GEE Group Inc. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not applicable. 43 Table of Contents Item 8. Consolidated Financial Statements and Supplementary Data. Page Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of September 30, 2025 and 2024 F-4 Consolidated Statements of Operations for the years ended September 30, 2025 and 2024 F-5 Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2025 and 2024 F-6 Consolidated Statements of Cash Flows for the years ended September 30, 2025 and 2024 F-7 Notes to Consolidated Financial Statements F-8 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders GEE Group Inc. and Subsidiaries Atlanta, Georgia Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of GEE Group Inc. and Subsidiaries (collectively, the “Company”) as of September 30, 2025 and 2024, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatements of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit mattes below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F-2 Goodwill Impairment Assessment Description of Matter The Company’s consolidated goodwill balance was $24.8 million as of September 30, 2025. The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of its Professional Staffing reporting unit to its carrying value. The fair value of the reporting unit is estimated using the discounted cash flow and guideline public company methods, which requires the use of estimates and assumptions related to cash flow forecasts, discount rates, terminal values, and market multiples of comparable companies. Management’s cash flow forecasts included significant judgments and assumptions relating to revenue growth rates, expense reductions and operating margins. The fair value of the reporting unit did not exceed its carrying value as of March 31, 2025; therefore, an impairment charge of $22 million was recognized as of March 31, 2025 and during the year ended September 30, 2025. The impairment charge was recognized for the amount by which the carrying amount exceeded the reporting unit’s estimated fair value. As more fully described in Note 8 to the consolidated financial statements, as of September 30, 2025, the fair value of the reporting unit exceeded its carrying value. Management made significant judgments when developing the fair value estimate of the reporting unit. As a result, a high degree of auditor judgment and effort was required, including involving the use of our valuation specialists, in performing audit procedures to evaluate the reasonableness of management’s cash flow forecasts and the significant assumptions identified above. Significant uncertainty exists with these assumptions because they are sensitive to future market or economic conditions. How We Addressed the Matter in Our Audit Our audit procedures included the following: · Obtained an understanding of the internal controls and processes in place over the Company’s goodwill impairment review process, including management’s review of the significant assumptions described above. · Evaluated the reasonableness of management’s revenue, expenses, operating margins, and other forecasted amounts by comparing the forecasts to actual historical results. · Evaluated the reasonableness of guideline public company valuation multiples. · Evaluated management’s determination of reporting units and segments. · With the assistance of our valuation specialists, evaluated the valuation methodologies and significant assumptions, including discount rates, and developed a range of independent estimates and compared those to the significant assumptions used by management. · Tested the mathematical accuracy of the calculations. /s/ Cherry Bekaert LLP We have served as the Company’s auditor since 2024. Atlanta, Georgia December 17, 2025 F-3 Table of Contents GEE GROUP INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands) September 30, 2025 2024 ASSETS CURRENT ASSETS: Cash $ 21,364 $ 20,735 Accounts receivable, less allowances ($ 76 and $ 144 , respectively) 9,695 12,751 Prepaid expenses and other current assets 622 762 Current assets of discontinued operations - 1,153 Total current assets 31,681 35,401 Property and equipment, net 354 546 Goodwill 24,759 46,008 Intangible assets, net 620 834 Deferred tax assets, net - 9,364 Right-of-use assets 2,443 3,115 Other long-term assets 140 295 Noncurrent assets of discontinued operations - 339 TOTAL ASSETS $ 59,997 $ 95,902 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,392 $ 1,960 Accrued compensation 4,519 5,026 Current operating lease liabilities 986 1,090 Current portion of notes payable 196 - Other current liabilities 595 899 Current liabilities of discontinued operations - 347 Total current liabilities 7,688 9,322 Deferred taxes, net 262 - Noncurrent operating lease liabilities 1,829 2,254 Notes payable 196 - Other long-term liabilities 12 82 Noncurrent liabilities of discontinued operations - 33 Total liabilities 9,987 11,691 Commitments and contingencies (Note 13) SHAREHOLDERS' EQUITY: Common stock, no-par value; authorized - 200,000 shares; 114,900 shares issued and 109,413 shares outstanding at September 30, 2025 and September 30, 2024 113,675 113,129 Accumulated deficit ( 60,479 ) ( 25,732 ) Treasury stock; at cost - 5,487 shares at September 30, 2025 and September 30, 2024 ( 3,186 ) ( 3,186 ) Total shareholders' equity 50,010 84,211 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 59,997 $ 95,902 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents GEE GROUP INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except basic and diluted loss per share) Year Ended September 30, 2025 2024 NET REVENUES: Contract staffing services $ 84,686 $ 94,753 Direct hire placement services 11,818 12,183 NET REVENUES 96,504 106,936 Cost of contract services 63,132 70,794 GROSS PROFIT 33,372 36,142 Selling, general and administrative expenses 35,624 39,809 Depreciation expense 201 261 Amortization of intangible assets 857 2,363 Intangible asset impairment charges - 5,209 Goodwill impairment charges 22,000 14,201 LOSS FROM OPERATIONS ( 25,310 ) ( 25,701 ) Interest expense ( 333 ) ( 315 ) Interest income 577 722 LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION ( 25,066 ) ( 25,294 ) Provision for income tax (expense) benefit attributable to continuing operations ( 9,588 ) 2,619 LOSS FROM CONTINUING OPERATIONS ( 34,654 ) ( 22,675 ) Loss from discontinued operations, net of tax (Note 5) ( 93 ) ( 1,427 ) CONSOLIDATED NET LOSS $ ( 34,747 ) $ ( 24,102 ) WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED 109,413 109,139 BASIC AND DILUTED LOSS PER SHARE From continuing operations $ ( 0.32 ) $ ( 0.21 ) From discontinued operations $ ( 0.00 ) $ ( 0.01 ) Consolidated net loss per share $ ( 0.32 ) $ ( 0.22 ) The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents GEE GROUP INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Amounts in thousands) Common Stock Treasury Stock Accumulated Shareholders' Shares Amount Shares Amount Deficit Equity Balance, September 30, 2023 114,900 $ 112,915 3,412 $ ( 1,984 ) $ ( 1,630 ) $ 109,301 Purchase of treasury stock - - 2,717 ( 1,575 ) - ( 1,575 ) Share-based compensation - 587 - - - 587 Issuance of shares under incentive stock plan - ( 373 ) ( 642 ) 373 - - Net loss - - - - ( 24,102 ) ( 24,102 ) Balance, September 30, 2024 114,900 $ 113,129 5,487 $ ( 3,186 ) $ ( 25,732 ) $ 84,211 Share-based compensation - 546 - - - 546 Net loss - - - - ( 34,747 ) ( 34,747 ) Balance, September 30, 2025 114,900 $ 113,675 5,487 $ ( 3,186 ) $ ( 60,479 ) $ 50,010 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents GEE GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Year Ended September 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Consolidated net loss $ ( 34,747 ) $ ( 24,102 ) Adjustments to reconcile consolidated net loss to cash provided by operating activities: Loss (gain) on disposal of assets 3 ( 14 ) Depreciation and amortization 1,062 2,664 Amortization of operating lease right-of-use assets 1,250 1,443 Intangible assets impairment charges - 5,209 Goodwill impairment charges 22,000 15,285 Share-based compensation 546 587 Provisions for credit losses 9 49 Gain on sale of Industrial Segment ( 133 ) - Deferred income taxes 9,606 ( 2,431 ) Amortization of debt issuance costs 153 153 Changes in operating assets and liabilities: Accounts receivable 3,745 4,655 Other assets 244 170 Accounts payable ( 1,054 ) ( 775 ) Accrued compensation ( 704 ) ( 241 ) Operating lease liabilities ( 1,107 ) ( 1,521 ) Other liabilities ( 324 ) ( 929 ) Net cash provided by operating activities 549 202 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment ( 16 ) ( 58 ) Business acquisition, net of cash acquired ( 968 ) - Proceeds from sale of Industrial Segment 1,038 - Net cash provided by (used in) investing activities 54 ( 58 ) CASH FLOWS FROM FINANCING ACTIVITIES: Purchases of treasury stock - ( 1,575 ) Payments on finance leases ( 67 ) ( 212 ) Net cash used in financing activities ( 67 ) ( 1,787 ) Net change in cash 536 ( 1,643 ) Cash at beginning of year 20,828 22,471 Cash at end of year 21,364 20,828 Less cash from discontinued operations - ( 93 ) Cash from continuing operations at end of year $ 21,364 $ 20,735 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 180 $ 169 Cash paid for taxes 72 43 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) 1. Description of Business GEE Group Inc. was incorporated in the State of Illinois in 1962 and is the successor to employment offices doing business since 1893. GEE Group Inc. and its wholly owned material operating subsidiaries, Access Data Consulting Corporation, Agile Resources, Inc., Hornet Staffing, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., and Triad Personnel Services, Inc. (collectively referred to as the “Company,” “us,” “our” or “we”) are providers of permanent and temporary professional staffing and placement services in and near several major U.S cities. We specialize in the placement of information technology, accounting, finance, office, engineering, and medical professionals for direct hire and contract staffing for our professional clients. The Company markets its services using the trade names Access Data Consulting, Agile Resources, Ashley Ellis, GEE Group (Columbus), General Employment, Hornet Staffing, Omni One, Paladin Consulting, Scribe Solutions, SNI Companies, Accounting Now, Staffing Now®, SNI Banking, SNI Certes®, SNI Energy®, SNI Financial® and SNI Technology®. As of September 30, 2025, we operated from locations in ten (10) states, including nineteen (19) branch offices in downtown or suburban areas of major U.S. cities and four (4) additional U.S. locations utilizing local staff members working remotely. The Company’s fiscal year begins on October 1 and ends on September 30 of each year. Fiscal 2025 and fiscal 2024 refer to the fiscal years ended September 30, 2025 and 2024, respectively. Liquidity The primary sources of liquidity for the Company are revenues earned and collected from its clients for the placement of contractors and permanent employment candidates and borrowings available under its asset-based senior secured revolving credit facility. Uses of liquidity include primarily the costs and expenses necessary to fund operations, including payment of compensation to the Company’s contract and permanent employees, payment of operating costs and expenses, payment to lessors, payment of taxes, payment of interest, fees and principal under its debt agreements, if any, purchases of treasury stock, and capital expenditures. Management believes that the Company has adequate cash and working capital and can generate adequate liquidity to meet its obligations for the foreseeable future and at least for one year after the date that these consolidated financial statements are issued. 2. Significant Accounting Policies and Estimates Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for financial information and with the instructions to Article 8 of Regulation S-X. Certain reclassifications have been made to the prior year’s consolidated financial statements and/or related disclosures to conform to the current year’s presentation. Principles of Consolidation The consolidated financial statements include the accounts and transactions of the Company and its wholly owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. F-8 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) Cash and Cash Equivalents Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. As of September 30, 2025, and September 30, 2024, there were no cash equivalents. Cash deposit accounts are maintained at financial institutions and, at times, balances may exceed federally insured limits guaranteed by the FDIC. During 2023, the Company entered into enhanced deposit arrangements with two financial institutions in which monies are deposited through a brokerage account and are further placed on deposit by the broker amongst U.S. banks pre-screened by the broker in amounts per bank that do not exceed the individual $ 250 FDIC per depositor limit. The aggregate amount of all funds on deposit under these accounts was $ 15,087 and $ 14,515 as of September 30, 2025 and 2024, respectively. The Company also holds funds in various other bank accounts that may exceed FDIC insured limits. These uninsured amounts, in aggregate, were $ 5,067 and $ 5,194 as of September 30, 2025 and 2024, respectively. We have never experienced any material losses related to cash on deposit with banks. Accounts Receivable The Company extends credit to its various customers based on evaluation of the customer’s financial condition and ability to pay the Company in accordance with the payment terms. An allowance for credit losses is recorded as a charge to bad debt expense where collection is considered to be doubtful due to credit issues. The Company adopted the methodology under ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), during fiscal 2024. The amendments in ASU 2016-13 replace the probable incurred loss impairment methodology underlying our previous allowance for doubtful accounts with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. During fiscal 2025, the Company elected to use the practical expedient introduced by ASU 2025-05 which simplifies the calculation of these estimates by assuming that current conditions will continue through the forecast period. Under ASU 2016-13, an allowance is recorded with a corresponding charge to bad debt expense for expected credit losses in our accounts receivable including consideration of the effects of past, present and future conditions that may reasonably be expected to impact credit losses. The Company charges off uncollectible accounts against the allowance once the invoices are deemed unlikely to be collectible. The allowance for credit losses is reflected in the consolidated balance sheets as a reduction of accounts receivable. The impact of adoptions of ASUs 2016-13 and 2025-05 were immaterial to the Company’s consolidated financial statements. As of September 30, 2025 and 2024 the allowance for credit losses was $ 76 and $ 144 , respectively. A summary of changes in this account is as follows: Year Ended September 30, 2025 2024 Beginning balance $ 144 $ 118 Provisions for credit losses 9 74 Accounts receivable write-offs ( 77 ) ( 48 ) Ending balance $ 76 $ 144 The Company has one customer that made up approximately 21 % of the consolidated accounts receivable balance as of September 30, 2025 and two customers that, in aggregate, made up approximately 27 % of the consolidated accounts receivable balance as of September 30, 2024. These customers are offered extended payment terms due to the frequency and volume of our services that they utilize. Each has demonstrated consistent creditworthiness since doing business with us and the Company has not experienced any losses related to these two customers historically. F-9 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) Property and Equipment Property and equipment are recorded at cost. Depreciation expense is calculated on a straight-line basis over estimated useful lives of five years for computer equipment and two to ten years for office equipment, furniture and fixtures. Depreciation expense for leasehold improvements is also calculated on a straight-line basis over the lesser of the useful life of the asset or the corresponding lease terms, which generally range from three to five years. The Company capitalizes computer software purchased or developed for internal use and amortizes it over an estimated useful life of five years. The carrying value of property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that it may not be recoverable. If the carrying amount of an asset group is greater than its estimated future undiscounted cash flows, the carrying value is written down to the estimated fair value. There was no impairment of property and equipment in fiscal 2025 and 2024. Leases The Company determines if a contractual arrangement is a lease at inception and evaluates and classifies leases as operating or finance leases for financial reporting purposes. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the Company’s consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities on the Company’s consolidated balance sheets. The lease classification is determined at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty. All the Company’s real estate leases are classified as operating leases. Also, the Company elected the practical expedient which allows aggregation of non-lease components with the related lease components when evaluating accounting treatment. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The lease payments included in the present value are fixed lease payments. As most of the Company’s leases do not provide an implicit rate, the Company estimates its collateralized incremental borrowing rate, based on information available at the commencement date, in determining the present value of lease payments. The Company applies the portfolio approach in applying discount rates to its classes of leases. The operating lease ROU assets include any payments made before the commencement date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company currently has one sublease which is accounted for on a net basis in other non-operational costs within selling, general, and administrative expenses and is not material to the consolidated financial statements. The Company does not currently have residual value guarantees or restrictive covenants in its leases. Goodwill The Company evaluates its goodwill for possible impairment as prescribed by FASB ASC 350, Intangibles — Goodwill and Other: Goodwill , at least annually and on an interim basis when one or more triggering events or circumstances indicate that the goodwill might be impaired. Under this guidance, annual or interim goodwill impairment testing is performed by comparing the estimated fair value of a reporting unit with its carrying amount. The Company allocates its goodwill to its Professional Services reporting unit for purposes of evaluation for impairments. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s estimated fair value, not to exceed the carrying value of goodwill. F-10 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) In determining the fair value of our Professional Services reporting unit, we use one or a combination of commonly accepted valuation methodologies: (1) the income approach, which is based on the present value of discounted cash flows projected for the reporting unit or, in certain instances, capitalization of earnings, and (2) the market approach, which estimates a fair value based on an appropriate revenue and/or earnings multiple(s) derived from comparable companies. These valuation techniques rely upon assumptions and other factors, such as the estimated future cash flows of our reporting unit, the discount rate used to determine the present value of future cash flows, and the market multiples of comparable companies utilized. In applying our methods, we consider and use averages and medians in the selection of assumptions derived from comparable companies or market data, where applicable, and in the application of the income and/or market approaches if we determine that this will provide a more appropriate estimated fair value or range of fair value estimates of the reporting unit. Changes to input assumptions and other factors used or considered in the analysis could result in materially different evaluations of goodwill impairment. The Company performed interim goodwill impairment assessments during fiscal 2025 and 2024, as of March 31, 2025 and June 30, 2024, respectively, which indicated the goodwill assigned to the Company’s Professional Services reporting unit was impaired as of each date. As a result of these interim assessments, the Company reduced its goodwill by $22,000 and $14,201, with corresponding non-cash impairment charges being recognized in its consolidated statements of operations for fiscal 2025 and 2024, respectively . The Company performed annual goodwill impairment assessments for its Professional Services reporting unit as of September 30, 2025 and September 30, 2024 and found its goodwill was not further impaired as of each date. Intangible Assets Separately identifiable intangible assets held in the form of customer relationships, non-competes and trade names were recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives ranging from two to ten years using the straight-line method. Impairment of Long-lived Assets (other than Goodwill) The Company recognizes an impairment of long-lived intangible assets used in operations, other than goodwill, when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method. For purposes of testing the long-lived assets other than goodwill, long-lived assets are grouped and considered with other assets and liabilities within the Professional Services reporting unit. An evaluation performed as of June 30, 2024, determined that certain asset groups associated with the Company’s intangible assets were producing negative or sufficiently low gross cash flows and that their estimated future discounted cash flows indicated impairments. As a result, the Company recorded a non-cash impairment charge of $ 5,209 on intangible assets during fiscal 2024. Fair Value Measurement The Company follows the provisions of FASB ASC 820, Fair Value Measurement , which defines fair value, establishes a framework for measuring fair value and enhances fair value measurement disclosure. Under these provisions, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances when observable inputs are not available. The hierarchy is described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. F-11 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) The fair values of the Company’s current assets and current liabilities approximate their carrying values due to their short-term nature. The carrying value disclosures of the Company’s long-term liabilities approximate their respective fair values based on current yield for debt instruments with similar terms. The Company has no assets or liabilities which are measured at fair value on a recurring basis. Fair value measurements utilized in evaluating the Company’s goodwill and other intangible assets for impairments are measured at fair value on a non-recurring basis using a combination of Level 2 and Level 3 inputs. Earnings per Share Basic earnings per share are computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period, which is computed using shares issued and outstanding. Diluted earnings per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the vesting of restricted shares granted but unissued, exercise of stock options and warrants. The dilutive effect of the common stock equivalents is reflected in earnings per share by use of the treasury stock method. Due to the loss from continuing operations reported for fiscal 2025 and 2024, there were no dilutive incremental shares considered in the calculation of dilutive shares. Common stock equivalents, which are excluded because their effect is anti-dilutive, were approximately 4,377 and 4,206 for fiscal 2025 and 2024, respectively. Revenue Recognition Revenues from contracts with customers are generated from direct hire placement services and professional contract services. Revenues are recognized when all placement obligations entitling the company to payment have been met. Our revenues are recorded net of variable consideration such as sales adjustments or allowances. Payment terms in our contracts vary by the type and location of our customer and the services offered. The terms between invoicing and when payments are due are not significant. Direct hire placement service revenues from contracts with customers are recognized when the Company has met each of the criteria under FASB ASC 606, Revenue from Contracts with Customers , including its performance obligations under the contracts. This generally occurs when the employment candidates accept offers of employment and have started their newly placed positions, less a provision for estimated credits or refunds to customers as the result of applicants not remaining employed for the entirety of the Company’s guarantee period (referred to as “falloffs”). The Company’s guarantee periods for permanently placed employees generally range from 60 to 90 days from the date of hire. Fees associated with candidate placement are generally calculated as a percentage of the new employee’s annual compensation. The Company records direct hire placement services revenues on a net basis as the Company acts as an agent for the customer and does not directly contract with or employ the direct hire candidates it places. No fees for permanent placement services are charged to direct hire employment candidates. F-12 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) Charges for expected future falloffs are recorded as reductions of revenues for estimated losses due to applicants not remaining employed for the Company’s guarantee period. Estimated future falloffs are determined by analyzing recent historical trends of actual falloffs and applying a formula comprised of average number of falloffs, average falloff amounts, and average cycle times between billing and fall off dates to derive an allowance for falloffs. Thus, the estimated allowance is derived from observed trends in actual historical falloffs and assumes that historical trends are indicative of future falloff activity. Liabilities for falloffs during the period are reflected in the consolidated balance sheets in the amounts of $ 72 and $ 102 , as of September 30, 2025 and 2024, respectively. Falloffs during the period are reflected in the consolidated statements of operations as a reduction of placement service revenues and were approximately $ 571 and $ 401 in fiscal 2025 and 2024, respectively. Temporary staffing service revenues from contracts with customers are recognized in amounts for which the Company has a right to invoice, as the services are rendered by the Company’s temporary employees. The Company records temporary staffing revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company controls the specified service before that service is performed for a customer. The Company has the risk of identifying and hiring qualified employees, has the discretion to select the employees and establish their price, and bears the risk for services that are not fully paid for by customers. There was no customer that represented 10% or more of the Company’s consolidated revenue in fiscal 2025 or 2024. Cost of Contract Staffing Services The cost of contract services includes the wages and the related payroll taxes, employee benefits and certain other employee-related costs of the Company’s contract service employees while they work on contract assignments. All costs associated with direct hire placements are recorded as selling, general and administrative expenses as the Company acts as an agent for the customer, only recognizing revenue for the net fees earned. Accordingly, none of the Company’s costs associated with direct hire placement services are reportable as costs of services. Advertising Expenses The Company expenses the costs of job boards used for identifying and recruiting candidates, print and internet media advertising and promotions as incurred and reports these costs in selling, general and administrative expenses. Advertising expense totaled $ 1,881 and $ 2,083 for fiscal 2025 and 2024, respectively. Share-Based Compensation The Company accounts for share-based awards to employees in accordance with FASB ASC 718, Compensation-Stock Compensation , which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the consolidated financial statements based on a determination of the fair value of the stock options or restricted stock grants. The grant date fair value of stock options is determined using the Black-Scholes-Merton ("Black-Scholes") pricing model. For all employee stock options and restricted stock grants, the Company recognizes expense over the employee's requisite service period (generally the vesting period of the equity grant) and records an estimate for forfeitures. The Company's option pricing model requires the input of subjective assumptions, including the expected stock price volatility, and expected term. Any changes in these subjective assumptions significantly impact our share-based compensation expense. See Note 11 for the assumptions used to calculate the fair value of share-based employee and non-employee compensation. Upon the exercise of options, the Company may elect to utilize treasury shares instead of issuing new shares. F-13 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) Income Taxes The Company accounts for income taxes under the asset and liability method, FASB ASC 740, Income Taxes , which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it is believed these assets are more likely than not to be realized. In making such a determination, all available positive and negative evidence is considered, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. In the event it is determined that the Company would be able to realize the deferred tax assets in the future in excess of their recorded amount, an adjustment would be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions on the basis of a two-step process in which (1) determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. Interest and penalties related to uncertain tax benefits are recognized on the income tax expense line in the accompanying consolidated statement of operations. As of September 30, 2025 and 2024, no accrued interest or penalties are included on the related tax liability line in the accompanying consolidated balance sheets. 3. Recent Accounting Pronouncements Recently Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which contains authoritative guidance amending how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance requires the application of a current expected credit loss (“CECL”) model, which is a new impairment model based on expected losses. The new guidance was effective for fiscal years beginning after December 15, 2022. ASU 2016-13 became effective for the Company on October 1, 2023. The new guidance was implemented during the quarter ended December 31, 2023, is applicable to the Company’s trade (accounts) receivable and did not have a material impact on its consolidated financial statements taken as a whole. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), which enhances prior reportable segment disclosure requirements in part by requiring entities to disclose significant expenses related to their reportable segments. The guidance also requires disclosure of the Chief Operating Decision Maker's (“CODM”) position for each segment and detail of how the CODM uses financial reporting to assess their segment’s performance. The new guidance is effective for fiscal years beginning after December 15, 2023, and for interim periods during fiscal years beginning after December 15, 2024. The new guidance was implemented during the quarter ended September 30, 2025, as presented in Note 16, and did not have a material effect on the Company’s consolidated financial statements and disclosures. In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326), which introduces a practical expedient for estimating credit losses under CECL for current accounts receivable and contract assets arising from revenue transactions under ASC 606. If elected, this expedient allows entities to assume that current conditions at the balance sheet date will persist through the forecast period, simplifying the estimation process. The new guidance is effective for fiscal years and interim periods beginning after December 15, 2025. The Company elected to early adopt the expedient during the quarter ended September 30, 2025 which did not have a material impact on its consolidated financial statements. F-14 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which expands income tax disclosure requirements in part by requiring entities to disclose a reconciliation of their effective tax rates to statutory rates and provide disaggregation of taxes paid. The guidance also eliminates existing disclosure requirements related to anticipated changes in unrecognized tax benefits and temporary differences related to unrecorded deferred tax liabilities. The new guidance is effective for fiscal years beginning after December 15, 2024. The Company has not yet determined the effects of the new guidance on its consolidated financial statements and disclosures. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), which expands expense disclosure requirements in part by requiring entities to provide tabular disclosure of the nature of expenses making up relevant captions on the face of the income statement. The guidance requires disclosure of the amounts making up each caption in categories such as inventory purchases, employee compensation, depreciation, intangible asset amortization, and depletion. The guidance also requires qualitative descriptions of other amounts included in each caption that are not separately disaggregated. The new guidance is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. The Company has not yet determined the effects of the new guidance on its consolidated financial statements and disclosures. No other recent accounting pronouncements were issued by FASB and the SEC that are believed by management to have a material impact on the Company’s present or future financial statements. 4. Business Acquisition On January 3, 2025, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Hornet Staffing, Inc., a Georgia corporation (“Hornet”) and its shareholders, and purchased 100 shares of its capital stock which represents 100 % of the ownership interest in Hornet. Hornet is an Atlanta-based provider of staff augmentation services with national service capability. Hornet provides staffing solutions to many markets serving large scale, "blue chip" companies in the information technology ("IT"), professional and customer service staffing verticals. The total consideration paid for the purchased shares was $ 1,500 , consisting of (i) a $ 1,100 cash payment, and (ii) the issuance to its former shareholders of subordinated and unsecured promissory notes (the "Promissory Notes") totaling an aggregate initial principal amount of $ 400 . Interest on the outstanding principal balances of the Promissory Notes is payable at a fixed rate of 5 % per annum. Payments on the Promissory Notes shall be made annually with the first payment due on the first anniversary of the issuance dates and the second and final payment due on the second anniversary of the issuance date. The Company also paid legal and professional fees of $ 111 related to the purchase during fiscal 2025, which are included in selling, general and administrative expenses in the consolidated statements of operations. The Purchase Agreement also provides that for the initial two-year period after closing, Hornet is required to achieve an agreed upon minimum average gross profit measure equal to $ 720 for each of the two subsequent twelve-month periods (each twelve-month period being separately measured). If the average gross profit measure during either of the subsequent two years is less than the minimum required average gross profit, then the Company will reduce the remaining balance under the Promissory Notes proportionally by an amount equal to the amount of the shortfall; provided the Company may not deduct more than the amount due under the then current payment for the Promissory Notes and may not seek to claw back any previous payments made under the Notes. F-15 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) The Purchase Agreement contains certain representations and warranties customary and standard for this type of transaction. The assets and liabilities of Hornet were recorded at their estimated fair values as of the closing date of the Purchase Agreement. The Promissory Notes were measured at fair value using Level 3 inputs and were recorded net of discounts of $8 at the acquisition date. The following table summarizes the preliminary balance sheet at January 3, 2025: Assets purchased $ 612 Liabilities assumed (a) 514 Net assets purchased 98 Purchase consideration: Cash paid at closing 1,100 Promissory notes, net 392 Intangible assets from purchase $ 1,394 (a) Liabilities assumed includes a $151 deferred tax liability present at January 3, 2025 but recorded by the Company post-acquisition due to a tax election made during fiscal 2025. An independent purchase price allocation and valuation has been performed to identify intangible assets acquired. The allocation to these intangible assets is as follows: Fair Value Useful Life Customer relationships $ 564 8 years Tradename 68 10 years Non-compete 11 2 years Goodwill 751 Indefinite Total intangible assets acquired $ 1,394 The following table represents the unaudited consolidated pro forma results of operations for fiscal 2025 and 2024 had the acquisition occurred on October 1, 2023, the first day of the most historic period reported in this Annual Report on Form 10-K. This unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisition occurred on October 1, 2023. This information is based on Hornet’s unaudited historical financial statements. Year Ended September 30, 2025 2024 Net revenues $ 98,092 $ 112,599 Cost of contract services 64,490 75,683 Gross profit 33,602 36,916 Selling, general and administrative expenses 35,776 40,372 Loss from operations ( 34,577 ) ( 22,527 ) Basic and diluted loss per share $ ( 0.32 ) $ ( 0.21 ) F-16 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) 5. Discontinued Operations On April 18, 2024, the Company’s Mergers and Acquisitions (“M&A”) committee of the Board of Directors completed its review of strategic alternatives recommended by an outside investment banking firm. This included recommendation of divesture of the Company’s Industrial Segment which was subsequently approved by the Company’s full Board of Directors on May 13, 2024. Management thereafter began the process of identifying and contacting potential buyers. As of March 31, 2025, the Company’s plan to sell its Industrial Segment met all the criteria for the first time to be reported as discontinued operations under U.S. GAAP, the final one being making the determination that the sale or other disposition would be completed within twelve months. On June 2, 2025, the Company entered into an agreement for the sale of certain operating assets of its Industrial Segment, including those of BMCH, Inc., Triad Logistics, Inc., and its Triad Staffing brand. The Company received total cash consideration of $ 250 from the buyer at closing and an additional $ 788 during the first 90 days following closing. A pre-tax net gain of $ 133 , including transaction costs of $ 97 , is included in discontinued operations for fiscal 2025. The remaining assets of the Industrial Segment not sold were distributed to the Company. Assets and Liabilities of Discontinued Operations The balances of assets and liabilities under the Industrial Segment as of September 30, 2025 and 2024 consisted of the following: September 30, 2025 September 30, 2024 Assets of discontinued operations: Cash $ - $ 93 Accounts receivable, net - 996 Prepaid expenses and other current assets - 64 Property and equipment, net - 13 Right-of-use assets - 138 Deferred tax assets, net - 131 Other long-term assets - 57 Total assets of discontinued operations $ - $ 1,492 Liabilities of discontinued operations: Accounts payable $ - $ 27 Accrued compensation - 197 Current operating lease liabilities - 105 Other current liabilities - 18 Noncurrent operating lease liabilities - 33 Total liabilities of discontinued operations $ - $ 380 F-17 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) Net Loss from Discontinued Operations Results of the Industrial Segment for fiscal 2025 and 2024, respectively, consisted of the following: Year Ended September 30, 2025 2024 Revenue $ 4,609 $ 9,547 Expenses: Cost of contract services 3,525 8,043 Selling, general and administrative expenses 1,290 1,736 Depreciation expense 4 40 Goodwill impairment charge - 1,084 Interest expense - 7 Loss from discontinued operations before gain on sale and income taxes ( 210 ) ( 1,363 ) Gain on sale of Industrial Segment 133 - Provision for income tax expense attributable to discontinued operations ( 16 ) ( 64 ) Loss from discontinued operations, net of tax $ ( 93 ) $ ( 1,427 ) Cash Flows from Discontinued Operations The net cash flows of the Industrial Segment during fiscal 2025 included the cash proceeds of $ 1,038 received as consideration on the sale. There were no capital expenditures or other significant non-operating cash flows under the Industrial Segment during fiscal 2025 or 2024. 6. Property and Equipment Property and equipment, net, consisted of the following: September 30, 2025 September 30, 2024 Computer software $ 117 $ 472 Computer equipment 1,174 2,102 Furniture and fixtures 630 941 Leasehold improvements 99 176 Total property and equipment, at cost 2,020 3,691 Accumulated depreciation ( 1,666 ) ( 3,145 ) Property and equipment, net $ 354 $ 546 7. Leases The Company occasionally acquires equipment under finance leases including hardware and software used by our IT department to improve security and capacity, and certain furniture for our offices. Terms for these leases generally range from two to six years. The assets obtained under finance leases are included in property and equipment, net, on the consolidated balance sheets. Finance lease expenses such as amortization of the lease assets and interest expense on the lease liabilities are included on the consolidated statements of operations in depreciation expense and interest expense, respectively. Supplemental information related to these expenses consisted of the following: Fiscal 2025 Fiscal 2024 Amortization of finance lease assets $ 89 $ 95 Interest on finance lease liabilities 7 18 F-18 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) Supplemental balance sheet information related to finance leases consisted of the following: September 30, 2025 September 30, 2024 Net book value of finance lease assets $ 113 $ 202 Weighted average remaining lease term for finance leases 1.2 years 2.2 years Weighted average discount rate for finance leases 5.3 % 5.3 % The table below reconciles the undiscounted future minimum lease payments under non-cancelable finance lease agreements to the total finance lease liabilities recognized on the consolidated balance sheets, included in other current liabilities and other long-term liabilities, as of September 30, 2025: Fiscal 2026 $ 73 Fiscal 2027 12 Less: Imputed interest ( 3 ) Present value of finance lease liabilities (a) $ 82 (a) Includes current portion of $ 70 for finance leases. The Company leases space for all its branch offices, which are generally located either in downtown or suburban business centers, and for its corporate headquarters. Branch offices are generally leased over periods ranging from three to five years. The corporate office lease expires in 2026. The Company’s leases generally provide for payment of basic rent plus a share of building real estate taxes, maintenance costs and utilities. Operating lease expenses included in selling, general, and administrative expenses on the consolidated statements of operations were $ 1,748 and $ 2,029 for fiscal 2025 and 2024, respectively. Supplemental cash flow information related to operating leases consisted of the following: Fiscal 2025 Fiscal 2024 Cash paid for operating lease liabilities $ 1,252 $ 1,557 Right-of-use assets obtained in exchange for new operating lease liabilities 488 906 Supplemental balance sheet information related to operating leases consisted of the following: September 30, 2025 September 30, 2024 Weighted average remaining lease term for operating leases 2.6 years 2.6 years Weighted average discount rate for operating leases 5.5 % 5.6 % The table below reconciles the undiscounted future minimum lease payments under non-cancelable operating lease agreements having initial terms in excess of one year to the total operating lease liabilities recognized on the consolidated balance sheet as of September 30, 2025, including certain closed offices are as follows: Fiscal 2026 $ 1,048 Fiscal 2027 893 Fiscal 2028 620 Fiscal 2029 316 Fiscal 2030 123 Less: Imputed interest ( 185 ) Present value of operating lease liabilities (a) $ 2,815 (a) Includes current portion of $ 986 for operating leases. F-19 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) 8 . Goodwill and Intangible Assets Goodwill For purposes of performing its annual goodwill impairment assessments as of September 30, 2025 and 2024, the Company applied the valuation techniques and assumptions to its Professional Segment reporting unit as discussed in Note 2, above; and also considered recent trends in the Company’s stock price, implied control or acquisition premiums, earnings, and other possible factors and their effects on estimated fair value of the Company’s reporting unit. The Company completed its most recent annual goodwill impairment assessment as of September 30, 2025 and determined that its goodwill was not further impaired. Prior to this, as of March 31, 2025, an interim assessment was performed as the estimated fair value of the Professional Services reporting unit was determined to have decreased and indicated that the reporting unit’s carrying value exceeded its estimated fair value. As a result, a non-cash goodwill impairment charge of $ 22,000 was recognized during fiscal 2025, as determined by the interim evaluation made of our goodwill as of March 31, 2025. Upon completion of the prior annual goodwill impairment assessment as of September 30, 2024, it was determined that the Company’s goodwill was not further impaired. In fiscal 2024, an interim assessment was also performed due to the decline in operating results and market capitalization experienced during the year which, in management’s view, represented one or more triggering events that could indicate an impairment in the Company’s goodwill. The interim assessment was performed as of June 30, 2024 and indicated the goodwill assigned to the Professional Services reporting unit was impaired. As a result, a non-cash goodwill impairment charge of $ 14,201 was recognized during fiscal 2024, as determined by the interim evaluation made of our goodwill as of June 30, 2024. A summary of goodwill balances is presented as follows: Goodwill Accumulated Impairment Carrying Amount As of September 30, 2024 $ 75,510 $ ( 29,502 ) $ 46,008 Addition from business acquisition 751 - 751 Impairment adjustment - ( 22,000 ) ( 22,000 ) As of September 30, 2025 $ 76,261 $ ( 51,502 ) $ 24,759 The estimated fair value of the Professional Services reporting unit resulting from the September 30, 2025 assessment exceeded the reporting unit’s adjusted carrying value, net of the impairment recorded during the March 31, 2025 interim assessment, by approximately 39 %, or approximately $ 12.7 million. Should industry conditions remain consistently negative, or worsen, or if assumptions such as control premiums, revenue growth projections, cost reduction projections, cost of capital or discount rates or business enterprise value multiples change such conditions could result in a deficit of the fair value of the Company’s Professional Services reporting unit as compared to its remaining carrying value, leading to an impairment in the future. F-20 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) Intangible Assets The following tables set forth the costs, accumulated amortization and net book value of the Company’s separately identifiable intangible assets as of September 30, 2025 and September 30, 2024 and estimated future amortization expense. September 30, 2025 September 30, 2024 Cost Impairment Charges Accumulated Amortization Net Book Value Cost Impairment Charges Accumulated Amortization Net Book Value Customer relationships $ 27,521 $ ( 5,153 ) $ ( 21,833 ) $ 535 $ 26,957 $ ( 5,153 ) $ ( 21,147 ) $ 657 Trade names 8,397 ( 56 ) ( 8,262 ) 79 8,329 ( 56 ) ( 8,096 ) 177 Non-competes 4,342 - ( 4,336 ) 6 4,331 - ( 4,331 ) - Total $ 40,260 $ ( 5,209 ) $ ( 34,431 ) $ 620 $ 39,617 $ ( 5,209 ) $ ( 33,574 ) $ 834 Fiscal 2026 $ 122 Fiscal 2027 79 Fiscal 2028 77 Fiscal 2029 77 Fiscal 2030 77 Thereafter 188 $ 620 Intangible assets that represent customer relationships are amortized on the basis of estimated future undiscounted cash flows or using the straight-line basis over estimated remaining useful lives of five to ten years. Non-competes and trade names are amortized on a straight-line basis over their respective estimated useful lives of between two and ten years. Due to the presence of negative macroeconomic conditions impacting U.S. staffing firms, including ours, and related reductions to the Company’s forecasts of future results, the Company performed an evaluation of its intangible assets as of June 30, 2024, using the undiscounted cash flows method. In performing this evaluation, it was determined that certain asset groups associated with the Company’s intangible assets were producing negative or sufficiently low gross cash flows and that their estimated future discounted cash flows indicated impairments of the remaining unamortized balances. As a result, the Company recorded a non-cash impairment charge of $ 5,209 on intangible assets during fiscal 2024. 9. Other Current Liabilities Other current liabilities consisted of the following: September 30, 2025 September 30, 2024 Accrued client rebates $ 137 $ 340 Reserve for falloffs 72 102 Current finance leases payable 70 67 Accrued audit fees 73 47 Accrued severance - 45 Other 243 298 Total other current liabilities $ 595 $ 899 F-21 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) 10. Senior Bank Loan, Security and Guarantee Agreement The Company and its subsidiaries have a Loan, Security and Guaranty Agreement for a $ 20 million asset-based senior secured revolving credit facility (the “Facility”) with First Citizens Bank (“FCB”) (formerly CIT Bank, N.A.). The Facility is collateralized by 100% of the assets of the Company and its subsidiaries who are co-borrowers and/or guarantors. The Facility matures on the fifth anniversary of the closing date ( May 14, 2026 ). As of September 30, 2025, the Company had no outstanding borrowings and $ 4,828 of unused capacity available for borrowing under the terms of the Facility. The Company had $ 102 and $ 255 in unamortized debt issuance costs associated with the Facility as of September 30, 2025 and 2024, respectively. Of these costs, $ 102 and $ 153 were reflected in other current assets on the consolidated balance sheets as of September 30, 2025 and 2024, respectively, with the remainder, if any, being reflected in other long-term assets. The amortization expense of these debt costs included in interest expense on the consolidated statements of operations was $153 in both fiscal 2025 and 2024. Under the Facility, advances are subject to a borrowing base formula that is computed based on 85 % of eligible accounts receivable of the Company and subsidiaries as defined in the Facility, and subject to certain other criteria, conditions, and applicable reserves, including any additional eligibility requirements as determined by the administrative agent. The Facility is subject to usual and customary covenants and events of default for credit facilities of this type but is not subject to any financial covenants. The interest rate, at the Company’s election, was based on either the Base Rate, as defined, plus the applicable margin; or the London Interbank Offered Rate (“LIBOR”), or any successor thereto, for the applicable interest period, subject to a 1 % floor, plus the applicable margin. In addition to interest costs on advances outstanding, the Facility will provide an unused line fee ranging from 0.37 5% to 0.50 % depending on the amount of undrawn credit, original issue discount and certain fees for diligence, implementation, and administration. The unused line fees incurred and included in interest expense totaled $ 101 in both fiscal 2025 and 2024. On May 18, 2023, the Company entered into a Consent and Amendment No. 1 to the Loan and Security and Guarantee Agreement (“Amendment No. 1”), by and among the Company, certain subsidiaries of the Company as Borrowers, the Guarantors, the financial institutions party to the agreement from time to time as the Lenders, and FCB, as Agent for the Lenders. Pursuant to the terms of Amendment No. 1 and subject to the terms and conditions set forth in Amendment No. 1, FCB and Lenders consented to the Company’s previously announced 2023 Stock Repurchase Program (as defined in Amendment No. 1), which continued through December 31, 2023; provided that (i) the aggregate amount paid for all such repurchase transactions did not exceed $20 million, and (ii) no Default or Event of Default (as defined in Amendment No. 1) exists or would exist after giving effect to each repurchase transaction consummated thereunder. In addition, effective as of the date of Amendment No. 1, LIBOR is no longer used as a benchmark rate or otherwise operative within Amendment No. 1 and was replaced with the Secured Overnight Financing Rate (“SOFR”) as well as other conforming changes. On December 15, 2023, the Company and FCB entered into Amendment No. 2 to the Facility (“Amendment No. 2”), which provides for an increase in the Facility’s concentration limits for certain large clients at the discretion of FCB. On January 3, 2025, in connection with its acquisition of Hornet, the Company and FCB entered into Consent and Amendment No. 3 to the Facility (“Amendment No. 3”), pursuant to which, FCB consented to the Hornet acquisition and the Company and its subsidiaries, as co-borrowers, the guarantors and FCB made certain amendments to the Loan Agreement and related collateral agreements to add Hornet to the Facility, accordingly. F-22 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) 11. Shareholders’ Equity (Share-based Compensation and Share Repurchase Program) Preferred Stock The Company has authorized 20,000 shares of preferred stock of which 1,000 shares have been designated Series A Preferred Stock, and no shares were issued or are outstanding; 5,950 shares have been designated Series B Preferred Stock, of which 5,926 shares were issued and none remain outstanding, and 3,000 shares have been designated Series C Preferred Stock, of which 2,093 shares were issued and none remained outstanding as of September 30, 2025 and 2024. Based on the terms of the Series B Convertible Preferred Stock, if certain fundamental transactions were to occur, the Series B Convertible Preferred Stock would require redemption, which would preclude permanent equity classification on the accompanying consolidated balance sheets. The Series C Convertible Preferred Stock has a Liquidation Value equal to $ 1.00 per share and ranks pari passu with the Company’s Series B Convertible Preferred Stock and senior to all “Junior Securities” (including the Company’s Common Stock) with respect to any distribution of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary. Amended and Restated 2013 Incentive Stock Plan, as amended As of September 30, 2025, there were vested and unvested shares of restricted stock and stock options outstanding under the Company’s Amended and Restated 2013 Incentive Stock Plan, as amended (“Incentive Stock Plan”). The Incentive Stock Plan, as amended, provides for total shares available for restricted stock and stock options of 15,000 ( 7,500 restricted stock shares and 7,500 stock option shares). The Incentive Stock Plan authorizes the Compensation Committee of the Board of Directors to grant non-statutory stock options to employees. Vesting periods are established by the Compensation Committee at the time of grant. As of September 30, 2025, there were 7,140 shares available to be granted under the Plan ( 4,052 shares available for restricted stock grants and 3,088 shares available for non-qualified stock option grants). Restricted Stock On September 27, 2022, the Company adopted a new annual incentive compensation program (“AICP”) for its executives to be administered under the Company’s Incentive Stock Plan. The AICP includes a long-term incentive (“LTI”) compensation plan in the form of restricted stock awards comprised of two components: one that vests based on future service only, and a second that vests based on future service and performance. Initial awards under both service-only and service plus performance-based components of the AICP LTI plan are determined based on financial performance measures for the immediately preceding fiscal year. The Company did not grant shares of restricted stock during fiscal 2025, however, it did grant 164 shares of restricted stock during fiscal 2024. The 164 shares of restricted stock granted under the AICP during fiscal 2024 were based on actual fiscal 2023 results and will cliff vest on December 1, 2026, based on future service only. No service plus performance-based restricted shares were granted in fiscal 2024 upon determination that financial targets set by the Company’s Board of Directors were not met for fiscal 2024. F-23 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) Under the AICP LTI, the service plus performance-based awards for each fiscal year are scheduled in annual tranches to be granted over three subsequent years. The schedule for these is as follows: Shares granted (b) Maximum future shares eligible to be granted (c) Tranche Grant Date (a) Vesting Date Fiscal 2023 Fiscal 2024 Fiscal 2025 Fiscal 2026 Awards based on Fiscal 2022 performance: 1 December 2, 2022 December 2, 2025 41 2 December 1, 2023 December 2, 2025 - 3 November 29, 2024 December 2, 2025 - Awards based on Fiscal 2023 performance: 1 December 1, 2023 December 1, 2026 - 2 November 29, 2024 December 1, 2026 - 3 December 1, 2025 December 1, 2026 55 Total shares granted or eligible to be granted in future 41 - - 55 (a) Future grant dates are estimates subject to change based on approval by the Company’s Board of Directors of the related financial targets for the fiscal year in which the grants are made. (b) Shares granted reflect the portions earned of each award, as adjusted for the performance of each respective fiscal year with regard to the applicable financial targets as set by the Board of Directors. (c) The maximum future shares eligible to be granted under each award will be further adjusted based on the outcome for each respective fiscal year with regard to the financial targets set by the Board of Directors. Share-based compensation expense attributable to restricted stock was $ 215 and $ 292 in fiscal 2025 and 2024, respectively. As of September 30, 2025, there was approximately $ 89 of unrecognized compensation expense related to restricted stock currently outstanding and the weighted average remaining vesting period for those grants was 0.5 years. A summary of restricted stock activity is presented as follows: Number of Shares Weighted Average Fair Value ($) Non-vested restricted stock outstanding as of September 30, 2023 1,384 0.62 Granted 164 0.54 Vested ( 642 ) 0.46 Non-vested restricted stock outstanding as of September 30, 2024 906 0.71 Granted - - Vested - - Non-vested restricted stock outstanding as of September 30, 2025 906 0.71 Warrants The Company had no warrants outstanding as of September 30, 2025. As of September 30, 2024, the Company had 77 warrants outstanding with a weighted average exercise price per share of $ 2 and a weighted average remaining contractual life of 0.5 years. No warrants were granted during fiscal 2025 and 2024. All outstanding warrants expired during fiscal 2025. Stock Options All stock options outstanding as of September 30, 2025 and September 30, 2024 were non-qualified stock options, had exercise prices equal to the market price on the date of grant, and had expiration dates ten years from the date of grant. F-24 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) The Company granted 1,550 stock options during fiscal 2025 and did not grant stock options during fiscal 2024. The Company’s stock options generally vest on annual schedules during periods ranging from two to four years from the date of grant, although some options are fully vested upon grant. Share-based compensation expense attributable to stock options is recognized over their estimated remaining lives and was $ 331 and $ 295 in fiscal 2025 and 2024, respectively. As of September 30, 2025, there was approximately $ 472 of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average remaining vesting period for those options was 2.8 years. A summary of stock option activity is as follows: Number of Shares Weighted Average Exercise Price per share ($) Weighted Average Fair Value per share ($) Weighted Average Remaining Contractual Life (Years) Total Intrinsic Value of Options ($) Options outstanding as of September 30, 2023 3,933 1.18 0.96 7.96 27 Granted - - - - - Forfeited ( 582 ) 1.25 1.10 - - Options outstanding as of September 30, 2024 3,351 1.17 0.93 7.08 - Granted 1,550 0.22 0.17 - - Forfeited ( 489 ) 1.68 0.92 - - Options outstanding as of September 30, 2025 4,412 0.78 0.68 7.28 - Exercisable as of September 30, 2024 2,293 1.43 1.13 6.38 - Exercisable as of September 30, 2025 2,970 0.98 0.87 6.55 - The fair value of stock options granted was made using the Black-Scholes option pricing model and the following assumptions: Fiscal 2025 Fiscal 2024 Weighted average fair value of options $ 0.22 $ - Weighted average risk-free interest rate 4.3 % - Weighted average volatility factor 96.5 % - Weighted average expected life 5.9 years - Share Repurchase Program On April 27, 2023, the Company’s Board of Directors approved a share repurchase program authorizing the Company to purchase up to an aggregate of $ 20 million of the Company’s currently outstanding shares of common stock. The share repurchase program continued through December 31, 2023. The repurchase program did not obligate the Company to repurchase any number of shares of common stock. The share repurchase program was conducted in accordance with Rules 10b-5 and 10b-18 of the Securities Exchange Act of 1934, as amended. Subject to applicable rules and regulations, shares of common stock were purchased from time to time in the open market transactions and in amounts the Company deemed appropriate, based on factors such as market conditions, legal requirements, and other business considerations. During fiscal 2024, the Company repurchased 2,717 shares of its common stock at a net cost of $ 1,575 . Upon conclusion of the share repurchase program, as of December 31, 2023, the Company repurchased 6,129 shares in aggregate (accounting for approximately 5.4 % of our then issued and outstanding shares of common stock immediately prior to the program). On August 13, 2024, the Company re-issued 642 of its treasury shares to fulfill commitments for the issuance of previously granted restricted share awards that became fully vested and unrestricted. The treasury shares were reissued in lieu of issuing 642 new shares of our common stock, therefore, while the Company’s total number of outstanding shares of common stock increased by 642, its total number of issued shares of common stock did not increase as a result of the reissuance of treasury shares instead. F-25 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) 12. Income Taxes The components of the provision for income taxes is as follows: Year Ended September 30, 2025 2024 Current expense (benefit): Federal $ - $ - State ( 5 ) ( 123 ) Total current expense (benefit): $ ( 5 ) $ ( 123 ) Deferred expense (benefit): Federal $ ( 1,981 ) $ ( 3,027 ) State ( 390 ) ( 262 ) Total deferred expense (benefit): $ ( 2,371 ) $ ( 3,289 ) Change in valuation allowance: Federal $ 10,990 $ - State 974 793 Total change in valuation allowance: $ 11,964 $ 793 Provision for income tax expense (benefit) $ 9,588 $ ( 2,619 ) A reconciliation of the Company’s statutory income tax rate to the Company’s effective income tax rate is as follows: Year Ended September 30, 2025 2024 Income at US statutory rate $ ( 5,263 ) $ ( 5,484 ) State taxes, net of federal benefit ( 394 ) ( 366 ) Tax credits ( 46 ) ( 50 ) Stock compensation 323 24 Goodwill impairment 2,906 2,377 Valuation allowance 11,964 793 Other 98 87 Total income tax expense (benefit): $ 9,588 $ ( 2,619 ) The net deferred income tax asset (liability) balance related to the following: September 30, 2025 September 30, 2024 Net operating loss carryforwards $ 7,045 $ 5,823 Stock options 1,520 1,770 Allowance for credit losses 31 57 Accrued and prepaid expenses 326 448 Tax credit carryforwards 1,258 1,212 Right-of-use liabilities 622 746 Interest 2,996 3,088 Depreciation 33 16 Other - 6 Total deferred tax assets $ 13,831 $ 13,166 Intangible assets $ ( 797 ) $ ( 2,329 ) Right-of-use assets ( 519 ) ( 679 ) Other ( 20 ) - Total deferred tax liabilities $ ( 1,336 ) $ ( 3,008 ) Deferred tax assets $ 12,495 $ 10,158 Valuation allowance ( 12,757 ) ( 794 ) Deferred tax assets (liabilities), net $ ( 262 ) $ 9,364 F-26 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) As of September 30, 2025, the Company had federal and state net operating loss (“NOL”) carryforwards of approximately $ 28.2 million and $ 29.5 million, respectively, which begin to expire in tax years 2034 for federal and 2026 for state purposes. Of the $28.2 million of federal net operating losses, $ 10.9 million can be carried forward indefinitely. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets (“DTA”). In view of the significance of the Company’s recent pre-tax book losses and likelihood of continuing uncertainty in the industry and economy as a whole, management excluded projections of future income from its forecast of the reversal of its DTAs as of September 30, 2025. As a result, it was determined that the Company's net DTAs would not be realized as there is not sufficient positive evidence to conclude that it is more likely than not that the deferred taxes are realizable. The Company has recorded an additional $ 11,964 valuation allowance in fiscal 2025, resulting in a total valuation allowance of $ 12,757 as of September 30, 2025, accordingly. Under Internal Revenue Code 382, if a corporation undergoes a specified change in ownership, the Corporation’s ability to use its pre-change net operating loss (“NOL”) carryforwards and other pre-change tax attributes to offset its post-change income may be limited. Such limitation may result in the expiration of the NOL carryforwards generated before 2018 prior to their utilization. The Company engaged outside tax experts to perform a comprehensive section 382 study to calculate the estimated limitation and evaluate the Corporation’s ability to use its NOL carryforwards and other pre-change tax attributes. The study was finalized in the quarter ended March 31, 2025 and concluded that the Company’s pre-2018 NOL carryovers and other tax attributes are subject to limitation under section 382. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and the many states and local tax jurisdictions in which we operate or do business in. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. We record tax positions as liabilities in accordance with ASC 740 and adjust these liabilities when our judgement changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the recognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of September 30, 2025, and 2024, we have not recorded any material uncertain tax positions in our consolidated financial statements. Our policy is to recognize interest and penalties related to uncertain tax benefits, if any, on the income tax expense line in the accompanying consolidated statements of operations. As of September 30, 2025, and 2024, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheets. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years are still open under statute from September 30, 2022, to the present. Earlier years may be examined to the extent that the net operating loss carryforwards from those earlier years are used in future periods. The resolution of tax matters is not expected to have a material effect on the Company’s consolidated financial statements. F-27 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) The One Big Beautiful Bill of 2025 On July 4, 2025, H.R.1 - One Big Beautiful Bill was enacted, introducing a wide range of tax reforms for businesses. Due to the Company's loss position and limited exposure to affected provisions, the bill’s overall impact is not material. The Company has historically elected out of bonus depreciation for all classes of property under Section 168(k)(7) and depreciates assets under MACRS without accelerated expensing. The Company continues to monitor ongoing regulatory guidance related to the new law. 13. Commitments and Contingencies Litigation and Claims The Company and its subsidiaries are involved in litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position. Indemnification Agreements On April 27, 2023, the Company entered into Indemnification Agreements with certain of its officers and members of the Board to provide for indemnification of each individual in their respective capacities as officers and members of the Board of the Company to the fullest extent permitted under the Company’s Amended and Restated Articles of Incorporation, Amended and Restated Bylaws, and the Illinois Business Corporation Act. The Company carries directors and officers liability insurance, which is intended to provide protection for potential claims against the Company’s directors and officers. Management is not aware of any matters or circumstances under which potential liability arising from these agreements would be material to the consolidated financial statements. 14. Related Party Transactions On January 3, 2025, the Company entered into an employment agreement with Lawrence Bruce, one of the former shareholders of Hornet. As part of the Purchase Agreement, the Company issued Promissory Notes to Lawrence Bruce and his spouse, Laurel Bruce, in the amounts of $ 160 and $ 240 , representing their respective portions of this purchase consideration based on their percentage of Hornet’s stock ownership prior to the acquisition. The Promissory Notes have certain contingencies as disclosed under Note 4. 15. Defined Contribution Plan The Company provides a defined contribution plan (the “401(k) Plan”) for the benefit of its eligible core and field personnel, including those assigned to provide staffing services for clients. The 401(k) Plan allows participants to make contributions subject to applicable statutory limitations. The Company matches 10% of each participant’s contributions on the first 10% of contributions from their wages. The Company match under the 401(k) Plan totaled $ 526 and $ 260 for fiscal 2025 and 2024, respectively. F-28 Table of Contents GEE GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share data, unless otherwise stated) 16. Segment Data The Company provides the following distinctive services: (a) direct hire placement services and (b) temporary professional staffing services in the fields of information technology, accounting, finance and office, engineering, and medical. These services make up the Company’s Professional Segment. As disclosed in Note 5, the Company’s Industrial Segment has been deemed a discontinued operation and, as such, is excluded from the table below which only reflects continuing operations. The results of the Professional Segment are assessed by the Company’s chief operating decision-maker (“CODM”), our CEO, who decides how to allocate resources based on the segment’s income (loss) from operations. The CODM uses growth trends in both revenues and income (loss) from operations to compare the segment’s results to those of competitors as benchmarks. Additionally, the CODM reviews trends in revenues with reference to projected market conditions as provided by SIA in their quarterly and annual reports. These analyses provide the CODM with information needed to make decisions on capital use such as reinvesting into the Professional Segment or seeking acquisitions. Year Ended September 30, 2025 2024 Net revenues $ 96,504 $ 106,936 Cost of contract services 63,132 70,794 Personnel expenses 22,381 25,334 Occupancy expenses 1,689 1,973 Advertising expenses 1,848 2,021 Other segment expenses (a) 3,430 3,664 Depreciation and amortization 969 2,513 Intangible assets impairment charges - 5,209 Goodwill impairment charges 22,000 14,201 Professional Segment loss from operations $ ( 18,945 ) $ ( 18,773 ) Corporate SG&A (b) 6,276 6,817 Depreciation and amortization 89 111 Loss from operations $ ( 25,310 ) $ ( 25,701 ) Total accounts receivables net $ 9,695 $ 12,751 Intangible assets 620 834 Goodwill 24,759 46,008 Total assets (c) 59,997 94,410 (a) Other segment expenses mainly consist of consulting expenses, business insurance and licensing fees, applicant tracking systems and other software subscriptions, equipment-related costs, and background checks for candidates placed with clients. (b) Corporate SG&A primarily includes certain executive and administrative salaries and related expenses, corporate legal expenses, share-based compensation expenses, consulting expenses, audit fees, corporate rent and facility costs, board related fees, certain advertising and promotional expenses, and acquisition, integration and restructuring expenses. (c) All corporate assets such as cash and other assets have been presented together with those of the Professional Segment. F-29 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.