Attached files
file | filename |
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8-K/A - ASURE SOFTWARE INC | asuresoftware8ka121611.htm |
EX-99.2 - ASURE SOFTWARE INC | ex99-2.htm |
EX-23.1 - ASURE SOFTWARE INC | ex23-1.htm |
EX-99.3 - ASURE SOFTWARE INC | ex99-3.htm |
EXHIBIT 99.1
Independent Auditors’ Report
To the Members
ADI Time, LLC
Warwick, Rhode Island
We have audited the accompanying balance sheets of ADI Time, LLC as of December 31, 2010 and 2009, and the related statements of income and members' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying financial statements referred to above in the first paragraph present fairly, in all material respects, the financial position of ADI Time, LLC as of December 31, 2010 and 2009 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic financial statements as a whole. The supplementary information presented on page 9 is for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements as a whole.
Ward Fisher & Company
March 15, 2011
1
ADI Time, LLC
Balance Sheet
December 31, 2010 and 2009
|
2010
|
2009
|
||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents (Notes 1 and 6)
|
$
|
397,680
|
$
|
587,984
|
||||
Accounts receivable trade (net of allowance for uncollectible accounts of $48,000 and $41,000, respectively) (Note 1)
|
573,559
|
488,873
|
||||||
Inventory (Note 1)
|
65,641
|
66,089
|
||||||
Prepaid expenses
|
10,564
|
7,732
|
||||||
Total current assets
|
1,047,444
|
1,150,678
|
||||||
Property and equipment, net
|
203,702
|
4,170
|
||||||
Total Assets
|
$
|
1,251,146
|
$
|
1,154,848
|
||||
LIABILITIES AND MEMBERS’ EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$
|
134,303
|
$
|
120,316
|
||||
Accrued payroll
|
-
|
26,617
|
||||||
401 (k) payable
|
26,939
|
-
|
||||||
Unearned service contract income (Note 1)
|
746,584
|
750,411
|
||||||
Unearned installation and training income (Note 1)
|
121,775
|
28,310
|
||||||
Accrued expense
|
296
|
1,466
|
||||||
Total current liabilities
|
1,029,897
|
927,120
|
||||||
Members’ Equity
|
221,249
|
227,728
|
||||||
TOTAL LIABLILITIES AND MEMBERS’ EQUITY
|
$
|
1,251,146
|
$
|
1,154,848
|
See accompanying notes to financial statements.
2
ADI Time, LLC
Statements of Income and Members' Equity
For the Years Ended December 31, 2010 and 2009
2010
|
2009
|
|||||||
Revenue
|
||||||||
Software
|
$ | 2,118,946 | $ | 1,728,848 | ||||
Services, support and maintenance
|
1,254,328 | 1,543,665 | ||||||
Hardware, peripherals and supplies
|
951,395 | 818,955 | ||||||
Total revenue
|
4,324,669 | 4,091,468 | ||||||
Cost of Sales
|
||||||||
Inventory - beginning
|
66,089 | 73,772 | ||||||
Hardware purchases
|
638,425 | 524,765 | ||||||
Software purchases and maintenance
|
445,623 | 569,549 | ||||||
Web hosting
|
139,443 | 139,430 | ||||||
Badge purchases
|
17,445 | 7,333 | ||||||
Training & installation
|
54,896 | 31,382 | ||||||
Programming salaries
|
470,359 | 594,874 | ||||||
Customer service salaries
|
475,573 | 526,784 | ||||||
Payroll taxes
|
82,296 | 93,267 | ||||||
Cost of goods available for sale
|
2,390,149 | 2,561,156 | ||||||
Inventory — ending
|
(65,641 | ) | (66,089 | ) | ||||
Total cost of sales
|
2,324,508 | 2,495,067 | ||||||
Gross Profit
|
2,000,161 | 1,596,401 | ||||||
Operating expenses (Page 9)
|
1,894,234 | 1,396,429 | ||||||
Income from Operations
|
105,927 | 199,972 | ||||||
Other Income (Expense)
|
||||||||
Bad debt expense
|
(45,536 | ) | (8,410 | ) | ||||
Interest income
|
3,130 | 4,467 | ||||||
Loss on sale of asset
|
(7,731 | ) | ||||||
Total other expense
|
(42,406 | ) | (11,674 | ) | ||||
Net Income
|
63,521 | 188,298 | ||||||
Members' equity — beginning
|
227,728 | 269,430 | ||||||
Distributions to members
|
(70,000 | ) | (230,000 | ) | ||||
MEMBERS' EQUITY - ENDING
|
$ | 221,249 | $ | 227,728 |
See accompanying notes to financial statements.
3
ADI Time, LLC
Statements of Cash Flows
For the Years Ended December 31, 2010 and 2009
2010
|
2009
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$ | 63,521 | $ | 188,298 | ||||
Adjustments to reconcile net income to net cash
|
||||||||
provided by operating activities:
|
||||||||
Depreciation and amortization
|
43,516 | 59,523 | ||||||
Loss on sale of fixed assets
|
- | 7,731 | ||||||
(Increase) decrease in:
|
||||||||
Net accounts receivable trade
|
(84,686 | ) | 90,967 | |||||
Inventory
|
448 | 7,683 | ||||||
Prepaid expense
|
(2,832 | ) | (512 | ) | ||||
Increase (decrease) in:
|
||||||||
Accounts payable
|
13,987 | (22,963 | ) | |||||
Accrued payroll
|
(26,617 | ) | 23,979 | |||||
401 (k) payable
|
26,939 | (19,866 | ) | |||||
Unearned service contract income
|
(3,827 | ) | (16,460 | ) | ||||
Unearned installation and training income
|
93,465 | 15,935 | ||||||
Accrued expenses
|
(1,170 | ) | (769 | ) | ||||
Total adjustments
|
59,223 | 145,248 | ||||||
Net cash provided by operating activities
|
122,744 | 333,546 | ||||||
Cash Flows used by Investing Activities
|
||||||||
Proceeds from sale of assets
|
- | 3,000 | ||||||
Purchase of property and equipment
|
(243,048 | ) | (34,949 | ) | ||||
Net cash used by investing activities
|
(243,048 | ) | (31,949 | ) | ||||
Cash Flows from Financing Activities
|
||||||||
Distributions to members
|
(70,000 | ) | (230,000 | ) | ||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
(190,304 | ) | 71,597 | |||||
Cash and cash equivalents at beginning of year
|
587,984 | 516,387 | ||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
$ | 397,680 | $ | 587,984 |
See accompanying notes to financial statements
4
ADI Time, LLC
Notes to Financial Statements
December 31, 2010 and 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of ADI Time, LLC is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.
As a limited liability company, the members' liability is limited to their investment.
Nature of Activities
ADI Time, LLC designs and develops integrated software and hardware systems for the time and attendance market. ADI Time, LLC develops and sells software, hardware, support and related products through various distribution channels worldwide.
Use of Estimates
The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, income, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents.
Accounts Receivable
The Company provides an allowance for losses on trade receivables based on a review of the current status of existing receivables and management's evaluation of periodic aging of accounts. Accounts receivable considered uncollectible are charged against the allowance account in the year they are deemed uncollectible. The allowance account is adjusted at year end to reflect the percentage of sales considered uncollectible. At December 31, 2010 and 2009, the allowance for losses was $48,000 and $41,000, respectively. At December 31, 2010 and 2009, accounts receivable of approximately $75,000 and $120,000, respectively, were outstanding for greater than 90 days.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market.
5
Property and Equipment
Property and equipment are stated at cost. Depreciation for both financial accounting and income tax purposes is computed using combinations of the straight-line and accelerated methods over the estimated lives of the respective assets, which approximate depreciation and amortization calculated in accordance with generally accepted accounting principles. Maintenance and repairs are charged to expense when incurred. When capital assets are retired or otherwise disposed of, the related cost and accumulated depreciation and amortization are removed from the respective accounts and any gain or loss is credited or charged to income. The estimated useful lives of capital assets are as follows:
Furniture and fixtures
|
5 years
|
Computer
|
5 years
|
Windows software
|
5 years
|
Other packaged software
|
3 years
|
Software Version 10
|
3 years
|
Website
|
3 years
|
Software Development Costs
Software development costs represent production costs incurred and capitalized subsequent to the establishment of technological feasibility in accordance with the "Software Cost of Sales and Services" topic of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). These costs are amortized on the straight-line method over the estimated useful lives of the products, generally three to five years.
Revenue Recognition
Revenue is recognized in accordance with the provisions of the "Software Revenue Recognition" topic of FASB ASC.
The Company recognizes income from software sales when the sale has been completed. This includes a written authorization for the order, confirmed shipment of the software and hardware, and the company's assessment that the order will be paid for. Any components of the order that have not been completed are recorded as unearned income until complete.
The Company sells software and hardware maintenance contracts that are normally for a one year period. These contracts are recorded as unearned income when written and the income is recognized on a monthly basis as the contracts age.
Advertising Costs
All advertising and promotional costs are expensed as incurred. The Company incurred advertising expense of approximately $48,816 and $60,982 for the years ended December 31, 2010 and 2009, respectively.
6
Income Taxes
The Company has elected to be taxed as a partnership. This method passes all items of income and expense through to the members of the LLC. The entity is not liable for taxes as an LLC.he Company has adopted the new "Accounting for Uncertainty in Income Taxes", a topic of FASB ASC, which prescribes a comprehensive model for recognizing, measuring, presenting, and disclosing in the financial statements tax positions taken or expected to be taken on a tax return. At December 31, 2010, management believes no such provisions for uncertain tax position are necessary.
Subsequent Events
The Company did not have any subsequent events through March 15, 2011, which is the date the financial statements were available to be issued for events requiring recording or disclosure in the financial statements for the year ended December 31, 2010.
2. LINE-OF-CREDIT
The Company has available a maximum line of credit of $300,000, established with Bank of America, providing short-term borrowing at an interest rate of three percent over the BBA LIBOR Adjusted Periodically Rate. The note is secured by substantially all corporate assets. There was no balance due on this line at December 31, 2010. The line is due on demand.
The Company had available a maximum line of credit of $500,000, established with Bank of America, providing short-term borrowing at and interest rate of one/half percent over the prime rate of the bank. The line matured in 2010. There was no balance due at the time of maturity.
3. LEASE COMMITMENTS
The Company leases office facilities in Warwick, RI of approximately 5,200 sq. ft. The lease commenced November 1, 2010 and is for a term of five years with a one time five year renewal option. The lease calls for annual lease payments of varying amounts. The Company had previously leased office space in East Providence, RI, under a lease that expired on December 31, 2010. Rent expense for the years ended December 31, 2010 and 2009 were $104,557 and $63,674, respectively.
Minimum Rental Payments
2011
|
$ | 102,883 | ||
2012
|
113,518 | |||
2013
|
114,821 | |||
2014
|
116,123 | |||
2015
|
97,674 |
4. PENSION AND PROFIT-SHARING PLANS
The Company sponsors a defined contribution pension plan (401k plan) and profit sharing plan covering substantially all employees meeting minimum eligibility requirements. The pension contribution is determined using a specified formula applied to each eligible employee's compensation; whereas, the profit sharing contribution is determined solely at management's discretion. The Company's 401k contribution for the years ended December 31, 2010 and 2009 was $68,862 and $65,716, respectively. Profit sharing contribution for the years ended December 31, 2010 and 2009 was $0. The participants become 50% vested in the employer's contributions after two years of service and fully vested in the employers' contribution after 3 years of service. The employer may terminate the pension and profit sharing plans at any time. The Company funds pension costs as accrued.
7
5. RESEARCH AND DEVELOPMENT
The Company owns the software referred to as the "Windows Software". Development of this software was performed by third parties. This software was amortized over five years. Amortization charged to expenses was $0 for the years ended December 31, 2010 and 2009. Accumulated amortization at December 31, 2010 and 2009 was $257,400 and $257,400, respectively.
The Company owns the software referred to as "Version 10". Development of this software was performed jointly by employees and third parties. This software was amortized over three years. Amortization charged to expense was $0 and $19,521 in the years ended December 31, 2010 and 2009, respectively. Accumulated amortization at December 31, 2010 and 2009 was $234,249 and $234,249, respectively.
6. SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
The Company maintains its cash accounts in two commercial banks whose cash balances are insured by FDIC up to $250,000 per depositor. Total uninsured cash amounted to approximately $31,500 and $142,000 at December 31st, 2010 and 2009, respectively.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments are cash and cash equivalents, accounts receivable, and accounts payable. The recorded value of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to their short-term nature.
8
ADI Time, LLC
Schedules of Operating Expenses
For the Years Ended December 31, 2010 and 2009
2010
|
2009
|
|||||||
Operating Expenses
|
||||||||
Research and development
|
$ | 184,664 | $ | - | ||||
Selling expenses
|
||||||||
Salaries
|
397,293 | 282,357 | ||||||
Consulting
|
17,500 | - | ||||||
Payroll taxes
|
35,106 | 21,870 | ||||||
Health insurance
|
43,824 | 44,905 | ||||||
Advertising expense
|
48,816 | 60,982 | ||||||
Training seminars
|
9,133 | 18,281 | ||||||
Travel and entertainment
|
12,647 | 17,225 | ||||||
Total selling expenses
|
564,319 | 445,620 | ||||||
General and administrative expenses
|
||||||||
Officer's salaries
|
112,500 | 150,000 | ||||||
Administrative salaries
|
216,109 | 178,610 | ||||||
Consulting
|
170,000 | - | ||||||
Payroll taxes
|
28,630 | 27,085 | ||||||
Employee benefits
|
188,040 | 213,678 | ||||||
401(k) contribution
|
68,862 | 65,716 | ||||||
Employee recruitment
|
1,267 | 918 | ||||||
Depreciation and amortization
|
43,516 | 59,523 | ||||||
Rent
|
104,557 | 63,674 | ||||||
Utilities
|
18,421 | 18,615 | ||||||
Telephone
|
44,114 | 49,607 | ||||||
Auto expense
|
13,935 | 12,078 | ||||||
Bank charges
|
19,956 | 17,669 | ||||||
Miscellaneous
|
2,761 | 1,051 | ||||||
Contributions
|
925 | - | ||||||
Dues and subscriptions
|
1,734 | 3,078 | ||||||
Insurance
|
24,989 | 23,533 | ||||||
Internet expenses
|
406 | 5,867 | ||||||
Office expense
|
40,427 | 32,043 | ||||||
Postage
|
2,193 | 2,833 | ||||||
Professional fees
|
34,906 | 18,993 | ||||||
Repair and maintenance
|
3,299 | 4,098 | ||||||
Taxes other
|
1,972 | 1,938 | ||||||
Training and seminar
|
1,732 | 202 | ||||||
Total general and administrative expense
|
1,145,251 | 950,809 | ||||||
TOTAL OPERATING EXPENSES
|
$ | 1,894,234 | $ | 1,396,429 |