What changed in this filing

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Item 1. Financial Statements

2025-10-30 compared with 2025-07-31 · 185 added, 111 removed, 430 unchanged (41% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Current assets:

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

Cash and cash equivalents $ 21,520 $ 21,425

Accounts receivable, net of allowance for credit losses of $ 7,625 and $ 6,328 at September 30, 2025, and December 31, 2024, respectively

14,563 18,154

15 unchanged sentences

Accrued compensation and benefits 3,401 4,485

Operating lease liabilities, current 1,452 1,438

Lease liabilities, current 1,871 1,438

Other accrued liabilities 8,240 6,600

7 unchanged sentences

Notes payable, net of current portion 64,157 5,709

Operating lease liabilities, noncurrent 4,200 3,578

Lease liabilities, noncurrent 4,925 3,578

Other liabilities 270 358

8 unchanged sentences

44,000 shares authorized;

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

27,727 and 26,671 shares issued, 27,727 and 26,671 shares outstanding at September 30, 2025, and December 31, 2024, respectively

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

Additional paid-in capital 513,587 504,849

10 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended June 30, Six Months Ended

Three Months Ended September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

13 unchanged sentences

Interest expense ( 1,966 ) ( 274 ) ( 3,226 ) ( 662 )

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

Other income, net 220 — 312 10

Loss from operations before income taxes ( 4,995 ) ( 3,731 ) ( 12,382 ) ( 8,135 )

1 unchanged sentence

Net loss ( 5,362 ) ( 3,901 ) ( 13,883 ) ( 8,569 )

Other comprehensive income (loss):

Unrealized income (loss) on marketable securities 228 9 670 ( 235 )

Other comprehensive income:

Unrealized gain on marketable securities 237 1,340 907 1,105

Comprehensive loss $ ( 5,125 ) $ ( 2,561 ) $ ( 12,976 ) $ ( 7,464 )

22 unchanged sentences

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

Stock issued upon option exercise and vesting of restricted stock units 100 1 — ( 24 ) — — ( 23 )

Stock issued for acquisitions 124 1 — 956 — — 957

Stock issued for debt payment 138 1 1,058 — — 1,059

Share-based compensation — — — 1,967 — — 1,967

Net loss — — — — ( 5,362 ) — ( 5,362 )

Other comprehensive income — — — — — 237 237

Balance at September 30, 2025 27,727 $ 277 $ — $ 513,587 $ ( 321,109 ) $ 332 $ 193,087

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

18 unchanged sentences

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

Stock issued upon option exercise and vesting of restricted stock units 97 1 — 329 — — 330

Stock issued for acquisitions 525 5 — 4,257 — — 4,262

Share-based compensation — — — 1,591 — — 1,591

Net loss — — — — ( 3,901 ) — ( 3,901 )

Other comprehensive income — — $ — — — 1,340 1,340

Balance at September 30, 2024 26,540 $ 265 $ — $ 502,920 $ ( 304,022 ) $ ( 10 ) $ 199,153

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

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

8 unchanged sentences

Provision for deferred income taxes 1,503 388

Loss on extinguishment of debt 103 —

Gain on extinguishment of debt ( 119 ) —

Net realized gains on sales of available-for-sale securities ( 2,068 ) ( 1,929 )

Share-based compensation 5,721 4,981

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

Changes in operating assets and liabilities:

5 unchanged sentences

Accrued expenses and other long-term obligations ( 2,918 ) ( 1,052 )

Operating lease liabilities ( 825 ) ( 374 )

Lease liabilities ( 1,236 ) ( 1,139 )

Deferred revenue ( 5,923 ) ( 4,539 )

1 unchanged sentence

Cash flows from investing activities:

Business combination consideration, net of cash acquired ( 37,500 ) ( 7,900 )

Acquisition of intangible assets ( 14,967 ) ( 4,497 )

5 unchanged sentences

Cash flows from financing activities:

Payments of finance lease principal ( 5 ) —

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

6 unchanged sentences

Net cash provided by (used in) financing activities 7,001 ( 26,291 )

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

Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents ( 60,245 ) ( 44,894 )

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

4 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

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

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

Cash and cash equivalents $ 21,520 $ 11,248

Restricted cash and restricted cash equivalents included in funds held for clients 63,947 121,480

2 unchanged sentences

Cash paid for interest $ 1,720 $ —

Cash paid for income taxes $ — $ 15

Non-cash investing and financing activities:

2 unchanged sentences

Shares issued for acquisitions $ 956 $ 9,125

Shares issued for debt payments $ 1,059 $ —

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

11 unchanged sentences

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

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

AsurePay™, our payroll card, which we provide in association with our partners, offers employees fast, secure access to earned wages.

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

11 unchanged sentences

Asure Payroll & Tax, Asure Tax Management Solutions, AsureRecruiting™, Asure Time & Attendance, Asure HR Compliance, Asure Insurance and Benefits Administration, AsureMarketplace™, and AsurePay™.

We develop, market, sell and support our offerings nationwide through our principal office in Austin, Texas and from our other office locations in Alabama, California, Florida, New Jersey, New York, North Carolina, Ohio, South Dakota, Tennessee, and Vermont.

We develop, market, sell and support our offerings nationwide through our principal office in Austin, Texas, and from our other office locations in Alabama, California, Florida, Georgia, New Jersey, New York, North Carolina, Ohio, South Dakota, Tennessee, Texas, Virginia, and Vermont.

We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accordingly, they do not include all information and footnotes required under U.S.

1 unchanged sentence

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 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 .

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 September 30, 2025, comprehensive loss and changes in stockholders’ equity for the three and nine months ended September 30, 2025, and 2024 , and cash flows for the nine months ended September 30, 2025, and 2024 .

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

These reclassifications had no effect on the consolidated financial position or consolidated results of operations of the Company.

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, CASH EQUIVALENTS, AND RESTRICTED CASH

CASH AND CASH EQUIVALENTS

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.

Our inventories consist primarily of finished goods and are stated at the lower of cost or net realizable value with cost determined on an average cost basis.

Items included in costs of inventory consist of labor, material, overhead costs, freight in, and additional transactions costs such as taxes and tariffs.

Provisions are made if the cost of inventories exceeds their net realizable value and is charged to cost of sales.

We did not recognize any provision for the three and nine months ended September 30, 2025 and 2024.

RECENT ACCOUNTING PRONOUNCEMENTS

4 unchanged sentences

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

In July 2025, the FASB issued ASU No.

2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to assume that, for estimating expected credit losses, current conditions as of the balance sheet date will remain constant through the remaining life of the assets.

The practical expedient is available to all entities.

The standard becomes effective for all entities for annual periods beginning after December 15, 2025.

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.

As of September 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

Business Combinations

Effective 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 $ 39,497 , consisting of $ 37,500 paid in cash on hand and the remaining $ 2,221 in the form of a promissory note ($ 1,997 net of discount).

The following table summarizes the amounts of assets acquired and liabilities assumed at the acquisition date, valued at their estimated acquisition-date fair value:

Acquisition Date Fair Value

Accounts receivable $ 2,020

Inventory 3,380

Prepaid expenses and other current assets 177

Property and equipment, net 185

Intangible assets, net 16,500

Operating lease assets, net 826

Other assets, net 777

Total assets acquired 23,865

Accounts payable 474

Operating lease liabilities, current 826

Other accrued liabilities 615

Deferred revenue 3,488

Total liabilities assumed 5,403

Total net assets acquired 18,462

Goodwill 21,035

Total purchase price $ 39,497

The goodwill of $ 21,035 arising from the acquisition consists largely of the synergies and economies of scale expected from combining our operations with Lathem and is expected to be deductible for tax purposes.

Lathem contributed net revenues of $ 4,631 , of which $ 2,710 are recurring revenues, and net income of $ 708 to our consolidated total operating activity from the acquisition date of July 1, 2025, through September 30, 2025.

The following unaudited pro forma financial information presents combined results of operations for each of the periods presented as if the transaction had occurred as of January 1, 2024, prepared in accordance with ASC 805:

Pro Forma (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

Total revenue

$ 36,252 $ 33,936 $ 110,608 $ 102,797

$ ( 5,174 ) $ ( 4,923 ) $ ( 13,682 ) $ ( 12,622 )

Pro forma earnings for the nine months ended September 30, 2025, were adjusted to exclude $ 733 of legal costs associated with the acquisition that were recognized in general and administrative expense.

Pro forma earnings for the nine months ended September 30, 2024, were adjusted to include these charges.

Asset Acquisitions

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.

During the nine months ended September 30, 2025, we completed six customer relationship asset acquisitions.

The total purchase price of these acquisitions was $ 19,363 , which consisted of $ 14,990 of cash paid during the nine months ended September 30, 2025 , $ 371 of cash to be paid over the next 12 months, the delivery of promissory notes in the amount of $ 3,046 , net of discounts, and the delivery of 124 shares of Asure common stock, which had an aggregate fair value of $ 956 at the acquisition dates.

The purchase prices for certain of these acquisitions are subject to adjustments for contingent events which are generally expected to occur over the next one to two years following September 30, 2025, 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 .

5 unchanged sentences

Additionally, we assumed $ 237 of deferred revenue and $ 498 of other accrued liabilities as part of the transaction.

The intangible assets are being amortized on a straight-line basis over eight and five years , respectively.

The intangible assets are being amortized on a straight-line basis over eight and seven years , respectively.

The remaining $ 8,713 of excess purchase consideration was allocated to goodwill, which is generally expected to be deductible for tax purposes.

2 unchanged sentences

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

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 total purchase price of these acquisitions was $ 15,206 , which consisted of $ 5,842 of cash paid during the year ended December 31, 2024, $ 1,381 of cash paid during the nine months ended September 30, 2025 , $ 1,462 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 $ 1,423 , 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 prices for certain of these acquisitions are subject to adjustments for contingent events which are generally expected to occur over the next one to three years following September 30, 2025, 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 .

13 unchanged sentences

Total Carrying Value Level 1 Level 2 Level 3

June 30, 2025

September 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):

June 30, 2025

September 30, 2025

Cash equivalents $ 1,251 $ — $ ( 1 ) $ 1,250

13 unchanged sentences

$ 77,011 $ 170 $ ( 748 ) $ 76,433

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

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.

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

As of September 30, 2025, and December 31, 2024, there were 122 and 45 securities, respectively, in an unrealized gain position and there were 30 and 89 securities in an unrealized loss position, respectively.

As of September 30, 2025, these unrealized losses were less than $ 18 individually and $ 151 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 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.

(2) At September 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):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Restricted cash and cash equivalents held to satisfy client funds obligations $ 63,947 $ 124,287

2 unchanged sentences

Total funds held for clients $ 148,338 $ 192,615

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

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

One year or less $ 11,376

2 unchanged sentences

NOTE 5 - GOODWILL AND OTHER INTANGIBLE ASSETS

December 31, 2024 Acquisitions June 30, 2025

December 31, 2024 Acquisitions September 30, 2025

Goodwill $ 94,724 $ 21,035 $ 115,759

2 unchanged sentences

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

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

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

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

Customer relationships $ 148,097 $ 32,850 $ 180,947

7 unchanged sentences

Amortization Net

June 30, 2025

September 30, 2025

Customer relationships 8.5 $ 180,947 $ ( 96,313 ) $ 84,634

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 $ 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.

Amortization expenses recorded in operating expenses were $ 13,250 and $ 11,790 for the nine months ended September 30, 2025 and 2024, respectively.

Amortization expenses recorded in cost of sales were $ 783 and $ 150 for the nine months ended September 30, 2025 and 2024, respectively.

There was no impairment of intangibles during the nine months ended September 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 as of June 30, 2025 (in thousands):

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

2025 (Remaining) $ 5,368

2 unchanged sentences

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

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

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

Notes Payable – Acquisitions (1)

7 unchanged sentences

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

June 30, 2025

September 30, 2025

Current portion of notes payable $ 6,784 $ ( 571 ) $ 6,213

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 June 30, 2025 (in thousands):

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

2025 (Remaining) $ 2,200

1 unchanged sentence

Notes Payable - Acquisitions

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).

As of September 30, 2025, we have nine promissory notes related to acquisitions that occurred during the nine months ended September 30, 2025, and prior years with a combined outstanding principal balance of $ 14,475 and maturity dates ranging from October 1, 2025, to July 1, 2029.

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

See Note 3 — Business Combinations and Asset Acquisitions for further discussion regarding the issuance of notes payable related to acquisitions.

On August 13, 2025, we prepaid the outstanding balance on one of our acquisition-related promissory notes through the issuance of shares of our common stock.

Prior to extinguishment, the promissory note had an outstanding principal balance of $ 1,000 and would mature on February 22, 2026.

In connection with the extinguishment, the principal balance of the note was reduced by $ 118 for indemnifiable claims related to the acquisition.

The remaining $ 956 of principal and accrued interest was repaid with 91 shares of common stock, having a fair value of $ 701 .

See Note 12 — Subsequent Events for the details of an extinguishment of an acquisition-related promissory note through the issuance of shares of our common stock after the reporting period.

Notes Payable - Other

1 unchanged sentence

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).

On April 10, 2025, we agreed 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.

2 unchanged sentences

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).

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

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.

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

This rate was 9.66 % as of September 30, 2025.

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

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

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 $ 7,279 , w ere $ 13,623 at June 30, 2025.

Receivables from contracts with customers, net of allowance for credit losses of $ 7,625 , w ere $ 14,563 at September 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 $ 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.

We had a provision for expected losses of $ 1,121 , write-offs charged against the allowance for credit losses of $ 562 , and recoveries on previously written off receivables of $ 737 during the nine months ended September 30, 2025.

We had a provision for expected losses of $ 111 , write-offs charges against the allowance for credit losses of $ 16 , and recoveries on previously written off receivables of $ 1,267 during the nine months ended September 30, 2024.

The increase in provision for expected losses is primarily due to regulatory and legislative changes impacting our expectation on current and future credit losses related to professional service receivables associated with Employee Retention Tax Credits.

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

Contract Assets

Costs to Fulfill Contracts

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

Contract assets from contracts with customers were $ 2,726 and $ 1,712 at September 30, 2025 and December 31, 2024 , respectively .

Costs to Obtain Contracts

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 commission costs from contracts with customers w ere $ 14,467 and $ 12,351 at September 30, 2025 and December 31, 2024 , respectively.

The amount of amortization recognized for the three and nine months ended September 30, 2025 was $ 839 and $ 2,453 , respectively, and for the three and nine months ended September 30, 2024 was $ 689 and $ 1,548 , respectively.

Deferred Revenue

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.

During the three and nine months ended September 30, 2025, revenue of $ 1,834 and $ 10,391 , respectively, and during the three and nine months ended September 30, 2024, revenue of $ 286 and $ 6,409 , respectively, was recognized from the deferred revenue balance at the beginning of each period.

Transaction Price Allocated to the Remaining Performance Obligations

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

As of September 30, 2025, approximately $ 84,701 of revenue is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 39 % 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.

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

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Lease Commitments

We have entered into office space lease agreements, which qualify as operating leases under ASU No.

2016-02, “Leases (Topic 842)”.

We have entered into office space lease agreements, which qualify as operating leases under ASC 842 (“Leases”).

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

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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):

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

We have entered into a software license agreement, which qualifies as a finance lease under ASC 842 (“Leases”).

Under this lease, the lessor receives fixed payments over a period of four years , after which we take ownership of the software and source code.

The resulting software asset is included in property and equipment, net, in the accompanying Condensed Consolidated Balance Sheets.

We record amortization for the related asset over its useful life on a straight-line basis and recognize interest expense under the effective interest method over the term of the lease.

In the accompanying Condensed Consolidated Statements of Comprehensive Loss, these expenses are included in general and administrative expenses and interest expense, respectively.

The components of the lease-related expenses are as follows for the periods presented below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Operating lease cost:

Rent expense $ 577 $ 501 $ 1,631 $ 1,454

Sublease income — — — ( 4 )

Net rent expense $ 520 $ 507 $ 1,054 $ 949

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 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):

Six Months Ended June 30,

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

Total operating lease cost $ 577 $ 501 $ 1,631 $ 1,450

Finance lease cost:

Amortization of assets $ 5 $ — $ 5 $ —

Interest on lease liabilities 2 — 2 —

Total finance lease cost $ 7 $ — $ 7 $ —

For purposes of calculating the 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 September 30, 2025, and December 31, 2024.

The weighted average remaining lease term for our operating leases is three years and four years as of September 30, 2025 and December 31, 2024, respectively.

The discount rate of our finance lease is 11 % as of September 30, 2025.

The remaining lease term for our finance lease is four years as of September 30, 2025.

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

Nine Months Ended September 30,

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

Operating cash outflows from operating leases $ 1,652 $ 1,560

Non-cash operating activities:

Non-cash activities:

Operating lease assets obtained or removed in exchange for new, modified or terminated operating lease liabilities $ 2,723 $ 419

Future minimum commitments over the life of all operating leases, which exclude variable rent payments, are as follows for the period presented below (in thousands):

Finance lease assets obtained or removed in exchange for new, modified, or terminated finance lease liabilities $ 284 $ —

Future minimum commitments over the life of all operating and financing leases, which exclude variable rent payments, are as follows for the period presented below (in thousands):

Operating Leases Finance Leases

2025 (Remaining) $ 613 $ 22

2026 2,258 88

2027 1,954 88

2028 1,787 87

2029 1,035 58

Thereafter 27 —

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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 June 30, 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 September 30, 2025 , we were not currently a party to any material legal proceedings.

NOTE 9 - SHARE-BASED COMPENSATION

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

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 .

We have an aggregate of 2,341 options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) granted and outstanding pursuant to the 2018 Plan as of September 30, 2025.

As of September 30, 2025, the number of shares available for future grant under the 2018 Plan is 2,589 .

Share-based compensation for our stock option plans for the three and nine months ended September 30, 2025, was $ 1,967 and $ 5,721 , respectively, and for the three and nine months ended September 30, 2024, was $ 1,591 and $ 4,981 , 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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100 46 555 370

(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.

(1) Included in these amounts are 4 and 184 shares withheld for taxes or in connection with a cashless exercise of options during the three and nine months ended September 30, 2025, respectively.

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

There were no stock units converted from performance stock units during the three months ended September 30, 2025 and 2024.

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.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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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 and six months ended June 30, 2025 and 2024, are as follows (in thousands):

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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Amortization, depreciation, and other noncash expenses 9,518 7,604 26,566 21,619

Other segment expenses (1)

Other segment expenses (income) (1)

1,501 109 2,221 ( 110 )

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NOTE 12 - SUBSEQUENT EVENTS

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.

Subsequent to September 30, 2025, but before the filing of the financial statements, we completed a customer relationship asset acquisition.

The total purchase price of this acquisition was $ 1,146 , which consisted of $ 700 of cash paid at close and the delivery of a promissory note in the amount of $ 446 , net of discount.

On October 30, 2025, we partially repaid the outstanding balance on one of our acquisition-related promissory notes through the issuance of shares of our common stock and cash payment of accrued interest.

Prior to the transaction, the promissory note had an outstanding principal balance of $ 3,000 and would mature on July 1, 2029.

In connection with the partial extinguishment, the holders of the promissory note agreed to reduce the principal balance of the portion of the note by $ 300 in consideration of the early repayment.

The remaining $ 1,700 of principal was repaid with 201 shares of common stock, having an estimated fair value of $ 1,511 , and $ 20 of accrued interest was paid with cash.

After the partial extinguishment, the outstanding principal balance of the note is $ 1,000 .

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