ASURE SOFTWARE INC

Previous wording

This Quarterly Report on Form 10-Q contains certain statements made by management that may constitute “forward-looking” statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements about our financial results may include expected or projected U.S GAAP and other operating and non-operating results. The words “believe,” “may,” “will,” “estimate,” “projects,” “anticipate,” “intend,” “expect,” “should,” “plan,” and similar expressions are intended to identify forward-looking statements. 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 we have no 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. The risks and uncertainties referred to above include—but are not limited to—risks associated with breaches of our security measures; risks related to material weaknesses; possible fluctuations in our financial and operating results; privacy concerns and laws and other regulations may limit the effectiveness of our applications; the financial and other impact of any previous and future acquisitions; domestic and international regulatory developments, including changes to or applicability to our business of privacy and data securities laws, money transmitter laws and anti-money laundering laws; regulatory pressures on economic relief enacted as a result of the COVID-19 pandemic that change or cause different interpretations with respect to eligibility for such programs; risk of our software and solutions not functioning adequately; interruptions, delays or changes in our services or our Web hosting; may incur debt to meet future capital requirements; volatility and weakness in bank and capital markets; access to additional capital; significant costs as a result of operating as a public company; the expiration of Employee Retention Tax Credits (“ERTC”) and the impact of the Internal Revenue Service recent measures regarding ERTC claims and the corresponding cash collections of existing receivables; the inability to continue to release timely updates for changes in laws; the inability to develop new and improved versions of our services and technological developments; customer’s nonrenewal of their agree…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q contains certain statements made by management that may constitute “forward-looking” statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements about our financial results may include expected or projected U.S GAAP and other operating and non-operating results. The words “believe,” “may,” “will,” “estimate,” “projects,” “anticipate,” “intend,” “expect,” “should,” “plan,” and similar expressions are intended to identify forward-looking statements. 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 we have no 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. The risks and uncertainties referred to above include—but are not limited to—risks associated with breaches of our security measures; risks related to material weaknesses; possible fluctuations in our financial and operating results; privacy concerns and laws and other regulations may limit the effectiveness of our applications; the financial and other impact of any previous and future acquisitions; domestic and international regulatory developments, including changes to or applicability to our business of privacy and data securities laws, money transmitter laws and anti-money laundering laws; regulatory pressures on economic relief enacted as a result of the COVID-19 pandemic that change or cause different interpretations with respect to eligibility for such programs; risk of our software and solutions not functioning adequately; interruptions, delays or changes in our services or our Web hosting; potential debt incurred to meet future capital requirements; volatility and weakness in bank and capital markets; access to additional capital; significant costs as a result of operating as a public company; the expiration of Employee Retention Tax Credits (“ERTC”) and the impact of the Internal Revenue Service recent measures regarding ERTC claims and the corresponding cash collections of existing receivables; the inability to continue to release timely updates for changes in laws; the inability to develop new and improved versions of our services and technological developments; customer’s nonrenewal of thei…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

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

Current wording

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

Previous wording

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, Recruiting, Time & Attendance software, HR management tools, 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 Visa-branded payroll card, provides employees with 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.

Current wording

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, Recruiting, Time & Attendance software, HR management tools, 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, provides employees with 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.

Previous wording

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 consistently represented over 95% of total revenue in three months ended March 31, 2025, and 2024.

Current wording

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 consistently represented over 95% of total revenue in the three and six months ended June 30, 2025, compared to 96% in the three and six months ended June 30, 2024.

Previous wording

Recurring revenues include revenues relating to the annual processing of payroll forms, such as Form W-2 and Form 1099, and revenues from processing unscheduled payroll runs (such as bonuses) for our clients. Because payroll forms are typically processed in the first quarter of the year and many of our clients are subject to form filing requirements mandated by the ACA, first quarter revenues and margins are generally higher than in subsequent quarters. We anticipate our revenues will continue to exhibit this seasonal pattern related to Affordable Care Act (“ACA”) form filings for so long as the ACA (or replacement legislation) includes employer reporting requirements. In addition, we often experience increased revenues during the fourth quarter due to unscheduled payroll runs for our clients that occur before the end of the year. We expect the seasonality of our revenue cycle to decrease to the extent clients utilize more of our non-payroll applications.

Current wording

Recurring revenues include revenues relating to the annual processing of payroll forms, such as Form W-2 and Form 1099, and revenues from processing unscheduled payroll runs (such as bonuses) for our clients. Because payroll forms are typically processed in the first quarter of the year and many of our clients are subject to form filing requirements mandated by the Affordable Care Act (“ACA”), first quarter revenues and margins are generally higher than in subsequent quarters. We anticipate our revenues will continue to exhibit this seasonal pattern related to ACA form filings for so long as the ACA (or replacement legislation) includes employer reporting requirements. In addition, we often experience increased revenues during the fourth quarter due to unscheduled payroll runs for our clients that occur before the end of the year. We expect the seasonality of our revenue cycle to decrease to the extent clients utilize more of our non-payroll applications.

Previous wording

Recurring revenue for the three months ended March 31, 2025 was $33,187, an increase of $2,914, or 10%, from $30,273 for the three months ended March 31, 2024. The increase is primarily due to an increase tax management solutions.

Current wording

Recurring revenue for the three months ended June 30, 2025 was $28,596, an increase of $1,545, or 6%, from $27,051 for the three months ended June 30, 2024. The increase is primarily due to an increase in tax management solutions.

Previous wording

Professional services, hardware and other revenue increased $288, or 21%, for the three months ended March 31, 2025 from the similar period in 2024, primarily due to an increase in professional services, offset with a decrease in non-recurring ERTC revenue. Refer to “Risk Factors” previously disclosed in our Annual Report on Form 10-K, filed with the SEC on March 6, 2025, for more information about risks related to our ERTC business.

Current wording

Professional services, hardware and other revenue increased $535, or 54%, for the three months ended June 30, 2025 from the similar period in 2024, primarily due to an increase in professional services, offset with a decrease in non-recurring ERTC revenue. Refer to “Risk Factors” previously disclosed in our Annual Report on Form 10-K, filed with the SEC on March 6, 2025, for more information about risks related to our ERTC business.

Previous wording

Consolidated gross profit for the three months ended March 31, 2025, was $24,608, an increase of $2,001, or 9%, from $22,607 for the three months ended March 31, 2024. Gross margin as a percentage of revenue remained consistent at 71% for the three months ended March 31, 2025, and 2024.

Current wording

Consolidated gross profit for the six months ended June 30, 2025, was $44,519, an increase of $3,044, or 7%, from $41,475 for the six months ended June 30, 2024. Gross profit as a percentage of revenue remained flat at 69% for the six months ended June 30, 2025 and 2024.

Previous wording

General and administrative expenses for the three months ended March 31, 2025 were $11,900, an increase of $1,837, or 18%, from $10,063 for the three months ended March 31, 2024. The increase is primarily attributable to increased personnel compensation expenses along with higher service costs associated with regulatory compliance and transactions. General and administrative expenses as a percentage of revenue increased to 34% for the three months ended March 31, 2025 from 32% for the same period in 2024.

Current wording

General and administrative expenses for the six months ended June 30, 2025 were $22,868, an increase of $2,687, or 13%, from $20,181 for the six months ended June 30, 2024. The increase is primarily attributable to an increased personnel compensation expenses along with higher service costs associated with regulatory compliance and customer relationship acquisitions. General and administrative expenses as a percentage of revenue increased to 35% for the six months ended June 30, 2025 compared to 34% for the same period in 2024.

Previous wording

R&D expenses for the three months ended March 31, 2025 were $2,029, an increase of $260, or 15%, from $1,769 for the three months ended March 31, 2024. Theincrease isprimarily attributable to an increase personnel compensation expenses and partially offset by an increase in capitalization of software expenses for continued investment in the development of our products. R&D expenses as a percentage of revenue remained flat at 6% for the three months ended March 31, 2025 compared to the same period in 2024.

Current wording

R&D expenses for the three months ended June 30, 2025 were $1,273, a decrease of $689, or 35%, from $1,962 for the three months ended June 30, 2024. The decrease is primarily attributable to an increase in capitalization of software development expenses driven by continued investments in the development of our products, partially offset by an increase in personnel compensation expenses. R&D expenses as a percentage of revenue decreased to 4% for the three months ended June 30, 2025 from 7% for the same period in 2024.

Previous wording

Interest income for the three months ended March 31, 2025 was $171 compared to interest income of $336 for the three months ended March 31, 2024. Interest income as a percentage of revenue was negligible for the three months ended March 31, 2025, compared to 1% for the three months ended March 31, 2024. Interest expense for thethree months ended March 31, 2025 was $451 compared to interest expense of $180 for the three months ended March 31, 2024. Interest expense as a percentage of revenue was 1% for the three months ended March 31, 2025 and 2024.

Current wording

Interest income for the three months ended June 30, 2025 was $277 compared to interest income of $261 for the three months ended June 30, 2024. Interest income as a percentage of revenue was 1% for the three months ended June 30, 2025 and 2024. Interest expense for the three months ended June 30, 2025 was $809 compared to interest expense of $208 for the three months ended June 30, 2024. Interest expense as a percentage of revenue was 3% for the three months ended June 30, 2025 compared to 1% for the three months ended June 30, 2024. The increase in Interest expense in the three months ended June 30, 2025 is primarily due to our new Loan Agreement (defined below) with MidCap Financial Trust (“MidCap”) during the quarter.

Previous wording

Other income, net for the three months ended March 31, 2025 was $188 compared to $10 for the three months ended March 31, 2024. Other income, net as a percentage of revenue was 1% for the three months ended March 31, 2025, and negligible for the three months ended March 31, 2024. The increase is primarily attributable to the receipt of incremental ERTC refundable tax credit paid by the IRS for our original claim.

Current wording

Other (expense) income, net for the three months ended June 30, 2025 was $96 of expense compared to $0 for the three months ended June 30, 2024. Other (expense) income, net as a percentage of revenue was negligible for the three months ended June 30, 2025 and 2024.

Previous wording

For the three months ended March 31, 2025 and 2024, we recorded income tax expense attributable to continuing operations of$291 and $33, respectively, an increase of $258.

Current wording

For the three months ended June 30, 2025 and 2024, we recorded income tax expense attributable to continuing operations of $843 and $231, respectively, an increase of $612.

Previous wording

We incurred a loss of $2,398, or $0.09 per share, during the three months ended March 31, 2025, compared to a loss of $308, or $0.01 per share, during the three months ended March 31, 2024. Loss as a percentage of total revenue was 7% and 1% for the three months ended March 31, 2025 and 2024, respectively.

Current wording

We incurred a loss of $6,123, or $0.22 per share, during the three months ended June 30, 2025, compared to a loss of $4,360, or $0.17 per share, during the three months ended June 30, 2024. Loss as a percentage of total revenue was 20% and 16% for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Working Capital. We had working capital of $9,000 at March 31, 2025, a decrease of $4,641 from working capital of $13,641 at December 31, 2024. Working capital as of March 31, 2025 and December 31, 2024 includes $4,662 and $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.

Current wording

Working Capital. We had working capital of $64,268 at June 30, 2025, an increase of $50,627 from working capital of $13,641 at December 31, 2024. Working capital as of June 30, 2025 and December 31, 2024 includes $3,724 and $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.

Previous wording

Operating Activities. Net cash provided by operating activities of $1,996 for the three months ended March 31, 2025 was primarily driven by non-cash adjustments to our net loss of approximately $8,277, primarily due to depreciation and amortization and share-based compensation. This was offset by changes in operating assets and liabilities, which resulted in a use of $3,883 in cash. Net cash used in operating activities of $3,947 for the three months ended March 31, 2024 was driven by non-cash adjustments to our net loss of approximately $6,579, primarily due to depreciation and amortization and share-based compensation. For the three months ended March 31, 2024, changes in operating assets and liabilities resulted in a use of $10,218 in cash.

Current wording

Operating Activities. Net cash provided by operating activities of $5,151 for the six months ended June 30, 2025 was primarily driven by non-cash adjustments to our net loss of approximately $17,614, 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 $3,942 in cash. Net cash used in operating activities of $1,719 for the six months ended June 30, 2024 was primarily driven by changes in operating assets and liabilities, which results in a use of $10,677 in cash. This was offset by non-cash adjustments to our net loss of approximately $13,626, primarily due to depreciation, amortization, and share-based compensation.

Previous wording

Investing Activities. Net cash used in investing activities of $12,630 for the three months ended March 31, 2025 is primarily due to purchases of available-for-sale securities and maturities of $6,589 and intangible assets of $6,346, offset by proceeds from sales and maturities of available-for-sale securities of $3,266. Net cash used in investing activities of $4,495 for the three months ended March 31, 2024 is primarily due to purchases of available-for-sale securities and maturities of $3,516.

Current wording

Investing Activities. Net cash used in investing activities of $17,814 for the six months ended June 30, 2025 is primarily due to acquisitions of intangible assets in business combinations or asset acquisitions of $6,346, purchases of available-for-sale securities and maturities of $12,304, and software capitalization costs of $6,470, partially offset by proceeds from sales and maturities of available-for-sale securities of $7,699. Net cash used in investing activities of $7,359 for the six months ended June 30, 2024 is primarily due to purchases of available-for-sale securities and maturities of $6,462 and software capitalization costs of $5,042, partially offset by proceeds from sales and maturities of available-for-sale securities of $8,617.

Previous wording

Financing Activities. Net cash provided by financing activities was $63,925 for the three months ended March 31, 2025, which primarily consisted of a net increase in client fund obligations of $64,207. Net cash provided by financing activities was $21,062 for the three months ended March 31, 2024, which primarily consisted of a net increase in client fund obligations of $21,122.

Current wording

Financing Activities. Net cash provided by financing activities was $73,097 for the six months ended June 30, 2025, which primarily consisted of net proceeds of $57,982 from the Loan Agreement (defined below) with MidCap and net increase in client fund obligations of $20,461. Net cash used in financing activities was $27,935 for the six months ended June 30, 2024, which primarily consisted of a net decrease in client fund obligations of $28,225.

Previous wording

As of March 31, 2025, we have seven subordinated promissory notes related to acquisitions that occurred during thethree months ended March 31, 2025 and prior years with a combined outstanding principal balance of $11,345 and maturity dates ranging from October 1, 2025 to July 1, 2029.

Current wording

As of June 30, 2025, we have seven subordinated promissory notes related to acquisitions that occurred during the six months ended June 30, 2025 and prior years with a combined outstanding principal balance of $11,345 and maturity dates ranging from October 1, 2025 to July 1, 2029.

Previous wording

On April 10, 2025, we entered into a Credit, Security and Guaranty Agreement (the “Loan Agreement”) with MidCap Financial Trust (“MidCap”) and the lenders from time to time party thereto (such lenders collectively with MidCap, the “Lenders”).

Current wording

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”).

Previous wording

Under the Loan Agreement, we may borrow up to $60,000 from the Lenders, with $20,000 funded on April 10. 2025, the closing date of the Loan Agreement (the “Closing Date”). The remaining $40,000 is available through March 31, 2027, in increments of $2,000 (subject to customary notice period requirements), provided that we maintain a Total Leverage Ratio (as defined in the Loan Agreement) of less than 4.50 to 1.00, at the time that we draw funds, and that the funds are used for permitted acquisitions (as defined in the Loan Agreement). The maturity date of the loan as provided under the Loan Agreement is April 1, 2030 (the “Maturity Date”).

Current wording

Under the Loan Agreement, we may borrow up to $60,000 from the Lenders, all of which has been funded as of June 30, 2025. The first $20,000 was advanced on April 10, 2024, the closing date of the Loan Agreement. The remaining $40,000 was advanced on June 30, 2025, which funds may only be used for Permitted Acquisitions (as defined in the Loan Agreement). The maturity date of the loan as provided under the Loan Agreement is April 1, 2030 (the “Maturity Date”).

Previous wording

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

Current wording

Interest on the outstanding loan balance is payable monthly in arrears at an annual rate of Term SOFR plus 5.00%, subject to a Secured Overnight Financing Rate (“SOFR”) floor of 2.00%. 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 of the loan, we will provide a final payment fee of 1.00% of the amount advanced thereunder except in the case of a refinance of the loan with MidCap and the Lenders.

Previous wording

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 2.0% per annum in excess of the rate otherwise payable. Under the Loan Agreement, we covenant to maintain a (1) Total Leverage Ratio (as defined in the Loan Agreement), as tested quarterly, no greater than 5.50 to 1.00, and (2) minimum liquidity threshold of 10.00% of the outstanding principal amount of the Loans.

Current wording

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 2.0% per annum in excess of the rate otherwise payable. Under the Loan Agreement, we covenant to maintain (1) Total Leverage Ratio (as defined in the Loan Agreement), as tested quarterly, no greater than 5.50 to 1.00, and (2) minimum liquidity threshold of 10.00% of the outstanding principal amount of the Loans. As of June 30, 2025, we are in compliance with all covenants under the Loan Agreement.

Previous wording

Sources of Liquidity. As of March 31, 2025, our principal sources of liquidity consisted of approximately $14,076 of cash and cash equivalents, cash generated from operations of our business over the next twelve months, and the net proceeds from our Loan Agreement received on April 10, 2025. We also have the ability to obtain an additional $40,000 from the Loan Agreement. With respect to future advances under the Loan Agreement, we must use such proceeds for acquisitions. Additionally, we have access to an “at the market offering” program entered in October 31, 2024, under which we may offer and sell up to $25,000 of newly issued common stock. As of March 31, 2025, there are $25,000 of shares of common stock available for issuance under the program.

Current wording

Sources of Liquidity. As of June 30, 2025, our principal sources of liquidity consisted of $66,000 of cash and cash equivalents from proceeds of the MidCap Loan Agreement and cash generated from operations of our business over the next twelve months. Additionally, we have access to an “at the market offering” program entered in October 31, 2024, under which we may offer and sell up to $25,000 of newly issued common stock. As of June 30, 2025, there are $25,000 of shares of common stock available for issuance under this program.