761)	$	(1,359)	$	197,675


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net (loss) income	$	(308)	$	339
Adjustments to reconcile (loss) income to net cash (used) in provided by operations:
Depreciation and amortization	4,860		4,789
Amortization of operating lease assets	335		307
Amortization of debt financing costs and discount	142		169
Non-cash interest expense	—		982
Net accretion of discounts on available-for-sale securities	(78)		(14)
Provision for expected losses	46		652
Provision for (recovery of) deferred income taxes	24		(73)
Net realized gains on sales of available-for-sale securities	(652)		(453)
Share-based compensation	1,902		1,337
Loss on disposals of long-term assets	—		160
Change in fair value of contingent purchase consideration	—		(69)
Changes in operating assets and liabilities:
Accounts receivable	(919)		(3,290)
Inventory	(50)		33
Prepaid expenses and other assets	(473)		4,850
Operating lease right-of-use assets	30		—
Accounts payable	(960)		(450)
Accrued expenses and other long-term obligations	(2,665)		(123)
Operating lease liabilities	(141)		(219)
Deferred revenue	(5,040)		(4,339)
Net cash (used) in provided by operating activities	(3,947)		4,588
Cash flows from investing activities:
Acquisition of intangible asset	(710)		—
Purchases of property and equipment	(240)		(726)
Software capitalization costs	(2,435)		(1,158)
Purchases of available-for-sale securities	(3,516)		(10,189)
Proceeds from sales and maturities of available-for-sale securities	2,406		5,426
Net cash used in investing activities	(4,495)		(6,647)
Cash flows from financing activities:
Payments of notes payable	—		(232)
Payments made on amounts due for the acquisition of intangible assets	(236)		—
Net proceeds from issuance of common stock	176		1,988
Net change in client fund obligations	21,122		19,372
Net cash provided by financing activities	21,062		21,128
Net increase in cash and cash equivalents	12,620		19,069
Cash and cash equivalents, beginning of period	177,622		164,042
Cash and cash equivalents, end of period	$	190,242	$	183,111


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.


	Total Carrying Value		Level 1		Level 2		Level 3
March 31, 2024
Assets:
Funds held for clients
Money market funds	$	2,316	$	2,316	$	—	$	—
Available-for-sale securities	72,732		—		72,732		—
Total	$	75,048	$	2,316	$	72,732	$	—

December 31, 2023
Assets:
Funds held for clients
Money market funds	$	3,431	$	3,431	$	—	$	—
Available-for-sale securities	71,770		—		71,770		—
Total	$	75,201	$	3,431	$	71,770	$	—


	Amortized Cost		Gross Unrealized Gains (1)		Gross Unrealized Losses (1)		Aggregate Estimated Fair Value
March 31, 2024
Cash equivalents	$	2,320	$	1	$	(4)	$	2,316
Available-for-sale securities:
Certificates of deposit	842		2		(1)		843
Corporate debt securities	66,607		130		(1,232)		65,505
Municipal bonds	4,241		—		(222)		4,019
U.S. Government agency securities	2,398		1		(34)		2,365
Total available-for-sale securities	74,088		133		(1,489)		72,732

Total(2)	$	76,408	$	134	$	(1,493)	$	75,048

December 31, 2023
Cash equivalents	$	3,447	$	—	$	(16)	$	3,431
Available-for-sale securities:
Certificates of deposit	845		2		(1)		846
Corporate debt securities	67,277		258		(1,090)		66,445
Municipal bonds	4,251		—		(239)		4,012
U.S. Government agency securities	500		—		(33)		467
Total available-for-sale securities	72,873		260		(1,363)		71,770

Total(2)	$	76,320	$	260	$	(1,379)	$	75,201


	March 31, 2024		December 31, 2023
Cash and cash equivalents held to satisfy client funds obligations	$	167,076	$	147,305
Short-term marketable securities held to satisfy client funds obligations	13,881		10,042
Long-term marketable securities held to satisfy client funds obligations	58,851		61,728
Total funds held for clients	$	239,808	$	219,075


	March 31, 2024
One year or less	$	13,881
After one year through five years	58,851
Total	$	72,732


Gross Intangible Assets	December 31, 2023		Acquisitions		March 31, 2024
Customer relationships	$	127,843	$	12,376	$	140,219
Developed technology	12,001		—		12,001
Trade names	880		—		880
Non-compete agreements	1,032		—		1,032
Total	$	141,756	$	12,376	$	154,132


	Weighted Average Amortization Period (in Years)	Gross		Accumulated Amortization		Net
March 31, 2024
Customer relationships	8.6	$	140,219	$	(70,630)	$	69,589
Developed technology	6.9	12,001		(10,731)		1,270
Trade names	4.3	880		(880)		—
Non-compete agreements	5.2	1,032		(931)		101
	8.4	$	154,132	$	(83,172)	$	70,960

December 31, 2023
Customer relationships	8.5	$	127,843	$	(67,165)	$	60,678
Developed technology	6.9	12,001		(10,701)		1,300
Trade names	4.3	880		(880)		—
Non-compete agreements	5.2	1,032		(928)		104
	8.3	$	141,756	$	(79,674)	$	62,082


	March 31, 2024
2024	$	12,047
2025	15,292
2026	12,177
2027	9,983
2028	8,537
2029	6,694
Thereafter	6,230
	$	70,960


	Maturity	Cash Interest Rate	March 31, 2024		December 31, 2023
Subordinated Notes Payable – Acquisitions(1)	10/31/25 - 9/30/26	2.00% - 5.00%	$	6,700	$	5,700
Gross Notes Payable			$	6,700	$	5,700


	Gross Notes Payable		Debt Issuance Costs and Debt Discount		Net Notes Payable
March 31, 2024
Current portion of notes payable	$	420	$	(397)	$	23
Notes payable, net of current portion	6,280		(1,024)		5,256
Total	$	6,700	$	(1,421)	$	5,279

December 31, 2023
Current portion of notes payable	$	420	$	(393)	$	27
Notes payable, net of current portion	5,280		(998)		4,282
Total	$	5,700	$	(1,391)	$	4,309


	March 31, 2024
2024	$	1,505
2025	1,679
2026	1,217
2027	1,000
2028	995
Thereafter	855
Total minimum lease payments	7,251
Less: imputed interest	(1,460)
Total lease liabilities	$	5,791


	Three Months Ended March 31,				Variance
	2024		2023		$		%
Recurring	$	30,273	$	27,956	$	2,317	8	%
Professional services, hardware and other	1,379		5,108		(3,729)		(73)	%
Total	$	31,652	$	33,064	$	(1,412)	(4)	%

SEC Form 10-Q filed by Asure Software Inc