ASURE SOFTWARE INC MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements about our financial results,
which may include expected or projected U.S GAAP and non-U.S. GAAP financial and
other operating and non-operating results, including, by way of example,
revenue, net income, diluted earnings per share, operating cash flow growth,
operating margin improvement, deferred revenue growth, expected revenue run
rate, bookings, expected tax rates, stock-based compensation expenses,
amortization of purchased intangibles, amortization of debt discount and shares
outstanding. 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, the Company's results could differ
materially from the results expressed or implied by the forward-looking
statements we make. The risks and uncertainties referred to above include-but
are not limited to-risks associated with possible fluctuations in the Company's
financial and operating results; the Company's rate of growth and anticipated
revenue run rate, including impact of the current environment, the spread of
major pandemics or epidemics (including COVID-19), interruptions to supply
chains and extended shut down of businesses, political unrest, including the
current issues between Russian and Ukraine, reductions in employment and an
increase in business failures, specifically among our clients, the
Company's ability to convert deferred revenue and unbilled deferred revenue into
revenue and cash flow, and ability to maintain continued growth of deferred
revenue and unbilled deferred revenue; errors, interruptions or delays in the
Company's services or the Company's Web hosting; breaches of the Company's
security measures; domestic and international regulatory developments, including
changes to or applicability to our business of privacy and data securities laws,
money transmitter laws and anti-money laundering laws; the financial and other
impact of any previous and future acquisitions; the nature of the Company's
business model, including risks related to government contracts; the
Company's ability to continue to release, gain customer acceptance of and
provide support for new and improved versions of the Company's services;
successful customer deployment and utilization of the Company's existing and
future services; changes in the Company's sales cycle; competition; various
financial aspects of the Company's subscription model; unexpected increases in
attrition or decreases in new business; the Company's ability to realize
benefits from strategic partnerships and strategic investments; the emerging
markets in which the Company operates; unique aspects of entering or expanding
in international markets, including the compliance with United States export
control laws, the Company's ability to hire, retain and motivate employees and
manage the Company's growth; changes in the Company's customer base;
technological developments; litigation and any related claims, negotiations and
settlements, including with respect to intellectual property matters or
industry-specific regulations; unanticipated changes in the Company's effective
tax rate; regulatory pressures on economic relief enacted as a result of the
COVID-19 pandemic that change or cause different interpretations with respect to
eligibility for such programs; factors affecting the Company's term loan;
fluctuations in the number of Company shares outstanding and the price of such
shares; interest rates; collection of receivables; factors affecting the
Company's deferred tax assets and ability to value and utilize them; the
potential negative impact of indirect tax exposure; the risks and
expenses associated with the Company's real estate and office facilities space;
and general developments in the economy, financial markets, credit markets and
the impact of current and future accounting pronouncements and other financial
reporting standards.

Further information on these and other factors that could affect the Company's
financial results is included in the reports on Forms 10-K, 10-Q and 8-K, and in
other filings we make with the SEC from time to time. These documents are
available on the SEC Filings section of the Investor Information section of the
Company's website at investor.asuresoftware.com. Asure assumes no obligation and
does not intend to update these forward-looking statements, except as required
by law.

OVERVIEW

Our Business

The following review of Asure's financial position as of September 30, 2022 and
December 31, 2021, and results of operations for the three and nine months ended
September 30, 2022 and 2021 should be read in conjunction with our 2021 Annual
Report on Form 10-K filed with the SEC on March 14, 2022. Asure's internet
website address is www.asuresoftware.com. Our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 are available through the investor relations
page of our internet website free of charge as soon as reasonably practicable
after they are electronically filed, or furnished to, the SEC. Asure's internet
website and the information contained in our website or connected to our website
are not incorporated into this Quarterly Report on Form 10-Q, however we do post
information on the investor relations page of our website that we believe may be
of interest to our investors.
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Asure is a leading provider of cloud-based Human Capital Management ("HCM")
software and services. We help small and medium-sized businesses ("SMBs") grow
by offering the HR tools necessary to build a better workforce, providing the
resources to stay compliant with ever changing federal, state, and local tax
jurisdictions and labor laws, ultimately freeing their cash flows so they can
spend their financial capital on growing their business rather than back-office
overhead that impedes growth. Asure's HCM suite, named AsureHCM, includes
cloud-based Payroll & Tax, HR, and Time & Attendance software as well as HR
Services ranging from HR projects to completely outsourcing payroll and HR
staff. We also offer these products and services through our network of Reseller
Partners.

We are a leading provider of cloud-based HCM solutions, delivered as a
software-as-a-service ("SaaS") for SMBs. From recruitment to retirement, our
solutions help more than 80,000 SMBs across the United States grow their
businesses. About 15,000 of our clients are direct and approximately 65,000
remaining clients are indirect as they have contracts with Reseller Partners
that white label our solutions.

We strive to be the most trusted HCM resource to entrepreneurs and are focused
on less densely populated U.S. metropolitan cities where fewer of our
competitors have a presence. Our solution strategy solves three primary
challenges that prevent businesses from growing: HR complexity, allocation of
human and financial capital, and the ability to build great teams. We have
invested in, and intend to continue to invest in, research and development to
expand our solution. Asure HCM, our user-friendly solution, reduces the
administrative burden on employers and increases employee productivity while
managing the complete employment lifecycle.

Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the COVID-19 outbreak to
be a global pandemic that resulted in federal, state and local government
imposed restrictions that have since been lifted. As of June 1, 2021, we have
opened our offices and resumed in person work. We continue to take proactive
measures, including regular cleaning of the offices, and monitoring of the
Center for Disease Control guidelines for returning to work. We will continue to
actively monitor the situation and may take further actions that alter our
business operations as may be required by federal, state or local authorities or
that we determine are in the best interests of our employees and clients.

In 2022, we continue to aggressively invest in sales and marketing and in
research and development to drive future growth and expand our market share.
Lower headcount at our clients and other pandemic-related factors, which had a
negative impact on recurring revenue, combined with increased sales and
marketing and research and development expenses, cumulatively had an adverse
impact on our operating results for the quarter ended September 30, 2022. We
expect net income to be negatively affected by the impact of the pandemic on our
recurring revenue and our deliberate, increased level of investment in sales and
marketing and research and development to drive the growth of our business.

Prior to the COVID-19 pandemic, our sales force traveled frequently to market
our solution set. The current remote work environment presents a unique
opportunity because each sales employee is able to meet virtually with a greater
number of client prospects in a given day than they would if conducting
in-person meetings. Although we have not experienced such challenges to date, if
clients and client prospects are not as willing or available to engage by video
conference and teleconference, the shift from in-person to virtual sales
meetings could negatively affect our sales efforts, impede client acquisition
and lengthen our sales cycles, which would negatively impact our business and
results of operations and could impact our financial condition in the future.

We are unable to estimate the continuing impact the COVID-19 pandemic could have
on our business and results of operations in the future due to numerous
uncertainties, including the severity of the disease, the occurrence of variant
strains, the duration of the outbreak, actions that may be taken by governmental
authorities, the impact it may have on the business of our clients and other
factors identified in Part I, Item 1A "Risk Factors" in our 2021 Annual Report
on Form 10-K.

Acquisitions

On September 30, 2021, our subsidiary, Evolution Payroll Processing LLC ("EPP"),
acquired certain assets of a payroll business, which were used to provide
payroll processing services. The aggregate purchase price we paid for the assets
was $24,150, including: (i) $15,000 in cash at closing, (ii) the delivery of 523
shares of the Company's common stock which the parties agreed had an aggregate
value of $4,800 as of September 30, 2021, and (iii) the delivery of a promissory
note of $4,350. The promissory note amount as of September 30, 2022 was $4,080
due to a principal payment made during the period.

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Also on September 30, 2021, EPP acquired certain assets of a payroll business,
which were used to provide payroll processing services. The aggregate purchase
price for these assets was $14,750, paid as follows: (i) $10,325 in cash at
closing, (ii) the delivery of 244 shares of the Company's common stock which the
parties agreed had an aggregate value of $2,213 as of September 30, 2021, and
(iii) the delivery of a promissory note in the amount of $2,213. The promissory
note was adjusted to $2,223 to account for post close and working capital
adjustments.

On January 1, 2022, the Company acquired certain assets of a Reseller Partner,
which were used to provide payroll processing services. The Partner is located
in the northeastern United States. The aggregate purchase price that the Company
paid for these assets was $2,350, paid as follows: (i) $1,939 in cash at closing
and (ii) the delivery of a promissory note in the amount of $411.

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 the Company’s Condensed
Consolidated Statements of Comprehensive Loss:

                                                      Three Months Ended September 30,                 Nine Months Ended September 30,
                                                        2022                     2021                    2022                    2021
Revenues                                                      100  %                 100  %                   100  %                 100  %
Gross profit                                                   62  %                  60  %                    62  %                  61  %
Sales and marketing                                            22  %                  22  %                    21  %                  20  %
General and administrative                                     37  %                  39  %                    36  %                  37  %
Research and development                                        6  %                   8  %                     7  %                   7  %
Amortization of intangible assets                              15  %                  14  %                    15  %                  14  %
Total operating expenses                                       79  %                  83  %                    80  %                  78  %
Interest expense                                               (5) %                  (3) %                    (5) %                  (2) %
Other income(expense), net                                      2  %                  59  %                     2  %                  19  %
Gain on extinguishment of debt                                  -  %                  (2) %                     -  %                  15  %
Loss from operations before income taxes                      (20) %                  31  %                   (20) %                  15  %
Net loss                                                      (21) %                  30  %                   (20) %                  14  %



Revenue

Revenues are comprised of recurring revenues, professional services, hardware,
and other revenues. We expect our revenues to increase as we introduce new
applications, expand our client base and renew and expand relationships with
existing clients. As a percentage of total revenues, we expect our mix of
recurring revenues, and professional services, hardware and other revenues to
remain relatively constant. While revenue mix varies by product, recurring
revenue represented over 93% of total revenue in nine months ended September 30,
2022, compared to 94% in nine months ended September 30, 2021.

Our revenue was derived from the following sources (in thousands):

                                         Three Months Ended September 30,                    Variance
                                             2022                2021                 $                   %
Recurring                                $   19,959          $  16,374          $    3,585                   22  %
Professional services, hardware and
other                                         1,944              1,607                 337                   21  %
Total                                        21,903             17,981               3,922                   22  %


                                              Nine Months Ended September 30,                     Variance
                                                  2022                2021                 $                   %
Recurring                                     $   61,977          $  51,688          $   10,289                   20  %
Professional services, hardware and other          4,559              3,263               1,296                   40  %
Total                                         $   66,536          $  54,951          $   11,585                   21  %



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Recurring Revenues

Recurring revenues include fees for our payroll, payroll tax, time and labor
management, and other Asure solutions as well as fees charged for form filings
and delivery of client payroll checks and reports. These revenues are derived
from fixed amounts charged per billing period and sometimes an additional fee
per employee or transaction processed. We do not require clients to enter into
long-term contractual commitments for our services. Our billing period varies by
client based on when each client pays its employees, which may be weekly,
bi-weekly, semi-monthly or monthly. 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. Recurring revenues are recognized
in the period services are rendered.

Recurring revenues include revenues relating to the annual processing of payroll
forms, such as Form W-2 and Form 1099, and revenues from processing unscheduled
payroll runs (such as bonuses) for our clients. 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. We anticipate our
revenues will continue to exhibit this seasonal pattern related to ACA form
filings for so long as the ACA (or replacement legislation) includes employer
reporting requirements. In addition, we often experience increased revenues
during the fourth quarter due to unscheduled payroll runs for our clients that
occur before the end of the year. Over time, 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. We
collect funds from clients in advance of either the applicable due date for
payroll tax submissions or the applicable disbursement date for employee payment
services. These collections from clients are typically disbursed from one to 30
days after receipt, with some funds being held for up to 120 days. We typically
invest funds held for clients in money market funds, demand deposit accounts,
commercial paper, fixed income securities and certificates of deposit until they
are paid to the applicable tax or regulatory agencies or to client employees.
The amount of interest we earn from the investment of client funds is also
impacted by changes in interest rates.

Revenue for the three months ended September 30, 2022 was $21,903, an increase
of $3,922, or 22%, from $17,981 for the three months ended September 30, 2021.
Recurring revenue increase is primarily due to our acquisitions at the end of
the third quarter 2021 as well as organic growth related to our Asure HCM suite
of services.

Revenue for the nine months ended September 30, 2022 was $66,536, an increase of
$11,585, or 21%, from $54,951 for the nine months ended September 30, 2021.
Recurring revenue increase is primarily due to our acquisitions at the end of
the third quarter 2021 as well as organic growth related to our Asure HCM suite
of services.
Professional Services, Hardware and Other Revenues

Professional Services, Hardware and Other Revenues represents implementation
fees, one-time consulting projects, on-premise maintenance, and hardware devices
to enhance our software products.

Professional services, hardware and other revenue increased $337, or 21%, for
the three months ended September 30, 2022 from the similar period in 2021,
primarily due to organic growth related to HR services and payroll tax service
projects.

Professional services, hardware and other revenue increased $1,296, or 40%, for
the nine months ended September 30, 2022 from the similar period in 2021,
primarily due to organic growth related to HR services and payroll tax service
projects.

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. 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.

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Gross Profit and Gross Margin

Consolidated gross profit for the three months ended September 30, 2022 was
$13,647, an increase of $2,779, or 26%, from $10,868 for the three months ended
September 30, 2021. Gross margin as a percentage of revenue was 62% for the
three months ended September 30, 2022 as compared to 60% for the three months
ended September 30, 2021. Our increase in gross margin is primarily attributable
to the increase in revenue and more efficient operations.

Consolidated gross profit for the nine months ended September 30, 2022 was
$41,372, an increase of $8,067, or 24%, from $33,305 for the nine months ended
September 30, 2021. Gross margin as a percentage of revenue was 62% for the nine
months ended September 30, 2022 as compared to 61% for the nine months ended
September 30, 2021. Our increase in gross margin is primarily attributable to
the increase in revenue and more efficient operations.

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. 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.

Selling and marketing expenses for the three months ended September 30, 2022
were $4,752, an increase of $855, or 22%, from $3,897 for the three months ended
September 30, 2021, primarily due to increase in advertising and marketing
spending, as well as an increase in commissions resulting from higher bookings.
Selling and marketing expenses as a percentage of revenue remained flat at 22%
for the three months ended September 30, 2022 from 22% for the same period in
2021.

Selling and marketing expenses for the nine months ended September 30, 2022 were
$14,238, an increase of $3,108, or 28%, from $11,130 for the nine months ended
September 30, 2021, primarily due to increase in advertising and marketing
spending, as well as an increase in commissions resulting from higher bookings.
Selling and marketing expenses as a percentage of revenue increased to 21% for
the nine months ended September 30, 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.

General and Administrative Expenses

General and administrative expenses primarily consist of salaries and related
expenses, including stock-based expenses for finance and accounting, legal,
internal audit, human resources and management information systems personnel,
legal costs, professional fees, and other corporate expenses such as transaction
costs for acquisitions.

General and administrative expenses for the three months ended September 30,
2022 were $8,023, an increase of $1,018, or 15%, from $7,005 for the three
months ended September 30, 2021, primarily attributable to increased personnel
and contracting costs. General and administrative expenses as a percentage of
revenue decreased to 37% for the three months ended September 30, 2022 from 39%
for the same period in 2021.

General and administrative expenses for the nine months ended September 30, 2022
were $24,204, an increase of $3,880, or 19%, from $20,324 for the nine months
ended September 30, 2021, primarily attributable to increased personnel and
contracting costs. General and administrative expenses as a percentage of
revenue decreased to 36% for the nine months ended September 30, 2022 from 37%
for the same period in 2021.

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.

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R&D expenses for the three months ended September 30, 2022 were $1,230, a
decrease of $275, or 18%, from $1,505 for the three months ended September 30,
2021. The decrease in R&D expense is a result of an increase in capitalizable
software expenses resulting from a focus on developmental projects. R&D expenses
as a percentage of revenue decreased to 6% for the three months ended September
30, 2022 from 8% for the same period in 2021.

R&D expenses for the nine months ended September 30, 2022 were $4,523, an
increase of $551, or 14%, from $3,972 for the nine months ended September 30,
2021. The increase in R&D expense is primarily attributable to an increase in
investment costs. R&D expenses as a percentage of revenue remained flat at 7%
for the nine months ended September 30, 2022 for the same period in 2021.

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. 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 believe that our
expanded investment in product, engineering, SaaS hosting, and mobile and
hardware technologies lays 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.

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 have also made
significant investments outside of core R&D into compliance and certifications,
including SOC I Type 2 and SOC II Type 2 certifications, BIPA, CCPA, and other
initiatives.

Amortization of Intangible Assets

Amortization expense in operating expenses for the three months ended September
30, 2022 was $3,350, an increase of $816, or 32%, from $2,534 for the three
months ended September 30, 2021. Amortization expense as a percentage of revenue
increased to 15% for the three months ended September 30, 2022 from 14% for the
same period in 2021, respectively.

Amortization expense in operating expenses for the nine months ended
September 30, 2022 was $10,134, an increase of $2,544, or 34%, from $7,590 for
the nine months ended September 30, 2021. Amortization expense as a percentage
of revenue increased to 15% for the nine months ended September 30, 2022 from
14% for the same period in 2021, respectively.

Interest Expense, Net

Interest expense, net for the three months ended September 30, 2022 was $1,122
compared to $530 for the three months ended September 30, 2021. The change in
interest expense and other is primarily attributed to the decrease in fair value
of the seller notes from acquisitions. Interest expense, net as a percentage of
revenue was 5% for the three months ended September 30, 2022 compared to 3% for
the three months ended September 30, 2021. The increase in interest expense, net
in the current period is primarily due to our credit facility with Structural
Capital Investments II LP signed in the third quarter of 2021 as discussed in
Note 6 - Notes Payable.

Interest expense, net for the nine months ended September 30, 2022 was $3,006
compared to $977 for the nine months ended September 30, 2021. The increase in
interest expense, net relative to the prior year is attributable to new
borrowings under our credit facility with Structural Capital Investments III LP
as discussed in Note 6 - Notes Payable. Interest expense, net as a percentage of
revenue was 5% and 2% for the nine months ended September 30, 2022 and
September 30, 2021, respectively.

Other Income, Net

Other income, net for the three months ended September 30, 2022 was $399
compared to $10,191 for the three months ended September 30, 2021. Other income,
net as a percentage of revenue was 2% for the three months ended September 30,
2022 compared to 59% for the same period ended September 30, 2021. For the three
months ended September 30, 2022, the amounts in other income, net primarily
consisted of contingent liability adjustments and debt extinguishment. For the
three months ended September 30, 2021, the amounts in other income, net
consisted of debt extinguishment related to the Company's Paycheck Protection
Program loan and amounts accrued for the Employee Retention Tax Credit.

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Other income, net for the nine months ended September 30, 2022 was $1,349
compared to $18,845 for the nine months ended September 30, 2021. Other income,
net as a percentage of revenue was 2% and 19% for the nine months ended
September 30, 2022 and September 30, 2021, respectively. For the nine months
ended September 30, 2022, the amounts in other income, net primarily consisted
of contingent liability adjustments and debt extinguishment. For the nine months
ended September 30, 2021, the amounts in other income, net consisted of debt
extinguishment related to the Company's Paycheck Protection Program loan and
amounts accrued for the Employee Retention Tax Credit.

Income Taxes

For the three months ended September 30, 2022 and 2021, we recorded an income
tax expense attributable to continuing operations of $102 and $260,
respectively, a decrease of $158 or 61%.

For the nine months ended September 30, 2022 and 2021, we recorded an income tax
expense attributable to continuing operations of $206 and $663, respectively, a
decrease of $457 or 69%.

Net Loss

We incurred a loss of $4,533, or $0.22 per share, during the three months ended
September 30, 2022, compared to net income of $5,328, or $0.28 per share, during
the three months ended September 30, 2021. Loss and income as a percentage of
total revenues was 21% and 30% for the three months ended September 30, 2022 and
2021, respectively.

We incurred a loss of $13,410, or $0.67 per share, during the nine months ended
September 30, 2022, compared to income of $7,494, or $0.39 per share, during the
nine months ended September 30, 2021. Loss and income as a percentage of total
revenues was 20% and 14% for the nine months ended September 30, 2022 and 2021,
respectively.

LIQUIDITY AND CAPITAL RESOURCES (in thousands)

                                September 30, 2022       December 31, 2021
Cash and cash equivalents(1)   $            10,885      $           13,427

(1)This balance excludes cash equivalents in funds held for clients

Working Capital. We had working capital of $5,179 at September 30, 2022, a
decrease of $11,827 from working capital of $17,006 at December 31, 2021.
Working capital as of September 30, 2022 and December 31, 2021 includes
$4,173 and $3,750 of short-term deferred revenue, respectively. Deferred revenue
is an obligation to perform future services. We expect that deferred revenue
will convert to future revenue as we perform our services, but this does not
represent future payments. Deferred revenue can vary based on seasonality,
expiration of initial multi-year contracts and deals that are billed after
implementation rather than in advance of service delivery.

Operating Activities. Net cash provided by operating activities of $6,957 for
the nine months ended September 30, 2022 was primarily driven by non-cash
adjustments to our net loss of approximately $17,917, primarily due to
depreciation and amortization. This was offset by our net loss of $13,410 and
changes in operating assets and liabilities, which resulted in cash provided of
$3,777. Net cash used in operating activities of $1,144 for the nine months
ended September 30, 2021 was driven by non-cash adjustments to our net income of
approximately $7,026, primarily due to depreciation and amortization, offset by
our net income of $7,494. For the nine months ended September 30, 2021, changes
in operating assets and liabilities resulted in a use of $15,473 in cash.

Investing Activities. Net cash used in investing activities of $33,991 for the
nine months ended September 30, 2022 is primarily due to our first quarter
acquisition totaling $2,289 and purchases of available-for-sale securities and
maturities of $33,454. Net cash used in investing activities of $21,042 for the
nine months ended September 30, 2021 is primarily due to the proceeds from sales
and maturities of available-for-sale securities of $1,926.

Financing Activities. Net cash used in financing activities was $34,032 for the
nine months ended September 30, 2022, which primarily consisted of a net
decrease in client fund obligations of $32,527. Net cash used in financing
activities was $133,990 for the nine months ended September 30, 2021, which
primarily consisted of a net decrease in client fund obligations of $146,206.

Sources of Liquidity. As of September 30, 2022, the Company's principal sources
of liquidity consisted of approximately $10,885 of cash, cash equivalents and
restricted cash, together with cash generated from operations of our business
over the next twelve months.
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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; however we do believe that we have sufficient
liquidity to support our business operations for at least the next twelve
months. Future business demands may lead to cash utilization at levels greater
than recently experienced. We may need to raise additional capital in the future
in order to grow our existing software operations and to seek additional
strategic acquisitions in the near future. Further, we cannot assure that we
will be able to raise additional capital on acceptable terms, or at all.

CRITICAL ACCOUNTING POLICIES

We have prepared our Condensed Consolidated Financial Statements in accordance
with U.S. generally accepted accounting principles and included the accounts of
our wholly owned subsidiaries. We have eliminated all significant intercompany
transactions and balances in the consolidation. Preparation of the Condensed
Consolidated Financial Statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of the assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. These
estimates are subjective in nature and involve judgments that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at fiscal year-end and the reported amounts of revenues and
expenses during the fiscal year. The more significant estimates made by
management include the valuation allowance for our gross deferred tax asset, the
determination of the fair value of our long-lived assets. We base our estimates
on historical experience and on various other assumptions that management
believes are reasonable under the given circumstances. These estimates could be
materially different under different conditions and assumptions. Additionally,
the actual amounts could differ from the estimates made. Management periodically
evaluates estimates used in the preparation of our financial statements for
continued reasonableness. We prospectively apply appropriate adjustments, if
any, to our estimates based upon our periodic evaluation. For a description of
our critical accounting policies, see Management's Discussion and Analysis in
our Annual Report on Form 10-K for the year ended December 31, 2021.
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