ASURE SOFTWARE INC

Previous wording

The following review of Asure’s financial position as of March 31, 2026 and December 31, 2025, and results of operations for the three months ended March 31, 2026 and 2025 should be read in conjunction with our 2025 Annual Report on Form 10-K filed with the SEC on February 26, 2026. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are available through the investor relations page of our internet website free of charge as soon as reasonably practicable after they are electronically filed, or furnished to, the SEC. 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, 2026, and December 31, 2025, and results of operations for the three and six months ended June 30, 2026 and 2025, should be read in conjunction with our 2025 Annual Report on Form 10-K filed with the SEC on February 26, 2026 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.

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, HR management tools, Time & Attendance software, Recruiting, and Benefits Administration. This platform serves as the foundation for delivering both our core software and a range of complementary, technology-enabled services. These include AsureMarketplace™, which automates data exchange between our HCM system and third-party providers to increase efficiency, accuracy, and breadth of services. Our HR Compliance services combine expert guidance with scalable digital delivery. AsurePay™, our payroll card, which we provide in association with our partners, offers employees fast, secure access to earned wages. Additionally, through our licensed brokerage, we offer Insurance Services that help employers manage benefits and reduce administrative costs. We deliver our solutions directly and through a national network of Reseller Partners.

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, 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.

Previous wording

From recruitment to retirement, our solutions help more than 100,000 clients across the United States. Approximately 36% of our clients are direct and the remaining clients are indirect, as they have contracts with reseller partners who white label our solutions.

Current wording

From recruitment to retirement, our solutions help more than 100,000 clients across the United States. Approximately 35% of our clients are direct and the remaining clients are indirect, as they have contracts with reseller partners who white label our solutions.

Previous wording

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:

Current wording

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

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 represented over 88% of total revenue in the three months ended March 31, 2026, compared to 95% in the three months ended March 31, 2025. This decrease was primarily due to the increase in hardware sales as a result of time and attendance business growth.

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 represented over 91% and 90% of total revenue in the three and six months ended June 30, 2026, respectively, compared to 95% in the three and six months ended June 30, 2025. This decrease was due to the increase in hardware sales as a result of time and attendance business growth.

Previous wording

Consolidated gross profit for the three months ended March 31, 2026, was $30,470, an increase of $5,862, or 24%, from $24,608 for the three months ended March 31, 2025. Gross margin as a percentage of revenue remained consistent at 71% for the three months ended March 31, 2026, and 2025.

Current wording

Consolidated gross profit for the three months ended June 30, 2026, was $25,055, an increase of $5,144, or 26%, from $19,911 for the three months ended June 30, 2025. Gross profit as a percentage of revenue increased to 68% for the three months ended June 30, 2026, from 66% for the same period in 2025. The increase is primarily attributable to the growth in our time and attendance solutions.

Previous wording

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

Current wording

Our cost of sales relates primarily to direct product costs, compensation for operations and related consulting expenses, web hosting, and related expenses and the amortization of our purchased software development costs. We include intangible amortization related to developed and acquired technology within cost of sales.

Previous wording

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

Current wording

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

Previous wording

Sales and marketing expenses for the three months ended March 31, 2026, were $8,764, an increase of $378, or 5%, from $8,386 for the three months ended March 31, 2025. The increase is primarily due to an increase in expenditures for lead generation. Sales and marketing expenses as a percentage of revenue decreased to 20% for the three months ended March 31, 2026, from 24% for the same period in 2025.

Current wording

Sales and marketing expenses for the three months ended June 30, 2026, were $9,098, an increase of $949, or 12%, from $8,149 for the three months ended June 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 25% for the three months ended June 30, 2026, from 27% for the same period in 2025.

Previous wording

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

Current wording

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

Previous wording

General and administrative expenses for the three months ended March 31, 2026, were $12,748, an increase of $848, or 7%, from $11,900 for the three months ended March 31, 2025. The increase is primarily attributable to an increased compensation-related expenses and contractors due to changes in headcount associated with administrative functions. General and administrative expenses as a percentage of revenue decreased to 30% for the three months ended March 31, 2026, from 34% for the same period in 2025.

Current wording

General and administrative expenses for the three months ended June 30, 2026, were $12,099, an increase of $1,131, or 10%, from $10,968 for the three 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 33% for the three months ended June 30, 2026 from 36% for the same period in 2025.

Previous wording

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

Current wording

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

Previous wording

R&D expenses for the three months ended March 31, 2026, were $1,657, a decrease of $372, or 18%, from $2,029 for the three months ended March 31, 2025. The decrease is primarily attributable to an increase in the capitalization of software expenses for continued investment in the development of our products and partially offset by an increase in personnel compensation expenses. R&D expenses as a percentage of revenue decreased to 4% for the three months ended March 31, 2026, from 6% forthe same period in 2025.

Current wording

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.

Previous wording

Amortization expense for the three months ended March 31, 2026, was $4,972, an increase of $664, or 15%, from $4,308 for the three months ended March 31, 2025. The increase in amortization expense is primarily attributable toour continuing acquisitions strategy, with additional acquisitions occurring each quarter. Amortization expense as a percentage of revenue remained flat at 12% for the three months ended March 31, 2026 and 2025.

Current wording

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.

Previous wording

Interest income for the three months ended March 31, 2026, was $188 compared to interest income of $171 for the three months ended March 31, 2025. Interest income as a percentage of revenue was negligible for the three months ended March 31, 2026 and 2025. Interest expense for thethree months ended March 31, 2026, was $1,748 compared to interest expense of $451 for the three months ended March 31, 2025. The increase in interest expense relative to the prior year is primarily attributable to interest accrued under our Loan Agreement (defined below) with MidCap Financial Trust (“MidCap”). Interest expense as a percentage of revenue was 4% for the three months ended March 31, 2026, compared to 1% for the three months ended March 31, 2025.

Current wording

Interest income for the three months ended June 30, 2026, was $168 compared to interest income of $277 for the three months ended June 30, 2025. Interest income as a percentage of revenue was negligible for the three months ended June 30, 2026, compared to 1% for three months ended June 30, 2025. Interest expense for the three months ended June 30, 2026 was $1,753 compared to interest expense of $809 for the three months ended June 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 in the three months ended June 30, 2026, is primarily related to interest accrued under our Loan Agreement (defined below) with MidCap Financial Trust (“MidCap”).

Previous wording

Other income, net for the three months ended March 31, 2026 was nominal compared to $188 for the three months ended March 31, 2025. Other income, net as a percentage of revenue was negligible for the three months ended March 31, 2026, compared to 1% for the three months ended March 31, 2025.

Current wording

Other income (expense), net for the three months ended June 30, 2026 was $0 compared to $96 of expense for the three months ended June 30, 2025. Other income, net as a percentage of revenue was negligible for the three months ended June 30, 2026 and 2025.

Previous wording

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

Current wording

For the three months ended June 30, 2026 and 2025, we recorded income tax expense attributable to continuing operations of $462 and $843, respectively, a decrease of $381.

Previous wording

We generated income of $625, or $0.02 per share, during the three months ended March 31, 2026, compared to a loss of $2,398, or $(0.09) per share, during the three months ended March 31, 2025. Income and loss as a percentage of total revenue was 1% and (7)% for the three months ended March 31, 2026 and 2025, respectively.

Current wording

We incurred a loss of $4,443, or $0.15 per share, during the three months ended June 30, 2026, compared to a loss of $6,123, or $0.22 per share, during the three months ended June 30, 2025. Loss as a percentage of total revenue was 12% and 20% for the three months ended June 30, 2026 and 2025, respectively.

Previous wording

Working Capital. We had working capital of $12,818 at March 31, 2026, a decrease of $5,828 from working capital of $18,646 at December 31, 2025. This decrease is primarily attributable to the cash spent on the acquisition of a reseller partner that occurred during the period. Working capital as of March 31, 2026 and December 31, 2025 includes $7,036 and $11,622 of short-term deferred revenue, respectively. Deferred revenue is an obligation to perform future services. 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 $13,434 at June 30, 2026, a decrease of $5,212 from working capital of $18,646 at December 31, 2025. Working capital as of June 30, 2026 and December 31, 2025 includes $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.

Previous wording

Operating Activities. Net cash provided by operating activities of $2,709 for the three months ended March 31, 2026, was primarily driven by non-cash adjustments to our net income of approximately $10,605, primarily due to depreciation and amortization and share-based compensation. This was offset by changes in operating assets and liabilities, which resulted in a use of $8,521 in cash. Net cash provided by operating activities of $1,996 for the three months ended March 31, 2025, was driven by non-cash adjustments to our net loss of approximately $8,277, primarily due to depreciation and amortization and share-based compensation. This was offset by changes in operating assets and liabilities, which resulted in a use of $3,883 in cash.

Current wording

Operating Activities. Net cash provided by operating activities of $7,180 for the six months ended June 30, 2026 was primarily driven by non-cash adjustments to our net loss of approximately $18,764, 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 $7,766 in cash. 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 $17,199, 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 $3,527 in cash.

Previous wording

Investing Activities. Net cash used in investing activities of $5,379 for the three months ended March 31, 2026 is primarily due to purchases intangible assets of $4,721, purchases of available-for-sale securities and maturities of $4,051, and software capitalization costs of $3,236, offset by proceeds from sales and maturities of available-for-sale securities of $6,847. Net cash used in investing activities of $12,630 for the three months ended March 31, 2025 is primarily due to purchases intangible assets of $6,346, purchases of available-for-sale securities and maturities of $6,589, and software capitalization costs of $2,769, offset by proceeds from sales and maturities of available-for-sale securities of $3,266.

Current wording

Investing Activities. Net cash used in investing activities of $23,205 for the six months ended June 30, 2026, is primarily due to cash paid in business combinations or asset acquisitions of $4,721, purchases of available-for-sale securities of $23,752, and software capitalization costs of $6,789, partially offset by proceeds from sales and maturities of available-for-sale securities of $12,529. Net cash used in investing activities of $17,814 for the six months ended June 30, 2025, is primarily due to cash paid in asset acquisitions of $6,346, purchases of available-for-sale securities 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.

Previous wording

Financing Activities. Net cash used in financing activities was $11,528 for the three months ended March 31, 2026, which primarily consisted of a net decrease in client fund obligations of $11,177. Net cash provided by financing activities was $63,925 for the three months ended March 31, 2025, which primarily consisted of a net increase in client fund obligations of $64,207.

Current wording

Financing Activities. Net cash used in financing activities was $49,187 for the six months ended June 30, 2026, which primarily consisted of a net decrease in client fund obligations of $48,647. 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 a net increase in client fund obligations of $20,461.

Previous wording

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

Current wording

As of June 30, 2026, we have nine subordinated promissory notes outstanding, all of which related to acquisitions that occurred during the six months ended June 30, 2026 and periods prior to January 1, 2025, with a combined outstanding principal balance of $11,395 and maturity dates ranging from August 1, 2026 to July 1, 2029.

Previous wording

On April 10, 2025, we entered into a Credit, Security and Guaranty Agreement (the “Loan Agreement”) with MidCap and the lenders from time to time party thereto (such lenders collectively with MidCap, the “Lenders”). Under the Loan Agreement, we may borrow up to $60,000 from the Lenders, all of which was funded as of June 30, 2025. The maturity date of the loan as provided under the Loan Agreement is April 1, 2030 (the “Maturity Date”).

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”). 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 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 Secured Overnight Financing Rate (“SOFR”) plus 5.00%, subject to a SOFR floor of 2.00%. This rate was 9.04% as of March 31, 2026. Prior to April 1, 2029 (the “Amortization Start Date”), we must make interest-only payments on the outstanding loan balance. 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.

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%. This rate was 8.74% as of June 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 of the loan, we will provide a final payment fee of 2.00% of the amount advanced thereunder except in the case of a refinance of the loan with MidCap and the Lenders.

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 2.00% 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 March 31, 2026, we are in compliance with all covenants under the Loan Agreement.

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 $10,000. As of June 30, 2026, we are in compliance with all covenants under the Loan Agreement.

Previous wording

Sources of Liquidity. As of March 31, 2026, our principal sources of liquidity consisted of approximately $19,221 of cash and cash equivalents and cash generated from operations of our business over the next twelve months. Additionally, we have access to an “at the market offering” program entered in October 31, 2024, under which we may offer and sell up to $25,000 of newly issued common stock. As of March 31, 2026, there are $25,000 of shares of common stock available for issuance under the program.

Current wording

Sources of Liquidity. As of June 30, 2026, our principal sources of liquidity consisted of $19,679 of cash and cash equivalents generated from operations of our business, which we expect to be our principal source of liquidity over the next twelve months. Additionally, we have access to an “at the market offering” program entered in October 31, 2024, under which we may offer and sell up to $25,000 of newly issued shares of common stock. As of June 30, 2026, there are $25,000 of shares of common stock available for issuance under this program.