BGSF, INC.

Previous wording

On May 8, 2024, we announced that our Board of Directors had initiated a process to evaluate potential strategic alternatives and engaged financial advisors in an endeavor to maximize shareholder value (“Strategic alternatives review”). During December 2024, we announced a cost restructuring plan as part of our strategic review process. On June 14, 2025, we entered into an Equity Purchase Agreement with INSPYR Solutions Intermediate, LLC, pursuant to which we sold substantially all of our outstanding equity interest pertaining to the Professional segment on September 8, 2025. The Professional segment financial results for periods prior to the sale have been reflected as discontinued operations in our Unaudited Consolidated Financial Statements, see “Note 3 - Discontinued Operations.”

Current wording

On May 8, 2024, we announced that our Board of Directors had initiated a process to evaluate potential strategic alternatives and engaged financial advisors in an endeavor to maximize shareholder value (“Strategic alternatives review”). On June 14, 2025, we entered into an Equity Purchase Agreement with INSPYR Solutions Intermediate, LLC, pursuant to which we sold substantially all of our outstanding equity interest pertaining to the Professional segment on September 8, 2025. The Professional segment financial results for periods prior to the sale have been reflected as discontinued operations in our Unaudited Consolidated Financial Statements, see “Note 3 - Discontinued Operations.”

Previous wording

We currently operate primarily within the United States of America in our Property Management segment. Our Property Management segment provides office and maintenance field talent in 44 states and D.C., to property management companies responsible for the apartment communities' and commercial buildings' day-to-day operations.

Current wording

We currently operate primarily within the United States of America in our Property Management segment. Our Property Management segment currently has the ability to service all states and D.C., and provide office and maintenance field talent to property management companies responsible for the apartment communities' and commercial buildings' day-to-day operations.

Previous wording

Our business normally experiences seasonal fluctuations. Our quarterly operating results are affected by the number of billing days in a quarter, as well as the seasonality of our client partners’ business. Demand for our Property Management workforce solutions typically increase in the second quarter and is highest during the third quarter of the year due to the increased turns in multifamily units during the summer months when schools are not in session. Overall first quarter demand can be affected by adverse weather conditions in the winter months. In addition, our cost of services typically increases in the first quarter primarily due to the reset of payroll taxes.

Current wording

Our business normally experiences seasonal fluctuations. Our quarterly operating results are affected by seasonality of our client partners’ business, as well as the number of billing days in a quarter. Demand for our Property Management workforce solutions typically increases in the second quarter and is highest during the third quarter of the year due to the increased turns in multifamily units during the summer months when schools are not in session. Overall first quarter demand can be affected by adverse weather conditions in the winter months. In addition, our cost of services typically increases in the first quarter primarily due to the reset of payroll taxes.

Previous wording

Gross Profit: Gross profit decreased approximately $0.2 million (2.0%), which is in line with revenues with a partial offset by higher permanent placement business that have no cost of service.

Current wording

Gross Profit: Gross profit decreased approximately $0.5 million (5.9%), which is in line with revenues with a partial offset by higher permanent placement business that have no cost of service.

Previous wording

Selling, General, and Administrative Expenses: Selling, general, and administrative expenses decreased $0.2 million (2.2%). The components of selling, general, and administrative expense are detailed in the following table:

Current wording

Selling, General, and Administrative Expenses: Selling, general, and administrative expenses decreased $3.6 million (29.0%), primarily due to reduced compensation costs on less headcount and is reflective of cost reduction activities that occurred during 2025 and continued into 2026 to align our administrative costs with our lower revenue following the sale of BGSF Professional. The components of selling, general, and administrative expense are detailed in the following table:

Previous wording

Depreciation and Amortization: Depreciation and amortization charges decreased $0.2 million (52.0%) primarily due to lower amortization of intangible assets for computer software.

Current wording

Depreciation and Amortization: Depreciation and amortization charges decreased $0.1 million (30.5%) primarily due to amortization of intangible assets for computer software.

Previous wording

Interest Expense, net: Interest expense, net decreased $1.1 million (99.7%) due to the payoff of the BMO Bank, N.A. (“BMO”) balance on the existing term loan commitment, and revolving credit facility using the proceeds from the sale of BGSF Professional in September 2025.

Current wording

Interest Income (Expense), net: Interest income (expense), net increased $2.1 million (112.7%) due to short-term investment income in Fiscal 2026 following the sale of BGSF Professional compared to expense on the BMO Bank, N.A. (“BMO”) term loan commitment and revolving credit facility in Fiscal 2025.

Previous wording

Income Tax Benefit: Income tax benefit decreased $0.4 million due to a lower net loss and a lower effective tax rate in Fiscal 2026.

Current wording

Income Tax Benefit: Income tax benefit decreased $1.2 million due to a lower net loss and a lower effective tax rate in Fiscal 2026.

Previous wording

We define “Adjusted EBITDA” as earnings before interest expense, income taxes, depreciation and amortization expense, costs associated with the Strategic alternatives review, software as a service costs, and certain non-cash expenses such as share-based compensation expense, as well as certain specific events that management does not consider in assessing our on-going operating performance. Omitting interest, taxes, and the other items provides a financial measure that facilitates comparisons of our results of operations with those of companies having different capital structures. Since the levels of indebtedness and tax structures that other companies have are different from ours, we omit these amounts to facilitate investors’ ability to make these comparisons. Similarly, we omit depreciation and amortization because other companies may employ a greater or lesser amount of property and equipment and intangible assets. We also believe that investors, analysts and other interested parties view our ability to generate Adjusted EBITDA as an important measure of our operating performance and that of other companies in our industry. Adjusted EBITDA should not be considered as an alternative to net loss from operations for the periods indicated as a measure of our performance. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Current wording

We define “Adjusted EBITDA” as earnings before interest (income) expense, income taxes, depreciation and amortization expense, costs associated with the Strategic alternatives review, software as a service costs, and certain non-cash expenses such as share-based compensation expense, as well as certain specific events that management does not consider in assessing our on-going operating performance. Omitting interest, taxes, and the other items provides a financial measure that facilitates comparisons of our results of operations with those of companies having different capital structures. Since the levels of indebtedness and tax structures that other companies have are different from ours, we omit these amounts to facilitate investors’ ability to make these comparisons. Similarly, we omit depreciation and amortization because other companies may employ a greater or lesser amount of property and equipment and intangible assets. We also believe that investors, analysts and other interested parties view our ability to generate Adjusted EBITDA as an important measure of our operating performance and that of other companies in our industry. Adjusted EBITDA should not be considered as an alternative to net loss from operations for the periods indicated as a measure of our performance. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Previous wording

2 Adjusted EBITDA from discontinued operations includes $1.4 million of depreciation and amortization and $0.5 million of income tax expense.

Current wording

(2)Adjusted EBITDA from discontinued operations for the thirteen and twenty-six weeks ended June 29, 2025 includes $1.3 million and $2.7 million of depreciation and amortization, respectively, and $0.2 million and $0.7 million of income tax expense, respectively.

Previous wording

Our working capital requirements are primarily driven by field talent payments, tax payments, and client partner accounts receivable receipts. Since receipts from client partners lag payments to field talent, working capital requirements increase substantially in periods of growth.

Current wording

Our working capital requirements are primarily driven by field talent payments, tax payments, and client partner accounts receivable receipts. Since receipts from client partners lag payments to field talent, working capital requirements may increase substantially in periods of growth.

Previous wording

Our primary sources of liquidity were cash generated from operations and borrowings under an agreement with BMO that was paid on September 8, 2025. We paid a $2.00 per share special dividend on September 30, 2025, which means we currently hold approximately $19.0 million in available cash and short-term investments to fund the business. Our primary uses of cash are payments to field talent, team members, related payroll liabilities, operating expenses, capital expenditures, cash interest, cash taxes, contingent consideration, and note payments. We believe that cash on hand, short-term investments, and the cash generated from operations, will be sufficient to meet our normal working capital needs for at least the next twelve months, including investments made, and expenses incurred, in connection with opening new markets throughout the next year. Our ability to continue to fund these items may be affected by general economic, competitive and other factors, many of which are outside of our control. If our future cash flow from operations and other capital resources are insufficient to fund our liquidity needs, we may be forced to obtain new debt or equity capital.

Current wording

Our primary sources of liquidity were cash generated from operations, which was used to fund payments to field talent and team members, related payroll liabilities, operating expenses, capital expenditures, cash taxes, and note payments. We believe that cash on hand, short-term investments, and the cash generated from operations, will be sufficient to meet our normal working capital needs for at least the next twelve months, including investments made, and expenses incurred, in connection with opening new markets throughout the next year. Our ability to continue to fund these items may be affected by general economic, competitive and other factors, many of which are outside of our control. During Fiscal 2025, we received cash proceeds from the sale of BGSF Professional on September 8, 2025, which allowed us to fully payoff and retire the borrowings under an agreement with BMO and pay a $2.00 per share special dividend on September 30, 2025, which means we currently hold approximately $18.2 million in available cash and short-term investments to fund the business. If our future cash flow and other capital resources are insufficient to fund our liquidity needs, we may obtain new debt or equity capital.

Previous wording

Cash provided by operating activities from continuing operations consists of net loss adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, provision for credit losses, and the effect of working capital changes. The primary driver of cash inflows and outflows are accounts receivable, transition services payable, escrow receivable, and accounts payable.

Current wording

Cash provided by operating activities from continuing operations consists of net loss adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, provision for credit losses, and the effect of working capital changes. The primary driver of cash inflows and outflows are accounts receivable, transition services payable, escrow receivable, accounts payable, and accrued payroll and expenses.

Previous wording

During Fiscal 2026, net cash provided by operating activities from continuing operations decreased by $1.0 million compared to Fiscal 2025. The decrease is primarily due to decreased receipts on accounts receivable and decreased payments on accounts payable.

Current wording

During Fiscal 2026, net cash used in operating activities from continuing operations increased by $3.1 million compared to Fiscal 2025. The increase is primarily due to increased payments on accrued payroll and expenses and accounts payable, which was partially offset by a decrease in other current assets for CARES Act receipts.

Previous wording

Cash flows from investing activities related to continuing operations consisted of purchases for short-term marketable securities and proceeds from the sale of BGSF Professional.

Current wording

Cash flows from investing activities from continuing operations consisted of capital expenditures, purchases of short-term marketable securities, and proceeds from the sale of BGSF Professional.

Previous wording

For Fiscal 2026, we purchased $5.0 million of short-term investments partially offset by $0.9 million of additional funds received for the final settlement of working capital from the sale of BGSF Professional.

Current wording

For Fiscal 2026, we purchased $17.4 million of short-term investments and minimal capital expenditures, which were partially offset by $0.9 million of additional funds received for the final settlement of working capital from the sale of BGSF Professional. In Fiscal 2025, capital expenditures were minimal.

Previous wording

For Fiscal 2026, we repurchased $0.9 million of our common stock under the Company's stock buyback plan. For Fiscal 2025, we borrowed $1.6 million on our revolving credit facility for increased operating needs and we paid down $1.0 million on our term loan commitment.

Current wording

For Fiscal 2026, we repurchased $1.2 million of our common stock under the Company's stock buyback plan. For Fiscal 2025, we borrowed $1.6 million on our revolving credit facility for increased operating needs and we paid down $1.9 million on our term loan commitment.

Previous wording

We invest in marketable securities that are classified as trading securities based on the expected holding period and reported at fair value using observable market data. Realized and unrealized gains and losses, interest income, and dividends are recognized as earned into earnings within interest income (expense), net in the consolidated statements of operations in accordance with Accounting Standards Codification (“ASC”) Topic 320, Investments in Debt Securities.

Current wording

We invest in U.S. Treasury securities that are classified as trading securities based on the expected holding period and are reported at fair value using observable market data. Realized and unrealized gains and losses as well as interest income are recognized in earnings within interest income (expense), net in the consolidated statements of operations in accordance with Accounting Standards Codification (“ASC”) Topic 320, Investments in Debt Securities.

Previous wording

The current provision for income taxes represents estimated amounts payable or refundable on tax returns filed or to be filed for the year. We recognize any penalties when necessary as part of selling, general, and administrative expenses. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts are classified net as noncurrent in the consolidated balance sheets. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. As of March 29, 2026 and December 28, 2025, the Company carried a valuation allowance of $1.5 million. We follow the guidance of ASC Topic 740, Accounting for Uncertainty in Income Taxes.

Current wording

The current provision for income taxes represents estimated amounts payable or refundable on tax returns filed or to be filed for the year. We recognize any penalties when necessary as part of selling, general, and administrative expenses. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts are classified net as noncurrent in the consolidated balance sheets. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. As of June 28, 2026 and December 28, 2025, the Company carried a valuation allowance of $1.5 million related to capital losses and stock-based compensation from the sale of BGSF Professional. We follow the guidance of ASC Topic 740, Accounting for Uncertainty in Income Taxes.