GEE Group Inc.

G****EE GROUP INC.

1. B****asis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the nine-month period ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending September 30, 2026. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2025 as filed on December 17, 2025.

A discontinued operation is a component of an entity that has either been disposed of, or that is classified as held for sale, which represents a strategic shift that has an effect on an entity’s operation and financial results. In accordance with U.S. GAAP, the assets and liabilities of discontinued operations are presented separately on the Company’s unaudited condensed consolidated balance sheets for all periods presented, if applicable. Net losses from discontinued operations are reported as a separate component of net loss on the unaudited condensed consolidated statements of operations. Cash flows from discontinued operations are not reported separately on the unaudited condensed consolidated statements of cash flows. All footnotes included herein present only continuing operations and exclude amounts related to discontinued operations for all periods presented, unless otherwise stated.

Certain additional reclassifications have been made to the prior year’s condensed consolidated financial statements and/or related disclosures to conform to the current year’s presentation.

2. Business Acquisition

On January 3, 2025, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Hornet Staffing, Inc., a Georgia corporation (“Hornet”) and its shareholders, and purchased 100 shares of its capital stock which represents 100% of the ownership interest in Hornet. Hornet is an Atlanta-based provider of staff augmentation services with national service capability. Hornet provides staffing solutions to many markets serving large scale, "blue chip" companies in the information technology ("IT"), professional and customer service staffing verticals.

The total consideration paid for the purchased shares was $1,500, consisting of (i) a $1,100 cash payment, and (ii) the issuance to its former shareholders of subordinated and unsecured promissory notes (the "Promissory Notes") totaling an aggregate initial principal amount of $400. Interest on the outstanding principal balances of the Promissory Notes is payable at a fixed rate of 5% per annum. Payments on the Promissory Notes shall be made annually with the first payment due on the first anniversary of the issuance dates and the second and final payment due on the second anniversary of the issuance date. The Company also paid legal and professional fees of $111 related to the purchase during the nine months ended June 30, 2025, which are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations.

The Purchase Agreement also provides that for the initial two-year period after closing, Hornet is required to achieve an agreed upon minimum average gross profit measure equal to $720 for each of the two subsequent twelve-month periods (each twelve-month period being separately measured). If the average gross profit measure during either of the subsequent two years is less than the minimum required average gross profit (“AGP”), then the Company will reduce the remaining balance under the Promissory Notes proportionally by an amount equal to the amount of the shortfall; provided the Company may not deduct more than the amount due under the then current payment for the Promissory Notes and may not seek to claw back any previous payments made under the Notes.

G****EE GROUP INC.

As of December 31, 2025, upon conclusion of the first twelve-month measurement period, there was a shortfall in the minimum required AGP under the Purchase Agreement. This shortfall resulted in the elimination of the amounts of $196 that would have been due under the first installments of the Promissory Notes. As of June 30, 2026, the determination was made that the minimum required AGP for the second twelve-month measurement period can no longer be met under the terms of the Purchase Agreement and the second installments of the Promissory Notes were entirely eliminated, accordingly. The elimination of the Promissory Notes has been recognized as other income on the unaudited condensed consolidated statements of operations in the amounts of $196 and $392 for the three and nine-month periods ended June 30, 2026, respectively. No payments are required to be made to Hornet’s former shareholders on the Promissory Notes, accordingly.

The Purchase Agreement contains certain representations and warranties customary and standard for this type of transaction.

The assets and liabilities of Hornet were recorded at their estimated fair values as of the closing date of the Purchase Agreement. The Promissory Notes were measured at fair value using Level 3 inputs and were recorded net of discounts of $8 at the acquisition date. The following table summarizes the balance sheet at January 3, 2025:

An independent purchase price allocation and valuation has been performed to identify intangible assets acquired. The allocation to these intangible assets is as follows:

The following table represents the unaudited consolidated pro forma results of operations for the three and nine-month periods ended June 30, 2025 had the acquisition occurred on October 1, 2024, the first day of the most historic period reported in this Quarterly Report on Form 10-Q. This unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisition occurred on October 1, 2024. This information is based on Hornet’s unaudited historical financial statements.

3. Discontinued Operations

On April 18, 2024, the Company’s Mergers and Acquisitions (“M&A”) committee of the Board of Directors completed its review of strategic alternatives recommended by an outside investment banking firm. This included a recommendation of divesture of the Company’s Industrial Segment which was subsequently approved by the Company’s full Board of Directors on May 13, 2024. Management thereafter began the process of identifying and contacting potential buyers. As of March 31, 2025, the Company’s plan to sell its Industrial Segment met all the criteria for the first time to be reported as discontinued operations under U.S. GAAP, the final one being making the determination that the sale or other disposition would be completed within twelve months.

On June 2, 2025, the Company entered into an agreement for the sale of certain operating assets of its Industrial Segment, including those of BMCH, Inc., Triad Logistics, Inc., and its Triad Staffing brand. The Company received total cash consideration of $250 from the buyer at closing and an additional $788 during the first 90 days following closing. A pre-tax net gain of $133, including transaction costs of $97, is included in discontinued operations for the three-month period ended June 30, 2025. The remaining assets of the Industrial Segment not sold were distributed to the Company.

Assets and Liabilities of Discontinued Operations

There were no assets or liabilities remaining under the Industrial Segment as of June 30, 2026 and September 30, 2025.

Net Loss from Discontinued Operations

Results of the Industrial Segment for the three and nine-month periods ended June 30, 2026 and 2025 consisted of the following:

Cash Flows from Discontinued Operations

There were no capital expenditures or other significant cash flows under the Industrial Segment during either of the nine-month periods ended June 30, 2026 or 2025.

4. Recent Accounting Pronouncements

Recently Adopted

In December 2025, the FASB issued ASU 2025‑11,Interim Reporting (Topic 270), which clarifies content and disclosure requirements for interim financial statements and adds a principle requiring disclosure of material events occurring after the most recent annual reporting period. The guidance is effective for interim periods within fiscal years beginning after December 15, 2027. The Company elected to early adopt the guidance during the quarter ended March 31, 2026, which did not have a material impact on its consolidated financial statements or disclosures.

Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09*, Income Taxes (Topic 740)*, which expands income tax disclosure requirements in part by requiring entities to disclose a reconciliation of their effective tax rates to statutory rates and provide disaggregation of taxes paid. The guidance also eliminates existing disclosure requirements related to anticipated changes in unrecognized tax benefits and temporary differences related to unrecorded deferred tax liabilities. The new guidance applies to annual periods only and is effective for fiscal years beginning after December 15, 2024. The Company has not yet determined the effects of the new guidance on its consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU 2024-03,Disaggregation of Income Statement Expenses (Subtopic 220-40), which expands expense disclosure requirements in part by requiring entities to provide tabular disclosure of the nature of expenses making up relevant captions on the face of the income statement. The guidance requires disclosure of the amounts making up each caption in categories such as inventory purchases, employee compensation, depreciation, intangible asset amortization, and depletion. The guidance also requires qualitative descriptions of other amounts included in each caption that are not separately disaggregated. The new guidance is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. The Company has not yet determined the effects of the new guidance on its consolidated financial statements and disclosures.

No other recent accounting pronouncements were issued by FASB and the SEC that are believed by management to have a material impact on the Company’s present or future financial statements.

5. Cash and Cash Equivalents, Customer Concentrations, and Allowances for Credit Losses

Cash and Cash Equivalents

Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. As of June 30, 2026 and September 30, 2025, there were no cash equivalents.

Cash deposit accounts are maintained at financial institutions and, at times, balances may exceed federally insured limits guaranteed by the FDIC. The Company holds a substantial portion of its funds in enhanced deposit arrangements with multiple financial institutions in which monies are deposited through a brokerage account and are further placed on deposit by the broker amongst U.S. banks pre-screened by the broker in amounts per bank that do not exceed the individual $250 FDIC per depositor limit. The aggregate amount of all funds on deposit under these accounts was $15,442 and $15,087 as of June 30, 2026 and September 30, 2025, respectively. The Company also holds funds in various other bank accounts that may exceed FDIC insured limits. These uninsured amounts, in aggregate, were $3,773 and $5,067 as of June 30, 2026 and September 30, 2025, respectively. The Company earns interest on a substantial portion of its cash on deposit at financial institutions at an annual interest rate of 3.25% as of June 30, 2026. The Company has never experienced any material losses related to cash on deposit with banks.

Customer Concentrations

There wasno customer that represented 10% or more of the Company’s consolidated revenues for the three and nine-month periods ended June 30, 2026. There was one customer that represented 10% of the Company’s consolidated revenues for the three and nine-month periods ended June 30, 2025. The Company ceased doing business with this customer in October 2025, when it was acquired and our former contract services business was moved to an affiliate of the acquirer.

The Company had one customer that made up approximately 18% and 21% of the consolidated accounts receivable balances as of June 30, 2026 and September 30, 2025. This customer is offered extended payment terms due to the frequency and volume of our services it utilizes and has demonstrated consistent creditworthiness since doing business with us. The Company has not experienced any losses related to this customer historically.

Allowance for Credit Losses

The Company extends credit to customers based on evaluation of their financial condition and ability to pay the Company in accordance with the payment terms. An allowance for credit losses is recorded as a charge to bad debt expense where collection is considered to be doubtful due to credit issues. The Company follows the methodology under ASU 2016-13,Financial Instruments-Credit Losses (Topic 326), which requires consideration of a broad range of reasonable and supportable information to inform credit loss estimates. During fiscal 2025, the Company elected to use the practical expedient introduced by ASU 2025-05 which simplifies the calculation of these estimates by assuming that current conditions will continue through the forecast period. The Company records an allowance with a corresponding charge to bad debt expense and charges off uncollectible accounts against the allowance once the invoices are considered unlikely to be collected. The allowance for credit losses is reflected in the unaudited condensed consolidated balance sheets as a reduction of accounts receivable. The impact of the adoption of ASU 2025-05 was immaterial to the Company’s unaudited condensed consolidated financial statements.

As of June 30, 2026 and September 30, 2025, the allowance for credit losses was $110 and $76, respectively.

A summary of changes in this account is as follows:

Liabilities for Direct Hire Placement Falloffs

Direct hire placement service revenues from contracts with customers are recognized when the Company has met each of the criteria under ASC 606,Revenue from Contracts with Customers, including its performance obligations under the contracts. This generally occurs when the employment candidates accept offers of employment and have started their newly placed positions, less a provision for estimated credits or refunds to customers as the result of applicants not remaining employed for the entirety of the Company’s guarantee period (referred to as “falloffs”). The Company’s guarantee periods for permanently placed employees generally range from 60 to 90 days from the date of hire.

Charges for expected future falloffs are recorded as reductions of revenues for estimated losses due to applicants not remaining employed for the Company’s guarantee period. Liabilities for falloffs and refunds during the period are reflected in other current liabilities in the unaudited condensed consolidated balance sheets in the amounts of $65 and $72, as of June 30, 2026, and September 30, 2025, respectively. The corresponding charges included in the unaudited condensed consolidated statements of operations as reductions of direct hire placement service revenues were $318 and $152 for the three-month periods and $423 and $404 for the nine-month periods ended June 30, 2026 and 2025, respectively.

6. Advertising Expenses

The Company expenses the costs of job boards used for identifying and recruiting candidates, print and internet media advertising and promotions as incurred and reports these costs in selling, general and administrative expenses. Advertising expenses totaled $359 and $489 for the three-month periods and $988 and $1,413 for the nine-month periods ended June 30, 2026 and 2025, respectively.

7. Earnings per Share

Basic earnings per share are computed by dividing net income or loss attributable to common stockholders by the weighted average common shares outstanding for the period, which is computed using shares issued and outstanding. Diluted earnings per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the vesting of restricted shares granted but unissued, exercise of stock options and warrants. The dilutive effect of the common stock equivalents is reflected in earnings per share by use of the treasury stock method.

The weighted average dilutive incremental shares included in the calculation of diluted shares for the three and nine-month periods ended June 30, 2026 were 289 and 196, respectively. Due to the loss from continuing operations reported for the three and nine-month periods ended June 30, 2025, there were no dilutive incremental shares considered in the calculation of dilutive shares. Common stock equivalents, which are excluded because their effect is anti-dilutive, were approximately 3,592 and 5,001 for the three-month periods and 3,967 and 4,440 for the nine-month periods ended June 30, 2026 and 2025, respectively.

8. Property and Equipment

Property and equipment, net consisted of the following:

9. Leases

The Company leases space for all its branch offices, which are generally located either in downtown or suburban business centers, and for its corporate headquarters. Branch offices are generally leased over periods ranging from three to five years. The corporate office lease expires in 2026. The Company’s leases generally provide for payment of basic rent plus a share of building real estate taxes, maintenance costs and utilities.

Operating lease expenses included in selling, general, and administrative expenses on the unaudited condensed consolidated statements of operations were $383 and $410 for the three-month periods and $1,112 and $1,329 for the nine-month periods ended June 30, 2026 and 2025, respectively.

Supplemental cash flow information related to operating leases consisted of the following:

Supplemental balance sheet information related to operating leases consisted of the following:

The table below reconciles the undiscounted future minimum lease payments under non-cancelable operating lease agreements having initial terms in excess of one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of June 30, 2026, including certain closed offices are as follows:

The Company acquires some of its equipment under finance leases including hardware and software used by our IT department to improve security and capacity, and certain furniture for our offices. Terms for these leases generally range from two to six years. The assets obtained under finance leases are included in property and equipment, net, on the unaudited condensed consolidated balance sheets.

Finance lease expenses such as amortization of the lease assets and interest expense on the lease liabilities are included on the unaudited condensed consolidated statements of operations in depreciation expense and interest expense, respectively. Supplemental information related to these expenses consisted of the following:

Supplemental balance sheet information related to finance leases consisted of the following:

The table below reconciles the undiscounted future minimum lease payments under non-cancellable finance lease agreements to the total finance lease liabilities recognized on the unaudited condensed consolidated balance sheets, included in other current liabilities as of June 30, 2026:

10. Goodwill and Intangible Assets

Goodwill

The Company performs a goodwill impairment assessment at least annually. The Company completed its most recent annual goodwill impairment assessment as of September 30, 2025 and determined that its goodwill was not impaired. The estimated fair value of the Professional Services reporting unit resulting from the September 30, 2025 assessment exceeded the reporting unit’s carrying value by approximately 39%, or approximately $12.7 million.

The Company also may perform interim goodwill impairment assessments if a triggering event occurs that may indicate the fair value of a reporting unit decreased below its carrying value. Upon reevaluation of its financial projections for the March 31, 2025 quarterly results and other indications of a potential triggering event, the Company performed an interim impairment assessment of its goodwill using the updated information as of March 31, 2025. For purposes of performing its interim goodwill impairment assessment, the Company applied certain valuation techniques and assumptions to its Professional Segment reporting unit and also considered recent trends in the Company’s stock price, implied control or acquisition premiums, earnings, and other possible factors and their effects on estimated fair value of the Company’s reporting unit. The results of the interim assessment indicated the Company’s goodwill assigned to its Professional Services reporting unit was impaired. As a result, the Company reduced its goodwill by $22,000 with a corresponding non-cash impairment charge recognized in its unaudited condensed consolidated statements of operations for the nine-month period ended June 30, 2025.

Should industry conditions or the Company’s performance deteriorate in the future, or if assumptions such as control premiums, revenue growth projections, cost reduction projections, cost of capital or discount rates or business enterprise value multiples change, such conditions could result in a deficit of the fair value of the Company’s Professional Services reporting unit as compared to its remaining carrying value, leading to an impairment in the future.

Intangible Assets

The following provides a summary of the Company’s separately identifiable intangible assets as of June 30, 2026 and September 30, 2025 and estimated future amortization expense:

Intangible assets that represent customer relationships are amortized on the basis of estimated future undiscounted cash flows orusing the straight-line basis over estimated remaining useful lives of five to ten years. Trade names are amortized on a straight-line basis over their respective estimated useful lives of between five and ten years. Non-competes are amortized on a straight-line basis over their respective estimated useful lives of between two and five years.

11. Other Current Liabilities

Other current liabilities consisted of the following:

12**. Senior Bank Loan, Security and Guarantee Agreement**

The Company and its subsidiaries have a Loan, Security and Guaranty Agreement for a $20 million asset-based senior secured revolving credit facility (the “Facility”) with First Citizens Bank (“FCB”) (formerly CIT Bank, N.A.). The Facility is collateralized by 100% of the assets of the Company and its subsidiaries who are co-borrowers and/or guarantors.

The Facility was scheduled to mature on the fifth anniversary of the closing date (May 14, 2026). On May 12, 2026, the Company and FCB entered into Amendment No. 4 to the Facility (“Amendment No. 4”) which extends the Facility expiration date from May 14, 2026, to May 13, 2027. Additionally, this amendment increases the availability block to the greater of $1.5 million, or 12.5% of the lesser of (i) the revolver commitment and (ii) the borrowing base. Amendment No. 4 also contains two new requirements. First, during the term of the Facility, as amended, all cash and cash equivalents held by the Company will not exceed an aggregate amount of $25 million (or such greater amount that FCB may, in its sole discretion, otherwise consent to in writing). Second, within fourteen (14) days following the effective date of Amendment No. 4, the Company was required to increase its cash on deposit with FCB and/or its affiliates and thereafter maintain such cash and cash equivalents on deposit in an aggregate amount of no less than $12 million (or such lesser amount that FCB may, in its sole discretion, otherwise consent to in writing).

As of June 30, 2026, the Company had no outstanding borrowings and $5,181 of unused capacity available for borrowing under the terms of the Facility. The Company had $102 in unamortized debt issuance costs associated with the Facility as of September 30, 2025, which are reflected in other current assets on the unaudited condensed consolidated balance sheet. As of June 30, 2026, all debt issuance costs associated with the Facility have been amortized. The amortization expense of these debt costs totaled $26 and $102 for the three and nine-month periods ended June 30, 2026, respectively, and $39 and $115 for the three and nine-month periods ended June 30, 2025, respectively. The unused line fees incurred and included in interest expense totaled $25 for the three-month periods and $76 for the nine-month periods ended June 30, 2026 and 2025.

13. Shareholders’ Equity

Share-based Compensation

Amended and Restated 2013 Incentive Stock Plan, as amended

As of June 30, 2026, there were vested and unvested shares of restricted stock and stock options outstanding under the Company’s Amended and Restated 2013 Incentive Stock Plan, as amended (“Incentive Stock Plan”). The Incentive Stock Plan, as amended, provides for total shares available for restricted stock and stock options of 15,000 (7,500 restricted stock shares and 7,500 stock option shares). The Incentive Stock Plan authorizes the Compensation Committee of the Board of Directors to grant non-statutory stock options and restricted stock to employees. Vesting periods are established by the Compensation Committee at the time of grant.

As of June 30, 2026, there were 7,610 shares available to be granted under the Plan (4,052 shares available for restricted stock grants and 3,558 shares available for non-qualified stock option grants).

Restricted Stock

The Company has an annual incentive compensation program (“AICP”) for its executives which is administered under the Company’s Incentive Stock Plan. The AICP includes a long-term incentive (“LTI”) compensation program in the form of restricted stock awards comprised of two components: one that vests based on future service only, and a second that vests based on future service and performance. Initial awards under both service-only and service plus performance-based components of the AICP LTI plan are determined based on financial performance measures for the immediately preceding fiscal year.

The Company did not grant shares of restricted stock under the AICP during the nine months ended June 30, 2026. The Company granted 48 shares of restricted stock under the AICP during the nine months ended June 30, 2025. All of the original 48 shares granted during the nine months ended June 30, 2025 have been adjusted to zero (0) shares based on the probable outcome as compared to their respective financial targets for fiscal 2025.

Share-based compensation expense attributable to restricted stock was $15 and $53 for the three-month periods and $70 and $161 for the nine-month periods ended June 30, 2026 and 2025, respectively. As of June 30, 2026, there was approximately $19 of unrecognized compensation expense related to restricted stock outstanding and the weighted average remaining vesting period for those grants was 0.3 years.

A summary of restricted stock activity is presented as follows:

Stock Options

All stock options outstanding as of June 30, 2026 and September 30, 2025 were non-qualified stock options, had exercise prices equal to the market price on the date of grant, and had expiration dates ten years from the date of grant.

The Company did not grant stock options during the nine months ended June 30, 2026. The Company’s stock options previously granted generally vest on annual schedules during periods ranging from two to four years, although some options are fully vested upon grant. Share-based compensation expense attributable to stock options is recognized over their estimated remaining lives and was $54 and $124 for the three-month periods and $198 and $257 for the nine-month periods ended June 30, 2026 and 2025, respectively. As of June 30, 2026, there was approximately $263 of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average remaining vesting period for those options was 2.3 years.

A summary of stock option activity is presented as follows:

Treasury Stock

During the nine months ended June 30, 2026, the Company reissued 592 of its treasury shares to fulfill commitments for the issuance of previously granted restricted stock awards that became fully vested and unrestricted. These treasury shares were reissued in lieu of issuing new shares of the Company’s common stock; therefore, while its total number of outstanding shares of common stock increased as a result of the issuance, its total number of issued shares of common stock did not increase. Of these shares,135 were returned to the Company by the grantees on January 7, 2026 to satisfy statutory tax withholding obligations on the vested restricted stock awards.

14. Income Tax

The following table presents the provision for income taxes and our effective tax rate for the three and nine-month periods ended June 30, 2026 and 2025:

The effective income tax rate on operations is based upon the estimated income for the year, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies. The effective tax rates for the three and nine-month periods ended June 30, 2026 and 2025 differ from the statutory rate primarily due to the effect of the change in the valuation allowance on the Company’s net deferred tax asset position along with the sensitivity due to the lower pre-tax book income present in both the three and nine-month periods ended June 30, 2026.

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 (“DTAs”). In view of the significance of the Company’s recent pre-tax book losses, and possibility of continuing uncertainty in the industry and economy as a whole, management reduced projections of future income and the reversal of its DTAs as of September 30, 2025. As a result, it was determined that the Company's net DTAs would not be realized as there is not sufficient positive evidence to conclude that it is more likely than not that the net deferred tax assets are realizable. The Company holds a full valuation allowance of $12,605 and $12,757 as of June 30, 2026 and September 30, 2025, accordingly.

The One Big Beautiful Bill of 2025

On July 4, 2025, H.R.1 - One Big Beautiful Bill was enacted, introducing a wide range of tax reforms for businesses. Due to the Company's loss position and limited exposure to affected provisions, the bill’s overall impact is not material. The Company has historically elected out of bonus depreciation for all classes of property under Section 168(k)(7) and depreciates assets under MACRS without accelerated expensing. The Company continues to monitor ongoing regulatory guidance related to the new law.

15. Commitments and Contingencies

Litigation and Claims

The Company and its subsidiaries are involved in litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position.

16. Related Party Transactions

On January 3, 2025, the Company entered into an employment agreement with the former CEO and one of the former shareholders of Hornet. As part of the Purchase Agreement, the Company issued Promissory Notes to the former CEO and his spouse, the other shareholder, in the amounts of $160 and $240, representing their respective portions of this purchase consideration based on their percentage of Hornet’s stock ownership prior to the acquisition. Payments on the Promissory Notes were to be made annually in two equal installments on the first and second anniversaries of the issuance date. Amounts payable under the Promissory Notes were contingent upon the achievement of minimum average gross profit (“AGP”) requirements by Hornet, as disclosed in more detail under Note 2.

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 due to determination that the minimum AGP requirements 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.

17. Segment Data

The Company provides the following distinctive services: (a) direct hire placement services and (b) temporary professional staffing services in the fields of information technology, accounting, finance and office, engineering, and medical. These services make up the Company’s Professional Segment. As disclosed in Note 3, the Company’s former Industrial Segment has been designated a discontinued operation and sold and, as such, is excluded from the table below which only reflects continuing operations.

Our consolidated results, as well as the results of the Professional Segment are assessed by the Company’s chief operating decision-maker (“CODM”), our CEO, who decides how to allocate resources based on operating needs and results. The CODM uses financial and operating information presented in periodic detailed financial statements and management reports and considers growth trends in revenues, gross profits and gross margins, operating expenses, income (loss) from operations, net income (loss) from operations and related data to compare the segment’s current results with budgeted and prior period results, as well as those of competitors obtained from publicly available information as benchmarks. Additionally, the CODM reviews trends in non-financial information including headcount, numbers of contractors on billing, billable hours, and fee rates and spreads applied in billings to clients. The CODM also reviews certain non-GAAP financial measures of segment performance including earnings before income taxes, depreciations and amortization (“EBITDA”), adjusted EBITDA, which represents EBITDA adjusted for certain non-cash and non-operating and non-recurring expenses, contribution margins, which represent net operating income or loss, excluding corporate expenses, free cash flow and other variants of these non-GAAP measures in order to make informative decisions regarding allocation of resources. This information and underlying analyses provide the CODM with information necessary to make decisions on business and financial strategy and plans, working capital needs and overall capital use. All corporate assets such as cash and other assets are presented together with those of the Professional Segment; these can be found on the unaudited condensed consolidated balance sheets.