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”). 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/restructuring”). 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

Revenues: Revenues decreased $1.2 million (5.1%). The decrease was primarily due to a 6.8% reduction in billed hours, which was driven by a combination of lower demand from cost pressures on property owners and property management companies and increased competition in certain markets.

Current wording

Revenues: Revenues decreased $1.8 million (6.6%). The decrease was primarily due to a 8.7% reduction in billed hours, which was driven by a combination of lower demand from cost pressures on property owners and property management companies and increased competition in certain markets with a partial offset from higher permanent placement revenue.

Previous 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.

Current wording

Gross Profit: Gross profit decreased approximately $0.6 million (6.0%), which is in line with revenues with a partial offset by higher permanent placement revenue that has no cost of service.

Previous 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:

Current wording

Selling, General, and Administrative Expenses: Selling, general, and administrative expenses decreased $1.5 million (14.7%), primarily due to reduced headcount allowing for less compensation and software costs as part of the cost reduction activities which began after the 2025 sale of BGSF Professional and continued into 2026 to align our administrative costs with our lower revenue, and lower shared-based compensation costs related to leadership changes and accelerated amortization from the sale of BGSF Professional.

Previous wording

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

Current wording

Depreciation and Amortization: Depreciation and amortization charges decreased $0.7 million (80.7%) primarily due to a change in useful life of certain software in 2025 after the sale of BGSF Professional, which created additional amortization in continuing operations on intangible assets for computer software.

Previous 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.

Current wording

Interest Income (Expense), net: Interest income (expense), net increased $1.6 million (102.4%) due to short-term investment income in Fiscal 2026 following the sale of BGSF Professional compared to expense related to our previous credit agreement with BMO Bank, N.A. (“BMO”) that was paid off in Fiscal 2025.

Previous wording

Twenty-six Week Fiscal Period Ended June 28, 2026 (“Fiscal 2026”) Compared with Twenty-six Week Fiscal Period Ended June 29, 2025 (“Fiscal 2025”)

Current wording

Thirty-nine Week Fiscal Period Ended September 27, 2026 (“Fiscal 2026”) Compared with Thirty-nine Week Fiscal Period Ended September 28, 2025 (“Fiscal 2025”)

Previous wording

Revenues: Revenues decreased approximately $1.2 million (2.7%). The decrease was primarily due to a 3.9% reduction in billed hours, which was driven by a combination of lower demand from cost pressures on property owners and property management companies and increased competition in certain markets with partial offsets by higher permanent placement business and average bill rate.

Current wording

Revenues: Revenues decreased approximately $3.0 million (4.2%). The decrease was primarily due to a 5.7% reduction in billed hours, which was driven by a combination of lower demand from cost pressures on property owners and property management companies and increased competition in certain markets with partial offsets by higher permanent placement revenue and average bill rate.

Previous wording

Gross Profit: Gross profit decreased approximately $0.7 million (4.0%) 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 $1.2 million (4.8%) which is in line with revenues with a partial offset by higher permanent placement revenue that has no cost of service.

Previous wording

Depreciation and Amortization: Depreciation and amortization charges decreased approximately $0.3 million (42.5%) primarily due to amortization of intangible assets for computer software.

Current wording

Depreciation and Amortization: Depreciation and amortization charges decreased approximately $0.9 million (64.8%) primarily due to a change in useful life of certain software in 2025 after the sale of BGSF Professional, which created additional amortization in continuing operations on intangible assets for computer software.

Previous wording

Interest Income (Expense), net: Interest income (expense) increased $3.3 million (107.7%) due to short-term investment income in Fiscal 2026 following the sale of BGSF Professional compared to the expense adjustment of amortization of debt issuance costs relating to a waiver and amendment with respect to our previous credit agreement with BMO in Fiscal 2025.

Current wording

Interest Income (Expense), net: Interest income (expense) increased $4.9 million (105.9%) due to short-term investment income in Fiscal 2026 following the sale of BGSF Professional compared to the expense adjustment of amortization of debt issuance costs relating to a waiver and amendment with respect to our previous credit agreement with BMO in Fiscal 2025.

Previous 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.

Current wording

Income Tax Benefit: Income tax benefit decreased $1.3 million primarily due to improvement of loss before income taxes and a higher effective tax rate in Fiscal 2026.

Previous 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.

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/restructuring, 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 income (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

The use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from, or as an alternative to, GAAP measures such as net loss. Adjusted EBITDA is not a measure of liquidity under GAAP or otherwise, and is not an alternative to cash flow from operating activities. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from that term or by unusual or non-recurring items. The limitations of Adjusted EBITDA include: (i) it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) it does not reflect changes in, or cash requirements for, our working capital needs; (iii) it does not reflect income tax payments we may be required to make; and (iv) it does not reflect the cash requirements necessary to service interest or principal payments associated with indebtedness.

Current wording

The use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from, or as an alternative to, GAAP measures such as net income (loss). Adjusted EBITDA is not a measure of liquidity under GAAP or otherwise, and is not an alternative to cash flow from operating activities. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from that term or by unusual or non-recurring items. The limitations of Adjusted EBITDA include: (i) it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) it does not reflect changes in, or cash requirements for, our working capital needs; (iii) it does not reflect income tax payments we may be required to make; and (iv) it does not reflect the cash requirements necessary to service interest or principal payments associated with indebtedness.

Previous wording

To properly and prudently evaluate our business, we encourage you to review our unaudited consolidated financial statements included elsewhere in this report and the reconciliation to Adjusted EBITDA from net loss, the most directly comparable financial measure presented in accordance with GAAP, set forth in the following table. All of the items included in the reconciliation from net loss to Adjusted EBITDA are either (i) non-cash items or (ii) items that management does not consider in assessing our on-going operating performance. In the case of the non-cash items, management believes that investors may find it useful to assess our comparative operating performance because the measures without such items are less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of other factors that affect operating performance. In the case of the other items that management does not consider in assessing our on-going operating performance, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact may not reflect ongoing operating performance.

Current wording

To properly and prudently evaluate our business, we encourage you to review our unaudited consolidated financial statements included elsewhere in this report and the reconciliation to Adjusted EBITDA from net income (loss), the most directly comparable financial measure presented in accordance with GAAP, set forth in the following table. All of the items included in the reconciliation from net income (loss) to Adjusted EBITDA are either (i) non-cash items or (ii) items that management does not consider in assessing our on-going operating performance. In the case of the non-cash items, management believes that investors may find it useful to assess our comparative operating performance because the measures without such items are less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of other factors that affect operating performance. In the case of the other items that management does not consider in assessing our on-going operating performance, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact may not reflect ongoing operating performance.

Previous wording

(1)We capitalize direct costs incurred in cloud computing implementation from hosting arrangements, which are reported as a Software as a service and are expensed as incurred in selling, general, and administrative expenses.

Current wording

(1)We capitalize direct costs incurred in cloud computing implementation from hosting arrangements, which are reported as a Software as a service and are expensed in selling, general, and administrative expenses.

Previous 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.

Current wording

(2)Adjusted EBITDA from discontinued operations for the thirteen and thirty-nine weeks ended September 28, 2025 includes $0.9 million and $3.6 million of depreciation and amortization, respectively, and $0.1 million and $0.8 million of income tax expense, respectively.

Previous 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.

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 $17.9 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, accounts payable, and accrued payroll and expenses.

Current wording

Cash provided by operating activities from continuing operations consists of net income (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, and escrow receivable.

Previous 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.

Current wording

During Fiscal 2026, net cash used in operating activities from continuing operations decreased by $1.2 million compared to Fiscal 2025. The decrease is primarily due to increased payments on transition services payable, accrued payroll and expenses, and accounts payable, which were partially offset by the cash receipts of $4.2 million related escrow holdbacks in the sale of BGSF Professional.

Previous 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.

Current wording

For Fiscal 2026, we purchased $20.4 million of short-term investments and minimal capital expenditures, which were partially offset by $3.0 million and $8.9 million of funds received from redemptions and sale, respectively, of short-term investments and $1.2 million of additional funds received for the final settlement of working capital from the sale of BGSF Professional. In Fiscal 2025, cash provided by investing activities from continuing operations consists primarily of net proceeds from the sale of BGSF Professional of approximately for $91.5 million, which was partially offset by minimal capital expenditures.

Previous 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.

Current wording

For Fiscal 2026, we repurchased $1.3 million of our common stock under the Company's stock buyback plan. For Fiscal 2025, we paid off our Term Loan, Revolving Facility, and Convertible Note of $32.7, $10.2 million, and $4.4 million, respectively.

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 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.

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 September 27, 2026 and December 28, 2025, the Company carried a valuation allowance of $1.5 million related to capital losses and stock-based compensation deferred tax assets from the sale of BGSF Professional. We follow the guidance of ASC Topic 740, Accounting for Uncertainty in Income Taxes.