---

---

---

EXHIBIT 23.1

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S CONSENT

We consent to the incorporation by reference in the Registration Statements of Asure Software, Inc. on Form S-3 (File Nos. 333-182828 and 333-216075) and Form S-8 (File Nos. 333-175186 and 333-215097) of our report dated March 17, 2017, with respect to our audits of the financial statements of Personnel Management Systems, Inc. as of December 31, 2016 and 2015 and for the years then ended, which report is included in this Current Report on Form 8-K/A of Asure Software, Inc. as of March 20, 2017.

Marcum llp

Irvine, California

March 20, 2017

EXHIBIT 23.2

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S CONSENT

We consent to the incorporation by reference in the Registration Statements of Asure Software, Inc. on Form S-3 (File Nos. 333-182828 and 333-216075) and Form S-8 (File Nos. 333-175186 and 333-215097) of our report dated March 17, 2017, with respect to our audits of the special purpose carve-out financial statements of Corporate Payroll, Inc. – Payroll Division as of December 31, 2016 and 2015 and for the years then ended, which report is included in this Current Report on Form 8-K/A of Asure Software, Inc. as of March 20, 2017.

Marcum llp

Irvine, California

March 20, 2017

EXHIBIT 99.1

PERSONNEL MANAGEMENT SYSTEMS, INC.

FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

Independent Auditors’ Report	1-2
Financial Statements
Balance Sheets	3
Statements of Income	4
Statements of Stockholders’ Equity (Deficit)	5
Statements of Cash Flows	6
Notes to Financial Statements	7-12

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of

Personnel Management Systems, Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of Personnel Management Systems, Inc. (the “Company”), which comprise the balance sheets as of December 31, 2016 and 2015, and the related statements of income, changes in stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.  The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.  In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.  Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Personnel Management Systems, Inc. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Irvine, CA

March 17, 2017

 

 

		2016				2015
Assets
Current Assets
Cash		$	130,072			$	115,181
Accounts receivable, net			346,952				359,563
Prepaid expenses and other current assets			17,306				26,760
Total Current Assets			494,330				501,504
Property, Equipment and Improvements, Net			130,538				123,799
Total Assets		$	624,868			$	625,303
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable		$	20,617			$	44,158
Accrued expenses and other current liabilities			189,619				175,593
Deferred revenue			369,710				325,106
Total Current Liabilities			579,946				544,857
Stockholders' Equity
Preferred stock, 2,000,000 shares authorized, 0 shares
issued as of December 31, 2016 and 2015			--				--
Common stock, no par value per share; 10,000,000
shares authorized, 4,500,000 shares issued and
outstanding as of December 31, 2016 and 2015			143,989				143,989
Accumulated deficit			(99,067	)			(63,543	)
Total Stockholders' Equity			44,922				80,446
Total Liabilities and Stockholders' Equity		$	624,868			$	625,303

 

		2016				2015
Revenues		$	4,584,880			$	3,975,715
Operating Expenses
Employee compensation and benefits			3,292,034				2,889,454
Rent expense			195,300				178,800
Other operating expenses			653,820				613,762
Total Operating Expenses			4,141,154				3,682,016
Operating Income			443,726				293,699
Sale Transaction Cost			57,740				--
Interest (Income) Expense, Net			(37	)			3,449
Net Income		$	386,023			$	290,250

 

		Common Stock								Accumulated
		Shares				Amount				deficit				Total
Balance - January 1, 2015			4,500,550			$	144,539			$	(255,976	)		$	(111,437	)
Net income			--				--				290,250				290,250
Buyback of stock			(550	)			(550	)			(450	)			(1,000	)
Distributions			--				--				(97,367	)			(97,367	)
Balance - December 31, 2015			4,500,000				143,989				(63,543	)			80,446
Net income			--				--				386,023				386,023
Distributions			--				--				(421,547	)			(421,547	)
Balance - December 31, 2016			4,500,000			$	143,989			$	(99,067	)		$	44,922

 

 

 

 

		2016				2015
Cash Flows From Operating Activities
Net income		$	386,023			$	290,250
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization			40,362				31,570
Provision for bad debt			1,000				1,000
Changes in operating assets and liabilities:
Accounts receivable			11,611				(83,117	)
Prepaid expenses and other current assets			9,454				(6,191	)
Accounts payable			(23,541	)			6,068
Accrued expenses and other current liabilities			14,026				29,603
Deferred revenue			44,604				39,480
Total Adjustments			97,516				18,413
Net Cash Provided by Operating Activities			483,539				308,663
Cash Flows From Investing Activities
Purchase of property, equipment and improvements			(47,101	)			(52,302	)
Net Cash Used in Investing Activities			(47,101	)			(52,302	)
Cash Flows From Financing Activities
Buyback of stock			--				(1,000	)
Repayment of note payable to stockholder			--				(143,000	)
Distribution paid to stockholders			(421,547	)			(97,367	)
Net Cash Used in Financing Activities			(421,547	)			(241,367	)
Net Increase in Cash			14,891				14,994
Cash - Beginning			115,181				100,187
Cash - Ending		$	130,072			$	115,181

 

 

 

 

Note 1 - Description of Business

Personnel Management Systems, Inc. (the “Company”) is an S-Corporation founded in 1987 and headquartered in Seattle, Washington. The Company is a completely outsourced, off-site human resources department for small and mid-size companies, and provides a hands-on turn-key human resource department. The Company’s services comprise of all aspects of a traditional human resource management function including employment recruitment, personnel policies and procedures, group benefits, human resource administration, training and development, payroll administration, and employee relations.

In January 2017, the Company entered into a stock purchase agreement with Asure Software, Inc. (“Asure”), pursuant to which Asure purchased all outstanding shares of common stock of the Company for an aggregate consideration of $5,000,000.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements.  Such financial statements and accompanying notes are the representation of the Company’s management, who is responsible for their integrity and objectivity.

Variable Interest Entities

The Company leases its corporate headquarters from Rosehill Partners, LLC, a related party. The Company and Rosehill Partners, LLC are related through common ownership. Other than the common ownership and the operating lease, the Company does not have any economic arrangements with Rosehill Partners, LLC such that the Company will have an obligation to support the operations of Rosehill Partners, LLC. Accordingly, the Company is not considered to be the primary beneficiary of Rosehill Partners, LLC and has not consolidated Rosehill Partners, LLC.

The Company does not carry an investment in Rosehill Partners, LLC. The Company’s maximum exposure to loss is limited to the lease arrangement. Refer to Note 6 for further discussion. At December 31, 2016 and 2015, the mortgage debt owed by Rosehill Partners, LLC amounted to $1,293,865 and $1,351,645, respectively.

Note 2 - Summary of Significant Accounting Policies (continued)

Use of Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenue and expenses during the reported periods. The most significant of estimates relate to the allowance for doubtful accounts and useful lives of long-lived assets. Actual results could differ from the estimates included in the accompanying financial statements.

Cash concentration

The Company maintains its cash balances in bank accounts with major financial institutions that, from time to time, may exceed federally insured limits.  The Company has not experienced any losses in such accounts.  The Company believes cash balances are not exposed to significant credit risk.

Accounts Receivable

Accounts receivable consist primarily of amounts due from customers under normal trade terms as of December 31, 2016 and 2015. An allowance for doubtful accounts is provided for based upon a variety of factors, including historical amounts written-off, an evaluation of current economic conditions, and an assessment of individual customer collectability. As of December 31, 2016 and 2015, the Company had recorded $11,937 and $14,587, respectively, as an allowance for doubtful accounts.

Revenue Recognition

The Company recognizes revenue for services provided under two major type of contracts: monthly-fees and per project basis. Revenue is recognized when the services are performed in accordance with client arrangements.  Prior to recognizing revenue, persuasive evidence of an arrangement must exist, the sales price must be fixed or determinable, service must have been performed, and collectability is reasonably assured. If the earnings process has not been completed, amounts billed to customer are reflected as deferred revenue.

Monthly-fees: The Company enters into several monthly fee arrangements where customers pay a fixed subscription fee negotiated in advance for a specified scope of work. The Company recognizes revenue on such contracts ratably as the services are delivered on a monthly basis.

Note 2 - Summary of Significant Accounting Policies (continued)

Revenue Recognition (continued)

Per project basis: The Company negotiates fees based on project requested and charges its customers half of the total value in advance and the other half once the project is completed.  Revenue is recognized as services are rendered.

Property, Equipment and Improvements

Property, equipment and improvements are recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization expense is computed using the straight-line method over the estimated useful lives of the respective assets, which range from three to seven years.  Leasehold improvements are amortized over the economic life of the asset. Expenditures that materially increase the asset’s life are capitalized, while ordinary maintenance and repairs are charged to operations as incurred. Upon disposition of property and equipment, the related cost and accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the statement of operations.

The useful lives of property, equipment and improvements are as follows:

 

Impairment of Long-Lived Assets

The Company’s management reviews the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of these assets is determined based upon expected undiscounted future net cash flows from the operations to which the assets relate, utilizing management’s best estimate, appropriate assumptions, and projections at the time. If the carrying value of the long-lived asset is determined to be unrecoverable from future operating cash flows, the asset is deemed impaired and an impairment loss would be recognized to the extent the carrying value exceeded the estimated fair value of the asset. The fair value of the asset is determined based upon expected discounted cash flows or appraisals, depending on the nature of the asset. At December 31, 2016 and 2015, there was no impairment loss on long-lived assets.

Note 2 - Summary of Significant Accounting Policies (continued)

Income Taxes

The Company and its stockholders have elected since inception to be taxed as an
S Corporation.  Under this election, the stockholders of the corporation are personally liable for federal and state income taxes arising from income, if any.

The Company evaluates any uncertain tax provisions in accordance with GAAP. The Company has elected to classify interest and penalties related to uncertain tax positions as a component of income tax expense. To date, the Company has not identified any uncertain tax positions and there have been no interest or penalties assessed or paid.

Fair Value Measurements 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value is as follows:

 

Level 3 -

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying values of financial instruments, which include cash, accounts receivable, accounts payable and accrued expenses, approximate fair value due to their short-term maturities.

Sale Transaction Costs

The Company incurred certain legal and professional fees and travel costs, in connection with the stock purchase agreement with Asure. Such costs have been reflected as non-operating expenses in the statement of income.

Note 3 - Property, Equipment and Improvements, Net

Property, equipment and improvements consist of the following at December 31:

 

Depreciation expense amounted to $40,362 and $31,570 for the years ended December 31, 2016 and 2015, respectively.

Note 4 - Accrued Expenses

Accrued expenses consist of the following at December 31:

The accrued vacation balance at December 31, 2016 was paid to employees on January 4, 2017 and is included in the payroll liability.

Note 5 - Line of Credit

The Company had a revolving line of credit with a financial institution whereby the Company was able to borrow up to $150,000 for working capital purposes that was automatically renewed annually in October for a twelve month period unless the Company gives written notice of its intention to terminate the line of credit at least thirty days prior to the date of expiration.  The line of credit bore interest rate of 50 basis points in excess of the U.S. Prime rate as published in the Wall Street Journal.  The Company had $150,000 available on the line of credit at December 31, 2015. The line of credit agreement was terminated in December 2016.

Note 6 - Related Party Transactions

The Company has a lease arrangement with Rosehill Partners, LLC, a related party, for office space in the state of Washington. The lease arrangement is cancelable at any time through mutual consent.  Rent expense totaled $195,300 and $178,800, respectively, for the years ended December 31, 2016 and 2015.

Note 7 - Subsequent Events

The Company evaluated subsequent events through March 17, 2017, the date these financial statements were available to be issued.  Except for the matter disclosed in Note 1, there were no material subsequent events that required recognition or additional disclosure in the accompanying financial statements.

EXHIBIT 99.2

 

		2016				2015
Customer relationship		$	--			$	132,000
Accumulated amortization			--				(118,800	)
Intangible Assets, Net		$	--			$	13,200

		2016				2015
Accrued payroll taxes		$	--			$	20,813
Sales tax payable			--				15,125
Accrued Expenses and Other Current Liabilities		$	--			$	35,938

		2016				2015
Customer payments and other cash receipts		$	66,697			$	138,154
Allocation of expenses			105,111				134,574
Accounts payable and other payments			92,599				111,676
Net Contributions From Corporate Plans, Inc.		$	264,407			$	384,404

EXHIBIT 99.3

 

	Estimated Useful Lives
Computer and related equipment	3 - 5 years
Equipment – other	5 – 7 years
Leasehold improvements	5 – 7 years

	Level 1					Level 2				Level 3				Total
	December 31, 2016
Money market account 1		$	100,000			$	--			$	--			$	100,000
	December 31, 2015
Money market account 1		$	80,242			$	--			$	--			$	80,242
Equity investments 2			296,402				--				--				296,402
		$	376,644			$	--			$	--			$	376,644

		2016				2015
Accrued payroll		$	49,702			$	37,734
Contribution payable to cash balance plan			156,471				119,000
Contribution payable to 401(k) plan			16,911				13,514
Accrued Expenses		$	223,084			$	170,248

For the years ending December 31,		Amount
2017		$	49,817
2018			49,817
2019			8,303
		$	107,937

EXHIBIT 99.4

 

ASURE SOFTWARE, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(Amounts in thousands, except per share data)

 

In January 2017, we closed three strategic acquisitions: Personnel Management Systems, Inc., a leading provider of outsourced HR solutions; Corporate Payroll, Inc. (Payroll Division), a leading provider of payroll services; and Payroll Specialties NW, Inc., a leading provider of payroll services. Through these acquisitions, we have expanded our payroll solutions offerings, which we intend to integrate into our existing AsureForce® product line.

Stock Purchase Agreement

On January 3, 2017, we closed on the acquisition of all of the outstanding shares of common stock of Personnel Management Systems, Inc., a Washington corporation (“PMSI”), pursuant to a Stock Purchase Agreement (the “Stock Purchase Agreement”), among us, PMSI, the sellers identified therein, and the stockholders’ representative named therein. The aggregate consideration for the shares consisted of (i) $3,875 in cash and (ii) a subordinated promissory note (the “PMSI Note”) in the principal amount of $1,125 subject to adjustment as provided in the Stock Purchase Agreement. We funded the cash payment with proceeds from our recent public stock offering. The PMSI Note bears interest at an annual rate of 2.0% and matures on April 30, 2018. The entire unpaid principal and all accrued interest under the PMSI Note is payable at maturity.

Asset Purchase Agreement

On January 3, 2017, we closed on the acquisition of substantially all the assets of Corporate Payroll, Inc., an Ohio corporation (“CPI”), relating to its payroll service bureau business, pursuant to an Asset Purchase Agreement (the “CPI Asset Purchase Agreement”). The aggregate consideration for the assets consisted of (i) $1,500 in cash, (ii) a subordinated promissory note (the “CPI Note”) in the principal amount of $500 and (iii) 112,166 shares of our common stock valued at $1,000, subject to adjustment as provided in the CPI Asset Purchase Agreement. We funded the cash payment with proceeds from our recent public stock offering. The CPI Note bears no interest and matures on April 30, 2018. The entire unpaid principal under the CPI Note is payable at maturity. The recipient of the shares of our common stock entered into a six month lock-up agreement with us.

Asset Purchase Agreement

On January 3, 2017, we closed on the acquisition of substantially all the assets of Payroll Specialties NW, Inc., an Oregon corporation (“PSNW”), pursuant to an Asset Purchase Agreement (the “PSNW Asset Purchase Agreement”). The aggregate consideration for the assets consisted of (i) $3,010 in cash and (ii) a subordinated promissory note (the “PSNW Note”) in the principal amount of $600, subject to adjustment as provided in the PSNW Asset Purchase Agreement. We funded the cash payment with proceeds from our recent public stock offering. The PSNW Note bears interest at an annual rate of 2.0% and matures on April 30, 2018. The entire unpaid principal and all accrued interest under the PSNW Note is payable at maturity.

 

Following is the purchase price allocation for the acquisitions. We based the preliminary fair value estimate for the assets acquired and liabilities assumed for this acquisition upon preliminary calculations and valuations.  Our estimates and assumptions for this acquisition are subject to change as we obtain additional information for our estimates during the respective measurement periods (up to one year from the acquisition date). The primary areas of those preliminary estimates that we have not yet finalized relate to certain tangible assets and liabilities acquired, certain legal matters and income and non-income based taxes.

 

We recorded the transaction using the acquisition method of accounting and recognized assets and liabilities assumed at their fair value as of the date of acquisition. The $6,088 of intangible assets subject to amortization consist of $134 allocated to Noncompete Agreements, $5,623 in Customer Relationships and $331 for Trade Names.  We estimated the fair value of the Customer Relationships and Noncompete Agreements using the excess earnings method, a form of the income approach. We discounted cash flow projections using a rate of 14.1%, 15.1% and 16.5% for PMSI, PSNW and CPI, respectively, which reflects the risk associated with the intangible asset related to the other assets and the overall business operations to us. We estimated the fair value of the Trade Names using the relief from royalty method based upon a 1.2% royalty rate for PSNW and CPI and 0.5% for PMSI.  The fair value of the PMSI Note, CPI Note and PSNW Note (“Seller Notes”) was estimated using a discount rate of 6.5%. We estimated the fair value of common stock tendered for the CPI acquisition using the discounts for lack of marketability method. 

We believe significant synergies are expected to arise from this strategic acquisition. This factor contributed to a purchase price that was in excess of the fair value of the net assets acquired and, as a result, we recorded goodwill. A portion of acquired goodwill will be deductible for tax purposes.

We based the allocations on fair values at the date of acquisition:

 

The following unaudited pro forma condensed combined financial information is derived from, and should be read in conjunction with, the consolidated financial statements of Asure Software, Inc. for the year ended December 31, 2016 filed on Form 10-K. The unaudited pro forma condensed combined financial information includes unaudited pro forma adjustments that are factually supportable and directly attributable to the acquisitions of PMSI, CPI, and PSNW. While the unaudited pro forma condensed combined balance sheet assumes these acquisitions occurred on December 31, 2016, the unaudited statement of operations assumes that the acquisition of these businesses occurred at the beginning of the period presented.  In addition, with respect to the unaudited pro forma condensed combined financial information, the unaudited pro forma adjustments are expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information was prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805 – Business Combinations. Certain amounts in the historical financial statements of PMSI, CPI, and PSNW have been reclassified to conform to classifications used by Asure Software, Inc. (“Asure Software”).

 

The unaudited pro forma condensed combined statement of operations does not include non-recurring transaction costs associated with the acquisition that are no longer capitalized as part of the acquisition.

 

The following pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of (i) the results of operations and financial position that would have been achieved had the PMSI, PSNW and CPI acquisitions taken place on the dates indicated or (ii) the future operations of the combined company. The following information should be relied on only for the limited purpose of presenting what the results of operations and financial position of the combined businesses of Asure, PMSI, PSNW and CPI might have looked like had the acquisitions taken place at an earlier date.

 

The pro forma financial statements enclosed herein reflects the operations of PMSI, PSNW and CPI, during the period presented.