ASUR 10-K & 10-Q changes, risk factors and insider trading
Asure Software Inc. · Nasdaq · Services-Computer Integrated Systems Design · CIK 884144 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We may need additional capital to support business growth or to make scheduled payments on or refinance our existing indebtedness. Such additional capital may have restrictions that could adversely affect our financial condition and our ability to respond to changes in our business or may be prevented entirely by our existing restrictive covenants.”
New heading “Some of our key components are procured from a single or limited number of suppliers. Thus, we are at risk of shortages, price increases, tariffs, changes in international trade policies or treaties, delays, or discontinuation of key components, which could disrupt and materially and adversely affect our business.”
New heading “We have previously identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future, fail to remediate the identified material weakness, or otherwise fail to maintain an effective system of internal control, all of which, if they occur, may result in material misstatements of our financial statements.”
New heading “Advancements and adoption of AI, either in our industry or those of our clients, could reduce demand for our solutions, which could have a material adverse effect on our business, operating results, and financial results.”
New heading “A portion of our accounts receivable is related to tax processing services that enabled businesses to file for Employee Retention Tax Credits under the CARES Act.”
Removed heading “We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future, fail to remediate the identified material weakness, or otherwise fail to maintain an effective system of internal control, all of which, if they occur, may result in material misstatements of our financial statements.”
Removed heading “Our failure to comply with existing laws and regulations may result in adverse effects on our business, service and financial condition and failure to comply with licensing requirements or changing laws and regulations through modifications, developments, and enhancements to our products and services could have a material adverse effect on our business and results of operations.”
Removed heading “We may be required to incur debt to meet future capital requirements of our business. Should we be required to incur debt, the restrictions imposed by the terms of such debt could adversely affect our financial condition and our ability to respond to changes in our business.”
Removed heading “We may require additional capital to support business growth, and this capital may not be available on acceptable terms, or at all.”
Removed heading “A portion of our accounts receivable is related tax processing services to that enabled businesses to file for Employee Retention Tax Credits under the CARES Act. Such regulations were originally expected to expire in 2024 and 2025, which, following their expiration, will adversely impact our revenues on a comparative basis. Further, abuses of this program may require government intervention that could adversely affect the timing of our cash collections.”
Removed heading “Some of our key components are procured from a single or limited number of suppliers. Thus, we are at risk of shortage, price increases, tariffs, changes, delay, or discontinuation of key components, which could disrupt and materially and adversely affect our business.”
Largest changes
“Our services are subject to various laws and regulations including COBRA, HIPAA, laws and regulations promulgated by state wage and hour authorities, anti-money laundering regulations, and licensure requirements. Failure to comply with the multiple laws and regulations that impact us may result in civil liability from our clients for noncompliance, regulatory fines, and loss of reputation in the event of a public regulatory investigation or consent order or civil lawsuit. …”see in full comparison
“We are in the process of designing and implementing measures to improve our internal controls over financial reporting and remediate the identified material weakness. However, we cannot predict the success of these measures nor give assurance that these measures will remediate the material weakness or prevent additional material weaknesses or significant deficiencies in our internal controls over financial reporting from occuring. …”see in full comparison
“While we have implemented measures and remediated the identified material weakness, we cannot give assurance that these measures will prevent additional material weaknesses or significant deficiencies in our internal controls over financial reporting from occurring. …”see in full comparison
“We have previously identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future, fail to remediate the identified material weakness, or otherwise fail to maintain an effective system of internal control, all of which, if they occur, may result in material misstatements of our financial statements.”see in full comparison
“We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future, fail to remediate the identified material weakness, or otherwise fail to maintain an effective system of internal control, all of which, if they occur, may result in material misstatements of our financial statements.”see in full comparison
“The adoption of new money transmitter or money service business statutes in new jurisdictions, changes in regulators’ interpretations of existing statutes, or disagreement by regulators of our interpretation of such statutes or regulations could require additional registrations or licensing, limit certain of our business activities until we are properly licensed and expose us to financial penalties. These occurrences could also require change to the manner in which we conduct some aspects of our money movement business, client funds investment strategy or our overall business strategy. …”see in full comparison
Full comparison: every changed paragraph (69)
Our solution involves the collection, storage and transmission of clients’ and their employees’ confidential and proprietary information, including personal identifying information such as social security numbers and data protected by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA data”) with respect to our consumer health care administration services, as well as financial and payroll data. This type of data is highly sensitive and is regulated by laws in all jurisdictions governing the security and privacy of personal information. HCM software is often targeted in cyber-attacks, including computer viruses, worms, phishing attacks, malicious software programs and other information security breaches due to the sensitive nature of the data, which could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our clients’ sensitive data or otherwise disrupt our clients’ or other third parties’ business operations. If cybercriminals are able to circumvent our security measures, or if we are unable to detect an intrusion into our systems and contain such intrusion in a reasonable amount of time, our clients’ sensitive data may be compromised, as well as our intellectual property and other confidential business information.
We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future, fail to remediate the identified material weakness, or otherwise fail to maintain an effective system of internal control, all of which, if they occur, may result in material misstatements of our financial statements.
In connection with the preparation of our Annual Report for the year ended December 31, 2024, we have identified a material weakness in our internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. See Item 9A. Controls and Procedures included in Item II of this Annual Report for more information about the identified material weakness.
We are in the process of designing and implementing measures to improve our internal controls over financial reporting and remediate the identified material weakness. However, we cannot predict the success of these measures nor give assurance that these measures will remediate the material weakness or prevent additional material weaknesses or significant deficiencies in our internal controls over financial reporting from occuring. If our remediation measures are insufficient to address the material weakness or additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, we may not detect errors in a timely manner, our financial statements could be misstated, we could face a loss of confidence by stakeholders, or we could be subject to regulatory scrutiny, sanctions, or litigation, any of which could harm our business, financial condition, results of operations, or the market price of our securities.
We may need additional capital to support business growth or to make scheduled payments on or refinance our existing indebtedness. Such additional capital may have restrictions that could adversely affect our financial condition and our ability to respond to changes in our business or may be prevented entirely by our existing restrictive covenants.
We intend to continue to make investments, including the acquisition of complementary businesses, to support our business growth and may need to respond to business challenges, including the need to develop new features or enhance our existing products, improve our operating infrastructure or acquire complementary businesses and technologies. However, our business may not generate cash flow from operations in the future sufficient to service our debt and support our growth strategies. Our future performance is subject to economic, financial, competitive, and other factors beyond our control. If we are unable to generate sufficient cash flow, we may be required to pursue one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, restructuring debt, or obtaining additional equity or debt financing.
If we raise additional funds through issuances of equity securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. If we incur debt to raise additional fund, we may not be able to do so on desirable terms. New indebtedness may adversely affect our financial condition and ability to respond to changes may be impaired by vulnerability to adverse economic conditions, limitations to decision flexibility and cash flow, competitive disadvantage caused by new scheduled payments or covenant restrictions.
Our Credit, Security, and Guaranty Agreement with MidCap Financial Trust may further restrict our cash flow and business flexibility, as well as potentially restricting other debt financing from occurring at all. Our agreement contains restrictive covenants, including restrictions on our ability to pay dividends to stockholders, as well as requirements to comply with certain leverage ratios and other financial maintenance tests and stringent requirements around regulatory compliance. These restrictive covenants and requirements limit the amount of borrowings that are available to us. The agreement covenants may also affect our ability to obtain future financing and to pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions. In addition, if for any reason we are unable to meet our debt service and repayment obligations, we would be in default under the terms of the agreement, which would allow our creditors at that time to declare all outstanding indebtedness to be due and payable. Under these circumstances, our lenders could compel us to apply all of our available cash to repay our indebtedness.
Our products are subject to various complex laws and regulations on the federal, state and local levels, including those governing data security and privacy. The regulatory framework for privacy issues is rapidly evolving and will remain uncertain as more jurisdictions adopt laws and regulations regarding the collection, processing, storage and disposal of personal information. In the United States, the laws include regulations promulgated by the Federal Trade Commission, the Health Insurance Portability and Accountability Act of 1996, state data breach notification laws, and state security and privacy laws such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act, (the “CCPA”) and the Illinois Biometric Information Privacy Act (“IBIPA”) governing biometric data. Some of these laws, such as the CCPA and IBIPA, grant consumers private right of actions for data breaches or violations as applicable. Additionally, new privacy legislation became effective throughout 2023 in many other states in which we operate. These laws track significant portions of existing laws but include differences that may or may not increase our compliance burden. Additional states may adopt privacy laws in the future that may increase our compliance burden.
Further, because some of our Reseller clients have clients in the European Union utilizing Asure’s Time and Attendance product, the GDPR may impact our processing of certain client and client employee information. Failure to comply with laws, including security and privacy laws, could subject us to liability, fines, lawsuits and could require us to change our applications in order to comply.
In addition to governmental regulation, self-regulatory standards may place additional burdens on us. Many of our customers expect us to meet voluntary certification or other standards established by third parties as well as other audited measures and controls. If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutions to certain customers and could harm our business. Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our products or services, and could limit adoption of our cloud-based solutions.
Furthermore, certain of our products use client data to provide value to our solutions, aid in efficiency and reduce human error. Evolving privacy requirements and privacy concerns could restrict our ability to store and process data, which may impact our ability to offer our services thereby reducing demand. Enforcement actions and investigations could also impact us through increased costs, regulatory penalties, or restrictions on our business.
Our products and services are subject to various complex laws and regulations on the federal, state and local levels, including those governing data security, privacy, payroll, benefits administration, insurance brokerage, and other regulated service offerings. As a provider of human capital management solutions and insurance brokerage services, we process sensitive employee and client data, including personal, financial, biometric, and health-related information, which subjects us to an extensive and evolving regulatory landscape that creates significant ongoing compliance obligations.
The regulatory framework for privacy and data security is rapidly evolving and will remain uncertain as more jurisdictions adopt laws and regulations regarding the collection, processing, storage and disposal of personal information. In the United States, these laws include regulations promulgated by the Federal Trade Commission, HIPAA, and state security and privacy laws such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act (the "CCPA"), and the Illinois Biometric Information Privacy Act ("IBIPA") governing biometric data. Additional states have enacted comprehensive privacy laws in recent years, including Virginia, Colorado, Connecticut, Texas, and Oregon, among others, and further states may adopt similar legislation in the future. These laws frequently track significant portions of existing frameworks but include differences that may increase our compliance burden. Some of these laws, such as the CCPA and IBIPA, also grant consumers private rights of action for data breaches or violations, as applicable.
Beyond privacy, our services are subject to a broad range of additional federal and state laws and regulations, including the Fair Labor Standards Act, the Employee Retirement Income Security Act, COBRA, state wage and hour laws, IRS payroll tax regulations, anti-money laundering regulations, federal and state laws governing prepaid and payroll card products, and state insurance laws and regulations governing our insurance brokerage and third-party administrator ("TPA") activities. We maintain insurance producer licenses in all 50 states and the District of Columbia, and TPA licenses in states where such licensure is required, and our ability to operate these lines of business depends on maintaining those licenses in good standing across each applicable jurisdiction. Our insurance brokerage and TPA operations are subject to oversight by state departments of insurance in each jurisdiction in which we operate. Because many of our solutions are designed to help clients manage their own compliance obligations, changes in applicable laws could simultaneously increase our own compliance burden while requiring us to rapidly update the tools and applications we provide to clients. Changes in laws could also impact applications under development, rendering them inapplicable or obsolete mid-development and resulting in wasted time and development costs. Certain of our product offerings are provided in partnership with or through third-party program managers, and any regulatory non-compliance or adverse regulatory action involving those third parties could disrupt our ability to offer such products and adversely affect our business and results of operations.
Our failure to comply with existing laws and regulations, or to anticipate and respond to regulatory changes in a timely fashion, may result in civil liability from our clients for noncompliance, regulatory fines, loss of reputation, and a material adverse effect on our business, financial condition, and results of operations. Furthermore, we could fail to renew expiring licenses or have active licenses suspended or revoked for noncompliance with rules or regulations issued by licensing bodies, including state departments of insurance. Any such failure could adversely affect our ability to offer certain services, damage client relationships, and harm our business and results of operations.
As part of our payroll processing services, we impound funds from employer clients and remit payments to employees, taxing authorities, and designated third parties on their behalf. This money movement activity subjects us to federal and state laws and regulations governing money service businesses and money transmitters, the application of which to payroll processors continues to evolve across jurisdictions.
The adoption of new money transmitter or money service business statutes in new jurisdictions, changes in regulators' interpretations of existing statutes, or disagreement by regulators with our interpretation of such statutes or regulations could require additional registrations or licensing, limit certain of our business activities until we are properly licensed, and expose us to financial penalties. These occurrences could also require changes to the manner in which we conduct some aspects of our money movement business or our overall business strategy.
At the federal level, the Financial Crimes Enforcement Network (“FinCEN”) has not declared payroll processing to constitute money transmission. Nonetheless, out of an abundance of caution, we have proactively registered with FinCEN and maintain a comprehensive Anti-Money Laundering ("AML") Policy and compliance program designed to mitigate the risk of our services being utilized for illegal purposes, including money laundering, and to assist in detecting fraud. At the state level, we currently hold money transmission licenses or payroll processor licenses in all jurisdictions in which we believe such licensure is required. Maintaining these licenses entails significant ongoing costs, including surety bond premiums, examination fees, and other compliance expenditures. These costs may increase as regulatory requirements evolve, as bonding authorities reassess our risk profile, or as the volume of funds we process grows. Due to the constantly evolving regulatory landscape, we continuously monitor state legislative developments and shifting regulatory interpretations, proactively seeking licensure in any jurisdiction where new requirements may apply.
Our money transmitter and payroll processor licenses subject us to routine examinations by the regulatory agencies overseeing those licenses. If such examinations reveal violations that cannot be remediated, we may be subject to civil and criminal fines and penalties and could lose our license to provide services in the affected jurisdictions, any of which could have a material adverse effect on our business and results of operations. Further, should states or other jurisdictions where we are not currently licensed determine that we are a money service business or money transmitter, we could be subject to civil and criminal fines and penalties, registration fees, surety bond requirements, reputational damage, and other negative consequences that could have a material adverse effect on our financial condition and results of operations.
Our failure to comply with existing laws and regulations may result in adverse effects on our business, service and financial condition and failure to comply with licensing requirements or changing laws and regulations through modifications, developments, and enhancements to our products and services could have a material adverse effect on our business and results of operations.
Our services are subject to various laws and regulations including COBRA, HIPAA, laws and regulations promulgated by state wage and hour authorities, anti-money laundering regulations, and licensure requirements. Failure to comply with the multiple laws and regulations that impact us may result in civil liability from our clients for noncompliance, regulatory fines, and loss of reputation in the event of a public regulatory investigation or consent order or civil lawsuit. Moreover, many of our solutions are designed to assist our clients with their compliance with myriad government regulations and laws that continually change. For example, regulatory changes in 2020 in response to the COVID-19 pandemic necessitated multiple product modifications to accommodate changes relevant to the collection and remittance of payroll tax, including payroll tax deferments. The introduction of new regulatory requirements or changes in interpretation of existing laws or regulations could increase our cost of doing business. As with the development changes necessitated with new regulations in response to COVID-19, changing regulatory requirements may require the introduction of new applications or enhancements, or may make new modifications or new applications more expensive or could prevent the introduction of new applications. Changes in laws could also impact applications under development, rendering them in applicable or obsolete mid-development which could result in wasted time and development money. Furthermore, we could fail to renew expiring licenses or have active licenses suspended or revoked for noncompliance with rules or regulations issued by the licensing bodies. Any failure to anticipate and respond to these legal regulations and changes and provide tools and applications to solve for these changes in a timely fashion could adversely affect our reputation and affect our business and results of operations.
We may be required to incur debt to meet future capital requirements of our business. Should we be required to incur debt, the restrictions imposed by the terms of such debt could adversely affect our financial condition and our ability to respond to changes in our business.
If we incur debt, we may be subject to the following risks:
•our vulnerability to adverse economic conditions may be heightened;
•our flexibility in planning for, or reacting to, changes in our business may be limited;
•our debt covenants may affect our flexibility in planning for, and reacting to, changes in the economy and in our industry;
•higher levels of debt may place us at a competitive disadvantage compared to our competitors or prevent us from pursuing opportunities;
•covenants contained in the agreements governing our indebtedness may limit our ability to borrow additional funds and make certain investments;
•a significant portion of our cash flow could be used to service our indebtedness; and
•our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes may be impaired.
We cannot assure you that our leverage and such restrictions will not materially and adversely affect our ability to finance our future operations or capital needs or to engage in other business activities.
We may require additional capital to support business growth, and this capital may not be available on acceptable terms, or at all.
We intend to continue to make investments, including the acquisition of complementary businesses, to support our business growth and may seek additional funds to respond to business challenges, including the need to develop new features or enhance our existing products, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through issuances of equity or debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to satisfy our obligations under the notes and any future indebtedness we may incur and to make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on the notes or future indebtedness.
Some of our key components are procured from a single or limited number of suppliers. Thus, we are at risk of shortages, price increases, tariffs, changes in international trade policies or treaties, delays, or discontinuation of key components, which could disrupt and materially and adversely affect our business.
Some of the key components used to manufacture our Time and Attendance products come from limited or single sources of supply. We do not have contractual commitments or guaranteed supply arrangements with our suppliers. As a result, we are subject to the risk of shortages and long lead times in the supply of our components or products. Further, recent increase in tariffs and the impositions of new trade restrictions by the United States and other countries have created uncertainty and volatility in global markets, particularly those affecting key manufacturing regions. Other factors which may affect our suppliers’ ability or willingness to supply components to us include internal management or reorganizational issues, such as roll-out of new equipment which may delay or disrupt supply of previously forecasted components, or industry consolidation and divestitures, which may result in changed business and product priorities among certain suppliers. It could be difficult, costly and time-consuming to obtain alternative sources for these components, or to change product designs to make use of alternative components. In addition, difficulties in transitioning from an existing supplier to a new supplier could create delays in component availability that would have a significant impact on our ability to fulfill orders for our products.
We have previously identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future, fail to remediate the identified material weakness, or otherwise fail to maintain an effective system of internal control, all of which, if they occur, may result in material misstatements of our financial statements.
In connection with the preparation of our Annual Report for the year ended December 31, 2024, we identified a material weakness in our internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. See Item 9A. Controls and Procedures included in Item II of this Annual Report for more information about the identified material weakness and its remediation.
While we have implemented measures and remediated the identified material weakness, we cannot give assurance that these measures will prevent additional material weaknesses or significant deficiencies in our internal controls over financial reporting from occurring. If additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, we may not detect errors in a timely manner, our financial statements could be misstated, we could face a loss of confidence by stakeholders, or we could be subject to regulatory scrutiny, sanctions, or litigation, any of which could harm our business, financial condition, results of operations, or the market price of our securities.
A portion of our accounts receivable is related tax processing services to that enabled businesses to file for Employee Retention Tax Credits under the CARES Act. Such regulations were originally expected to expire in 2024 and 2025, which, following their expiration, will adversely impact our revenues on a comparative basis. Further, abuses of this program may require government intervention that could adversely affect the timing of our cash collections.
Since the introduction of the Employee Retention Tax Credits in 2021, we have received a significant portion of our tax processing revenues from the support we provide our customers as a tax processor in filing for Employee Retention Tax Credits. Employee Retention Tax Credits were originally expected to expire during 2024 and 2025; however, it is possible that the government could make changes to or revoke the program prior to its scheduled expiration. In January 2024, the United States House of Representatives passed the Tax Relief for American Families and Workers Act of 2024, which sets an expiration date of January 31, 2024, on additional claims for ERTC that can potentially apply retroactively. The bill also includes various enforcement provisions related to ERTC, including extending the statute of limitation on assessment for the credit, and increasing certain penalties and reporting requirements for those who are considered COVID-ERTC promoters. The Senate must also pass an identical version of the bill that must then be signed by the President before it becomes law. On September 14, 2023, the IRS announced a moratorium on processing new ERTC claims until at least December 31, 2023, to handle the increased number of fraudulent ERTC claims filed. While the IRS is not pausing the processing of ERTC claims filed before September 14, 2023, and eligible taxpayers retain the right to continue to file legitimate ERTC claims, the moratorium will likely adversely affect revenues earned from support provided to customers who would otherwise undergo ERTC claim processing. Given this, investors should not expect our tax processing revenues from ERTC filings to continue beyond 2024, and any earlier expiration or revocation of the ERTC program, including the moratorium described above, will have an adverse effect on our financial condition and results of operation. Further, we have entered into deferred payment arrangements with some customers and referral partners whereby collections from the customer are expected to be received upon the customer’s future receipt of their tax credit. Given the deferred nature of such receipts there is risk pertaining to our ability to collect such amounts in the future. In certain situations, the tax authorities could have the ability to challenge the validity of a business’ filing or could challenge our calculations or find other deficiencies in our filings that could expose us to uncertain penalties or damages.
The market for payroll and HCM solutions is fragmented, highly competitive and rapidly changing. Our competitors vary, and include (i) our main competitors, such as ADP, Paychex, UKG, Paylocity, Paycor, Paycom, Ceridian, isolved, and Gusto, (ii) competitors to Asure Time & Attendance, such as UKG, Paychex, ADP and Time SimplicityADP and (iii) primary competitors to our tax management solutions, such as Ceridian and ADP.
Advancements and adoption of AI, either in our industry or those of our clients, could reduce demand for our solutions, which could have a material adverse effect on our business, operating results, and financial results.
Our recurring revenues depend in part on the number of employees our customers manage using our solutions. Many emerging AI and automation technologies have the potential to reduce workforce sizes across a wide range of industries. If our customers reduce headcount as a result of adopting AI-based automation, the volume of employees supported by our solutions may decrease. Such reductions would negatively impact our recurring revenues, particularly for our solutions that are priced based on employee or transaction count, active users, or payroll volume.
In addition, advancements in AI may materially impact the HCM industry and offer an alternative to our solutions. AI-driven tools that are capable of performing or automating core functions of our HCM suite may reduce the need for traditional HCM software solutions such as ours. If customers adopt AI-native platforms or develop their own internal AI capabilities that replicate or replace the functionality of our products, demand for our solutions could decline. If such a decline occurs, our business, financial condition, and results of operations could be adversely affected.
Issues in the use of artificial intelligence (“AI”) in our HCM products and services may result in reputational harm or liability to us.us, and our business, operating results, and financial results may be adversely affected.
We are actively integrating AI technologies across our HCM platform and internal operations to enhance automation, analytics, customer experience, and operational efficiency. As we expand the use of AI-enabled capabilities, we are exposed to risks inherent in the development and deployment of emerging technologies.
AI systems may generate inaccurate, biased, incomplete, or unintended outputs due to limitations in algorithms, data quality, model design, or oversight. If AI-enabled features fail to perform as intended or are perceived as unreliable, we could experience reputational harm, customer dissatisfaction, competitive disadvantage, or legal exposure.
Certain AI capabilities rely on third-party service providers, cloud infrastructure, or external models. Disruptions, security incidents, pricing changes, contractual restrictions, or termination of such services could impair the availability or performance of AI-enhanced features and increase our costs.
The regulatory framework governing AI, data privacy, and automated decision-making is evolving in the United States and internationally. New or expanded legal requirements may require product modifications, increased compliance expenditures, or limitations on certain AI-driven functionality.
Our AI-enabled features process sensitive customer and employee data. Any failure to maintain appropriate safeguards, governance controls, or oversight could result in regulatory scrutiny, litigation, or reputational harm.
We have implemented governance frameworks, human oversight, security controls, and monitoring processes designed to manage risks associated with AI-enabled capabilities. However, these measures may not be sufficient to prevent errors, misuse, security incidents, or regulatory non-compliance. If our risk management efforts are ineffective, our business, financial condition, and results of operations could be adversely affected.
We are enhancing our products and technologies through the integration of artificial intelligence (“AI”), anticipating its increasing role in our business offerings. Like any developing technology, AI brings inherent risks and challenges that may impact its development, adoption, and use, consequently affecting the reliability of our business and product offerings.
AI algorithms may have flaws, and datasets may be insufficient, of poor quality, or contain biased information. While our goal is to use AI to assist customers in data collection, there is a risk that the information produced by AI applications may be perceived as deficient or inaccurate, potentially resulting in competitive harm, legal liability, and damage to our brand or reputation.
In addition, our use of AI technology may subject us to financial or regulatory risks. Evolving rules, regulations, and industry standards governing AI may require us to expend significant resources to modify, maintain, or align our business practices or products to comply with US and non-US rules and regulations, the nature of which cannot be determined at this time. Several jurisdictions around the globe, including the EU and certain US states, have already proposed or enacted laws governing AI. US federal agencies are likely to release AI regulations in the near future in light of the Biden administration’s October 30, 2023 Executive Order on AI. The regulatory environment surrounding the impact of the implementation of AI on our products and services may adversely affect our ability to produce and export products and as a result may cause harm to our reputation and financial liability.
Despite our efforts to mitigate these risks through sound business practices, the ability to generate data-driven insights for our customers using AI in our HCM technology may be constrained by existing and future regulatory requirements. These regulations could limit our innovative use of data to support the evolving needs of our customers.
A portion of our accounts receivable is related to tax processing services that enabled businesses to file for Employee Retention Tax Credits under the CARES Act.
Since the introduction of and subsequent expiration of the Employee Retention Tax Credits, we have a significant amount of accounts receivable from prior processing revenues for the support we provided our customers as a tax processor in filing for Employee Retention Tax Credits. We entered into deferred payment arrangements with some customers and referral partners whereby collections from the customer are expected to be received upon the customer’s future receipt of their tax credit. Given the deferred nature of these receipts, there is risk pertaining to our ability to collect these amounts in the future. In certain situations, the IRS could have the ability to challenge the validity of a business’ filing or could challenge our calculations or find other deficiencies in our filings that could expose us to uncertain penalties or damages.
The adoption of new money transmitter or money service business statutes in new jurisdictions, changes in regulators’ interpretations of existing statutes, or disagreement by regulators of our interpretation of such statutes or regulations could require additional registrations or licensing, limit certain of our business activities until we are properly licensed and expose us to financial penalties. These occurrences could also require change to the manner in which we conduct some aspects of our money movement business, client funds investment strategy or our overall business strategy. Although we maintain that we are not a money service business or money transmitter at the federal level, we proactively registered with FinCEN and adopted an Anti-Money Laundering Policy and compliance program designed to mitigate the risk of our services and application being utilized for illegal purposes including money laundering and to assist in detecting fraud. We are licensed in any jurisdiction that requires a payroll processor to be licensed under state money transmission laws. Due to the constantly evolving regulatory landscape, we continuously monitor state legislative developments and shifting interpretations of transmission laws, proactively seeking licensure where required. The statutes governing our money transmitter licenses subject us to routine examinations from the regulatory agencies overseeing these licenses. If these examinations reveal violations of the money transmitter license and those violations cannot be remediated, we may be subject to civil and criminal fines and penalties and we could lose our license to provide our services in those jurisdictions, all of which could have a material adverse effect on our business. Further, should states or jurisdictions where we are not licensed or pursuing licenses determine that that we are a money service business or money transmitter, we could be subject to civil and criminal fines, penalties, registration fees, cost of surety bonds or other security, reputational damage and other negative consequences that may have an adverse effect on our financial condition.
Management's Discussion & Analysis (MD&A)
Removed heading “Loss on Extinguishment of Debt”
Largest changes
“We are subject to customary events of default as described in the Loan Agreement. In such event, and for so long as it continues, the outstanding loan balance will bear interest at 2.00% per annum in excess of the rate otherwise payable. Under the Loan Agreement, we covenant to maintain a (1) Total Leverage Ratio (as defined in the Loan Agreement), as tested quarterly, no greater than 5.50 to 1.00, and (2) minimum liquidity threshold of $10,000. As of December 31, 2025, we are in compliance with all covenants under the Loan Agreement.”see in full comparison
“Financing Activities. Net cash provided by financing activities was $83,450 for the year ended December 31, 2025, which primarily consisted of net proceeds of $57,975 from the Loan Agreement (defined below) with MidCap and a net increase in client fund obligations of $34,105. Net cash used in financing activities was $22,042 for the year ended December 31, 2024, which primarily consisted of a net decrease in client fund obligations of $26,342, offset by proceeds of notes payable, net of issuance costs of $4,995.”see in full comparison
Interest income for the year ended December 31,see in full comparison2024,2025, was$913$869 compared to interest income of$1,342$913 for the year ended December 31,2023.2024. Interest income as a percentage of revenue remained flat at 1% for the years ended December 31,20242025 and2023.2024. Interest expense for the year ended December 31,2024,2025, was$1,024$5,056 compared to interest expense of$5,639$1,024 for the year ended December 31,2023.2024. Thedecreaseincrease in interestexpense, netexpense relative to the prior year is primarily attributable toourinterestpayoff of the outstanding debtaccrued undertheourcreditLoanfacilityAgreement (defined below) withStructuralMidCapCapitalFinancialInvestments III LPTrust (“Structural CapitalMidCap”)in 2023.. Interest expense as a percentage of revenue was 4% for the year ended December 31, 2025, compared to 1% for the year ended December 31,2024, compared to 5% for the year ended December 31, 2023.2024. Interest expenses for the years ended December 31,20242025 and2023,2024, are composed primarily of interest expense on notes payable.
“On October 31, 2024, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”). The Sales Agreement provides for the offer and sale of up to $25,000 of our newly issued common stock, from time to time through an “at the market offering” program. …”see in full comparison
We are a provider of cloud-based Human Capital Management (“HCM”) software solutions delivered as Software-as-a-Service (“SaaS”) to businesses of all sizes. We offer human resources (“HR”) tools necessary to build a thriving workforce, provide the resources to stay compliant with dynamic federal, state, and local tax jurisdictions and their respective labor laws, freeing cash flows so these businesses can spend their financial capital on growing their businesses rather than administrative overhead that can impede growth. Our solutions also provide new ways for employers to connect with their employeessee in full comparisoninandorder to enhance theirstrengthen relationships with their talent.Asure’sAt the core of our offering is the Asure HCMsuiteplatform—a(“AsureSaaS-basedHCM”)system that includes Payroll & Taxsolutions, Recruiting,filing, HRcompliancemanagementand services,tools, Time & Attendance software,InsuranceRecruiting, and BenefitsAdministration,Administration. This platform serves as the foundation for delivering both our core software anddataaintegrations that enable employers and their employees to enhance efficiencies and take advantagerange ofvalue-addedcomplementary,solutions,technology-enabled services. These include AsureMarketplace™, whichwe refer to as AsureMarketplace™. AsureMarketplace™automatesinteractionsdata exchange between our HCMsystemssystemwithand third-party providers toenhanceincrease efficiency,improve accuracyaccuracy, andto extend the rangebreadth of services. Our HR Compliance servicesofferedcombine expert guidance with scalable digital delivery. AsurePay™, our payroll card, which we provide in association with our partners, offers employees fast, secure access to earned wages. Additionally, through our licensed brokerage, we offer Insurance Services that help employers manage benefits andtheirreduceemployees.administrativeOur approach to HR compliance services leverages technology and on-demand content to enhance scalability and efficiency while prioritizing client interactions.costs. Weofferdeliver ourservicessolutions directly andindirectlythroughoura national network of Reseller Partners.
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We have attempted to identify these forward-looking statements with the words “believe,” “may,” “will,” “estimate,” “projects,” “anticipate,” “intend,” “expect,” “should,” “plan,” and similar expressions. Examples of “forward-looking statements” include statements we make regarding our operating performance, future results of operations and financial position, revenue growth, earnings or other projections. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions, over many of which weare haveoutside noof our control. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. Additionally, we are under no obligation to update any of the forward-looking statements after the date of this Annual Report on Form 10-K or to conform such statements to actual results.
We are a provider of cloud-based Human Capital Management (“HCM”) software solutions delivered as Software-as-a-Service (“SaaS”) to businesses of all sizes. We offer human resources (“HR”) tools necessary to build a thriving workforce, provide the resources to stay compliant with dynamic federal, state, and local tax jurisdictions and their respective labor laws, freeing cash flows so these businesses can spend their financial capital on growing their businesses rather than administrative overhead that can impede growth. Our solutions also provide new ways for employers to connect with their employees inand order to enhance theirstrengthen relationships with their talent. Asure’sAt the core of our offering is the Asure HCM suiteplatform—a (“AsureSaaS-based HCM”)system that includes Payroll & Tax solutions, Recruiting,filing, HR compliancemanagement and services,tools, Time & Attendance software, InsuranceRecruiting, and Benefits Administration,Administration. This platform serves as the foundation for delivering both our core software and dataa integrations that enable employers and their employees to enhance efficiencies and take advantagerange of value-addedcomplementary, solutions,technology-enabled services. These include AsureMarketplace™, which we refer to as AsureMarketplace™. AsureMarketplace™ automates interactionsdata exchange between our HCM systemssystem withand third-party providers to enhanceincrease efficiency, improve accuracyaccuracy, and to extend the rangebreadth of services. Our HR Compliance services offeredcombine expert guidance with scalable digital delivery. AsurePay™, our payroll card, which we provide in association with our partners, offers employees fast, secure access to earned wages. Additionally, through our licensed brokerage, we offer Insurance Services that help employers manage benefits and theirreduce employees.administrative Our approach to HR compliance services leverages technology and on-demand content to enhance scalability and efficiency while prioritizing client interactions.costs. We offerdeliver our servicessolutions directly and indirectly through oura national network of Reseller Partners.
As of December 31, 2024,2025, Asure had more than 100,000 clients, with approximately 20%35% being direct and the remaining clients being indirect who havethrough contracts with Reseller Partners.
We plan to continue to enhance our products and technologies by leveraging the latest technology stack, RoboticRPA, Process Automation (“RPA”), artificial intelligence (“AI”),AI, and development partnerships. We expect that our expanded investment in product, engineering, SaaS hosting, mobile and hardware technologies will lay the groundwork for broader market opportunities and represent a key aspect of our competitive differentiation. We also plan to expand our technological resources through organic improvements and acquired intellectual property. We expect to continue to expand the breadth of integration between our solutions, allowing direct clients and our Reseller Partners the ability to easily add and implement components across our entire solution set. Our initiatives include providing our customers with more accurate and efficient automation powered by an informed knowledge base. Consistent with that effort, our engineering team utilizes an AI development Copilot to increase their productivity and efficiency. Our operations team utilizes a digital assistant to allow for a more efficient and accurate way to automate repetitive tasks, which we believe will free up our time for more strategic work and reducing the risk of errors. We are committed to providing the best-in-class solutions.
Software-as-a-service revenue is generated when clients utilize our product suite for their recurring human resource needs—primarily payroll, tax, recruiting, HR compliance, time and attendance, recruiting, insurance and benefits administration and AsureMarketplace™. This also contains revenue generated from quarterly and annual reporting requirements to local, state and federal regulatory agencies. Examples include Form W-2 and reporting mandated by the ACA.
•Recurring revenue of $114,471$127,288 for 2024,2025, representing aan 15%11% increase over recurring revenue in 2023.2024.
RESULTS OF OPERATIONS (dollar amounts in thousands)
Revenues are comprised of recurring revenues, professional services, hardware, and other revenues. We expect our revenues to increase as we introduce new applications, expand our client base and renew and expand relationships with existing clients. As a percentage of total revenues, we expect our mix of recurring revenues, and professional services, hardware and other revenues to remain relatively constant. While revenue mix varies by product, recurring revenue represented over 96%91% of total revenue in the year ended 2024,2025, compared to 84%96% in 2023.2024. This decrease was primarily due to the increase in hardware sales as a result of time and attendance business growth.
This revenue line also includes interest earned on funds held for clients. Interest earned is generated from funds we collect from clients in advance of either the applicable due date for payroll tax submissions or the applicable disbursement date for employee payment services. These collections from clients are typically disbursed from one to 30 days after receipt, with some funds being held for up to 120 days. We typically invest funds held for clients in money market funds, demand deposit accounts, commercial paper, and fixed income securities and certificates of deposit until they are paid to the applicable tax or regulatory agencies or to client employees. The amount of interest we earn from the investment of client funds is also impacted by changes in interest rates. Refer to “Risk Factors” in Part I, 1A. for more information about risks related to our ERTC business.
Recurring revenue for the year ended December 31, 2024,2025, was $114,471,$127,288, an increase of $14,737,$12,817, or 15%,11%, from $99,734$114,471 for the year ended December 31, 2023.2024. The increase is primarily due to an increase of approximately $8,718 in acquisition related revenuetime and anattendance increaseand ofpayroll $4,323tax formanagement new multi-year licensing agreements with larger employers finalized during the year.solutions.
Professional Services,services, Hardwarehardware and Otherother Revenuesrevenues represents implementation fees, one-time consulting projects, on-premise maintenance, hardware devices to enhance our software products as well as ERTC revenues that are transactional in nature.products.
Professional services, hardware and other revenue decreasedincreased by $14,027,$7,932, or 72%,149%, for the year ended December 31, 2024,2025, from the similar period in 2023,2024, primarily due to thean discontinuationincrease ofin non-recurringhardware ERTCrelated revenues.to our time and attendance solutions.
ERTC revenues were originally expected to expire during 2024 and 2025; however, subsequent legislation impacted revenues and cash collections during 2024 and is expected to continue in 2025. For example, in January 2024, the United States House of Representatives passed the Tax Relief for American Families Act of 2024, which sets an expiration date of January 31, 2024, on additional claims for ERTC that can potentially apply retroactively. In September 2023, the IRS announced a moratorium through the end of the year on processing new ERTC claims due to concerns over questionable or fraudulent claims. During 2024, the IRS issued multiple releases announcing they had resumed processing of ERTC claims, additionally indicating that most claims are being approved. Refer to “Risk Factors” in Part I, 1A. for more information about risks related to our ERTC business.
Consolidated gross profit for the year ended December 31, 2024,2025, was $82,107,$94,874, aan decreaseincrease of $3,430,$12,767, or 4%,16%, from $85,537$82,107 for the year ended December 31, 2023.2024. Gross margin as a percentage of revenue was 68% for the year ended December 31, 2025, as compared to 69% for the year ended December 31, 2024, as compared to 72% for the year ended December 31, 2023.2024. The decrease is primarily attributable to the decreasegrowth in revenueour time and attendance solutions, which are lower margin in highercomparison marginto revenueour streams.other offerings.
Our cost of sales relates primarily to direct product costs, compensation for operations and related consulting expenses, hardware expenses, facilitiescloud and relatedhosting expenses and the amortization of our purchasedcapitalized software development costs. We include intangible amortization related to developed and acquired technology within cost of sales.
Sales and marketing expenses for the year ended December 31, 2024,2025, were $28,316,$33,569, aan decreaseincrease of $418,$5,253, or 1%,19%, from $28,734$28,316 for the year ended December 31, 2023,2024, primarily due to an increase in directcompensation-related expenses due to changes in headcount associated with sales personneland offsetmarketing by decreases resulting from reduced ERTC revenues.functions. Sales and marketing expenses as a percentage of revenue remained flat at 24% for the year ended December 31, 20242025 and 2023.2024.
General and administrative expenses for the year ended December 31, 2024,2025, were $40,499,$45,831, an increase of $1,166,$5,332, or 3%,13%, from $39,333$40,499 for the year ended December 31, 2023,2024, primarily attributable to an increaseincreased compensation-related expenses and contractors due to changes in personnelheadcount costsassociated fromwith higheradministrative healthcare premiums and an increase in share-based compensation.functions. General and administrative expenses as a percentage of revenue increaseddecreased to 34%33% for the year ended December 31, 2024,2025, from 33%34% for the same period in 2023.2024.
R&D expenses for the year ended December 31, 2024,2025, were $7,807,$5,599, ana increasedecrease of $961,$2,208, or 14%,28%, from $6,846$7,807 for the year ended December 31, 2023.2024. The increasedecrease in R&D expense is primarily attributable to an increase in personnelcapitalization costsof fromsoftware higherdevelopment wagesexpenses anddriven contractorby usage,continued investments in the development of our products, partially offset by an increase in capitalizedpersonnel softwarecompensation expenses driven by continued investments in development of our products.expenses. R&D expenses as a percentage of revenues increaseddecreased to 7%4% for the year ended December 31, 2024,2025, from 6%7% for the same period in 2023.2024.
Amortization expense in operating expenses for the year ended December 31, 2024,2025, was $16,222,$18,283, an increase of $2,599,$2,061, or 19%,13%, from $13,623$16,222 for the year ended December 31, 2023.2024. The increase in Amortizationamortization expense is primarily attributable to increasedour acquisitioncontinuing activityacquisitions comparedstrategy, towith theadditional prioracquisitions year.occurring each quarter. Amortization expense as a percentage of revenue was 14%13% for the year ended December 31, 2024,2025, from 11%14% for the same period in 2023.2024.
Interest income for the year ended December 31, 2024,2025, was $913$869 compared to interest income of $1,342$913 for the year ended December 31, 2023.2024. Interest income as a percentage of revenue remained flat at 1% for the years ended December 31, 20242025 and 2023.2024. Interest expense for the year ended December 31, 2024,2025, was $1,024$5,056 compared to interest expense of $5,639$1,024 for the year ended December 31, 2023.2024. The decreaseincrease in interest expense, netexpense relative to the prior year is primarily attributable to ourinterest payoff of the outstanding debtaccrued under theour creditLoan facilityAgreement (defined below) with StructuralMidCap CapitalFinancial Investments III LPTrust (“Structural CapitalMidCap”) in 2023.. Interest expense as a percentage of revenue was 4% for the year ended December 31, 2025, compared to 1% for the year ended December 31, 2024, compared to 5% for the year ended December 31, 2023.2024. Interest expenses for the years ended December 31, 20242025 and 2023,2024, are composed primarily of interest expense on notes payable.
Loss on Extinguishment of Debt
Loss on extinguishment of debt for the year ended December 31, 2024, was $0 compared to a loss of $1,517 for the year ended December 31, 2023. There was no loss on extinguishment of debt for the year ended December 31, 2024, compared to 1% of revenue for the year ended December 31, 2023. For the year ended December 31, 2023, the amount in loss on extinguishment of debt consisted of loss recognized as a result of the termination of our credit facility with Structural Capital.
Other (Expense) Income, Net
Other (expense) income, net for the year ended December 31, 2024,2025, was an expense of $8$121 compared to income of $292$8 for the year ended December 31, 2023.2024. Other (expense) income, net as a percentage of revenue was negligible for the years ended December 31, 20242025 and 2023,2024. respectively.For the year ended December 31, 2025, the amounts in other income, net primarily consisted of net gains from settlements of debt via equity issuance. For the year ended December 31, 2024, the amounts in other (expense) income, net primarily consisted of bank fees. For the year ended December 31, 2023, the amounts in other (expense) income, net primarily consisted of losses on disposal of assets.
For the year ended December 31, 20242025 and 2023,2024, we recorded an income tax expense attributable to continuing operations of $933$652 and $109,$933, respectively, ana increasedecrease of $824.$281.
We incurred a loss from operations of $11,773,$13,126, or $(0.45)$0.48 per share, during the year ended December 31, 2024,2025, compared to a loss from operations of $9,214,$11,773, or $(0.42)$0.45 per share, during the year ended December 31, 2023.2024. Loss from operations as a percentage of total revenues was 10%9% and 8%10% for the years ended December 31, 20242025 and 2023,2024, respectively.
LIQUIDITY AND CAPITAL RESOURCES (dollar amounts in thousands)
(1)This balance excludes cash and cash equivalents in funds held for clients Working Capital. We had working capital of $13,641$18,646 at December 31, 2024,2025, aan decreaseincrease of $12,239$5,005 from working capital of $25,880$13,641 at December 31, 2023.2024. Working capital as of December 31, 20242025 and 2023,2024, includes $8,363$11,622 and $6,853$8,363 of short-term deferred revenue, respectively. Deferred revenue is an obligation to perform future services. We expect that deferred revenue will convert to future revenue as we perform our services, but this does not represent future payments. Deferred revenue can vary based on seasonality, expiration of initial multi-year contracts and deals that are billed after implementation rather than in advance of service delivery.
Operating Activities. Net cash provided by operating activities of $22,218 for the year ended December 31, 2025, was driven by non-cash adjustments to our net loss of approximately $39,291, primarily due to depreciation, amortization, and share-based compensation. This was offset by changes in operating assets and liabilities, which resulted in a use of $3,947 in cash. Net cash provided by operating activities of $9,388 for the year ended December 31, 2024, was driven by non-cash adjustments to our net loss of approximately $28,940, primarily due to depreciation, amortization, and share-based compensation. This was offset by changes in operating assets and liabilities, which resulted in a use of $7,779 in cash.
Investing Activities. Net cash used in investing activities of $86,677 for the year ended December 31, 2025, is primarily due to cash paid in business combinations or asset acquisitions of $53,166, which primarily consists of the purchase of Lathem, purchases of available-for-sale securities of $44,614, and software capitalization costs of $13,733, partially offset by proceeds from sales and maturities of available-for-sale securities of $25,623. Net cash used in investing activities of $19,256 for the year ended December 31, 2024, is primarily due to cash paid in business combinations or asset acquisitions of $13,256 and purchases of available-for-sale securities of $15,643, partially offset by proceeds from sales and maturities of available-for-sale securities of $20,522.
Financing Activities. Net cash provided by financing activities was $83,450 for the year ended December 31, 2025, which primarily consisted of net proceeds of $57,975 from the Loan Agreement (defined below) with MidCap and a net increase in client fund obligations of $34,105. Net cash used in financing activities was $22,042 for the year ended December 31, 2024, which primarily consisted of a net decrease in client fund obligations of $26,342, offset by proceeds of notes payable, net of issuance costs of $4,995.
Operating Activities. Net cash provided by operating activities of $9,388 for the year ended December 31, 2024, was driven by non-cash adjustments to our net loss of approximately $28,940, primarily due to depreciation and amortization. Net cash provided by operating activities of $18,900 for the year ended December 31, 2023, was driven by non-cash adjustments to our net loss of approximately $29,530, primarily due to depreciation and amortization, offset by our net loss of $9,214. For the year ended December 31, 2023, changes in operating assets and liabilities resulted in a use of $1,416 in cash.
Investing Activities. Net cash used in investing activities of $19,256 for the year ended December 31, 2024, is primarily due to purchases of available-for-sale securities of $15,643, partially offset by proceeds from sales and maturities of available-for-sale securities of $20,522. Net cash used in investing activities of $29,525 for the year ended December 31, 2023, is primarily due to the purchase of available-for-sale securities of $27,647, partially offset by proceeds from sales and maturities of available-for-sale securities of $14,385.
Financing Activities. Net cash used in financing activities was $22,042 for the year ended December 31, 2024, which primarily consisted of a net decrease in client fund obligations of $26,342, offset by proceeds from notes payable, net of issuance costs of $4,995. Net cash provided by financing activities was $24,205 for the year ended December 31, 2023, which primarily consisted of net proceeds from the issuance of common stock of $46,800, a net increase in client fund obligations of $13,931, offset by payments of notes payable of $35,627.
On October 31, 2024, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”). The Sales Agreement provides for the offer and sale of up to $25,000 of our newly issued common stock, from time to time through an “at the market offering” program. We will specify the parameters for the sale of the shares of common stock, including the number of shares to be issued, the time period during which sales are requested to be made, any limitation on the number of shares that may be sold in any one trading day and any minimum price below which sales may not be made. We may offer and sell up to $25,000 of shares of common stock pursuant to the Sales Agreement. Actual sales of common stock under the Sales Agreement will depend on a variety of factors including, among other things, market conditions, the trading price of the Common Stock and potential funding needs. As a result, the full amount of capital may not be fully realized. We intend to use the net proceeds from these at-market offerings, if any, for general corporate purposes. Our general corporate purposes include, but are not limited to, repayment or refinancing of debt, capital expenditures, funding possible acquisitions, working capital and satisfaction of other obligations. As of December 31, 2024, there are $25,000 of shares of common stock available for issuance under this acquisition shelf registration statement.
On September 12, 2023, we terminated the Loan and Security Agreement (the “Loan Agreement”) dated September 10, 2021, with Structural Capital, and Ocean II PLO LLC, as administrative and collateral agent for the Lenders (“Agent”), and repaid the secured promissory note (the “Note”) with Agent evidencing our obligations under the Loan Agreement. In connection with the termination, we paid an aggregate amount of $30,927 (the “Payoff Amount”) in full payment of the outstanding obligations under the Loan Agreement and Note. The Payoff Amount represented $30,617 of outstanding principal and interest on the unpaid principal balance, a prepayment fee in the amount of $306 and an immaterial amount of fees and other expenses due to Agent.
On August 16, 2023, we entered into an underwriting agreement (the “Underwriting Agreement”) with Stifel, Nicolaus & Company, Incorporated and Craig-Hallum Capital Group LLC, as representatives of the several underwriters named therein (collectively, the “Underwriters”), relating to a firm commitment offering of 3,333 newly issued shares of our common stock at a public offering price of $12.00 per share (the “2023 Offering”). On August 21, 2023, we completed the 2023 Offering, and realized net proceeds of $37,395, after deducting underwriting discounts and offering expenses of $2,605. Additionally, on August 30, 2023, the Underwriters exercised their option to purchase an additional 500 shares of our common stock, and we realized net proceeds of $5,507, after deducting underwriting discounts and offering expenses of $493.
We also have an outstanding promissory note with an unrelated third party intended to fund future acquisitions and for general working capital purposes from November 2024 in the amount of $5,000 as of December 31, 2024. The outstanding promissory note matures on November 1, 2025.
As of December 31, 2024,2025, we have fiveeight subordinated promissory notes related to acquisitions that occurred during 20242025 and prior years with a combined outstanding principal balance of $9,943$10,775 and maturity dates ranging from OctoberAugust 1, 20252026 to July 1, 2029.
On April 10, 2025, we entered into a Loan Agreement with MidCap and the lenders from time to time party thereto (such lenders collectively with MidCap, the “Lenders”). Under the Loan Agreement, we may borrow up to $60,000 from the Lenders, all of which was funded as of June 30, 2025. The maturity date of the loan as provided under the Loan Agreement is April 1, 2030 (the “Maturity Date”).
Interest on the outstanding loan balance is payable monthly in arrears at an annual rate of Term Secured Overnight Financing Rate (“SOFR”) plus 5.00%, subject to a SOFR floor of 2.00%. This rate was 9.25% as of December 31, 2025. Prior to April 1, 2029 (the “Amortization Start Date”), we must make interest-only payments on the outstanding loan balance. Commencing on the Amortization Start Date and continuing on the first day of each calendar month thereafter, we will pay an amount equal to the total principal of the outstanding loan balance divided by twelve (12), for a twelve (12) month straight-line amortization of equal monthly principal payments. Also on a monthly basis, we must pay an administrative agency fee to MidCap equal to 0.25% of the average end-of-day principal balance outstanding during the immediately preceding month. At the time of final payment under the loan, we will provide a final payment fee of 2.00% of the amount advanced thereunder except in the case of a refinance of the loan with MidCap and the Lenders.
We are subject to customary events of default as described in the Loan Agreement. In such event, and for so long as it continues, the outstanding loan balance will bear interest at 2.00% per annum in excess of the rate otherwise payable. Under the Loan Agreement, we covenant to maintain a (1) Total Leverage Ratio (as defined in the Loan Agreement), as tested quarterly, no greater than 5.50 to 1.00, and (2) minimum liquidity threshold of $10,000. As of December 31, 2025, we are in compliance with all covenants under the Loan Agreement.
Sources of Liquidity. As of December 31, 2024,2025, our principal sources of liquidity consisted of approximately $21,425$25,244 of cash, cash equivalents and restricted cash, and cash generated from operations of our business over twelve months. Additionally, we have access to an “at the market offering” program entered in October 31, 2024, under which we may offer and sell up to $25,000 of newly issued shares of common stock. As of December 31, 2025, there are $25,000 of shares of common stock available for issuance under this program.
Identifiable intangible assets and goodwill obtained during business combination transactions are recognized based on the relative and absolute fair values of acquired assets and the excess of purchase price over that value. Intangible assets and goodwill are tested annualannually for impairment or more frequently when an event or circumstance indicates that they might be impaired.
JudgementsJudgments and Uncertainties
What changed in the latest 10-Q
Risk Factors
There have been no material changes from the risk factors previously disclosed in the Company’s 2025 Annual Report on Form 10-K, filed with the SEC on February 26, 2026, and investors are encouraged to review these risk factors prior to making an investment in the Company.
No wording changes found in this section.
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Management's Discussion & Analysis (MD&A)
Largest changes
Financing Activities. Net cash used in financing activities wassee in full comparison$11,528$49,187 for thethreesix months endedMarchJune31,30, 2026, which primarily consisted of a net decrease in client fund obligations of$11,177.$48,647. Net cash provided by financing activities was$63,925$73,097 for thethreesix months endedMarchJune31,30, 2025, which primarily consisted of net proceeds of $57,982 from the Loan Agreement (defined below) with MidCap and a net increase in client fund obligations of$64,207.$20,461.
Sources of Liquidity. As ofsee in full comparisonMarchJune31,30, 2026, our principal sources of liquidity consisted ofapproximately $19,221$19,679 of cash and cash equivalentsand cashgenerated from operations of ourbusinessbusiness, which we expect to be our principal source of liquidity over the next twelve months. Additionally, we have access to an “at the market offering” program entered in October 31, 2024, under which we may offer and sell up to $25,000 of newly issued shares of common stock. As ofMarchJune31,30, 2026, there are $25,000 of shares of common stock available for issuance underthethis program.
“Interest income for the six months ended June 30, 2026 was $354 compared to interest income of $448 for the six months ended June 30, 2025. Interest income as a percentage of revenue was negligible for the six months ended June 30, 2026, compared to 1% for the six months ended June 30, 2025. Interest expense for the six months ended June 30, 2026 was $3,499 compared to interest expense of $1,260 for the six months ended June 30, 2025. Interest expense as a percentage of revenue was 4% for the six months ended June 30, 2026 compared to 2% for the same period in 2025. …”see in full comparison
Interest income for the three months endedsee in full comparisonMarchJune31,30, 2026, was$188$168 compared to interest income of$171$277 for the three months endedMarchJune31,30, 2025. Interest income as a percentage of revenue was negligible for the three months endedMarchJune31,30,20262026,andcompared to 1% for three months ended June 30, 2025. Interest expense for the three months endedMarchJune31,30,2026,2026 was$1,748$1,753 compared to interest expense of$451$809 for the three months endedMarchJune31,30, 2025. Interest expense as a percentage of revenue was 5% for the three months ended June 30, 2026 compared to 3% for the same period in 2025. The increase in interest expenserelative toin thepriorthreeyearmonths ended June 30, 2026, is primarilyattributablerelated to interest accrued under our Loan Agreement (defined below) with MidCap Financial Trust (“MidCap”).Interest expense as a percentage of revenue was 4% for the three months ended March 31, 2026, compared to 1% for the three months ended March 31, 2025.
“General and administrative expenses for the six months ended June 30, 2026, were $24,847, an increase of $1,979, or 9%, from $22,868 for the six months ended June 30, 2025. The increase is primarily attributable to an increase in compensation-related expenses and contractors due to changes in headcount associated with administrative functions. General and administrative expenses as a percentage of revenue decreased to 31% for the six months ended June 30, 2026, from 35% for the same period in 2025.”see in full comparison
“During the three months ended March 31, 2026, we completed one customer relationship asset acquisition. The total purchase price of this acquisition was $6,172, which consisted of $4,721 of cash paid during the three months ended March 31, 2026, $127 of cash to be paid over the next 12 months, the delivery of promissory notes in the amount of $879, net of discounts, and the delivery of 49 shares of Asure common stock, which had an aggregate fair value of $445 at the acquisition date.”see in full comparison
Full comparison: every changed paragraph (42)
The following review of Asure’s financial position as of MarchJune 31,30, 20262026, and December 31, 2025, and results of operations for the three and six months ended MarchJune 31,30, 2026 and 20252025, should be read in conjunction with our 2025 Annual Report on Form 10-K filed with the SEC on February 26, 2026 and our quarterly report filed with the SEC on April 30, 2026. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are available through the investor relations page of our internet website free of charge as soon as reasonably practicable after they are electronically filed, or furnished to, the SEC. Asure’s internet website and the information contained in our website or connected to our website are not incorporated into this Quarterly Report on Form 10-Q. However, we do post information on the investor relations page of our website that we believe may be of interest to our investors. Asure’s internet website address is www.asuresoftware.com.
We are a provider of cloud-based Human Capital Management (“HCM”) software solutions delivered as Software-as-a-Service (“SaaS”) to businesses of all sizes. We offer human resources (“HR”) tools necessary to build a thriving workforce, provide the resources to stay compliant with dynamic federal, state, and local tax jurisdictions and their respective labor laws, freeing cash flows so these businesses can spend their financial capital on growing their businesses rather than administrative overhead that can impede growth. Our solutions also provide new ways for employers to connect with their employees and strengthen relationships with their talent. At the core of our offering is the Asure HCM platform—a SaaS-based system that includes Payroll & Tax filing, HR management tools, Time & Attendance software, Recruiting, and Insurance and Benefits Administration. This platform serves as the foundation for delivering both our core software and a range of complementary, technology-enabled services. These include AsureMarketplace™, which automates data exchange between our HCM system and third-party providers to increase efficiency, accuracy, and breadth of services. Our HR Compliance services combine expert guidance with scalable digital delivery. AsurePay™, our payroll card, which we provide in association with our partners, offers employees fast, secure access to earned wages. Additionally, through our licensed brokerage, we offer Insurance Services that help employers manage benefits and reduce administrative costs. We deliver our solutions directly and through a national network of Reseller Partners.
During the three months ended March 31, 2026, we completed one customer relationship asset acquisition. The total purchase price of this acquisition was $6,172, which consisted of $4,721 of cash paid during the three months ended March 31, 2026, $127 of cash to be paid over the next 12 months, the delivery of promissory notes in the amount of $879, net of discounts, and the delivery of 49 shares of Asure common stock, which had an aggregate fair value of $445 at the acquisition date.
The following table sets forth, for the fiscal periods indicated, the percentage of total revenue represented by certain items in our Condensed Consolidated Statements of Comprehensive Income and Loss:
Revenue is comprised of recurring revenue, professional services, hardware, and other revenue. We expect our revenue to increase as we introduce new applications, expand our client base and renew and expand relationships with existing clients. As a percentage of total revenue, we expect our mix of recurring revenue, and professional services, hardware and other revenue to remain relatively constant. While revenue mix varies by product, recurring revenue represented over 88%91% and 90% of total revenue in the three and six months ended MarchJune 31,30, 2026, respectively, compared to 95% in the three and six months ended MarchJune 31,30, 2025. This decrease was primarily due to the increase in hardware sales as a result of time and attendance business growth.
Recurring revenue for the three months ended MarchJune 31,30, 2026, was $37,757,$33,958, an increase of $4,570,$5,362, or 14%,19%, from $33,187$28,596 for the three months ended MarchJune 31,30, 2025. The increase is primarily due to an increase in payroll services related to our timekeepingtime and attendance solutions business.
Recurring revenue for the six months ended June 30, 2026, was $71,715, an increase of $9,932, or 16%, from $61,783 for the six months ended June 30, 2025. The increase is primarily due to an increase in our time and attendance solutions business.
Professional services, hardware and other revenue increasedfor $3,333,the three months ended June 30, 2026, was $3,155, an increase of $1,627, or 200%,106%, from $1,528 for the three months ended MarchJune 31,30, 2026,2025. fromThis theincrease similar period in 2025,is primarily due to an increase in hardware sales related to our time and attendance solutions.
Professional services, hardware, and other revenue for the six months ended June 30, 2026, was $8,155, an increase of $4,960, or 155%, from $3,195 for the six months ended June 30, 2025. The increase is primarily due to an increase in hardware related to our time and attendance solutions.
Consolidated gross profit for the three months ended MarchJune 31,30, 2026, was $30,470,$25,055, an increase of $5,862,$5,144, or 24%,26%, from $24,608$19,911 for the three months ended MarchJune 31,30, 2025. Gross marginprofit as a percentage of revenue remainedincreased consistentto at 71%68% for the three months ended MarchJune 31,30, 2026, from 66% for the same period in 2025. The increase is primarily attributable to the growth in our time and 2025.attendance solutions.
Consolidated gross profit for the six months ended June 30, 2026, was $55,525, an increase of $11,006, or 25%, from $44,519 for the six months ended June 30, 2025. Gross profit as a percentage of revenue increased to 70% for the six months ended June 30, 2026, from 69% for the same period in 2025. The increase is primarily attributable to the growth in our time and attendance solutions.
Our cost of sales relates primarily to direct product costs, compensation for operations and related consulting expenses, hardwareweb expenses,hosting, cloudand hostingrelated expenses and the amortization of our capitalizedpurchased software development costs. We include intangible amortization related to developed and acquired technology within cost of sales.
Sales and marketing expenses primarily consist of salaries and related expenses for sales and marketing staff, including share-based compensation,expenses, commissions, as well as marketing programs, which include events, corporate communications and product marketing activities.
Sales and marketing expenses for the three months ended MarchJune 31,30, 2026, were $8,764,$9,098, an increase of $378,$949, or 5%,12%, from $8,386$8,149 for the three months ended MarchJune 31,30, 2025. The increase is primarily due to an increase in expenditures for lead generation. Sales and marketing expenses as a percentage of revenue decreased to 20%25% for the three months ended MarchJune 31,30, 2026, from 24%27% for the same period in 2025.
Sales and marketing expenses for the six months ended June 30, 2026, were $17,862, an increase of $1,327, or 8%, from $16,535 for the six months ended June 30, 2025. The increase is primarily due to increase in expenditures for lead generation. Sales and marketing expenses as a percentage of revenue decreased to 22% for the six months ended June 30, 2026, from 25% for the same period in 2025.
General and administrative expenses primarily consist of salaries and related expenses, including share-based compensationexpenses for finance and accounting, legal, internal audit, human resources and management information systems personnel, legal costs, professional fees, and other corporate expenses such as transaction costs for acquisitions.
General and administrative expenses for the three months ended MarchJune 31,30, 2026, were $12,748,$12,099, an increase of $848,$1,131, or 7%,10%, from $11,900$10,968 for the three months ended MarchJune 31,30, 2025. The increase is primarily attributable to an increasedincrease in compensation-related expenses and contractors due to changes in headcount associated with administrative functions. General and administrative expenses as a percentage of revenue decreased to 30%33% for the three months ended MarchJune 31,30, 2026,2026 from 34%36% for the same period in 2025.
General and administrative expenses for the six months ended June 30, 2026, were $24,847, an increase of $1,979, or 9%, from $22,868 for the six months ended June 30, 2025. The increase is primarily attributable to an increase in compensation-related expenses and contractors due to changes in headcount associated with administrative functions. General and administrative expenses as a percentage of revenue decreased to 31% for the six months ended June 30, 2026, from 35% for the same period in 2025.
Research and development (“R&D”) expenses consist primarily of salaries and related expenses, including share-based compensationexpenses for employees supporting our R&D activities.
R&D expenses for the three months ended MarchJune 31,30, 2026, were $1,657,$1,565, aan decreaseincrease of $372,$292, or 18%,23%, from $2,029$1,273 for the three months ended MarchJune 31,30, 2025. The decreaseincrease is primarily attributable to an increase in thecompensation-related expenses and decrease in capitalization of software expenses for continued investment in the development of our products and partiallyexpenses, offset by ana increasedecrease in personnelcontractor compensation expenses.expenditures. R&D expenses as a percentage of revenue decreasedremained toflat at 4% for the three months ended MarchJune 31,30, 2026, from 6% for the same period inand 2025.
R&D expenses for the six months ended June 30, 2026, were $3,222, a decrease of $80, or 2%, from $3,302 for the six months ended June 30, 2025. The decrease is primarily attributable to a decrease in contractor expenditures and an increase in the capitalization of software development expenses, offset by an increase in compensation-related expenses. R&D expenses as a percentage of revenue decreased to 4% for the six months ended June 30, 2026, from 5% for the same period in 2025.
Amortization expense for the three months ended MarchJune 31,30, 2026, was $4,972,$4,689, an increase of $664,$516, or 15%,12%, from $4,308$4,173 for the three months ended MarchJune 31,30, 2025. The increase in amortization expense is primarily attributable to our continuing acquisitions strategy, with additional acquisitions occurring each quarter.strategy. Amortization expense as a percentage of revenue remaineddecreased flatto at 12%13% for the three months ended MarchJune 31,30, 20262026, andfrom 14% for the same period in 2025.
Amortization expense for the six months ended June 30, 2026, was $9,661, an increase of $1,180, or 14%, from $8,481 for the six months ended June 30, 2025. The increase is primarily attributable to our continuing acquisitions strategy. Amortization expense as a percentage of revenue decreased to 12% for the six months ended June 30, 2026, from 13% for the same period in 2025.
Interest income for the three months ended MarchJune 31,30, 2026, was $188$168 compared to interest income of $171$277 for the three months ended MarchJune 31,30, 2025. Interest income as a percentage of revenue was negligible for the three months ended MarchJune 31,30, 20262026, andcompared to 1% for three months ended June 30, 2025. Interest expense for the three months ended MarchJune 31,30, 2026,2026 was $1,748$1,753 compared to interest expense of $451$809 for the three months ended MarchJune 31,30, 2025. Interest expense as a percentage of revenue was 5% for the three months ended June 30, 2026 compared to 3% for the same period in 2025. The increase in interest expense relative toin the priorthree yearmonths ended June 30, 2026, is primarily attributablerelated to interest accrued under our Loan Agreement (defined below) with MidCap Financial Trust (“MidCap”). Interest expense as a percentage of revenue was 4% for the three months ended March 31, 2026, compared to 1% for the three months ended March 31, 2025.
Interest income for the six months ended June 30, 2026 was $354 compared to interest income of $448 for the six months ended June 30, 2025. Interest income as a percentage of revenue was negligible for the six months ended June 30, 2026, compared to 1% for the six months ended June 30, 2025. Interest expense for the six months ended June 30, 2026 was $3,499 compared to interest expense of $1,260 for the six months ended June 30, 2025. Interest expense as a percentage of revenue was 4% for the six months ended June 30, 2026 compared to 2% for the same period in 2025. The increase in interest expense in the six months ended June 30, 2026, is primarily related to interest accrued under our Loan Agreement with MidCap.
Other Income,Income (Expense), Net
Other income,income (expense), net for the three months ended MarchJune 31,30, 2026 was nominal$0 compared to $188$96 of expense for the three months ended MarchJune 31,30, 2025. Other income, net as a percentage of revenue was negligible for the three months ended MarchJune 31,30, 2026,2026 compared to 1% for the three months ended March 31,and 2025.
Other income (expense), net for the six months ended June 30, 2026 was $0 compared to $92 of income for the six months ended June 30, 2025. Other income, net as a percentage of revenue was negligible for the six months ended June 30, 2026 and 2025.
For the three months ended MarchJune 31,30, 2026 and 2025, we recorded income tax expense attributable to continuing operations of $144$462 and $291,$843, respectively, a decrease of $147.$381.
For the six months ended June 30, 2026 and 2025, we recorded income tax expense attributable to continuing operations of $606 and $1,134, respectively, a decrease of $528.
Net Income (Loss)
We generatedincurred incomea loss of $625,$4,443, or $0.02$0.15 per share, during the three months ended MarchJune 31,30, 2026, compared to a loss of $2,398,$6,123, or $(0.09)$0.22 per share, during the three months ended MarchJune 31,30, 2025. Income and lossLoss as a percentage of total revenue was 1%12% and (7)%20% for the three months ended MarchJune 31,30, 2026 and 2025, respectively.
We incurred a loss of $3,818, or $0.13 per share, during the six months ended June 30, 2026, compared to a loss of $8,521, or $0.31 per share, during the six months ended June 30, 2025. Loss as a percentage of total revenue was 5% and 13% for the six months ended June 30, 2026 and 2025, respectively.
Working Capital. We had working capital of $12,818$13,434 at MarchJune 31,30, 2026, a decrease of $5,828$5,212 from working capital of $18,646 at December 31, 2025. This decrease is primarily attributable to the cash spent on the acquisition of a reseller partner that occurred during the period. Working capital as of MarchJune 31,30, 2026 and December 31, 2025 includes $7,036$6,730 and $11,622 of short-term deferred revenue, respectively. Deferred revenue is an obligation to perform future services. We expect that deferred revenue will convert to future revenue as we perform our services, but this does not represent future payments. Deferred revenue can vary based on seasonality, expiration of initial multi-year contracts and deals that are billed after implementation rather than in advance of service delivery.
Operating Activities. Net cash provided by operating activities of $2,709$7,180 for the threesix months ended MarchJune 31,30, 2026,2026 was primarily driven by non-cash adjustments to our net incomeloss of approximately $10,605,$18,764, primarily due to depreciationdepreciation, and amortizationamortization, and share-based compensation. This was offset by changes in operating assets and liabilities, which resulted in a use of $8,521$7,766 in cash. Net cash provided by operating activities of $1,996$5,151 for the threesix months ended MarchJune 31,30, 2025,2025 was primarily driven by non-cash adjustments to our net loss of approximately $8,277,$17,199, primarily due to depreciationdepreciation, and amortizationamortization, and share-based compensation. This was offset by changes in operating assets and liabilities, which resulted in a use of $3,883$3,527 in cash.
Investing Activities. Net cash used in investing activities of $5,379$23,205 for the threesix months ended MarchJune 31,30, 20262026, is primarily due to purchasescash intangiblepaid assetsin business combinations or asset acquisitions of $4,721, purchases of available-for-sale securities and maturities of $4,051,$23,752, and software capitalization costs of $3,236,$6,789, partially offset by proceeds from sales and maturities of available-for-sale securities of $6,847.$12,529. Net cash used in investing activities of $12,630$17,814 for the threesix months ended MarchJune 31,30, 20252025, is primarily due to purchasescash intangiblepaid assetsin asset acquisitions of $6,346, purchases of available-for-sale securities and maturities of $6,589,$12,304, and software capitalization costs of $2,769,$6,470, partially offset by proceeds from sales and maturities of available-for-sale securities of $3,266.$7,699.
Financing Activities. Net cash used in financing activities was $11,528$49,187 for the threesix months ended MarchJune 31,30, 2026, which primarily consisted of a net decrease in client fund obligations of $11,177.$48,647. Net cash provided by financing activities was $63,925$73,097 for the threesix months ended MarchJune 31,30, 2025, which primarily consisted of net proceeds of $57,982 from the Loan Agreement (defined below) with MidCap and a net increase in client fund obligations of $64,207.$20,461.
As of MarchJune 31,30, 2026, we have nine subordinated promissory notes outstanding, all of which related to acquisitions that occurred during the threesix months ended MarchJune 31,30, 2026 and periods prior yearsto January 1, 2025, with a combined outstanding principal balance of $11,701$11,395 and maturity dates ranging from August 1, 2026,2026 to July 1, 2029.
On April 10, 2025, we entered into a Credit, Security and Guaranty Agreement (as amended, the “Loan Agreement”) with MidCap and the lenders from time to time party thereto (such lenders collectively with MidCap, the “Lenders”). Under the Loan Agreement, we may borrow up to $60,000 from the Lenders, all of which washas been funded as of June 30, 2025. The maturity date of the loan as provided under the Loan Agreement is April 1, 2030 (the “Maturity Date”).
Interest on the outstanding loan balance is payable monthly in arrears at an annual rate of Term SOFR plus 5.00%, subject to a Secured Overnight Financing Rate (“SOFR”) plus 5.00%, subject to a SOFR floor of 2.00%. This rate was 9.04%8.74% as of MarchJune 31,30, 2026. Prior to April 1, 2029 (the “Amortization Start Date”), we must make interest-only payments on the outstanding loan balance. Commencing on the Amortization Start Date and continuing on the first day of each calendar month thereafter, we will pay an amount equal to the total principal of the outstanding loan balance divided by twelve (12), for a twelve (12) month straight-line amortization of equal monthly principal payments. Also on a monthly basis, we must pay an administrative agency fee to MidCap equal to 0.25% of the average end-of-day principal balance outstanding during the immediately preceding month. At the time of the final payment underof the loan, we will provide a final payment fee of 2.00% of the amount advanced thereunder except in the case of a refinance of the loan with MidCap and the Lenders.
We are subject to customary events of default as described in the Loan Agreement. In such event, and for so long as it continues, the outstanding loan balance will bear interest at 2.00%2.0% per annum in excess of the rate otherwise payable. The Loan Agreement is collateralized by substantially all of our assets except for all client funds balances and an amount of cash intended solely to cover employee wages, benefits, and taxes for a limited period. Under the Loan Agreement, we covenant to maintain a (1) Total Leverage Ratio (as defined in the Loan Agreement), as tested quarterly, no greater than 5.50 to 1.00, and (2) minimum liquidity threshold of $10,000. As of MarchJune 31,30, 2026, we are in compliance with all covenants under the Loan Agreement.
Sources of Liquidity. As of MarchJune 31,30, 2026, our principal sources of liquidity consisted of approximately $19,221$19,679 of cash and cash equivalents and cash generated from operations of our businessbusiness, which we expect to be our principal source of liquidity over the next twelve months. Additionally, we have access to an “at the market offering” program entered in October 31, 2024, under which we may offer and sell up to $25,000 of newly issued shares of common stock. As of MarchJune 31,30, 2026, there are $25,000 of shares of common stock available for issuance under thethis program.
ASUR insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 1 filing (1 insider, 1 trade date, 15,420 shares, about $128.8K). Net open-market shares: -15,420 (purchases minus sales); net value about -$128.8K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-01 | Goldstein Eyal |
Shares withheld for tax | 879 | $7.68 | $6.8K |
| 2026-10-01 | Goldstein Eyal |
Shares withheld for tax | 1,804 | $7.68 | $13.9K |
| 2026-10-01 | Goldstein Eyal |
Shares withheld for tax | 1,837 | $7.68 | $14.1K |
| 2026-10-01 | Pence John F |
Shares withheld for tax | 628 | $7.68 | $4.8K |
| 2026-10-01 | Pence John F |
Shares withheld for tax | 1,312 | $7.68 | $10.1K |
| 2026-10-01 | Pence John F |
Shares withheld for tax | 1,312 | $7.68 | $10.1K |
| 2026-09-01 | Goldstein Eyal |
Shares withheld for tax | 879 | $9.06 | $8.0K |
| 2026-09-01 | Pence John F |
Shares withheld for tax | 628 | $9.06 | $5.7K |
| 2026-08-11 | Reynolds Bjorn |
Open-market sale | 15,420 | $8.35 | $128.8K |
| 2026-08-03 | Goldstein Eyal |
Shares withheld for tax | 879 | $8.76 | $7.7K |
| 2026-08-03 | Pence John F |
Shares withheld for tax | 628 | $8.76 | $5.5K |
| 2026-07-28 | Reynolds Bjorn |
Grant/award | 5,420 | — | — |
| 2026-07-28 | Oberwager Bradford Scovill |
Grant/award | 5,420 | — | — |
| 2026-07-28 | Lee Grace G. |
Grant/award | 5,420 | — | — |
| 2026-07-28 | Gill Daniel M |
Grant/award | 5,420 | — | — |
| 2026-07-28 | Drew William Carl |
Grant/award | 5,420 | — | — |
| 2026-07-28 | Allen Ben F |
Grant/award | 5,420 | — | — |
| 2026-07-01 | Goldstein Eyal |
Shares withheld for tax | 1,837 | $8.13 | $14.9K |
| 2026-07-01 | Goldstein Eyal |
Shares withheld for tax | 1,804 | $8.13 | $14.7K |
| 2026-07-01 | Goldstein Eyal |
Shares withheld for tax | 879 | $8.13 | $7.1K |
| 2026-07-01 | Pence John F |
Shares withheld for tax | 628 | $8.13 | $5.1K |
| 2026-07-01 | Pence John F |
Shares withheld for tax | 1,312 | $8.13 | $10.7K |
| 2026-07-01 | Pence John F |
Shares withheld for tax | 1,312 | $8.13 | $10.7K |
| 2026-06-01 | Pence John F |
Shares withheld for tax | 628 | $9.66 | $6.1K |
| 2026-06-01 | Goldstein Eyal |
Shares withheld for tax | 879 | $9.66 | $8.5K |
| 2026-05-12 | Gill Daniel M |
Option exercise | 5,000 | $7.86 | $39.3K |
| 2026-05-12 | Gill Daniel M |
Shares withheld for tax | 4,581 | $8.58 | $39.3K |
| 2026-05-11 | Pence John F |
Shares withheld for tax | 55,645 | $8.88 | $494.1K |
| 2026-05-11 | Pence John F |
Option exercise | 60,000 | $7.86 | $471.6K |
| 2026-05-07 | Allen Ben F |
Option exercise | 5,000 | $7.86 | $39.3K |
| 2026-05-07 | Reynolds Bjorn |
Option exercise | 5,000 | $7.86 | $39.3K |
| 2026-05-07 | Reynolds Bjorn |
Shares withheld for tax | 4,282 | $9.18 | $39.3K |
| 2026-05-07 | Goldstein Eyal |
Shares withheld for tax | 54,768 | $9.18 | $502.8K |
| 2026-05-07 | Goldstein Eyal |
Option exercise | 60,000 | $7.86 | $471.6K |
| 2026-05-07 | Goepel Patrick |
Option exercise | 60,000 | $7.86 | $471.6K |
| 2026-05-07 | Goepel Patrick |
Option exercise | 90,000 | $6.74 | $606.6K |
| 2026-05-07 | Goepel Patrick |
Shares withheld for tax | 75,492 | $9.18 | $693.0K |
| 2026-05-07 | Goepel Patrick |
Shares withheld for tax | 54,768 | $9.18 | $502.8K |
| 2026-05-01 | Pence John F |
Shares withheld for tax | 389 | $9.19 | $3.6K |
| 2026-05-01 | Goldstein Eyal |
Shares withheld for tax | 879 | $9.19 | $8.1K |
Well-known investors holding ASUR (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 56,089 | $445.3K | 0.0% | Reduced 2% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 40,384 | $320.6K | 0.0% | Added 27% |
| D. E. Shaw & Co. | 2026-06-30 | 13,198 | $104.8K | 0.0% | Reduced 5% |