COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2025

Commitments and Contingencies Disclosure [Abstract]

Lease Commitments

We have entered into office space lease agreements, which qualify as operating leases under ASU No. 2016-02, “Leases (Topic 842)”. Under such leases, we have commitments to pay annual minimum (base) rent. The leases have original terms (excluding extension options) ranging from one to ten years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We record base rent expense under the straight-line method over the term of the lease. In the accompanying Consolidated Statements of Comprehensive Loss, rent expense is included in operating expenses under general and administrative expenses.

We have entered into a software license agreement, which qualifies as a finance lease under ASC 842 (“Leases”). Under this lease, the lessor receives fixed payments over a period of four years, after which we take ownership of the software and source code. The resulting software asset is included in property and equipment, net, in the accompanying Consolidated Balance Sheets. We record amortization for the related asset over its useful life on a straight-line basis and recognize interest expense under the effective interest method over the term of the lease. In the accompanying Consolidated Statements of Comprehensive Loss, these expenses are included in general and administrative expenses and interest expense, respectively.

The components of the lease-related expenses for the years ended December 31, 2025 and 2024, are as follows (in thousands):


	2025		2024
Operating lease cost:
Rent expense	$	2,262	$	1,948
Sublease income	—		(4)
Total operating lease cost	$	2,262	$	1,944

Finance lease cost:
Amortization of assets	$	19	$	—
Interest on lease liabilities	10		—
Total finance lease cost	$	29	$	—

For purposes of calculating the operating lease assets and lease liabilities, extension options are not included in the lease term unless it is reasonably certain we will exercise the option, or the lessor has the sole ability to exercise the option. The weighted average discount rate of our operating leases is 10% as of December 31, 2025 and 2024. The weighted average remaining lease term for our operating leases is three years and four years as of December 31, 2025 and 2024, respectively. The discount rate of our finance lease is 11% as of December 31, 2025. The remaining lease term for our finance lease is four years as of December 31, 2025.

Supplemental cash flow information related to leases for the years ended December 31, 2025 and 2024, are as follows (in thousands):


	2025		2024
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash outflows from operating leases	$	2,265	$	2,106
Non-cash activities:
Operating lease assets obtained or removed in exchange for new, modified or terminated operating lease liabilities	$	3,547	$	419
Finance lease assets obtained or removed in exchange for new, modified, or terminated finance lease liabilities	$	284	$	—

Future minimum commitments over the life of all operating and financing leases, which exclude variable rent payments, are as follows for the periods presented below (in thousands):


	Operating Leases		Finance Leases
2026	$	2,514	$	88
2027	2,376		88
2028	2,110		87
2029	1,035		58
2030	208		—
Thereafter	27		—
Total minimum lease payments	8,270		321
Less: imputed interest	(1,358)		(56)
Total lease liabilities	$	6,912	$	265

Contingencies

Although we have been, are, and in the future may be, the defendant or plaintiff in various actions arising in the normal course of business, as of December 31, 2025, we were not currently a party to any material legal proceedings.

ASURE SOFTWARE INC 10-K