GEE Group Inc.

Previous wording

GEE Group Inc. and its wholly owned material operating subsidiaries, Access Data Consulting Corporation, Agile Resources, Inc., Hornet Staffing, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., and Triad Personnel Services, Inc. are providers of permanent and temporary professional 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, and data entry assistants (medical scribes) who specialize in electronic medical records (EMR) services for emergency departments, specialty physician practices and clinics. GEE Group Inc.’s former wholly owned subsidiaries, BMCH, Inc. and Triad Logistics, Inc., provided temporary staffing services for our industrial clients until their operations were discontinued and assets were sold on June 2, 2025. Effective January 1, 2026, the Company transitioned the medical scribe business formerly done by Scribe Solutions under SNI’s Staffing Now division.

Current wording

GEE Group Inc. and its wholly owned material operating subsidiaries, Access Data Consulting Corporation, Agile Resources, Inc., Hornet Staffing, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., and Triad Personnel Services, Inc. are providers of permanent and temporary professional 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, and data entry assistants (medical scribes) who specialize in electronic medical records (EMR) services for emergency departments, specialty physician practices and clinics. GEE Group Inc.’s former wholly owned subsidiaries, BMCH, Inc. and Triad Logistics, Inc., provided temporary staffing services for our industrial clients until their operations were discontinued and assets were sold on June 2, 2025. Effective January 1, 2026, the Company transitioned the medical scribe business formerly done by Scribe Solutions, Inc. under the Staffing Now division of SNI Companies, Inc.

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, and Hornet Staffing. As of March 31, 2026, we operated from locations in ten (10) states, including fourteen (14) branch offices in downtown or suburban areas of major U.S. cities and five (5) 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, New Jersey and Texas; (ii) two offices each in Massachusetts, Colorado, and Ohio; (v) four offices in Florida; and (vi) , and one remote local market presence in each of Florida, Georgia, Illinois, Texas and Virginia.

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, 2026, we operated from locations in ten (10) states, including fourteen (14) branch offices in downtown or suburban areas of major U.S. cities and five (5) 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, New Jersey and Texas; (ii) two offices each in Massachusetts, Colorado and Ohio; (iii) four offices in Florida; and (iv) one remote local market presence in each of Florida, Georgia, Illinois, Texas and Virginia.

Previous wording

We incurred net income (losses) from continuing operations of $14 thousand and $(33) million for the three-month periods ended March 31, 2026 and 2025, respectively. We incurred net losses from continuing operations of $(136) thousand and ($33.6) million for the six-month periods ended March 31, 2026 and 2025, respectively.

Current wording

We incurred net income (losses) from continuing operations of $566 thousand and $(401) thousand for the three-month periods ended June 30, 2026 and 2025, respectively. We incurred net income (losses) from continuing operations of $430 thousand and $(34.0) million for the nine-month periods ended June 30, 2026 and 2025, respectively.

Previous wording

The net income for the fiscal second quarter ended March 31, 2026 and the net loss for the six-month period ended March 31, 2026 have improved relative to the comparable prior year periods and sequential calendar quarters. These improvements are due to growth in our direct hire revenues and resulting improvements in our gross profits and margins associated with them, and operating cost reductions and other productivity improvement initiatives. We were able to reduce selling, general, and administrative expenses (“SG&A”) by approximately $3.8 million on an annual basis during the latter part our fiscal year ended September 30, 2025, with the substantial benefit of these now being realized in fiscal 2026. We also remain committed and prepared to make additional cost cuts necessary to restore profitability.

Current wording

Net income for the fiscal third quarter and year-to-date periods ended June 30, 2026 has improved relative to the comparable prior year periods and sequential calendar quarters. These improvements are due to growth in our direct hire revenues and resulting improvements in our gross profits and margins associated with them, and operating cost reductions and other productivity improvement initiatives. We were able to reduce selling, general, and administrative expenses (“SG&A”) by approximately $3.8 million on an annual basis during the latter part our fiscal year ended September 30, 2025, with the substantial benefit of these now being realized in fiscal 2026. We also remain committed and prepared to make additional cost cuts necessary to restore profitability.

Previous wording

The net losses and lower volumes of business underlying them are primarily attributable to uncertain conditions in the U.S. labor markets that have been ongoing since the second half of 2023. 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 improve. As a result of the prolonged negative effects on our business associated with these conditions, we recorded a $22 million impairment charge in the quarter ended March 31, 2025, 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 a substantial portion of the net losses reported for the three and six-month periods ended March 31, 2025.

Current wording

The net losses incurred for the fiscal third quarter and year-to-date periods ended June 30, 2025, and the lower volumes of business underlying them, are primarily attributable to uncertain conditions in the U.S. labor markets that have been ongoing since the second half of 2023. 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 improve. As a result of the prolonged negative effects on our business associated with these conditions, we recorded a $22 million impairment charge in the nine months ended June 30, 2025, 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 a substantial portion of the net losses reported for the nine months ended June 30, 2025.

Previous wording

We learned at the end of fiscal 2025 that one of our larger contract services accounts was acquired. As a result, our services were terminated as of October 1, 2025, and replaced by comparable services provided by an affiliate of the acquirer. This account produced revenues of $2.5 million and $5.1 million, and contributed approximately $199 thousand and $683 thousand to income from operations, net of direct expenses, that offset the losses from operations during the three and six-month periods ended March 31, 2025, respectively.

Current wording

We learned at the end of fiscal 2025 that one of our larger contract services accounts was acquired. As a result, our services were terminated as of October 1, 2025, and replaced by comparable services provided by an affiliate of the acquirer. This account produced revenues of $2.2 million and $7.3 million, and contributed approximately $172 thousand and $855 thousand to income from operations, net of direct expenses, that offset the losses from operations during the three and nine-month periods ended June 30, 2025, respectively.

Previous wording

On January 3, 2025, we acquired Hornet Staffing, Inc., an Atlanta-based provider of staff augmentation services with national service capability. Hornet provides staffing solutions to markets serving large scale, "blue chip" companies in the information technology, professional and customer service staffing verticals. The acquisition is expected to be accretive to earnings. Under the terms of the stock purchase agreement, we acquired 100% of the Hornet common stock for consideration including cash and seller financing. Larry Bruce, Hornet’s Managing Director and Founder, has continued his capacity at Hornet and joined the GEE Group National Sales Team, working with our vertical leaders on new business development.

Current wording

On January 3, 2025, we acquired Hornet Staffing, Inc., an Atlanta-based provider of staff augmentation services with national service capability. Hornet provides staffing solutions to markets serving large scale, "blue chip" companies in the information technology, professional and customer service staffing verticals. The acquisition is expected to be accretive to earnings. Under the terms of the stock purchase agreement, we acquired 100% of the Hornet common stock for consideration including cash and seller financing.

Previous wording

Professional contract staffing services contributed $34,094 or approximately 85% of consolidated revenue and direct hire placement services contributed $5,903, or approximately 15%, of consolidated revenue for the six months ended March 31, 2026. This compares to professional contract staffing services revenue of $43,009, or approximately 89%, of consolidated revenue and direct hire placement revenue of $5,511, or approximately 11%, of consolidated revenue for the six months ended March 31, 2025.

Current wording

Professional contract staffing services contributed $17,019 or approximately 82% of consolidated revenue and direct hire placement services contributed $3,746, or approximately 18%, of consolidated revenue for the three months ended June 30, 2026. This compares to professional contract staffing services revenue of $21,301, or approximately 87%, of consolidated revenue and direct hire placement revenue of $3,222, or approximately 13%, of consolidated revenue for the three months ended June 30, 2025.

Previous wording

Direct hire placement revenue for the three months ended March 31, 2026 increased $187, or approximately 6%, as compared to the three months ended March 31, 2025, and $471, or approximately 17%, as compared to the prior sequential quarter ended December 31, 2025. Direct hire opportunities tend to be highly cyclical and demand dependent and may be expected to rise during times of economic recovery and decline during downturns and periods of uncertainty. And while this increase is encouraging and might be viewed by some as a leading indicator or sign of recovery in our business, we remain cautiously optimistic.

Current wording

Direct hire placement revenue for the three months ended June 30, 2026 increased $524, or approximately 16%, as compared to the three months ended June 30, 2025, and $559, or approximately 18%, as compared to the prior sequential quarter ended March 31, 2026. Direct hire opportunities tend to be highly cyclical and demand dependent and may be expected to rise during times of economic recovery and decline during downturns and periods of uncertainty. While this increase is encouraging and might be viewed by some as a leading indicator or sign of recovery in our business, we remain cautiously optimistic.

Previous wording

As mentioned in ourSummary and Outlook discussion above, one of our larger contract services accounts terminated our services as of October 1, 2025, upon being acquired and accessing comparable services provided by an affiliate of the acquirer. This account produced revenues of $2,512 during the three months ended March 31, 2025. Uncertainties in the U.S. labor markets have continued to negatively impact our results and ability to grow our contract services revenue through the three months ended March 31, 2026. The proliferation of AI applications and tools is also having disruptive effects on our business by causing business plans, hiring plans, and HR needs across industries, including those we serve, to be reconsidered. As a result of these events and trends, professional contract staffing services revenues decreased $5,201, or 24%, as compared to the three months ended March 31, 2025.

Current wording

Uncertainties in the U.S. labor markets have continued to negatively impact our results and ability to grow our contract services revenue through the three months ended June 30, 2026. The proliferation of AI applications and tools is also having disruptive effects on our business by causing business plans, hiring plans, and HR needs across industries, including those we serve, to be reconsidered. As mentioned in ourSummary and Outlook discussion above, one of our larger contract services accounts terminated our services as of October 1, 2025, upon being acquired and accessing comparable services provided by an affiliate of the acquirer. This account produced revenues of $2,192 during the three months ended June 30, 2025. As a result of these events and trends, professional contract staffing services revenues decreased $4,282, or 20%, as compared to the three months ended June 30, 2025.

Previous wording

Cost of contract services includes wages and related payroll taxes, 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, 2026 decreased by approximately 25% to $12,066 compared to $16,135 for the three months ended March 31, 2025. The $4,069 overall decrease in cost of contract services is consistent with the decrease in revenues as discussed above. As further explained below, our gross profit and gross margin for the three months ended March 31, 2026 are proportionally higher relative to revenue than those for the three months ended March 31, 2025.

Current wording

Cost of contract services includes wages and related payroll taxes, 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, 2026 decreased by approximately 21% to $12,484 compared to $15,842 for the three months ended June 30, 2025. The $3,358 overall decrease in cost of contract services is consistent with the decrease in revenues as discussed above. As further explained below, our gross profit and gross margin for the three months ended June 30, 2026 are proportionally higher relative to revenue than those for the three months ended June 30, 2025.

Previous wording

Our combined gross profit margin, including direct hire placement services, for the three-month periods ended March 31, 2026 and 2025 were approximately 38.1% and 34.1%, respectively. Our professional contract staffing services gross margins for the three-month periods ended March 31, 2026 and 2025 were approximately 25.9% and 24.9%, 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, and to an increase in the mix of higher margin business following the termination of our services by one of our former contract services clients, which produced below average margins for us.

Current wording

Our combined gross profit margin, including direct hire placement services, for the three-month periods ended June 30, 2026 and 2025 were approximately 39.9% and 35.4%, respectively. Our professional contract staffing services gross margins for the three-month periods ended June 30, 2026 and 2025 were approximately 26.6% and 25.6%, 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, and to an increase in the mix of higher margin business following the termination of our services by one of our former contract services clients, which produced below average margins for us.

Previous wording

Our SG&A for the three months ended March 31, 2026 decreased by $1,898 as compared to the three months ended March 31, 2025. SG&A, as a percentage of revenues, were approximately 38% for both the three months ended March 31,2026 and March 31, 2025. SG&A expenses as a percentage of revenues remained consistent among both periods, as the decrease in SG&A expenses during the three months ended March 31, 2026 was large enough to offset the increase normally associated with the decline in revenue. This was mainly due to certain cost reductions and productivity improvement initiatives made during the latter portion of our fiscal year ended September 30, 2025. These cost reductions contributed approximately $1,336 to the decrease in SG&A for the three months ended March 31, 2026.

Current wording

Our SG&A expenses for the three months ended June 30, 2026 decreased by $1,114 as compared to the three months ended June 30, 2025. SG&A expenses as a percentage of revenues were approximately 37.7% and 36.5% for the three months ended June 30, 2026 and 2025, respectively. The increase in SG&A expenses as a percentage of revenues during the three months ended June 30, 2026 was attributable to lower revenues in relation to fixed costs, including certain personnel and occupancy costs, and an increase in incentive compensation resulting from the increase in direct hire revenues. These were primarily offset by certain cost reductions and productivity improvement initiatives made during the latter portion of the fiscal year ended September 30, 2025. These cost reductions contributed approximately $1,144 to the net decrease in SG&A expenses for the three months ended June 30, 2026.

Previous 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 $108 and $317 for the six-month periods ended March 31, 2026 and 2025, respectively, and include mainly advisory and legal fees related to other than routine matters, severance costs associated with eliminated positions, and expenses associated with former closed or consolidated locations.

Current wording

SG&A expenses include 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 $97 and $68 for the three-month periods ended June 30, 2026 and 2025, respectively, and include mainly advisory and legal fees related to other than routine matters, severance costs associated with eliminated positions, and expenses associated with former closed or consolidated locations.

Previous wording

Amortization expense was $20 and $225 for the three-month periods ended March 31, 2026 and 2025, respectively. The decrease in amortization expense is due to certain intangible assets becoming fully amortized during the fiscal year ended September 30, 2025. Depreciation expense was $45 and $50 for the three-month periods ended March 31, 2026 and 2025, respectively.* *

Current wording

Amortization expense was $21 and $225 for the three-month periods ended June 30, 2026 and 2025, respectively. The decrease in amortization expense is due to certain intangible assets becoming fully amortized during the fiscal year ended September 30, 2025. Depreciation expense was $45 and $49 for the three-month periods ended June 30, 2026 and 2025, respectively.* *

Previous wording

Loss from operations was $(57) and $(23,220) for the three-month periods ended March 31, 2026 and 2025, respectively. The improvement in loss from operations is primarily attributable to the goodwill impairment charge included in results for the three months ended March 31, 2025. Additionally, the growth in our direct hire revenues, and the cost reductions and productivity improvements initiated during the latter portion of our fiscal year ended September 30, 2025, as discussed above, contributed to this improvement.

Current wording

Income (loss) from operations was $378 and $(544) for the three-month periods ended June 30, 2026 and 2025, respectively. The improvement in operating results is primarily attributable to the growth in our direct hire revenues, and the cost reductions and productivity improvements initiated during the latter portion of our fiscal year ended September 30, 2025, as discussed above.

Previous wording

Interest expense was $66 and $89 for the three-month periods ended March 31, 2026 and 2025, respectively, and was comprised mainly of fees associated with our Facility including unused capacity fees, administrative charges, and the amortization of related debt issuance costs. No advances were taken on our Facility during the three-month periods ended March 31, 2026 and 2025.

Current wording

Interest expense was $119 and $112 for the three-month periods ended June 30, 2026 and 2025, respectively, and was comprised mainly of fees associated with our Facility including unused capacity fees, administrative charges, and the amortization of related debt issuance costs. No advances were taken on our Facility during the three-month periods ended June 30, 2026 and 2025.

Previous wording

Interest income earned was $116 and $139 for the three-month periods ended March 31, 2026 and 2025, respectively. Interest income is earned on cash balances held in our two brokerage accounts. The reduction in interest income is primarily due to a reduction in interest rates available on our cash balances.

Current wording

Interest income earned was $112 and $140 for the three-month periods ended June 30, 2026 and 2025, respectively. Interest income is earned on cash balances held in our brokerage accounts. The reduction in interest income is primarily due to a reduction in interest rates available on our cash balances.

Previous wording

We recognized income tax expense (benefit) of $(21) and $9,786 for the three-month periods ended March 31, 2026 and 2025, respectively. Our effective tax rates for the three-month periods ended March 31, 2026 and 2025 differ from the statutory rate primarily due to the effect of changes in the valuation allowance on our net DTA position.

Current wording

We recognized income tax (expense) benefit of $(1) and $115 for the three-month periods ended June 30, 2026 and 2025, respectively. Our effective tax rates for the three-month periods ended June 30, 2026 and 2025 differ from the statutory rate primarily due to the effect of changes in the valuation allowance on our net DTA position.

Previous wording

As a result of our Industrial Segment being designated 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 substantially all of the operating assets of our former Industrial Segment. Loss from discontinued operations was $(163) for the three months ended March 31, 2025.

Current wording

As a result of our Industrial Segment being designated 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 substantially all of the operating assets of our former Industrial Segment. Loss from discontinued operations was $(22) for the three months ended June 30, 2025.

Previous wording

Our consolidated net income (loss) was $14 and $(33,119) for the three-month periods ended March 31, 2026 and 2025, respectively. The improvement in consolidated net income (loss) is primarily attributable to the goodwill impairment charge and valuation allowance related to our deferred tax assets included in results for the three months ended March 31, 2025, as explained in the preceding paragraphs. Additionally, the growth in our direct hire revenue, and the cost reductions and productivity improvements initiated during the latter portion of our fiscal year ended September 30, 2025, as discussed above, contributed to this improvement.

Current wording

Our consolidated net income (loss) was $566 and $(423) for the three-month periods ended June 30, 2026 and 2025, respectively. The improvement in consolidated net income (loss) is primarily attributable to the growth in our direct hire revenue, and the cost reductions and productivity improvements initiated during the latter portion of our fiscal year ended September 30, 2025, as discussed above.

Previous wording

Six Months Ended March 31, 2026 Compared to the Six Months Ended March 31, 2025

Current wording

Nine Months Ended June 30, 2026 Compared to the Nine Months Ended June 30, 2025

Previous wording

Professional contract staffing services contributed $16,294 or approximately 84% of consolidated revenue and direct hire placement services contributed $3,187, or approximately 16%, of consolidated revenue for the three months ended March 31, 2026. This compares to professional contract staffing services revenue of $21,495, or approximately 88%, of consolidated revenue and direct hire placement revenue of $3,000, or approximately 12%, of consolidated revenue for the three months ended March 31, 2025.

Current wording

Professional contract staffing services contributed $51,113 or approximately 84% of consolidated revenue and direct hire placement services contributed $9,649, or approximately 16%, of consolidated revenue for the nine months ended June 30, 2026. This compares to professional contract staffing services revenue of $64,310, or approximately 88%, of consolidated revenue and direct hire placement revenue of $8,733, or approximately 12%, of consolidated revenue for the nine months ended June 30, 2025.

Previous wording

Direct hire placement revenue for the six months ended March 31, 2026 increased $392, or approximately 7%, as compared to the six months ended March 31, 2025. Direct hire opportunities tend to be highly cyclical and demand dependent and may be expected to rise during times of economic recovery and decline during downturns and periods of uncertainty. And while this increase is encouraging and might be viewed by some as a leading indicator or sign of recovery in our business, we remain cautiously optimistic.

Current wording

Direct hire placement revenue for the nine months ended June 30, 2026 increased $916, or approximately 10%, as compared to the nine months ended June 30, 2025. Direct hire opportunities tend to be highly cyclical and demand dependent and may be expected to rise during times of economic recovery and decline during downturns and periods of uncertainty. While this increase is encouraging and might be viewed by some as a leading indicator or sign of recovery in our business, we remain cautiously optimistic.

Previous wording

As mentioned in ourSummary and Outlook discussion above, one of our larger contract services accounts terminated our services as of October 1, 2025, upon being acquired and accessing comparable services provided by an affiliate of the acquirer. This account produced revenues of $5,081 during the six months ended March 31, 2025. Uncertainties in the U.S. labor markets have continued to negatively impact our results and ability to grow our contract services revenue through the six months ended March 31, 2026. The proliferation of AI applications and tools is also having disruptive effects on our business by causing business plans, hiring plans, and HR needs across industries, including those we serve, to be reconsidered. As a result of these events and trends, professional contract staffing services revenues decreased $8,915, or 21%, as compared to the six months ended March 31, 2025.

Current wording

Uncertainties in the U.S. labor markets have continued to negatively impact our results and ability to grow our contract services revenue through the nine months ended June 30, 2026. The proliferation of AI applications and tools is also having disruptive effects on our business by causing business plans, hiring plans, and HR needs across industries, including those we serve, to be reconsidered. As mentioned in ourSummary and Outlook discussion above, one of our larger contract services accounts terminated our services as of October 1, 2025, upon being acquired and accessing comparable services provided by an affiliate of the acquirer. This account produced revenues of $7,274 during the nine months ended June 30, 2025. As a result of these events and trends, professional contract staffing services revenues decreased $13,197, or 21%, as compared to the nine months ended June 30, 2025.

Previous wording

Cost of contract services includes wages and related payroll taxes, 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, 2026 decreased by approximately 22% to $25,177 compared to $32,234 for the six months ended March 31, 2025. The $7,057 overall decrease in cost of contract services is consistent with the decrease in revenues as discussed above. As further explained below, our gross profit and gross margin for the six months ended March 31, 2026 are proportionally higher relative to revenue than those for the six months ended March 31, 2025.

Current wording

Cost of contract services includes wages and related payroll taxes, 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, 2026 decreased by approximately 22% to $37,661 compared to $48,076 for the nine months ended June 30, 2025. The $10,415 overall decrease in cost of contract services is consistent with the decrease in revenues as discussed above. As further explained below, our gross profit and gross margin for the nine months ended June 30, 2026 are proportionally higher relative to revenue than those for the nine months ended June 30, 2025.

Previous wording

Our combined gross profit margin, including direct hire placement services, for the six-month periods ended March 31, 2026 and 2025 were approximately 37.1% and 33.6%, respectively. Our professional contract staffing services gross margins for the six-month periods ended March 31, 2026 and 2025 were approximately 26.2% and 25.1%, 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, and to an increase in the mix of higher margin business following the termination of our services by one of our former contract services clients, which produced below average margins for us.

Current wording

Our combined gross profit margin, including direct hire placement services, for the nine-month periods ended June 30, 2026 and 2025 were approximately 38.0% and 34.2%, respectively. Our professional contract staffing services gross margins for the nine-month periods ended June 30, 2026 and 2025 were approximately 26.3% and 25.2%, 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, and to an increase in the mix of higher margin business following the termination of our services by one of our former contract services clients, which produced below average margins for us.

Previous wording

Our SG&A for the six months ended March 31, 2026 decreased by $2,629 as compared to the six months ended March 31, 2025. SG&A for the six months ended March 31, 2026, as a percentage of revenues, were approximately 37.8% compared to approximately 36.6% for the six months ended March 31, 2025. The increase in SG&A expenses as a percentage of revenues during the six months ended March 31, 2026 was attributable to lower revenues in relation to fixed costs, including certain personnel, occupancy and costs associated with applicant tracking systems and job boards. This was offset, in part, by certain cost reductions and productivity improvement initiatives made during the latter portion of the fiscal year ended September 30, 2025. These cost reductions contributed approximately $2,389 to the decrease in SG&A for the six months ended March 31, 2026.

Current wording

Our SG&A expenses for the nine months ended June 30, 2026 decreased by $3,743 as compared to the nine months ended June 30, 2025. SG&A expenses for the nine months ended June 30, 2026 as a percentage of revenues were approximately 37.8% compared to approximately 36.5% for the nine months ended June 30, 2025. The increase in SG&A expenses as a percentage of revenues during the nine months ended June 30, 2026 was attributable to lower revenues in relation to fixed costs, including certain personnel and occupancy costs, and an increase in incentive compensation resulting from the increase in direct hire revenues. This was primarily offset by certain cost reductions and productivity improvement initiatives made during the latter portion of the fiscal year ended September 30, 2025. These cost reductions contributed approximately $3,534 to the net decrease in SG&A expenses for the nine months ended June 30, 2026.

Previous 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 $14 and $226 for the three-month periods ended March 31, 2026 and 2025, respectively, and include mainly advisory and legal fees related to other than routine matters and expenses associated with former closed or consolidated locations.

Current wording

SG&A expenses include 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 $205 and $385 for the nine-month periods ended June 30, 2026 and 2025, respectively, and include mainly advisory and legal fees related to other than routine matters, severance costs associated with eliminated positions, and expenses associated with former closed or consolidated locations.

Previous wording

Amortization expense was $80 and $430 for the six-month periods ended March 31, 2026, and 2025, respectively. The decrease in amortization expense is due to certain intangible assets becoming fully amortized during the fiscal year ended September 30, 2025. Depreciation expense was $91 and $105 for the six-month periods ended March 31, 2026, and 2025, respectively.* *

Current wording

Amortization expense was $101 and $655 for the nine-month periods ended June 30, 2026, and 2025, respectively. The decrease in amortization expense is due to certain intangible assets becoming fully amortized during the fiscal year ended September 30, 2025. Depreciation expense was $136 and $154 for the nine-month periods ended June 30, 2026, and 2025, 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 months 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. As a result, a non-cash goodwill impairment charge of $22,000 was recorded during the nine months ended June 30, 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.

Previous wording

Loss from operations was $(466) and $(23,993) for the six-month periods ended March 31, 2026 and 2025, respectively. The improvement in loss from operations is primarily attributable to the goodwill impairment charge included in results for the six months ended March 31, 2025. Additionally, the growth in our direct hire revenue, and cost reductions and productivity improvements initiated in the latter portion of the fiscal year ended September 30, 2025, as discussed above, contributed to this improvement.

Current wording

Loss from operations was $(88) and $(24,537) for the nine-month periods ended June 30, 2026 and 2025, respectively. The improvement in loss from operations is primarily attributable to the goodwill impairment charge included in results for the nine months ended June 30, 2025. Additionally, the growth in our direct hire revenue, and cost reductions and productivity improvements initiated in the latter portion of the fiscal year ended September 30, 2025, as discussed above, contributed to this improvement.

Previous wording

Interest expense was $131 and $155 for the six-month periods ended March 31, 2026 and 2025, respectively, and was comprised mainly of fees associated with our Facility including unused capacity fees, administrative charges, and the amortization of related debt issuance costs. No advances were taken on our Facility during the six-month periods ended March 31, 2026 and 2025.

Current wording

Interest expense was $250 and $267 for the nine-month periods ended June 30, 2026 and 2025, respectively, and was comprised mainly of fees associated with our Facility including unused capacity fees, administrative charges, and the amortization of related debt issuance costs. No advances were taken on our Facility during the nine-month periods ended June 30, 2026 and 2025.

Previous wording

Interest income earned was $244 and $294 for the six-month periods ended March 31, 2026 and 2025, respectively. Interest income is earned on cash balances held in our two brokerage accounts. The reduction in interest income is primarily due to a reduction in interest rates available on our cash balances.

Current wording

Interest income earned was $356 and $434 for the nine-month periods ended June 30, 2026 and 2025, respectively. Interest income is earned on cash balances held in our brokerage accounts. The reduction in interest income is primarily due to a reduction in interest rates available on our cash balances.

Previous wording

Other income was $196 for the six months ended March 31, 2026 and was the result of elimination of a portion of the Promissory Notes issued to Hornet’s former shareholders as part of the purchase consideration. Under the Purchase Agreement, payments on the Promissory Notes are to be made annually in two equal installments on the first and second anniversaries of the issuance date. These payments are contingent upon the achievement of minimum average gross profit (“AGP”) requirements by Hornet over the first two annual periods prior to closing. The first installments of the Promissory Notes have been entirely eliminated as of December 31, 2025 due to the minimum AGP requirements not being met.

Current wording

Other income was $392 for the nine months ended June 30, 2026 and was the result of elimination of the Promissory Notes issued to Hornet’s former shareholders as part of the purchase consideration, which were contingent upon the achievement of minimum AGP requirements. The first installments of the Promissory Notes were entirely eliminated as of December 31, 2025 due to the minimum AGP requirements not being met. The second installments were entirely eliminated as of June 30, 2026 upon determination that the minimum AGP requirements for the second annual measurement period can no longer be met under the terms of the Purchase Agreement.* *

Previous wording

We recognized income tax expense (benefit) of $(21) and $9,786 for the six-month periods ended March 31, 2026 and 2025, respectively. Our effective tax rates for the six-month periods ended March 31, 2026 and 2025 differ from the statutory rate primarily due to the effect of the change in valuation allowance on our net DTA position.

Current wording

We recognized income tax benefit (expense) of $20 and $(9,671) for the nine-month periods ended June 30, 2026 and 2025, respectively. Our effective tax rates for the nine-month periods ended June 30, 2026 and 2025 differ from the statutory rate primarily due to the effect of the change in valuation allowance on our net DTA position.

Previous wording

As a result of our Industrial Segment being designated 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 substantially all of the operating assets of our former Industrial Segment. Loss from discontinued operations was $(171) for the six months ended March 31, 2025.

Current wording

As a result of our Industrial Segment being designated 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 substantially all of the operating assets of our former Industrial Segment. Loss from discontinued operations was $(193) for the nine months ended June 30, 2025.

Previous wording

Our consolidated net loss was $(136) and $(33,811) for the six-month periods ended March 31, 2026 and 2025, respectively. The improvement in consolidated net loss is primarily attributable to the goodwill impairment charge and change in valuation allowance related to our deferred tax assets included in results for the six months ended March 31, 2025, as explained in the preceding paragraphs. Additionally, the growth in our direct hire revenue, and cost reductions and productivity improvements initiated in the latter portion of the fiscal year ended September 30, 2025, as discussed above, contributed to this improvement.

Current wording

Our consolidated net income (loss) was $430 and $(34,234) for the nine-month periods ended June 30, 2026 and 2025, respectively. The improvement in consolidated net income (loss) is primarily attributable to the goodwill impairment charge and change in valuation allowance related to our deferred tax assets included in results for the nine months ended June 30, 2025, as explained in the preceding paragraphs. Additionally, the growth in our direct hire revenue, and cost reductions and productivity improvements initiated in the latter portion of the fiscal year ended September 30, 2025, as discussed above, contributed to this improvement.

Previous wording

As of March 31, 2026, we had $20,331 of cash, a decrease of $1,033 from $21,364 as of September 30, 2025. As of March 31, 2026, we had working capital of $23,769 compared to $23,993 as of September 30, 2025. Cash flows used in operating activities improved $279 due to positive cash flow from operating activities during the quarter ended March 31, 2026.

Current wording

As of June 30, 2026, we had $20,272 of cash, a decrease of $1,092 from $21,364 as of September 30, 2025. As of June 30, 2026, we had working capital of $24,392 compared to $23,993 as of September 30, 2025. Cash flows used in operating activities improved $57 during the quarter ended June 30, 2026 due to positive cash flow from operating activities.

Previous wording

The primary use of cash for investing activities was for the acquisition of property and equipment during the six months ended March 31, 2026. During the six months ended March 31, 2025, the primary use of cash for investing activities was for the acquisition of Hornet. 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. The first installments of the Promissory Notes have been entirely eliminated as of December 31, 2025 due to the minimum AGP requirements not being met, and no payments being required to Hornet’s former shareholders under the former first installments, accordingly.

Current wording

During the nine months ended June 30, 2025, the primary use of cash for investing activities was for the acquisition of Hornet. 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 were subject to reduction in the event Hornet did not achieve agreed upon profit metrics during the two years subsequent to closing on a dollar-for-dollar basis. The first installments of the Promissory Notes were entirely eliminated as of December 31, 2025 due to the minimum AGP requirements not being met. The second installments of the Promissory Notes were entirely eliminated as of June 30, 2026 upon determination that the minimum AGP requirements for the second annual measurement period can no longer be met under the terms of the Purchase Agreement. No payments are required to be made to Hornet’s former shareholders on the Promissory Notes, accordingly.