What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-07-31 compared with 2025-05-01 · 149 added, 104 removed, 392 unchanged (39% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Current assets:

Cash and cash equivalents $ 14,076 $ 21,425

Accounts receivable, net of allowance for credit losses of $ 6,545 a nd $ 6,328 at March 31, 2025 and December 31, 2024, respectively

Cash, cash equivalents, and restricted cash $ 66,000 $ 21,425

Accounts receivable, net of allowance for credit losses of $ 7,279 and $ 6,328 at June 30, 2025, and December 31, 2024, respectively

13,623 18,154

36 unchanged sentences

44,000 shares authorized;

27,122 and 26,671 shares issued, 27,122 and 26,671 shares outstanding at March 31, 2025 and December 31, 2024, respectively

Treasury stock at cost, zero (1) shares at March 31, 2025 and December 31, 2024

27,365 and 26,671 shares issued, 27,365 and 26,671 shares outstanding at June 30, 2025, and December 31, 2024, respectively

Treasury stock at cost, zero (1) shares at June 30, 2025, and December 31, 2024

Additional paid-in capital 509,630 504,849

Accumulated deficit ( 315,747 ) ( 307,226 )

Accumulated other comprehensive loss ( 133 ) ( 575 )

Accumulated other comprehensive income (loss) 95 ( 575 )

Total stockholders’ equity 194,252 197,315

7 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended

Three Months Ended June 30, Six Months Ended

2025 2024 2025 2024

Recurring $ 28,596 $ 27,051 $ 61,783 $ 57,324

12 unchanged sentences

Interest expense ( 809 ) ( 208 ) ( 1,260 ) ( 388 )

Other income, net 188 10

Other (expense) income, net ( 96 ) — 92 10

Loss from operations before income taxes ( 5,280 ) ( 4,129 ) ( 7,387 ) ( 4,404 )

14 unchanged sentences

(in thousands)

Common Stock Outstanding Common Stock Amount Treasury Stock Additional Paid-in Capital Accumulated Deficit Other Comprehensive Loss Total Stockholders’ Equity

Common Stock Outstanding Common Stock Amount Treasury Stock Additional Paid-in Capital Accumulated Deficit Other Comprehensive Income (Loss) Total Stockholders’ Equity

Balance at December 31, 2024 26,671 $ 267 $ — $ 504,849 $ ( 307,226 ) $ ( 575 ) $ 197,315

2 unchanged sentences

Net loss — — — — ( 2,398 ) — ( 2,398 )

Other comprehensive loss — — — — — 442 442

Other comprehensive income — — — — — 442 442

Balance at March 31, 2025 27,122 $ 271 $ — $ 507,149 $ ( 309,624 ) $ ( 133 ) $ 197,663

Stock issued upon option exercise and vesting of restricted and performance stock units 189 2 — 239 — — 241

Stock issued, ESPP 54 1 — 351 — — 352

Share-based compensation — — — 1,891 — — 1,891

Net loss — — — — ( 6,123 ) — ( 6,123 )

Other comprehensive income — — — — — 228 228

Balance at June 30, 2025 27,365 $ 274 $ — $ 509,630 $ ( 315,747 ) $ 95 $ 194,252

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Common Stock Outstanding Common Stock Amount Treasury Stock Additional Paid-in Capital Accumulated Deficit Other Comprehensive Loss Total Stockholders’ Equity

Common Stock Outstanding Common Stock Amount Treasury Stock Additional Paid-in Capital Accumulated Deficit Other Comprehensive Income (Loss) Total Stockholders’ Equity

Balance at December 31, 2023 24,998 $ 254 $ ( 5,017 ) $ 487,973 $ ( 290,440 ) $ ( 1,115 ) $ 191,655

4 unchanged sentences

Net income — — — — ( 308 ) — ( 308 )

Other comprehensive income — — — — — ( 244 ) ( 244 )

Other comprehensive loss — — — — — ( 244 ) ( 244 )

Balance at March 31, 2024 25,749 $ 258 $ — $ 494,537 $ ( 295,761 ) $ ( 1,359 ) $ 197,675

Stock issued upon option exercise and vesting of restricted stock units 58 — — 63 — — 63

Stock issued, ESPP 61 1 — 332 — — 333

Stock issued for acquisitions 50 — — 323 — — 323

Share-based compensation — — — 1,488 — — 1,488

Net loss — — — — ( 4,360 ) — ( 4,360 )

Other comprehensive income — — $ — — — 9 9

Balance at June 30, 2024 25,918 $ 259 $ — $ 496,743 $ ( 300,121 ) $ ( 1,350 ) $ 195,531

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

8 unchanged sentences

Provision for deferred income taxes 1,134 255

Loss on extinguishment of debt 103 —

Net realized gains on sales of available-for-sale securities ( 1,310 ) ( 1,294 )

Share-based compensation 3,754 3,390

Gain on disposals of long-term assets ( 7 ) —

Changes in operating assets and liabilities:

9 unchanged sentences

Cash flows from investing activities:

Acquisition of intangible asset ( 6,346 ) ( 710 )

Acquisition of intangible assets ( 6,346 ) ( 4,097 )

Purchases of property and equipment ( 393 ) ( 375 )

4 unchanged sentences

Cash flows from financing activities:

Proceeds from notes payable, net of issuance costs 57,982 —

Payments of notes payable ( 5,000 ) —

Debt extinguishment costs ( 100 ) —

Payments made on amounts due for the acquisition of intangible assets ( 1,280 ) ( 236 )

Net proceeds from issuance of common stock 1,034 572

Capital raise fees — ( 46 )

Net change in client fund obligations 20,461 ( 28,225 )

Net cash provided by financing activities 63,925 21,062

Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents 53,291 12,620

Cash and cash equivalents, beginning of period 145,712 177,622

Cash and cash equivalents, end of period $ 199,003 $ 190,242

Net cash provided by (used in) financing activities 73,097 ( 27,935 )

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents 60,434 ( 37,013 )

Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period 145,712 177,622

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period $ 206,146 $ 140,609

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Reconciliation of cash, cash equivalents, and restricted cash, and restricted cash equivalents to the Condensed Consolidated Balance Sheets

Cash and cash equivalents $ 14,076 $ 23,166

Cash, cash equivalents, and restricted cash $ 66,000 $ 20,736

Restricted cash and restricted cash equivalents included in funds held for clients 140,146 119,873

19 unchanged sentences

Our HR Compliance services combine expert guidance with scalable digital delivery.

AsurePay™, our Visa-branded payroll card, provides employees with fast, secure access to earned wages.

AsurePay™, our payroll card, provides employees with fast, secure access to earned wages.

Additionally, through our licensed brokerage, we offer Insurance Services that help employers manage benefits and reduce administrative costs.

15 unchanged sentences

GAAP”) for complete financial statements.

In the opinion of management, these interim financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation of our financial position as of March 31, 2025, comprehensive (loss) income and changes in stockholders’ equity for the three months ended March 31, 2025 and March 31, 2024, and cash flows for the three months ended March 31, 2025 and March 31, 2024.

In the opinion of management, these interim financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation of our financial position as of June 30, 2025, comprehensive loss and changes in stockholders’ equity for the three and six months ended June 30, 2025, and 2024 , and cash flows for the six months ended June 30, 2025, and 2024 .

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes thereto filed with the SEC in our annual report on Form 10-K for the fiscal year ended December 31, 2024 (our “2024 Annual Report on Form 10-K”).

11 unchanged sentences

These estimates could be materially different under different conditions and assumptions.

CASH AND CASH EQUIVALENTS

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

We consider all highly liquid investments with maturity of 90 days or less to be cash equivalents.

2 unchanged sentences

Carrying value approximates fair value.

Restricted cash consists of cash balances which are restricted as to their withdrawal or usage.

As of June 30, 2025, we have $ 40,000 of restricted cash.

Pursuant to the terms of our Credit, Security and Guaranty Agreement (as amended to date, the “Loan Agreement”) with MidCap Financial Trust (“MidCap”) we may only use these funds for Permitted Acquisitions (as defined in the Loan Agreement).

See Note 6 — Notes Payable for information about the Loan Agreement.

RECENT ACCOUNTING PRONOUNCEMENTS

3 unchanged sentences

The standard becomes effective for public entities for annual periods beginning after December 15, 2024.

We are currently evaluating this standard and the potential effects of these changes to our consolidated financial statements and have adopted this new standard for the current fiscal year.

We do not expect it will have a material impact.

ACCUMULATED OTHER COMPREHENSIVE LOSS

As of March 31, 2025 and December 31, 2024, accumulated other comprehensive loss consisted of net unrealized gains and losses on available-for-sale securities.

We are currently evaluating this standard and the potential effects of these changes to our consolidated financial statements.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

As of June 30, 2025, and December 31, 2024, accumulated other comprehensive income (loss) consisted of net unrealized gains and losses on available-for-sale securities.

NOTE 3 - BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

Asset Acquisitions

During the three months ended March 31, 2025 , we completed three customer relationship asset acquisitions.

The total purchase price of these acquisitions was $ 7,705 , which consisted of $ 6,362 of cash paid during the three months ended March 31, 2025, $ 193 of cash to be paid over the next 12 months, and the delivery of promissory notes in the amount of $ 1,150 , net of discounts.

During the six months ended June 30, 2025, we completed four customer relationship asset acquisitions.

The total purchase price of these acquisitions was $ 8,086 , which consisted of $ 6,362 of cash paid during the six months ended June 30, 2025 , $ 574 of cash to be paid over the next 12 months, and the delivery of promissory notes in the amount of $ 1,150 , net of discounts.

The acquired customer relationships are recorded as intangible assets and are being amortized on a straight-line basis over eight years .

As of March 31, 2025, the outstanding principal balance of the promissory notes for these acquisitions was $ 1,402 .

Business Combinations

2 unchanged sentences

The aggregate purchase price paid for the business was $ 15,162 , consisting of $ 7,900 paid in cash on hand, $ 3,000 in the form of a promissory note ($ 1,716 net of discount), and 525 shares of Asure common stock, which had a fair value of $ 4,262 on the day of acquisition.

As of March 31, 2025, the promissory note had an outstanding principal balance of $ 3,000 and matures on July 1, 2029.

The purchase consideration was allocated among the acquired assets, which consist of a customer relationships intangible asset with fair value of $ 2,700 , and a developed technology intangible asset with a fair value of $ 3,200 .

5 unchanged sentences

During the year ended December 31, 2024, we completed eleven customer relationship asset acquisitions.

The total purchase price of these acquisitions was $ 14,607 , which consisted of $ 5,842 of cash paid during the year ended December 31, 2024, $ 723 of cash paid during the three months ended March 31, 2025, $ 1,198 of cash to be paid over the next 12 months, $ 595 of cash to be paid thereafter, the delivery of promissory notes in the amount of $ 1,386 , net of discounts, and the delivery of 500 shares of Asure common stock, which had an aggregate fair value of $ 4,863 at the acquisition dates.

The total purchase price of these acquisitions was $ 15,202 , which consisted of $ 5,842 of cash paid during the year ended December 31, 2024, $ 1,280 of cash paid during the six months ended June 30, 2025 , $ 1,596 of cash to be paid over the next 12 months, $ 235 of cash to be paid thereafter, the delivery of promissory notes in the amount of $ 1,386 , net of discounts, and the delivery of 500 shares of Asure common stock, which had an aggregate fair value of $ 4,863 at the acquisition dates.

The purchase price for certain acquisitions is subject to adjustments for contingent events to be resolved primarily over the next one to three years , including revenue generated from the acquired assets.

The acquired customer relationships are recorded as intangible assets and are being amortized on a straight-line basis over eight years .

As of March 31, 2025, the outstanding principal balance of the promissory notes for these acquisitions was $ 1,663 .

See Note 6 — Notes Payable for information related to outstanding debt in connection with our business combinations and asset acquisitions.

NOTE 4 - INVESTMENTS AND FAIR VALUE MEASUREMENTS

11 unchanged sentences

Total Carrying Value Level 1 Level 2 Level 3

March 31, 2025

June 30, 2025

Funds held for clients

8 unchanged sentences

Cash equivalents and investments classified as available-for-sale within funds held for clients consisted of the following for the periods presented below (in thousands):

March 31, 2025

June 30, 2025

Cash equivalents $ 3,291 $ — $ ( 8 ) $ 3,283

14 unchanged sentences

(1) Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss.

As of March 31, 2025 and December 31, 2024, there were 79 and 45 securities, respectively, in an unrealized gain position and there were 61 and 89 securities in an unrealized loss position, respectively.

As of March 31, 2025, these unrealized losses were less than $ 29 individually and $ 450 in the aggregate.

As of June 30, 2025, and December 31, 2024, there were 88 and 45 securities, respectively, in an unrealized gain position and there were 52 and 89 securities in an unrealized loss position, respectively.

As of June 30, 2025, these unrealized losses were less than $ 24 individually and $ 299 in the aggregate.

As of December 31, 2024, these unrealized losses were less than $ 38 individually and $ 738 in the aggregate.

4 unchanged sentences

Factors considered in determining whether a loss is a credit loss include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

(2) At March 31, 2025 and December 31, 2024, none of these securities were classified as cash and cash equivalents on the accompanying Condensed Consolidated Balance Sheets.

(2) At June 30, 2025 and December 31, 2024, none of these securities were classified as cash and cash equivalents on the accompanying Condensed Consolidated Balance Sheets.

Funds held for clients represent assets that we have classified for use solely for the purposes of satisfying the obligations to remit funds relating to our payroll and payroll tax filing services, which are classified as client funds obligations on our Condensed Consolidated Balance Sheets.

Funds held for clients have been invested in the following categories for the periods presented below (in thousands):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Restricted cash and cash equivalents held to satisfy client funds obligations $ 140,146 $ 124,287

2 unchanged sentences

Total funds held for clients $ 213,972 $ 192,615

Expected maturities of available-for-sale securities are as of March 31, 2025, are as follows (in thousands):

Expected maturities of available-for-sale securities are as of June 30, 2025, are as follows (in thousands):

One year or less $ 14,033

2 unchanged sentences

NOTE 5 - GOODWILL AND OTHER INTANGIBLE ASSETS

December 31, 2024 Acquisitions March 31, 2025

December 31, 2024 Acquisitions June 30, 2025

Goodwill $ 94,724 $ — $ 94,724

2 unchanged sentences

A portion of acquired goodwill will be amortizable for tax purposes.

As of March 31, 2025, there has been no impairment of goodwill based on the qualitative assessments we have performed.

Gross Intangible Assets December 31, 2024 Acquisitions March 31, 2025

As of June 30, 2025, there has been no impairment of goodwill based on the qualitative assessments we have performed.

Gross Intangible Assets December 31, 2024 Acquisitions June 30, 2025

Customer relationships $ 148,097 $ 9,383 $ 157,480

7 unchanged sentences

Amortization Net

March 31, 2025

June 30, 2025

Customer relationships 8.5 $ 157,480 $ ( 91,548 ) $ 65,932

10 unchanged sentences

We record amortization expenses using the straight-line method over the estimated useful lives of the intangible assets, as noted above.

Amortization expenses recorded in Operating Expenses were $ 4,308 and $ 3,449 for the three months ended March 31, 2025 and 2024, respectively.

Amortization expenses recorded in Cost of Sales were $ 50 for the three months ended March 31, 2025 and 2024.

There was no impairment of intangibles during the three months ended March 31, 2025 based on the qualitative assessment we performed.

Amortization expenses recorded in operating expenses were $ 8,481 and $ 7,495 for the six months ended June 30, 2025 and 2024, respectively.

Amortization expenses recorded in cost of sales were $ 420 and $ 100 for the six months ended June 30, 2025 and 2024, respectively.

There was no impairment of intangibles during the six months ended June 30, 2025, based on the qualitative assessment we performed.

However, if market, political and other conditions over which we have no control continue to affect the capital markets and our stock price declines, we may experience an impairment of our intangibles in future quarters.

The following table summarizes the future estimated amortization expense relating to our intangible assets for the period presented below (in thousands):

The following table summarizes the future estimated amortization expense relating to our intangible assets as of June 30, 2025 (in thousands):

2025 (Remaining) $ 9,024

2 unchanged sentences

The following table summarizes our outstanding debt as of the dates indicated (in thousands):

Maturity Cash Interest Rate March 31, 2025 December 31, 2024

Maturity Cash Interest Rate June 30, 2025 December 31, 2024

Notes Payable – Acquisitions (1)

2 unchanged sentences

Notes Payable – Other 11/01/25 10.00 % — 5,000

Notes Payable – MidCap 04/01/30 9.33 % 60,000 —

Gross Notes Payable $ 71,345 $ 14,943

2 unchanged sentences

Gross Notes Payable Debt Issuance Costs and Debt Discount Net Notes Payable

March 31, 2025

June 30, 2025

Current portion of notes payable $ 3,541 $ ( 509 ) $ 3,032

5 unchanged sentences

Total $ 14,943 $ ( 2,226 ) $ 12,717

The following table summarizes the future principal payments related to our outstanding debt as of March 31, 2025 (in thousands):

The following table summarizes the future principal payments related to our outstanding debt as of June 30, 2025 (in thousands):

2025 (Remaining) $ 2,578

1 unchanged sentence

Notes Payable - Acquisitions

As of March 31, 2025, we have seven promissory notes related to acquisitions that occurred during the three months ended March 31, 2025 and prior years with a combined outstanding principal balance of $ 11,345 and maturity dates ranging from October 1, 2025 to July 1, 2029.

As of June 30, 2025, we have seven promissory notes related to acquisitions that occurred during the six months ended June 30, 2025, and prior years with a combined outstanding of principal balance of $ 11,345 and maturity dates ranging from October 1, 2025, to July 1, 2029.

All of our promissory notes related to acquisitions are subordinated to our Loan Agreement with MidCap (defined below).

See Note 2 — Business Combinations and Asset Acquisitions for further discussion regarding the issuance of notes payable related to acquisitions.

1 unchanged sentence

In November 2024, we delivered a promissory note to an unrelated third party in exchange for cash.

As of March 31, 2025 , the promissory note had an outstanding principal balance of $ 5,000 and matures on November 1, 2025.

On April 10, 2025, we extinguished this debt using the proceeds of a new credit facility.

See Note 12 — Subsequent Events for the details of the extinguishment of this note after the reporting period.

As of December 31, 2024, the promissory note had an outstanding principal balance of $ 5,000 and would mature on November 1, 2025.

On April 10, 2025, we opted to repay the outstanding balance on our unrelated third-party promissory note prior to its maturity using the proceeds of the Loan Agreement (described below).

In connection with the extinguishment, we paid the lender an aggregate amount of $ 5,197 (the “Payoff Amount”) in full payment of our outstanding obligations under the Note.

The Payoff Amount represented $ 5,097 of outstanding principal and interest on the unpaid principal balance and a $ 100 prepayment fee.

Notes Payable - MidCap

On April 10, 2025, we entered into a Loan Agreement with MidCap and the lenders from time to time party thereto (such lenders collectively with MidCap, the “Lenders”).

Under the Loan Agreement, we may borrow up to $ 60,000 from the Lenders, all of which has been funded as of June 30, 2025.

The first $ 20,000 was advanced on April 10, 2025, the closing date of the Loan Agreement.

The remaining $ 40,000 was advanced on June 30, 2025, which funds may only be used for Permitted Acquisitions (as defined in the Loan Agreement).

The maturity date of the loan as provided under the Loan Agreement is April 1, 2030 (the “Maturity Date”).

See Note 12 — Subsequent Events for information regarding our use of these restricted funds in connections with an acquisition.

Interest on the outstanding loan balance is payable monthly in arrears at an annual rate of Term SOFR plus 5.00 %, subject to a Secured Overnight Financing Rate (“SOFR”) floor of 2.00 %.

This rate was 9.33 % as of June 30, 2025.

Prior to April 1, 2029 (the “Amortization Start Date”), we must make interest-only payments on the outstanding loan balance.

Commencing on the Amortization Start Date and continuing on the first day of each calendar month thereafter, we will pay an amount equal to the total principal of the outstanding loan balance divided by twelve ( 12 ), for a twelve ( 12 ) month straight-line amortization of equal monthly principal payments.

Also on a monthly basis, we must pay an administrative agency fee to MidCap equal to 0.25 % of the average end-of-day principal balance outstanding during the immediately preceding month.

At the time of final payment under the loan, we will provide a final payment fee of 1.00 % of the amount advanced thereunder except in the case of a refinance of the loan with MidCap and the Lenders

We are subject to customary events of default as described in the Loan Agreement.

In such event, and for so long as it continues, the outstanding loan balance will bear interest at 2.0 % per annum in excess of the rate otherwise payable.

Under the Loan Agreement, we covenant to maintain a (1) Total Leverage Ratio (as defined in the Loan Agreement), as tested quarterly, no greater than 5.50 to 1.00, and (2) minimum liquidity threshold of 10.00 % of the outstanding principal amount of the Loans.

As of June 30, 2025, we are in compliance with all covenants under the Loan Agreement.

In connection with the Loan Agreement and subsequent draw, we incurred $ 2,025 of origination, legal, and other fees that represent debt financing costs to be deferred and amortized over the duration of the Loan Agreement, of which $ 7 was unpaid as of June 30, 2025.

As a result, net proceeds of all borrowings under the Loan Agreement were $ 57,975 .

See Note 12 — Subsequent Events for information related to amendments to our Loan Agreement.

NOTE 7 – CONTRACTS WITH CUSTOMERS AND REVENUE CONCENTRATION

Receivables from contracts with customers, net of allowance for credit losses of $ 6,545 , were $ 15,800 at March 31, 2025.

Receivables from contracts with customers, net of allowance for credit losses of $ 7,279 , w ere $ 13,623 at June 30, 2025.

Receivables from contracts with customers, net of allowance for credit losses of $ 6,328 , were $ 18,154 at December 31, 2024.

We had a provision for expected losses of $ 93 , write-offs charged against the allowance for credit losses of $ 22 , and recoveries on previously written off receivables of $ 145 during the three months ended March 31, 2025.

We had a provision for expected losses of $ 46 , write-offs charged against the allowance for credit losses of $ 3 , and recoveries on previously written off receivables of $ 279 during the three months ended March 31, 2024.

No customer represented more than 10% of our net accounts receivable bal ance as of March 31, 2025 and December 31, 2024, respectively.

We had a provision for expected losses of $ 20 , write-offs charged against the allowance for credit losses of $ 69 , and recoveries on previously written off receivables of $ 1,000 during the six months ended June 30, 2025.

We had a provision for expected losses of $ 107 , write-offs charges against the allowance for credit losses of $ 5 , and recoveries on previously written off receivables of $ 580 during the six months ended June 30, 2024.

No customer represented more than 10% of our net accounts receivable balance as of June 30, 2025, and December 31, 2024.

Contract Assets

Costs to Fulfill Contracts

Contract assets from contracts with customers were $ 2,232 and $ 1,712 at March 31, 2025 and December 31, 2024, respectively .

Contract assets from contracts with customers were $ 2,885 and $ 1,712 at June 30, 2025 and December 31, 2024 , respectively .

Costs to Obtain Contracts

Deferred commission costs from contracts with customers were $ 12,956 and $ 12,351 at March 31, 2025, and December 31, 2024 , respectively.

The amount of amortization recognized for the three months ended March 31, 2025, and March 31, 2024, was $ 737 and $ 611 , respectively.

Deferred commission costs from contracts with customers w ere $ 13,317 and $ 12,351 at June 30, 2025 and December 31, 2024 , respectively.

The amount of amortization recognized for the three and six months ended June 30, 2025 was $ 878 and $ 1,615 , respectively, and for the three and six months ended June 30, 2024 was $ 565 and $ 1,191 , respectively.

Deferred Revenue

During the three months ended March 31, 2025 and 2024 , revenue of $ 5,990 and $ 5,118 , respectively, was recognized from the deferred revenue balance at the beginning of each period.

During the three and six months ended June 30, 2025, revenue of $ 2,567 and $ 8,557 , respectively, and during the three and six months ended June 30, 2024, revenue of $ 888 and $ 6,007 , respectively, was recognized from the deferred revenue balance at the beginning of each period.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2025, approximately $ 82,125 of revenue is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 38 % of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

These amounts exc lude remaining performance obligations related to contracts for professional services for tax and payroll offerings whose remaining contractual term is less than one year as of March 31, 2025.

Revenue Co ncentration

During the three months ended March 31, 2025 and 2024, there were no customers that individually represented 10% or more of consolidated revenue.

As of June 30, 2025, approximately $ 82,390 of revenue is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 27 % of these remaining performance obligations over the next twelve months, with the balance recognized thereafter.

These amounts exclude remaining performance obligations related to contracts for professional services for tax and payroll offerings whose remaining contractual term is less than one year as of June 30, 2025.

Revenue Concentration

During the six months ended June 30, 2025 and 2024, there were no customers that individually represented 10% or more of consolidated revenue.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

Under such leases, the lessors receive annual minimum (base) rent.

The leases have original terms (excluding extension options) ranging from one year to ten years .

The leases have original terms (excluding extension options) ranging from one to ten years .

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We record base rent expense under the straight-line method over the term of the lease.

In the accompanying Condensed Consolidated Statements of Comprehensive (Loss) Income, rent expense is included in operating expenses under general and administrative expenses.

In the accompanying Condensed Consolidated Statements of Comprehensive Loss, rent expense is included in operating expenses under general and administrative expenses.

The components of the rent expense are as follows for the periods presented below (in thousands):

Three Months Ended March 31,

Six Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Operating lease cost $ 520 $ 507 $ 1,054 $ 953

2 unchanged sentences

For purposes of calculating the operating lease assets and lease liabilities, extension options are not included in the lease term unless it is reasonably certain we will exercise the option, or the lessor has the sole ability to exercise the option.

The weighted average discount rate of our operating leases is 10 % as of March 31, 2025 and December 31, 2024.

The weighted average remaining lease term is four years as of March 31, 2025 and December 31, 2024.

The weighted average discount rate of our operating leases is 10 % as of June 30, 2025, and December 31, 2024.

The weighted average remaining lease term is four years as of June 30, 2025 and December 31, 2024.

Supplemental cash flow information related to operating leases are as follows for the periods presented below (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Cash paid for amounts included in the measurement of lease liabilities:

9 unchanged sentences

Contingencies

Although we have been, are, and in the future may be, the defendant or plaintiff in various actions arising in the normal course of business, as of March 31, 2025, we were not currently a party to any material legal proceedings.

Although we have been, are, and in the future may be, the defendant or plaintiff in various actions arising in the normal course of business, as of June 30, 2025 , we were not currently a party to any material legal proceedings.

NOTE 9 - SHARE-BASED COMPENSATION

3 unchanged sentences

The number of shares reserved for issuance under the 2018 Plan is 6,998 shares.

We have an aggregate of 2,809 options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) granted and outstanding pursuant to the 2018 Plan as of March 31, 2025.

As of March 31, 2025, the number of shares available for future grant under the 2018 Plan is 163 .

Share based compensation for our stock option plans for the three months ended March 31, 2025, and March 31, 2024, was $ 1,863 and $ 1,902 , respectively.

We have an aggregate of 2,428 options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) granted and outstanding pursuant to the 2018 Plan as of June 30, 2025.

As of June 30, 2025, the number of shares available for future grant under the 2018 Plan is 2,602 .

Share-based compensation for our stock option plans for the three and six months ended June 30, 2025, was $ 1,891 and $ 3,754 , respectively, and for the three and six months ended June 30, 2024, was $ 1,488 and $ 3,390 , respectively .

Issuance of common stock related to the exercise of stock options and the vesting of restricted stock units (including restricted stock units that converted from performance stock units) are as follows for the period presented below (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Common stock issued - options (1)

Common stock issued - RSU (1)(2)

(1) Included in these amounts are 159 and 109 of restricted stock units that were converted from performance stock units which vested during the three months ended March 31, 2025 and 2024, respectively.

Effective January 1, 2024, the Compensation Committee approved the grant of PSUs pursuant to a PSU Award Grant Notice and PSU Award Agreement (the “2024 PSU Award Agreement”) under the 2018 Plan to our executive officers payable in the form of RSUs.

The number of RSUs into which the PSUs convert for each executive officer is a sliding scale between 0 % to 200 % of the target amount based on our achievement of certain performance metrics tied to our recurring revenue and gross profit for 2024.

On March 6, 2025, the PSUs converted to RSUs at 70 % of target based on the achievement of set performance metrics, and we paid out a total of 153 RSUs to our executive officers.

73 49 455 324

(1) Included in these amounts are 180 shares withheld for taxes or for cashless exercise of options during the three and six months ended June 30, 2025.

(2) Included in these amounts are 0 and 159 restricted stock units during the three and six months ended June 30, 2025, respectively, and 0 and 109 restricted stock units during the three and six months ended June 30, 2024, respectively, that were converted from performance stock units which vested during those periods.

Effective January 1, 2025, the Compensation Committee approved the grant of PSUs pursuant to a PSU Award Grant Notice and PSU Award Agreement (the “2025 PSU Award Agreement”) under the 2018 Plan to our executive officers payable in the form of RSUs.

6 unchanged sentences

The following table sets forth the computation of basic and diluted net loss per common share for the periods presented below (in thousands, except per share amounts):

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Net loss $ ( 6,123 ) $ ( 4,360 ) $ ( 8,521 ) $ ( 4,668 )

10 unchanged sentences

The CODM does not review assets in evaluating the results of the segment, and therefore, such information is not presented.

The operating financial results of our single reportable segment for three months ended March 31, 2025, and March 31, 2024, are as follows (in thousands):

The operating financial results of our single reportable segment for three and six months ended June 30, 2025 and 2024, are as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Total revenues $ 30,124 $ 28,044 $ 64,978 $ 59,696

5 unchanged sentences

Other segment expenses (1)

631 ( 46 ) 727 ( 197 )

Total expenses 36,247 32,404 73,499 64,364

Net loss $ ( 6,123 ) $ ( 4,360 ) $ ( 8,521 ) $ ( 4,668 )

(1) Other segment expenses include interest expense (income) and other business expense (income)

NOTE 12 - SUBSEQUENT EVENTS

Credit, Security and Guaranty Agreement with MidCap Financial Trust

On April 10, 2025, we entered into a Credit, Security and Guaranty Agreement (the “Loan Agreement”) with MidCap Financial Trust (“MidCap”) and the lenders from time to time party thereto (such lenders collectively with MidCap, the “Lenders”).

Under the Loan Agreement, we may borrow up to $ 60,000 from the Lenders, with $ 20,000 funded on April 10.

2025, the closing date of the Loan Agreement (the “Closing Date”).

The remaining $ 40,000 is available through March 31, 2027, in increments of $ 2,000 (subject to customary notice period requirements), provided that we maintain a Total Leverage Ratio (as defined in the Loan Agreement) of less than 4.50 to 1.00, at the time that we draw funds, and that the funds are used for permitted acquisitions (as defined in the Loan Agreement).

The maturity date of the loan as provided under the Loan Agreement is April 1, 2030 (the “Maturity Date”).

Interest on the outstanding loan balance is payable monthly in arrears at an annual rate of Term SOFR plus 5.00 %, subject to a Secured Overnight Financing Rate (“SOFR”) floor of 2.00 %.

Prior to April 1, 2029 (the “Amortization Start Date”), we must make interest-only payments on the outstanding loan balance.

Also on a monthly basis, we must pay an administrative agency fee to MidCap equal to 0.25 % of the average end-of-day principal balance outstanding during the immediately preceding month.

We are subject to customary events of default as described in the Loan Agreement.

In such event, and for so long as it continues, the outstanding loan balance will bear interest at 2.0 % per annum in excess of the rate otherwise payable.

In connection with the Loan Agreement, we incurred $ 1,954 of origination, legal, and other fees that represent debt financing costs to be deferred and amortized over the duration of the Loan Agreement.

As a result, net proceeds of the Loan Agreement were $ 18,046 .

Extinguishment of Third-Party Note Payable

On April 10, 2025, we opted to repay the outstanding balance on our unrelated third-party promissory note (the “Note”) prior to its maturity using the proceeds of the Loan Agreement.

In connection with the extinguishment, we paid the lender an aggregate amount of $ 5,197 (the “Payoff Amount”) in full payment of our outstanding obligations under the Note.

The Payoff Amount represented $ 5,097 of outstanding principal and interest on the unpaid principal balance and a $ 100 prepayment fee.

On July 1, 2025, we acquired 100 % of the membership interests of Lathem Time 2025 LLC (f/k/a Lathem Time Corporation, “Lathem”) , whose technology will be used to expand the capabilities of our broader suite of HR solutions, specifically in timekeeping systems.

The aggregate purchase price that we paid for the membership interests was $ 39,500 , consisting of $ 37,500 paid in restricted cash on hand drawn from the MidCap Loan Agreement and the remaining $ 2,000 in the form of a promissory note ($ 1,803 net of discount) with the principal balance due on July 1, 2029.

In connection with the acquisition, we recognized $ 733 of legal costs as General and Administrative expense.

Due to the close proximity of the acquisition date and our filing of this Quarterly Report on Form 10-Q for the six months ended June 30, 2025, the initial accounting for the business combination is incomplete.

Accordingly, we are unable to disclose the allocation of purchase consideration among the assets acquired and liabilities assumed as well as pro forma revenue and earnings information of the consolidated entity at this time.

We will include relevant disclosures as required in the third quarter of 2025.

During July 2025, we entered a Limited Consent, Amendment No.

1, and Joinder to the Loan Agreement and Amendment No.

2 of the Loan Agreement (the “Amendments”).

The Amendments, collectively, resulted in an increase in our minimum liquidity threshold from $ 6,000 ( 10.00 % of the outstanding balance under the Loan Agreement) to $ 10,000 .

In addition, we agreed with the Lenders to increase the final payment fee paid to the Lenders at the time of final payment under the loan from 1.00 % to 2.00 % of the amount advanced thereunder except in the case of a refinance of the loan with MidCap and the Lenders, in which case, the unaccrued portion of that fee would be waived.

Furthermore, Lathem joined the Loan Agreement as Guarantor and the Lenders consented to the Lathem transaction.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements