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What changed in ASURE SOFTWARE INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ASURE SOFTWARE INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+202 added−178 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-27)

Top changes in ASURE SOFTWARE INC's 2023 10-K

202 paragraphs added · 178 removed · 146 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

22 edited+5 added−5 removed49 unchanged
Biggest changeOur Tax Management solutions also support bulk filing and processing of Employee Retention Tax credits, which is new legislation that is part of the CARES Act. TRADEMARKS We have registered Asure Software® as a federal trademark with the U.S. Patent and Trademark Office. Asure’s other core federally registered trademarks include AsureForce®, AsureHCM® and Evolution®.
Biggest changeTRADEMARKS We have registered Asure Software® as a federal trademark with the U.S. Patent and Trademark Office. Asure’s other core federally registered trademarks include Asure®, AsureForce®, AsureHCM® and Evolution®. EMPLOYEES As of December 31, 2023 , we had a total of 581 employees, 564 of which are full-time employees.
In general, data that we process and store includes personally identifying information such as names, addresses, social security numbers, bank account information. As part of our time and attendance products, data that we process and store includes biometric data. We are, therefore, subject to certain compliance obligations under federal, state, and foreign privacy and data security-related laws.
In general, data that we process and store includes personally identifying information such as names, addresses, social security numbers, and bank account information. As part of our time and attendance products, data that we process and store includes biometric data. We are, therefore, subject to certain compliance obligations under federal, state, and foreign privacy and data security-related laws.
Many providers continue to deliver legacy enterprise software, but there is increased competition in the delivery of HCM cloud-based solutions by other SaaS providers. Competitors in the HCM market tend to fluctuate, however, Asure’s main competitors are ADP, Paychex, UKG, Paylocity, Paycor, Paycom, Ceridian, Namely, and Gusto.
Many providers continue to deliver legacy enterprise software, but there is increased competition in the delivery of HCM cloud-based solutions by other SaaS providers. Competitors in the HCM market tend to fluctuate, however, Asure’s main competitors are ADP, Paychex, UKG, Paylocity, Paycor, Paycom, Ceridian, isolved, and Gusto.
Our HCM solutions assist clients with managing their compliance with other laws, including help to meet their obligations as a plan sponsor under COBRA; sponsor and administer compliant Flexible Spending Account Plans; and provide compliant Consumer Health Care Plans, such as Health Savings Accounts and Health Reimbursement Accounts.
Our HCM solutions assist clients with managing their compliance with other laws, including helping to meet their obligations as a plan sponsor under COBRA; sponsor and administer compliant Flexible Spending Account Plans; and provide compliant Consumer Health Care Plans, such as Health Savings Accounts and Health Reimbursement Accounts.
These integrations enable businesses to communicate seamlessly and support a wide range of business-to-business and business-to-consumer applications. Business applications can include income verification and earned wage access. We are currently developing consumer applications and expect such applications to be a component of the marketplace in the future.
These integrations enable businesses to communicate seamlessly and support a wide range of business-to-business and business-to-consumer applications. Business applications can include income verification and earned wage access. We are currently developing consumer applications and expect such applications to be a component of AsureMarketplace™ in the future.
We offer the human resource (“HR”) tools necessary to build a thriving workforce, providing the resources to stay compliant with dynamic federal, state, and local tax jurisdictions and their respective labor laws, freeing cash flows so they can spend their financial capital on growing their businesses rather than administrative overhead that can impede growth.
We offer human resources (“HR”) tools necessary to build a thriving workforce, providing the resources to stay compliant with dynamic federal, state, and local tax jurisdictions and their respective labor laws, freeing cash flows so SMBs can spend their financial capital on growing their businesses rather than administrative overhead that can impede growth.
From recruitment to retirement, our solutions help more than 100,000 SMBs across the United States. Approximately 15,000 of our clients are direct and the 85,000 remaining clients are indirect, as they have contracts with Reseller Partners who white label our solutions. We strive to be the most trusted HCM resource to SMBs.
From recruitment to retirement, our solutions help more than 100,000 SMBs across the United States. Approximately 15% of our clients are direct with the remaining balance indirect, as they have contracts with Reseller Partners who white label our solutions. We strive to be the most trusted HCM resource to SMBs.
ITEM 1. BUSINESS GENERAL Asure is a provider of cloud-based Human Capital Management (“HCM”) software and services, delivered as Software-as-a-Service (“SaaS”) for small and medium-sized businesses (“SMBs”).
ITEM 1. BUSINESS GENERAL Asure is a provider of cloud-based Human Capital Management (“HCM”) software solutions delivered as Software-as-a-Service (“SaaS”) for small and medium-sized businesses (“SMBs”).
Price tends to be the most important factor of competition for our small business clients with fewer employees, while the range of features, implementation, and scalability is more important to our clients with larger businesses. 5 Table of Contents We compete with companies that provide HCM solutions by various means.
Price tends to be the most important factor of competition for our small business clients with fewer employees, while the range of features, implementation, and scalability is more important to our clients with larger businesses. We compete with companies that provide HCM solutions by various means.
Reports and other information we file with the SEC may also be viewed at the SEC’s website at www.sec.gov. SOLUTIONS Our solutions are primarily cloud-based and delivered as SaaS and HR services as well as professional services and hardware (time clocks and data collection devices). 3 Table of Contents Payroll and Tax.
Reports and other information we file with the SEC may also be viewed at the SEC’s website at www.sec.gov. SOLUTIONS Our solutions are primarily cloud-based and delivered as SaaS and HR services as well as professional services and hardware (time clocks and data collection devices). Payroll and Tax.
We seek to simultaneously allow organizations to improve their productivity while reducing the costs associated with those tasks. 4 Table of Contents Asure is particularly focused on developing product capabilities that involve the movement and reconciliation of money.
We seek to simultaneously allow organizations to improve their productivity while reducing the costs associated with those tasks. We are particularly focused on developing product capabilities that involve the movement and reconciliation of money.
The headcount by department includes 102 in research and development, 147 in sales and marketing, 195 in customer service and technical support, and 57 in finance, human resources and administration. 7 Table of Contents We continually evaluate and adjust the size and composition of our workforce.
The headcount by department includes 96 in research and development, 194 in sales and marketing, 233 in customer service and technical support, and 58 in finance, human resources and administration. 7 Table of Contents We continually evaluate and adjust the size and composition of our workforce.
Our solutions reduce the administrative burden on employers and increases employee productivity while managing the employment lifecycle. We were incorporated in 1985 as a Delaware corporation and our principal executive offices are located at 405 Colorado Street, Suite 1800, Austin, Texas 78701. Our telephone number is (888) 323-8835 and our website is www.asuresoftware.com.
We were incorporated in 1985 as a Delaware corporation and our principal executive offices are located at 405 Colorado Street, Suite 1800, Austin, Texas 78701. Our telephone number is (888) 323-8835 and our website is www.asuresoftware.com.
We make available free of charge, on or through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file these materials or furnish them to the SEC.
Information on our website is not part of this Annual Report on Form 10-K, however we do post information on the investor relations page of our website that we believe may be of interest to our investors. 3 Table of Contents We make available free of charge, on or through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file these materials or furnish them to the SEC.
Such state and federal laws include laws such as the California Consumer Privacy Act of 2018, as amended and the Illinois Biometric Information Privacy Act and rules and regulations promulgated under the Federal Trade Commission. Other states, including Colorado, Connecticut, Virginia, and Utah, have recently enacted new data privacy laws.
Such state and federal laws include laws such as the California Consumer Privacy Act of 2018, as amended and the Illinois Biometric Information Privacy Act and rules and regulations promulgated under the Federal Trade Commission.
We have a small number of end-user clients located in the European Union using our time and attendance software. Accordingly, the EU’s General Data Protection Regulation applies to the collection, processing, and storage of applicable sensitive and personal data.
These new laws track significant portions of existing laws but include differences that may or may not increase our compliance burden. We have a small number of end-user clients located in the European Union using our time and attendance software. Accordingly, the EU’s General Data Protection Regulation applies to the collection, processing, and storage of applicable sensitive and personal data.
Asure’s HCM suite (“AsureHCM”) includes Payroll & Tax solutions, HR compliance and services, Time & Attendance software and data integrations that enable employers and their employees to enhance efficiencies and take advantage of value-added solutions. We offer these services directly and indirectly through our network of Reseller Partners.
Asure’s HCM suite (“Asure HCM”) includes Payroll & Tax solutions, HR compliance and services, Time & Attendance software and data integrations that enable employers and their employees to enhance efficiencies and take advantage of value-added solutions, which we refer to as AsureMarketplace™.
COMPETITION The market for HCM solutions is competitive and subject to evolving technology, shifting client needs, and regular introduction of new products and services. Our competitors range from regional payroll companies to large, well-established companies with multiple product offerings.
COMPETITION The market for HCM solutions is competitive and subject to evolving technology, shifting client needs, and regular introduction of new products and services.
Our development teams work with clients and sales and marketing teams to build solutions based on market requirements and client feedback. We also garner inputs from clients, competitive comparisons, and relevant technology innovations. Development teams are staffed with product owners, solutions architects, software engineers, software engineers in test, quality assurance analysts, technical writers, scrum masters and usability designers.
Our development teams work with clients and sales and marketing teams to build solutions based on market requirements and client feedback. We also garner inputs from clients, competitive comparisons, and relevant technology innovations.
Our research and development strategies are based on agile methodologies that foster continuous innovation and improvement with collaboration with stakeholders. The development team enhances the functionality of our solutions through new feature releases, with a focus on solutions delivered as SaaS for businesses that struggle with complexity and Reseller Partners that need back-office tools and scalable infrastructure.
The development team enhances the functionality of our solutions through new feature releases, with a focus on solutions delivered as SaaS for businesses that struggle with complexity and Reseller Partners that need back-office tools and scalable infrastructure. We continue to evaluate opportunities for developing new solutions that enable organizations to streamline and automate HR tasks associated with growing their businesses.
Competition in the HCM market is primarily based on product and service quality and reputation, scope of service, application offering and price.
Our competitors range from regional payroll companies to large, well-established companies with multiple product offerings. 5 Table of Contents Competition in the HCM market is based on product and service quality and reputation, scope of service, application offering and price.
Money transmission activities may be subject to anti-money laundering laws at the state and federal levels.
We are licensed or are actively pursuing licensure as a money transmitter in jurisdictions that require payroll processors to be licensed under state money transmission laws. Money transmission activities may be subject to anti-money laundering laws at the state and federal levels.
Removed
Information on our website is not part of this Annual Report on Form 10-K, however we do post information on the investor relations page of our website that we believe may be of interest to our investors.
Added
AsureMarketplace™ automates interactions between our HCM systems with third-party providers to enhance efficiency, improve accuracy and to extend the range of services offered to employers and their employees. Our approach to HR compliance services incorporates artificial intelligence technology to enhance scalability and efficiency while prioritizing client interactions. We offer these services directly and indirectly through our network of Reseller Partners.
Removed
We continue to evaluate opportunities for developing new solutions that enable organizations to streamline and automate HR tasks associated with growing their businesses.
Added
Our solutions reduce the administrative burden on employers and increase employee productivity while managing the employment lifecycle. The Asure HCM suite includes five product lines: Asure Payroll & Tax, Asure Tax Management Solutions, Asure Time & Attendance, Asure HR Compliance, and AsureMarketplace™.
Removed
The Virginia Consumer Data Protection Act became effective in January 2023. The remainder of the new legislation becomes effective mid to late 2023. These new laws track significant portions of existing laws but include differences that may or may not increase our compliance burden.
Added
Development teams are staffed with product owners, solutions architects, software engineers, software engineers in test, quality assurance analysts, technical writers, scrum masters and usability designers. 4 Table of Contents Our research and development strategies are based on agile methodologies that foster continuous innovation and improvement with collaboration with stakeholders.
Removed
We pursue licensure as a money transmitter in jurisdictions that require payroll processors to be licensed under state money transmission laws. We are also planning to pursue money transmission licenses in jurisdictions that have not yet made a determination as to whether their money transmitter statutes apply to payroll processors.
Added
Other states, including Colorado (effective July 1, 2023), Connecticut (effective July 1, 2023), Delaware (effective January 1, 2025), Indiana, Iowa (effective January 1, 2025), Montana (effective October 1, 2024), New Jersey (effective January 15, 2025), Oregon (effective July 1, 2024), Tennessee (effective July 1, 2025), Texas (effective July 1, 2024), Utah (effective December 31, 2023), and Virginia (effective January 1, 2023) have recently enacted new data privacy laws.
Removed
EMPLOYEES As of December 31, 2022, we had a total of 501 employees, 493 of which are full-time employees.
Added
Our Tax Management Solutions also support bulk filing and processing of Employee Retention Tax Credits, which is legislation that is part of the CARES Act. Recent legislation makes it possible that the government could make changes to or revoke the ERTC program prior to its scheduled expiration during 2024 and 2025, which may impact future revenue and cash collections.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

62 edited+23 added−19 removed164 unchanged
Biggest changeInability to maintain the third-party licensed software we use in our applications at the current costs could result in increased costs or reduced service levels, which could adversely affect our business. We use certain third-party software in our applications that we obtain from other companies and will continue to rely on such third party software.
Biggest changeAny such limitations on the ability to use our net operating loss carryforwards and other tax assets could adversely impact our business, operating results, and financial condition. 19 Table of Contents Inability to maintain the third-party licensed software we use in our applications at the current costs could result in increased costs or reduced service levels, which could adversely affect our business.
Accordingly, we may need to engage in additional equity or debt financings to secure additional funds. If we raise additional funds through issuances of equity or debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through issuances of equity or debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
Factors that may cause such disruptions include: • human error; • security breaches; • telecommunications outages from third-party providers; • computer viruses; • acts of terrorism, war, sabotage or other intentional acts of vandalism, including cyber attacks; • unforeseen interruption or damages experienced in moving hardware to a new location, including government-imposed travel restrictions; • fire, earthquake, flood, the spread of major epidemics (including coronavirus) and other natural disasters; and • power loss.
Factors that may cause such disruptions include: • human error; • security breaches; • telecommunications outages from third-party providers; • computer viruses; • acts of terrorism, war, sabotage or other intentional acts of vandalism, including cyber attacks; • unforeseen interruption or damages experienced in moving hardware to a new location, including government-imposed travel restrictions; • fire, earthquake, flood, the spread of major epidemics and other natural disasters; and • power loss.
Any of these risks could have an adverse effect on our business, operating results and financial condition. To facilitate these acquisitions or investments, we may seek additional equity or debt financing, which may not be available on terms favorable to us, or at all, which may affect our ability to complete acquisitions or investments.
Any of these risks could have an adverse effect on our business, operating results and financial condition. To facilitate these acquisitions or investments, we may seek equity or debt financing, which may not be available on terms favorable to us, or at all, which may affect our ability to complete acquisitions or investments.
Although we generally back up our client databases hourly, store our data in more than one geographically distinct location at least weekly, we do not currently offer immediate access to disaster recovery locations in the event of a disaster or major outage.
Although we generally back up our client databases hourly, and store our data in more than one geographically distinct location at least weekly, we do not currently offer immediate access to disaster recovery locations in the event of a disaster or major outage.
Our future performance depends largely on our ability to continually and effectively attract, train, retain, motivate and manage highly qualified and experienced technical, sales, marketing, managerial and executive personnel. Our future development and growth depend on the efforts of key management personnel and technical employees.
Our future performance depends largely on our ability to continually and effectively attract, train, retain, motivate and manage highly qualified and experienced technical, sales, marketing, finance, managerial and executive personnel. Our future development and growth depend on the efforts of key management personnel and technical employees.
Further, we have entered into deferred payment arrangements with some referral partners whereby collections from the customer are expected to be received upon the customer’s future receipt of their tax credit. Given the deferred nature of such receipts there is risk pertaining to our ability to collect such amounts in the future.
Further, we have entered into deferred payment arrangements with some customers and referral partners whereby collections from the customer are expected to be received upon the customer’s future receipt of their tax credit. Given the deferred nature of such receipts there is risk pertaining to our ability to collect such amounts in the future.
We evaluate on a regular basis whether all or a portion of our goodwill and identifiable intangible assets may be impaired. Under current accounting rules, any determination that impairment has occurred would require us to write off the impaired portion of goodwill and such intangible assets, resulting in a charge to our earnings.
We evaluate on a regular basis whether all or a portion of our goodwill and identifiable intangible assets may be impaired. Under current accounting rules, any determination that impairment has occurred would require us to write off the impaired portion of goodwill and such intangible assets, resulting in a change to our earnings.
For example, the Federal Communications Commission (the “FCC”) recently adopted an order repealing rules that prohibit Internet service providers (“ISPs”) from blocking or throttling Internet traffic, and from engaging in practices that prioritize particular Internet content in exchange for payment (also known as “paid prioritization”).
For example, in 2017 the Federal Communications Commission (the “FCC”) adopted an order repealing rules that prohibit Internet service providers (“ISPs”) from blocking or throttling Internet traffic, and from engaging in practices that prioritize particular Internet content in exchange for payment (also known as “paid prioritization”).
If these banks terminate their relationships with us or restrict the dollar amounts of funds that they will process on behalf of our clients, their doing so may impede our ability to process funds and could have an adverse impact on our financial results and liquidity. Our balance sheet includes significant amounts of goodwill and intangible assets.
If these banks terminate their relationships with us or restrict the dollar amounts of funds that they will process on behalf of our clients, their doing so may impede our ability to process funds and could have an adverse impact on our financial results and liquidity. 13 Table of Contents Our balance sheet includes significant amounts of goodwill and intangible assets.
It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines and penalties that could adversely affect our business, financial condition and results of operations. We incur significant costs as a result of operating as a public company, and our management will devote substantial time to new compliance initiatives.
It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines and penalties that could adversely affect our business, financial condition and results of operations. 16 Table of Contents We incur significant costs as a result of operating as a public company, and our management will devote substantial time to new compliance initiatives.
In addition, many of our competitors have established marketing relationships, access to larger customer bases, and major distribution agreements with consultants, system integrators, and resellers. Furthermore, our current or potential competitors may be acquired by third parties with greater available resources and the ability to initiate or withstand substantial price competition.
In addition, many of our competitors have established marketing relationships, access to larger customer bases, and major distribution agreements with consultants, system integrators, and resellers. 12 Table of Contents Furthermore, our current or potential competitors may be acquired by third parties with greater available resources and the ability to initiate or withstand substantial price competition.
Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our products or services, and could limit adoption of our cloud-based solutions. 9 Table of Contents Furthermore, certain of our products use client data to provide value to our solutions, aid in efficiency and reduce human error.
Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our products or services, and could limit adoption of our cloud-based solutions. Furthermore, certain of our products use client data to provide value to our solutions, aid in efficiency and reduce human error.
Additionally, error or issues in that software could adversely affect our own software and errors or defects may not be readily apparent to use, resulting in a failure of our applications.
Additionally, error or issues in that software could adversely affect our own software and errors or defects may not be readily apparent to us, resulting in a failure of our applications.
These service interruptions could diminish the overall attractiveness of our products to existing and potential users and could cause demand for our products to suffer. 20 Table of Contents Adverse tax laws or regulations could be enacted, or existing laws could be applied to us or our clients, which could increase the costs of our services and adversely impact our business.
These service interruptions could diminish the overall attractiveness of our products to existing and potential users and could cause demand for our products to suffer. Adverse tax laws or regulations could be enacted, or existing laws could be applied to us or our clients, which could increase the costs of our services and adversely impact our business.
We cannot guarantee that we will continue to attract and retain personnel with the requisite capabilities and experience. The loss of one or more of our key management or technical personnel could have a material and adverse effect on our business, operating results and financial condition. We continue to experience turnover within our finance team.
We cannot guarantee that we will continue to attract and retain personnel with the requisite capabilities and experience. The loss of one or more of our key management or technical personnel could have a material and adverse effect on our business, operating results and financial condition.
Goodwill and identifiable intangible assets together accounted for approximately 36% of the total assets on our balance sheet as of December 31, 2022. We may not realize the full fair value of our intangible assets and goodwill. We expect to engage in additional acquisitions, which may result in our recognition of additional identifiable intangible assets and goodwill.
Goodwill and identifiable intangible assets together accounted for approximately 33% of the total assets on our balance sheet as of December 31, 2023. We may not realize the full fair value of our intangible assets and goodwill. We expect to engage in additional acquisitions, which may result in our recognition of additional identifiable intangible assets and goodwill.
Given this, investors should not expect our tax processing revenues from ERTC filings to continue beyond 2025, and any earlier expiration or revocation of the ERTC program will have an adverse effect on our financial condition and results of operation.
Given this, investors should not expect our tax processing revenues from ERTC filings to continue beyond 2024, and any earlier expiration or revocation of the ERTC program, including the moratorium described above, will have an adverse effect on our financial condition and results of operation.
If we lose key personnel, including key management personnel, or are unable to attract and retain additional personnel as needed in the future, it could disrupt the operation of our business, delay our product development and harm our growth efforts.
If we lose key personnel, including key management personnel, or are unable to attract and retain additional personnel as needed in the future, it could disrupt the operation of our business, delay our product development, harm our growth efforts and have a material adverse effect on our business.
During the fiscal year ended December 31, 2022, the Nasdaq closing price of one share of our common stock fluctuated from a low of $5.04 to a high o f $10.50.
During the fiscal year ended December 31, 2022, the Nasdaq closing price of one share of our common stock fluctuated from a l ow of $5.04 to a high of $10.50.
If we are not able to develop enhancements and new features to our products, keep pace with technological developments or respond to future technologies, our business, operating results and financial results will be adversely affected. Our future success will depend on our ability to adapt and innovate.
If we are not able to develop enhancements and new features to our products, keep pace with technological developments or respond to future technologies, our business, operating results and financial results will be adversely affected.
Our success is dependent, in part, upon protecting our proprietary technology. We rely on a combination of trademarks, service marks, trade secret laws and contractual restrictions to establish and protect our proprietary rights in our products and services. However, the steps we take to protect our intellectual property may be inadequate.
We rely on a combination of trademarks, service marks, trade secret laws and contractual restrictions to establish and protect our proprietary rights in our products and services. However, the steps we take to protect our intellectual property may be inadequate.
If one or more taxing authorities determines that taxes should have, but have not, been paid with respect to our services, we might be liable for past taxes and the associated interest and penalty charges, in addition to taxes going forward, which will adversely affect our business, sales activity, results of operations and financial condition.
If one or more taxing authorities determines that taxes should have, but have not, been paid with respect to our services, we might be liable for past taxes and the associated interest and penalty charges, in addition to taxes going forward, which may adversely affect our business, sales activity, results of operations and financial condition. 20 Table of Contents Political, economic and social factors may materially adversely affect our business and financial results.
Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, capital requirements, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.
Investors seeking cash dividends should not purchase our common stock. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, capital requirements, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.
As a result, we are subject to the risk of shortages and long lead times in the supply of our components or products. Further, our suppliers may experience financial or other difficulties as a result of uncertain and weak worldwide economic conditions.
We do not have contractual commitments or guaranteed supply arrangements with our suppliers. As a result, we are subject to the risk of shortages and long lead times in the supply of our components or products. Further, our suppliers may experience financial or other difficulties as a result of uncertain and weak worldwide economic conditions.
If we incur additional debt, we may be subject to the following risks: • our vulnerability to adverse economic conditions may be heightened; • our flexibility in planning for, or reacting to, changes in our business may be limited; • our debt covenants may affect our flexibility in planning for, and reacting to, changes in the economy and in our industry; • higher levels of debt may place us at a competitive disadvantage compared to our competitors or prevent us from pursuing opportunities; • covenants contained in the agreements governing our indebtedness may limit our ability to borrow additional funds and make certain investments; • a significant portion of our cash flow could be used to service our indebtedness; and • our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes may be impaired. 14 Table of Contents We cannot assure you that our leverage and such restrictions will not materially and adversely affect our ability to finance our future operations or capital needs or to engage in other business activities.
If we incur debt, we may be subject to the following risks: • our vulnerability to adverse economic conditions may be heightened; • our flexibility in planning for, or reacting to, changes in our business may be limited; • our debt covenants may affect our flexibility in planning for, and reacting to, changes in the economy and in our industry; • higher levels of debt may place us at a competitive disadvantage compared to our competitors or prevent us from pursuing opportunities; • covenants contained in the agreements governing our indebtedness may limit our ability to borrow additional funds and make certain investments; • a significant portion of our cash flow could be used to service our indebtedness; and • our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes may be impaired.
Although we maintain that we are not a money service business or money transmitter, we have proactively registered in some jurisdictions due to regulatory changes and have adopted an Anti-Money Laundering Policy and compliance program designed to mitigate the risk of our services and application being utilized for illegal purposes including money laundering and to assist in detecting fraud.
Although we maintain that we are not a money service business or money transmitter at the federal level, we proactively registered with FinCEN and adopted an Anti-Money Laundering Policy and compliance program designed to mitigate the risk of our services and application being utilized for illegal purposes including money laundering and to assist in detecting fraud.
We may be required to incur further debt to meet future capital requirements of our business. Should we be required to incur additional debt, the restrictions imposed by the terms of such debt could adversely affect our financial condition and our ability to respond to changes in our business.
Should we be required to incur debt, the restrictions imposed by the terms of such debt could adversely affect our financial condition and our ability to respond to changes in our business.
The market price of our common stock may be influenced by many factors, some of which are beyond our control, including: • announcements regarding the results of expansion or development efforts by us or our competitors; • announcements regarding the acquisition of businesses or companies by us or our competitors; • technological innovations or new products and services developed by us or our competitors; • changes in domestic or foreign laws and regulations affecting our industry • issuance of new or changed securities analysts’ reports and/or recommendations applicable to us or our competitors; • changes in financial or operational estimates or projections; • additions or departure of our key personnel; • actual or anticipated fluctuations in our quarterly financial and operating results and degree of trading liquidity in our common stock; and • political or economic uncertainties, including the continuing impact of the coronavirus, the Russian invasion of Ukraine and other developments that affect the equity trading markets 21 Table of Contents In addition, stock markets generally have experienced significant price and volume volatility.
The market price of our common stock may be influenced by many factors, some of which are beyond our control, including: • announcements regarding the results of expansion or development efforts by us or our competitors; • announcements regarding the acquisition of businesses or companies by us or our competitors; • technological innovations or new products and services developed by us or our competitors; • changes in domestic or foreign laws and regulations affecting our industry • issuance of new or changed securities analysts’ reports and/or recommendations applicable to us or our competitors; • changes in financial or operational estimates or projections; • additions or departure of our key personnel; • actual or anticipated fluctuations in our quarterly financial and operating results and degree of trading liquidity in our common stock; and • political or economic uncertainties, including rising interest rates or inflation, ongoing international conflicts and other developments that affect the equity trading markets.
For example, a smaller pre-tax income or loss will increase the likelihood of a quantitative assessment of a control deficiency as a significant deficiency or material weakness. 18 Table of Contents To the extent that our pre-tax income or loss is relatively small, if management or our independent registered public accountants identify an error in our interim or annual financial statements, it is more likely that such an error may be determined to be a material weakness or be considered a material error that could, depending upon the complete quantitative and qualitative analysis, result in our having to restate previously issued financial statements.
To the extent that our pre-tax income or loss is relatively small, if management or our independent registered public accountants identify an error in our interim or annual financial statements, it is more likely that such an error may be determined to be a material weakness or be considered a material error that could, depending upon the complete quantitative and qualitative analysis, result in our having to restate previously issued financial statements.
We have historically incurred losses since our inception. We experienced a net loss from continuing operations of $(14.5) million in the fiscal year ended December 31, 2022. At December 31, 2022, our accumulated deficit was $281.2 million and total stockholders’ equity was $145.1 million .
We have historically incurred losses since our inception. We experienced a net loss from continuing operations of $9.2 million in the fiscal year ended December 31, 2023. At December 31, 2023, our accumulated deficit was $290.4 million and total stockholders’ equity was $191.7 million .
Such write-downs or write-offs could negatively affect our operating results for the period in which they occur, and could harm our financial condition. 13 Table of Contents If the banks that currently provide ACH and wire transfers fail to properly transmit ACH, exit the payroll industry, or terminate their relationship with us or limit our ability to process funds or we are not able to increase our ACH capacity with our existing and new banking partners, our ability to process funds on behalf of our clients and our financial results and liquidity could be adversely affected.
If the banks that currently provide ACH and wire transfers fail to properly transmit ACH, exit the payroll industry, or terminate their relationship with us or limit our ability to process funds or we are not able to increase our ACH capacity with our existing and new banking partners, our ability to process funds on behalf of our clients and our financial results and liquidity could be adversely affected.
Under these circumstances, our lenders could compel us to apply all of our available cash to repay our indebtedness. The adoption of new or interpretation of existing money service business statutes and money transmitter statutes at the federal and state level could subject us to additional regulation and related expense and necessitate changes to our business model.
The adoption of new or interpretation of existing money service business statutes and money transmitter statutes at the federal and state level could subject us to additional regulation and related expense and necessitate changes to our business model.
One element of our analysis of the significance of any control deficiency is its actual or potential financial impact. This assessment will vary depending on our level of pre-tax income or loss.
One element of our analysis of the significance of any control deficiency is its actual or potential financial impact. This assessment will vary depending on our level of pre-tax income or loss. For example, a smaller pre-tax income or loss will increase the likelihood of a quantitative assessment of a control deficiency as a significant deficiency or material weakness.
Volatility and weakness in bank and capital markets may adversely affect credit availability and related financing costs for us. Banking and capital markets can experience periods of volatility and disruption. If the disruption in these markets is prolonged, our ability to refinance, and the related cost of refinancing, some or all of our debt could be adversely affected.
Banking and capital markets have recently and may in the future experience periods of volatility and disruption. If the disruption in these markets is prolonged, our ability to refinance, and the related cost of refinancing, some or all of our debt could be adversely affected.
Since the introduction of the Employee Retention Tax Credits in 2021, we have received a signification portion of our tax processing revenues from the support we provide our customers in filing for Employee Retention Tax Credits and we expect revenues from these services to continue to be a significant portion of our tax processing revenues while the Employee Retention Tax Credits are available.
Since the introduction of the Employee Retention Tax Credits in 2021, we have received a significant portion of our tax processing revenues from the support we provide our customers as a tax processor in filing for Employee Retention Tax Credits.
If we were required to find alternatives to such software for whatever reason, it may be expensive to replace, and could require significant investment of time and resources to find alternatives and integrate with our software.
We use certain third-party software in our applications that we obtain from other companies and will continue to rely on such third party software. If we were required to find alternatives to such software for whatever reason, it may be expensive to replace, and could require significant investment of time and resources to find alternatives and integrate with our software.
During the fiscal year ended December 31, 2021, the Nasdaq closing price of one share of our common stock fluctuated from a l ow of $7.22 to a high of $9.80.
During the fiscal year ended December 31, 2023, the Nasdaq closing price of one share of our common stock fluctuated from a low of $6.83 to a high of $16.83.
These laws track significant portions of existing laws but include differences that may or may not increase our compliance burden. Further, because some of our Reseller clients have clients in the European Union utilizing Asure’s Time and Attendance product, the GDPR may impact our processing of certain client and client employee information.
Additional states may adopt privacy laws in the future that may increase our compliance burden. 9 Table of Contents Further, because some of our Reseller clients have clients in the European Union utilizing Asure’s Time and Attendance product, the GDPR may impact our processing of certain client and client employee information.
In certain situations, the tax authorities could have the ability to challenge the validity of a business’ filing or could challenge our calculations or find other deficiencies in our filings that could expose us to uncertain penalties or damages. Our current outlook envisions continued revenues from ERTC.
In certain situations, the tax authorities could have the ability to challenge the validity of a business’ filing or could challenge our calculations or find other deficiencies in our filings that could expose us to uncertain penalties or damages. We have a history of losses, and we cannot be certain that we will achieve or sustain profitability.
Employee Retention Tax Credits are expected, at this time, to expire in 2025; however it is possible that the government could revoke the program prior to its scheduled expiration.
Employee Retention Tax Credits were originally expected to expire during 2024 and 2025; however, it is possible that the government could make changes to or revoke the program prior to its scheduled expiration.
The regulatory framework for privacy issues is rapidly evolving and will remain uncertain as more jurisdictions adopt laws and regulations regarding the collection, processing, storage and disposal of personal information.
Our products are subject to various complex laws and regulations on the federal, state and local levels, including those governing data security and privacy. The regulatory framework for privacy issues is rapidly evolving and will remain uncertain as more jurisdictions adopt laws and regulations regarding the collection, processing, storage and disposal of personal information.
If we are unable to respond in a timely and cost-effective manner to these rapid technological developments, our products may become less marketable and less competitive or obsolete, and our business, operating results and financial condition will be adversely affected. 11 Table of Contents If we are unable to release timely updates to reflect changes in wage and hour laws, tax, privacy, benefit and other laws and regulations that our products help our clients address, the market acceptance of our products may be adversely affected and our revenues could decline.
If we are unable to release timely updates to reflect changes in wage and hour laws, tax, privacy, benefit and other laws and regulations that our products help our clients address, the market acceptance of our products may be adversely affected and our revenues could decline.
Any such events could have a material adverse effect on our business, financial condition and results of operations. Some of our key components are procured from a single or limited number of suppliers. Thus, we are at risk of shortage, price increases, tariffs, changes, delay, or discontinuation of key components, which could disrupt and materially and adversely affect our business.
Any such events could have a material adverse effect on our business, financial condition and results of operations. 15 Table of Contents Some of our key components are procured from a single or limited number of suppliers.
Moreover, some of our agreements include performance guarantees and service level standards that obligate us to provide credits, refunds or termination rights in the event of a significant disruption in our SaaS hosting network infrastructure or other technical problems that relate to the functionality or design of our software. 15 Table of Contents We may require additional capital to support business growth, and this capital may not be available on acceptable terms, or at all.
Moreover, some of our agreements include performance guarantees and service level standards that obligate us to provide credits, refunds or termination rights in the event of a significant disruption in our SaaS hosting network infrastructure or other technical problems that relate to the functionality or design of our software. 18 Table of Contents Volatility and weakness in bank and capital markets may adversely affect credit availability and related financing costs for us.
Any future impairment of a significant portion of goodwill or intangible assets could have a material adverse effect on our business, operating results and financial condition. Our ability to incur debt and the use of our funds could be limited by the restrictive covenants in our loan agreement for our term loan.
Any future impairment of a significant portion of goodwill or intangible assets could have a material adverse effect on our business, operating results and financial condition. We may be required to incur debt to meet future capital requirements of our business.
Any actual or perceived breach of our security could damage our reputation, cause existing clients and resellers to terminate our services, prevent future clients from doing business with us and result in regulatory liability and third-party liability, any of which could adversely affect our business and results of operations. 8 Table of Contents We have a history of losses, and we cannot be certain that we will achieve or sustain profitability.
Any actual or perceived breach of our security could damage our reputation, cause existing clients and resellers to terminate our services, prevent future clients from doing business with us and result in regulatory liability and third-party liability, any of which could adversely affect our business and results of operations. 8 Table of Contents We generate a portion of our revenues by providing tax processing services to enable businesses to file for Employee Retention Tax Credits under the CARES Act.
As a result, we cannot assure you that our SaaS HCM software products will achieve and sustain the high level of market acceptance that is critical for the success of our business. 17 Table of Contents Our failure to comply with existing laws and regulations may result in adverse effects on our business, service and financial condition and failure to comply with changing laws and regulations through modifications, developments, and enhancements to our products and services could have a material adverse effect on our business and results of operations.
Our failure to comply with existing laws and regulations may result in adverse effects on our business, service and financial condition and failure to comply with changing laws and regulations through modifications, developments, and enhancements to our products and services could have a material adverse effect on our business and results of operations.
Accordingly, investors must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our common stock.
For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Accordingly, investors must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur.
This volatility has had a substantial effect on the market prices of securities of many public companies for reasons frequently unrelated or disproportionate to the operating performance of the specific companies.
This volatility has had a substantial effect on the market prices of securities of many public companies for reasons frequently unrelated or disproportionate to the operating performance of the specific companies. 21 Table of Contents Sales, or the potential for sales, of a substantial number of shares of our common stock in the public market by us or our existing stockholders could cause our stock price to fall.
Any loss or inability to access client funds could have an adverse impact on our cash position and could require us to obtain additional sources of liquidity, and could have a material adverse effect on our business, financial condition and results of oper ations. 12 Table of Contents The markets in which we participate are highly competitive, and if we do not compete effectively, our operating results could be adversely affected.
These risks may be exacerbated during periods of unusual financial market volatility. Any loss or inability to access client funds could have an adverse impact on our cash position and could require us to obtain additional sources of liquidity, and could have a material adverse effect on our business, financial condition and results of oper ations.
Under the statutes governing our money transmitter licenses, we are subject to routine examinations from the regulatory agencies overseeing these licenses.
We are licensed or are pursuing licensure in any jurisdiction that requires a payroll processor to be licensed under state money transmission laws. The statutes governing our money transmitter licenses subject us to routine examinations from the regulatory agencies overseeing these licenses.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired. 14 Table of Contents Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
Any such limitations on the ability to use our net operating loss carryforwards and other tax assets could adversely impact our business, operating results, and financial condition. 19 Table of Contents Our software and solutions may not function adequately, which could damage our reputation and give rise to claims against us, which could harm our business and operating results.
These regulations could limit our innovative use of data to support the evolving needs of our customers. 17 Table of Contents Our software and solutions may not function adequately, which could damage our reputation and give rise to claims against us, which could harm our business and operating results.
To attract new clients and increase revenue from existing clients, we will need to enhance and improve our existing products and introduce new features. The success of any enhancement or new feature depends on several factors, including timely completion, introduction and market acceptance.
Our future success relies on our capacity to attract new clients and increase revenue from existing clients, necessitating the ongoing improvement and innovation of our products. The timely completion, introduction, and market acceptance of enhancements or new features are crucial factors for success.
Some of the key components used to manufacture our products, such as the AsureForce® time clocks and air clocks, come from limited or single sources of supply. We do not have contractual commitments or guaranteed supply arrangements with our suppliers.
Thus, we are at risk of shortage, price increases, tariffs, changes, delay, or discontinuation of key components, which could disrupt and materially and adversely affect our business. Some of the key components used to manufacture our products, such as the AsureForce® time clocks and air clocks, come from limited or single sources of supply.
Some of these laws, such as the CCPA and IBIPA, grant consumers private right of actions for data breaches or violations as applicable. Additionally, The Virginia Consumer Data Protection Act became effective January 2023. Colorado legislation becomes effective mid to late 2023.
Some of these laws, such as the CCPA and IBIPA, grant consumers private right of actions for data breaches or violations as applicable. Additionally, new privacy legislation became effective throughout 2023 in various states including Virginia, Colorado, Utah and Connecticut. These laws track significant portions of existing laws but include differences that may or may not increase our compliance burden.
In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired.
In addition, we may not be able to obtain additional financing on terms favorable to us, if at all.
If we are unable to retain and successfully integrate the current employees serving in these roles, it could have a material impact on our business and financial results. 16 Table of Contents If we fail to adequately protect our proprietary rights, our competitive advantage and brand could be impaired and we may lose valuable assets, generate reduced revenue and incur costly litigation to protect our rights.
If we fail to adequately protect our proprietary rights, our competitive advantage and brand could be impaired and we may lose valuable assets, generate reduced revenue and incur costly litigation to protect our rights. Our success is dependent, in part, upon protecting our proprietary technology.
In particular, the repeal of restrictions on paid prioritization could enable ISPs to impose higher fees and otherwise adversely affect our business. In addition, the rapid and continual growth of traffic on the Internet has resulted at times in slow connection and download speeds of Internet users.
Changes in regulatory requirements or uncertainty associated with the regulatory environment could delay or cause us to experience discriminatory or anti-competitive behavior, which could adversely affect the sale of our products and services. In addition, the rapid and continual growth of traffic on the Internet has resulted at times in slow connection and download speeds of Internet users.
The market for payroll and HCM solutions is fragmented, highly competitive and rapidly changing.
The markets in which we participate are highly competitive, and if we do not compete effectively, our operating results could be adversely affected. The market for payroll and HCM solutions is fragmented, highly competitive and rapidly changing.
We cannot be certain that we will be able to achieve or sustain profitability on a quarterly or annual basis. We generate revenues by providing services to enable businesses to file for Employee Retention Tax Credits under the CARES Act and such regulations will eventually expire, which, following their expiration, will adversely impact our revenues.
We cannot be certain that we will be able to achieve or sustain profitability on a quarterly or annual basis. Privacy concerns and laws and other regulations may limit the effectiveness of our applications and adversely affect our business.
Removed
Privacy concerns and laws and other regulations may limit the effectiveness of our applications and adversely affect our business. Our products are subject to various complex laws and regulations on the federal, state and local levels, including those governing data security and privacy.
Added
Such regulations were originally expected to expire in 2024 and 2025, which, following their expiration, will adversely impact our revenues and abuses of this program may require government intervention, that could adversely affect the timing of our processing services and delay or otherwise materially affect our future revenue and cash collections.
Removed
Our ability to make scheduled payments on or to refinance our existing indebtedness (including the indebtedness under our Senior Credit Facility with Structural Capital Investments III LP and our subordinated promissory notes) depends on our future performance, which is subject to economic, financial, competitive and other factors that may be beyond our control.
Added
In January 2024, the United States House of Representatives passed the Tax Relief for American Families and Workers Act of 2024, which sets an expiration date of January 31, 2024, on additional claims for ERTC that can potentially apply retroactively.
Removed
Our business may not generate cash flow from operations in the future sufficient to service our debt and support our growth strategies. If we are unable to generate sufficient cash flow, we may be required to pursue one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or dilutive.
Added
The bill also includes various enforcement provisions related to ERTC, including extending the statute of limitation on assessment for the credit, and increasing certain penalties and reporting requirements for those who are considered COVID-ERTC promoters. The Senate must also pass an identical version of the bill that must then be signed by the President before it becomes law.
Removed
Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or on desirable terms, which could result in a default on our debt obligations, including under our current debt obligations.
Added
On September 14, 2023, the IRS announced a moratorium on processing new ERTC claims until at least December 31, 2023, to handle the increased number of fraudulent ERTC claims filed.
Removed
In addition, if for any reason we are unable to meet our debt service and repayment obligations, we would be in default under the terms of our Senior Credit Facility with Structural Capital Investments III LP, which would allow our creditors at that time to declare all outstanding indebtedness to be due and payable.
Added
While the IRS is not pausing the processing of ERTC claims filed before September 14, 2023, and eligible taxpayers retain the right to continue to file legitimate ERTC claims, the moratorium will likely adversely affect revenues earned from support provided to customers who would otherwise undergo ERTC claim processing.
Removed
If we are unable to enhance our existing products to meet client needs or successfully develop or acquire new features or products, or if such new features or products fail to be successful, our business, operating results and financial condition will be adversely affected.
Added
Inability to meet client needs, develop/acquire successful features, or navigate market challenges could adversely affect our business, operating results, and financial condition. 11 Table of Contents Our products, designed to operate across various platforms and utilizing Internet tools and protocols, require continuous modification to align with changes in Internet-related hardware, software, communication, browser, and database technologies.
Removed
Our products are designed to operate on a variety of network, hardware and software platforms using Internet tools and protocols, and we must continuously modify and enhance our products to keep pace with changes in Internet-related hardware, software, communication, browser and database technologies.
Added
Additionally, the emergence of technologies offering HCM software at lower prices or with increased efficiency poses competition challenges. Failing to respond promptly and cost-effectively to these technological shifts may render our products less marketable or competitive, potentially impacting our business, operating results, and financial condition negatively.
Removed
In addition, if new technologies emerge that are able to deliver HCM software at lower prices, more efficiently or more conveniently, we may be unable to compete with these technologies.
Added
Our competitors vary, and include (i) our main competitors, such as ADP, Paychex, UKG, Paylocity, Paycor, Paycom, Ceridian, isolved, and Gusto, (ii) competitors to Asure Time & Attendance, such as UKG, Paychex, ADP and Time Simplicity and (iii) primary competitors to our tax management solutions, such as Ceridian and ADP.
Removed
These risks may be exacerbated during periods of unusual financial market volatility.
Added
Such write-downs or write-offs could negatively affect our operating results for the period in which they occur, and could harm our financial condition.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal offices are located in Austin, Texas where we occupy approximately 9,500 square feet of office space. We also lease office suites in California, Florida, Nebraska, New Jersey, New York, Tennessee and Vermont.
Biggest changeITEM 2. PROPERTIES Our principal offices are located in Austin, Texas where we occupy approximately 9,500 square feet of office space. We also lease office suites in Alabama, California, Florida, New Jersey, New York, Tennessee and Vermont.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS Although we have been, and in th e future may be, the defendant or plaintiff in various actions arising in the normal course of business, as of December 31, 2022, we were not party to any material legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 24 Table of Contents PART II – OTHER INFORMATION
Biggest changeITEM 3. LEGAL PROCEEDINGS Although we have been, and in th e future may be, the defendant or plaintiff in various actions arising in the normal course of business, as of December 31, 2023, we were not party to any material legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 25 Table of Contents PART II – OTHER INFORMATION

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS The following table provides information as of December 31, 2022 with respect to shares of our common stock that we may issue under our existing equity compensation plans (share amounts in thousands): A B C Number of Securities to be Issued Upon Exercise of Outstanding Options and Release of Nonvested RSUs Weighted Average Exercise Price of Outstanding Options Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A) (3) Equity Compensation Plan Approved by Stockholders (1) $ 2,212 $ 7.30 $ 2,343 Equity Compensation Plans Not Approved by Stockholders (2) — — — Total $ 2,212 $ 7.30 $ 2,343 (1) Consists of stock option and restricted stock unit awards granted under our 2018 Incentive Award Plan.
Biggest changeSECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS The following table provides information as of December 31, 2023 with respect to shares of our common stock that we may issue under our existing equity compensation plans (share amounts in thousands): A B C Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A) Equity Compensation Plan Approved by Stockholders (1) 2,220 $ 4.60 1,733 Equity Compensation Plans Not Approved by Stockholders (2) — — — Total 2,220 $ 4.60 1,733 (1) Consists of stock options, restricted stock units, and performance stock units adjusted for performance as of December 31, 2023.
UNREGISTERED SALE OF EQUITY SECURITIES There were no unregistered sales of equity securities by us during the year ended December 31, 2022 that were not reported in our quarterly reports on Form 10-Q or our current reports on Form 8-K.
UNREGISTERED SALE OF EQUITY SECURITIES There were no unregistered sales of equity securities by us during the year ended December 31, 2023 that were not reported in our quarterly reports on Form 10-Q or our current reports on Form 8-K.
(2) Our stockholders have previously approved our existing equity compensation plan. ITEM 6. RESERVED 25 Table of Contents
(2) Our stockholders have previously approved our existing equity compensation plan. ITEM 6. RESERVED 26 Table of Contents
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock trades on the Nasdaq Capital Market under the symbol “ASUR.” HOLDERS As of February 24, 2023, we had approximatel y 253 s tockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock trades on the Nasdaq Capital Market under the symbol “ASUR.” HOLDERS As of February 23, 2024, we had approxim ately 370 stoc kholders of record of our common stock.
Added
On February 22, 2024, we issued 450 shares of our common stock to a payroll processing and benefits brokerage servicer based in New Jersey from whom we acquired certain of their assets. The shares were part of the purchase price consideration in connection with such purchase. The shares were valued at $10.01 per share, or an aggregate of $4,500.
Added
The issuance and sale of the shares of our common stock in connection with this acquisition are exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof and Rule 506(b) of Regulation D thereunder.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRESULTS OF OPERATIONS (in thousands) The following table sets forth, for the fiscal periods indicated, the percentage of total revenues represented by certain items in the Company’s Consolidated Statements of Comprehensive (Loss) Income: Year Ended December 31, 2022 2021 Revenues 100 % 100 % Gross profit 65 % 61 % Sales and marketing 21 % 20 % General and administrative 35 % 36 % Research and development 6 % 7 % Amortization of intangible assets 14 % 14 % Total operating expenses 77 % 78 % Interest expense and other, net (5) % (3) % Gain on extinguishment of debt — % 11 % Employee retention tax credit — % 14 % Gain (loss) from operations before income taxes (15) % 5 % Net income (loss) (15) % 4 % Revenue Revenues are comprised of recurring revenues, professional services, hardware, and other revenues.
Biggest changeBecause we operate as one operating segment, all required financial segment information can be found in the Consolidated Financial Statements. 28 Table of Contents RESULTS OF OPERATIONS (in thousands) The following table sets forth, for the fiscal periods indicated, the percentage of total revenues represented by certain items in our Consolidated Statements of Comprehensive Loss: Year Ended December 31, 2023 2022 Revenues 100 % 100 % Gross profit 72 % 65 % Sales and marketing 24 % 21 % General and administrative 33 % 35 % Research and development 6 % 6 % Amortization of intangible assets 11 % 14 % Total operating expenses 74 % 77 % Interest expense, net (4) % (5) % Loss on extinguishment of debt (1) % — % Other (expense) income, net — % 1 % Loss from operations before income taxes (8) % (15) % Net loss (8) % (15) % Revenue Revenues are comprised of recurring revenues, professional services, hardware, and other revenues.
Revenue recognized from professional services offerings are reported as Professional service revenue on the Consolidated Statements of Comprehensive Income (Loss). We recognize allocated revenue for maintenance and support on an output basis ratably over the non-cancellable term of the support agreement. Initial maintenance and support terms are typically one to three years and are renewable on an annual basis.
Revenue recognized from professional services offerings are reported as Professional service revenue on the Consolidated Statements of Comprehensive Loss. We recognize allocated revenue for maintenance and support on an output basis ratably over the non-cancellable term of the support agreement. Initial maintenance and support terms are typically one to three years and are renewable on an annual basis.
We also generate recurring revenue from our Reseller Partners that license our solutions. Because recurring revenues are based, in part, on fees for use of our applications and the delivery of checks and reports that are levied on a per-employee basis, our recurring revenues increase as our clients hire more employees.
We also generate recurring revenues from our Reseller Partners that license our solutions. Because recurring revenues are based, in part, on fees for use of our applications and the delivery of checks and reports that are levied on a per-employee basis, our recurring revenues increase as our clients hire more employees.
Revenue recognized from maintenance and support are reported as Maintenance and support revenue on the Consolidated Statements of Comprehensive Income (Loss). We do not recognize revenue for agreements with rights of return, refundable fees, cancellation rights or substantive acceptance clauses until these return, refund or cancellation rights have expired or acceptance has occurred.
Revenue recognized from maintenance and support are reported as Maintenance and support revenue on the Consolidated Statements of Comprehensive Loss. We do not recognize revenue for agreements with rights of return, refundable fees, cancellation rights or substantive acceptance clauses until these return, refund or cancellation rights have expired or acceptance has occurred.
We determine standalone selling prices based on the amount that we believe the market is willing to pay determined through historical analysis of sales data as well as through use of the residual approach when we can estimate the standalone selling price for one or more, but not all, of the promised goods or services. 31 Table of Contents Effective January 1, 2018, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), and ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date, which deferred the effective date of ASU 2014-09 by one year.
We determine standalone selling prices based on the amount that we believe the market is willing to pay determined through historical analysis of sales data as well as through use of the residual approach when we can estimate the standalone selling price for one or more, but not all, of the promised goods or services. 33 Table of Contents Effective January 1, 2018, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), and ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date, which deferred the effective date of ASU 2014-09 by one year.
Revenue recognized from hardware devices sold to customers via either of the two above types of arrangements are reported as Hardware revenue on the Consolidated Statements of Comprehensive Income (Loss). Our professional services offerings typically include data migration, set up, training, and implementation services.
Revenue recognized from hardware devices sold to customers via either of the two above types of arrangements are reported as Hardware revenue on the Consolidated Statements of Comprehensive Loss. Our professional services offerings typically include data migration, set up, training, and implementation services.
Revenue allocated to the SaaS/software subscription performance obligations are recognized on an output basis ratably as the service is provided over the non-cancellable term of the SaaS/subscription service and are reported as Recurring revenue on the Consolidated Statements of Comprehensive Income (Loss).
Revenue allocated to the SaaS/software subscription performance obligations are recognized on an output basis ratably as the service is provided over the non-cancellable term of the SaaS/subscription service and are reported as recurring revenue on the Consolidated Statements of Comprehensive Loss.
OPERATING SEGMENT We operate as one operating segment. Operating segments are defined as components of an enterprise for which the chief operating decision maker, who in our case is the Chief Executive Officer, in deciding how to allocate resources and assess performance, evaluates separate financial information regularly. Over the last seven years, we have completed a number of acquisitions.
OPERATING SEGMENT We operate as one operating segment. Operating segments are defined as components of an enterprise for which the chief operating decision maker, who in our case is the Chief Executive Officer, in deciding how to allocate resources and assess performance, evaluates separate financial information regularly. Over the last eight years, we have completed a number of acquisitions.
ASU 2014-09 (“Topic 606”) “Revenue from Contracts with Customers) supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") 605, Revenue Recognition, and is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
ASU 2014-09 (“Topic 606”) “Revenue from Contracts with Customers) supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition, and is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
However, we believe to have sufficient liquidity as of December 31, 2022 to support our business operations for the next 12 months. We may need to raise additional capital in the future in order to grow our existing software operations and to seem additional strategic acquisitions in the near future.
However, we believe to have sufficient liquidity as of December 31, 2023 to support our business operations for the next 12 months. We may need to raise additional capital in the future in order to grow our existing software operations and to seem additional strategic acquisitions in the near future.
We test goodwill for impairment on an annual basis in the fourth fiscal quarter of each year, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach. There was no impairment of goodwill in either 2022 or 2021.
We test goodwill for impairment on an annual basis in the fourth fiscal quarter of each year, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach. There was no impairment of goodwill in either 2023 or 2022.
The transaction prices of our contracts do not include consideration amounts that are variable and do not include noncash consideration. 32 Table of Contents Deferred revenue includes amounts invoiced to customers in excess of revenue we recognize, and is comprised of deferred SaaS/software, HaaS, Maintenance and support, Professional services revenue and ERTC revenue.
The transaction prices of our contracts do not include consideration amounts that are variable and do not include noncash consideration. 34 Table of Contents Deferred revenue includes amounts invoiced to customers in excess of revenue we recognize and is comprised of deferred SaaS/software, HaaS, maintenance and support, and professional services revenue.
U.S. generally accepted accounting principles (“GAAP”) require that we not amortize intangible assets other than goodwill with an indefinite life until we determine their life as finite. We must amortize all other intangible assets over their useful lives. We currently amortize our acquired intangible assets with definite lives over periods ranging from one to nine years.
U.S. generally accepted accounting principles (“GAAP”) require that we not amortize intangible assets other than goodwill with an indefinite life until we determine their life as finite. We must amortize all other intangible assets over their useful lives. We currently amortize our acquired intangible assets with definite lives over periods ranging from two to fifteen years.
Selling and marketing expenses as a percentage of revenue increased to 21% for the year ended December 31, 2022 from 20% for the same period in 2021. We continue to expand and increase selling costs as we focus on hiring direct sales personnel, expanding recognition of our brand, and lead generation.
Sales and marketing expenses as a percentage of revenue increased to 24% for the year ended December 31, 2023 from 21% for the same period in 2022. We expect to continue to expand and increase selling costs as we focus on hiring direct sales personnel, expanding recognition of our brand, and lead generation.
Because payroll forms are typically processed in the first quarter of the year and many of our clients are subject to form filing requirements mandated by the ACA, first quarter revenues and margins are generally higher than in subsequent quarters.
Because payroll forms are typically processed in the first quarter of the year and many of our clients are subject to form filing requirements mandated by the Affordable Care Act (“ACA”), first quarter revenues and margins are generally higher than in subsequent quarters.
We have assessed the fair value of our customer relationship intangible assets as of December 31, 2022, we do not believe these to be impaired, as the carrying value of the customer relationship intangible assets are recoverable through the associated project cash flows.
We have assessed the fair value of our customer relationship intangible assets as of December 31, 2023, and we do not believe these to be impaired, as the carrying value of the customer relationship intangible assets are recoverable through the associated projected cash flows.
Net cash provided by operating activities of $13,674 for the year ended December 31, 2022 was primarily driven by non-cash adjustments to our net loss of approximately $22,875. This was offset by changes in operating assets and liabilities, which resulted in cash provided of $5,265.
Net cash provided by operating activities of $13,674 for the year ended December 31, 2022 was driven by non-cash adjustments to our net loss of approximately $22,875, primarily due to depreciation and amortization, offset by our net loss of $14,466. For the year ended December 31, 2022, changes in operating assets and liabilities resulted in cash provided of $5,265.
Geographically, we sell our products primarily in the United States. In addition to continuing to develop our workforce solutions and release of new software updates and enhancements, we continue to actively explore other opportunities to acquire additional products or technologies to complement our current software and services.
In addition to continuing to develop our workforce solutions and release of new software updates and enhancements, we continue to actively explore other opportunities to acquire additional products or technologies to complement our current software and services.
While revenue mix varies by product, recurring revenue represented over 90% of total revenue in the year ended 2022, compared to 93% in 2021.
While revenue mix varies by product, recurring revenue represented over 84% of total revenue in the year ended 2023, compared to 90% in 2022.
Net cash used in financing activities was $12,376 for the year ended December 31, 2022, which primarily consisted of a net decrease in client fund obligations of $11,055 and payments of notes payable of $1,688.
Net cash used in financing activities was $12,376 for the year ended December 31, 2022, which primarily consisted of a net decrease in client fund obligations of $11,055.
Loss and income from operations as a percentage of total revenues was (15)% and 4% for the years ended December 31, 2022 and 2021, respectively. LIQUIDITY AND CAPITAL RESOURCES (in thousands) December 31, 2022 December 31, 2021 Cash and cash equivalents (1) $ 17,010 $ 13,427 (1) This balance excludes cash equivalents in funds held for clients Working Capital .
Loss from operations as a percentage of total revenues was 8% and 15% for the years ended December 31, 2023 and 2022, respectively. LIQUIDITY AND CAPITAL RESOURCES (in thousands) December 31, 2023 December 31, 2022 Cash and cash equivalents (1) $ 30,317 $ 17,010 (1) This balance excludes cash equivalents in funds held for clients Working Capital .
Additionally, we are under no obligation to update any of the forward-looking statements after the date of this Annual Report on Form 10-K or to conform such statements to actual results. OVERVIEW We are a provider of Human Capital Management (“HCM”) solutions, delivered as software-as-a-service.
Additionally, we are under no obligation to update any of the forward-looking statements after the date of this Annual Report on Form 10-K or to conform such statements to actual results. OVERVIEW We are a provider of cloud-based Human Capital Management (“HCM”) software solutions delivered as Software-as-a-Service (“SaaS”) for small and medium-sized businesses (“SMBs”).
Therefore, we expect the seasonality of our revenue cycle to decrease to the extent clients utilize more of our non-payroll applications. This revenue line also includes interest earned on funds held for clients as well as revenues generated via fixed fee arrangements for provisioning and filing for ERTC credits.
We expect the seasonality of our revenue cycle to decrease to the extent clients utilize more of our non-payroll applications. 29 Table of Contents This revenue line also includes interest earned on funds held for clients as well as revenues generated via fixed fee arrangements for provisioning and filing for Employee Retention Tax Credit (“ERTC”) credits.
Our tax management solutions revenue is derived from providing clients with innovative payroll tax processing software and service solutions and includes revenue generated from Employee Retention Tax Credit tax filing activity related to the CARES Act. Interest from client funds is generated when we gain possession of funds intended to be disbursed based on the clients’ needs.
Our tax management solutions revenue is derived from providing clients with innovative payroll tax processing software and service solutions. Interest from client funds is generated when we gain possession of funds intended to be disbursed based on the clients’ needs.
Our development efforts for future releases and enhancements are driven by feedback received from our existing and potential customers and by gauging market trends. We believe we have the appropriate development team to design and enhance our solution suite and integrated platform.
We are committed to providing the best-in-class solutions. 27 Table of Contents Our development efforts for future releases and enhancements are driven by feedback received from our existing and potential customers and by gauging market trends. We believe we have the appropriate development team to design and enhance our solution suite and integrated platform.
Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the risks and uncertainties described in this Report and in our other SEC filings. We have attempted to identify these forward-looking statements with the words “believes,” “estimates,” “plans,” “expects,” “anticipates,” “may,” “will,” “could,” “should” and other similar expressions.
Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the risks and uncertainties described in this Report and in our other SEC filings. We have attempted to identify these forward-looking statements with the words “believe,” “may,” “will,” “estimate,” “projects,” “anticipate,” “intend,” “expect,” “should,” “plan,” and similar expressions.
Our increase in gross margin is primarily attributable to the increase in revenue and more efficient operations. 28 Table of Contents Our cost of sales relates primarily to direct product costs, compensation for operations and related consulting expenses, hardware expenses, facilities and related expenses and the amortization of our purchased software development costs.
The increase is primarily attributable to the increase in revenue in higher margin revenue streams and more efficient operations driven by consolidation and standardization efforts across the Company. Our cost of sales relates primarily to direct product costs, compensation for operations and related consulting expenses, hardware expenses, facilities and related expenses and the amortization of our purchased software development costs.
Additionally, $7,076 of Employee Retention Tax Credit cash was received subsequent to December 31, 2022. We cannot assure that we can grow our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced.
We cannot assure that we can grow our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced.
Income (Loss) From Operations We incurred a loss from operations of $(14,466), or $(0.72) per share, during the year ended December 31, 2022, compared to income from operations of $3,193, or $0.17 per share, during the years ended December 31, 2021.
Loss From Operations We incurred a loss from operations of $9,214, or $(0.42) per share, during the year ended December 31, 2023, compared to a loss from operations of $14,466, or $(0.72) per share, during the year ended December 31, 2022.
We supplement our direct sales efforts with partner programs that afford us access to opportunities in various geographic and industry niches. Asure has two types of partners: Reseller Partners that white label our product s while providing value-added services to their clients (our indirect clients) and Referral Partners that provide us with SMB leads but do not resell our solutions.
Asure has two types of partners: Reseller Partners that white label our product s while providing value-added services to their clients (our indirect clients) and Referral Partners that provide us with SMB leads but do not resell our solutions.
The increase in interest expense and other, net relative to the prior year is attributable to higher average borrowings under our credit facility with Structural Capital Investments III LP. Interest expense and other, net as a percentage of revenue was an expense of 5% and 3% for the years ended December 31, 2022 and December 31, 2021, respectively.
The decrease in interest expense, net relative to the prior year is primarily attributable to our payoff of the outstanding debt under the credit facility with Structural Capital Investments II LP in 2023. Interest expense, net as a percentage of revenue was an expense of 4% and 5% for the years ended December 31, 2023 and December 31, 2022, respectively.
We had working capital of $8,093 at December 31, 2022, a decrease of $8,913 from working capital of $17,006 at December 31, 2021. Working capital as of December 31, 2022 and December 31, 2021 includes $8,461 and $3,750 of short-term deferred revenue, respectively. Deferred revenue is an obligation to perform future services.
We had working capital of $25,880 at December 31, 2023, an increase of $17,787 from working capital of $8,093 at December 31, 2022. Working capital as of December 31, 2023 and December 31, 2022 includes $6,853 and $8,461 of short-term deferred revenue, respectively. Deferred revenue is an obligation to perform future services.
Gross Profit and Gross Margin Consolidated gross profit for the year ended December 31, 2022 was $62,510, an increase of $15,946, or 34%, from $46,564 for the year ended December 31, 2021. Gross margin as a percentage of revenue was 65% for the year ended December 31, 2022 as compared to 61% for the year ended December 31, 2021.
Gross Profit and Gross Margin Consolidated gross profit for the year ended December 31, 2023 was $85,537, an increase of $23,027, or 37%, from $62,510 for the year ended December 31, 2022. Gross margin as a percentage of revenue was 72% for the year ended December 31, 2023 as compared to 65% for the year ended December 31, 2022.
Net cash used in investing activities of $36,970 for the year ended December 31, 2021 is primarily due to the purchase and sale of available-for-sale securities as well as acquisitions. Financing Activities .
Net cash used in investing activities of $35,999 for the year ended December 31, 2022 is primarily due to the purchase of available-for-sale securities of $37,232. Financing Activities .
Recurring revenue increased due to organic growth within our client base, the impact of acquisitions, higher interest revenue and from the AsureMarketplace™. Professional Services, Hardware and Other Revenues Professional Services, Hardware and Other Revenues represents implementation fees, one-time consulting projects, on-premise maintenance, hardware devices to enhance our software products as well as ERTC revenues that are transactional in nature.
Professional Services, Hardware and Other Revenues Professional Services, Hardware and Other Revenues represents implementation fees, one-time consulting projects, on-premise maintenance, hardware devices to enhance our software products as well as ERTC revenues that are transactional in nature.
Our revenue was derived from the following sources (in thousands): Year Ended December 31, Variance 2022 2021 $ % Recurring $ 86,222 $ 71,078 $ 15,144 21 % Professional services, hardware and other 9,606 4,986 4,620 93 % Total $ 95,828 $ 76,064 $ 19,764 26 % 27 Table of Contents Recurring Revenues Recurring revenues include fees for our payroll, payroll tax, tax management, time and labor management, HR compliance services, AsureMarketplace and other Asure solutions as well as fees charged for form filings and delivery of client payroll checks and reports.
Our revenue was derived from the following sources (in thousands): Year Ended December 31, Variance 2023 2022 $ % Recurring $ 99,734 $ 86,222 $ 13,512 16 % Professional services, hardware and other 19,348 9,606 9,742 101 % Total $ 119,082 $ 95,828 $ 23,254 24 % Recurring Revenues Recurring revenues include fees for our payroll, payroll tax, tax management, time and labor management, HR compliance services, AsureMarketplace™ and other Asure solutions as well as fees charged for form filings and delivery of client payroll checks and reports.
We strive to be the most trusted HCM resource to small and medium-sized businesses (“SMBs”) and are focused on less densely populated U.S. metropolitan cities where fewer of our competitors have a presence. We sell our solutions through both direct and partner channels.
We strive to be the most trusted HCM resource to SMBs and are focused on less densely populated U.S. metropolitan cities where fewer of our competitors have a presence. We sell our solutions through both direct and partner channels. We supplement our direct sales efforts with partner programs that afford us access to opportunities in various geographic and industry niches.
Net cash provided by operating activities of $1,378 for the year ended December 31, 2021 was driven by non-cash adjustments to our net income of approximately $12,975, primarily due to depreciation and amortization, offset by our net income of $3,193.
Net cash provided by operating activities of $18,900 for the year ended December 31, 2023 was driven by non-cash adjustments to our net loss of approximately $29,530, primarily due to depreciation and amortization.
We qualified for the ERTC in 2021 and recorded an aggregate benefit of $10,533 in the third quarter of 2021. Income Taxes For the year ended December 31, 2022 and 2021, we recorded an income tax expense attributable to continuing operations of $112 and $802, respectively, a decrease of $690 or 86%.
Income Taxes For the year ended December 31, 2023 and 2022, we recorded an income tax expense attributable to continuing operations of $109 and $112, respectively, a decrease of $3 or 3%.
We will continue to expand the breadth of integration between our solutions, allowing direct clients and resellers the ability to easily add and implement components across our entire solution set.
We expect to continue to expand the breadth of integration between our solutions, allowing direct clients and resellers the ability to easily add and implement components across our entire solution set. Our initiatives include providing our customers with more accurate and efficient automation powered by an informed knowledge base.
Interest expenses for the year ended December 31, 2022 and 2021 is composed primarily of interest expense on notes payable. Gain on Extinguishment of Debt There was no gain on extinguishment of debt for the year ended December 31, 2022, compared with a gain of $8,312 for the year ended December 31, 2021.
Interest expenses for the years ended December 31, 2023 and 2022 are composed primarily of interest expense on notes payable. Loss on Extinguishment of Debt Loss on extinguishment of debt for the year ended December 31, 2023 was $1,517 compared to no loss for the year ended December 31, 2022.
General and administrative expenses for the year ended December 31, 2022 were $33,924, an increase of $6,204, or 22%, from $27,720 for the year ended December 31, 2021, primarily attributable to increased personnel, contracting and bank charges.
General and administrative expenses for the year ended December 31, 2023 were $39,333, an increase of $5,409, or 16%, from $33,924 for the year ended December 31, 2022, primarily attributable to increased personnel, share-based compensation, and contracting costs.
Amortization expense as a percentage of revenue was 14% for the years ended December 31, 2022 and 2021, respectively. 29 Table of Contents Interest Expense and Other, Net Interest expense and other, net for the year ended December 31, 2022 was an expense of $4,438 compared to an expense of $2,038 for the year ended December 31, 2021.
Amortization expense as a percentage of revenue was 11% for the year ended December 31, 2023 from 14% for the same period in 2022. Interest Expense, Net Interest expense, net for the year ended December 31, 2023 was an expense of $4,297 compared to an expense of $4,438 for the year ended December 31, 2022.
As of December 31, 2022, the Company’s principal sources of liquidity consisted of approximately $17,010 of cash, cash equivalents and restricted cash, and cash generated from operations of our business over twelve months, and $3,457 of Employee Retention Tax Credit cash recei ved as of December 31, 2022.
As of December 31, 2023, our principal sources of liquidity consisted of approximately $30,317 of cash, cash equivalents and restricted cash, and cash generated from operations of our business over twelve months .
Research and Development Expenses Research and development (“R&D”) expenses consist primarily of salaries and related expenses, including stock-based expenses for employees supporting our R&D activities. R&D expenses for the year ended December 31, 2022 were $6,147, an increase of $737, or 14%, from $5,410 for the year ended December 31, 2021.
General and administrative expenses as a percentage of revenue decreased to 33% for the year ended December 31, 2023 from 35% for the same period in 2022. Research and Development Expenses Research and development (“R&D”) expenses consist primarily of salaries and related expenses, including stock-based expenses for employees supporting our R&D activities.
Amortization of Intangible Assets Amortization expense in operating expenses for the year ended December 31, 2022 was $13,486, an increase of $2,538, or 23%, from $10,948 for the year ended December 31, 2021.
R&D expenses as a percentage of revenues remained flat at 6% for the years ended December 31, 2023 and 2022. Amortization of Intangible Assets Amortization expense in operating expenses for the year ended December 31, 2023 was $13,623, an increase of $137, or 1%, from $13,486 for the year ended December 31, 2022.
We believe that our expanded investment in product, engineering, SaaS hosting, mobile and hardware technologies lay the groundwork for broader market opportunities and represents a key aspect of our competitive differentiation. Native mobile applications, common user interface, expanded web service integration and other technologies are all part of our initiatives.
We expect that our expanded investment in product, engineering, SaaS hosting, mobile and hardware technologies will lay the groundwork for broader market opportunities and represent a key aspect of our competitive differentiation. We also plan to expand our technological resources through organic improvements and acquired intellectual property.
As of December 31, 2022, Asure had more than 100,000 clients, split between approximately 15,000 direct and the remaining 85,000 indirect clients who have contracts with Reseller Partners.
As of December 31, 2023, Asure had more than 100,000 clients, with approximately 15% direct and the remaining clients indirect who have contracts with Reseller Partners. We plan to continue to enhance our products and technologies by leveraging the latest technology stack, Robotic Process Automation (“RPA”), artificial intelligence (“AI”), and development partnerships.
The increase in R&D expense is primarily attributable to an increase in personnel costs. R&D expenses as a percentage of revenues decreased to 6% for the year ended December 31, 2022 from 7% for the same period in 2021.
R&D expenses for the year ended December 31, 2023 were $6,846, an increase of $699, or 11%, from $6,147 for the year ended December 31, 2022. The increase in R&D expense is primarily attributable to an increase in personnel costs, partially offset by an increase in capitalized software expenses driven by continued investments in development of our products.
For the year ended December 31, 2021, changes in operating assets and liabilities resulted in a use of $14,790 in cash. 30 Table of Contents Investing Activities . Net cash used in investing activities of $35,999 for the year ended December 31, 2022 is primarily due to purchases of available-for-sale securities of $37,232.
Investing Activities . Net cash used in investing activities of $29,525 for the year ended December 31, 2023 is primarily due to purchases of available-for-sale securities of $27,647, partially offset by proceeds from sales and maturities of available-for-sale securities of $14,385.
Selling and marketing expenses for the year ended December 31, 2022 were $20,260, an increase of $4,812, or 31%, from $15,448 for the year ended December 31, 2021, primarily due to increased personnel costs, higher sales commissions owing to increased revenues and higher advertising expense.
Sales and Marketing Expenses Sales and marketing expenses primarily consist of salaries and related expenses for sales and marketing staff, including stock-based expenses, commissions, as well as marketing programs, which include events, corporate communications and product marketing activities. 30 Table of Contents Sales and marketing expenses for the year ended December 31, 2023 were $28,734, an increase of $8,474, or 42%, from $20,260 for the year ended December 31, 2022, primarily due to an increase in direct sales personnel, higher sales commissions owing to increased revenues, and an increase in marketing initiatives.
We include intangible amortization related to developed and acquired technology within cost of sales. Sales and Marketing Expenses Sales and marketing expenses primarily consist of salaries and related expenses for sales and marketing staff, including stock-based expenses, commissions, as well as marketing programs, which include events, corporate communications and product marketing activities.
We include intangible amortization related to developed and acquired technology within cost of sales.
Professional services, hardware and other revenue increased $4,620, or 93%, for the year ended December 31, 2022 from the similar period in 2021 , due to higher ERTC revenues. Although our total customer base is widely spread across industries, our sales are concentrated in SMBs. We continue to target SMBs across industries as prospective customers.
Professional services, hardware and other revenue increased $9,742, or 101%, for the year ended December 31, 2023 from the similar period in 2022, primarily due to growth in non-recurring ERTC revenues.
Net cash used in financing activities was $90,650 for the year ended December 31, 2021, which primarily consisted of a net decrease in client fund obligations of $103,434. Sources of Liquidity .
Net cash provided by financing activities was $24,205 for the year ended December 31, 2023, which primarily consisted of net proceeds from the issuance of common stock of $46,800, a net increase in client fund obligations of $13,931, offset by payments of notes payable of $35,627.
Asure also generates revenues from provisioning and filing for Earned Retention Tax Credits. Revenue generated for such activity is based on multi-year contracts with volume commitments and is recorded as recurring revenues. Recurring revenue for the year ended December 31, 2022 was $86,222, an increase of $15,144, or 21%, from $71,078 for the year ended December 31, 2021.
Asure also generates revenues from provisioning and filing for ERTC. Revenue generated for such activity is based on multi-year contracts with volume commitments and is recorded as recurring revenues. Refer to “Risk Factors” in Part I, 1A. for more information about risks related to our ERTC business.
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Although these forward-looking statements reflect management’s current plans and expectations, which we believe reasonable as of the filing date of this Report, they inherently are subject to certain risks and uncertainties.
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Examples of “forward-looking statements” include statements we make regarding our operating performance, future results of operations and financial position, revenue growth, earnings or other projections.
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Our product suite manages the entire employment lifecycle, allowing our clients to better serve their employees by providing the tools necessary to field a human resources department without the traditional overhead costs.
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We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs.
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We invest the monies in short and long-term securities that may be held to maturity before disbursement. 2022 Highlights • Consolidated revenue of $95,828 for 2022, representing a 26% increase over revenue in 2021 26 Table of Contents • Launch of AsureMarketplace™, to automate interactions between Asure’s HCM systems with third-party providers to enhance efficiency, improve accuracy and to extend the range of services offered to employers and their employees.
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The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions, over many of which we have no control. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.
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Because we operate as one operating segment, all required financial segment information can be found in the Consolidated Financial Statements.
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We offer human resources (“HR”) tools necessary to build a thriving workforce, provide the resources to stay compliant with dynamic federal, state, and local tax jurisdictions and their respective labor laws, freeing cash flows so SMBs can spend their financial capital on growing their businesses rather than administrative overhead that can impede growth.
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General and administrative expenses as a percentage of revenue decreased to 35% for the year ended December 31, 2022 from 36% for the same period in 2021. We continue to drive efficiencies within our payroll operations by continually reevaluating our vendor relationships.
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Our solutions also provide new ways for employers to connect with and to differentiate themselves with their employees in order to enhance their relationships with their talent.
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We will continue to enhance our products and technologies through expansion of our technological resources by increasing headcount and development partnerships, as well as through organic improvements and acquired intellectual property.
Added
Asure’s HCM suite (“Asure HCM”) includes Payroll & Tax solutions, HR compliance and services, Time & Attendance software and data integrations that enable employers and their employees to enhance efficiencies and take advantage of value-added solutions, which we refer to as AsureMarketplace™.
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The gain in 2021 was primarily related to the forgiveness of an unsecured Paycheck Protection Program (“PPP”) loan from Pinnacle Bank (the “Lender”) under the Coronavirus Aid, Relief and Economic Security Act. In June 2021, we received notice from our Lender that the Small Business Administration (“SBA”) had approved our application for forgiveness of our PPP loan.
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AsureMarketplace™ automates interactions between our HCM systems with third-party providers to enhance efficiency, improve accuracy and to extend the range of services offered to employers and their employees. Our approach to HR compliance services incorporates artificial intelligence technology to enhance scalability and efficiency while prioritizing client interactions. We offer our services directly and indirectly through our network of Reseller Partners.
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The amount forgiven was $8,654. Employee Retention Tax Credit There was no Employee Retention Tax Credit (“ERTC”) recorded for the year ended December 31, 2022. An ERTC of $10,533 was recorded in the year ended December 31, 2021. The ERTC is a refundable tax credit against certain employment taxes provided under the CARES Act.
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Consistent with that effort, our engineering team utilizes an AI development Copilot to increase their productivity and efficiency. Our operations team utilizes a digital assistant to allow for a more efficient and accurate way to automate repetitive tasks, which we believe will free up our time for more strategic work and reducing the risk of errors.
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We invest the monies in short and long-term securities that may be held to maturity before disbursement. 2023 Highlights • Consolidated revenue of $119,082 for 2023, representing a 24% increase over revenue in 2022. • Recurring revenue of $99,734 for 2023, representing a 16% increase over recurring revenue in 2022. • Net loss of $9,214 for 2023, an improvement of $5,252 from prior year loss of $14,466. • Gross profit of $85,537 for 2023 versus $62,510 in 2022.
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Recurring revenue for the year ended December 31, 2023 was $99,734, an increase of $13,512, or 16%, from $86,222 for the year ended December 31, 2022.
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The increase is primarily due to an increase of approximately $7,200 in HR compliance revenue, an increase of $6,500 in interest earned on funds held for clients, and an increase of $3,300 in revenue from AsureMarketplace™, offset by a decrease of $2,300 in ERTC revenue.
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ERTC revenues were originally expected to expire during 2024 and 2025; however, it is possible that the government could make changes to or revoke the program prior to its scheduled expiration.
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For example, in January 2024, the United States House of Representatives passed the Tax Relief for American Families Act of 2024, which sets an expiration date of January 31, 2024, on additional claims for ERTC that can potentially apply retroactively. If approved by other branches of the government, this will have an effect on our ERTC revenues and cash collections.
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Additionally, in September 2023, the IRS announced a moratorium through the end of the year on processing new ERTC claims due to concerns over questionable or fraudulent claims. The moratorium may potentially delay the processing and collections of previously filed ERTC claims. Refer to “Risk Factors” in Part I, 1A. for more information about risks related to our ERTC business.
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Although our total customer base is widely spread across industries, our sales are concentrated in small and medium-sized businesses (“SMBs”). We continue to target SMBs across industries as prospective customers. Geographically, we sell our products primarily in the United States.
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Loss on extinguishment of debt as a percentage of revenue was 1% for the year ended December 31, 2023.
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For the year ended December 31, 2023, the amount in loss on extinguishment of debt consisted of loss recognized as a result of the termination of our credit facility with Structural Capital. 31 Table of Contents Other (Expense) Income, Net Other (expense) income, net for the year ended December 31, 2023 was an expense of $292 compared to income of $1,391 for the year ended December 31, 2022 .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe have also not used, nor do we intend to use, derivatives for trading or speculative purposes. 33 Table of Contents
Biggest changeWe have also not used, nor do we intend to use, derivatives for trading or speculative purposes. 35 Table of Contents