What changed in this filing

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Item 1. Financial Statements

2026-07-29 compared with 2026-05-06 · 143 added, 127 removed, 520 unchanged (34% of the section changed)

3 unchanged sentences

(unaudited, in thousands, except per share amounts)

Three Months Ended Six Months Ended

March 31, March 31,

Three Months Ended Nine Months Ended

June 30, June 30,

2026 2025 2026 2025

34 unchanged sentences

Operating lease right-of-use assets 7,249 8,764

Deferred income taxes, net

Deferred tax asset — 7,947

Equipment and improvements, net 761 1,274

9 unchanged sentences

Total current liabilities 42,535 42,671

Long-term liabilities:

Debt obligations - long-term, net of deferred financing costs 104,942 119,966

Operating lease liabilities - long-term 11,958 14,022

Deferred tax liability 1,111 —

Other long-term liabilities 999 1,046

Total long-term liabilities 124,151 135,034

Total liabilities 161,545 177,705

2 unchanged sentences

40,000 shares authorized;

14,493 and 14,493 shares issued and outstanding at March 31, 2026 and September 30, 2025, respectively

14,493 and 14,493 shares issued and outstanding at June 30, 2026 and September 30, 2025, respectively

Additional paid-in capital 102,686 101,734

Retained earnings

Retained earnings (accumulated deficit) ( 9,436 ) 11,210

Total shareholders’ equity 93,264 112,958

4 unchanged sentences

(unaudited, in thousands)

Six Months Ended

Nine Months Ended

Operating activities

1 unchanged sentence

$ ( 20,646 ) $ 2,281

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 12,600 12,880

2 unchanged sentences

Deferred income taxes, net

( 1,363 ) 1,530

Changes in operating assets and liabilities:

4 unchanged sentences

Other liabilities ( 2,388 ) 2,067

Net cash provided by (used in) operating activities

( 984 ) 2,965

Net cash provided by operating activities 3,219 12,536

Investing activities

5 unchanged sentences

( 148,898 ) ( 170,075 )

Repayments of debt obligations ( 1,500 ) ( 4,750 )

Repayments of secured term loan ( 8,500 ) ( 14,250 )

Payments of deferred financing costs ( 159 ) ( 202 )

Payments for taxes related to net share settlement of restricted stock units

Net cash provided by (used in) financing activities

1,029 ( 3,110 )

Net cash used in financing activities ( 3,070 ) ( 12,471 )

Net change in cash 110 ( 148 )

12 unchanged sentences

Common Stock Additional

Capital Retained Earnings Total Shareholders' Equity

Capital Retained Earnings (Accumulated Deficit) Total Shareholders' Equity

Shares Amount

Balance at December 31, 2025

Balance at March 31, 2026

14,493 $ 14 $ 102,905 $ 7,351 $ 110,270

2 unchanged sentences

— — — ( 16,787 ) ( 16,787 )

Balance at March 31, 2026

Balance at June 30, 2026

14,493 $ 14 $ 102,686 $ ( 9,436 ) $ 93,264

Common Stock Additional

Capital Retained Earnings Total Shareholders' Equity

Capital Retained Earnings (Accumulated Deficit)

Total Shareholders' Equity

Shares Amount

6 unchanged sentences

— — — ( 20,646 ) ( 20,646 )

Balance at March 31, 2026

Balance at June 30, 2026

14,493 $ 14 $ 102,686 $ ( 9,436 ) $ 93,264

3 unchanged sentences

Shares Amount

Balance at December 31, 2024

Balance at March 31, 2025

14,386 14 $ 100,995 $ 11,840 $ 112,849

2 unchanged sentences

Net income — — — 289 289

Balance at March 31, 2025

Balance at June 30, 2025

14,386 $ 14 $ 101,555 $ 12,129 $ 113,698

8 unchanged sentences

Net income — — — 2,281 2,281

Balance at March 31, 2025

Balance at June 30, 2025

14,386 $ 14 $ 101,555 $ 12,129 $ 113,698

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2026

June 30, 2026

Basis of Presentation and Principles of Consolidation

5 unchanged sentences

Certain prior year amounts have been reclassified to conform to the fiscal 2026 presentation.

Operating results for the six months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending September 30, 2026 or any future period.

Amounts as of March 31, 2026 and for the three and six months ended March 31, 2026 are unaudited.

These reclassifications had no impact on the Company's reported total revenues, expenses, net income, current assets, total assets, current liabilities, total liabilities, stockholders' equity, or cash flows.

No reclassifications of prior period balances were material to the unaudited consolidated financial statements.

Operating results for the nine months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending September 30, 2026 or any future period.

Amounts as of June 30, 2026 and for the three and nine months ended June 30, 2026 are unaudited.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2025 filed with the Securities and Exchange Commission on December 10, 2025.

2 unchanged sentences

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.

The most significant of these estimates and assumptions relate to estimating costs including overhead and its allocation, valuing and determining the amortization periods for long-lived intangible assets, interest rate swaps, stock-based compensation, goodwill, and right-of-use assets and lease liabilities.

The most significant of these estimates and assumptions relate to estimating costs including overhead and its allocation, valuing and determining the amortization periods for long-lived intangible assets, evaluating the realizability of deferred tax assets, including the need for valuation allowances, interest rate swaps, stock-based compensation, goodwill, and right-of-use assets and lease liabilities.

We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current and expected future outcomes, third-party evaluations, and various other assumptions that we believe are reasonable under the circumstances.

2 unchanged sentences

Actual results could differ from those estimates.

Segment Reporting

The Company reports operating results and financial data in one operating and reportable segment.

The Company provides technology-enabled business process, program management, and digital transformation solutions primarily to U.S.

government agencies, which share similar economic characteristics, production processes, customer bases, and regulatory environments.

The Chief Executive Officer serves as the Chief Operating Decision Maker ("CODM") and evaluates performance and allocates resources based on consolidated financial results.

Significant expense categories regularly provided to the CODM to manage operations are those disclosed in the consolidated statements of operations.

The Company's revenues from contracts with customers are derived from offerings that include technology-enabled business process outsourcing, program management solutions, and public health research and analytics, substantially within the U.S.

1 unchanged sentence

The Company has various types of contracts including time-and-materials contracts, cost-reimbursable contracts, and firm-fixed-price contracts.

We consider a contract with a customer to exist when there is a commitment by both parties (customer and Company), payment terms are determinable, there is commercial substance, and collectability is probably in accordance with Accounting Standards Codification ("ASC") No.

We consider a contract with a customer to exist when there is a commitment by both parties (customer and Company), payment terms are determinable, there is commercial substance, and collectability is probable in accordance with Accounting Standards Codification ("ASC") No.

606, "Revenue from Contracts with Customers" ("Topic 606").

5 unchanged sentences

Contract modification can occur throughout the life of the contract and can affect the transaction price, extend the period of performance, adjust funding, or create new performance obligations.

We review each modification to assess the impact of these

contract changes to determine if it should be treated as part of the original performance obligation or as a separate contract.

We review each modification to assess the impact of these contract changes to determine if it should be treated as part of the original performance obligation or as a separate contract.

Contract modifications impact performance obligations when the modification either creates new or changes the existing enforceable rights and obligations.

9 unchanged sentences

Contract costs generally include direct costs such as labor, materials, subcontract costs, and indirect costs identifiable with or allocable to a specific contract.

Costs are expensed as incurred and include an estimate of the contractual fees earned.

Costs are expensed as incurred.

Contract costs incurred for U.S.

21 unchanged sentences

Intangible assets (other than goodwill) are originally recorded at fair value and are amortized on a straight-line basis over their estimated useful lives of 10 years.

Right-of-use assets are measured at the present value of future minimum lease payments, including all probable renewals, plus lease payments made to the lessor before or at lease commencement and indirect costs paid, less incentives received.

Our right-of-use assets include long-term leases for facilities and equipment and are amortized over their respective lease terms.

8 unchanged sentences

The Company does not have any finance leases.

As of March 31, 2026, operating leases for facilities and equipment have remaining lease terms of less than 9 months to 6.8 years.

As of June 30, 2026, operating leases for facilities and equipment have remaining lease terms of less than 6 months to 6.6 years.

The Company performs impairment evaluation at least annually at the end of the fiscal year and between annual tests whenever there is an indication of impairment.

The assessment at March 31, 2026 indicated a triggering event had occurred requiring that the Company perform additional quantitative assessments.

The assessment at June 30, 2026 indicated a triggering event had occurred requiring that the Company perform additional quantitative assessments.

The triggering event was primarily due to the decrease in the Company's share price resulting in a decline in market capitalization.

12 unchanged sentences

This guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized.

During the three nine months ended June 30, 2026, we recognized a valuation allowance against our deferred tax assets of $ 10.4 million.

We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon the technical merits, it is more likely than not that the position will be sustained upon examination.

We had no uncertain tax positions at either March 31, 2026 or September 30, 2025.

We had no uncertain tax positions at either June 30, 2026 or September 30, 2025.

We report interest and penalties as a component of provision for income taxes.

During the six months ended March 31, 2026 and 2025, we recognized no interest and no penalties related to income taxes.

During the nine months ended June 30, 2026 and 2025, we recognized no interest and no penalties related to income taxes.

Stock-Based Compensation

9 unchanged sentences

The stock-based compensation expense for equity awards has been based on the grant-date fair value of those awards as calculated for recognition purposes under applicable guidance.

For other equity awards

that vest based on the Company’s common stock achieving and maintaining defined market prices, the Company values the awards with a Monte Carlo method that utilizes various probability factors and other criterion in establishing fair value of the grant.

For other equity awards that vest based on the Company’s common stock achieving and maintaining defined market prices, the Company values the awards with a Monte Carlo method that utilizes various probability factors and other criterion in establishing fair value of the grant.

The related compensation expense is recognized over the service period.

6 unchanged sentences

We evaluate our receivables for expected credit losses on a quarterly basis and determine whether an allowance for expected credit losses is appropriate based on specific collection issues.

No allowance for doubtful accounts was deemed necessary at either March 31, 2026 or September 30, 2025.

No allowance for doubtful accounts was deemed necessary at either June 30, 2026 or September 30, 2025.

Earnings Per Share

4 unchanged sentences

The Company periodically purchases its own common stock that is traded on public markets as part of announced stock repurchase programs.

The repurchased common stock is classified as treasury stock on the consolidated balance sheets and held at cost.

As of March 31, 2026 and September 30, 2025, the Company did not hold any treasury stock.

The repurchased common stock is classified as treasury stock on the consolidated balance sheets and held

As of June 30, 2026 and September 30, 2025, the Company did not hold any treasury stock.

Preferred Stock

Our certificate of incorporation authorizes the issuance of "blank check" preferred stock with designations, rights and preferences as may be determined from time to time by our board of directors up to an aggregate of 5,000,000 shares of preferred stock.

As of March 31, 2026 and September 30, 2025, the Company has not issued any preferred stock.

As of June 30, 2026 and September 30, 2025, the Company has not issued any preferred stock.

Interest Rate Swap

6 unchanged sentences

Management evaluates the impact of global markets and economic factors on our industry and the potential for adverse effects on the Company's consolidated financial position and its operations.

As of March 31, 2026 and September 30, 2025, there was no indication of any global or economic impact to our industry.

As of June 30, 2026 and September 30, 2025, there was no indication of any global or economic impact to our industry.

New Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures" which provides guidance on the requirements such as the requirement that public business entities on an annual basis (1)

disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold.

Improvements to Income Tax Disclosures" which provides guidance on the requirements such as the requirement that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold.

DLH is a public company that reports income tax disclosures and therefore this ASU applies to the Company.

2 unchanged sentences

We are currently evaluating the impacts of the improvements to income tax disclosure.

In March 2024, the Securities and Exchange Commission ("SEC") released a final rule that requires registrants to provide comprehensive climate-related disclosures in their annual reports and registration statements, including those for IPOs, beginning with annual reports for the year ending December 31, 2027, for smaller reporting companies ("SRC").

Registrants must disclose climate-related financial metrics and impacts on their financial estimates and assumptions in a footnote to the audited financial statements.

The disclosures will also need to be addressed as part of management’s internal control over financial reporting ("ICFR") and will be subject to the financial statement and ICFR audit (if applicable) of an independent registered public accounting firm.

We are currently evaluating the impacts of the improvements to our disclosure.

In March 2024, the Securities and Exchange Commission ("SEC") adopted final rules requiring registrants to provide certain climate-related disclosures in their annual reports and registration statements.

In May 2026, the SEC proposed rescinding these rules, and the proposal remains subject to a public comment process and further Commission action.

The Company is monitoring these developments and evaluating the potential impact, if any, on its future disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40):

Expense Disaggregation Disclosures.

To enhance transparency in financial reporting by requiring public business entities to disclose disaggregated information about expenses in their financial statements.

The guidance mandates disclosure of specific cost components, such as inventory purchases, employee compensation, depreciation, and amortization, within relevant income statement expense captions, along with qualitative descriptions of any remaining undissected amounts.

In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date, which clarified the effective date of ASU 2024-03.

This guidance enhances transparency in financial reporting by requiring public business entities to disclose disaggregated information about expenses in their financial statements.

Entities must also disclose total selling expenses and define these annually.

Effective for annual reporting periods beginning after December 15, 2026, and interim periods in 2027, the ASU allows prospective or retrospective application and permits early adoption.

The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted, and the guidance may be applied prospectively or retrospectively.

We are currently evaluating the impacts of the improvements to our disclosure.

1 unchanged sentence

The following table summarizes the contract balances recognized on the Company's consolidated balance sheets as follows (in thousands):

March 31, September 30,

June 30, September 30,

Contract assets $ 7,342 $ 22,000

Contract assets are included as part of accounts receivable on the consolidated balances sheets.

Contract assets are included as part of accounts receivable on the consolidated balance sheets.

The change from prior period is primarily due to reduced revenue volume.

Contract liabilities had no balance as of March 31, 2026 and September 30, 2025.

Contract liabilities had no balance as of June 30, 2026 and September 30, 2025.

Disaggregation of Revenue from Contracts with Customers

3 unchanged sentences

Revenue by customer was as follows (in thousands):

Three Months Ended Six Months Ended

March 31, March 31,

Three Months Ended Nine Months Ended

June 30, June 30,

2026 2025 2026 2025

5 unchanged sentences

Revenue by contract type was as follows (in thousands):

Three Months Ended Six Months Ended

March 31, March 31,

Three Months Ended Nine Months Ended

June 30, June 30,

2026 2025 2026 2025

4 unchanged sentences

Revenue by whether the Company acts as a prime contractor or a subcontractor was as follows (in thousands):

Three Months Ended Six Months Ended

March 31, March 31,

Three Months Ended Nine Months Ended

June 30, June 30,

2026 2025 2026 2025

3 unchanged sentences

The following table summarizes lease balances presented on our consolidated balance sheets as follows (in thousands):

March 31, September 30,

June 30, September 30,

Operating lease right-of-use assets $ 7,249 $ 8,764

3 unchanged sentences

Total operating lease liabilities $ 14,830 $ 16,940

As of March 31, 2026, operating leases for facilities and equipment have remaining lease terms of less than 9 months to 6.8 years.

As of June 30, 2026, operating leases for facilities and equipment have remaining lease terms of less than 6 months to 6.6 years.

Total lease costs for our leases were as follows (in thousands):

Three Months Ended Six Months Ended

March 31, March 31,

Three Months Ended Nine Months Ended

June 30, June 30,

2026 2025 2026 2025

7 unchanged sentences

The remaining sublease term is 4.8 years.

The Company's future minimum lease payments as of March 31, 2026 were as follows (in thousands):

The Company's future minimum lease payments as of June 30, 2026 were as follows (in thousands):

Fiscal year ending:

6 unchanged sentences

Long-term operating lease liabilities $ 11,958

At March 31, 2026, the weighted-average remaining lease term and weighted-average discount rate were 5.1 years and 6.9 %, respectively.

At June 30, 2026, the weighted-average remaining lease term and weighted-average discount rate were 4.8 years and 6.9 %, respectively.

The calculation of the weighted-average discount rate was determined based on borrowing terms from our secured term loan.

Other information related to our leases was as follows (in thousands):

Three Months Ended Six Months Ended

March 31, March 31,

Three Months Ended Nine Months Ended

June 30, June 30,

2026 2025 2026 2025

1 unchanged sentence

Lease liabilities arising from obtaining right-of-use assets — 2,810 — 4,187

Other lease information $ 986 $ 982 $ 1,884 $ 3,327

Supporting Financial Information

1 unchanged sentence

The following table summarizes accounts receivable presented on our consolidated balance sheets as follows (in thousands):

March 31, September 30,

June 30, September 30,

Billed receivables $ 17,066 $ 16,394

3 unchanged sentences

The following table summarizes other current assets presented on our consolidated balance sheets as follows (in thousands):

March 31, September 30,

June 30, September 30,

Prepaid licenses and other expenses $ 2,444 $ 1,892

2 unchanged sentences

Other current assets $ 4,062 $ 4,018

There were no changes in goodwill for the six months ended March 31, 2026.

The balance of goodwill was approximately $ 138.2 million as of March 31, 2026 and September 30, 2025.

There were no changes in goodwill for the nine months ended June 30, 2026.

The balance of goodwill was approximately $ 138.2 million as of June 30, 2026 and September 30, 2025.

Intangible assets

The following table summarizes intangible assets, net presented on our consolidated balance sheets as follows (in thousands):

March 31, September 30,

June 30, September 30,

Intangible assets

12 unchanged sentences

Intangible assets, net $ 79,818 $ 91,865

Amortization expense was $ 4.1 million and $ 4.1 million for the three months ended March 31, 2026 and 2025, respectively, and $ 8.2 million and $ 8.2 million for the six months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, the estimated amortization expense per fiscal year was as follows (in thousands):

Amortization expense was $ 3.8 million and $ 4.1 million for the three months ended June 30, 2026 and 2025, respectively, and $ 12.0 million and $ 12.3 million for the nine months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, the estimated amortization expense per fiscal year was as follows (in thousands):

Fiscal year ending:

2 unchanged sentences

Total amortization expense $ 79,818

The weighted-average remaining amortization period at March 31, 2026 is as follows:

The weighted-average remaining amortization period at June 30, 2026 is as follows:

Intangible assets Weighted-Average Remaining Amortization Period

1 unchanged sentence

Backlog 5.7 years

Trade names 6.3 years

Trade name 6.1 years

Covenants-not-to-compete 6.0 years

1 unchanged sentence

The following table summarizes equipment and improvements, net presented on our consolidated balance sheets as follows (in thousands):

March 31, September 30,

June 30, September 30,

Furniture and equipment $ 1,192 $ 1,177

5 unchanged sentences

Equipment and improvements, net $ 761 $ 1,274

Depreciation expense was $ 0.2 million and $ 0.2 million for the three months ended March 31, 2026 and 2025, respectively, and $ 0.4 million and $ 0.3 million for the six months ended March 31, 2026 and 2025, respectively.

Depreciation expense was $ 0.2 million and $ 0.2 million for the three months ended June 30, 2026 and 2025, respectively, and $ 0.6 million and $ 0.5 million for the nine months ended June 30, 2026 and 2025, respectively.

Accounts payable and accrued liabilities

The following table summarizes accounts payable and accrued liabilities presented on our consolidated balance sheets as follows (in thousands):

March 31, September 30,

June 30, September 30,

Accounts payable $ 7,600 $ 12,299

Accrued benefits 518 1,214

Accrued workers' compensation insurance 516 750

Accrued bonus and incentive compensation 1,023 1,527

Accrued interest 895 474

Other accrued expenses 482 2,982

Other accrued liabilities 362 3,732

Accounts payable and accrued liabilities $ 10,398 $ 19,246

1 unchanged sentence

The following table summarizes accrued payroll presented on our consolidated balance sheets as follows (in thousands):

March 31, September 30,

June 30, September 30,

Accrued leave $ 3,611 $ 8,112

6 unchanged sentences

The following table summarizes debt obligations presented on our consolidated balance sheets as follows (in thousands):

March 31, September 30,

June 30, September 30,

Secured term loan $ 115,000 $ 123,500

4 unchanged sentences

Long-term portion of debt obligations, net of deferred financing costs $ 104,942 $ 119,966

As of March 31, 2026, we have satisfied quarterly minimum principal payments on our secured term loan until December 31, 2026, and have made a partial payment toward the principal due as of that date.

(a) As of March 31, 2026, the current portion comprises term loan amortization of $ 10.4 million and the $ 10.7 million outstanding balance on the secured revolving line of credit, net of $ 1.6 million of unamortized deferred financing costs.

As of June 30, 2026, we have satisfied quarterly minimum principal payments on our secured term loan until March 31, 2027, and have made a partial payment toward the principal due as of that date.

(a) As of June 30, 2026, the current portion comprises term loan amortization of $ 9.3 million and the $ 13.7 million outstanding balance on the secured revolving line of credit, net of $ 1.7 million of unamortized deferred financing costs.

Interest expense

The following table summarizes interest expense presented on our consolidated statements of operations as follows (in thousands):

Three Months Ended Six Months Ended

March 31, March 31,

Three Months Ended Nine Months Ended

June 30, June 30,

2026 2025 2026 2025

10 unchanged sentences

During the three months ended June 30, 2026, the Company recorded a noncash valuation allowance of approximately $ 10.4 million against its deferred tax assets.

The deferred tax assets primarily related to net operating loss carryforwards and interest expense carryforwards, which have an indefinite life, as well as other deductible temporary differences.

In assessing the realizability of its deferred tax assets, the Company considered all available positive and negative evidence.

Based primarily on cumulative losses in recent periods, the Company concluded that it is more likely than not that the deferred tax assets will not be realized.

Accordingly, the Company recorded a valuation allowance against its deferred tax assets.

The valuation allowance was reflected as a component of income tax expense for the three and nine months ended June 30, 2026.

The adjustment was noncash and did not result in a current-period cash income tax payment.

The valuation allowance will be evaluated quarterly and may be reversed as the Company's conditions change.

Credit Facilities

A summary of our credit facilities as presented on our consolidated balance sheets as follows (in millions):

March 31, 2026 September 30, 2025

A summary of our credit facilities as presented on our consolidated balance sheets as follows (in thousands):

June 30, 2026 September 30, 2025

Arrangement Loan Balance Interest Loan Balance Interest

3 unchanged sentences

$ 8,067 SOFR 1 + 4.1 %

1 Secured Overnight Financing Rate ("SOFR") as of March 31, 2026 and September 30, 2025 were 3.8 % and 4.3 % respectively.

1 Secured Overnight Financing Rate ("SOFR") as of June 30, 2026 and September 30, 2025 were 3.7 % and 4.3 %, respectively.

(a) Represents the principal amounts payable on our term loan, which is secured by liens on substantially all of the assets of the Company.

1 unchanged sentence

On January 31, 2023, we executed a floating-to-fixed interest rate swap with First National Bank ("FNB") that had an ending notional amount of $ 74.0 million and a fixed interest rate of 4.1 %, which matured on January 31, 2026.

As of March 31, 2026, no interest rate swaps were outstanding, and all debt is subject to floating interest rates.

As of June 30, 2026, no interest rate swaps were outstanding, and all debt is subject to floating interest rates.

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

7 unchanged sentences

On November 6, 2024, the Company completed an amendment to its credit facility.

The amendment modified certain financial covenants thresholds for future measurement periods and reduced the amount available under the revolving line of credit, as discussed in further detail below.

The amendment was approved by the Company's Board of Directors and Executive Management and the credit facility lenders.

The loan agreement also requires us to comply with certain quarterly financial covenants including:

The amendment modified certain financial covenants thresholds and reduced the amount available under the revolving line of credit.

On June 11, 2026, the Company completed an amendment to its credit facility.

The amendment modified certain definitions and financial covenants thresholds.

The amendments were approved by the Company's Board of Directors, Executive Management, and the credit facility lenders.

As amended, the Credit Agreement requires us to comply with certain quarterly financial covenants including:

(i) a minimum fixed charge coverage ratio ranging from 1.25 :1.00 to 1.05 :1.00 and (ii) a total leverage ratio not exceeding the ratio of 5.50 :1.00 to 4.25 :1.00 through maturity.

We are in compliance with all loan covenants and restrictions as of March 31, 2026.

The total leverage ratio is calculated by dividing the Company's total interest-bearing debt by net income adjusted to exclude (i) interest and other expenses, (ii) provision for income taxes, if any, (iii) depreciation and amortization, (iv) non-cash charges, losses or expenses, including stock-based compensation, (v) non-recurring charges, losses or expenses including transaction and non-cash equity expense, (vi) fiscal 2026 losses, expenses, or non-cash charges arising from or related to the termination of a lease, (vii) cash restructuring charges, including termination costs, incurred during fiscal 2026, and (viii) up to $ 3.0 million of pro forma consolidated net Income attributable to material contract awards entered into following the amendment.

We are in compliance with all loan covenants and restrictions as of June 30, 2026.

We are required to pay quarterly amortization payments, which commenced in December 2022.

1 unchanged sentence

The quarterly payments are equal installments.

The outstanding principal balance on the secured term loan was $ 122.0 million as of March 31, 2026 .

We have satisfied the mandatory principal payments until December 2026.

The outstanding principal balance on the secured term loan was $ 115.0 million as of June 30, 2026 .

We have satisfied the mandatory principal payments through December 2026 and partially satisfied the March 2027 payment.

In addition to quarterly payments of the outstanding indebtedness, the loan agreement also requires annual payments of a percentage of excess cash flow, as defined in the loan agreement.

7 unchanged sentences

(b) As amended, the secured revolving line of credit has a ceiling of up to $ 50.0 million;

as of March 31, 2026, we had unused borrowing capacity of $ 9.7 million, which is net of outstanding letters of credit.

as of June 30, 2026, we had unused borrowing capacity of $ 5.0 million, which is net of outstanding letters of credit.

Borrowing on the secured revolving line of credit is secured by liens on substantially all of the assets of the Company.

The Company accessed funds from the secured revolving line of credit during the year, which had a $ 10.7 million outstanding balance at March 31, 2026.

As part of the

secured revolving line of credit, the lenders agreed to a sublimit of $ 5.0 million for letters of credit for the account of the Company, subject to applicable procedures.

The Company accessed funds from the secured revolving line of credit during the year, which had a $ 13.7 million outstanding balance at June 30, 2026.

As part of the secured revolving line of credit, the lenders agreed to a sublimit of $ 5.0 million for letters of credit for the account of the Company, subject to applicable procedures.

Stock-Based Compensation and Equity Grants

4 unchanged sentences

Shares issued upon option exercise are newly issued shares.

As of March 31, 2026, there were 1.0 million shares available for grant under the 2025 Plan.

As of June 30, 2026, there were 1.2 million shares available for grant under the 2025 Plan.

Stock-based compensation expense shown in the table below, is recorded in general and administrative expenses in our consolidated statements of operations as follows (in thousands):

Three Months Ended Six Months Ended

March 31, March 31,

Three Months Ended Nine Months Ended

June 30, June 30,

2026 2025 2026 2025

5 unchanged sentences

(a) Included in this amount are equity grants of restricted stock units ("RSU") to Executive Officers, which were issued in accordance with the DLH long-term incentive compensation policy in this fiscal year, and stock option grants to employees during prior fiscal years.

The RSUs issued and outstanding totaled 959,582 and 697,384 shares at March 31, 2026 and 2025, respectively.

No grants were awarded during the three months ended March 31, 2026 and 2025.

During the six months ended March 31, 2026 and 2025, the Company granted 427,046 and 312,906 shares of restricted stock units, respectively.

Of the RSUs granted during the six months ended March 31, 2026, 380,338 shares have performance and market based vesting criteria and the remaining 46,708 shares have service-based vesting criteria.

Of the RSUs granted during the six months ended March 31, 2025, 156,453 shares have performance and market based vesting criteria and the remaining 156,453 shares have service-based vesting criteria.

The RSUs issued and outstanding totaled 569,356 and 697,384 shares at June 30, 2026 and 2025, respectively.

During the nine months ended June 30, 2026 and 2025, the Company granted 550,855 and 312,906 shares of restricted stock units, respectively.

Of the RSUs granted during the nine months ended June 30, 2026, 380,338 shares have performance and market based vesting criteria and the remaining 170,517 shares have service-based vesting criteria.

Of the 170,517 service-based RSUs granted during the nine months ended June 30, 2026, 123,809 restricted stock units were granted during three months ended June 30, 2026.

Of the RSUs granted during the nine months ended June 30, 2025, 156,453 shares have performance and market based vesting criteria and the remaining 156,453 shares have service-based vesting criteria.

The RSUs granted were valued using the Monte Carlo Method, and will be amortized over the 3 -year measurement period.

7 unchanged sentences

Results based on 100,000 simulations

(b) Equity grants of RSUs were made in accordance with DLH compensation policy for non-employee directors and a total of 67,615 and 61,525 restricted stock units were issued and outstanding at March 31, 2026 and 2025, respectively.

These grants have service-based vesting criteria and vest at the end of this fiscal year.

4 unchanged sentences

Total unrecognized expense $ 3,622 $ 4,158

(a) On a weighted average basis, the unrecognized expense as of March 31, 2026 is expected to be recognized within the next 2.67 years.

Restricted stock unit activity for the six months ended March 31, 2026

(a) On a weighted average basis, the unrecognized expense as of June 30, 2026 is expected to be recognized within the next 2.80 years.

Restricted stock unit activity for the nine months ended June 30, 2026:

Performance Vesting Service

3 unchanged sentences

Cancelled ( 514,035 ) — ( 514,035 )

Outstanding, March 31, 2026

Outstanding, June 30, 2026

98,764 470,592 569,356

Stock option activity for the six months ended March 31, 2026

Stock option activity for the nine months ended June 30, 2026

The aggregate intrinsic value in the table below represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates.

9 unchanged sentences

Cancelled ( 92 ) 10.57 — —

Options outstanding, March 31, 2026

Options outstanding, June 30, 2026

1,095 $ 8.70 6.1 $ —

Vested and exercisable, March 31, 2026

Vested and exercisable, June 30, 2026

810 $ 9.48 4.7 $ —

Stock option shares outstanding, vested and unvested balance as follows (in thousands):

March 31, September 30,

June 30, September 30,

Vested and exercisable 810 902

7 unchanged sentences

Earnings per share information is presented in the table below (in thousands except for per share amounts):

Three Months Ended Six Months Ended

March 31, March 31,

Three Months Ended Nine Months Ended

June 30, June 30,

2026 2025 2026 2025

8 unchanged sentences

Diluted $ ( 1.16 ) $ 0.02 $ ( 1.42 ) $ 0.16

(a) For the three and six months ended March 31, 2026, stock options and restricted stock units representing approximately 70 thousand shares were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive.

(a) For the three and nine months ended June 30, 2026, stock options and restricted stock units representing approximately 68 thousand shares were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive.

Commitments and Contingencies

Contractual obligations as of March 31, 2026 are as follows (in thousands):

Contractual obligations as of June 30, 2026 are as follows (in thousands):

Payments Due Per Fiscal Year

8 unchanged sentences

Related Party Transactions

The Company has determined that for the six months ended March 31, 2026 and 2025, there were no significant related party transactions that have occurred which require disclosure through the date that these consolidated financial statements were issued.

The Company has determined that for the nine months ended June 30, 2026 and 2025, there were no significant related party transactions that have occurred which require disclosure through the date that these consolidated financial statements were issued.

Subsequent Events

Management has evaluated subsequent events through the date that the Company's unaudited consolidated financial statements were issued.

Based on this evaluation, the Company has determined that no subsequent events have occurred which require disclosure through the date that these consolidated financial statements were issued.

Based on this evaluation, the Company identified the following subsequent event:

Subsequent to June 30, 2026, the Company entered into an 11-year lease agreement to replace leases that expire in December 2026.

The lease has approximately 20,265 rentable square feet of office and lab space in Durham, North Carolina.

The lease is expected to commence on January 1, 2027, unless an earlier commencement occurs pursuant to the terms of the lease agreement and represents a future contractual commitment of approximately $ 7.4 million in undiscounted base rent payments over the initial lease term.

Given that the lease had not commenced as of June 30, 2026, no right-of-use asset or lease liability was recognized in the accompanying consolidated financial statements.

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-Q

Item 1. Financial Statements