Asure Software Inc: Form 10-Q for the period ended Sep 30, 2026

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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; possible fluctuations in our financial and operating results; potential financing needed to meet future capital requirements; access to additional capital; volatility and weakness in bank and capital markets; the financial and other impact of any previous and future acquisitions; privacy concerns and laws and other regulations that may limit the effectiveness of our applications; inability to adopt new or correctly interpret existing money service and money transmitter business status; risk of our software and solutions not functioning adequately; interruptions, delays or changes in our services or our Web hosting; significant costs as a result of operating as a public company; economic and governmental interruptions to supply chains; risks related to weaknesses in internal control; the inability to continue to release timely updates for changes in laws; the inability to develop new and improved versions of our services and technological developments; customer’s nonrenewal of their agreements and other similar changes; the exposure of market, interest, credit and liquidity risk on client funds held in trust; our operations in highly competitive markets; risks that our clients could have insufficient funds, limitations in the ability to transmit ACH transactions; the nature of our business model; impairment of intangible assets; litigation and any related claims, negotiations and settlements, including with respect to intellectual property matters or industry-specific regulations; market demand of our Software-as-a-Service offerings; adverse effects to our business a result of claims, lawsuits, and other proceedings; adverse material effects caused by advancements and adoption of artificial intelligence; issues in the use of artificial intelligence in our HCM products and services; adverse changes to financial accounting standards to us; intellectual property risks associated with the use of open source software; failures of our service providers; factors affecting our deferred tax assets and ability to value and utilize them; inability to maintain third-party licensed software; evolving regulation of the Internet, changes in the infrastructure underlying the Internet or interruptions in Internet services; the expiration of Employee Retention Tax Credits (“ERTC”) and the impact of recent regulatory and other measures by governmental authorities-regarding ERTC claims and the corresponding cash collections of existing receivables; our ability to hire, retain and motivate employees and manage our growth; potential enactment of adverse tax laws, regulation, political, economic and social factors; potential sales of a substantial number of shares of our common stock along with its volatility; and risks associated with potential equity-related transactions including dividends, rights under the stockholder plan to discourage certain actions and other impacts as a result of actions of our stockholders.

Further information on these and other factors that could affect our financial results is included in the reports on Forms 10-K, 10-Q and 8-K, and in other filings we make with the Securities and Exchange Commission (the “SEC”) from time to time. These documents are available on the SEC Filings section of the Investor Information section of our website at investor.asuresoftware.com. Asure assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

OVERVIEW

The following review of Asure’s financial position as of September 30, 2026, and December 31, 2025, and results of operations for the three and nine months ended September 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 reports filed with the SEC on April 30, 2026, and July 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 (http://www.asuresoftware.com).

Our Business

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.

We strive to be the most trusted HCM resource. Our solutions solve three primary challenges that prevent businesses from growing: HR complexity, allocation of human and financial capital, and the ability to build great teams. We sell our solutions through both direct and partner channels. We supplement our direct sales efforts with partner programs that afford us access to opportunities in various geographic and industry niches. Asure has two types of partners: Reseller Partners that white label our products while providing value-added services to their clients (our indirect clients) and Referral Partners that provide us with client leads but do not resell our solutions. We have and will continue to invest in research and development to expand our solutions. Our solutions reduce the administrative burden on employers and increase employee productivity while managing the employment lifecycle. The Asure HCM suite includes eight product lines: Asure Payroll & Tax, Asure HR Compliance, Asure Time & Attendance, AsureRecruiting®, Asure Insurance and Benefits Administration, AsurePay™, Asure Tax Management Solutions, and AsureMarketplace™.

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

RESULTS OF OPERATIONS (in thousands)

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

Revenue

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 92% and 91% of total revenue in the three and nine months ended September 30, 2026, respectively, compared to 88% and 92% in the three and nine months ended September 30, 2025, respectively. The increase in recurring revenue as a percentage of total revenue for the three months ended September 30, 2026 was due to growth in our payroll direct business and lower non-recurring time and attendance hardware sales. The decrease for the nine months ended September 30, 2026 was due to higher non-recurring hardware sales, primarily resulting from the inclusion of a full period of results from the time and attendance business acquired in July 2025.

Our revenue was derived from the following sources (in thousands):

22

Recurring Revenue

Recurring revenues include fees for our payroll and tax management, recruiting services, HR compliance, time and labor management, insurance and benefits administration, AsureMarketplace™ and other Asure solutions as well as fees charged for form filings and delivery of client payroll checks and reports. These revenues are derived from fixed amounts charged per billing period and sometimes an additional fee per employee or transaction processed. We do not require clients to enter into long-term contractual commitments for our services. Our billing period varies by client based on when each client pays its employees, which may be weekly, bi-weekly, semi-monthly or monthly. We also generate recurring revenues from our Reseller Partners that license our solutions. Because recurring revenues are based, in part, on fees for use of our applications and the delivery of checks and reports that are levied on a per-employee basis, our recurring revenues increase as our clients hire more employees. Recurring revenues are recognized in the period services are rendered.

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.

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, 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.

Recurring revenue for the three months ended September 30, 2026, was $36,912, an increase of $5,071, or 16%, from $31,841 for the three months ended September 30, 2025. The increase is primarily due to an increase in payroll solutions.

Recurring revenue for the nine months ended September 30, 2026, was $108,627, an increase of $15,003, or 16%, from $93,624 for the nine months ended September 30, 2025. The increase is primarily due to an increase in HR compliance, payroll solutions, and time and attendance solutions.

Professional Services, Hardware and Other Revenue

Professional services, hardware and other revenues represents implementation fees, one-time consulting projects, on-premise maintenance, hardware devices to enhance our software products.

Professional services, hardware and other revenue for the three months ended September 30, 2026, was $3,110, a decrease of $1,301, or 29%, from $4,411 for the three months ended September 30, 2025. This decrease is primarily due to a decrease in hardware related to our time and attendance solutions, which is non-recurring in nature.

Professional services, hardware, and other revenue for the nine months ended September 30, 2026, was $11,265, an increase of $3,659, or 48%, from $7,606 for the nine months ended September 30, 2025. The increase is primarily due to an increase in non-recurring hardware sales, primarily resulting from the inclusion of a full period of results from the time and attendance business acquired in July 2025.

Our total customer base is widely spread across industries and sizes. Geographically, we sell our products primarily in the United States.

In addition to continuing to develop our workforce solutions and release of new software updates and enhancements, we continue to actively explore other opportunities to acquire additional products or technologies to complement our current software and services.

Gross Profit and Gross Margin

Consolidated gross profit for the three months ended September 30, 2026, was $27,844, an increase of $4,306, or 18%, from $23,538 for the three months ended September 30, 2025. Gross profit as a percentage of revenue increased to 70% for the three months ended September 30, 2026, from 65% for the same period in 2025. The increase is primarily attributable to the growth in our payroll solutions, which are higher margin in comparison to our other offerings.

Consolidated gross profit for the nine months ended September 30, 2026, was $83,369, an increase of $15,197, or 22%, from $68,172 for the nine months ended September 30, 2025. Gross profit as a percentage of revenue increased to 70% for the nine months ended September 30, 2026, from 67% for the same period in 2025. The increase is primarily attributable to the growth in our HR compliance, payroll solutions, and time and attendance solutions, which is higher margin in comparison to our other offerings.

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

Sales and Marketing Expenses

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

Sales and marketing expenses for the three months ended September 30, 2026, were $8,925, a decrease of $118, or 1%, from $9,043 for the three months ended September 30, 2025. The decrease is primarily due to a decrease in bad debt. Sales and marketing expenses as a percentage of revenue decreased to 22% for the three months ended September 30, 2026, from 25% for the same period in 2025.

Sales and marketing expenses for the nine months ended September 30, 2026, were $26,787, an increase of $1,209, or 5%, from $25,578 for the nine months ended September 30, 2025. The increase is primarily due to an increase in advertising. Sales and marketing expenses as a percentage of revenue decreased to 22% for the nine months ended September 30, 2026, from 25% for the same period in 2025.

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

General and Administrative Expenses

General and administrative expenses primarily consist of salaries and related expenses, including 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.

General and administrative expenses for the three months ended September 30, 2026, were $12,540, an increase of $885, or 8%, from $11,655 for the three months ended September 30, 2025. The increase is primarily attributable to increased personnel compensation expenses. General and administrative expenses as a percentage of revenue decreased to 31% for the three months ended September 30, 2026, from 32% for the same period in 2025.

General and administrative expenses for the nine months ended September 30, 2026, were $37,387, an increase of $2,864, or 8%, from $34,523 for the nine months ended September 30, 2025. The increase is primarily attributable to an increased personnel compensation expenses. General and administrative expenses as a percentage of revenue decreased to 31% for the nine months ended September 30, 2026, from 34% for the same period in 2025.

Research and Development Expenses

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

R&D expenses for the three months ended September 30, 2026, were $1,677, an increase of $107, or 7%, from $1,570 for the three months ended September 30, 2025. The increase is primarily attributable to an increase in software subscriptions. R&D expenses as a percentage of revenue remained flat at 4% for the three months ended September 30, 2026 and 2025.

R&D expenses for the nine months ended September 30, 2026, were $4,899, a decrease of $88, or 2%, from $4,987 for the nine months ended September 30, 2025. The decrease is primarily attributable to an increase in capitalized software. R&D expenses as a percentage of revenue decreased to 4% for the nine months ended September 30, 2026 from 5% for the same period in 2025.

Amortization of Intangible Assets

Amortization expense for the three months ended September 30, 2026, was $4,187, a decrease of $582, or 12%, from $4,769 for the three months ended September 30, 2025. The decrease is primarily attributable to intangible assets fully amortized in the current year. Amortization expense as a percentage of revenue decreased to 10% for the three months ended September 30, 2026, from 13% for the same period in 2025.

Amortization expense for the nine months ended September 30, 2026, was $13,848, an increase of $598, or 5%, from $13,250 for the nine months ended September 30, 2025. The increase is primarily attributable to our continuing acquisitions strategy, with additional acquisitions occurring each quarter. Amortization expense as a percentage of revenue decreased to 12% for the nine months ended September 30, 2026 from 13% for the same period in 2025.

Interest Income and Expense

Interest income for the three months ended September 30, 2026, was $178 compared to interest income of $250 for the three months ended September 30, 2025. Interest income as a percentage of revenue was negligible for the three months ended September 30, 2026 compared to 1% for the same period in 2025. Interest expense for the three months ended September 30, 2026 was $1,762 compared to interest expense of $1,966 for the three months ended September 30, 2025. Interest expense as a percentage of revenue was 4% for the three months ended September 30, 2026 compared to 5% for the same period in 2025. The decrease in Interest expense in the three months ended September 30, 2026, is primarily related to the variable interest rate accrued under our Loan Agreement (defined below) with MidCap Financial Trust (“MidCap”) being lower in the three months ended September 30, 2026 compared to the same period in 2025.

Interest income for the nine months ended September 30, 2026 was $532 compared to interest income of $698 for the nine months ended September 30, 2025. Interest income as a percentage of revenue was negligible for the nine months ended September 30, 2026 compared to 1% for the same period in 2025. Interest expense for the nine months ended September 30, 2026 was $5,261 compared to interest expense of $3,226 for the nine months ended September 30, 2025. Interest expense as a percentage of revenue was 4% for the nine months ended September 30, 2026 compared to 3% for the same period in 2025. The increase in interest expense in the nine months ended September 30, 2026, is primarily related to interest accrued under our Loan Agreement with MidCap entered into on April 10, 2025.

Other Income, Net

Other income, net for the three months ended September 30, 2026 was $9 compared to $220 for the three months ended September 30, 2025. Other income, net as a percentage of revenue was negligible for the three months ended September 30, 2026 compared to 1% for the same period in 2025.

Other income, net for the nine months ended September 30, 2026 was $9 compared to $312 for the nine months ended September 30, 2025. Other income, net as a percentage of revenue was negligible for the nine months ended September 30, 2026 and 2025.

Income Taxes

For the three months ended September 30, 2026, we recorded income tax benefit attributable to continuing operations of $456 compared to an income tax expense of $367 for the three months ended September 30, 2025, a decrease of $823.

For the nine months ended September 30, 2026 and 2025, we recorded income tax expense attributable to continuing operations of $150 and $1,501, respectively, a decrease of $1,351.

Net Loss

We incurred a loss of $604, or $0.02 per share, during the three months ended September 30, 2026, compared to a loss of $5,362, or $0.19 per share, during the three months ended September 30, 2025. Loss as a percentage of total revenue was 2% and 15% for the three months ended September 30, 2026 and 2025, respectively.

We incurred a loss of $4,422, or $0.15 per share, during the nine months ended September 30, 2026, compared to a loss of $13,883, or $0.51 per share, during the nine months ended September 30, 2025. Loss as a percentage of total revenue was 4% and 14% for the nine months ended September 30, 2026 and 2025, respectively.

LIQUIDITY AND CAPITAL RESOURCES (in thousands)

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

Working Capital. We had working capital of $11,419 at September 30, 2026, a decrease of $7,227 from working capital of $18,646 at December 31, 2025. Working capital as of September 30, 2026 and December 31, 2025 includes $5,864 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 $12,810 for the nine months ended September 30, 2026 was primarily driven by non-cash adjustments to our net loss of approximately $27,780, 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 $10,548 in cash. Net cash provided by operating activities of $10,926 for the nine months ended September 30, 2025 was primarily driven by non-cash adjustments to our net loss of approximately $27,918, primarily due to depreciation, amortization, and share-based compensation. This was offset by changes in operating assets and liabilities, which results in a use of $3,109 in cash.

Investing Activities. Net cash used in investing activities of $22,680 for the nine months ended September 30, 2026, is primarily due to cash paid in asset acquisitions of $4,739, purchases of available-for-sale securities of $25,566, and software capitalization costs of $10,582, partially offset by proceeds from sales and maturities of available-for-sale securities of $18,773. Net cash used in investing activities of $78,177 for the nine months ended September 30, 2025, is primarily due to cash paid in business combinations or asset acquisitions of $52,467, purchases of available-for-sale securities of $36,655, and software capitalization costs of $10,271, partially offset by proceeds from sales and maturities of available-for-sale securities of $21,738.

Financing Activities. Net cash used in financing activities was $36,311 for the nine months ended September 30, 2026, which primarily consisted of payments of notes payables of $4,554 and net decrease in client fund obligations of $31,103. Net cash provided by financing activities was $7,006 for the nine months ended September 30, 2025, which primarily consisted of net proceeds of $57,982 from the MC Credit Agreement (defined below) with MidCap offset by a net decrease in client fund obligations of $45,506.

As of September 30, 2026, we have seven subordinated promissory notes outstanding, all of which related to acquisitions that occurred during the nine months ended September 30, 2026 and periods prior to January 1, 2025, with a combined outstanding principal balance of $6,811 and maturity dates ranging from November 1, 2026 to July 1, 2029.

On October 15, 2026, we entered into a Credit Agreement (the “Credit Agreement”) with MUFG Bank, LTD (“MUFG”), as administrative agent, and the lenders from time to time party thereto (such lenders collectively with MUFG, the “Lenders”).

Under the Credit Agreement, the Company may borrow up to $115 million from the Lenders (the “Senior Credit Facility”), comprising a (i) $85.0 million (the “Initial Loan Balance”) term loan facility, all of which was drawn by the Company on October 15, 2026 (the “Closing Date”), (ii) $10.0 million five-year revolving credit facility (the “Revolving Facility”), and (iii) $20.0 million delayed-draw term loan facility (the “DDTL Facility”). After the Closing Date, the Company is permitted to incur (a) additional term loans under a new term facility to be included in the Senior Credit Facility and/or (b) increases in the Revolving Credit Facility, in an aggregate principal amount not to exceed $30 million, subject to the terms and conditions set forth in the Credit Agreement.

Subject to the conditions set forth in the Credit Agreement, the Revolving Facility is available through October 15, 2031 and the DDTL Facility is available through October 15, 2028.

The Company will begin to make principal payments on the Initial Loan Balance in quarterly installments beginning on April 1, 2027, such that 2.5% of the Initial Loan Balance will be paid in the first year, 5.0% of the Initial Loan Balance will be paid in each of the second and third year, and 7.5% of the Initial Loan Balance will be paid in each of the fourth and fifth year, with the last payment being made on October 1, 2031, and the remaining Initial Loan Balance paid on the October 15, 2031 (the “Maturity Date”). The Company may, upon notice to MUFG pursuant to the Credit Agreement, voluntarily prepay amounts loaned under the Credit Agreement in whole or in part without premium or penalty, subject to certain conditions set forth in the Credit Agreement.

The interest rates that the Company will be charged under the Senior Credit Facility is generally equal to the Term SOFR (as defined in the Credit Agreement’) plus the Applicable Rate (as defined in the Credit Agreement) or, at the the Company’s option, the Base Rate (as defined in the Credit Agreement ) plus the Applicable Rate. The Applicable Rate generally adjusts quarterly based on the Company’s Consolidated Net Leverage Ratio. With respect to Term SOFR loans, the Borrower may select interest periods of one, three or six months. For the Initial Loan Balance, the Company selected a three month interest period for Term SOFR and the interest rate to be charged during the initial three month interest period is 7.04%, calculated on the basis of a year of 360 days and actual days elapsed, reflecting a rate based on Term SOFR plus three percent (3.00%), as provided in the Credit Agreement.

The Company is subject to customary events of default as described in the Credit Agreement, including insolvency of the Company, breaches of certain covenants and representations and warranties, and failures to pay. In such event, and for so long as it continues, the outstanding loan balance will bear interest at a rate per annum, subject to certain exceptions set forth in the Credit Agreement, (i) equal to two percent (2.00%) in excess of the rate otherwise applicable thereto, and (ii) with respect to any loan for which a rate is not specified or available, a rate per annum equal to the Base Rate (as defined in the Credit Agreement), plus (a) the Applicable Rate for revolving loans that are Base Rate Loans (as defined in the Credit Agreement), plus (b) two percent (2.00%), in each case, to the fullest extent permitted by applicable law.

Under the Credit Agreement, the Company covenants to maintain a (i) Consolidated Net Leverage Ratio (as defined in the Credit Agreement), as tested quarterly, no greater than 3.50 to 1.00 (subject to certain conditions set forth therein), and (ii) Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement), as tested quarterly, of not less than 1.25 to 1.00. The Senior Credit Facility is secured by substantially all of the assets of the Company.

In connection with the Credit Agreement, we incurred $1,226 of origination, legal, and other fees that represent debt financing costs to be deferred and amortized over the duration of the Loan Agreement. As a result, net proceeds of the Loan Agreement were $83,774.

In connection with the entry into the Credit Agreement, we terminated the Credit, Security and Guaranty Agreement (the “MC Credit Agreement”), by and among the Company and MidCap Financial Trust (“MidCap”) and the lenders thereto and the secured promissory note (the “Note”) with MidCap, evidencing its obligations under the MC Credit Agreement. In connection with the extinguishment, the Company paid to MidCap for the benefit of lenders under the MC Credit Agreement an aggregate amount of $62,646 (the “Payoff Amount”) in full payment of its outstanding obligations under the MC Credit Agreement and Note. The Payoff Amount represented approximately $60,208 outstanding of principal and interest on the unpaid principal balance and $2,438 of prepayment and termination fees and other expenses due to MidCap.

Sources of Liquidity. As of September 30, 2026, our principal sources of liquidity consisted of $16,780 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. As of October 29, 2026, we have access to the $10.0 million Revolving Facility, and the $20.0 million DDTL Facility. Additionally, we have access to an “at the market offering” program entered in October 31, 2024, under which we may offer and sell up to $25,000 of newly issued shares of common stock. As of September 30, 2026, there are $25,000 of shares of common stock available for issuance under this program.

We cannot ensure that we can grow our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future acquisitions; however, we do believe that we have sufficient liquidity to support our business operations for at least the next twelve months. Future business demands may lead to cash utilization at levels greater than recently experienced or expected. We may need to raise additional capital in the future in order to grow our existing software operations and to seek additional strategic acquisitions in the near future. Further, we cannot ensure that we will be able to raise additional capital on acceptable terms, or at all, or at the time we need it.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are subjective in nature and involve judgments that affect the amounts reported. The Condensed Consolidated Financial Statements and the Notes to the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q, and the Notes to the Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025, describe the significant accounting policies and methods used in the preparation of our consolidated financial statements. There have been no material changes to our critical accounting estimates included in our Annual Report on Form 10-K for the year ended December 31, 2025.

There have been no material changes to our exposure from market risks from those disclosed in the Company’s 2025 Annual Report on Form 10-K for the year ended December 31, 2025.

Evaluation of Disclosure Control and Procedures

The Company maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports filed or submitted by Asure to the SEC is recorded, processed, summarized, and reported, within the time periods specified by the SEC’s rules and forms, and is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management, including the Chief Executive Officer and Chief Financial Officer, performed an evaluation to conclude with reasonable assurance that Asure’s disclosure controls and procedures were designed and operating effectively to report the information each company is required to disclose in the reports they file with the SEC on a timely basis. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer of Asure have concluded that as of September 30, 2026, disclosure controls and procedures were effective.

Change in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the period ended September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, 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.