What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-30 compared with 2025-10-30 · 86 added, 126 removed, 140 unchanged (60% of the section changed)

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The risks and uncertainties referred to above include—but are not limited to—risks associated with breaches of our security measures;

risks related to material weaknesses;

possible fluctuations in our financial and operating results;

privacy concerns and laws and other regulations that may limit the effectiveness of our applications;

potential financing needed to meet future capital requirements;

access to additional capital;

volatility and weakness in bank and capital markets;

the financial and other impact of any previous and future acquisitions;

domestic and international regulatory developments, including tarriffs, changes to or applicability to our business of privacy and data securities laws, money transmitter laws, laws related to earned wage access and anti-money laundering laws;

regulatory pressures on economic relief enacted as a result of the COVID-19 pandemic that change or cause different interpretations with respect to eligibility for such programs;

privacy concerns and laws and other regulations that may limit the effectiveness of our applications;

inability to adopt new or correctly interpret existing money service and money transmitter business status;

risk of our software and solutions not functioning adequately;

interruptions, delays or changes in our services or our Web hosting;

potential debt incurred to meet future capital requirements;

volatility and weakness in bank and capital markets;

access to additional capital;

significant costs as a result of operating as a public company;

the expiration of Employee Retention Tax Credits (“ERTC”) and the impact of recent regulatory and other measures by governmental authorities regarding ERTC claims and the corresponding cash collections of existing receivables;

economic and governmental interruptions to supply chains;

risks related to weaknesses in internal control;

the inability to continue to release timely updates for changes in laws;

the inability to develop new and improved versions of our services and technological developments;

customer’s nonrenewal of their agreements and other similar changes could negatively impact revenue, operating results and financial conditions;

customer’s nonrenewal of their agreements and other similar changes;

the exposure of market, interest, credit and liquidity risk on client funds held in trust;

our operations in highly competitive markets;

risk that our clients could have insufficient funds that could result in limitations in the ability to transmit ACH transactions;

risks that our clients could have insufficient funds, limitations in the ability to transmit ACH transactions;

the nature of our business model;

impairment of intangible assets;

litigation and any related claims, negotiations and settlements, including with respect to intellectual property matters or industry-specific regulations;

various financial aspects of our Software-as-a-Service model;

market demand of our Software-as-a-Service offerings;

adverse effects to our business a result of claims, lawsuits, and other proceedings;

adverse material effects caused by advancements and adoption of artificial intelligence;

issues in the use of artificial intelligence in our HCM products and services;

adverse changes to financial accounting standards to us;

intellectual property risks associated with the use of open source software;

failures of our service providers;

factors affecting our deferred tax assets and ability to value and utilize them;

inability to maintain third-party licensed software;

evolving regulation of the Internet, changes in the infrastructure underlying the Internet or interruptions in Internet services;

factors affecting our deferred tax assets and ability to value and utilize them;

the nature of our business model;

inability to adopt new or correctly interpret existing money service and money transmitter business status;

the expiration of Employee Retention Tax Credits (“ERTC”) and the impact of recent regulatory and other measures by governmental authorities-regarding ERTC claims and the corresponding cash collections of existing receivables;

our ability to hire, retain and motivate employees and manage our growth;

interruptions to supply chains and extended shut down of businesses;

potential enactment of adverse tax laws, regulation, political, economic and social factors;

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Asure assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

The following review of Asure’s financial position as of September 30, 2025, and December 31, 2024, and results of operations for the three and nine months ended September 30, 2025 and 2024, should be read in conjunction with our 2024 Annual Report on Form 10-K filed with the SEC on March 6, 2025 and our quarterly reports filed with the SEC on May 1, 2025, and July 31, 2025.

The following review of Asure’s financial position as of March 31, 2026 and December 31, 2025, and results of operations for the three months ended March 31, 2026 and 2025 should be read in conjunction with our 2025 Annual Report on Form 10-K filed with the SEC on February 26, 2026.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are available through the investor relations page of our internet website free of charge as soon as reasonably practicable after they are electronically filed, or furnished to, the SEC.

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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, Recruiting, Time & Attendance software, HR management tools, and Benefits Administration.

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.

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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.

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.

We have and will continue to invest in research and development to expand our solutions.

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The Asure HCM suite includes eight product lines:

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

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

From recruitment to retirement, our solutions help more than 100,000 clients across the United States.

Approximately 36% of our clients are direct and the remaining clients are indirect, as they have contracts with reseller partners who white label our solutions.

On July 1, 2025, we acquired Lathem Time 2025 LLC (f/k/a Lathem Time Corporation, “Lathem”), a trusted name in employee time and attendance solutions.

Lathem’s existing cloud-based time and attendance solutions and customer base will add to the scale of our existing time and attendance business.

The acquisition enables us to both improve our existing time and attendance offerings as well as allow us to cross-sell our full suite of HCM products to the new customer base.

During the three months ended September 30, 2025, we completed two customer relationship asset acquisitions as part of our ongoing acquisition strategy.

The total purchase price of these acquisitions was $11,227, which consisted of $8,252 of cash paid during the three months ended September 30, 2025 , $173 of cash to be paid over the next 12 months, the delivery of promissory notes in the amount of $1,896, 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 price for one acquisition is subject to an adjustment for contingent events which are generally expected to occur over the next one to two years, including revenue generated from the acquired assets.

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.

During the three months ended March 31, 2026, we completed one customer relationship asset acquisition.

The total purchase price of this acquisition was $6,172, which consisted of $4,721 of cash paid during the three months ended March 31, 2026 , $127 of cash to be paid over the next 12 months, the delivery of promissory notes in the amount of $879, net of discounts, and the delivery of 49 shares of Asure common stock, which had an aggregate fair value of $445 at the acquisition date.

RESULTS OF OPERATIONS (in thousands)

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

Nine Months Ended September 30,

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

Three Months Ended March 31,

Revenue 100 % 100 %

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Other income, net — % 1 %

Loss from operations before income taxes (12) % (9) %

Net loss (14) % (10) %

Income (loss) from operations before income taxes 2 % (6) %

Net income (loss) 1 % (7) %

Revenue is comprised of recurring revenue, professional services, hardware, and other revenue.

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As a percentage of total revenue, we expect our mix of recurring revenue, and professional services, hardware and other revenue to remain relatively constant.

While revenue mix varies by product, recurring revenue represented over 88% and 92% of total revenue in the three and nine months ended September 30, 2025, respectively, compared to 98% and 97% in the three and nine months ended September 30, 2024, respectively.

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

While revenue mix varies by product, recurring revenue represented over 88% of total revenue in the three months ended March 31, 2026, compared to 95% in the three months ended March 31, 2025.

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):

Three Months Ended

September 30, Variance

2025 2024 $ %

Recurring $ 31,841 $ 28,626 $ 3,215 11 %

Professional services, hardware and other 4,411 678 3,733 551 %

Total $ 36,252 $ 29,304 $ 6,948 24 %

Nine Months Ended

September 30, Variance

Three Months Ended March 31, Variance

2026 2025 $ %

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The amount of interest we earn from the investment of client funds is also impacted by changes in interest rates.

Recurring revenue for the three months ended September 30, 2025, was $31,841, an increase of $3,215, or 11%, from $28,626 for the three months ended September 30, 2024.

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

Recurring revenue for the nine months ended September 30, 2025, was $93,624, an increase of $7,674, or 9%, from $85,950 for the nine months ended September 30, 2024.

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

Recurring revenue for the three months ended March 31, 2026, was $37,757, an increase of $4,570, or 14%, from $33,187 for the three months ended March 31, 2025.

The increase is primarily due to an increase in payroll services related to our timekeeping solutions business.

Professional Services, Hardware and Other Revenue

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 for the three months ended September 30, 2025, was $4,411, an increase of $3,733, or 551%, from $678 for the three months ended September 30, 2024.

This increase is primarily due to an increase in hardware related to our time and attendance solutions.

Professional services, hardware, and other revenue for the nine months ended September 30, 2025, was $7,606, an increase of $4,556, or 149%, from $3,050 for the nine months ended September 30, 2024.

The increase is primarily due to an increase in professional services and our time and attendance solutions.

Professional services, hardw are and other revenue increased $3,333, or 200%, for the three months ended March 31, 2026, from the similar period in 2025, primarily due to an increase in hardware sales 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 three months ended September 30, 2025, was $23,142, an increase of $3,438, or 17%, from $19,704 for the three months ended September 30, 2024.

Gross profit as a percentage of revenue decreased to 64% for the three months ended September 30, 2025, from 67% for the same period in 2024.

The decrease is primarily attributable to the growth in our time and attendance solutions.

Consolidated gross profit for the nine months ended September 30, 2025, was $67,661, an increase of $6,482, or 11%, from $61,179 for the nine months ended September 30, 2024.

Gross profit as a percentage of revenue decreased to 67% for the nine months ended September 30, 2025, from 69% for the same period in 2024.

The decrease is primarily attributable to the growth in our time and attendance solutions.

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.

Consolidated gross profit for the three months ended March 31, 2026, was $30,470, an increase of $5,862, or 24%, from $24,608 for the three months ended March 31, 2025.

Gross margin as a percentage of revenue remained consistent at 71% for the three months ended March 31, 2026, and 2025.

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.

Sales and Marketing Expenses

Sales and marketing expenses primarily consist of salaries and related expenses for sales and marketing staff, including stock-based expenses, commissions, as well as marketing programs, which include events, corporate communications and product marketing activities.

Sales and marketing expenses for the three months ended September 30, 2025, were $9,043, an increase of $2,363, or 35%, from $6,680 for the three months ended September 30, 2024.

The increase is primarily due to an increase in bad debt and headcount resulting in an increase in salaries and wages.

Sales and marketing expenses as a percentage of revenue increased to 25% for the three months ended September 30, 2025, from 23% for the same period in 2024.

Sales and marketing expenses for the nine months ended September 30, 2025, were $25,578, an increase of $4,207, or 20%, from $21,371 for the nine months ended September 30, 2024.

The increase is primarily due to an increase in bad debt and headcount resulting in an increase in salaries and wages.

Sales and marketing expenses as a percentage of revenue increased to 25% for the nine months ended September 30, 2025, from 24% for the same period in 2024.

Sales and marketing expenses primarily consist of salaries and related expenses for sales and marketing staff, including share-based compensation, commissions, as well as marketing programs, which include events, corporate communications and product marketing activities.

Sales and marketing expenses for the three months ended March 31, 2026, were $8,764, an increase of $378, or 5%, from $8,386 for the three months ended March 31, 2025.

The increase is primarily due to an increase in expenditures for lead generation.

Sal es and marketing expenses as a percentage of revenue decreased to 20% for the three months ended March 31, 2026, from 24% for the same period in 2025.

We expect to continue to expand and increase selling costs as we focus on hiring direct sales personnel, expanding recognition of our brand, and lead generation.

General and Administrative Expenses

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

General and administrative expenses for the three months ended September 30, 2025, were $11,655, an increase of $1,277, or 12%, from $10,378 for the three months ended September 30, 2024.

The increase is primarily attributable to increased personnel compensation expenses along with higher service costs associated with regulatory compliance and our acquisitions.

General and administrative expenses as a percentage of revenue decreased to 32% for the three months ended September 30, 2025, from 35% for the same period in 2024.

General and administrative expenses for the nine months ended September 30, 2025, were $34,523, an increase of $3,964, or 13%, from $30,559 for the nine months ended September 30, 2024.

The increase is primarily attributable to an increased personnel compensation expenses along with higher service costs associated with regulatory compliance and our acquisitions.

General and administrative expenses as a percentage of revenue remained flat at 34% for the nine months ended September 30, 2025 and 2024.

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

General and administrative expenses for the three months ended March 31, 2026, were $12,748, an increase of $848, or 7%, from $11,900 for the three months ended March 31, 2025.

The increase is primarily attributable to an increased compensation-related expenses and contractors due to changes in headcount associated with administrative functions.

Ge neral and administrative expenses as a percentage of revenue decreased to 30% for the three months ended March 31, 2026, from 34% for the same period in 2025.

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 three months ended September 30, 2025, were $1,174, a decrease of $799, or 40%, from $1,973 for the three months ended September 30, 2024.

The decrease 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 revenue decreased to 3% for the three months ended September 30, 2025, from 7% for the same period in 2024.

R&D expenses for the nine months ended September 30, 2025, were $4,476, a decrease of $1,228, or 22%, from $5,704 for the nine months ended September 30, 2024.

R&D expenses as a percentage of revenue decreased to 4% for the nine months ended September 30, 2025, from 6% for the same period in 2024.

Research and development (“R&D”) expenses consist primarily of salaries and related expenses, including share-based compensation for employees supporting our R&D activities.

R&D expenses for the three months ended March 31, 2026, were $1,657, a decrease of $372, or 18%, from $2,029 for the three months ended March 31, 2025.

The decrease is primarily attributable to an increase in the capitalization of software expenses for continued investment in the development of our products and partially offset by an increase in personnel compensation expenses.

R&D expenses as a percentage of revenue decreased to 4% for the three months ended March 31, 2026, from 6% for the same period in 2025.

Amortization of Intangible Assets

Amortization expense for the three months ended September 30, 2025, was $4,769, an increase of $474, or 11%, from $4,295 for the three months ended September 30, 2024.

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

Amortization expense as a percentage of revenue decreased to 13% for the three months ended September 30, 2025, from 15% for the same period in 2024.

Amortization expense for the nine months ended September 30, 2025, was $13,250, an increase of $1,460, or 12%, from $11,790 for the nine months ended September 30, 2024.

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

Amortization expense as a percentage of revenue remained flat at 13% for the nine months ended September 30, 2025 and 2024.

Amortization expense for the three months ended March 31, 2026, was $4,972, an increase of $664, or 15%, from $4,308 for the three months ended March 31, 2025.

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 remained flat at 12% for the three months ended March 31, 2026 and 2025.

Interest Income and Expense

Interest income for the three months ended September 30, 2025, was $250 compared to interest income of $165 for the three months ended September 30, 2024.

Interest income as a percentage of revenue was 1% for the three months ended September 30, 2025 and 2024.

Interest expense for the three months ended September 30, 2025 was $1,966 compared to interest expense of $274 for the three months ended September 30, 2024.

Interest expense as a percentage of revenue was 5% for the three months ended September 30, 2025 compared to 1% for the same period in 2024.

The increase in Interest expense in the three months ended September 30, 2025, is primarily related to interest accrued under our Loan Agreement (defined below) with MidCap Financial Trust (“MidCap”).

Interest income for the nine months ended September 30, 2025 was $698 compared to interest income of $762 for the nine months ended September 30, 2024.

Interest income as a percentage of revenue was 1% for the three months ended September 30, 2025 and 2024.

Interest expense for the nine months ended September 30, 2025 was $3,226 compared to interest expense of $662 for the nine months ended September 30, 2024.

Interest expense as a percentage of revenue was 3% for the nine months ended September 30, 2025 compared to 1% for the same period in 2024.

The increase in interest expense in the nine months ended September 30, 2025, is primarily related to interest accrued under our Loan Agreement with MidCap.

Interest income for the three months ended March 31, 2026, was $188 compared to interest income of $171 for the three months ended March 31, 2025.

Interest income as a percentage of revenue was negligible for the three months ended March 31, 2026 and 2025 .

Interest expense for the three months ended March 31, 2026, was $1,748 compared to interest expense of $451 for the three months ended March 31, 2025.

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 three months ended March 31, 2026, compared to 1% for the three months ended March 31, 2025.

Other Income , Net

Other income, net for the three months ended September 30, 2025 was $220 compared to $0 for the three months ended September 30, 2024.

Other income, net as a percentage of revenue was 1% for the three months ended September 30, 2025, compared to a negligible amount for the same period in 2024.

Other income, net for the nine months ended September 30, 2025 was $312 compared to $10 for the nine months ended September 30, 2024.

Other income, net as a percentage of revenue was negligible for the nine months ended September 30, 2025 and 2024.

For the three months ended September 30, 2025 and 2024, we recorded income tax expense attributable to continuing operations of $367 and $170, respectively, an increase of $197.

For the nine months ended September 30, 2025 and 2024, we recorded income tax expense attributable to continuing operations of $1,501 and $434, respectively, an increase of $1,067.

We incurred a loss of $5,362, or $0.19 per share, during the three months ended September 30, 2025, compared to a loss of $3,901, or $0.15 per share, during the three months ended September 30, 2024.

Loss as a percentage of total revenue was 15% and 13% for the three months ended September 30, 2025 and 2024, respectively.

We incurred a loss of $13,883, or $0.51 per share, during the nine months ended September 30, 2025, compared to a loss of $8,569, or $0.33 per share, during the nine months ended September 30, 2024.

Loss as a percentage of total revenue was 14% and 10% for the nine months ended September 30, 2025 and 2024, respectively.

Other income, net for the three months ended March 31, 2026 was nominal compared to $188 for the three months ended March 31, 2025.

Other income, net as a percentage of revenue was negligible for the three months ended March 31, 2026, compared to 1% for the three months ended March 31, 2025 .

For the three months ended March 31, 2026 and 2025, we recorded income tax expense attributable to continuing operations of $144 and $291, respectively, a decrease of $147.

Net Income (Loss)

We generated income of $625, or $0.02 per share, during the three months ended March 31, 2026, compared to a loss of $2,398, or $(0.09) per share, during the three months ended March 31, 2025.

Income and loss as a percentage of total revenue was 1% and (7)% for the three months ended March 31, 2026 and 2025, respectively.

LIQUIDITY AND CAPITAL RESOURCES (in thousands)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Cash and cash equivalents $ 19,221 $ 25,244

$ 21,520 $ 21,425

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

Working Capital .

We had working capital of $14,838 at September 30, 2025, an increase of $1,197 from working capital of $13,641 at December 31, 2024.

Working capital as of September 30, 2025 and December 31, 2024 includes $7,090 and $8,363 of short-term deferred revenue, respectively.

We had working capital of $12,818 at March 31, 2026, a decrease of $5,828 from working capital of $18,646 at December 31, 2025.

This decrease is primarily attributable to the cash spent on the acquisition of a reseller partner that occurred during the period.

Working capital as of March 31, 2026 and December 31, 2025 includes $7,036 and $11,622 of short-term deferred revenue, respectively.

Deferred revenue is an obligation to perform future services.

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Operating Activities .

Net cash provided by operating activities of $10,924 for the nine months ended September 30, 2025 was primarily driven by non-cash adjustments to our net loss of approximately $29,526, primarily due to depreciation, amortization, and share-based compensation.

Net cash provided by operating activities of $2,709 for the three months ended March 31, 2026, was primarily driven by non-cash adjustments to our net income of approximately $10,605, primarily due to depreciation and amortization and share-based compensation.

This was offset by changes in operating assets and liabilities, which resulted in a use of $8,521 in cash.

Net cash used in operating activities of $394 for the nine months ended September 30, 2024 was primarily driven by non-cash adjustments to our net loss of approximately $21,034, primarily due to depreciation, amortization, and share-based compensation.

This was offset by changes in operating assets and liabilities, which results in a use of $12,859 in cash.

Net cash provided by operating activities of $1,996 for the three months ended March 31, 2025, was driven by non-cash adjustments to our net loss of approximately $8,277, primarily due to depreciation and amortization and share-based compensation.

This was offset by changes in operating assets and liabilities, which resulted in a use of $3,883 in cash.

Investing Activities .

Net cash used in investing activities of $78,170 for the nine months ended September 30, 2025, is primarily due to cash paid in business combinations or asset acquisitions of $52,467, which primarily consists of the acquisition of Lathem, purchases of available-for-sale securities of $36,655, and software capitalization costs of $10,271, partially offset by proceeds from sales and maturities of available-for-sale securities of $21,738.

Net cash used in investing activities of $18,209 for the nine months ended September 30, 2024, is primarily due to cash paid in business combinations or asset acquisitions of $12,397, purchases of available-for-sale securities of $10,914, and software capitalization costs of $7,677, partially offset by proceeds from sales and maturities of available-for-sale securities of $13,325.

Net cash used in investing activities of $5,379 for the three months ended March 31, 2026 is primarily due to purchases intangible assets of $4,721, purchases of available-for-sale securities and maturities of $4,051, and software capitalization costs of $3,236, offset by proceeds from sales and maturities of available-for-sale securities of $6,847.

Net cash used in investing activities of $12,630 for the three months ended March 31, 2025 is primarily due to purchases intangible assets of $6,346, purchases of available-for-sale securities and maturities of $6,589, and software capitalization costs of $2,769, offset by proceeds from sales and maturities of available-for-sale securities of $3,266.

Financing Activities .

Net cash provided by financing activities was $7,001 for the nine months ended September 30, 2025, which primarily consisted of net proceeds of $57,982 from the Loan Agreement (defined below) with MidCap offset by a net decrease in client fund obligations of $45,506.

Net cash used in financing activities was $26,291 for the nine months ended September 30, 2024, which primarily consisted of a net decrease in client fund obligations of $26,068.

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

After September 30, 2025, but before the filing of the financial statements, we repaid two subordinated promissory notes having maturity dates during such period, as well as a partial prepayment of one subordinated promissory note, having an original maturity date of July 1, 2029, reducing the principal balance of such note to $1,000.

As of October 30, 2025, the combined outstanding principal balance of our subordinated promissory notes is $10,275.

On April 10, 2025, we entered into a Credit, Security and Guaranty Agreement (as amended, the “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.

Net cash used in financing activities was $11,528 for the three months ended March 31, 2026, which primarily consisted of a net decrease in client fund obligations of $11,177.

Net cash provided by financing activities was $63,925 for the three months ended March 31, 2025, which primarily consisted of a net increase in client fund obligations of $64,207.

As of March 31, 2026, we have nine subordinated promissory notes related to acquisitions that occurred during the three months ended March 31, 2026 and prior years with a combined outstanding principal balance of $11,701 and maturity dates ranging from August 1, 2026, to July 1, 2029.

On April 10, 2025, we entered into a Credit, Security and Guaranty Agreement (the “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 SOFR plus 5.00%, subject to a Secured Overnight Financing Rate (“SOFR”) floor of 2.00%.

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 9.04% as of March 31, 2026 .

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

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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 the final payment of 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.

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

The Loan Agreement is collateralized by substantially all of our assets except for all client funds balances and an amount of cash intended solely to cover employee wages, benefits, and taxes for a limited period.

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 March 31, 2026 , 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.

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

Sources of Liquidity .

As of September 30, 2025, our principal sources of liquidity consisted of $21,520 of cash and cash equivalents generated from operations of our business, which we expect to be our principal source of liquidity over the next 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 September 30, 2025, there are $25,000 of shares of common stock available for issuance under this program.

As of March 31, 2026, our principal sources of liquidity consisted of approximately $19,221 of cash and cash equivalents and cash generated from operations of our business over the next 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 common stock.

As of March 31, 2026, there are $25,000 of shares of common stock available for issuance under the program.

We cannot ensure 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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What changed 10-Q

Item 2. Management’s Discussion and Analysis