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Item 7. Management’s Discussion and Analysis

2026-03-30 compared with 2025-03-17 · 115 added, 207 removed, 112 unchanged (74% of the section changed)

7 unchanged sentences

Financial information provided is based on the results of our continuing operations.

Please refer to “Note 4 — Discontinued Operations” of our audited consolidated financial statements for information regarding our discontinued operations.

Please refer to “Note 4 — Discontinued Operations” in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K.

Our historical financial information may not be indicative of our future performance.

Company Overview

We provide workforce solutions to our client partners in a variety of industries through our various divisions in IT, Finance & Accounting, Managed Solutions, and Property Management (apartment communities and commercial buildings) and have completed a series of acquisitions including the acquisition of BG Personnel, LP and B G Staff Services Inc.

in June 2010, substantially all of the assets of JNA Staffing, Inc.

in December 2010, Extrinsic, LLC in December 2011, American Partners, Inc.

in December 2012, InStaff in June 2013, D&W in March 2015, VTS in October 2015, Zycron in April 2017, Smart in September 2017, and LJK in December 2019, 100% of the equity of EdgeRock in February 2020, Momentum Solutionz in February 2021, Horn Solutions in 2022, and Arroyo Consulting in 2023.

We have continuing operations in two industry segments Property Management and Professional, and had discontinued operations in the Light Industrial segment.

We primarily operate within the United States of America.

On May 8, 2024, we announced that our Board of Directors has initiated a process to evaluate potential strategic alternatives and engaged financial advisors in an endeavor to maximize shareholder value (“Strategic alternatives review”).

On March 21, 2022, we sold substantially all of the assets and certain liabilities of InStaff to Sentech Engineering Services, Inc.

The Light Industrial segment provided field talent primarily to manufacturing, distribution, logistics, and call center client partners needing a flexible workforce.

The InStaff financial results for periods prior to the sale have been reflected in our Consolidated Statements of Operations and Comprehensive (Loss) Income and Consolidated Statements of Cash Flows as discontinued operations.

See “Note 4 — Discontinued Operations” of our audited consolidated financial statements for information regarding our discontinued operations.

We provide workforce solutions through the Property Management (apartment communities and commercial buildings) segment that operates primarily within the United States of America (“U.S.”).

With the acquisitions of BG Personnel, LP and B G Staff Services Inc., we laid the foundation for our entrance into the Property Management (“PM”) staffing industry.

Through a series of acquisitions, we diversified into the professional services markets, which included consulting and staffing solutions for both information technology and finance and accounting as well as managed solutions services, which included both workforce solutions and fixed fee arrangements.

We have continuing operations in one industry segment, Property Management, and have discontinued operations the Light Industrial and Professional segments.

On May 8, 2024, the Company announced that our Board had initiated a process to evaluate potential strategic alternatives and engaged financial advisors in an endeavor to maximize shareholder value (“Strategic alternatives review”).

During December 2024, the Company announced a cost restructuring plan as part of the strategic review process.

On June 14, 2025, the Company entered into an Equity Purchase Agreement with INSPYR Solutions Intermediate, LLC, pursuant to which the Company sold substantially all of the outstanding equity and net assets pertaining to the Professional segment (“BGSF Professional”) on September 8, 2025.

The BGSF Professional financial results for periods prior to the sale have been reflected as discontinued operations in the Unaudited Consolidated Financial Statements, see “Note 4 - Discontinued Operations.”

The Property Management segment provides office and maintenance talent in 44 states and D.C., to property management companies responsible for the apartment communities’ and commercial buildings’ day-to-day operations.

The Professional segment provides specialized talent and business consultants for information technology (“IT”), managed services, finance, accounting, legal and human resource.

The segment operates across the U.S.

in three divisions, IT, Managed Solutions, and Finance & Accounting, with the IT division providing additional nearshore and offshore solutions in Colombia and India.

The Company normally experiences seasonal fluctuations.

The quarterly operating results are affected by the number of billing days in a quarter, as well as the seasonality of client partners’ business.

Demand for the Property Management workforce solutions has typically increased in the second quarter and is highest during the third quarter of the year due to the increased turns in multifamily units during the summer months when schools are not in session.

Overall first quarter demand can be affected by adverse weather conditions in the winter months.

Results of Operations

The following tables summarize key components of our results from continuing operations for the periods indicated, both in dollars and as a percentage of revenues, and have been derived from our consolidated financial statements.

Fiscal Year Ended

Fiscal Years Ended

2025 December 29,

2023 January 1,

2024 December 31,

(dollars in thousands)

3 unchanged sentences

Selling, general, and administrative expenses 41,136 42,902 45,402

Gain on contingent consideration (1,452) — —

Impairment losses — 22,545 —

Contingent consideration adjustment (450) — —

Depreciation and amortization 1,550 1,334 1,313

Operating income (loss) 1,213 (7,185) 16,283

Operating (loss) income (8,903) (5,867) 3,070

Interest expense, net (4,511) (4,921) (5,976)

(Loss) income before income taxes from continuing operations (3,708) (13,161) 14,920

Income tax benefit (expense) from continuing operations 370 2,938 (3,659)

(Loss) income from continuing operations (3,338) (10,223) 11,261

Income from discontinued operations:

Income — — 1,235

Gain on sale — — 17,675

Income tax expense — — (4,810)

Net (loss) income $ (3,338) $ (10,223) $ 25,361

Fiscal Year Ended

Loss before income taxes from continuing operations (13,414) (10,788) (2,906)

Income tax benefit from continuing operations 1,881 2,084 831

Net loss from continuing operations $ (11,533) $ (8,704) $ (2,075)

Fiscal Years Ended

2025 December 29,

2023 January 1,

2024 December 31,

Revenues 100.0 % 100.0 % 100.0 %

2 unchanged sentences

Selling, general, and administrative expenses 44.1 41.1 36.3

Gain on contingent consideration (0.5) — —

Impairment losses — 7.2 —

Contingent consideration adjustment (0.5) — —

Depreciation and amortization 1.7 1.3 1.0

Operating income (loss) 0.4 (2.3) 5.5

Operating (loss) income (9.6) (5.6) 2.5

Interest expense, net (4.8) (4.7) (4.8)

(Loss) income before income taxes from continuing operations (1.4) (4.2) 5.0

Income tax benefit (expense) from continuing operations 0.2 0.9 (1.2)

(Loss) income from continuing operations (1.2) % (3.3) % 3.8 %

Loss before income taxes from continuing operations (14.4) (10.3) (2.3)

Income tax benefit from continuing operations 2.1 2.0 0.7

Net loss from continuing operations (12.3) % (8.3) % (1.6) %

Fifty-two Week Fiscal Year Ended December 28, 2025 (Fiscal 2025) Compared with Fifty-two Week Fiscal Year Ended December 29, 2024 (Fiscal 2024)

Fiscal Year Ended

Fiscal Years Ended

2025 December 29,

(dollars in thousands)

Revenues by Segment:

Property Management $ 104,402 38.3 % $ 125,077 39.9 %

Professional 168,098 61.7 % 188,090 60.1 %

Total Revenues $ 272,500 100.0 % $ 313,167 100.0 %

Property Management Revenues :

Property Management revenues decreased approximately $20.7 million (16.5%).

The decrease was primarily due to a reduction in billed hours, which was driven by a combination of increased competition in certain markets and lower demand from cost pressures at the property management companies.

Professional Revenues :

Professional revenues decreased approximately $20.0 million (10.6%).

The April 2023 Arroyo Consulting acquisition contributed $5.6 million of incremental revenues with thirty-six weeks in prior period compared to fifty-two weeks in current period.

The remaining Professional segment decrease of $25.6 million (13.6%) is primarily due to a decline in billed hours in the Finance and Accounting division, as clients continued to delay projects or expand project timelines using less field talent in the IT division.

The Professional segment decrease was partially offset by growth in the Managed Solutions division.

Revenues $ 93,310 $ 104,402

Gross profit $ 33,333 $ 38,369

Gross profit represents revenues from workforce solutions less cost of services expenses, which consist of payroll, payroll taxes, payroll-related insurance, field talent costs, and reimbursable costs.

Fiscal Year Ended

2024 December 31,

(dollars in thousands)

Gross Profit by Segment:

Property Management $ 38,369 41.3 % $ 49,785 44.5 %

Professional 54,494 58.7 % 61,999 55.5 %

Total Gross Profit $ 92,863 100.0 % $ 111,784 100.0 %

Fiscal Year Ended

2024 December 31,

Gross Profit Percentage by Segment:

Property Management 36.8 % 39.8 %

Professional 32.4 % 33.0 %

Company Gross Profit Percentage 34.1 % 35.7 %

Total Company gross profit decreased approximately $18.9 million (16.9%) due to reduced customer demand in both segments.

As a percentage of revenue, gross profit has decreased to 34.1% from 35.7%, primarily due to the margin decline in Property Management.

Property Management Gross Profit:

Property Management gross profit decreased approximately $11.4 million (22.9%).

The decrease was primarily due to to a reduction in revenue, which was driven by a combination of increased competition in

certain markets, lower demand from cost pressures at the property management companies and lower permanent placement business, which has no cost of service.

Professional Gross Profit:

Professional gross profit decreased approximately $7.5 million (12.1%).

The April 2023 Arroyo Consulting acquisition contributed $1.8 million of incremental gross profit with thirty-six weeks in prior period compared to fifty-two weeks in current period.

The remaining Professional segment declined $9.3 million (15.0%) primarily due to lower revenue, which was partially offset by growth in the Managed Solutions division.

Gross profit percentage 35.7 % 36.8 %

Revenues decreased approximately $11.1 million (10.6%).

The decrease was primarily due to a 12.1% reduction in billed hours, which was driven by a combination of lower demand from cost pressures on property owners and property management companies and increased competition in certain markets with partial offsets by higher permanent placement business, average bill rate, and multi-family property owners.

Gross Profit:

Gross profit decreased approximately $5.1 million (13.1%) which is in line with revenues with a partial offset by higher permanent placement business that have no cost of service.

Selling, General, and Administrative Expenses:

Selling, general and administrative (“SGA”) expenses decreased $3.3 million (3.7%) primarily due to expense reduction and cost control efforts in response to the decline in revenues.

Selling, general and administrative (“SGA”) expenses decreased $1.8 million (4.1%) primarily due to reduced compensation costs on less headcount offset by an increase in strategic alternatives review.

The components of SGA expense are detailed in the following table:

Fiscal Year Ended

Fiscal Years Ended

2025 December 29,

1 unchanged sentence

(dollars in thousands)

Selling $ 22,961 24.6 % $ 24,631 23.6 % $ (1,670) (6.8) %

General and administrative:

Compensation and related 8,290 8.9 9,394 9.0 (1,104) (11.8) %

Advertising and recruitment 2,099 1 2,111 1 (12) (1)

Occupancy and office operations 3,200 1 3,310 1 (110) (3)

Travel, meals and entertainment 1,215 — 1,349 — (134) (10)

Software 2,875 3.1 2,862 2.7 13 0.5 %

1 unchanged sentence

Professional fees 1,938 2.1 1,899 1.8 39 2.1 %

Public company related costs 1,056 — 851 — 205 24

Bad debt 2,066 1 798 — 1,268 159

Share-based compensation 1,006 1.1 908 0.9 98 10.8 %

Strategic alternatives review 2,519 2.7 962 0.9 1,557 161.9 %

Cost restructuring plan 230 — — — 230 100

Transaction fees 48 — 974 — (926) (95)

Workers’ compensation loss retention return (95) — (491) — 396 (81)

Other 398 0.4 1,247 1.2 (849) (68.1) %

Total $ 41,136 44.1 % $ 42,902 41.1 % $ (1,766) (4.1) %

Gain on contingent consideration:

As a result of the certain business developments in Fiscal 2024, the Company recognized a $1.5 million gain on contingent consideration related to the 2023 Arroyo Consulting acquisition.

Contingent consideration adjustment:

As a result of the certain business developments in Fiscal 2025, the Company recognized a $0.5 million contingent consideration adjustment related to the sale of BGSF Professional, see “Note 4 - Discontinued Operations.”

Depreciation and Amortization:

Depreciation and amortization charges were flat due to the increase in software amortization that was partially offset by the decrease in client partner lists amortization.

Depreciation and amortization charges increased approximately $0.2 million (16.2%) primarily due to higher amortization of intangible assets for computer software depreciation.

Interest Expense, net:

Interest expense, net decreased $1.1 million (17.7%) primarily due to reduced accretion in 2024 on contingent consideration associated with Arroyo Consulting and the lower average balance on the Revolving Facility, which was partially offset by the increase in debt issuance costs.

Income Taxes:

Income tax benefit decreased $2.6 million (87.4%) primarily due to a higher taxable loss in 2023 related to the trade name impairment.

Fifty-two Week Fiscal Year Ended December 31, 2023 (Fiscal 2023) Compared with Fifty-three Week Fiscal Year Ended January 1, 2023 (Fiscal 2022)

Fiscal Year Ended

2023 January 1,

Interest expense, net decreased $0.4 million (8.3%) primarily from paying the balance on the amended and restated credit agreement with BMO, using the proceeds from the sale of BGSF Professional, which was partially offset by the write off of amortization of debt issuance costs from the BMO May 2025 Waiver and Amendment.

Income Tax Benefit:

Income tax benefit decreased $0.2 million (9.7%) primarily due to an increased net loss before taxes and a lower effective tax rate in Fiscal 2025, which was partially offset by a $1.5 million valuation allowance recorded during Fiscal 2025 against certain net deferred tax assets generated in the sale of BGSF Professional and lower state tax expense.

Fifty-two Week Fiscal Year Ended December 29, 2024 (Fiscal 2024) Compared with Fifty-three Week Fiscal Year Ended December 31, 2023 (Fiscal 2023)

Fiscal Years Ended

2024 December 31,

(dollars in thousands)

Revenues by Segment:

Property Management $ 125,077 39.9 % $ 121,093 40.6 %

Professional 188,090 60.1 % 177,329 59.4 %

Total Revenues $ 313,167 100.0 % $ 298,422 100.0 %

Property Management Revenues :

Property Management revenues increased approximately $4.0 million (3.3%), primarily due to an 8.5% increase in average bill rate.

Professional Revenues :

Professional revenues increased approximately $10.8 million (6.1%).

The 2023 Arroyo Consulting acquisition contributed $14.8 million of new revenues.

The Horn Solutions acquisition, which was integrated with the organic business, added revenue that was not enough to offset the decline in the existing professional business.

Horn Solutions and the existing professional business declined $4.1 million (2.3%), primarily due to fewer hours billed and lower permanent placement revenue.

Revenues $ 104,402 $ 125,077

Gross profit $ 38,369 $ 49,785

Fiscal Year Ended

2023 January 1,

(dollars in thousands)

Gross Profit by Segment:

Property Management $ 49,785 44.5 % $ 47,695 46.1 %

Professional 61,999 55.5 % 55,853 53.9 %

Total Gross Profit $ 111,784 100.0 % $ 103,548 100.0 %

Fiscal Year Ended

2023 January 1,

Gross Profit Percentage by Segment:

Property Management 39.8 % 39.4 %

Professional 33.0 % 31.5 %

Company Gross Profit Percentage 35.7 % 34.7 %

Total gross profit increased approximately $8.2 million (8.0%).

As a percentage of revenue, gross profit has increased to 35.7% from 34.7%, with both segments contributing to the increase.

Property Management Gross Profit:

Property Management gross profit increased approximately $2.1 million (4.4%), consistent with a 3.3% increase in revenues, partially offset by lower permanent placement revenue, which has no cost of services.

Professional Gross Profit:

Professional gross profit increased approximately $6.1 million (11.0%).

The Arroyo Consulting acquisition contributed $5.1 million in gross profit.

The Horn Solutions acquisition, which was integrated with the organic business, added growth to offset the decline experienced in the existing professional business.

Gross profit percentage 36.8 % 39.8 %

Revenues decreased approximately $20.7 million (16.5%).

Gross Profit:

Gross profit decreased approximately $11.4 million (22.9%).

The decrease was primarily due to to a reduction in revenue, which was driven by a combination of increased competition in certain markets, lower demand from cost pressures at the property management companies and lower permanent placement business, which has no cost of service.

Selling, General, and Administrative Expenses:

SGA expenses increased $5.4 million (6.5%) versus prior year.

The overall increase slightly outpaced revenue growth adding 40 bps to total SGA expense as a percent of revenue.

Acquisition transaction fees increased $0.7 million over the prior year.

Fiscal Year Ended

2023 January 1,

SGA expenses decreased $2.5 million (5.5%) versus prior year, primarily due to expense reduction and cost control efforts in response to the decline in revenues.

The components of SGA expense are detailed in the following table:

Fiscal Years Ended

2024 December 31,

Amount % of Revenue Amount % of Revenue $

(dollars in thousands)

Selling $ 24,631 23.6 % $ 26,427 21.1 % $ (1,796) (6.8) %

General and administrative:

Compensation and related 9,394 9.0 10,215 8.2 (821) (8.0) %

Advertising and recruitment 2,111 1 1,987 1 124 6

Occupancy and office operations 3,310 1 2,773 1 537 19

Travel, meals and entertainment 1,349 — 1,044 — 305 29

Software 2,862 2.7 2,720 2.2 142 5.2 %

1 unchanged sentence

Professional fees 1,899 1.8 2,066 1.7 (167) (8.1) %

Public company related costs 851 — 734 — 117 16

Bad debt 798 — 315 — 483 153

Share-based compensation 908 0.9 957 0.8 (49) (5.1) %

Transaction fees 974 — 271 — 703 259

Workers’ compensation loss retention return (491) — (117) — (374) 320

Strategic alternatives review 962 0.9 — — 962 — %

Other 1,247 1.2 2,037 1.6 (790) (38.8) %

Total $ 42,902 41.1 % $ 45,402 36.4 % $ (2,500) (5.5) %

Impairment losses:

In Fiscal 2023, managements’s plan to eliminate the use of various trade names was approved by the Board of Directors.

The decision to rebrand as BGSF created a $22.5 million write-off in trade names.

Depreciation and Amortization:

Depreciation and amortization charges increased $3.7 million (91.8%).

The increase in deprecation and amortization is primarily due to the amortization of intangible assets related to the 2022 Horn Solutions acquisition and the 2023 Arroyo Consulting acquisition.

Depreciation and amortization charges were flat due to the increase in software amortization that was partially offset by the decrease in computer equipment.

Interest Expense, net:

Interest expense, net increased $4.6 million primarily due to the increased debt balances related to the 2022 Horn Solutions acquisition, the 2023 Arroyo Consulting acquisition, and higher interest rates.

Income Taxes:

We recorded a tax benefit of approximately $2.9 million primarily due impairment losses on the trade names in the first quarter versus a tax expense of $3.7 million in 2022.

Non-GAAP Same Day Revenues:

Same Day Revenues are defined as a fifty-three week fiscal year ended January 1, 2023 (Fiscal 2022) revenues less five revenue days.

The Fiscal 2022 revenues of $298.4 million would be less $5.9 million for five revenue days resulting in Same Day Revenues of $292.5 million.

Same Day Revenues increased $20.7 million (7.1%) to $313.2 million in Fiscal 2023.

Same Day Revenues and GAAP revenues were equal for Fiscal 2023.

Non-GAAP Same Day Gross Profit:

Same Day Gross Profit is defined as a fifty-three week fiscal year ended January 1, 2023 (Fiscal 2022) gross profit less five gross profit days.

The Fiscal 2022 gross profit of $103.5 million would be less $2.1 million for five gross profit days resulting in Same Day Gross Profit of $101.5 million.

Same Day Gross Profit increased $10.3 million (10.2%) to $111.8 million in Fiscal 2023.

Same Day Gross Profit and GAAP gross profit were equal for Fiscal 2023.

Interest expense, net decreased $1.1 million (17.7%) primarily due to reduced accretion in Fiscal 2024 on contingent consideration associated with Arroyo Consulting and the lower average balance on the Revolving Facility, which was partially offset by the increase in debt issuance costs.

Income Tax Benefit:

Income tax benefit increased $1.3 million (150.8%) primarily due to a lower taxable loss in Fiscal 2023.

Liquidity and Capital Resources

1 unchanged sentence

Since receipts from client partners lag payments to field talent, working capital requirements increase substantially in periods of growth.

Our primary sources of liquidity are cash generated from operations and borrowings under our first amendment under our amended and restated credit agreement with BMO, that provides for a revolving credit facility maturing December 31, 2026 (the “Revolving Facility”).

Our primary sources of liquidity were cash generated from operations and borrowings under our amended and restated credit agreement with BMO, that provided for a revolving credit facility (the “Revolving Facility”).

On September 8, 2025, we paid the balance on the existing Term Loan and Revolving Facility using the proceeds from the sale of BGSF Professional.

We do not currently have access to a revolving credit facility.

On September 30, 2025, we paid a $2.00 per share special cash dividend.

Our primary uses of cash are payments to field talent, team members, related payroll liabilities, operating expenses, capital expenditures, cash interest, cash taxes, contingent consideration, and debt payments.

We believe that the cash generated from operations, together with the borrowing availability under our Revolving Facility, will be sufficient to meet our normal working capital needs for at least the next twelve months, including investments made, and expenses incurred, in connection with opening new markets throughout the next year.

We believe that the cash generated from operations will be sufficient to meet our normal working capital needs for at least the next twelve months, including investments made, and expenses incurred, in connection with opening new markets throughout the next year.

Our ability to continue to fund these items may be affected by general economic, competitive and other factors, many of which are outside of our control.

If our future cash flow from operations and other capital resources are insufficient to fund our liquidity needs, we may be forced to obtain additional debt or equity capital or refinance all or a portion of our debt.

While we believe we have sufficient liquidity and capital resources to meet our current operating requirements and expansion plans, we may elect to pursue additional growth opportunities within the next year that could require additional debt or equity financing.

If we are unable to secure additional financing at favorable terms in order to pursue such additional growth opportunities, our ability to pursue such opportunities could be materially adversely affected.

If our future cash flow from operations and other capital resources are insufficient to fund our liquidity needs, we may be forced to obtain new debt or equity capital.

If we are unable to secure new financing at favorable terms in order to pursue such additional growth opportunities, our ability to pursue such opportunities could be materially and adversely affected.

A summary of our working capital, operating, investing, and financing activities are shown in the following table:

Fiscal Year Ended

Fiscal Years Ended

2025 December 29,

2023 January 1,

2024 December 31,

(dollars in thousands)

1 unchanged sentence

$ 29,116 $ 6,897 $ (38,156)

Net cash provided by (used in) continuing operations:

Net cash (used in) provided by continuing operations:

Operating activities $ 117 $ 19,385 $ 12,922

1 unchanged sentence

Financing activities (72,521) (18,136) (10,770)

Net change in cash and cash equivalents discontinued operations — — (3,848)

Net change in cash and cash equivalents $ 353 $ — $ (112)

Cash and cash equivalents, beginning of year 32 — —

Net change in cash and cash equivalents, continuing operations $ 19,018 $ 32 $ —

(1) The 2023 working capital amount includes the movement of the balances from long-term to current liabilities related to the amended credit agreement with BMO Harris Bank, N.A.

1 unchanged sentence

Operating Activities

Cash provided by operating activities consists of net (loss) income adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, interest expense, provision for credit losses, impairment losses, contingent consideration adjustment, and the effect of working capital changes.

The primary drivers of cash inflows and outflows are accounts receivable, accrued payroll and expenses, prepaid expenses and other current assets.

Cash provided by operating activities consists of net loss adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, interest expense, and provision for credit losses.

The primary drivers of cash inflows and outflows are accounts receivable, transition services payable, other current assets, and accrued payroll and expenses.

During Fiscal 2025, net cash provided by continuing operating activities was $0.1 million, a decrease of $19.3 million compared with $19.4 million net cash provided by continuing operating activities for Fiscal 2024.

This decrease is primarily attributable to decreased receipts on accounts receivable, increased payments on accrued payroll and expenses, increased payments on transition services payable, the recording of an escrow receivable related to the sale of BGSF Professional, and decreased payments on other current assets.

During Fiscal 2024, net cash provided by continuing operating activities was $19.4 million, an increase of $6.5 million compared with $12.9 million net cash provided by continuing operating activities for Fiscal 2023.

This increase is primarily attributable to increased payments on accounts receivable, decreased payments on accrued payroll and expenses, and within prepaid expenses and other current assets there were payments made in 2024 related to the 2023 Arroyo Consulting acquisition which were partially offset by payments received in 2023 related to sale of the Light Industrial segment.

This increase is primarily attributable to increased receipts on accounts receivable and decreased payments on accrued payroll and expenses.

During Fiscal 2023, net cash provided by continuing operating activities was $12.9 million, an increase of $16.2 million compared with $3.3 million net cash used in continuing operating activities for Fiscal 2022.

This increase is primarily attributable to payments on accounts receivable, payments on accrued payroll and expenses, and payments of deferred employer FICA for the CARES Act in other current liabilities in Fiscal 2022.

During Fiscal 2022, net cash used in continuing operating activities was $3.3 million, a decrease of $4.7 million compared with $1.4 million net cash provided by continuing operating activities for Fiscal 2021.

This decrease is primarily attributable to field talent and team member compensation disbursements including bonuses, commissions, and related taxes for services rendered in accrued payroll and expenses, an increase in accounts receivable, and payments of deferred employer FICA for the CARES Act in other current liabilities.

This increase is primarily attributable to receipts on accounts receivable, payments on accrued payroll and expenses, and payments of deferred employer FICA for the CARES Act in other current liabilities in Fiscal 2022.

Investing Activities

Cash used in investing activities consists primarily of cash paid for businesses acquired net of cash required, cash received for businesses sold, and capital expenditures.

In Fiscal 2024, we made capital expenditures of $1.6 million mainly related to continued IT improvements.

In Fiscal 2023, we paid $6.8 million in connection with the Arroyo Consulting acquisition, funded a working capital payment of $0.1 million in connection with the Horn Solutions acquisition, and made capital expenditures of $2.6 million mainly related to continued IT improvements and for software and computer equipment purchased in the ordinary course of business.

In Fiscal 2022, we received $30.7 million in connection with the sale of InStaff, we paid $33.9 million in connection with the Horn Solutions acquisition, and we made capital expenditures of $5.7 million mainly related to the the IT improvement project and for software and computer equipment purchased in the ordinary course of business.

Cash provided by investing activities consists primarily of cash received for business sold and capital expenditures.

In Fiscal 2025, cash provided by investing activities from continuing operations consists primarily of net proceeds from the sale of BGSF Professional of approximately for $91.4 million, which was partially offset by minimal capital expenditures.

In Fiscal 2024, we made capital expenditures of $1.2 million from continuing operations mainly related to continued IT improvements.

In Fiscal 2023, we made capital expenditures of $2.1 million from continuing operations mainly related to continued IT improvements and for software and computer equipment purchased in the ordinary course of business.

Financing Activities

Cash flows from financing activities consisted principally of borrowings and payments under our credit agreement, payment of dividends, payment of issuance costs, and contingent consideration paid.

For Fiscal 2024, we reduced our Revolving Facility by $18.5 million, we made a payment of $4.3 million of contingent consideration related to the Arroyo Consulting Acquisition using the funds borrowed on our Term Loan, we paid down $1.7 million on the Term Loan, we disbursed $1.6 million in cash dividends on our common stock, and we paid $1.3 million in debt issuance costs.

For Fiscal 2023, we disbursed $6.5 million in cash dividends on our common stock, we paid down $6.0 million on the Term Loan, we paid $1.1 million of contingent consideration related to the Momentum acquisition, and borrowed $2.3 million on our Revolving Facility for increased working capital needs.

For Fiscal 2022, we received $40.0 million on the issuance of the New Term Loan, we paid down $26.9 million on the Term Loan, as discussed below, we disbursed $6.3 million in cash dividends on our common stock, we paid $1.1 million of contingent consideration related to the Momentum acquisition, and borrowed $9.8 million on our Revolving Facility for increased working capital needs.

Cash flows from financing activities consisted principally of borrowings and repayments under our credit agreement, special cash dividends, repurchases of our common stock, and contingent consideration paid.

For Fiscal 2025, we paid off our credit agreement of $42.9 million and the convertible unsecured promissory note of $4.4 million.

We paid $1.4 million of contingent consideration related to Arroyo Consulting, we paid $22.4 million in cash dividends on our common stock, and repurchased $1.5 million of our common stock.

For Fiscal 2024, we reduced our credit agreement by $15.9 million, we disbursed $1.6 million in cash dividends on our common stock, and we paid $1.3 million in debt issuance costs.

For Fiscal 2023, we disbursed $6.5 million in cash dividends on our common stock and we reduced our Credit Agreement by $4.7 million.

Credit Agreements

On July 16, 2019, we entered into a Credit Agreement (the “Credit Agreement”), which would have matured on July 16, 2024, led by BMO, as lead administrative agent, lender, letters of credit issuer, and swing line lender.

We entered into four amendments from August 18, 2022 through May 19, 2023, which changed the interest rate component from LIBOR to the Secured Overnight Financing Rate (“SOFR”), exercised the option to borrow $40 million, required 2.5% of the original principal balance of the new term loan, permitted a foreign entity acquisition, modified the distributions terms, and increased a revolving credit facility (the "Revolving Facility") by $6.0 million.

On March 13, 2024, the Credit Agreement was amended and restated through our entry into an Amended and Restated Credit Agreement, which would have matured on March 13, 2028, led by BMO as administrative agent, letter of credit issuer, and swing line lender (the “Restated Agreement”).

The Restated Agreement provided for a Revolving Facility which permitted

us to borrow funds in an aggregate amount up to $40 million.

On September 8, 2025, we paid the balance on the existing Term Loan and Revolving Facility using the proceeds from the sale of BGSF Professional.

On July 16, 2019, we entered into a Credit Agreement.

We entered into four amendments from August 18, 2022 through May 19, 2023, which changed the interest rate component from LIBOR (“London Interbank Offered Rate”) to the Secured Overnight Financing Rate (“SOFR”), exercised the option to borrow $40 million, required 2.5% of the original principal balance of the new term loan, permitted a foreign entity acquisition, modified the distributions terms, and increased a revolving credit facility by $6.0 million.

On March 12, 2024, the Credit Agreement was amended and restated (the “Restated Agreement”), which provided for a Revolving Facility which permitted us to borrow funds in an aggregate amount up to $40 million.

The Restated Agreement also provided for a term loan commitment, which permitted us to borrow funds from time to time (the “Term Loan”).

In July 2024, we exercised the option to borrow on a delayed draw term loan of $4.3 million related to payments on the Arroyo Consulting Acquisition's working capital “true up”, hold backs, and year one contingent consideration.

On November 6, 2024, we entered into the First Amendment to Amended and Restated Credit Agreement, maturing December 31, 2026, led by BMO as administrative agent, letter of credit issuer, and swing line lender (the “First Credit Amendment”).

The availability on the Revolving Facility, which permits us to borrow funds from time to time, was reduced in an aggregate amount up to $20 million.

We are required to repay the Term Loan in quarterly principal installments equal to 2.5% of the aggregate principal balance.

The First Credit Amendment provides for interest either at the Base Rate plus the Applicable Margin, or the Adjusted Term SOFR plus the Applicable Margin (as defined in the First Credit Amendment).

Our obligations are secured by a first priority security interest in substantially all our tangible and intangible property.

The First Credit Amendment provides for amended financial covenants with a maximum Leverage Ratio, a minimum Fixed Charge Coverage Ratio, and a minimum EBITDA (as such terms are defined in the First Credit Amendment).

We will pay an unused commitment fee on the daily average unused amount of Revolving Facility.

We were not in compliance with the foregoing financial covenants as of the fiscal quarter ended December 29, 2024.

We were also not in compliance with certain affirmative covenants, and we anticipated that we would not be in compliance with the foregoing financial covenants as of the fiscal quarter ended March 31, 2025.

On March 13, 2025, we entered into a Waiver and Second Amendment to Amended and Restated Credit Agreement (the “Second Amendment”) pursuant to which, among other things, the lenders unanimously waived noncompliance with the foregoing covenants as of December 29, 2024 and March 31, 2025, and certain amendments were made to the Amended and Restated Credit Agreement including, but not limited to, a new definition of Applicable Margin, a reduction of the swing line sublimit to zero, and limiting the aggregate revolving credit borrowings to $8 million.

The amendments described in the Second Amendment are effective as of March 13, 2025, subject to the satisfaction or waiver of certain conditions described therein relating to, among other things, debt financing and refinancing and our previously announced strategic alternatives review.

On November 6, 2024, we entered into the First Amendment to Restated Agreement, which reduced the availability on the Revolving Facility an aggregate amount up to $20 million.

On March 13, 2025, we entered into a Waiver and Second Amendment to Restated Agreement in which the lenders unanimously waived noncompliance with the covenants as of December 29, 2024 and March 30, 2025 and a new definition of

Applicable Margin, a reduction of the swing line sublimit to zero, and limiting the aggregate revolving credit borrowings to $8.0 million.

On May 7, 2025, we entered into a Waiver and Amendment in which the lenders unanimously waived noncompliance on the requirement of least $2.0 million in cash equity contributions by extending the deadline and adding the option of subordinated debt.

On August 4, 2025, we entered into a Waiver and Amendment in which the lenders unanimously waived noncompliance with the foregoing covenants as of June 29, 2025 and that provided that we would finalize and close the sale BGSF Professional no later than September 30, 2025.

We were required to repay the Term Loan in quarterly principal installments equal to 2.5% of the aggregate principal balance.

We paid an unused commitment fee on the daily average unused amount of Revolving Facility.

Our obligations were secured by a first priority security interest in substantially all our tangible and intangible property.

We obtained the waivers described above for the non compliance with the foregoing financial covenants and certain affirmative covenants as of the quarters ended December 29, 2024, March 30, 2025, and June 29, 2025.

Contractual Obligations

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Total Less than 1

year 1–3 years 3–5 years More than 5

year 1–3 years 3–5 years

(dollars in thousands)

Long-term debt obligations

$ 42,945 $ 3,825 $ 39,120 $ — $ —

Contingent consideration 2,750 2,750 — — —

Convertible note 4,368 4,368 — — —

Note payable $ 449 $ 449 $ — $ —

Operating lease obligations 786 450 216 120

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Letter of Credit

In March 2020, in conjunction with the 2020 EdgeRock acquisition, we entered into a standby letter of credit arrangement, which expires December 31, 2024, for purposes of protecting a lessor against default on lease payments.

As of December 29, 2024, we had a maximum financial exposure from this standby letter of credit totaling $0.1 million, all of which is considered usage against our Revolving Facility.

In conjunction with a previous acquisition, we entered into a standby letter of credit arrangement, which expired, for purposes of protecting a lessor against default on lease payments.

As of December 29, 2024, we had a maximum financial exposure from this standby letter of credit totaling $0.1 million and no liability had been recorded, all of which was considered usage against our Revolving Facility.

On September 8, 2025, we assigned the related lease in the sale of BGSF Professional.

Critical Accounting Policies and Estimates

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Revenue Recognition

We derive our revenues from continuing operations in our Property Management and Professional segments.

We provide workforce solutions, placement services, and managed services.

Revenues are recognized when promised workforce solutions are delivered to client partners, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

We derive our revenues from continuing operations by providing workforce solutions and placement services.

Revenues are recognized when promised solutions are delivered to client partners, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

We recognize revenue through the following types of services:

workforce solutions, contingent placements, and managed services.

workforce solutions and contingent placements.

Intangible Assets

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Intangible assets with finite useful lives are amortized over their respective estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is realized.

We develop and implement software modifications to our IT infrastructure with direct internal payroll costs and external costs capitalized.

We develop and implement software modifications to our information technology infrastructure with direct internal payroll costs and external costs capitalized.

Minor upgrades and enhancements to software systems are are expensed in the period incurred as software maintenance and training costs.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis