What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-03-06 · 66 added, 77 removed, 147 unchanged (49% of the section changed)

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We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs.

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.

The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions, many of which are outside of our control.

If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.

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We offer human resources (“HR”) tools necessary to build a thriving workforce, provide the resources to stay compliant with dynamic federal, state, and local tax jurisdictions and their respective labor laws, freeing cash flows so these businesses can spend their financial capital on growing their businesses rather than administrative overhead that can impede growth.

Our solutions also provide new ways for employers to connect with their employees in order to enhance their relationships with their talent.

Asure’s HCM suite (“Asure HCM”) includes Payroll & Tax solutions, Recruiting, HR compliance and services, Time & Attendance software, Insurance and Benefits Administration, and data integrations that enable employers and their employees to enhance efficiencies and take advantage of value-added solutions, which we refer to as AsureMarketplace™.

AsureMarketplace™ automates interactions between our HCM systems with third-party providers to enhance efficiency, improve accuracy and to extend the range of services offered to employers and their employees.

Our approach to HR compliance services leverages technology and on-demand content to enhance scalability and efficiency while prioritizing client interactions.

We offer our services directly and indirectly through our network of Reseller Partners.

Our solutions also provide new ways for employers to connect with their employees and strengthen relationships with their talent.

At the core of our offering is the Asure HCM platform—a SaaS-based system that includes Payroll & Tax filing, HR management tools, Time & Attendance software, Recruiting, and Benefits Administration.

This platform serves as the foundation for delivering both our core software and a range of complementary, technology-enabled services.

These include AsureMarketplace™, which automates data exchange between our HCM system and third-party providers to increase efficiency, accuracy, and breadth of services.

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

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.

We deliver our solutions directly and through a national network of Reseller Partners.

We strive to be the most trusted HCM resource.

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Asure has two types of partners:

Reseller Partners that white label our product s while providing value-added services to their clients (our indirect clients) and Referral Partners that provide us with client leads but do not resell our solutions.

As of December 31, 2024, Asure had more th an 100,000 clients, with approximately 20% dire ct and the remaining clients indirect who have contracts with Reseller Partners.

We plan to continue to enhance our products and technologies by leveraging the latest technology stack, Robotic Process Automation (“RPA”), artificial intelligence (“AI”), and development partnerships.

Reseller Partners that white label our products while providing value-added services to their clients (our indirect clients) and Referral Partners that provide us with client leads but do not resell our solutions.

As of December 31, 2025, Asure had more than 100,000 clients, with approximately 35% being direct and the remaining clients being indirect through contracts with Reseller Partners.

We plan to continue to enhance our products and technologies by leveraging the latest technology stack, RPA, AI, and development partnerships.

We expect that our expanded investment in product, engineering, SaaS hosting, mobile and hardware technologies will lay the groundwork for broader market opportunities and represent a key aspect of our competitive differentiation.

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Asure has several forms of revenue that result from our business model:

Software-as-a-service revenue is generated when clients utilize our product suite for their recurring human resource needs—primarily payroll, tax, recruiting, HR compliance, time and attendance, insurance and benefits administration and AsureMarketplace™.

Software-as-a-service revenue is generated when clients utilize our product suite for their recurring human resource needs—primarily payroll, tax, HR compliance, time and attendance, recruiting, insurance and benefits administration and AsureMarketplace™.

This also contains revenue generated from quarterly and annual reporting requirements to local, state and federal regulatory agencies.

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• Consolidated revenue of $140,541 for 2025, representing a 17% increase over revenue in 2024.

• Recurring revenue of $114,471 for 2024, representing a 15% increase over recurring revenue in 2023.

• Recurring revenue of $127,288 for 2025, representing an 11% increase over recurring revenue in 2024.

• Net loss of $13,126 for 2025, an increase of $1,353 from prior year loss of $11,773.

• Gross profit of $94,874 for 2025 versus $82,107 in 2024.

RESULTS OF OPERATIONS (in thousands)

RESULTS OF OPERATIONS (dollar amounts in thousands)

The following table sets forth, for the fiscal periods indicated, the percentage of total revenues represented by certain items in our Consolidated Statements of Comprehensive Loss:

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Interest expense (4) % (1) %

Loss on extinguishment of debt — % (1) %

Other (expense) income, net — % — %

Other income, net — % — %

Loss from operations before income taxes (9) % (9) %

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While revenue mix varies by product, recurring revenue represented over 91% of total revenue in the year ended 2025, compared to 96% in 2024.

This decrease was primarily due to the increase in hardware sales as a result of time and attendance business growth.

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

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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.

We typically invest funds held for clients in money market funds, demand deposit accounts, commercial paper, and fixed income securities 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.

Refer to “Risk Factors” in Part I, 1A.

for more information about risks related to our ERTC business.

Recurring revenue for the year ended December 31, 2025, was $127,288, an increase of $12,817, or 11%, from $114,471 for the year ended December 31, 2024.

The increase is primarily due to an increase of approximately $8,718 in acquisition related revenue and an increase of $4,323 for new multi-year licensing agreements with larger employers finalized during the year.

The increase is primarily due to an increase in time and attendance and payroll tax management solutions.

Professional Services, Hardware and Other Revenues

Professional Services, Hardware and Other Revenues represents implementation fees, one-time consulting projects, on-premise maintenance, hardware devices to enhance our software products as well as ERTC revenues that are transactional in nature.

Professional services, hardware and other revenue decreased by $14,027, or 72%, for the year ended December 31, 2024, from the similar period in 2023, primarily due to the discontinuation of non-recurring ERTC revenues.

ERTC revenues were originally expected to expire during 2024 and 2025;

however, subsequent legislation impacted revenues and cash collections during 2024 and is expected to continue in 2025.

For example, in January 2024, the United States House of Representatives passed the Tax Relief for American Families Act of 2024, which sets an expiration date of January 31, 2024, on additional claims for ERTC that can potentially apply retroactively.

In September 2023, the IRS announced a moratorium through the end of the year on processing new ERTC claims due to concerns over questionable or fraudulent claims.

During 2024, the IRS issued multiple releases announcing they had resumed processing of ERTC claims, additionally indicating that most claims are being approved.

Refer to “Risk Factors” in Part I, 1A.

for more information about risks related to our ERTC business.

Professional services, hardware and other revenues represents implementation fees, one-time consulting projects, on-premise maintenance, hardware devices to enhance our software products.

Professional services, hardware and other revenue increased by $7,932, or 149%, for the year ended December 31, 2025, from the similar period in 2024, primarily due to an increase in hardware related to our time and attendance solutions.

Our total customer base is widely spread across industries and sizes.

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Gross Profit and Gross Margin

Consolidated gross profit for the year ended December 31, 2024, was $82,107, a decrease of $3,430, or 4%, from $85,537 for the year ended December 31, 2023.

Consolidated gross profit for the year ended December 31, 2025, was $94,874, an increase of $12,767, or 16%, from $82,107 for the year ended December 31, 2024.

Gross margin as a percentage of revenue was 68% for the year ended December 31, 2025, as compared to 69% for the year ended December 31, 2024.

The decrease is primarily attributable to the decrease in revenue in higher margin revenue streams.

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.

The decrease is primarily attributable to the growth in our time and attendance solutions, which are lower margin in comparison to our other offerings.

Our cost of sales relates primarily to direct product costs, compensation for operations and related consulting expenses, hardware expenses, cloud hosting expenses and the amortization of our capitalized software development costs.

We include intangible amortization related to developed and acquired technology within cost of sales.

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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.

Sales and marketing expenses for the year ended December 31, 2024, were $28,316, a decrease of $418, or 1%, from $28,734 for the year ended December 31, 2023, primarily due to an increase in direct sales personnel offset by decreases resulting from reduced ERTC revenues.

Sales and marketing expenses for the year ended December 31, 2025, were $33,569, an increase of $5,253, or 19%, from $28,316 for the year ended December 31, 2024, primarily due to an increase in compensation-related expenses due to changes in headcount associated with sales and marketing functions.

Sales and marketing expenses as a percentage of revenue remained flat at 24% for the year ended December 31, 2025 and 2024.

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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 year ended December 31, 2024, were $40,499, an increase of $1,166, or 3%, from $39,333 for the year ended December 31, 2023, primarily attributable to an increase in personnel costs from higher healthcare premiums and an increase in share-based compensation.

General and administrative expenses as a percentage of revenue increased to 34% for the year ended December 31, 2024, from 33% for the same period in 2023.

General and administrative expenses for the year ended December 31, 2025, were $45,831, an increase of $5,332, or 13%, from $40,499 for the year ended December 31, 2024, primarily attributable to an increased compensation-related expenses and contractors due to changes in headcount associated with administrative functions.

General and administrative expenses as a percentage of revenue decreased to 33% for the year ended December 31, 2025, from 34% for the same period in 2024.

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.

R&D expenses for the year ended December 31, 2024, were $7,807, an increase of $961, or 14%, from $6,846 for the year ended December 31, 2023.

The increase in R&D expense is primarily attributable to an increase in personnel costs from higher wages and contractor usage, partially offset by an increase in capitalized software expenses driven by continued investments in development of our products.

R&D expenses as a percentage of revenues increased to 7% for the year ended December 31, 2024, from 6% for the same period in 2023.

R&D expenses for the year ended December 31, 2025, were $5,599, a decrease of $2,208, or 28%, from $7,807 for the year ended December 31, 2024.

The decrease in R&D expense is primarily attributable to an increase in capitalization of software development expenses driven by continued investments in the development of our products, partially offset by an increase in personnel compensation expenses.

R&D expenses as a percentage of revenues decreased to 4% for the year ended December 31, 2025, from 7% for the same period in 2024.

Amortization of Intangible Assets

Amortization expense in operating expenses for the year ended December 31, 2025, was $18,283, an increase of $2,061, or 13%, from $16,222 for the year ended December 31, 2024.

The increase in Amortization expense is primarily attributable to increased acquisition activity compared to the prior year.

The increase in amortization expense is primarily attributable to our continuing acquisitions strategy, with additional acquisitions occurring each quarter .

Amortization expense as a percentage of revenue was 13% for the year ended December 31, 2025, from 14% for the same period in 2024.

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Interest expense for the year ended December 31, 2025, was $5,056 compared to interest expense of $1,024 for the year ended December 31, 2024.

The decrease in interest expense, net relative to the prior year is primarily attributable to our payoff of the outstanding debt under the credit facility with Structural Capital Investments III LP (“Structural Capital”) in 2023.

The increase in interest expense relative to the prior year is primarily attributable to interest accrued under our Loan Agreement (defined below) with MidCap Financial Trust (“MidCap”).

Interest expense as a percentage of revenue was 4% for the year ended December 31, 2025, compared to 1% for the year ended December 31, 2024.

Interest expenses for the years ended December 31, 2025 and 2024, are composed primarily of interest expense on notes payable.

Loss on Extinguishment of Debt

Loss on extinguishment of debt for the year ended December 31, 2024, was $0 compared to a loss of $1,517 for the year ended December 31, 2023.

There was no loss on extinguishment of debt for the year ended December 31, 2024, compared to 1% of revenue for the year ended December 31, 2023.

For the year ended December 31, 2023, the amount in loss on extinguishment of debt consisted of loss recognized as a result of the termination of our credit facility with Structural Capital.

Other (Expense) Income, Net

Other (expense) income, net for the year ended December 31, 2024, was an expense of $8 compared to income of $292 for the year ended December 31, 2023 .

Other (expense) income, net as a percentage of revenue was negligible for the years ended December 31, 2024 and 2023, respectively.

For the year ended December 31, 2024 , the amounts in other (expense) income, net primarily consisted of bank fees.

F or the year ended December 31, 2023 , the amounts in other (expense) income, net primarily consisted of losses on disposal of assets.

For the year ended December 31, 2024 and 2023, we recorded an income tax expense attributable to continuing operations of $933 and $109, respectively, an increase of $824.

Other Income, Net

Other income, net for the year ended December 31, 2025, was $121 compared to $8 for the year ended December 31, 2024 .

Other income, net as a percentage of revenue was negligible for the years ended December 31, 2025 and 2024.

For the year ended December 31, 2025 , the amounts in other income, net p rimarily consisted of net gains from settlements of debt via equity issuance.

For the year ended December 31, 2024 , the amounts in other income, net primarily consisted of bank fees .

For the year ended December 31, 2025 and 2024, we recorded an income tax expense attributable to continuing operations of $652 and $933, respectively, a decrease of $281.

Loss From Operations

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Loss from operations as a percentage of total revenues was 9% and 10% for the years ended December 31, 2025 and 2024, respectively.

LIQUIDITY AND CAPITAL RESOURCES (in thousands)

LIQUIDITY AND CAPITAL RESOURCES (dollar amounts in thousands)

December 31, 2025 December 31, 2024

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Working Capital .

We had working capital of $13,641 at December 31, 2024, a decrease of $12,239 from working capital of $25,880 at December 31, 2023.

We had working capital of $18,646 at December 31, 2025, an increase of $5,005 from working capital of $13,641 at December 31, 2024.

Working capital as of December 31, 2025 and 2024, includes $11,622 and $8,363 of short-term deferred revenue, respectively.

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Operating Activities .

Net cash provided by operating activities of $9,388 for the year ended December 31, 2024, was driven by non-cash adjustments to our net loss of approximately $28,940, primarily due to depreciation and amortization.

Net cash provided by operating activities of $18,900 for the year ended December 31, 2023, was driven by non-cash adjustments to our net loss of approximately $29,530, primarily due to depreciation and amortization, offset by our net loss of $9,214.

For the year ended December 31, 2023, changes in operating assets and liabilities resulted in a use of $1,416 in cash.

Net cash provided by operating activities of $22,218 for the year ended December 31, 2025, was driven by non-cash adjustments to our net loss of approximately $39,291, primarily due to depreciation, amortization, and share-based compensation.

This was offset by changes in operating assets and liabilities, which resulted in a use of $3,947 in cash.

This was offset by changes in operating assets and liabilities, which resulted in a use of $7,779 in cash.

Investing Activities .

Net cash used in investing activities of $19,256 for the year ended December 31, 2024, is primarily due to purchases of available-for-sale securities of $15,643, partially offset by proceeds from sales and maturities of available-for-sale securities of $20,522.

Net cash used in investing activities of $29,525 for the year ended December 31, 2023, is primarily due to the purchase of available-for-sale securities of $27,647, partially offset by proceeds from sales and maturities of available-for-sale securities of $14,385.

Net cash used in investing activities of $86,677 for the year ended December 31, 2025, is primarily due to cash paid in business combinations or asset acquisitions of $53,166, which primarily consists of the purchase of Lathem, purchases of available-for-sale securities of $44,614, and software capitalization costs of $13,733, partially offset by proceeds from sales and maturities of available-for-sale securities of $25,623.

Net cash used in investing activities of $19,256 for the year ended December 31, 2024, is primarily due to cash paid in business combinations or asset acquisitions of $13,256 and purchases of available-for-sale securities of $15,643, partially offset by proceeds from sales and maturities of available-for-sale securities of $20,522.

Financing Activities .

Net cash used in financing activities was $22,042 for the year ended December 31, 2024, which primarily consisted of a net decrease in client fund obligations of $26,342, offset by proceeds from notes payable, net of issuance costs of $4,995.

Net cash provided by financing activities was $24,205 for the year ended December 31, 2023, which primarily consisted of net proceeds from the issuance of common stock of $46,800, a net increase in client fund obligations of $13,931, offset by payments of notes payable of $35,627.

On October 31, 2024, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”).

The Sales Agreement provides for the offer and sale of up to $25,000 of our newly issued common stock, from time to time through an “at the market offering” program.

We will specify the parameters for the sale of the shares of common stock, including the number of shares to be issued, the time period during which sales are requested to be made, any limitation on the number of shares that may be sold in any one trading day and any minimum price below which sales may not be made.

We may offer and sell up to $25,000 of shares of common stock pursuant to the Sales Agreement.

Actual sales of common stock under the Sales Agreement will depend on a variety of factors including, among other things, market conditions, the trading price of the Common Stock and potential funding needs.

As a result, the full amount of capital may not be fully realized.

We intend to use the net proceeds from these at-market offerings, if any, for general corporate purposes.

Our general corporate purposes include, but are not limited to, repayment or refinancing of debt, capital expenditures, funding possible acquisitions, working capital and satisfaction of other obligations.

As of December 31, 2024, there are $25,000 of shares of common stock available for issuance under this acquisition shelf registration statement.

On September 12, 2023, we terminated the Loan and Security Agreement (the “Loan Agreement”) dated September 10, 2021, with Structural Capital, and Ocean II PLO LLC, as administrative and collateral agent for the Lenders (“Agent”), and repaid the secured promissory note (the “Note”) with Agent evidencing our obligations under the Loan Agreement.

In connection with the termination, we paid an aggregate amount of $30,927 (the “Payoff Amount”) in full payment of the outstanding obligations under the Loan Agreement and Note.

The Payoff Amount represented $30,617 of outstanding principal and interest on the unpaid principal balance, a prepayment fee in the amount of $306 and an immaterial amount of fees and other expenses due to Agent.

On August 16, 2023, we entered into an underwriting agreement (the “Underwriting Agreement”) with Stifel, Nicolaus & Company, Incorporated and Craig-Hallum Capital Group LLC, as representatives of the several underwriters named therein (collectively, the “Underwriters”), relating to a firm commitment offering of 3,333 newly issued shares of our common stock at a public offering price of $12.00 per share (the “2023 Offering”).

On August 21, 2023, we completed the 2023 Offering, and realized net proceeds of $37,395, after deducting underwriting discounts and offering expenses of $2,605.

Additionally, on August 30, 2023, the Underwriters exercised their option to purchase an additional 500 shares of our common stock, and we realized net proceeds of $5,507, after deducting underwriting discounts and offering expenses of $493.

We also have an outstanding promissory note with an unrelated third party intended to fund future acquisitions and for general working capital purposes from November 2024 in the amount of $5,000 as of December 31, 2024.

The outstanding promissory note matures on November 1, 2025.

As of December 31, 2024, we have five promissory notes related to acquisitions that occurred during 2024 and prior years with a combined outstanding principal balance of $9,943 and maturity dates ranging from October 1, 2025 to July 1, 2029.

Net cash provided by financing activities was $83,450 for the year ended December 31, 2025, which primarily consisted of net proceeds of $57,975 from the Loan Agreement (defined below) with MidCap and a net increase in client fund obligations of $34,105.

As of December 31, 2025, we have eight subordinated promissory notes related to acquisitions that occurred during 2025 and prior years with a combined outstanding principal balance of $10,775 and maturity dates ranging from August 1, 2026 to July 1, 2029.

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 was funded as of June 30, 2025.

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 Secured Overnight Financing Rate (“SOFR”) plus 5.00%, subject to a SOFR floor of 2.00%.

This rate was 9.25% as of December 31, 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 2.00% 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 2.00% 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 $10,000.

As of December 31, 2025, we are in compliance with all covenants under the Loan Agreement.

Sources of Liquidity .

As of December 31, 2025, our principal sources of liquidity consisted of approximately $25,244 of cash, cash equivalents and restricted cash, and cash generated from operations of our business over twelve months .

Additionally, we have access to an “at the market offering” program entered in October 31, 2024, under which we may offer and sell up to $25,000 of newly issued shares of common stock.

As of December 31, 2025 , there are $25,000 of shares of common stock available for issuance under this program.

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.

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Identifiable intangible assets and goodwill obtained during business combination transactions are recognized based on the relative and absolute fair values of acquired assets and the excess of purchase price over that value.

Intangible assets and goodwill are tested annual for impairment or more frequently when an event or circumstance indicates that they might be impaired.

Judgements and Uncertainties

Intangible assets and goodwill are tested annually for impairment or more frequently when an event or circumstance indicates that they might be impaired.

Judgments and Uncertainties

During business combination transactions, we use the fair value of acquired identifiable intangible assets to allocate purchase price among acquired assets and determine the excess of purchase price to be recognized as goodwill.

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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-K

Item 7. Management’s Discussion and Analysis