GEE Group Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS (unaudited) GEE GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Amounts in thousands) March 31, 2026 September 30, 2025 ASSETS CURRENT ASSETS: Cash $ 20,331 $ 21,364 Accounts receivable, less allowances ($ 76 and $ 76 , respectively) 9,541 9,695 Prepaid expenses and other current assets 577 622 Total current assets 30,449 31,681 Property and equipment, net 373 354 Goodwill 24,759 24,759 Intangible assets, net 540 620 Right-of-use assets 3,419 2,443 Other long-term assets 124 140 TOTAL ASSETS $ 59,664 $ 59,997 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,255 $ 1,392 Accrued compensation 3,961 4,519 Current operating lease liabilities 993 986 Current portion of promissory notes payable 196 196 Other current liabilities 275 595 Total current liabilities 6,680 7,688 Deferred taxes, net 234 262 Noncurrent operating lease liabilities 2,704 1,829 Promissory notes payable - 196 Other long-term liabilities - 12 Total liabilities 9,618 9,987 Commitments and contingencies (Note 15) SHAREHOLDERS' EQUITY: Common stock, no-par value; authorized - 200,000 shares; 114,900 shares issued and 109,870 shares outstanding at March 31, 2026 and 114,900 shares issued and 109,413 shares outstanding at September 30, 2025 113,530 113,675 Accumulated deficit ( 60,615 ) ( 60,479 ) Treasury stock; at cost - 5,030 shares at March 31, 2026 and 5,487 shares at September 30, 2025 ( 2,869 ) ( 3,186 ) Total shareholders' equity 50,046 50,010 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 59,664 $ 59,997 The accompanying notes are an integral part of the unaudited condensed consolidated financial statement 4 Table of Contents GEE GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Amounts in thousands except per share data) Three Months Ended Six Months Ended March 31, March 31, 2026 2025 2026 2025 NET REVENUES: Contract staffing services $ 16,294 $ 21,495 $ 34,094 $ 43,009 Direct hire placement services 3,187 3,000 5,903 5,511 NET REVENUES 19,481 24,495 39,997 48,520 Cost of contract services 12,066 16,135 25,177 32,234 GROSS PROFIT 7,415 8,360 14,820 16,286 Selling, general and administrative expenses 7,407 9,305 15,115 17,744 Depreciation expense 45 50 91 105 Amortization of intangible assets 20 225 80 430 Goodwill impairment charge - 22,000 - 22,000 LOSS FROM OPERATIONS ( 57 ) ( 23,220 ) ( 466 ) ( 23,993 ) Interest expense ( 66 ) ( 89 ) ( 131 ) ( 155 ) Interest income 116 139 244 294 Other income - - 196 - LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION ( 7 ) ( 23,170 ) ( 157 ) ( 23,854 ) Provision for income tax (expense) benefit attributable to continuing operations 21 ( 9,786 ) 21 ( 9,786 ) INCOME (LOSS) FROM CONTINUING OPERATIONS 14 ( 32,956 ) ( 136 ) ( 33,640 ) Loss from discontinued operations, net of tax (Note 3) - ( 163 ) - ( 171 ) CONSOLIDATED NET INCOME (LOSS) $ 14 $ ( 33,119 ) $ ( 136 ) $ ( 33,811 ) WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 109,881 109,413 109,741 109,413 WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 110,596 109,413 109,741 109,413 BASIC AND DILUTED INCOME (LOSS) PER SHARE From continuing operations $ 0.00 $ ( 0.30 ) $ ( 0.00 ) $ ( 0.31 ) From discontinued operations $ - $ ( 0.00 ) $ - $ ( 0.00 ) Consolidated net income (loss) per share $ 0.00 $ ( 0.30 ) $ ( 0.00 ) $ ( 0.31 ) The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 5 Table of Contents GEE GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (unaudited) (Amounts in thousands) Total Common Stock Treasury Stock Accumulated Shareholders' Shares Amount Shares Amount Deficit Equity Balance, September 30, 2025 114,900 $ 113,675 5,487 $ ( 3,186 ) $ ( 60,479 ) $ 50,010 Share-based compensation - 113 - - - 113 Issuance of shares under incentive stock plan - ( 344 ) ( 592 ) 344 - - Net loss - - - - ( 150 ) ( 150 ) Balance, December 31, 2025 114,900 $ 113,444 4,895 $ ( 2,842 ) $ ( 60,629 ) $ 49,973 Share-based compensation - 86 - - - 86 Return of shares issued under incentive stock plan for taxes - - 135 ( 27 ) - ( 27 ) Net Income - - - - 14 14 Balance, March 31, 2026 114,900 $ 113,530 5,030 $ ( 2,869 ) $ ( 60,615 ) $ 50,046 Total Common Stock Treasury Stock Accumulated Shareholders' Shares Amount Shares Amount Deficit Equity Balance, September 30, 2024 114,900 $ 113,129 5,487 $ ( 3,186 ) $ ( 25,732 ) $ 84,211 Share-based compensation - 118 - - - 118 Net loss - - - - ( 692 ) ( 692 ) Balance, December 31, 2024 114,900 $ 113,247 5,487 $ ( 3,186 ) $ ( 26,424 ) $ 83,637 Share-based compensation - 123 - - - 123 Net loss - - - - ( 33,119 ) ( 33,119 ) Balance, March 31, 2025 114,900 $ 113,370 5,487 $ ( 3,186 ) $ ( 59,543 ) $ 50,641 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 6 Table of Contents GEE GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Amounts in thousands) Six Months Ended March 31, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Consolidated net loss $ ( 136 ) $ ( 33,811 ) Adjustments to reconcile net loss to cash used in operating activities: Loss on disposal of assets - 3 Depreciation and amortization 171 540 Amortization of operating lease right-of-use assets 472 640 Goodwill impairment changes - 22,000 Gain on reduction of promissory notes payable ( 196 ) - Share-based compensation 199 241 Provisions for credit losses - 10 Deferred income taxes ( 28 ) 9,783 Amortization of debt issuance costs 76 76 Changes in operating assets and liabilities: Accounts receivable 154 1,514 Other assets ( 15 ) ( 5 ) Accounts payable ( 137 ) ( 443 ) Accrued compensation ( 558 ) ( 742 ) Operating lease liabilities ( 566 ) ( 624 ) Other liabilities ( 298 ) ( 323 ) Net cash used in operating activities ( 862 ) ( 1,141 ) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment ( 110 ) ( 4 ) Business acquisition, net of cash acquired - ( 968 ) Net cash used in investing activities ( 110 ) ( 972 ) CASH FLOWS FROM FINANCING ACTIVITIES: Return of shares issued under incentive stock plan for taxes ( 27 ) - Payments on finance leases ( 34 ) ( 39 ) Net cash used in financing activities ( 61 ) ( 39 ) Net change in cash ( 1,033 ) ( 2,152 ) Cash at beginning of period 21,364 20,828 Cash at end of period 20,331 18,676 Less cash from discontinued operations - ( 175 ) Cash from continuing operations at end of period 20,331 18,501 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 55 $ 78 Cash paid for taxes 7 10 Non-cash investing and financing activities: Operating ROU assets obtained in exchange for new lease liabilities 1,448 488 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 7 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the six-month period ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending September 30, 2026. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2025 as filed on December 17, 2025. A discontinued operation is a component of an entity that has either been disposed of, or that is classified as held for sale, which represents a strategic shift that has an effect on an entity’s operation and financial results. In accordance with U.S. GAAP, the assets and liabilities of discontinued operations are presented separately on the Company’s unaudited condensed consolidated balance sheets for all periods presented, if applicable. Net losses from discontinued operations are reported as a separate component of net loss on the unaudited condensed consolidated statements of operations. Cash flows from discontinued operations are not reported separately on the unaudited condensed consolidated statements of cash flows. All footnotes included herein present only continuing operations and exclude amounts related to discontinued operations for all periods presented, unless otherwise stated. Certain additional reclassifications have been made to the prior year’s condensed consolidated financial statements and/or related disclosures to conform to the current year’s presentation. 2. 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 $ 75 related to the purchase during the six months ended March 31, 2025, which are included in selling, general and administrative expenses in the unaudited condensed 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 (“AGP”), 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. As of December 31, 2025, upon conclusion of the first twelve-month measurement period, there was a shortfall in the minimum required AGP under the Purchase Agreement. This shortfall resulted in the elimination of the amounts of $ 196 that would have been due under the first installment of the Promissory Notes, which were written down during the six months ended March 31, 2026 and recorded as other income on the unaudited condensed consolidated statements of operations. No payments were required to be made to Hornet’s former shareholders on the first installment of the Promissory Notes. The minimum required AGP for the second twelve-month measurement period is still projected to be achievable. As such, the second installments of the Promissory Notes remain accrued in full. 8 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (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 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 (b) 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-close due to a tax election made in the second half of fiscal 2025. (b) Represents the initial amount of the Promissory Notes at closing, not including the elimination of the first installments during the six months ended March 31, 2026, as discussed above. 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 the three and six-month periods ended March 31, 2025 had the acquisition occurred on October 1, 2024, the first day of the most historic period reported in this Quarterly Report on Form 10-Q. 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, 2024. This information is based on Hornet’s unaudited historical financial statements. Three Months Ended March 31, 2025 Six Months Ended March 31, 2025 Net revenues $ 24,560 $ 50,108 Cost of contract services 16,178 33,592 Gross profit 8,382 16,516 Selling, general and administrative expenses 9,319 17,896 Loss from continuing operations ( 32,949 ) ( 33,563 ) Basic and diluted loss per share $ ( 0.30 ) $ ( 0.31 ) 9 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) 3. 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 , was 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 There were no assets or liabilities remaining under the Industrial Segment as of March 31, 2026 and September 30, 2025. Net Loss from Discontinued Operations Results of the Industrial Segment for the three and six-month periods ended March 31, 2026 and 2025 consisted of the following: Three Months Ended Six Months Ended March 31, March 31, 2026 2025 2026 2025 Revenue $ - $ 1,545 $ - $ 3,546 Expenses: Cost of contract services - 1,288 - 2,919 Selling, general and administrative expenses - 418 - 794 Depreciation expense - 2 - 4 Loss from discontinued operations before gain on sale and income taxes - ( 163 ) - ( 171 ) Provision for income tax expense attributable to discontinued operations - - - - Loss from discontinued operations, net of tax $ - $ ( 163 ) $ - $ ( 171 ) Cash Flows from Discontinued Operations There were no capital expenditures or other significant cash flows under the Industrial Segment during either of the six-month periods ended March 31, 2026 or 2025. 4. Recent Accounting Pronouncements Recently Adopted In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 and did not have a material effect on the Company’s consolidated financial statements and disclosures. 10 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) 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 Accounting Standards Codification (“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. In December 2025, the FASB issued ASU 2025‑11, Interim Reporting (Topic 270), which clarifies content and disclosure requirements for interim financial statements and adds a principle requiring disclosure of material events occurring after the most recent annual reporting period. The guidance is effective for interim periods within fiscal years beginning after December 15, 2027. The Company elected to early adopt the guidance during the quarter ended March 31, 2026, which did not have a material impact on its consolidated financial statements or disclosures. 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 applies to annual periods only and 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. 5. Cash and Cash Equivalents, Customer Concentrations, and Allowances for Credit Losses 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 March 31, 2026 and September 30, 2025, 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 $ 15,330 and $ 15,087 as of March 31, 2026 and September 30, 2025, respectively. The Company also holds funds in various other bank accounts that may exceed FDIC insured limits. These uninsured amounts, in aggregate, were $ 3,945 and $ 5,067 as of March 31, 2026 and September 30, 2025, respectively. The Company has never experienced any material losses related to cash on deposit with banks. 11 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) Customer Concentrations There was no customer that represented 10 % or more of the Company’s consolidated revenues for the three and six-month periods ended March 31, 2026. There was one customer that represented 10 % of the Company’s consolidated revenues for the three and six-month periods ended March 31, 2025. The Company is no longer doing business with this customer. The Company had one customer that made up approximately 20 % and 21 % of the consolidated accounts receivable balances as of March 31, 2026 and September 30, 2025. This customer is offered extended payment terms due to the frequency and volume of our services it utilizes and has demonstrated consistent creditworthiness since doing business with us. The Company has not experienced any losses related to this customer historically. Allowance for Credit Losses The Company extends credit to customers based on evaluation of their 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 follows the methodology under ASU 2016-13, Financial Instruments-Credit Losses ( Topic 326) , which requires consideration of a broad 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. The Company records an allowance with a corresponding charge to bad debt expense and charges off uncollectible accounts against the allowance once the invoices are considered unlikely to be collected. The allowance for credit losses is reflected in the unaudited condensed consolidated balance sheets as a reduction of accounts receivable. The impact of the adoption of ASU 2025-05 was immaterial to the Company’s unaudited condensed consolidated financial statements. As of March 31, 2026 and September 30, 2025, the allowance for credit losses was $ 76 and $ 76 , respectively. A summary of changes in this account is as follows: Three Months Ended Six Months Ended March 31, March 31, 2026 2025 2026 2025 Beginning balance $ 71 $ 125 $ 76 $ 144 Provisions for credit losses 5 8 - 12 Accounts receivable write-offs - - - ( 23 ) Ending balance $ 76 $ 133 $ 76 $ 133 Liabilities for Direct Hire Placement Falloffs Direct hire placement service revenues from contracts with customers are recognized when the Company has met each of the criteria under 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. 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. Liabilities for falloffs and refunds during the period are reflected in other current liabilities in the unaudited condensed consolidated balance sheets in the amounts of $ 38 and $ 72 , as of March 31, 2026, and September 30, 2025, respectively. The corresponding charges included in the unaudited condensed consolidated statements of operations as reductions of direct hire placement service revenues were $ 20 and $ 30 for the three-month periods and $ 105 and $ 252 for the six-month periods ended March 31, 2026 and 2025, respectively. 12 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) 6. 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 expenses totaled $ 313 and $ 475 for the three-month periods and $ 629 and $ 933 for the six-month periods ended March 31, 2026 and 2025, respectively. 7. Earnings per Share Basic earnings per share are computed by dividing net income or 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. Basic and diluted weighted-average shares outstanding for the three-month period ended March 31, 2026 were 109,881 and 110,596 , respectively. Dilutive incremental shares were included in the calculation of diluted shares for the three-month period ended March 31, 2026 due to net income from continuing operations. No dilutive incremental shares were included for the six-month period ended March 31, 2026 or for the three-month and six-month periods ended March 31, 2025 due to net losses from continuing operations. Common stock equivalents, which are excluded because their effect is anti-dilutive, were approximately 3,907 and 4,730 for the three-month periods and 4,155 and 4,160 for the six-month periods ended March 31, 2026 and 2025, respectively. 8. Property and Equipment Property and equipment, net consisted of the following: March 31, 2026 September 30, 2025 Computer software $ 223 $ 117 Computer equipment 1,174 1,174 Furniture and fixtures 630 630 Leasehold improvements 103 99 Total property and equipment, at cost 2,130 2,020 Accumulated depreciation ( 1,757 ) ( 1,666 ) Property and equipment, net $ 373 $ 354 9. 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 unaudited condensed consolidated statements of operations were $ 363 and $ 437 for the three-month periods and $ 729 and $ 919 for the six-month periods ended March 31, 2026 and 2025, respectively. 13 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) Supplemental cash flow information related to operating leases consisted of the following: Six Months Ended March 31, 2026 2025 Cash paid for operating lease liabilities $ 553 $ 646 Right-of-use assets obtained in exchange for new operating lease liabilities 1,448 488 Supplemental balance sheet information related to operating leases consisted of the following: March 31, 2026 September 30, 2025 Weighted average remaining lease term for operating leases 3.4 years 2.6 years Weighted average discount rate for operating leases 5.3 % 5.5 % 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 unaudited condensed consolidated balance sheet as of March 31, 2026, including certain closed offices are as follows: Remainder of Fiscal 2026 $ 579 Fiscal 2027 1,124 Fiscal 2028 878 Fiscal 2029 588 Fiscal 2030 401 Thereafter 592 Less: Imputed interest ( 466 ) Present value of operating lease liabilities (a) $ 3,696 (a) Includes current portion of $ 993 for operating leases. The Company acquires some of its 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 unaudited condensed consolidated balance sheets. Finance lease expenses such as amortization of the lease assets and interest expense on the lease liabilities are included on the unaudited condensed consolidated statements of operations in depreciation expense and interest expense, respectively. Supplemental information related to these expenses consisted of the following: Three Months Ended Six Months Ended March 31, March 31, 2026 2025 2026 2025 Amortization of finance lease assets $ 21 $ 23 $ 42 $ 46 Interest on finance lease liabilities - 2 1 4 14 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) Supplemental balance sheet information related to finance leases consisted of the following: March 31, 2026 September 30, 2025 Net book value of finance leases $ 71 $ 113 Weighted average remaining lease term for finance leases 0.7 years 1.2 years Weighted average discount rate for finance leases 5.3 % 5.3 % The table below reconciles the undiscounted future minimum lease payments under non-cancellable finance lease agreements to the total finance lease liabilities recognized on the unaudited condensed consolidated balance sheets, included in other current liabilities as of March 31, 2026: Remainder of Fiscal 2026 $ 36 Fiscal 2027 13 Less: Imputed interest ( 1 ) Present value of finance lease liabilities $ 48 10. Goodwill and Intangible Assets Goodwill The Company performs a goodwill impairment assessment at least annually. The Company completed its most recent annual goodwill impairment assessment as of September 30, 2025 and determined that its goodwill was not impaired. The estimated fair value of the Professional Services reporting unit resulting from the September 30, 2025 assessment exceeded the reporting unit’s carrying value by approximately 39 %, or approximately $ 12.7 million. The Company also may perform interim assessments if a triggering event occurs that may indicate the fair value of a reporting unit decreased below its carrying value. Upon reevaluation of its financial projections for the March 31, 2025 quarterly results and other indications of a potential triggering event, the Company performed an interim impairment assessment of its goodwill using the updated information as of March 31, 2025. For purposes of performing its interim goodwill impairment assessment, the Company applied certain valuation techniques and assumptions to its Professional Segment reporting unit 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 results of the interim assessment indicated the Company’s goodwill assigned to its Professional Services reporting unit was impaired. As a result, the Company reduced its goodwill by $ 22,000 with a corresponding non-cash impairment charge recognized in its unaudited condensed consolidated statements of operations for the three-month period ended March 31, 2025. 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. 15 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) Intangible Assets The following provides a summary of the Company’s separately identifiable intangible assets as of March 31, 2026 and September 30, 2025 and estimated future amortization expense: March 31, 2026 September 30, 2025 Cost Impairment Charges Accumulated Amortization Net Book Value Cost Impairment Charges Accumulated Amortization Net Book Value Customer relationships $ 27,521 $ ( 5,153 ) $ ( 21,892 ) $ 476 $ 27,521 $ ( 5,153 ) $ ( 21,833 ) $ 535 Trade names 8,397 ( 56 ) ( 8,281 ) 60 8,397 ( 56 ) ( 8,262 ) 79 Non-competes 4,342 - ( 4,338 ) 4 4,342 - ( 4,336 ) 6 Total $ 40,260 $ ( 5,209 ) $ ( 34,511 ) $ 540 $ 40,260 $ ( 5,209 ) $ ( 34,431 ) $ 620 Remainder of Fiscal 2026 $ 41 Fiscal 2027 79 Fiscal 2028 77 Fiscal 2029 77 Fiscal 2030 77 Thereafter 189 $ 540 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. Trade names are amortized on a straight-line basis over their respective estimated useful lives of between five and ten years. Non-competes are amortized on a straight-line basis over their respective estimated useful lives of between two and five years. 11. Other Current Liabilities Other current liabilities consisted of the following: March 31, 2026 September 30, 2025 Accrued client rebates $ 37 $ 137 Reserve for falloffs 38 72 Current finance leases payable 48 70 Accrued audit fees 49 73 Other 103 243 Total other current liabilities $ 275 $ 595 12 . 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 March 31, 2026, the Company had no outstanding borrowings and $ 4,895 of unused capacity available for borrowing under the terms of the Facility. The Company had $ 25 and $ 102 in unamortized debt issuance costs associated with the Facility as of March 31, 2026 and September 30, 2025, respectively, which are reflected in other current assets on the unaudited condensed consolidated balance sheets. The amortization expense of these debt costs totaled $ 38 for the three-month periods and $ 76 for the six-month periods ended March 31, 2026 and 2025. The unused line fees incurred and included in interest expense totaled $ 25 for the three-month periods and $ 51 for the six-month periods ended March 31, 2026 and 2025. 16 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) 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. On May 12, 2026, the Company and FCB entered into Amendment No. 4 to the Facility (“Amendment No. 4”) which extends the Facility expiration date from May 14, 2026, to May 13, 2027 . Additionally, this amendment increases the availability block to the greater of $1.5 million, or 12.5% of the lesser of (i) the revolver commitment and (ii) the borrowing base. The Amendment No. 4 also contains two new requirements. First, during the term of the Facility, as amended, all cash and cash equivalents held by the Company will not exceed an aggregate amount of $25 million (or such greater amount that FCB may, in its sole discretion, otherwise consent to in writing). Second, within fourteen (14) days following the effective date of the Amendment No. 4, the Company has agreed to increase its cash on deposit with FCB and/or its affiliates and thereafter maintain such cash and cash equivalents on deposit in an aggregate amount of not less than $12 million (or such lesser amount that FCB may, in its sole discretion, otherwise consent to in writing) . 13. Shareholders’ Equity Share-based Compensation Amended and Restated 2013 Incentive Stock Plan, as amended As of March 31, 2026, 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 and restricted stock to employees. Vesting periods are established by the Compensation Committee at the time of grant. As of March 31, 2026, there were 7,204 shares available to be granted under the Plan ( 4,052 shares available for restricted stock grants and 3,152 shares available for non-qualified stock option grants). 17 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) Restricted Stock The Company has an annual incentive compensation program (“AICP”) for its executives which is administered under the Company’s Incentive Stock Plan. The AICP includes a long-term incentive (“LTI”) compensation program 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 under the AICP during the six months ended March 31, 2026. The Company granted 48 shares of restricted stock under the AICP during the six months ended March 31, 2025. All of the original 48 shares granted during the six months ended March 31, 2025 have been adjusted to zero (0) shares based on the probable outcome as compared to their respective financial targets. Share-based compensation expense attributable to restricted stock was $ 15 and $ 53 for the three-month periods and $ 55 and $ 108 for the six-month periods ended March 31, 2026 and 2025, respectively. As of March 31, 2026, there was approximately $ 34 of unrecognized compensation expense related to restricted stock outstanding and the weighted average remaining vesting period for those grants was 0.6 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, 2025 906 0.71 Granted - - Vested ( 592 ) 0.79 Non-vested restricted stock outstanding as of December 31, 2025 314 0.56 Granted - - Vested - - Non-vested restricted stock outstanding as of March 31, 2026 314 0.56 Stock Options All stock options outstanding as of March 31, 2026 and September 30, 2025 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. The Company did not grant stock options during the six months ended March 31, 2026. The Company’s stock options previously granted generally vest on annual schedules during periods ranging from two to four years, 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 $ 71 and $ 69 for the three-month periods and $ 144 and $ 133 for the six-month periods ended March 31, 2026 and 2025, respectively. As of March 31, 2026, there was approximately $ 317 of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average remaining vesting period for those options was 2.4 years. 18 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) A summary of stock option activity is presented 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, 2025 4,412 0.78 0.68 7.28 - Granted - - - - - Forfeited ( 9 ) 6.70 6.10 - - Options outstanding as of December 31, 2025 4,403 0.76 0.67 7.04 - Granted - - - - - Forfeited ( 55 ) 0.59 0.51 - - Options outstanding as of March 31, 2026 4,348 0.72 0.64 6.86 32 Exercisable as of September 30, 2025 2,970 0.98 0.87 6.55 - Exercisable as of March 31, 2026 3,196 0.86 0.76 6.31 22 Treasury Stock During the six months ended March 31, 2026, the Company reissued 592 of its treasury shares to fulfill commitments for the issuance of previously granted restricted stock awards that became fully vested and unrestricted. These treasury shares were reissued in lieu of issuing new shares of the Company’s common stock, therefore, while its total number of outstanding shares of common stock increased as a result of the issuance, its total number of issued shares of common stock did not increase. Of these shares, 135 were returned to the Company by the grantees on January 7, 2026, to satisfy statutory tax withholding obligations on the vested restricted stock awards. 14. Income Tax The following table presents the provision for income taxes and our effective tax rate for the three and six-month periods ended March 31, 2026 and 2025: Three Months Ended, March 31, Six Months Ended, March 31, 2026 2025 2026 2025 Provision for income tax expense (benefit) $ ( 21 ) $ 9,786 $ ( 21 ) $ 9,786 Effective tax rate 300 % - 42 % 13 % - 42 % The effective income tax rate on operations is based upon the estimated income for the year, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies. The effective tax rates for the three and six months ended March 31, 2026 and March 31, 2025 differ from the statutory rate primarily due to the effect of the change in the valuation allowance on the Company’s net deferred tax asset position along with the sensitivity due to the lower pre-tax book income present in both the three and six-months ended March 31,2026. For the three and six months ended March 31, 2026, the Company recognized an income tax benefit of $21. 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 (“DTAs”). In view of the significance of the Company’s recent pre-tax book losses, and possibility of continuing uncertainty in the industry and economy as a whole, management reduced projections of future income and 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 net deferred tax assets are realizable. The Company holds a full valuation allowance of $ 12,686 and $ 12,757 as of March 31, 2026 and September 30, 2025, accordingly. 19 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (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. 15. 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. 16. 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. Payments on the Promissory Notes are to be made annually in two equal installments on the first and second anniversaries of the issuance date. Amounts payable under the Promissory Notes are contingent upon the achievement of minimum average gross profit (“AGP”) requirements by Hornet, as disclosed in more detail under Note 2. The first installments of the Promissory Notes have been entirely eliminated as of December 31, 2025 due to the minimum AGP requirements not being met, and no payments being required to Hornet’s former shareholders under the former first installments, accordingly. As a result, the remaining amounts of the Promissory Notes payable to the former shareholders, Lawrence Bruce and Laurel Bruce, are $ 80 and $ 120 , respectively, to be paid on the second anniversary of the issuance date, based on achievement of the minimum AGP requirements. 20 Table of Contents GEE GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Amounts in thousands except per share data, unless otherwise stated) 17. 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 3, the Company’s former Industrial Segment has been designated a discontinued operation and sold and, as such, is excluded from the table below which only reflects continuing operations. Our consolidated results, as well as 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 operating needs and results. The CODM uses financial and operating information presented in periodic detailed financial statements and management reports and considers growth trends in revenues, gross profits and gross margins, operating expenses, income (loss) from operations, net income (loss) from operations and related data to compare the segment’s current results with budgeted and prior period results, as well as those of competitors obtained from publicly available information as benchmarks. Additionally, the CODM reviews trends in non-financial information including headcount, numbers of contractors on billing, billable hours, and fee rates and spreads applied in billings to clients. The CODM also reviews certain non-GAAP financial measures of segment performance including earnings before income taxes, depreciations and amortization (“EBITDA”), free cash flow and other variants of these non-GAAP measures in order to make informative decisions regarding allocation of resources. This information and underlying analyses provide the CODM with information necessary to make decisions on business and financial strategy and plans, working capital needs and overall capital use. All corporate assets such as cash and other assets are presented together with those of the Professional Segment; these can be found on the unaudited condensed consolidated balance sheets. Three Months Ended Six Months Ended March 31, March 31, 2026 2025 2026 2025 Net revenues $ 19,481 $ 24,495 $ 39,997 $ 48,520 Cost of contract services 12,066 16,135 25,177 32,234 Personnel expenses 4,890 5,907 9,873 11,168 Occupancy expenses 353 422 705 888 Advertising expenses 309 466 625 924 Other segment expenses (a) 533 899 1,077 1,721 Corporate expenses allocated 908 744 1,873 1,561 Depreciation and amortization 43 253 128 490 Goodwill impairment charges - 22,000 - 22,000 Professional Segment income (loss) from operations $ 379 $ ( 22,331 ) $ 539 $ ( 22,466 ) Corporate SG&A (b) 414 867 962 1,482 Depreciation and amortization 22 22 43 45 Loss from operations $ ( 57 ) $ ( 23,220 ) $ ( 466 ) $ ( 23,993 ) (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 selling, general, and administrative expenses (“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. 21 Table of Contents