BGSF, INC.

Current report

The sale of our Professional segment (the “Sale”) is subject to receipt of the required stockholder approval and other closing conditions and may not be completed as anticipated, or at all.

Current report

We are seeking the approval of the Sale by our stockholders in accordance with Section 271 of the Delaware General Corporation Law on the basis that the Sale may be considered to constitute the sale of substantially all of BGSF’s property and assets within the meaning of that statute. The closing is conditioned on, among other things, BGSF obtaining the required stockholder approval at a special meeting. In addition, the Equity Purchase Agreement provides for certain termination rights as described therein. The proceeds that may be realized from the Sale are contingent upon receiving the required stockholder approval and satisfying the other closing conditions. There can be no assurances that we will receive the vote and satisfy such conditions. Any delay in receiving the required stockholder vote and satisfying the other closing conditions may increase the risk that the Sale will be terminated, or reduce the benefits we expect to achieve.

Current report

The Sale and the other transactions contemplated by the Equity Purchase Agreement, whether or not completed, may adversely affect the retained business.

Current report

Transactions such as the Sale are often subject to lawsuits by stockholders. It is possible that our common stockholders or other stakeholders will commence or seek to commence litigation against BGSF or the BGSF Board of Directors. Such litigation could result in substantial costs and divert management’s attention from other business concerns, which could adversely affect the retained business. In addition, our ability to execute on our business strategies for the retained business depends on the retention and recruitment of qualified executives and other professionals. We rely upon the services of our current executive and senior management teams. The market for qualified executives, senior managers and other employees has become very competitive. As a result of the Sale, we may experience higher employee turnover and finding qualified replacements may be more difficult. The loss of the services of members of our executive and/or senior management teams or our inability to hire and retain other talented personnel could delay or prevent us from succeeding in executing our strategies, which could negatively impact the retained business. Further, while the completion of the Sale is pending, we may be unable to attract and retain key personnel and our management’s focus and attention and employee resources may be diverted from operational matters.

Current report

Because BGSF is expected to have fewer revenues and assets following the Sale, there is a possibility that such reduced revenues and assets may affect our ability to satisfy NYSE’s continued listing standards, which could result in the delisting of our common stock.

Current report

The continued listing standards of NYSE include, among other things, requirements that we maintain certain levels of stockholders’ equity, total assets, total revenue, market capitalization and/or minimum trading price. Even though we currently satisfy these requirements, following the Sale, our business will be smaller, which may cause us to fail to satisfy NYSE’s continued listing standards. In the event that we are unable to satisfy such continued listing standards, our common stock may be delisted from NYSE. Any delisting of our common stock from such market could adversely affect our ability to attract new investors, decrease the liquidity of our outstanding shares of common stock, reduce our flexibility to raise additional capital, reduce the price at which our common stock trades and increase the transaction costs inherent in trading such shares with overall negative effects for our stockholders. In addition, delisting of our common stock could deter broker-dealers from making a market in or otherwise seeking or generating interest in our common stock, and might deter certain institutions and persons from investing in our securities at all. For these reasons and others, delisting could adversely affect the price of our common stock and our business, financial condition and results of operations.

Current report

If we fail to complete the Sale, our business and financial performance may be adversely affected. The completion of the Sale is subject to the satisfaction or waiver of various conditions, including the approval of the Sale by our stockholders, which may not be satisfied in a timely manner or at all.

Current report

If the Sale is not completed, we may have difficulty recouping the costs incurred in connection with negotiating the Sale and the other transactions. Our directors, executive officers and other employees will have expended extensive time and effort and will have experienced significant distractions from their work during the pendency of the Sale, and we will have incurred significant third-party transaction costs, in each case, without any commensurate benefit, which may have a material and adverse effect on our stock price and results of operations. Furthermore, if the Sale and the other transactions are not completed, the announcement of the termination of the Equity Purchase Agreement may adversely affect our relationships with our customers, business partners, and employees, which could have a material adverse impact on our ability to effectively operate our business, and we may be required to pay the seller termination fee of $2,970,000 or the expense reimbursement of up to $3,000,000 under certain circumstances, each of which could have further adverse effects on our business, results of operations and the trading price of BGSF’s common stock.

Current report

If the Equity Purchase Agreement is not approved or if we fail to complete the Sale, there may not be any other offer from potential acquirors that the BGSF Board of Directors determines to be attractive.

Current report

If we fail to complete the Sale, the BGSF Board of Directors, in discharging its fiduciary obligations to our stockholders, may evaluate other strategic alternatives including, but not limited to, continuing to operate the business of the Professional segment for the foreseeable future or an alternative transaction relating to the Professional segment. An alternative transaction, if available, may yield lower consideration or value than the proposed Sale, be on less favorable terms and conditions than those contained in the Equity Purchase Agreement and involve significant delay. Any future sale of substantially all of BGSF’s property and assets within the meaning of Section 271 of the DGCL and related case law or other similar transaction may be subject to further stockholder approval, and there is no guarantee that BGSF would be able to obtain such stockholder approval in favor of any such sale or other transaction. If the Acquired Companies are not sold, there can be no assurance that we will realize value at least equivalent to the proceeds of the Sale from the operation of the business of the Professional segment over time, or any value; nor can we predict the timeline for realizing value, if any, from the business of the Professional segment in the absence of the Sale.

Current report

BGSF will receive all proceeds from the Sale.

Current report

BGSF intends to use the net proceeds from the Sale to substantially eliminate its outstanding debt and to make investments in its Property Management segment. The BGSF Board of Directors intends to work with its financial advisors to determine the best use of the remaining proceeds to increase stockholder value while continuing to evaluate strategic alternatives. BGSF’s stockholders will not directly receive any proceeds from the Sale.