What changed in this filing

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Item 1A. Risk Factors

2025-11-21 compared with 2024-11-25 · 136 added, 234 removed, 482 unchanged (43% of the section changed)

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In addition, the cybersecurity-related threats that we face may remain undetected for an extended period of time.

In addition, the rapid evolution and increased adoption of artificial intelligence (“AI”) and other emerging technologies also may heighten our cybersecurity risks by making cyberattacks and social engineering more difficult to detect, contain and mitigate.

In addition, the rapid evolution and increased adoption of AI and other emerging technologies also may heighten our cybersecurity risks by making cyberattacks and social engineering more difficult to detect, contain and mitigate.

While we have experienced cyber threats and incidents, we have not (whether directly or indirectly, including through our third-party vendors, customers or other business relations) been subject to a cybersecurity event of which we are aware that has had a material impact on us, including our business strategy, financial condition or results of operations.

However, despite our security measures, there is no assurance that we, or the third parties with which we interact, will not experience a cybersecurity incident in the future that materially impacts us.

If such an event were to occur it could materially disrupt our operations, expose us to liability under data breach laws, adversely impact our reputation, impact our customer relationships or subject us to other material losses or liability.

In addition, a breach of our system or a third-party system upon which we rely may subject us to material losses or liability, including payment network fines, assessments and claims for unauthorized purchases with misappropriated credit, debit or card information, impersonation or other similar fraud claims.

A misuse of such data or a cybersecurity breach could harm our reputation and deter our customers and potential customers from using electronic payments generally and our products and services specifically, thus reducing our revenue.

In addition, any such misuse or breach could cause us to incur costs to correct the breaches or failures, increase our risk of regulatory scrutiny, subject us to lawsuits and result in the imposition of material penalties and fines under

state and federal laws (including HIPAA) or by the payment networks.

These risks may be heightened in connection with employees working from remote work environments, as our dependency on certain service providers, such as video conferencing and web conferencing services, has significantly increased.

In addition, to access our network, products and services, customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and subject to their own security risks.

While we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses.

While we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber risks, such insurance coverage may exclude certain types of claims and otherwise be insufficient to cover all losses.

A significant cybersecurity breach could also result in payment networks prohibiting us from processing transactions on their networks or the loss of our financial institution sponsorship that facilitates our participation in the payment networks, either of which could materially impede our ability to conduct business.

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Although we seek to minimize these risks through security measures, controls, back-up data centers and emergency planning, there can be no assurance that such efforts will be successful or effective.

Defects in our systems or those of third parties, errors or delays in the processing of payment transactions, telecommunications failures or other difficulties could result in:

Defects in our systems or those of third

parties, errors or delays in the processing of payment transactions, telecommunications failures or other difficulties could result in:

• loss of revenues;

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If one or more of our hosting providers were unable to support our requirements for an extended period, and we are not able to find an alternative solution in a timely fashion, our customer relationships could be at risk of termination, and our business, financial condition and results of operation could be adversely impacted.

In addition, to the extent a third party service provider relies on AI, improper processing of data by those service providers could harm our reputation, business and clients, or expose us to legal liability.

We also rely in part on third parties for the development and access to new technologies, or for updates to existing products and services for which they provide ongoing support.

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This acquisition activity requires substantial capital and other expenditures.

While we had substantial net income attributable to i3 Verticals, Inc.

in the year ended September 30, 2024 as a result of the gain associated with the divestiture of our Merchant Services Business, taking into account the factors above, we incurred net losses attributable to i3 Verticals, Inc.

in the years ended September 30, 2023 and 2022 and prior years, and we may continue to incur losses in the future.

While we had net income attributable to i3 Verticals, Inc.

in the years ended September 30, 2025 and 2024 as a result of, among other things, the gains associated with the divestitures of our Healthcare RCM Business during fiscal year 2025 and our Merchant Services Business during fiscal year 2024, respectively, we incurred a net loss attributable to i3 Verticals, Inc.

in the year ended September 30, 2023 and prior years, and we

may continue to incur losses in the future.

A substantial portion of our historical revenue growth has resulted from acquisitions.

For the year ended September 30, 2024, the incremental impact of revenues attributable to the acquisitions we completed in 2023 and 2024 were $2.4 million, or 1.0% of our total revenues, net of intercompany eliminations.

For the year ended September 30, 2025, the incremental impact of revenues attributable to the acquisitions we completed in the 2024 and 2025 fiscal years were $5.9 million, or 2.7% of our total revenues.

We expect our cash needs to increase for the next several years as we:

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As a result of these continuing costs and expenses, we need to generate significant revenues to attain and maintain profitability and positive cash flow.

To date, our operations have been supported by equity and debt financings.

If we do not continue to increase our revenues, our business, results of operations and financial condition could be materially and adversely affected.

The vertical market software industry is competitive.

The enterprise software industry is competitive.

Such competition could adversely affect the revenue we receive, and as a result, our margins, business, financial condition and results of operations.

Other software providers of payment processing services have established a sizable market share in our vertical markets and service more customers than we do.

Other software providers of payment processing services have established a sizable market share in our public sector markets and service more customers than we do.

Our growth will largely depend on our ability to increase our market share.

Our competitors in the vertical market software industry include, among others, Tyler Technologies, Inc., Constellation Software, Inc.

Verra Mobility Corp, EverCommerce Inc., Roper Technologies, Inc., Axon Technologies, Paymentus Holdings, Inc., Flywire Corp, Weave Communications Inc., Phreesia Inc.

and Waystar Holding Corp.

Many of our competitors have substantially greater financial, technological, and marketing resources than we have.

Our competitors in the enterprise software industry include, among others, Tyler Technologies, Inc., Constellation Software, Inc., Verra Mobility Corp, EverCommerce Inc., Roper Technologies, Inc., Axon Enterprise, Inc., Paymentus Holdings, Inc., Flywire Corporation and Cellebrite DI Ltd.

Many of our competitors may have substantially greater financial, technological, and marketing resources than we have.

Accordingly, if these competitors specifically target our business model, they may be able to offer more attractive solutions to our customers.

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Additionally, larger financial institutions may decide to perform in-house some or all of the services we provide or could provide, which may give them a competitive advantage in the market.

There are also a large number of small providers of vertical market software services or payment processing services that provide various ranges of services to our customers and our potential customers.

There are also a large number of small providers of software services or payment processing services that provide various ranges of services to our customers and our potential customers.

This competition may effectively limit the prices we can charge and requires us to control costs aggressively in order to maintain acceptable profit margins.

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Because our standing arrangements and agreements with our vendors and customers typically contain no purchase or sale obligations and are terminable by either party upon no or relatively short notice, we are subject to significant risks associated with the loss or change at any time in the business habits and financial condition of key vendors as they adapt to changes in the market.

The development of next-generation solutions that utilize advanced features, including AI and machine learning, may require us to make predictions about the willingness of the markets we serve to adopt such offerings.

In connection therewith, we may be required to commit significant resources to maintain the competitiveness of our offerings by investing in such technologies before knowing whether we have correctly predicted market responsiveness to them.

If we cannot keep pace with rapid developments and changes in our industry, the use of our products and services could decline, causing a reduction in our revenues.

The vertical market software market is subject to constant and significant changes.

The enterprise software market is subject to constant and significant changes.

This market is characterized by rapid technological evolution, new product and service introductions, evolving industry standards, changing customer needs and the entrance of non-traditional competitors.

To remain competitive, we continually pursue initiatives to develop new products and services to compete in an effective manner.

These projects carry risks, such as cost overruns, delays in delivery, performance problems and lack of customer acceptance.

These projects carry risks,

such as cost overruns, delays in delivery, performance problems and lack of customer acceptance.

In addition, new products and offerings may not perform as intended or generate the business or revenue growth expected.

Additionally, we look for acquisition opportunities, investments and alliance relationships with other businesses that will increase our market penetration and enhance our technological capabilities, product offerings and distribution capabilities.

Any delay in the delivery of new products and services or the failure to differentiate our products and services or to accurately predict and address market demand could render our products and services less desirable, or even obsolete.Further, the development of AI is complex and uncertain, and presents various risks and uncertainties, including as the result of the rapidly evolving legal, regulatory and ethical landscape associated with the use of AI.

Our inability to successfully or effectively implement AI initiatives, or other deficiencies or failures in our AI systems or initiatives, could subject us to competitive harm, legal and regulatory risk, and increase our cybersecurity, intellectual property, and privacy risks.

Any of the foregoing could have a material and adverse effect on our operating results and financial condition.

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Our payment processing technology offerings in connection with our software must also integrate with a variety of network, hardware, mobile and software platforms and technologies.

Any failure to deliver an effective, reliable and secure service or any performance issue that arises could result in significant processing or reporting errors or other losses.Our future success will depend in part on our ability to develop or adapt to technological changes and evolving industry standards.

Any failure to deliver an effective, reliable and secure service or any performance issue that arises could result in significant processing or reporting errors or other losses.

Our future success will depend in part on our ability to develop or adapt to technological changes and evolving industry standards.

If we are unable to develop, adapt to or access technological changes or evolving industry standards on a timely and cost-effective basis, our business, financial condition and results of operations would be materially adversely affected.

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Failure to effectively manage risk and prevent fraud could increase our chargeback liability and other liability, which could have a material adverse effect on our business, financial condition and results of operations.

Visa rules associated with chargeback and fraud are being consolidated effective April 1, 2025, into the Visa Acquirer Monitoring Program, which will phase out the existing Visa Fraud Monitoring Program and Visa Dispute Monitoring Program.

Visa's new rules could have serious implications for the types of businesses that we can support, and high-risk merchants will be impacted by the changes.

On occasion, we experience increases in interchange and sponsorship fees;

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Some of our solutions require or benefit from the use of third-party hardware products that we sell to our customers, such as kiosks, payment terminals and point of sale equipment.

A number of such products come from

limited number of suppliers.

A number of such products come from limited number of suppliers.

Due to our reliance on the products produced by a limited number of suppliers, we are subject to the risk of shortages and long lead times in the supply of certain products.

Additionally, various sources of supply-chain risk, including strikes or shutdowns at delivery ports or loss of or damage to our products while they are in transit or storage, intellectual property theft, losses due to tampering, issues with quality or sourcing control, failure by our suppliers to comply with applicable laws and regulation, potential tariffs or other trade restrictions, or other similar problems could limit or delay the supply of our products or harm our reputation.

restrictions, or other similar problems could limit or delay the supply of our products or harm our reputation.

In the event of a shortage or supply interruption from suppliers, we may not be able to develop alternate sources quickly, cost-effectively, or at all.

Any interruption or delay in manufacturing supply, any increases in costs, or the inability to obtain these products from alternate sources at acceptable prices and within a reasonable amount of time, could harm our ability to provide products to our customers.

We are subject to economic and political risk, the business cycles of our customers and changes in the overall level of consumer and commercial spending, which could negatively impact our business, financial condition and results of operations.

We are exposed to general economic conditions that affect consumer confidence, consumer spending, consumer discretionary income and changes in consumer purchasing habits, as well as changes in political conditions.

Economic conditions in the United States continue to be challenging in certain respects, and the United States economy has experienced significant inflation, elevated interest rates, and challenging labor market conditions.

Adverse economic conditions may adversely affect our financial performance.

We have been adversely impacted by challenging economic conditions in the United States and may continue to adversely impacted by such conditions, particularly if current economic conditions deteriorate.

Rapidly evolving domestic and global conditions are beyond our control and could materially adversely affect our business, operations, and results of operations.

and international markets are experiencing uncertain and volatile economic and geopolitical conditions, including from the impacts of military conflict in the Middle East, Russian aggression in Ukraine, rises in fuel costs, sustained inflation, threats or concerns of recession, and supply chain disruptions.

We are subject to risks associated with general economic and geopolitical conditions, the business cycles of our customers and changes in the overall level of consumer and commercial spending, which could negatively impact our business, financial condition and results of operations.

We are exposed to general economic and geopolitical conditions that affect consumer confidence, consumer spending, consumer discretionary income and changes in consumer purchasing habits.

In connection therewith, U.S.

and international markets have been experiencing uncertain and volatile economic and geopolitical conditions, including from the impacts of military conflict in the Middle East, Russian aggression in Ukraine, tariff and trade-related developments, budgetary and political pressures to reduce government spending, inflationary pressures, elevated interest rate levels, possible recession concerns, and supply chain disruptions.

For example, the U.S.

government has imposed tariffs on certain foreign products and has raised the possibility of imposing significant, additional tariff increases, which has resulted in a deterioration of trade relations of the United States with various countries, including Canada.

In connection therewith, we have business operations in Canada, and the determination of Canadian governmental authorities or businesses to cancel or not renew contracts, or otherwise reduce business, with U.S.

companies as a result of current trade tensions with the United States, as has been advocated by certain Canadian governmental authorities, could adversely impact our financial results.

Additionally, we have a significant number of employees in India who assist us in various respects, primarily in connection with the development of intellectual property.

In the event that tensions between India and Pakistan increase, this could limit the ability of these employees to assist us for a significant period of time, disrupt our operations, and otherwise adversely impact our business and financial results.

Further, there is ongoing uncertainty regarding government budget and spending levels as a result of political developments and other factors.

In this regard, the current presidential administration has been focused on restructuring and streamlining government agencies and reducing or eliminating regulations and federal government programs and other expenditures, which has also given rise to separate efforts at the state level to reduce government spending.

As a result of the fact that a significant portion of our revenue is received from state and local governmental authorities, reductions in government spending at the state and local level could adversely impact our financial results and business.

These conditions make it extremely difficult for us to accurately forecast and plan future business activities.

Together, these circumstances create an environment in which it is challenging for us to predict future operating results.

If these uncertain business, macroeconomic or political conditions continue or further decline, or if the military conflicts noted above escalate, our business, financial condition and results of operations could be materially adversely affected.

In addition, our business, financial condition and results of operations could be materially adversely affected by outbreaks of illnesses, epidemics or pandemics, climate-related events, including extreme weather events and natural disasters, riots, strikes, civil insurrection or social unrest, terrorist or criminal activities, or other catastrophic events or other political and economic instability.

Moreover, if these business, macroeconomic or political conditions continue or worsen, our business, financial condition and results of operations could be materially adversely affected.

insurrection or social unrest, terrorist or criminal activities, or other catastrophic events or other political and economic instability.

A decline in the use of cards and ACH as payment mechanisms for consumers and businesses or adverse developments in the electronic payment industry in general could adversely affect our business, financial condition and operating results.

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We may not be able to successfully execute our strategy of growth through acquisitions.

Our future growth and profitability depend, in part, upon our continued growth within the vertical markets in which we currently operate.

Our future growth and profitability depend, in part, upon our continued growth within the markets in which we currently operate.

As part of our strategy to expand into new customer bases, we look for acquisition opportunities and partnerships with other businesses that will allow us to increase our market penetration, technological capabilities, product offerings and distribution capabilities.

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The occurrence of any of these factors could adversely affect our growth strategy.

Growth in our current vertical markets also depends upon our ability to adapt existing technology or develop new technologies to meet the particular needs of new and existing customers.

Growth in our current markets also depends upon our ability to adapt existing technology or develop new technologies to meet the particular needs of new and existing customers.

We may not have adequate financial or technological resources to develop effective and secure services that will satisfy the demands of these new customers.

Penetrating these new customers in our existing vertical markets may also prove to be more challenging or costly or take longer than we may anticipate.

If we fail to increase our penetration into existing vertical markets, we may not be able to continue to grow our revenues and earnings.

There are certain risks associated with the sale of our Merchant Services Business which was completed in September 2024.

In September 2024, we completed the sale of our Merchant Services Business.

There is no assurance that we will be able to realize the anticipated benefits from the disposition of our Merchant Services Business.

Moreover, there are post-closing risks associated with the ancillary agreements entered into by us at the closing, including the transition services agreement, the processing services agreement, and the restrictive covenant agreement.

In addition, pursuant to the Purchase Agreement, we agreed to indemnify Payroc with respect to certain matters and we agreed to retain certain liabilities related to the Merchant Services Business, which in any such case could result in liability to us following the closing.

Further, we are now highly dependent on the success of our two remaining business segments, our Public Sector segment and Healthcare segment.

Penetrating these new customers in our existing markets may also prove to be more challenging or costly or take longer than we may anticipate.

If we fail to increase our penetration into existing markets, we may not be able to continue to grow our revenues and earnings.

There are certain risks associated with the sale of our Merchant Services Business which was completed in September 2024 and the sale of our Healthcare RCM Business which was completed in May 2025.

In September 2024, we completed the sale of our Merchant Services Business, and in May 2025, we completed the sale of our Healthcare RCM Business.

There is no assurance that we will be able to realize the anticipated benefits from the disposition of our Merchant Services Business or our Healthcare RCM Business.

Moreover, there are post-closing risks associated with the ancillary agreements entered into by us at the closing of each of these businesses.

In addition, pursuant to the Merchant Services Purchase Agreement, we agreed to indemnify Payroc with respect to certain matters and we agreed to retain certain liabilities related to the Merchant

Services Business, which in any such case could result in liability to us following the closing.

We have received, and may in the future receive, indemnification claims from Payroc.

We are not able to predict the ultimate outcome of these or future claims that Payroc may assert against us in connection with the sale of our Merchant Services Business, any of which could have a material adverse effect on our results of operations and financial condition.

In addition, pursuant to the Healthcare RCM Purchase Agreement, we agreed to indemnify Infinx with respect to certain matters, which could result in liability to us following the closing.

As a result of the sales of our Merchant Services Business and Healthcare RCM Business, we are now highly dependent on the success of our remaining Public Sector business.

Revenues and profits generated via acquisition may be less than anticipated, the integration process could experience delays or difficulties, and we may fail to uncover all liabilities of acquisition targets through the due diligence process prior to an acquisition, resulting in unanticipated costs, losses or a decline in profits, as well as potential impairment charges.

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We may not be able to successfully manage our intellectual property.

Our intellectual property is critical to our future success, particularly in our strategic verticals where we may offer proprietary software solutions to our customers.

Our intellectual property is critical to our future success.

We rely on a combination of contractual license rights and copyright, trademark and trade secret laws to establish and protect our proprietary technology.

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We may have to litigate to enforce or determine the scope and enforceability of our intellectual property rights (including litigation against our third-party licensors), which is expensive, could cause a diversion of resources and may not prove successful.

Moreover, use of AI by our personnel, whether authorized or unauthorized, could increase the risk that our intellectual property and other proprietary information may be unintentionally disclosed.

The loss of intellectual property protection or the inability to obtain third-party intellectual property could harm our business and ability to compete.

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If we lose key personnel, or if their reputations are damaged, our business, financial condition and results of operations may be adversely affected, and proprietary information of our company could be shared with our competitors.

We depend on the ability and experience of a number of our key personnel who have substantial experience with our operations, the rapidly changing payment processing industry and the vertical markets in which we offer our products and services.

We depend on the ability and experience of a number of our key personnel who have substantial experience with our operations, the rapidly changing payment processing industry and the markets in which we offer our products and services.

Many of our key personnel have worked for us for a significant amount of time or were recruited by us specifically due to their experience.

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The number of business days in a month or quarter also may affect seasonal fluctuations.

Certain revenues in our Public Sector segment fluctuate with the fiscal calendars of our customers.

Certain revenues from our public sector customers fluctuate with the fiscal calendars of our customers.

Transactional revenue for our education customers is strongest in August, September, October, January and February, at the start of each semester, and generally weakens throughout the semester, with little revenue in the summer months of June and July.

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We are the subject of various claims and legal proceedings and may become the subject of claims, litigation or investigations which could have a material adverse effect on our business, financial condition or results of operations.

In the ordinary course of business, we are the subject of various claims and legal proceedings and may become the subject of claims, litigation or investigations, including commercial disputes and employee claims, such as claims of age discrimination, sexual harassment, gender discrimination, immigration violations or other local, state and federal labor law violations, and from time to time may be involved in governmental or regulatory investigations or similar matters arising out of our current or future business.

Any claims asserted against us or our management, regardless of merit or eventual outcome, could harm our reputation or the reputation of our management and have an adverse impact on our relationship with our customers and other third parties and could lead to additional related claims.

In light of the potential cost and uncertainty involved in litigation, we have in the past and may in the future settle matters even when we believe we have a meritorious defense.

In the ordinary course of business, we are the subject of various claims and legal proceedings and may become the subject of claims, litigation or investigations, including commercial disputes and employee claims, such as claims of age discrimination, sexual harassment, gender discrimination, immigration violations or other local, state and federal labor law violations, and from time to time may be involved in governmental or regulatory investigations, audits or similar matters arising out of our current or future business.

Any proceedings or claims asserted against us or our management, regardless of merit or eventual outcome, could harm our reputation or the reputation of our management and have an adverse impact on our relationship with our customers and other third parties and could lead to additional related claims.

Further, any determination of noncompliance with applicable laws and regulations may result in criminal and/or civil penalties.

In light of the potential cost and uncertainty involved in litigation, and the potential disruption to normal business operations, we have in the past and may in the future settle matters even when we believe we have a meritorious defense.

Certain claims may seek injunctive relief, which could disrupt the ordinary conduct of our business and operations or increase our cost of doing business.

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Countries outside of the United States may be subject to relatively higher degrees of political and social instability and may lack the infrastructure to withstand political unrest or natural disasters.

The occurrence of natural disasters, pandemics, or political or economic instability in these countries could interfere with work performed by these labor sources or could result in our having to replace or reduce these labor sources.

The occurrence of natural disasters, pandemics, or political or economic instability in these countries could interfere with work performed by these labor sources or could result in our

having to replace or reduce these labor sources.

If countries in which we operate experience civil or political unrest or acts of terrorism, our operations in such countries could be materially impaired.

For example, India has experienced civil unrest and terrorism and has experienced historical and recent tensions with Pakistan.

The occurrence of any of these circumstances could result in disruptions to our resources in India.

Our vendors in other countries could potentially shut down suddenly for any reason, including financial problems or personnel issues.

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We are subject to extensive laws and government regulation, the costs of compliance with which can be significant, and our actual or perceived failure to comply with such obligations may subject us to penalties and otherwise have an unfavorable impact on our business, financial condition and results of operations.

We are subject to numerous federal and state laws and regulations that affect the electronic payments industry and the other industries in which we provide services.

We are subject to numerous federal and state laws and regulations that affect the public sector enterprise software industry and the other industries in which we provide services.

Regulation of our industry has increased significantly in recent years and is constantly evolving.

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financial services, consumer protection, escheat and privacy and information security, among other subjects.

The cost of compliance with applicable laws and regulations is high and may increase in the future.

Changes to statutes, regulations or industry standards, including interpretation and implementation of statutes, regulations or standards, could increase our cost of doing business or affect the competitive balance.

Failure to comply with laws and regulations may have an adverse effect on our business, including the limitation, suspension or termination of services provided to, or by, third parties, and the imposition of other penalties or fines.

Failure to comply with laws and regulations may result in substantial civil and/or criminal penalties and may otherwise have an adverse effect on our business, including as a result of the limitation, suspension or termination of services provided to, or by, third parties.

To the extent these laws and regulations negatively impact the business, operations or financial condition of our customers, our business and results of operations could be materially and adversely affected because, among other matters, our customers could have less capacity to purchase products and services from us, could decide to avoid or abandon certain lines of business, or could seek to pass on increased costs to us by negotiating price reductions.

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The appearance of being involved in unfair trade practices and violating consumer protection laws when offering payment processing services to our customers could harm our reputation with our customers.

compliance with emerging sector-specific regulations may negatively impact our business, financial condition and results of operations by requiring us to alter our fee structure or payment processing practices.

The CFPB's focus on these payment processing practices may also lead to litigation against the Company.

Other companies in our industry that serve the public school sector have been the target of litigation related to the CFPB's increased focus on certain payment processing company practices as potentially volatile of consumer financial laws and as unfair trade practices.

As sector-specific laws, governmental rules and regulations develop to implement restrictions on payment processing services within certain sectors, we could become the subject of similar litigation, which could adversely impact our reputation, business and financial results.

Further, compliance with emerging sector-specific regulations may negatively impact our business, financial condition and results of operations by requiring us to alter our fee structure or payment processing practices.

The CFPB's focus on these payment processing practices has led to litigation against the Company.

For example, on May 16, 2025, Suzanne Hess, individually and on behalf of a putative class of citizens of the State of New York, filed a class action compliant in the Supreme Court of the State of New York, Nassau County, against i3 Verticals, LLC and CP-DBS, LLC d/b/a “PaySchools”, a subsidiary of i3 Verticals, LLC, seeking monetary damages and injunctive relief related to services offered by PaySchools that enable parents, guardians and caregivers to fund lunches for students in certain New York school districts and allegedly unlawful practices by PaySchools related to the fees charged for these school lunch services.

For additional information about this litigation, see Note 17 to our consolidated financial statements.

In addition, federal and state agencies have recently proposed or enacted cybersecurity regulations, such as the Cybersecurity Requirements for Financial Services Companies issued by the New York State Department of Financial Services and the Cyber Security Resource Guide for Financial Institutions issued November 2022 by the Federal Financial Institutions Examination Council replacing the 2018 Cyber Security Resource Guide.

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These restrictions could negatively affect the number of debit transactions processed, and prices charged per transaction, which would negatively affect our business.

If we violate the Family Educational Rights and Privacy Act ("FERPA") or Protection of Pupil Rights Amendment ("PPRA"), it could result in a material breach of contract with one or more of our customers in our Education sub-vertical and could harm our reputation.

Further, if we disclose student information in violation of FERPA or PPRA, our access to student information could be suspended.

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Further, if we disclose student information in violation of FERPA or PPRA, our access to student information could be suspended, thus inhibiting our business operations.

Actual or perceived failures to comply with applicable privacy and security laws and regulations could result in a material breach of contract with one or more of our customers in our Healthcare vertical, harm our reputation and subject us to substantial civil and criminal penalties under laws such as HIPAA and state privacy and security laws.

The data protection landscape is rapidly evolving, and we are or may become subject to numerous federal and state laws and regulations governing the collection, use, disclosure, retention, and security of health-related and other personal information.

The cost of compliance with the laws and regulations is high and is likely to increase in the future.

Any failure or perceived failure by us to comply with applicable data privacy and security laws or regulations, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties and damage to our reputation, any of which could have an adverse effect on our operations, financial performance and business.

For example, the HIPAA privacy and security regulations extensively regulate the use and disclosure of PHI and require business associates such as our company to implement administrative, physical and technical safeguards to protect the security of such information.

If we are unable to properly protect the privacy and security of PHI entrusted to us, we could be found to have breached our contracts with our customers and/or be subject to investigation by the United States Department of Health and Human Services ("HHS") Office for Civil Rights (“OCR”).

In the event OCR finds that we have failed to comply with applicable HIPAA privacy and security standards, we could face civil and criminal penalties.

OCR has become an increasingly active regulator and has signaled its intention to continue this trend.

OCR has the discretion to impose penalties without being required to attempt to resolve violations through informal means.

Further, OCR may require companies to enter into resolution agreements and corrective action plans that impose ongoing compliance requirements.

OCR enforcement activity can result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal resources.

In addition to enforcement by OCR, state attorneys general are authorized to bring civil actions under either HIPAA or similar state laws, seeking either injunctions or damages in response to violations that threaten the privacy of state residents.

Although we have implemented and maintain policies, processes and a compliance program infrastructure to assist us in complying with these laws and regulations and our contractual obligations, we cannot provide assurance regarding how these laws and regulations will be interpreted, enforced or applied to our Healthcare vertical operations.

Further, the Federal Trade Commission ("FTC") has prosecuted certain uses and disclosures of personal information and data breach cases as unfair and/or deceptive acts or practices under the Federal Trade Commission Act or under the FTC Health Breach Notification Act.

If we violate the federal Anti-Kickback Statue, Civil Monetary Penalties Law, the False Claims Act, the Cures Act or other federal or state laws and regulations applicable to healthcare services, it could result in a material breach of contract with one or more of our customers in our Healthcare vertical, harm our reputation and subject us to substantial civil and criminal penalties.

We strive to comply with healthcare laws, regulations and other requirements applicable to us directly and to our customers and contractors, but there can be no assurance that our operations will not be challenged or impacted by enforcement initiatives.

We could be adversely affected by violations of laws and regulations governing participants in the healthcare industry with respect to conduct prior to the sale of our Healthcare RCM Business.

The healthcare industry is governed by extensive and complex laws and regulations at the federal, state and local government levels.

These laws and regulations address, among other issues, billing and coding for services and properly handling overpayments, fraud and abuse, and the confidentiality, maintenance, interoperability, exchange and security of health-related and other confidential information.

In connection with the healthcare-related operations, including the sale of revenue cycle management software solutions, that we conducted prior to the sale of our Healthcare RCM Business, we could be adversely affected by violations of these laws and regulations.

Further, pursuant to the Healthcare RCM Purchase Agreement, we agreed to indemnify Infinx with respect to certain matters, which could result in liability to us.

We strived to structure our Healthcare RCM Business to comply with applicable healthcare laws, regulations and other requirements applicable to us directly and to our customers and contractors, but there can be no assurance that we will not be challenged or impacted by enforcement initiatives with respect to conduct occurring prior to the sale of our Healthcare RCM Business.

We have been, and in the future may become, involved in governmental investigations, audits, reviews and assessments.

Violation of these laws may result in criminal and/or civil penalties, including substantial monetary penalties.

Even an unsuccessful challenge by regulatory and other authorities or private whistleblowers could be expensive and time-consuming, could result in loss of business, exposure to adverse publicity and injury to our reputation and could adversely affect our ability to retain and attract customers.

Healthcare laws, regulations and other requirements impacting our Healthcare vertical operations include the following:

Anti-Kickback Laws.

A number of federal and state laws govern patient referrals, financial relationships with physicians and other referral sources and inducements to providers and patients, including restrictions contained in amendments to the Social Security Act, commonly known as the federal Anti-Kickback Statue ("AKS").

The AKS contains a limited number of exceptions, and the Office of Inspector General for the HHS ("OIG") has created regulatory safe harbors to the AKS.

Activities that comply with a safe harbor are deemed protected from prosecution under the AKS.

Certain of our contracts and other arrangements may not meet an exception or a safe harbor.

Failure to qualify for safe harbor protection does not mean the arrangement necessarily violates the AKS, but it may subject the arrangement to greater government scrutiny.

We cannot provide assurance that practices outside of a safe harbor will not be found to violate the AKS.

Allegations of violations of the AKS may be brought under the federal Civil Monetary Penalties ("the CMP Law"), which requires a lower burden of proof than the AKS.

The OIG has a longstanding concern that percentage-based billing arrangements may increase the risk of improper billing practices.

The OIG recommends that medical billing companies develop and implement comprehensive compliance programs to mitigate this risk.

In addition, certain states have adopted laws or regulations forbidding splitting of fees with non-physicians, which may be interpreted to prevent business service providers, including medical billing providers, from using a percentage-based billing arrangement.

While we have developed and implemented a comprehensive billing compliance program that we believe is consistent with federal guidance, our failure to ensure compliance with controlling legal requirements, accurately anticipate the application of these laws and regulations to our business and contracting model, or comply with regulatory requirements, could create liability for us, result in adverse publicity and negatively affect our business.

Violation of the AKS is a felony, and penalties may include imprisonment, criminal fines and substantial civil monetary penalties.

In addition, submission of a claim for items or services generated in violation of the AKS may be subject to additional penalties under the federal False Claims Act ("FCA") as a false or fraudulent claim.

False or Fraudulent Claim Laws;

Medical Billing and Coding .

Medical billing, coding and collection activities are governed by numerous federal and state civil and criminal laws, regulations and sub-regulatory guidance.

Our Healthcare vertical may be subject to, or contractually required to comply with, numerous federal and state laws that prohibit false or fraudulent claims including but not limited to the federal FCA, the CMP Law and state equivalents.

For example, errors or the unintended consequences of data manipulations by us or our systems with respect to the entry, formatting, preparation or transmission of claims, coding, audit, eligibility and other information, may result in allegations of false or fraudulent claims.

False or fraudulent claims under the FCA and other laws include, but are not limited to, billing for services not rendered, making or causing to be made or used a false record or statement that is material to a false claim, failing to report and refund known overpayments within 60 days of identifying the overpayment, misrepresenting actual services rendered, improper coding and billing for medically unnecessary items or services.

Submission of a claim for an item or service generated in violation of the AKS constitutes a false or fraudulent claim.

In addition, the FCA prohibits the knowing submission of false claims or statements to the federal government, including to Medicare and Medicaid programs.

Although simple negligence will not give rise to liability under the FCA, "knowingly" submitting a false claim may result in liability.

When an entity is determined to have violated the FCA,

the government may impose substantial civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in federal healthcare programs.

Private parties are able to bring qui tam, or whistleblower, lawsuits on behalf of the government in connection with alleged false claims submitted to the government, and these private parties are entitled to share in any amounts recovered by the government.

Several states, including states in which we operate, have adopted their own false claims provisions and their own whistleblower provisions whereby a private individual may file a civil lawsuit in state court.

Some fraud and abuse laws, such as the CMP Law, require a lower burden of proof than other fraud, waste and abuse laws.

Federal and state authorities increasingly assert liability under the CMP Law, especially where they believe they cannot meet the higher burden of proof requirements under the various criminal healthcare fraud provisions.

Current penalties under the CMP Law are significant and may result in penalties of up to three times the amount claimed or received.

Civil monetary penalties, including those imposed under the AKS, FCA, and CMP Law are updated annually based on changes to the consumer price index.

Although we believe our processes are consistent with applicable reimbursement rules and industry practice, a court, government authority or whistleblower could challenge these processes.

In addition, we cannot guarantee that federal and state authorities will regard any billing and coding errors we process or make as inadvertent or will not hold us responsible for any compliance issues related to claims, reports and other information we handle on behalf of our customers.

We cannot predict the impact of any enforcement actions under the various false claims and fraud, waste and abuse laws applicable to our operations.

Even an unsuccessful challenge of our practices could cause us to incur adverse publicity and significant legal and related costs.

The laws and regulations in this area are both broad and vague and judicial interpretation can be inconsistent.

We review our practices with regulatory experts in an effort to comply with all applicable laws and regulatory requirements.

However, we are unable to predict how laws and regulations will be interpreted or the full extent of their application, particularly to services that are not directly billed to or reimbursed by federal healthcare programs, such as transaction processing services.

Any determination by a federal or state regulatory authority that any of our activities or those of our customers or vendors violate any of these laws or regulations could:

subject us to civil or criminal penalties, require us to enter into corporate integrity agreements or similar agreements with government regulators to meet ongoing compliance obligations, require us to change or terminate some portions of our business, require us to refund a portion of our service fees and/or disqualify us from providing services to customers that are, or do business with, government programs.

Any of these could result in a material adverse impact on our business, results of operations or financial condition.

Even an unsuccessful challenge of our activities could result in adverse publicity and could require a costly response.

The Cures Act and Implementing Regulations (Information Blocking and Health Information Technology ("HIT") Standards and Certification Requirements).

Standards regarding electronic exchange of information and interoperability are subject to regular revision and updates, and we are required to modify and enhance products and services accordingly.

The Information Blocking Rule prohibits healthcare providers, Health Information Exchange ("HIEs"), and HIT developers, including our subsidiary that provides electronic medical records, from information blocking, which is defined as practices likely to interfere with, prevent, or materially discourage access, exchange, or use of electronic health information ("EHI"), except as required by law or specified by HHS as a reasonable and necessary activity.

Civil monetary penalties for information blocking by HIT developers are substantial, up to $1 million per violation.

The HIT Standards and Certification Criteria Final Rule imposes new criteria related to EHI export and standardized APIs for patient services, and HIT developers of certified HIT need to ensure that their products and services meet the requisite technical standards by the relevant deadlines and continue to evolve as developers and other stakeholders release revised versions of these standards.

Additionally, HIT developers that participate in the ONC Health IT Certification Program, like us, must make various certifications regarding their HIT and attest to compliance with applicable conditions of certification, including those related to information blocking.

These rules apply to certain services we offer, and customers may insist that we develop additional solutions that comply with these various interoperability requirements, which could subject us to additional costs.

We currently have and likely will continue to have certain solutions certified by ONC, which could further increase development costs and delay customer sales and implementations.

We also may incur costs in periods prior to the corresponding recognition of revenue.

To the extent current regulations are subsequently changed or

supplemented, or for other reasons beyond our control, customers may postpone or cancel their decisions to purchase or implement such solutions.

Exclusion from participation in government healthcare programs.

The OIG may or must exclude individuals and entities involved in misconduct related to federal healthcare programs, such as Medicare and Medicaid, from participation in those programs.

Federal law prohibits federal healthcare programs from paying for items or services furnished, ordered, or prescribed by an individual or entity excluded from participation.

The prohibition against federal program payment extends to payment for administrative and management services not directly related to patient care.

Civil penalties may be imposed against providers and entities that employ or enter into contracts with excluded individuals to provide items or services to federal healthcare program beneficiaries.

We have implemented compliance policies and procedures to screen for excluded individuals.

However, if we employ or contract with an excluded individual or entity, we could face significant consequences such as exclusion from participation in federal healthcare programs, civil monetary penalties, and treble damages.

In addition, we could be liable under our customer contracts, if we are excluded by the OIG or employ or contract with an excluded individual or entity.

Recent and future developments in the healthcare industry, particularly those related to HIT, could have a material adverse impact on our business, results of operations or financial condition.

A material portion of our revenue is derived from the healthcare industry, which is highly regulated and subject to changing political, legislative, regulatory and other influences.

There are numerous federal, state and private initiatives seeking to increase the use of HIT as a means of improving care and reducing costs.

For example, HITECH and the Cures Act promote the use of EHR technology, interoperability and the efficient exchange of EHI.

These statutes are implemented mainly through HIPAA, CMS’s Promoting Interoperability Program, and ONC’s Information Blocking Rule and HIT Standards and Certification Criteria Final Rule.

These and other initiatives may result in additional legal or regulatory requirements, the cost of compliance with which may be significant;

encourage more companies to enter our markets, provide advantages to our competitors;

and/or result in the development of competitive technology solutions.

Any such initiatives also may result in a reduction of expenditures by existing or potential customers, which could have a material adverse impact on our business, results of operations or financial condition.

In addition, other general reductions in expenditures by healthcare industry constituents could result from, among other things, government regulation or private initiatives that affect the manner in which providers interact with patients, payers or other healthcare industry constituents, including changes in pricing or means of delivery of healthcare solutions.

In addition, cost containment efforts at the federal and state levels may affect industry expenditures.

For example, the Budget Control Act of 2011 requires automatic spending reductions to reduce the federal deficit.

CMS began imposing a 2% reduction on payments of Medicare claims in 2013.

These reductions have been extended through the first six months of 2032.

In addition, the American Rescue Plan Act of 2021 increased the federal budget deficit in a manner that triggered an additional statutorily mandated sequestration.

As a result, an additional payment reduction of up to 4% was required to take effect in January 2022.

However, Congress has delayed implementation of this payment reduction until 2025.

We anticipate that the federal deficit will continue to place pressure on government healthcare programs.

Even if general expenditures by healthcare industry constituents remain the same or increase, other developments in the healthcare industry may reduce spending on healthcare IT and services or in some or all of the specific markets we serve or are planning to serve.

In addition, our customers’ expectations regarding pending or potential healthcare industry developments also may affect their budgeting processes and spending plans with respect to the types of solutions we provide.

For example, use of our solutions could be affected by:

• changes in the billing patterns of providers;

• the design of health insurance plans;

• the contracting methods payers use in their relationships with providers.

The healthcare industry has changed significantly in recent years, and we expect that significant changes will continue to occur.

The timing and impact of developments in the healthcare industry are difficult to predict.

We cannot be sure that the markets for our solutions will continue to exist at their current levels or will not change in ways that adversely affect us, or that we will have adequate technical, financial and marketing resources to react to changes in those markets.

We may be a party to regulatory and other proceedings that could result in unexpected adverse outcomes.

From time to time, we have been, are and may in the future be, a party to legal and regulatory proceedings, including investigations, audits, and other reviews.

There are an increasing number of investigations and proceedings in the healthcare industry that seek recovery under HIPAA, AKS, the FCA, the CMP, state laws and other statutes and regulations applicable to our business as described in more detail above.

Such proceedings can result in verdicts, injunctive relief or other sanctions that may affect how we operate our business and/or have an adverse effect on our financial condition.

Violations of applicable statutes and regulations may result in criminal penalties and substantial civil penalties, including exclusion from government healthcare programs, and settlements of lawsuits involving Medicare and Medicaid issues routinely require monetary penalties and corporate integrity agreements.

Assessing and predicting the outcome of these matters involves substantial uncertainties.

Unexpected outcomes in these legal proceedings, or changes in management’s evaluations or predictions and accompanying changes in established reserves, could have a material adverse impact on our business, results of operations or financial condition.

Litigation is costly, time-consuming and disruptive to normal business operations.

In addition, the defense of these matters could result in continued diversion of our management’s time and attention away from business operations, which could also harm our business.

Even if these matters are resolved in our favor, the uncertainty and expense associated with unresolved legal proceedings could harm our business and reputation.

We must comply with laws and regulations prohibiting unfair or deceptive acts or practices, and any failure to do so could materially and adversely affect our business.

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Failure to comply with the FCPA could result in the imposition of civil or criminal fines and penalties and could disrupt our business and adversely affect our results of operations, cash flows and financial condition.

Numerous other federal laws affect our business, and any failure to comply with those laws could harm our business.

Numerous other laws affect our business, and any failure to comply with those laws could harm our business.

Our payment facilitator solutions present certain regulatory challenges, principally those relating to money transmitter issues.

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We could be liable for penalties if our information returns are not in compliance with these regulations.

Our public sector case resolution and fund recovery services may be subject to certain laws, rules and regulations applicable to debt collectors, including, federal and state licensing or bonding requirements.

Such laws and regulations are extensive and subject to change.

Our failure to comply with these requirements, changing interpretations of existing requirements, or adoption of new requirements, could restrict our ability to offer these non-healthcare revenue cycle management services in certain jurisdictions, which would adversely affect our business, operating results and financial condition .

Depending on how our products and services evolve, we may be subject to a variety of additional laws and regulations, including those governing money transmission, gift cards and other prepaid access instruments, electronic funds transfers, anti-money laundering, counter-terrorist financing, restrictions on foreign assets, banking and lending, U.S.

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If we are required to pay additional taxes and are unable to pass the tax expense through to our customers, our costs would increase and our net income would be reduced, which could have a material adverse effect on our business, financial condition and results of operations.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing broad changes to the U.S.

tax code, including modifications to federal income tax provisions.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others taking effect in later years.

The aggregate impact of the OBBBA remains uncertain.

We will continue to monitor future developments, including regulatory guidance and interpretations, which could have a material impact on our business, financial condition and results of operations.

Changing laws and governmental rules and regulations designed to protect or limit access to or use of personal information could adversely affect our ability to effectively provide our products and services, and actual or perceived failure to comply with such legal and regulatory obligations may negatively impact our business, financial condition and results of operations.

In addition to those laws and regulations discussed previously that are imposed by the card networks and Nacha, governmental bodies in the United States have adopted, or are considering the adoption of, laws and regulations restricting the use, collection, storage, transfer and disposal of, and requiring safeguarding of, personal information.

In addition to the standards and requirements discussed previously that are imposed by the card networks and Nacha, governmental bodies in the United States have adopted, or are considering the adoption of, laws and regulations restricting the use, collection, storage, transfer and disposal of, and requiring safeguarding of, personal information.

Our operations are subject to certain provisions of these laws.

Relevant federal privacy laws include, in addition to FERPA, PPRA and HIPAA described above, the Gramm-Leach-Bliley Act of 1999, which applies directly to a broad range of financial institutions and indirectly, or in some instances directly, to companies that provide services to financial institutions.

Children’s Online Privacy Protection Act also regulates the collection of information by operators of websites and other electronic solutions that are directed to children under 13 years of age.

Relevant federal privacy laws include, in addition to FERPA and PPRA described above, the Gramm-Leach-Bliley Act of 1999, which applies directly to a broad range of financial institutions and indirectly, or in some instances directly, to companies that provide services to financial institutions.

Children’s Online Privacy Protection Act also regulates the collection of information by operators of websites and other electronic solutions that are directed to children under

13 years of age.

These laws and regulations restrict the collection, processing, storage, use and disclosure of personal information, require notice to individuals of privacy practices and provide individuals with certain rights to prevent the use and disclosure of protected information.

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Our ability to maintain compliance with these standards and satisfy these audits will affect our ability to attract, grow and maintain business in the future.

If we fail to comply with the laws and regulations relating to data privacy and information security, we could be exposed to legal claims and actions or to regulatory enforcement proceedings.

If we fail to comply with the laws and regulations relating to data privacy and information security, we could be exposed to legal claims and actions or to regulatory enforcement proceedings and may be subject to substantial civil and/or criminal penalties.

In addition, our relationships and reputation could be harmed, which could inhibit our ability to retain existing customers and obtain new customers.

Legal requirements relating to the collection, storage, handling and transfer of personal data continue to evolve at both the federal and state level.

For example, the CFPB finalized a rule which goes into effect January 17, 2025, that requires certain data providers to make covered data regarding covered financial products and services available to consumers and authorized third parties in an electronic form, subject to a number of requirements.

Many states have introduced or passed comprehensive consumer privacy laws, including California, Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee, Texas, Utah and Virginia, that may impose varying standards and requirements on our data collection use and processing activities.

For example, the CFPB finalized a rule which went into effect January 17, 2025, that requires certain data providers to make covered data regarding covered financial products and services available to consumers and authorized third parties in an electronic form, subject to a number of requirements.

Many states have introduced or passed comprehensive consumer privacy laws, which may impose varying standards and requirements on our data collection use and processing activities.

These laws require companies (regardless of their location) that process personal information of residents of those states make certain disclosures to consumers about data practices, grant consumers specific rights to their data, and allow consumers to opt out of certain data sharing activities.

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If more restrictive privacy laws or rules and/or inconsistent legal requirements are adopted by authorities in the future on the federal or state level, or regulators' enforcement priorities shift, our compliance costs may increase and our ability to perform due diligence on, and monitor the risk of, our current and potential customers may decrease, which could create liability for us.

M any consumer privacy laws provide for civil penalties for violations, and the CCPA and CPRA provide for a private right of action for data breaches that may increase data breach litigation.

Many consumer privacy laws provide for civil penalties for violations, and the CCPA and CPRA provide for a private right of action for data breaches that may increase data breach litigation.

We may also be exposed to litigation, regulatory fines, penalties or other sanctions if the personal, confidential or proprietary information of our customers is mishandled or misused by any of our suppliers, counterparties or other third parties, or if such third-parties do not have appropriate controls in place to protect such personal, confidential or proprietary information.

Further, many foreign data privacy regulations (including India’s Digital Personal Data Protection Act) can be more stringent than those in the United States.

These laws and regulations are rapidly evolving and changing and could have an adverse effect on our operations.

Our obligations and requirements under these laws and regulations are subject to uncertainty in how they may be interpreted by government authorities and regulators.

The costs of compliance with, and the other burdens imposed by, these and other laws or regulatory actions may increase our operational costs, affect our customers’ willingness to permit us to use and store personal data, prevent us from selling our products or services, and/or affect our ability to invest in or jointly develop products.

Failure to comply with these laws may result in governmental enforcement actions, private claims, including class action lawsuits, and damage to our reputation.

We may also face audits or investigations by one or more domestic or foreign government agencies relating to our compliance with these regulations.

For additional information on the risks associated with foreign data privacy regulations, see “Our international operations subject us to additional risks which could have an adverse effect on our business, operating results, and financial condition.” in Part I, Item 1A of this Form 10-K.

Additionally, if we suffer a data breach, other privacy or cybersecurity regulatory compliance failures or are subject to fines, sanctions or proceedings as a result of actual or perceived compliance failures, or any similar event causing reputational harm, our opportunities for growth may be curtailed, and our potential liability for security breaches may increase, all of which could have a material adverse effect on our business, financial condition and results of operations.

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These changes may also prevent our introduction of new products and services or make the continuation or maintenance of our existing products and services unprofitable or impossible.

We no longer qualify as an “emerging growth company”, and as a result, we have been subject to increased disclosure and compliance requirements.

We no longer qualify as an emerging growth company ("EGC") as defined in the Jumpstart Our Business Startups Act (the "JOBS Act").

As such, we are subject to certain disclosure and compliance requirements that apply to other public companies but did not previously apply to us due to our status as an EGC.

These requirements include, but are not limited to:

• the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002;

• compliance with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements, including critical audit matters;

• the requirement that we provide full and more detailed disclosures regarding executive compensation;

• the requirement that we hold a non-binding advisory vote on executive compensation and obtain stockholder approval of any golden parachute payments not previously approved.

The loss of EGC status and compliance has increased and may continue to increase our legal and financial compliance costs, and may cause management and other personnel to divert attention from operational and other business matters to devote substantial time to public company reporting requirements.

The heightened focus on environmental, social and governance (“ESG”) practices could increase our costs, harm our reputation and adversely impact our financial results.

There has been heightened focus by investors, customers, environmental activists, the media and governmental and nongovernmental organizations on a variety of ESG matters.

If we are not effective in addressing ESG matters affecting our business our reputation may suffer.

The evolving legal, ethical and regulatory landscape over AI technologies creates uncertainties.

The development of AI is complex and uncertain, and presents various risks and uncertainties, including as the result of the rapidly evolving legal, ethical and regulatory landscape associated with the use of AI.

Additionally, AI-generated outputs may be misleading, insecure, inaccurate, harmful, or otherwise flawed.

Further, if we fail to leverage AI technologies as effectively or rapidly as our peers, our competitiveness and financial results could be adversely impacted.

There is also uncertainty about the extent to which data privacy laws apply to AI technologies, and any delay in addressing those concerns may result in liability or regulatory investigations and fines, as well as harms to our business and reputation.

In addition, issues related to intellectual property rights in AI technologies have not been fully addressed by the courts or regulators.

As such, to the extent we implement generative AI technologies into our products and/or services, we may face resulting exposure to claims related to copyright infringement or other intellectual property misappropriation.

The ongoing focus on environmental, social and governance (“ESG”) practices could increase our costs, harm our reputation and adversely impact our financial results.

Many investors, customers, environmental activists, the media and governmental and nongovernmental organizations are focused on a variety of ESG matters.

At the same time, other stakeholders and governmental authorities have increasingly expressed or pursued opposing views, legislation and investment expectations with respect to ESG initiatives.

If we are not effective in addressing ESG matters affecting our business and balancing these evolving views and expectations, which may be conflicting, our reputation may suffer.

Moreover, we may experience increased costs in order to develop and execute upon any such ESG strategies, which could have an adverse impact on our business and financial condition.

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On May 8, 2023, i3 Verticals, LLC (the “Borrower”), entered into that certain Credit Agreement (as amended, the “2023 Senior Secured Credit Facility”) with the guarantors and lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan”).

The 2023 Senior Secured Credit Facility replaces the Prior Senior Secured Credit Facility (as defined below).

The 2023 Senior Secured Credit Facility provides for aggregate commitments of $450 million in the form of a senior secured revolving credit facility (the “Revolver”).

The 2023 Senior Secured Credit Facility replaced the prior senior secured credit facility of the Company which was entered into on May 9, 2019 (the "Prior Senior Secured Credit Facility").

Following an amendment to the Credit Facility entered into on May 5, 2025, as described below, the 2023 Senior Secured Credit Facility provides for aggregate commitments of $400 million in the form of a senior secured revolving credit facility (the “Revolver”).

Borrowings under the Revolver will be made, at the Borrower’s option, at the Adjusted Term SOFR rate or the base rate, plus, in each case, an applicable margin.

The Adjusted Term SOFR rate will be the rate of interest per annum equal to the Term SOFR rate (based upon an interest period of one, three or six months), plus 0.10%, plus an applicable margin of 2.00% to 3.00% (2.00% at September 30, 2024).

The Adjusted Term SOFR rate will be the rate of interest per annum equal to the Term SOFR rate (based upon an

interest period of one, three or six months), plus 0.10%, plus an applicable margin of 2.00% to 3.00% (2.00% at September 30, 2025).

The Adjusted Term SOFR rate shall not be less than 0% in any event.

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For additional information about our 2023 Senior Secured Credit Facility, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in Part II, Item 7 of this Annual Report on Form 10-K, and “Quantitative and Qualitative Disclosure About Market Risk” in Part II, Item 7A of this Annual Report on Form 10-K.

On February 18, 2020, i3 Verticals, LLC issued $138.0 million aggregate principal amount of its Exchangeable Notes.

The Exchangeable Notes bear interest at a fixed rate of 1.0% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020.

As of August 15, 2024, the Exchangeable Notes became exchangeable at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The Exchangeable Notes are exchangeable on the terms set forth in the Indenture into cash, shares of Class A common stock, or a combination thereof, at i3 Verticals, LLC’s election, provided that in September 2022, the Company made the irrevocable election to settle the principal portion of its Exchangeable Notes only in cash.

As of September 30, 2024, $26.2 million of the original aggregate principal amount of $138.0 million was outstanding.

To service our debt and any additional debt we may incur in the future, we need to generate cash.

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As discussed above, the 2023 Senior Secured Credit Facility contains restrictive covenants that limit our ability to incur additional debt and engage in other capital-raising activities.

Any debt financing we obtain in the future could involve covenants that further restrict our capital raising

activities and other financial and operational matters, which may make it more difficult for us to operate our business, obtain additional capital and pursue business opportunities, including potential acquisitions.

Any debt financing we obtain in the future could involve covenants that further restrict our capital raising activities and other financial and operational matters, which may make it more difficult for us to operate our business, obtain additional capital and pursue business opportunities, including potential acquisitions.

Furthermore, if we raise additional funds by issuing equity or convertible debt or other equity-linked securities, our then-existing stockholders could suffer significant dilution.

If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited.

We may not have the ability to raise the funds necessary to settle exchanges of the Exchangeable Notes or to repurchase the Exchangeable Notes upon a fundamental change.

Holders of our Exchangeable Notes have the right to require us to repurchase their Exchangeable Notes upon the occurrence of a fundamental change at a repurchase price equal to 100% of the principal amount of the Exchangeable Notes to be repurchased, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date.

In addition, unless we elect to deliver solely shares of Class A common stock to settle an exchange of the Exchangeable Notes, we will be required to make cash payments in respect of such Exchangeable Notes being exchanged.

However, we may not have enough available cash or be able to obtain financing at the time we are required to make purchases of Exchangeable Notes surrendered therefor or Exchangeable Notes being exchanged.

In addition, our ability to repurchase the Exchangeable Notes or to pay cash upon exchanges of the Exchangeable Notes is limited by the agreements governing our existing indebtedness (including the 2023 Senior Secured Credit Facility) and may also be limited by law, by regulatory authority or by agreements that will govern our future indebtedness.

Our failure to repurchase Exchangeable Notes at a time when the repurchase is required by the indenture that governs the Exchangeable Notes or to pay cash payable on future exchanges of the Exchangeable Notes if and/or as required by the Indenture would constitute a default under the Indenture.

A default under the Indenture or the fundamental change itself could also lead to a default under the agreements governing our other indebtedness (including the 2023 Senior Secured Credit Facility) and agreements governing our future indebtedness.

If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Exchangeable Notes or make cash payments upon exchanges thereof.

Risks Related to Our Organizational Structure and Our Company

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Instead, its net taxable income is generally allocated to its members, including us, pro rata according to the number of membership interests each member owns.

Accordingly, we incur income taxes on our proportionate share of any net taxable income of i3 Verticals, LLC in addition to expenses related to our operations, and our ability to obtain funds to pay these income taxes currently depends upon distributions from i3 Verticals, LLC.

distributions from i3 Verticals, LLC.

We intend to cause i3 Verticals, LLC to distribute cash to us in an amount at least equal to the amount necessary to cover our respective tax liabilities, if any, with respect to our allocable share of the net income of i3 Verticals, LLC and to cover cash dividends on our Class A common stock, if any, we declare, and purchases of Class A common stock pursuant to our share repurchase program, as well as any payments due under the Tax Receivable Agreement (the “Tax Receivable Agreement” or "TRA") by and among i3 Verticals, Inc., i3 Verticals, LLC and each of the holders, other than i3 Verticals, Inc., of common units in i3 Verticals, LLC (the “Continuing Equity Owners”).

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The Continuing Equity Owners, who collectively hold approximately 27% of the combined voting power of our common stock as of November 20, 2025, may receive payments from us under the Tax Receivable Agreement upon a redemption or exchange of their common units in i3 Verticals, LLC, including the issuance of shares of our Class A common stock upon any such redemption or exchange.

As a result, the interests of the Continuing Equity Owners may conflict with the interests of holders of shares of our Class A common stock.

For example, the Continuing Equity Owners may have different tax positions from us in relation to whether and when we dispose of assets, whether and when we incur new or refinance existing indebtedness, and whether and when we should terminate the Tax Receivable Agreement and accelerate our obligations thereunder.

As a result, the interests of the Continuing Equity Owners, including some members of our Board of Directors, may conflict with the interests of holders of shares of our Class A common stock.

For example, the Continuing Equity Owners may have different tax positions from us in relation to whether and when we enter into a change of control transaction, dispose of assets, whether and when we incur new or refinance existing indebtedness, and whether and when we should terminate the Tax Receivable Agreement and accelerate our obligations thereunder.

In addition, the structuring of future transactions may take into consideration tax or other considerations of the Continuing Equity Owners even in situations where no similar considerations are relevant to the Company itself.

We may not be able to realize all or a portion of the tax benefits that are expected to result from future redemptions or exchanges of common units by holders.

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As a result of the foregoing, (a) we could be required to make payments under the Tax Receivable Agreement that are greater than the specified percentage of the actual benefits we ultimately realize in respect of the tax benefits that are subject to the Tax Receivable Agreement and (b) if we elect to terminate the Tax Receivable Agreement early, we would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the Tax Receivable Agreement, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits.

In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business

combinations or other changes of control.

We may need to incur debt to finance payments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise.

There can be no assurance that we will be able to fund or finance our obligations under the Tax Receivable Agreement.

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Funds used by i3 Verticals, LLC to satisfy its tax distribution obligations may not be available for reinvestment in our business.

In particular, in connection with the taxable income associated with the gain on the sale in September 2024 of our Merchant Services Business that is anticipated to be recognized for 2024 federal income tax purposes by the members of i3 Verticals, LLC, a pass-through entity in which the Company held a 70.4% ownership interest as of September 30, 2024, we expect that i3 Verticals, LLC will be required under the terms of its limited liability company agreement to make a tax distribution in the first half of 2025 to the members of i3 Verticals, LLC, including i3 Verticals, Inc., the final amount of which tax distribution has not yet been determined.

As a result of potential differences in the amount of net taxable income allocable to us and to the Continuing Equity Owners, as well as the use of an assumed tax rate in calculating i3 Verticals, LLC’s distribution obligations, we may receive distributions significantly in excess of our tax liabilities and obligations to make payments under the Tax Receivable Agreement, including in connection with the anticipated tax distribution to be made by i3 Verticals, LLC to its members, including the Company, in early 2025 as described above.

Our Board of Directors will determine the appropriate uses for excess cash which is so held by the Company following tax distributions, which may include, among other uses, after giving effect to the payment of obligations under the Tax Receivable Agreement, the recontribution of such cash to i3 Verticals, LLC for use in our business in exchange for common units of i3 Verticals, LLC along with an associated recapitalization of all of the outstanding common units in i3 Verticals, LLC, and/or the payment of a cash dividend on our Class A common stock.

As a result of potential differences in the amount of net taxable income allocable to us and to the Continuing Equity Owners, as well as the use of an assumed tax rate in calculating i3 Verticals, LLC’s distribution obligations, we may receive distributions significantly in excess of our tax liabilities and obligations to make payments under the Tax Receivable Agreement, such as in connection with the 2025 LLC Tax Distribution described below.

In this regard, i3 Verticals, LLC made a tax distribution to the Company and the Continuing Equity Owners in January 2025 (the “2025 LLC Tax Distribution”) related to the taxable income associated with the gain on the sale of the Merchant Services Business completed in September 2024 that was anticipated to be recognized for 2024 federal income tax purposes by members of i3 Verticals, LLC.

The 2025 LLC Tax Distribution resulted in the Company holding cash in excess of the Company’s tax liabilities, its obligation to make payments under its tax receivables agreement, and any other expected liabilities of the Company.

Thereafter, on January 23, 2025, the Company and i3 Verticals, LLC effected certain recapitalization actions in order to reduce excess cash held at the Company following this 2025 LLC Tax Distribution.

For additional information regarding the 2025 LLC Tax Distribution and recapitalization actions, see Note 18 to the accompanying consolidated financial statements contained in this report.

Our Board of Directors will determine the appropriate uses for excess cash which may be held by the Company following any future tax distributions, which may include, among other uses, after giving effect to the payment of obligations under the Tax Receivable Agreement, effecting a recapitalization transaction similar to the recapitalization transaction associated with the 2025 LLC Tax Distribution as described above, and/or approving the payment of a cash dividend on our Class A common stock.

While our Board may choose to take any such actions, our Board is not required to do so, and to the extent, for example, such excess cash balances continue to be held by the Company, the Continuing Equity Owners would benefit from any value attributable to such accumulated cash balances as a result of their ownership of Class A common stock following a redemption or exchange of their common units.

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In addition, we may be required to incur costs in improving our internal control system, including the costs of the hiring of additional personnel.

Any such action

could negatively affect our business, financial condition, results of operations and cash flows and could also lead to a decline in the price of our Class A common stock.

Any such action could negatively affect our business, financial condition, results of operations and cash flows and could also lead to a decline in the price of our Class A common stock.

Certain provisions of Delaware law and anti-takeover provisions in our organizational documents could delay or prevent a change of control.

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• certain limitations on convening special stockholder meetings.

In addition, while we have opted out of Section 203 of the Delaware General Corporation Law, or the “DGCL,” our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless:

In addition, while we have opted out of Section 203 of the Delaware General Corporation Law (the “DGCL”), our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless:

• prior to such time, our board of directors (“Board of Directors”) approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

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Moreover, such dilution could have a material adverse effect on the market price for the shares of our Class A common stock.

stock if the preferred stock votes together with the common stock as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote, even if the action were approved by the holders of our shares of our Class A common stock.

The future issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of shares of our Class A common stock, either by diluting the voting power of our Class A common stock if the preferred stock votes together with the common stock as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote, even if the action were approved by the holders of our shares of our Class A common stock.

The future issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our Class A common stock by making an investment in the Class A common stock less attractive.

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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 1A. Risk Factors