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NOTE 6 - NOTES PAYABLE | 3 Months Ended
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Mar. 31, 2018
Debt Disclosure [Abstract] |
Debt Disclosure [Text Block] | NOTE 6 – NOTES PAYABLE The following table summarizes our outstanding debt as of the dates indicated:
Notes Payable |  | Maturity |  | Stated Interest Rate |  |  | Balance as of March 31, 2018 |  |  | Balance as of December 31, 2017 |
Subordinated Notes Payable- PMSI acquisition |  | 4/30/2018 |  |  | 2.00 | % |  |  | 1,125 |  |  |  | 1,125 |
Subordinated Notes Payable- CPI acquisition |  | 4/30/2018 |  |  | - | % |  |  | 500 |  |  |  | 500 |
Subordinated Notes Payable- PSNW acquisition |  | 4/30/2018 |  |  | 2.00 | % |  |  | 600 |  |  |  | 600 |
Subordinated Notes Payable- iSystems acquisition |  | 5/25/2019 |  |  | 3.50 | % |  |  | 5,000 |  |  |  | 5,000 |
Subordinated Notes Payable- Compass acquisition |  | 5/25/2022 |  |  | 2.00 | % |  |  | 1,474 |  |  |  | 1,500 |
Subordinated Notes Payable- ADS acquisition |  | 10/1/2019 |  |  | 2.00 | % |  |  | 1,122 |  |  |  | 1,122 |
Subordinated Notes Payable- TelePayroll acquisition |  | 01/01/2020 |  |  | 2.00 | % |  |  | 1,800 |  |  |  | - |
Subordinated Notes Payable- Savers Admin acquisition |  | 01/01/2020 |  |  | 2.00 | % |  |  | 570 |  |  |  | - |
Subordinated Notes Payable- Pay Systems acquisition |  | 01/01/2019 |  |  | 2.00 | % |  |  | 1,572 |  |  |  | - |
Term Loan – Wells Fargo Syndicate Partner |  | 5/25/2022 |  |  | 10.55 | % |  |  | 52,500 |  |  |  | 34,125 |
Term Loan - Wells Fargo |  | 5/25/2022 |  |  | 5.55 | % |  |  | 52,500 |  |  |  | 34,125 |
Total Notes Payable |  |  |  |  |  |  |  | $ | 118,763 |  |  | $ | 78,097 |
Short-term notes payable |  |  |  |  |  |  |  | $ | 8,012 |  |  | $ | 8,895 |
Long-term notes payable |  |  |  |  |  |  |  | $ | 110,751 |  |  | $ | 69,202 |
On January 1, 2016, we adopted ASU 2015-03 for debt issuance costs on our term loan, on a retrospective basis. The impact of adopting ASU 2015-03 was the classification of all deferred financing costs as a deduction to corresponding debt in addition to the reclassification of deferred financing costs in other current and long-term assets to short and long-term notes payable. The following table summarizes the debt issuance costs as of the dates indicated:
Notes Payable |  | Gross Notes Payable at March 31, 2018 |  |  | Debt Issuance Costs and Debt Discount |  |  | Net Notes Payable at March 31, 2018 |
Notes payable, current portion |  | $ | 8,012 |  |  | $ | (196 | ) |  | $ | 7,816 |
Notes payable, net of current portion |  |  | 110,751 |  |  |  | (3,979 | ) |  |  | 106,772 |
Total Notes Payable |  | $ | 118,763 |  |  | $ | (4,175 | ) |  | $ | 114,588 |
Notes Payable |  | Gross Notes Payable at December 31, 2017 |  |  | Debt Issuance Costs |  |  | Net Notes Payable at December 31, 2017 |
Notes payable, current portion |  | $ | 8,895 |  |  | $ | - |  |  | $ | 8,895 |
Notes payable, net of current portion |  |  | 69,202 |  |  |  | (2,229 | ) |  |  | 66,973 |
Total Notes Payable |  | $ | 78,097 |  |  | $ | (2,229 | ) |  | $ | 75,868 |
The following table summarizes the future principal payments related to our outstanding debt:
Year Ended |  | Gross Amount |
December 31, 2018 (April to December) |  | $ | 6,963 |
December 31, 2019 |  |  | 5,383 |
December 31, 2020 |  |  | 4,896 |
December 31, 2021 |  |  | 4,889 |
December 31, 2022 |  |  | 96,632 |
Gross Notes Payable |  | $ | 118,763 |
Subordinated Notes Payable- PMSI Acquisition In January 2017, we acquired all of the outstanding shares of common stock (the “PMSI Shares”) of Personnel Management Systems, Inc., a Washington corporation (“PMSI”), pursuant to a Stock Purchase Agreement (the “Stock Purchase Agreement”). The aggregate consideration for the PMSI 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. Subordinated Notes Payable- CPI Acquisition In January 2017, we acquired 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 a public stock offering which occurred in July 2016. The CPI Note bears no interest and matures on April 30, 2018. The entire unpaid principal under the CPI Note is payable at maturity. Subordinated Notes Payable – PSNW Acquisition In January 2017, we acquired 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 public stock offering which occurred in July 2016. 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. As of March 31, 2018, the principal amount of $600 is due to the seller, who is currently an employee. Subordinated Notes Payable- iSystems Acquisition In May 2017, we acquired 100% of the outstanding equity interests of iSystems Intermediate Holdco, Inc., a Delaware corporation (“iSystems”), pursuant to an equity purchase agreement (the “Equity Purchase Agreement”). The aggregate purchase price consisted of (i) $32,000 in cash, subject to adjustment as provided in the Equity Purchase Agreement, (ii) a secured subordinated promissory note (“iSystems Note”) in the principal amount of $5,000, subject to adjustment as provided in the Equity Purchase Agreement, and (iii) 1,526,332 shares of unregistered common stock valued at $18,000. The iSystems Note bears interest at an annual rate of 3.5% and matures on May 25, 2019. The unpaid principal and all accrued interest under the promissory note is payable in two installments of $2,500 on May 25, 2018 and May 25, 2019, subject to adjustment. Subordinated Notes Payable- Compass Acquisition In May 2017, we acquired 100% of the outstanding shares of capital stock of Compass HRM, Inc. (“Compass”) pursuant to a stock purchase agreement (the “Stock Purchase Agreement”). The aggregate purchase price consisted of $4,500 in cash and a subordinated promissory note (“Compass Note”) in the principal amount of $1,500, subject to adjustment as provided in the Stock Purchase Agreement. The Compass Note bears interest at an annual rate of 2.0% and matures on May 25, 2022. The Compass Note was payable in five annual installments of $300 on the anniversary of the closing date, subject to adjustment. The Compass Note was adjusted in March 2018, effective as of May 2017, to a principal amount of $1,474, which is payable in five (5) annual installments of $295. As of March 31, 2018, the principal amount of $1,474 is due to the seller, who is currently an employee. Subordinated Notes Payable- ADS Acquisition In October 2017, we acquired 100% of the outstanding shares of capital stock of Associated Data Services (“ADS”). The aggregate purchase price consists of $1,778 in cash; 44,624 shares of Asure Software, Inc. common stock valued at $400; and a subordinated promissory note (“ADS Note”) in the principal amount of $1,122, subject to adjustment. The ADS Note bears interest at an annual rate of 2.0%. The ADS Note is payable in two annual installments of $370 and $752, plus accrued interest, on October 1, 2018 and October 1, 2019, respectively, subject to adjustment. Subordinated Notes Payable- TelePayroll Acquisition In January 2018, we acquired 100% of the outstanding shares of capital stock of TelePayroll. The aggregate purchase price consists of $9,000 in cash; 91,848 shares of Asure Software, Inc. common stock valued at $1,200; and a subordinated promissory note in the principal amount of $1,800, subject to adjustment. The TelePayroll Note bears interest at an annual rate of 2.0% and matures on January 1, 2020. The entire unpaid principal and all accrued interest under the TelePayroll Note is payable at maturity. Subordinated Notes Payable- Savers Admin Acquisition In January 2018, we acquired 100% of the outstanding shares of capital stock of Savers Admin. The aggregate purchase price consists of $2,280 in cash and a subordinated promissory note in the principal amount of $570, subject to adjustment. The Savers Admin Note bears interest at an annual rate of 2.0% and matures on January 1, 2020. The entire unpaid principal and all accrued interest under the Savers Admin Note is payable at maturity. Subordinated Notes Payable- Pay Systems Acquisition In January 2018, we acquired 100% of the outstanding shares of capital stock of Pay Systems. The aggregate purchase price consists of $14,152 in cash and a subordinated promissory note in the principal amount of $1,572, subject to adjustment. The Pay Systems Note bears interest at an annual rate of 2.0%. The Pay Systems Note is payable in two annual installments of $786 each, along with accrued interest, on July 1, 2018 and January 1, 2019, subject to adjustment. Term Loan - Wells Fargo In March 2014, we entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A., as administrative agent, and the lenders that are party thereto. The Credit Agreement contains customary events of default, including, among others, payment defaults, covenant defaults, judgment defaults, bankruptcy and insolvency events, cross defaults to certain indebtedness, incorrect representations or warranties, and change of control. In some cases, the defaults are subject to customary notice and grace period provisions. In March 2014 and in connection with the Credit Agreement, we and our wholly-owned active subsidiaries entered into a Guaranty and Security Agreement with Wells Fargo Bank. Under the Guaranty and Security Agreement, we and each of our wholly-owned active subsidiaries have guaranteed all obligations under the Credit Agreement and granted a security interest in substantially all of our and our subsidiaries’ assets. The Credit Agreement provided for a term loan in the amount of $15,000 maturing in March 2019. The Credit Agreement also provided for a revolving loan commitment in the aggregate amount of up to $3,000. The outstanding principal amount of the revolving loan is due and payable in March 2019. Additionally, the Credit Agreement provided for a $10,000 uncommitted incremental term loan facility to support permitted acquisitions. In March 2016, we amended the Credit Agreement to, among other things, increase our overall credit facility to $29,188. In March 2017, we amended our Credit Agreement with Wells Fargo Bank, N.A to, among other things, obtain an additional term loan in the amount of $5,000. In the first quarter of 2017, we used the proceeds of the additional term loan to repay a portion of all amounts outstanding under the secured subordinated note we issued in connection with the Mangrove acquisition. Amended and Restated Credit Agreement In May 2017, we entered into an amended and restated credit agreement (the “Restated Credit Agreement”) with Wells Fargo Bank, N. A., as administrative agent, and the lenders that are parties thereto, amending and restating the terms of the Credit Agreement dated as of March 2014, as amended. The Restated Credit Agreement provides for an increase in the aggregate principal amount of total commitments from approximately $32,714 to $75,000. This increase includes an additional term loan commitment of approximately $40,286 and an additional revolver commitment of $2,000. The term loan consists of a $35,000 “First Out Loan Obligation” funded by Wells Fargo as administrative agent, and a $35,000 “Last Out Loan Obligation” funded by Wells Fargo’s syndicate partner, Goldman Sachs. Second Amended and Restated Credit Agreement On March 29, 2018, we entered into a second amended and restated credit agreement (the “Second Restated Credit Agreement”) with Wells Fargo Bank, National Association, and the lenders that are parties thereto, amending and restating the terms of the Amended and Restated Credit Agreement dated as of May 25, 2017 (the “First Facility”). The Second Restated Credit Agreement provides for a total of $175,000 in available financing consisting of (a) $105,000 in the aggregate principal amount of term loans, an increase of approximately $36,750; (b) a $5,000 line of credit, (c) a $25,000 delayed draw term loan commitment for the financing of permitted acquisitions, which is a new financing option for us; and (d) a $40,000 accordion, an increase of $30,000. The accordion allows us to increase the amount of financing we receive from our lenders at our option. Financing under the delayed draw term loan commitment and accordion are subject to certain conditions as described in the Second Restated Credit Agreement. The Second Restated Credit Agreement amends the applicable margin rates for determining the interest rate payable on the loans as follows:
Leverage Ratio | First Out Revolver Base Rate Margin | First Out Revolver LIBOR Rate Margin | First Out TL Base Rate Margin | First Out TL LIBOR Rate Margin | Last Out Base Rate Margin | Last Out LIBOR Rate Margin
≤ 3.25:1 | 4.25 percentage points | 5.25 percentage points | 1.75 percentage points | 2.75 percentage points | 6.75 percentage points | 7.75 percentage points
> 3.25:1 | 4.75 percentage points | 5.75 percentage points | 2.25 percentage points | 3.25 percentage points | 7.25 percentage points | 8.25 percentage points
The outstanding principal amount of the term loans is payable as follows:
· | $263 beginning on June 30, 2018 and the last day of each fiscal quarter thereafter up to March 31, 2020, plus an additional amount equal to 0.25% of the principal amount of all delayed draw term loans;
· | $656 beginning on June 30, 2020 and the last day of each fiscal quarter thereafter up to March 31, 2021, plus an additional amount equal to 0.625% of the principal amount of all delayed draw term loans; and
· | $1,313 beginning on June 30, 2021 and the last day of each fiscal quarter thereafter, plus an additional amount equal to 1.25% of the principal amount of all delayed draw term loans.
The outstanding principal balance and all accrued and unpaid interest on the term and revolving loans is due on May 25, 2022. The Second Restated Credit Agreement also:
· | amends our leverage ratio covenant to increase the maximum ratio to 6.50:1 at March 31, 2018 and June 30, 2018, 6.00:1 at September 30, 2018 and December 31, 2018 and then stepping down each quarter-end thereafter;
· | amends our fixed charge coverage ratio to be not less than 1.25:1at March 31, 2018 and each quarter-end thereafter; and
· | removes the TTM recurring revenue covenant.
As of March 31, 2018 and December 31, 2017, $2,379 and $0 was outstanding and $2,621 and $5,000, respectively, were available for borrowing under the revolver. As of March 31, 2018, we were in compliance with all covenants and all payments remain current. We expect to be in compliance or be able to obtain compliance through debt repayments with available cash on hand or cash we expect to generate from the ordinary course of operations over the next twelve months.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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