What changed in this filing

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Item 1A. Risk Factors

2025-12-10 compared with 2024-12-04 · 49 added, 32 removed, 386 unchanged (17% of the section changed)

10 unchanged sentences

Government as of September 30, 2025 and 2024.

However, in 2025, the U.S.

administration began efforts to reduce federal spending and the size of the federal workforce.

In addition, the General Services Administration ("GSA") has instructed all federal agencies to review their contracts with consulting firms and technology product resellers contracting with the U.S.

federal government.

These and similar spending reductions and contract reviews have resulted in and are likely to continue to result in contract terminations, delays and cancellations of new procurements, and reductions in price and contract scope, which have had an adverse effect on our results, and could in the future have a material impact on our results of operations or financial condition.

We expect that Federal government contracts will continue to be our primary source of revenue for the foreseeable future.

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DLH submitted revised proposals with its SDVOSB partner as prime contractor on certain of the opportunities.

During the fiscal year ended September 30, 2024, the VA awarded one of the task orders to a SDVOSB that is unaffiliated with DLH.

While the acquisition process is being conducted, DLH continues to operate as the prime contractor for the seven CMOP locations that it currently manages.

Our results of operations, cash flows and financial condition would be materially adversely affected if we were unable to continue our relationship with either of these customers, if we were to lose any of our material current contracts, or if the amount of services we provide to them is materially reduced.

During this solicitation process, the VA has awarded three task orders to SDVOSBs unaffiliated with DLH.

While the acquisition process is being conducted, DLH continues to operate as the prime contractor for the remaining CMOP locations that it currently manages.

In addition, our performance under a contract with HHS in support of its Head Start program was completed as of October 31, 2025 and the customer transitioned services to a new small business prime contractor unaffiliated with us.

In light of the decisions by these customers to award contracts to new prime contractors on a set-aside basis, our results of operations, cash flows and financial condition have been be adversely affected.

Our results of operations, cash flows and financial condition will be further adversely affected if we were unable to continue our relationship with either of these customers, if we were to lose any more of our material current contracts, or if the amount of services we provide to them is further reduced.

government may prefer veteran-owned, minority-owned, women-owned and small disadvantaged businesses;

3 unchanged sentences

In such cases, we would not be eligible to perform as a prime contractor on those programs and would be limited to work as a subcontractor on those programs.

As previously reported, various agencies within the federal government have policies that support small business goals, including the adoption of the “Rule of Two” by the VA, which provides that the agency shall award contracts by restricting competition for the contract to service-disabled or other veteran owned businesses.

As previously reported and described elsewhere herein in further detail, various agencies within the federal government have policies that support small business goals, including the adoption of the “Rule of Two” by the VA, which provides that the agency shall award contracts by restricting competition for the contract to service-disabled or other veteran owned businesses.

To restrict competition pursuant to this rule, the contracting officer must reasonably expect that at least two of these businesses, which are capable of delivering the services, will submit offers and that the award can be made at a fair and reasonable price that offers the best value to the U.S.

The effect of these set-aside provisions may limit our ability to compete for prime contractor positions on programs that we have targeted for growth and to maintain our prime contractor position as current contracts are subject to renewal.

Loss of our GSA schedule contracts or other contracting vehicles could impair our ability to win new business and perform under existing contracts.

We currently hold multiple GSA schedule contracts, including a Federal supply schedule contract for professional and allied healthcare services and the logistics worldwide services contract.

Loss of our contracting vehicles could impair our ability to win new business and perform under existing contracts.

We currently hold multiple contracting vehicles, which our customers utilize to award contracts.

If we were to lose one or more of these contracts or other contracting vehicles, we could lose a significant revenue source and our operating results and financial condition could be materially and adversely affected.

4 unchanged sentences

In recent years, we have seen frequent debates regarding the scope of funding of our customers, thereby leading to budgetary uncertainty for our Federal customers.

Changes in federal government budgetary priorities or actions taken to address government budget deficits, the national debt, and/or prevailing economic conditions, could directly affect our financial performance .

Further, congressional seats may change during election years, and the balance of spending priorities may change along with them.

Changes in federal government budgetary priorities or actions taken to address government budget deficits, the national debt, and/or prevailing economic conditions, including government closures or shutdowns, could result in projects being reduced in scope or price, or being terminated, and may directly affect our financial performance .

Further, political and economic factors, such as pending elections, the outcome of recent elections, changes in leadership among key executive or legislative decision makers, and revisions to governmental tax or other policies can affect the quantity and terms of new government contracts signed or the speed at which new contracts are signed, decrease future levels of spending and authorizations for programs that we bid, shift spending priorities to programs in areas for which we do not provide services and/or lead to changes in enforcement or how compliance with relevant rules or laws is assessed.

Congressional seats may change during election years, and the balance of spending priorities may change along with them.

Historically, our customers’ missions have received bipartisan support from the legislative and executive branches of the federal government.

However, we anticipate that the President-Elect and new Congress will seek to implement their budget priorities, which may impact our customers’ projects and budgets.

However, we anticipate that the current administration and Congress will seek to implement their budget priorities, which may impact our customers’ projects and budgets.

A significant decline in government expenditures, a shift of expenditures away from programs that we support or a change in federal government contracting policies could cause federal government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty or not to exercise options to renew contracts.

9 unchanged sentences

government does not complete its appropriations before the beginning of the new fiscal year on October 1, government operations are typically funded pursuant to a "continuing resolution," which allows federal government agencies to operate at spending levels approved in the previous appropriations cycle but does not authorize new spending initiatives.

Currently, the U.S.

government is operating under a continuing resolution (CR) which expires on December 20, 2024.

government had been operating under a continuing resolution (CR) which expired on September 30, 2025.

When the U.S.

1 unchanged sentence

When a CR expires, unless appropriations bills have been passed by Congress and signed by the President, or a new CR is passed and signed into law, the government must cease operations, or shutdown, except in certain emergency situations or when the law authorizes continued activity.

Subsequent to the expiration of the CR that transpired on September 30, 2025, the U.S.

government ceased operations until November 12, 2025 when a new stopgap spending bill was passed by Congress and signed into law by the President.

This current funding measure provides funding to support U.S.

government operations through January 30, 2026.

We continuously review our operations in an attempt to identify programs potentially at risk from CRs so that we can consider appropriate contingency plans.

A federal government shutdown could, however, result in our incurrence of substantial labor or other costs without reimbursement under customer contracts, the delay or cancellation of programs or the delay of contract payments, which could have a negative effect on our cash flows and adversely affect our future results of operations.

In general, a federal government shutdown could result in our incurrence of substantial labor or other costs without reimbursement under customer contracts, the delay or cancellation of programs or the delay of contract payments, which could have a negative effect on our cash flows and adversely affect our future results of operations.

During a shutdown our customers may issue stop work orders, delay new contract awards, withhold payments, or limit access to government facilities and systems.

Although certain of our programs may be deemed essential and continue, others could be delayed or suspended, creating significant unreimbursed costs and deferred revenue.

A prolonged shutdown or repeated lapses in funding could also postpone new procurements, reduce activity under existing contracts, and extend the time needed to resume normal operations once funding is restored.

These events could materially and adversely affect our business, financial condition, and results of operations.

The markets in which we operate are highly competitive, and many of the companies we compete against have substantial resources.

73 unchanged sentences

Accordingly, our backlog may not result in actual revenue in any particular period, or at all, which could cause our actual results to differ materially and adversely from those anticipated.

Restrictions on or other changes to the federal government’s use of service contracts may harm our operating results.

We derive a significant amount of revenues from service contracts with the federal government.

The government may face restrictions from new legislation, regulations, or government union pressures, on the nature and amount of services the government may obtain from private contractors (i.e., insourcing versus outsourcing).

Any reduction in the government’s use of private contractors to provide federal services could cause our actual results to differ materially and adversely from those anticipated.

Our business growth and profitable operations require that we develop and maintain strong relationships with other contractors with whom we partner or otherwise depend on.

4 unchanged sentences

Our revenue and operating results could differ materially and adversely from those anticipated if any such prime contractor or teammate chooses to offer directly to the customer services of the type that we provide or if they team with other companies to provide those services.

Restrictions on or other changes to the federal government’s use of service contracts may harm our operating results.

We derive virtually all of our revenue from service contracts with the federal government.

The government may face restrictions from new legislation, regulations or government union pressures on the nature and amount of services the government may obtain from private contractors (i.e., insourcing versus outsourcing).

Any reduction in the government’s use of private contractors to provide federal services could cause our actual results to differ materially and adversely from those anticipated.

Our earnings and margins may vary based on the mix of our contracts and programs.

62 unchanged sentences

Cybersecurity threats are constantly expanding and evolving, becoming increasingly sophisticated and complex, increasing the difficulty of detecting and defending against them and maintaining effective security measures and protocols.

Our systems and networks may be subject to cybersecurity breaches.

Our systems and networks may be subject to cybersecurity breaches, data privacy failures, or other security incidents that could harm our reputation, expose us to liability, and adversely affect our business.

Many of our operations rely heavily upon technology systems and networks to receive, input, maintain and communicate participant and customer data pertaining to the programs we manage.

25 unchanged sentences

Although we conduct extensive due diligence in connection with an acquisition, we cannot assure that this diligence revealed all material issues that may be present, that it would be possible to uncover all material issues through customary due diligence, or that factors outside of our control will not later arise.

We have also purchased representations and warranties insurance in connection with the acquisition, but there is no assurance that those policies will cover any losses we might experience from

breaches of the sellers’ representations and warranties or otherwise arising from the acquisition.

We have also purchased representations and warranties insurance in connection with the acquisition, but there is no assurance that those policies will cover any losses we might experience from breaches of the sellers’ representations and warranties or otherwise arising from the acquisition.

Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.

3 unchanged sentences

Through acquisitions, we may be able to expand our base of customers, increase the range of solutions we offer to our customers and deepen our penetration of existing markets and customers.

We may not identify and execute suitable acquisitions.

We may be unable to identify or complete attractive strategic transactions for many reasons, including competition from other acquirers, and high valuations of potential targets.

Even when we identify suitable candidates and reach agreement on terms, regulatory approvals, antitrust reviews, and other legal or contractual restrictions may delay or prevent completion.

To the extent that management is involved in identifying acquisition opportunities or integrating new acquisitions into our business, our management may be diverted from operating our core business.

2 unchanged sentences

• increased competition for acquisitions may increase the costs of our acquisitions;

• unforeseen expenses, delays, or conditions imposed in connection with regulatory or contractual approvals;

• challenges in retaining key employees, business partners, or customers of an acquired company;

• non-discovery or non-disclosure of material liabilities during the due diligence process, including omissions by prior owners of any acquired businesses or their employees in complying with applicable laws or regulations, or their inability to fulfill their contractual obligations to the federal government or other customers;

10 unchanged sentences

Any of these outcomes could cause our actual results to differ materially and adversely from those anticipated.

With respect to our acquisition of DLH, LLC (formerly, Grove Resource Solutions, LLC) in December 2022, the benefits of the acquisition will depend, in part, on our ability to successfully combine our businesses and realize the anticipated benefits, including business opportunities and growth prospects from combining our businesses.

We may not achieve these objectives within the anticipated time frame or may never realize these benefits and the value of our common stock may be harmed.

The acquisition involves the integration of the acquired business with our existing business, which was a costly and time-consuming process.

If we are ultimately unable to successfully or efficiently integrate our operations with those of the acquired business, we may incur unanticipated liabilities and be unable to realize the revenue growth, synergies, and other anticipated benefits resulting from the acquisition, and our business, results of operations, and financial condition could be materially adversely affected.

7 unchanged sentences

We have incurred debt in connection with acquisitions and we must make the scheduled principal and interest payments on the facility and maintain compliance with other debt covenants.

Following our acquisition of DLH, LLC (formerly, Grove Resource Solutions, LLC) in December 2022, we amended and restated our credit agreement with First National Bank of Pennsylvania and certain other lenders (the “Credit Agreement”) and incurred additional indebtedness.

We amended our credit agreement (as amended, the “Credit Agreement”) in November 2024 to modify the financial covenants and adjust the borrowing capacity of the revolving credit facility.

The Credit Agreement requires compliance with a number of financial covenants and contains restrictions on our ability to engage in certain transactions, including limitations on:

55 unchanged sentences

These matters might include proxy contests, tender offers, mergers or other purchases of common stock that could give our stockholders the opportunity to realize a premium over the then-prevailing market price for shares of our common stock.

In addition, persons associated with Wynnefield Capital, Inc.

currently serve on our Board of Directors.

In addition, a person associated with Wynnefield Capital, Inc.

currently serves on our Board of Directors.

As a result of this share ownership and relationships on our Board of Directors, our largest stockholder will be able to influence all affairs and actions of our company, including matters requiring stockholder approval such as the election of directors and approval of significant corporate transactions.

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We are dependent upon certain of our management personnel and do not maintain "key personnel" life insurance on our executive officers.

Our success to date has resulted in part from the significant contributions of our executive officers.

Our success to date has resulted in part from the significant contributions of our executive officers, who have been instrumental in shaping the strategic direction of the Company.

Our executive officers are expected to continue to make important contributions to our success.

From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, potentially disrupting our business.

As of September 30, 2025, certain of our officers are under employment contracts.

21 unchanged sentences

Any adverse determination could adversely impact our ability to bid in response to RFPs in one or more jurisdictions.

sector companies are not, the result of which could have a material adverse effect on our operating results, cash flows and financial condition.

Further, as a government contractor subject to the types of regulatory schemes described above, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which private sector companies are not, the result of which could have a material adverse effect on our operating results, cash flows and financial condition.

Changes to U.S.

tax laws may adversely affect our financial condition or results of operations and create the risk that we may need to adjust our accounting for these changes.

The accounting treatment of these tax law changes is complex, and some of the changes may affect both current and future periods.

Consistent with guidance from the SEC, our consolidated financial statements reflect our estimates of the tax effects of the current tax laws and regulations.

Changes in tax rates or exposure to additional tax liabilities or assessments could affect our profitability, and audits by tax authorities could lead to additional tax payments.

Determining our tax provisions requires significant judgment, and many transactions and calculations involve the application of tax laws whose interpretation is uncertain.

The accounting treatment of tax law changes is complex, and some changes may affect both current and future periods.

Consistent with SEC guidance, our consolidated financial statements reflect our estimates of the tax effects of the current tax laws and regulations.

We are exposed to increased costs and risks associated with complying with increasing and new regulation of corporate governance and disclosure standards.

7 unchanged sentences

We face various risks related to health epidemics, pandemics, and similar outbreak.

The COVID-19 pandemic and the mitigation efforts to control its spread created significant volatility, uncertainty and economic disruption and adversely impacted the U.S.

The occurrence of a pandemic and the mitigation efforts to control its spread would be expected to create significant volatility, uncertainty and economic disruption and adversely impact the U.S.

and global economies.

9 unchanged sentences

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 1A. Risk Factors