GEE Group Inc.

Previous wording

GEE Group Inc. and its wholly owned material operating subsidiaries, Access Data Consulting Corporation, Agile Resources, Inc., BMCH, Inc., Hornet Staffing, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., Triad Logistics, Inc., and Triad Personnel Services, Inc. are providers of permanent and temporary professional and industrial staffing and placement services in and near several major U.S. cities. We specialize in the placement of information technology, accounting, finance, office, and engineering professionals for direct hire and contract staffing for our clients, data entry assistants (medical scribes) who specialize in electronic medical records (EMR) services for emergency departments, specialty physician practices and clinics, and provide temporary staffing services for our industrial clients. The acquisitions of Scribe Solutions, Inc., a Florida corporation (“Scribe”) in April 2015, Agile Resources, Inc., a Georgia corporation (“Agile”) in July 2015, Access Data Consulting Corporation, a Colorado corporation (“Access”) in October 2015, Paladin Consulting Inc. (“Paladin”) in January 2016, and SNI Companies, Inc., a Delaware corporation (“SNI”) in April 2017, expanded our geographical footprint within the professional placement and contract staffing verticals or end markets of information technology, accounting, finance, office, engineering professionals, and medical scribes. The acquisition of Hornet Staffing, Inc., a Georgia corporation, (“Hornet”) in January 2025 broadened our footprint in the professional contract staffing market with a specialty in working with managed service providers (“MSP”) and vendor management systems (“VMS”) which streamline outsourced labor for large clients.

Current wording

The acquisitions of Scribe Solutions, Inc., a Florida corporation (“Scribe”) in April 2015, Agile Resources, Inc., a Georgia corporation (“Agile”) in July 2015, Access Data Consulting Corporation, a Colorado corporation (“Access”) in October 2015, Paladin Consulting Inc. (“Paladin”) in January 2016, and SNI Companies, Inc., a Delaware corporation (“SNI”) in April 2017, expanded our geographical footprint within the professional placement and contract staffing verticals or end markets of information technology, accounting, finance, office, engineering professionals, and medical scribes. The acquisition of Hornet Staffing, Inc., a Georgia corporation, (“Hornet”) in January 2025 broadened our footprint in the professional contract staffing market with a specialty in working with managed service providers (“MSP”) and vendor management systems (“VMS”) which streamline outsourced labor for large clients.

Previous wording

We market our services using the trade names General Employment Enterprises, Omni One, Ashley Ellis, Agile Resources, Scribe Solutions Inc., Access Data Consulting Corporation, Paladin Consulting Inc., SNI Companies (including Staffing Now, Accounting Now, and Certes), Triad Personnel Services, Triad Staffing, and Hornet Staffing. As of March 31, 2025, we operated from locations in eleven (11) states, including twenty-three (23) branch offices in downtown or suburban areas of major U.S. cities and four (4) additional U.S. locations utilizing local staff members working remotely. We have offices or serve markets remotely, as follows; (i) one office in each of Connecticut, Georgia, Illinois, and New Jersey, and one remote local market presence in each of Georgia and Virginia; (ii) two offices each in Massachusetts and Colorado; (iv) two offices and one additional local market presence in Texas; (v) six offices and one additional local market presence in Florida; and (vi) seven offices in Ohio.

Current wording

We market our services using the trade names General Employment Enterprises, Omni One, Ashley Ellis, Agile Resources, Scribe Solutions Inc., Access Data Consulting Corporation, Paladin Consulting Inc., SNI Companies (including Staffing Now, Accounting Now, and Certes), Triad Personnel Services, and Hornet Staffing. As of June 30, 2025, we operated from locations in ten (10) states, including nineteen (19) branch offices in downtown or suburban areas of major U.S. cities and four (4) additional U.S. locations utilizing local staff members working remotely. We have offices or serve markets remotely, as follows; (i) one office in each of Connecticut, Georgia, Illinois, and New Jersey, and one remote local market presence in each of Georgia and Virginia; (ii) two offices each in Massachusetts and Colorado; (iv) three offices and one additional local market presence in Texas; (v) six offices and one additional local market presence in Florida; and (vi) two offices in Ohio.

Previous wording

Our contract and placement services are currently provided under our Professional Staffing Services operating division or segment. Our former Industrial Staffing Services segment has been deemed a discontinued operation as of the quarter ended March 31, 2025 and is excluded from results of continuing operations reported in this MD&A, unless otherwise stated.

Current wording

Our contract and placement services are currently provided under our Professional Staffing Services operating division or segment. Our former Industrial Staffing Services segment was deemed a discontinued operation as of the quarter ended March 31, 2025 and is excluded from results of continuing operations reported in this MD&A, unless otherwise stated.

Previous wording

We have incurred a net loss of $(33) million for the fiscal second quarter ended March 31, 2025. The net loss is primarily attributable to declines in business resulting from negative economic and labor market conditions that began in 2023, continued throughout 2024 and continue to be present so far in 2025. These conditions have negatively impacted the number of job orders received and the numbers of qualified candidates available to fill orders for placements across all of our lines of business. Likewise, the U.S. Staffing Industry, as a whole, has experienced material declines in overall volume and financial performance and the industry outlook is mixed as to when these conditions may be expected to definitively subside. As a result of the prolonged negative effects on our business associated with our current environment, we recorded a $22 million impairment charge in the quarter and reduced our goodwill asset, accordingly. In addition, we established a full valuation allowance against our deferred tax assets. These two non-cash charges account for substantially the entire net loss from continuing operations reported for the quarter ended March 31, 2025.

Current wording

We have incurred a net loss of $(423) thousand for the fiscal third quarter ended June 30, 2025. The net loss is primarily attributable to continuation of adverse trends and conditions in the U.S. labor markets that began in 2023, continued throughout 2024, and have persisted so far in 2025. These conditions have negatively impacted the number of job orders received and the numbers of qualified candidates available to fill orders for placements across all of our lines of business. Likewise, the U.S. Staffing Industry, as a whole, has experienced material declines in overall volume and financial performance and the industry outlook remains mixed as to when these conditions may be expected to definitively subside. The net loss for the third quarter ended June 30, 2025, has lessened relative to the prior sequential quarters of fiscal 2025 due to the presence of a $22 million pre-tax non-cash impairment charge in the quarter ended March 31, 2025, and operating cost reductions and other productivity improvement measures.

Previous wording

As of March 31, 2025, we have classified and reported our Industrial Segment as a discontinued operation and are in the process of negotiating a sale of its assets and operations. The decision to discontinue this division is in continuance with our long-term strategy and focus on the professional verticals within our business. The initiative to seek a buyer for the Industrial Segment was approved on April 18, 2024, as part of our plans and budgets comprehended in the M&A Committee’s strategic recommendations developed during a formal review of strategic alternatives last year. It is expected to close during the quarter ending June 30, 2025, and any resulting net gain or loss on the sale is presently expected to be immaterial. Other strategic recommendations stemming from the strategic alternatives review are on-going, including (1) proactive measures to streamline operations and enhance growth opportunities and cost-efficiency, including significant cost reductions, (2) building upon past acquisitions by taking advantage of current conditions and further integrating and consolidating operations and systems for further efficiencies and cost saving opportunities, and (3) capitalizing on acquisition opportunities arising from the economic downturn by identifying and with the objective of acquiring businesses at reduced multiples and favorable valuations.

Current wording

As of March 31, 2025, and continuing through June 30, 2025, we classified and reported our Industrial Segment as a discontinued operation. The decision to discontinue this division is in continuance with our long-term strategy and focus on the professional verticals within our business. The initiative to seek a buyer for the Industrial Segment was approved on April 18, 2024, as part of our plans and budgets comprehended in the M&A Committee’s strategic recommendations developed during a formal review of strategic alternatives last year. Other strategic recommendations stemming from the strategic alternatives review are on-going, including (1) proactive measures to streamline operations and enhance growth opportunities and cost-efficiency, including significant cost reductions, (2) building upon past acquisitions by taking advantage of current conditions and further integrating and consolidating operations and systems for further efficiencies and cost saving opportunities, and (3) capitalizing on acquisition opportunities arising from the economic downturn by identifying and with the objective of acquiring businesses at reduced multiples and favorable valuations.

Previous wording

Professional contract staffing services contributed $21,495 or approximately 88% of consolidated revenue and direct hire placement services contributed $3,000, or approximately 12%, of consolidated revenue for the three months ended March 31, 2025. This compares to professional contract staffing services revenue of $23,134, or approximately 90%, of consolidated revenue and direct hire placement revenue of $2,455, or approximately 10%, of consolidated revenue for the three months ended March 31, 2024.

Current wording

Professional contract staffing services contributed $21,301 or approximately 87% of consolidated revenue and direct hire placement services contributed $3,222, or approximately 13%, of consolidated revenue for the three months ended June 30, 2025. This compares to professional contract staffing services revenue of $23,761, or approximately 88%, of consolidated revenue and direct hire placement revenue of $3,287, or approximately 12%, of consolidated revenue for the three months ended June 30, 2024.

Previous wording

Economic weakness and uncertainties, including persistent inflation and the possibility of recession, continued to negatively impact our results through the three months ended March 31, 2025. Professional contract staffing services revenues decreased $1,639, or 7%, as compared to the three months ended March 31, 2024.

Current wording

Economic uncertainties, including persistent inflation and the possibility of recession, continued to adversely affect trends and conditions in the U.S. labor markets, which in turn, have continued to negatively impact our results through the three months ended June 30, 2025. Professional contract staffing services revenues decreased $2,460, or 10%, as compared to the three months ended June 30, 2024. Professional contract staffing services for the three months ended June 30, 2025 includes $1,157 of revenues generated by Hornet, which was acquired by the Company effective January 3, 2025. The former light industrial segment revenues of $1,068 and $2,048 for the three months ended June 30, 2025 and 2024, respectively, have been reclassified as discontinued operations and are no longer included in professional contract staffing services.

Previous wording

Cost of contract services includes wages and related payroll taxes and employee benefits of our contract services employees, and certain other contract employee-related costs, while working on contract assignments. Cost of contract services for the three months ended March 31, 2025 decreased by approximately 6% to $16,135 compared to $17,196 for the three months ended March 31, 2024. The $1,061 overall decrease in cost of contract services is consistent with the decrease in revenues as discussed above.

Current wording

Cost of contract services includes wages and related payroll taxes and employee benefits of our contract services employees, and certain other contract employee-related costs, while working on contract assignments. Cost of contract services for the three months ended June 30, 2025 decreased by approximately 11% to $15,842 compared to $17,819 for the three months ended June 30, 2024. The $1,977 overall decrease in cost of contract services is consistent with the decrease in revenues as discussed above.

Previous wording

Our combined gross profit margin, including direct hire placement services, for the three-month periods ended March 31, 2025 and 2024 were approximately 34.1% and 32.8%, respectively. Our professional contract staffing services gross margins for the three-month periods ended March 31, 2025 and 2024 were approximately 24.9% and 25.7%, respectively. The net increase in our gross margins overall is mainly attributable to the increase in the mix of direct hire placement revenues, which have a 100% gross margin, from 10% of revenues in the prior year quarter to 12% for the current year quarter. The decline in professional contract staffing services gross margins also are attributable to changes in business mix and include the effects of some price concessions aimed at attracting or retaining business in the current environment.

Current wording

Our combined gross profit margin, including direct hire placement services, for the three-month periods ended June 30, 2025 and 2024 were approximately 35.4% and 34.1%, respectively. Our professional contract staffing services gross margins for the three-month periods ended June 30, 2025 and 2024 were approximately 25.6% and 25.0%, respectively. The net increase in our combined gross margin is mainly attributable to an increase in the mix of direct hire placement revenues, which have a 100% gross margin. The increase in professional contract staffing services gross margin is attributable to net increases in prices and spreads on some of our professional contract services businesses.

Previous wording

Our SG&A for the three months ended March 31, 2025 decreased by $251 as compared to the three months ended March 31, 2024. SG&A for the three months ended March 31, 2025, as a percentage of revenues, were approximately 38.0% compared to approximately 37.3% for the three months ended March 31, 2024. The increase in SG&A expenses as a percentage of revenues during the three months ended March 31, 2025, was primarily attributable to the declines in revenues in relation to the level of fixed SG&A expenses, including fixed personnel-related expenses, occupancy costs, job boards and applicant tracking systems.

Current wording

Our SG&A for the three months ended June 30, 2025 decreased by $802 as compared to the three months ended June 30, 2024. SG&A for the three months ended June 30, 2025, as a percentage of revenues, were approximately 36.5% compared to approximately 36.1% for the three months ended June 30, 2024. The increase in SG&A expenses as a percentage of revenues during the three months ended June 30, 2025 was attributable to lower revenues in relation to fixed costs, including certain personnel, occupancy and costs associated with applicant tracking systems and job boards. In addition, higher incentive compensation on direct hire placement revenues, which remained relatively level quarter over quarter, as contrasted with lower professional contract revenues, contributed to the higher SG&A ratios. These two items were offset by certain cost reductions and productivity improvements during the three months ended June 30, 2025.

Previous wording

SG&A includes certain non-cash costs and expenses incurred related to acquisition, integration, restructuring and other non-recurring activities, such as certain corporate legal and general expenses associated with capital markets activities, that either are not directly associated with core business operations or have been eliminated on a going forward basis. These costs were $226 and $452 for the three-month periods ended March 31, 2025 and 2024, respectively, and include mainly expenses associated with advisory fees and legal expenses related to other than routine matters.

Current wording

SG&A includes certain non-cash and non-operational costs and expenses incurred related to acquisition, integration, restructuring and other non-recurring activities, such as certain corporate legal and general expenses associated with capital markets activities, that either are not directly associated with core business operations or have been eliminated on a going forward basis. These costs were $68 and $46 for the three-month periods ended June 30, 2025 and 2024, respectively, and include mainly expenses associated with advisory fees and legal expenses related to other than routine matters.

Previous wording

Amortization expense was $225 and $719 for the three-month periods ended March 31, 2025, and 2024, respectively. The significant decline in amortization expense is mainly due to impairment charges recorded during the fiscal year ended September 30, 2024, which substantially reduced the remaining unamortized balances of our identifiable intangible assets and present amortization, accordingly. Depreciation expense was $50 and $66 for the three-month periods ended March 31, 2025, and 2024, respectively.* *

Current wording

Amortization expense was $225 and $720 for the three-month periods ended June 30, 2025, and 2024, respectively. The significant decline in amortization expense is mainly due to impairment charges recorded during the fiscal year ended September 30, 2024, which substantially reduced the remaining unamortized balances of our identifiable intangible assets and present amortization, accordingly. Depreciation expense was $49 and $63 for the three-month periods ended June 30, 2025, and 2024, respectively.* *

Previous wording

We completed an interim goodwill impairment assessment as of March 31, 2025 and determined that our goodwill was impaired. The estimated fair value of our Professional Services reporting unit decreased as compared to those resulting from the September 30, 2024 annual assessment, indicating that the pre-assessment carrying value as of March 31, 2025 exceeded its estimated fair value. As a result, a non-cash goodwill impairment charge of $22,000 was recorded during the three-month period ended March 31, 2025 so that the carrying value of the Professional Services reporting unit reflects its estimated fair value, as determined by the interim evaluations made of our goodwill.

Current wording

We completed an interim goodwill impairment assessment as of June 30, 2024 and determined that our goodwill was impaired. The estimated fair value of the Professional Services reporting unit decreased as compared to those resulting from the September 30, 2023 annual assessment, indicating that the pre-assessment carrying value as of June 30, 2024 exceeded the estimated fair values. As a result, a non-cash goodwill impairment charge of $14,201 was taken during the three months ended June 30, 2024 so that the carrying value of the Professional Services reporting unit reflected its estimated fair value, as determined by the interim evaluations made of our goodwill.

Previous wording

Interest expense was $89 and $65 for the three-month periods ended March 31, 2025 and 2024, respectively, and is mainly attributable to unused availability and administrative fees on our Facility.

Current wording

Interest expense was $112 and $113 for the three-month periods ended June 30, 2025 and 2024, respectively, and is mainly attributable to unused availability and administrative fees on our Facility.

Previous wording

Interest income earned was $139 and $179 for the three-month periods ended March 31, 2025 and 2024, respectively. Interest income is earned on cash balances held in our two brokerage accounts.

Current wording

Interest income earned was $140 and $179 for the three-month periods ended June 30, 2025 and 2024, respectively. Interest income is earned on cash balances held in our two brokerage accounts.

Previous wording

We recognized income tax expense (benefit) of $9,786 and $(915) for the three-month periods ended March 31, 2025 and 2024, respectively. Our effective tax rate for the three-month period ended March 31, 2025 is lower than the statutory rate primarily due to the effect of the valuation allowance on our net DTA position. Our effective tax rate for the three-month period ended March 31, 2024 is higher than the statutory tax rate primarily due to the effect of federal tax credits and state and local taxes.

Current wording

We recognized income tax benefits of $115 and $2,546 for the three-month periods ended June 30, 2025 and 2024, respectively. Our effective tax rate for the three-month period ended June 30, 2025 is higher than the statutory rate primarily due to the change in the valuation allowance between quarters. The incremental change in valuation allowance has a greater impact because of the smaller change in pre-tax book loss. Our effective tax rate for the three-month period ended June 30, 2024 is lower than the statutory rate primarily due to the effect of the valuation allowance on our net DTA position. Other than the deferred tax liability relating to indefinite lived assets, we are maintaining a full valuation allowance against the remaining net DTA position.

Previous wording

As a result of our Industrial Segment being deemed a discontinued operation, the results of that segment have been reclassified to loss from discontinued operations in the accompanying unaudited condensed consolidated statements of operations. Loss from discontinued operations was $(163) and $(89) for the three-month periods ended March 31, 2025 and 2024, respectively.

Current wording

As a result of our Industrial Segment being deemed a discontinued operation, the results of that segment have been reclassified to loss from discontinued operations in the accompanying unaudited condensed consolidated statements of operations. On June 2, 2025, we entered into an agreement to sell certain operating assets of our Industrial Segment and recorded a gain on sale of $133 during the three-month period ended June 30, 2025. Loss from discontinued operations, including the gain recorded upon sale, was $(22) and $(1,181) for the three-month periods ended June 30, 2025 and 2024, respectively.

Previous wording

Our consolidated net loss was $(33,811) and $(2,563) for the six-month periods ended March 31, 2025 and 2024, respectively. The increase in consolidated net loss is primarily the result of the non-cash goodwill impairment charge and valuation allowance related to our net deferred tax assets recorded as of March 31, 2025, as explained in the preceding paragraphs.

Current wording

Our consolidated net loss was $(423) and $(19,286) for the three-month periods ended June 30, 2025 and 2024, respectively. The improvement in consolidated net loss is primarily the result of the non-cash impairment charges recorded in the three months ended June 30, 2024, and other relevant items, as explained in the preceding paragraphs.

Previous wording

Six Months Ended March 31, 2025 Compared to the Six Months Ended March 31, 2024

Current wording

Nine Months Ended June 30, 2025 Compared to the Nine Months Ended June 30, 2024

Previous wording

Professional contract staffing services contributed $43,009 or approximately 89% of consolidated revenue and direct hire placement services contributed $5,511, or approximately 11%, of consolidated revenue for the six months ended March 31, 2025. This compares to professional contract staffing services revenue of $48,216, or approximately 90%, of consolidated revenue and direct hire placement revenue of $5,510, or approximately 10%, of consolidated revenue for the six months ended March 31, 2024.

Current wording

Professional contract staffing services contributed $64,310 or approximately 88% of consolidated revenue and direct hire placement services contributed $8,733, or approximately 12%, of consolidated revenue for the nine months ended June 30, 2025. This compares to professional contract staffing services revenue of $71,977, or approximately 89%, of consolidated revenue and direct hire placement revenue of $8,797, or approximately 11%, of consolidated revenue for the nine months ended June 30, 2024.

Previous wording

Economic weakness and uncertainties, including persistent inflation and the possibility of recession, continued to negatively impact our results through the six months ended March 31, 2025. Professional contract staffing services revenues decreased $5,207, or 11%, as compared to the six months ended March 31, 2024.

Current wording

Economic uncertainties, including persistent inflation and the possibility of recession, continued to adversely affect trends and conditions in the U.S. labor markets, which in turn, have continued to negatively impact our results through the nine months ended June 30, 2025. Professional contract staffing services revenues decreased $7,677, or 11%, as compared to the nine months ended June 30, 2024. Professional contract staffing services for the nine months ended June 30, 2025 includes $2,112 of revenues generated by Hornet, which was acquired by the Company effective January 3, 2025. The former light industrial segment revenues of $4,614 and $7,363 for the nine months ended June 30, 2025 and 2024, respectively, have been reclassified as discontinued operations and are no longer included in professional contract staffing services.

Previous wording

Cost of contract services includes wages and related payroll taxes and employee benefits of our contract services employees, and certain other contract employee-related costs, while working on contract assignments. Cost of contract services for the six months ended March 31, 2025 decreased by approximately 10% to $32,234 compared to $35,997 for the six months ended March 31, 2024. The $3,763 overall decrease in cost of contract services is consistent with the decrease in revenues as discussed above.

Current wording

Cost of contract services includes wages and related payroll taxes and employee benefits of our contract services employees, and certain other contract employee-related costs, while working on contract assignments. Cost of contract services for the nine months ended June 30, 2025 decreased by approximately 11% to $48,076 compared to $53,816 for the nine months ended June 30, 2024. The $5,740 overall decrease in cost of contract services is consistent with the decrease in revenues as discussed above.

Previous wording

Our combined gross profit margin, including direct hire placement services, for the six-month periods ended March 31, 2025 and 2024 were approximately 33.6% and 33.0%, respectively. Our professional contract staffing services gross margins for the six-month periods ended March 31, 2025 and 2024 were approximately 25.1% and 25.3%, respectively. The net increase in our gross margins is mainly attributable to changes in the mix of direct hire placement revenues, which have a 100% gross margin.

Current wording

Our combined gross profit margin, including direct hire placement services, for the nine-month periods ended June 30, 2025 and 2024 were approximately 34.2% and 33.4%, respectively. Our professional contract staffing services gross margins were 25.2% for both nine-month periods ended June 30, 2025 and 2024. The net increase in our combined gross margin is mainly attributable to an increase in the mix of direct hire placement revenues, which have a 100% gross margin.

Previous wording

SG&A includes certain non-cash costs and expenses incurred related to acquisition, integration, restructuring and other non-recurring activities, such as certain corporate legal and general expenses associated with capital markets activities, that either are not directly associated with core business operations or have been eliminated on a going forward basis. These costs were $317 and $995 for the six-month periods ended March 31, 2025 and 2024, respectively, and include mainly expenses associated with former closed and consolidated locations, legal expenses related to other than routine matters, and personnel costs associated with eliminated positions.

Current wording

SG&A includes certain non-cash and non-operational costs and expenses incurred related to acquisition, integration, restructuring and other non-recurring activities, such as certain corporate legal and general expenses associated with capital markets activities, that either are not directly associated with core business operations or have been eliminated on a going forward basis. These costs were $385 and $1,041 for the nine-month periods ended June 30, 2025 and 2024, respectively, and include mainly expenses associated with former closed and consolidated locations, legal expenses related to other than routine matters, and personnel costs associated with eliminated positions.

Previous wording

Amortization expense was $430 and $1,439 for the six-month periods ended March 31, 2025, and 2024, respectively. The significant decline in amortization expense is mainly due to impairment charges recorded during the fiscal year ended September 30, 2024, which substantially reduced the remaining unamortized balances of our identifiable intangible assets and present amortization, accordingly. Depreciation expense was $105 and $138 for the six-month periods ended March 31, 2025, and 2024, respectively.

Current wording

Amortization expense was $655 and $2,159 for the nine-month periods ended June 30, 2025, and 2024, respectively. The significant decline in amortization expense is mainly due to impairment charges recorded during the fiscal year ended September 30, 2024, which substantially reduced the remaining unamortized balances of our identifiable intangible assets and present amortization, accordingly. Depreciation expense was $154 and $201 for the nine-month periods ended June 30, 2025, and 2024, respectively.

Previous wording

We completed an interim goodwill impairment assessment as of March 31, 2025 and determined that our goodwill was impaired. The estimated fair value of our Professional Services reporting unit decreased as compared to those resulting from the September 30, 2024 annual assessment, indicating that the pre-assessment carrying value as of March 31, 2025 exceeded its estimated fair value. As a result, a non-cash goodwill impairment charge of $22,000 was recorded during the six-month period ended March 31, 2025 so that the carrying value of the Professional Services reporting unit reflects its estimated fair value, as determined by the interim evaluations made of our goodwill.

Current wording

We completed an interim goodwill impairment assessment as of March 31, 2025 and determined that our goodwill was impaired. The estimated fair value of our Professional Services reporting unit decreased as compared to those resulting from the September 30, 2024 annual assessment, indicating that the pre-assessment carrying value as of March 31, 2025 exceeded its estimated fair value. We also completed an interim goodwill assessment as of June 30, 2024 which determined our goodwill was impaired. As a result, non-cash goodwill impairment charges of $22,000 and $14,201 were recognized during the nine-month periods ended June 30, 2025 and 2024, respectively, so that the carrying values of the Professional Services reporting unit reflected its estimated fair value, as determined by the interim evaluations made of our goodwill.

Previous wording

Interest expense was $155 and $134 for the six-month periods ended March 31, 2025 and 2024, respectively, and is mainly attributable to unused availability and administrative fees on our Facility.

Current wording

Interest expense was $267 and $247 for the nine-month periods ended June 30, 2025 and 2024, respectively, and is mainly attributable to unused availability and administrative fees on our Facility.

Previous wording

Interest income earned was $294 and $369 for the six-month periods ended March 31, 2025 and 2024, respectively. Interest income is earned on cash balances held in our two brokerage accounts.

Current wording

Interest income earned was $434 and $548 for the nine-month periods ended June 30, 2025 and 2024, respectively. Interest income is earned on cash balances held in our two brokerage accounts.

Previous wording

We recognized income tax expense (benefit) of $9,786 and $(915) for the six-month periods ended March 31, 2025 and 2024, respectively. Our effective tax rate for the six-month period ended March 31, 2025 is lower than the statutory rate primarily due to the effect of the valuation allowance on our net DTA position. Our effective tax rate for the six-month period ended March 31, 2024 is higher than the statutory tax rate primarily due to the effect of federal tax credits and state and local taxes.

Current wording

We recognized income tax benefit (expense) of $(9,671) and $3,461 for the nine-month periods ended June 30, 2025 and 2024, respectively. Our effective tax rates for the nine-month periods ended June 30, 2025 and 2024 are lower than the statutory rate primarily due to the effect of the valuation allowance on our net DTA position.

Previous wording

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. In view of the significance of our recent pre-tax book losses and the likelihood of continuing uncertainty in the industry and economy as a whole, management excluded projections of future income from its forecast of the reversal of our DTAs as of March 31, 2025. As a result, it was determined that our net DTAs would not be realized as there is not sufficient positive evidence to conclude that it is more likely than not that the deferred taxes are realizable. As a result, we recorded an additional $12,713 valuation allowance accordingly as of March 31, 2025.

Current wording

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. In view of the significance of our recent pre-tax book losses and the likelihood of continuing uncertainty in the industry and economy as a whole, management excluded projections of future income from its forecast of the reversal of our DTAs as of March 31, 2025. As a result, it was determined that our net DTAs would not be realized as there is not sufficient positive evidence to conclude that it is more likely than not that the deferred taxes are realizable. We recorded an additional $12,426 valuation allowance, accordingly, during the nine months ended June 30, 2025.

Previous wording

As a result of our Industrial Segment being deemed a discontinued operation, the results of that segment have been reclassified to loss from discontinued operations in the accompanying unaudited condensed consolidated statements of operations. Loss from discontinued operations was $(171) and $(127) for the six-month periods ended March 31, 2025 and 2024, respectively.

Current wording

As a result of our Industrial Segment being deemed a discontinued operation, the results of that segment have been reclassified to loss from discontinued operations in the accompanying unaudited condensed consolidated statements of operations. On June 2, 2025, we entered into an agreement to sell certain operating assets of our Industrial Segment and recorded a net gain on sale of $133 during the nine-month period ended June 30, 2025. Loss from discontinued operations, including the net gain recorded upon sale, was $(193) and $(1,308) for the nine-month periods ended June 30, 2025 and 2024, respectively.

Previous wording

Our consolidated net loss was $(33,119) and $(1,008) for the three-month periods ended March 31, 2025 and 2024, respectively. The increase in consolidated net loss is primarily the result of the non-cash goodwill impairment charge and valuation allowance related to our net deferred tax assets recorded as of March 31, 2025, as explained in the preceding paragraphs.

Current wording

Our consolidated net loss was $(34,234) and $(21,849) for the nine-month periods ended June 30, 2025 and 2024, respectively. The increase in consolidated net loss is primarily the result of the increase in non-cash impairment charges, and valuation allowance related to our net deferred tax assets recognized during the nine-month period ended June 30, 2025, as explained in the preceding paragraphs.

Previous wording

As of March 31, 2025, we had $18,676 of cash, a decrease of $2,152 from $20,828 as of September 30, 2024.

Current wording

As of June 30, 2025, we had $18,622 of cash, a decrease of $2,206 from $20,828 as of September 30, 2024. As of June 30, 2025, we had working capital of $24,112 compared to $26,079 as of September 30, 2024.

Previous wording

As of March 31, 2025, we had working capital of $24,109 compared to $26,079 as of September 30, 2024. The decreases in cash and working capital are mainly attributable to the distribution of cash proceeds of $1,100 to the sellers of Hornet, and related expenses paid; and the effects of lower overall business volume during the six-months ended March 31, 2025.

Current wording

The decreases in cash and working capital are mainly attributable to the effects of lower overall business volume during the nine months ended June 30, 2025. In addition, we disbursed $1,100 in cash to the sellers of Hornet and paid related legal and professional fees of $111. We received $712 in cash from the buyer of the Industrial Segment’s assets during the nine-month period ended June 30, 2025.

Previous wording

The primary use of cash for investing activities was for the acquisition of Hornet during the six months ended March 31, 2025. As described under Note 2, on January 3, 2025, we completed the acquisition of 100% of the outstanding common stock of Hornet Staffing, Inc., which is now our wholly owned subsidiary. We paid $1,100 of cash consideration at closing on January 3, 2025, and entered into two 5% uncollateralized subordinated promissory notes with the sellers in the aggregate amount of $400, each payable in two equal annual installments due at the end of the two subsequent years following closing. The purchase price and our obligations under the subordinated promissory notes are subject to reduction in the event Hornet Staffing does not achieve agreed upon profit metrics during the two years subsequent to closing on a dollar-for-dollar basis.

Current wording

The primary use of cash for investing activities was for the acquisition of Hornet during the nine months ended June 30, 2025. As described under Note 2, on January 3, 2025, we completed the acquisition of 100% of the outstanding common stock of Hornet Staffing, Inc., which is now our wholly owned subsidiary. We paid $1,100 of cash consideration at closing on January 3, 2025, and entered into two 5% uncollateralized subordinated promissory notes with the sellers in the aggregate amount of $400, each payable in two equal annual installments due at the end of the two subsequent years following closing. The purchase price and our obligations under the subordinated promissory notes are subject to reduction in the event Hornet Staffing does not achieve agreed upon profit metrics during the two years subsequent to closing on a dollar-for-dollar basis.

Previous wording

The cash flows used in financing activities were primarily for purchases of treasury stock during the six-months ended March 31, 2024, and payments made on finance leases during the six-month periods ended March 31, 2025 and 2024.

Current wording

The cash flows used in financing activities were primarily for purchases of treasury stock during the nine months ended June 30, 2024, and payments made on finance leases during the nine-month periods ended June 30, 2025 and 2024.

Previous wording

We had $7,368 in availability for borrowings under our facility as of March 31, 2025. There were no outstanding borrowings on the Facility as of March 31, 2025, or September 30, 2024, except for certain accrued carrying fees and costs, which are included in other current liabilities in the accompanying unaudited condensed consolidated balance sheets.

Current wording

We had $6,566 in availability for borrowings under our facility as of June 30, 2025. There were no outstanding borrowings on the Facility as of June 30, 2025, or September 30, 2024, except for certain accrued incidental carrying fees and costs, which are included in other current liabilities in the accompanying unaudited condensed consolidated balance sheets.

Previous wording

On April 27, 2023, our Board of Directors approved a share repurchase program authorizing the Company to purchase up to an aggregate of $20 million of our currently outstanding shares of common stock. The share repurchase program continued through December 31, 2023. The repurchase program did not obligate us to repurchase any number of shares of common stock. The share repurchase program was conducted in accordance with Rules 10b-5 and 10b-18 of the Securities Exchange Act of 1934, as amended. Subject to applicable rules and regulations, shares of common stock were purchased from time to time in the open market transactions and in amounts we deemed appropriate, based on factors such as market conditions, legal requirements, and other business considerations. During the six-months ended March 31, 2024, we repurchased 2,717 shares of our common stock at a total cost of $1,575. Upon conclusion of the share repurchase program, as of December 31, 2023, we repurchased 6,129 shares in aggregate (accounting for approximately 5.4% of our issued and outstanding common shares immediately prior to the program).

Current wording

On April 27, 2023, our Board of Directors approved a share repurchase program authorizing the Company to purchase up to an aggregate of $20 million of our currently outstanding shares of common stock. The share repurchase program continued through December 31, 2023. The repurchase program did not obligate us to repurchase any number of shares of common stock. The share repurchase program was conducted in accordance with Rules 10b-5 and 10b-18 of the Securities Exchange Act of 1934, as amended. Subject to applicable rules and regulations, shares of common stock were purchased from time to time in the open market transactions and in amounts we deemed appropriate, based on factors such as market conditions, legal requirements, and other business considerations. During the nine months ended June 30, 2024, we repurchased 2,717 shares of our common stock at a total cost of $1,575. Upon conclusion of the share repurchase program, as of December 31, 2023, we repurchased 6,129 shares in aggregate (accounting for approximately 5.4% of our issued and outstanding common shares immediately prior to the program).

Previous wording

All our office facilities are leased. Minimum lease payments under all our lease agreements for the twelve-month period commencing after the close of business on March 31, 2025, are approximately $1,158. There are no minimum debt service principal payments due during the twelve-month period commencing after the close of business on March 31, 2025.

Current wording

All our office facilities are leased. Minimum lease payments under all our lease agreements for the twelve-month period commencing after the close of business on June 30, 2025, are approximately $1,128. There are no minimum debt service principal payments due during the twelve-month period commencing after the close of business on June 30, 2025.