BGSF 10-K & 10-Q changes, risk factors and insider trading

The workforce solution market is highly competitive with limited barriers to entry. We compete in national, regional and local markets with approximately 25,00027,000 full-servicefull service and specialized workforce solution companies. WeMarket expectdata thatis not available on the levelnumber of competitionfirms willinvolved remainin high,property whichmanagement couldbecause limitmany ourcompanies abilityoperate toacross maintaina orwide increasespectrum ourof marketstaffing sharemarkets. orThe profitability.number of firms involved in property management services is very large.

Because demand for workforce solutions is sensitive to changes in the level of economic activity, our business may suffer during economic downturns. During periods of weak economic growth or economic contraction, the demand for such workforce solutions typically declines. When demand drops, our operating profit is typically impacted unfavorably as we experience a deleveraging of our selling, general, and administrative expense base as expenses may not decline as quickly as revenues. In periods of decline, we can only reduce selling, general, and administrative expenses to a certain level without negatively impacting the long-term potential of our brands.brand. Additionally, during economic downturns companies may slow the rate at which they pay their vendors, or they may become unable to pay their obligations. If our client partners become unable to pay amounts owed to us, or pay us more slowly, then our cash flow and profitability may materially suffer.

We depend on our ability to attract and retain qualified field talent who possess the skills and experience necessary to meet the workforce solution requirements of our client partners. We must continually evaluate our base of available qualified personnel to keep pace with changing client partner needs. Competition for individuals with proven relevant professional skills is intense, and demand for these individuals is expected to remain strong for the foreseeable future. There can be no assurance that qualified personnel will continue to be available. Our success is substantially dependent on our ability to recruit and retain qualified field talent.

We expectmay to continue makingmake acquisitions and enteringenter into new business initiatives, including, but not limited to, dispositions, joint ventures, and strategic investments, as part of our long-term business strategy. These acquisitions and new business initiatives may involve significant challenges and risks, including that they may not advance our business strategy, that we may not realize a satisfactory return on our investment, that we may experience difficulty in integrating operations, or diversion of management’s attention from our other business.attention. We may be unable to identify suitable acquisition candidates in the future. Moreover, acquisitions may require substantial capital needs and the incurrence of additional indebtedness which may change significantly our capitalization and results of operations. Further, these acquisitions could result in post-closing discovery of material undisclosed liabilities of the acquired business or assets, title or other defects with respect to acquired assets, discrepancies or errors in furnished financial statements or other information or breaches of representations made by the sellers, or the unexpected loss of key team members or client partners from acquired businesses. These events could cause material harm to our operating results or financial condition.

We havemay incur debt that could adversely affect our financial health and prevent us from fulfilling our obligations or put us at a competitive disadvantage.

While we believe our current debt level is reasonable, weWe have utilized,utilized and expect to continue tomay utilize, debt for acquisitions. Our level of debt and theany limitations imposed on us by our lenders could have a material impact on investors, including the requirement to use a portion of our cash flow from operations for debt service rather than for our operations and the need to comply with the various covenants associated with any such debt. Additionally, we may not be able to obtain additional debt financing for future working capital, capital expenditures or other home office purposes or may have to pay more for such financing. We could also be less able to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions, or we may be disadvantaged compared to competitors with less leverage.

We have significant working capital needs and if we are unable to satisfy those needs from cash generated from our operations or borrowings under our revolving credit facility,operations, we may not be able to meet payroll requirements.

We derive working capital for our operations through cash generated by our operating activitiesactivities. and borrowings under our revolving credit facility. We believe that our current sources of capital are adequate to meet our working capital needs. However, ourOur available sources of capital are limited.limited If our working capital needs increase in the future,and we do not currently have access to a revolving credit facility. We may be forced to seek additional sources of capital, which may not be available on commercially reasonable terms, or at all.

We typically experience significant seasonal and other fluctuations in our borrowings and borrowing availability,fluctuations, and we aggressively manage our cash flow to ensure adequate funds to meet working capital needs. Such management steps include working to improve collections, adjusting the timing of cash expenditures and managing operating expenses. However, such steps may not always be successful.

In accordance with generally accepted accounting principles, we are required to review our goodwill and intangible assets for impairment at least annually. Our goodwill and intangibles assets were $59.2$1.1 million and $24.5$3.0 million, respectively, at the end of fiscal year 2024.2025. An unfavorable evaluation could cause us to write-off these assets in future periods. Any future write-offs could have a material adverse impact on our results of operations. For example, in 2023, the Board of Director approved management’s plan to rebrand as BGSF, eliminating various current trade names. See “Note 2 - Summary of Significant Accounting Policies” in our Consolidated Financial Statements included elsewhere in this report for additional information.

In the future we may issue additional securities up to our total authorized and unissued amounts, including shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock, resulting in the dilution of the ownership interests of our stockholders. We may issue additional shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock in connection with hiring or retaining personnel, option exercises, restricted stock awards, purchases under our 2020 ESPPEmployee purchases,Stock Repurchase Plan, grants under our 2013 Long-Term Incentive Plan, future acquisitions or future placements of our securities for capital-raising or other business purposes. Moreover, the exercise of our existing outstanding stock options, which are exercisable for or convertible into shares of our common stock, would dilute our existing common stockholders.

We cannotmay be sure we willnot pay dividends in the future, and consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

We aredo limitednot currently pay a regular dividend and have no plans to do so in ourthe abilityfuture. toWe paymay dividends by our credit agreement, and therefore, we cannot be certain if we willnot pay any cash dividends to holders of our common stock in the future. Any future determination with respect to the payment of dividends will be at the discretion of our board of directorsBoard and will be dependent upon, among other things, our financial condition, results of operations, capital requirements, the terms of our then existing indebtedness, contractual restrictions, future prospects, general economic conditions and other factors considered relevant by our board of directors.Board. Consequently, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.

Certain provisions of our organizational documents may make it difficult for stockholders to change the composition of our board of directorsBoard and may discourage hostile takeover attempts that some of our stockholders may consider to be beneficial.

Certain provisions of our certificate of incorporation and bylaws may have the effect of delaying or preventing changes in control if our board of directorsBoard determines that such changes in control are not in the best interests of us and our stockholders.

•a classified board of directorsBoard with three-year staggered terms;

•the ability of our board of directorsBoard to issue shares of preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval;

•advance notice procedures for nominating candidates to our board of directorsBoard or presenting matters at stockholder meetings;

•allowing only our board of directorsBoard to fill vacancies on our board of directorsBoard or increase the size of our board of directorsBoard; and

We have elected in our certificate of incorporation not to be subject to Section 203 of the Delaware General Corporation Law (the “DGCL”), a statutory provision that may have the effect of delaying, hindering or preventing some takeovers of our company. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with a person or group owning 15% or more of the corporation’s voting stock for a period of three years following the date the person became an “interested stockholder,” unless (with certain exceptions) the business combination or the transaction in which the person became an “interested stockholder” is approved in a prescribed manner. Accordingly, we will not be subject to any anti-takeover effects of Section 203. Our certificate of incorporation contains provisions that have the same effect as Section 203, except that they generally provide that Taglich Private Equity LLC, Taglich Brothers, Inc. or any of their respective affiliates or associates, including any investment funds or portfolio companies managed by any of the foregoing, or any other person with whom any of the foregoing act as a group for the purpose of acquiring, voting or disposing of our shares, or any person that becomes an interested stockholder as a result of a transfer of 5% or more of our voting stock by the forgoing persons to such person, will be excluded from the “interested stockholder” definition in our certificate of incorporation and will therefore not be subject to the restrictions set forth therein that have the same effect as Section 203.203 of the DGCL.

While these provisions have the effect of encouraging persons seeking to acquire control of our company to negotiate with our board of directors,Board, they could enable the board of directorsBoard to hinder or frustrate a transaction that some, or a majority, of the stockholders might believe to be in their best interests and, in that case, may prevent or discourage attempts to remove and replace incumbent directors.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors,Board, which is responsible for appointing the members of our management.

OurWe have continuing operations through one segment, Property Management, and have substantially eliminated our debt obligations. Any potential transaction or strategic alternatives review process may not be successful, may be costly, time-consuming,may andbe timing consuming, may be complex, and may notbe yielddistracting to management’s ability to focus on the desiredCompany’s results.operations.

On May 8, 2024, we announced that our Board of Directors had initiated a process to evaluate potential strategic alternatives and had engaged Houlihan Lokey as its financial advisors. WeOn haveSeptember not8, set2025, we completed the closing of the sale of our Professional segment. As a timetable for completionresult of thisthe strategicsale, alternativeswe reviewpaid process,off substantially all of our outstanding debt obligations, our company size (by revenue) was reduced by over 50%, and ourwe Board of Directors has not approvedbecame a definitivestaffing coursesolutions ofcompany action.solely Therefocused canon bethe noproperty assurancemanagement thatmarket. thisIf potential buyers, investors, or other counterparties demonstrate interest in engaging in a material transaction with us, we may decide to initiate a more fulsome strategic alternatives review process willto evaluate any potential interest. Any such process may be costly, time-consuming, and complex, and may distract management’s attention from the operation of our business. There is no assurance any potential interest or process may result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms, or at all. AnyNo potentialtimetable transactionor woulddefinitive be dependent on a numbercourse of factorsaction thathas maybeen be beyond our control, including, among other things, market conditions, industry trends, the interest of third parties, and stockholder support. The process of evaluating strategic alternatives may be costly, time-consuming, and complex.set. Speculation regarding any developments related to theany reviewpotential of strategic alternativestransaction and perceived uncertainties related to the future of the Company could cause our stock price to significantly fluctuate significantly or otherwise materially impactaffect our stockholder,stockholders, employee,employees, customer, supplier,customers, and other business relationships. Even if we successfully consummate aany transaction fromis ourultimately review of strategic alternatives,completed, we may fail to realize all of the anticipated benefits of any transaction, those benefits may take longer to realize than expected, or we may encounter integration or other significant difficulties.

We implementedimplement aor modify cost restructuring plan during the fourth fiscal quarter of 2024plans designed to reduce costs, improve operating performance, and position the Company for profitable growth, and we may implement or modify cost restructuring plans in the future.growth. Any such cost restructuring plans may be costly, time-consuming, and complex. Speculation and uncertainties regarding any developments related to any cost restructuring plans may cause our stock price to fluctuate significantly or otherwise materially impact our stockholder, employee, customer, supplier, and other business relationships. Even if we successfully implement or modify any cost restructuring plan, we may fail to realize all of the anticipated benefits of any cost restructuring plan, those benefits may take longer to realize than expected, or we may encounter implementation or other difficulties.

The following discussion and analysis of our financial condition and results of operations from continuing operations, our expectations regarding the future performance of our business and the other non-historical statements in the discussion and analysis are forward-looking statements. See “Forward-Looking Statements” in this Annual Report on Form 10-K. These forward-looking statements are subject to risks, uncertainties and other factors including those described in “Item 1A. Risk Factors” of this Annual Report on Form 10-K. Our actual results of operations may differ materially from those contained in any forward-looking statements. You should read the following discussion together with our audited consolidated financial statements and related notes thereto and other financial information included in this Annual Report on Form 10-K. Financial information provided is based on the results of our continuing operations. Please refer to “Note 4 — Discontinued Operations” in the Notes to the Consolidated Financial Statements of ourthis auditedAnnual consolidatedReport financialon statementsForm for information regarding our discontinued operations.10-K.

Property Management Revenues: Property Management revenuesRevenues decreased approximately $20.7$11.1 million (16.5%10.6%). The decrease was primarily due to a 12.1% reduction in billed hours, which was driven by a combination of lower demand from cost pressures on property owners and property management companies and increased competition in certain markets with partial offsets by higher permanent placement business, average bill rate, and lower demand from cost pressures at themulti-family property management companies.owners.

Property Management Gross Profit: Property Management grossGross profit decreased approximately $11.4$5.1 million (22.9%13.1%). Thewhich decreaseis wasin primarilyline duewith torevenues towith a reductionpartial in revenue, which was drivenoffset by a combination of increased competition in certain markets, lower demand from cost pressures at the property management companies and lowerhigher permanent placement business,business whichthat hashave no cost of service.

Selling, General, and Administrative Expenses: Selling, general and administrative (“SGA”) expenses decreased $3.3$1.8 million (3.7%4.1%) primarily due to expensereduced reductioncompensation andcosts coston controlless effortsheadcount offset by an increase in responsestrategic toalternatives the decline in revenues.review. The components of SGA expense are detailed in the following table:

Gain on contingentContingent consideration adjustment: As a result of the certain business developments in Fiscal 2024,2025, the Company recognized a $1.5$0.5 million gain on contingent consideration adjustment related to the 2023sale Arroyoof ConsultingBGSF acquisition.Professional, see “Note 4 - Discontinued Operations.”

Depreciation and Amortization: Depreciation and amortization charges wereincreased flatapproximately $0.2 million (16.2%) primarily due to thehigher increaseamortization inof intangible assets for computer software amortization that was partially offset by the decrease in client partner lists amortization.depreciation.

Interest Expense, net: Interest expense, net decreased $1.1$0.4 million (17.7%8.3%) primarily duefrom to reduced accretion in 2024 on contingent consideration associated with Arroyo Consulting andpaying the lower average balance on the Revolvingamended Facility,and restated credit agreement with BMO, using the proceeds from the sale of BGSF Professional, which was partially offset by the increasewrite inoff of amortization of debt issuance costs.costs from the BMO May 2025 Waiver and Amendment.

Property Management Gross Profit: Property Management grossGross profit increaseddecreased approximately $2.1$11.4 million (4.4%22.9%),. consistentThe withdecrease was primarily due to to a 3.3% increasereduction in revenues,revenue, partiallywhich offsetwas driven by a combination of increased competition in certain markets, lower demand from cost pressures at the property management companies and lower permanent placement revenue,business, which has no cost of services.service.

Selling, General, and Administrative Expenses: SGA expenses increaseddecreased $5.4$2.5 million (6.5%5.5%) versus prior year.year, primarily due to expense reduction and cost control efforts in response to the decline in revenues. The overallcomponents increase slightly outpaced revenue growth adding 40 bps to totalof SGA expense asare adetailed percent of revenue. Acquisition transaction fees increased $0.7 million overin the priorfollowing year.table:

Depreciation and Amortization: Depreciation and amortization charges increasedwere $3.7 million (91.8%). The increase in deprecation and amortization is primarilyflat due to the increase in software amortization ofthat intangiblewas assetspartially relatedoffset toby the 2022decrease Hornin Solutionscomputer acquisition and the 2023 Arroyo Consulting acquisition.equipment.

Income TaxesTax Benefit: We recorded aIncome tax benefit ofincreased approximately $2.9$1.3 million (150.8%) primarily due impairmentto lossesa onlower thetaxable trade namesloss in theFiscal first quarter versus a tax expense of $3.7 million in 2022.2023.

Our primary sources of liquidity arewere cash generated from operations and borrowings under our first amendment under our amended and restated credit agreement with BMO, that providesprovided for a revolving credit facility maturing December 31, 2026 (the “Revolving Facility”). On September 8, 2025, we paid the balance on the existing Term Loan and Revolving Facility using the proceeds from the sale of BGSF Professional. We do not currently have access to a revolving credit facility. On September 30, 2025, we paid a $2.00 per share special cash dividend. Our primary uses of cash are payments to field talent, team members, related payroll liabilities, operating expenses, capital expenditures, cash interest, cash taxes, contingent consideration, and debt payments. We believe that the cash generated from operations, together with the borrowing availability under our Revolving Facility,operations will be sufficient to meet our normal working capital needs for at least the next twelve months, including investments made, and expenses incurred, in connection with opening new markets throughout the next year. Our ability to continue to fund these items may be affected by general economic, competitive and other factors, many of which are outside of our control. If our future cash flow from operations and other capital resources are insufficient to fund our liquidity needs, we may be forced to obtain additionalnew debt or equity capital or refinance all or a portion of our debt.capital.

While we believe we have sufficient liquidity and capital resources to meet our current operating requirements and expansion plans, we may elect to pursue additional growth opportunities within the next year that could require additionalnew debt or equity financing. If we are unable to secure additionalnew financing at favorable terms in order to pursue such additional growth opportunities, our ability to pursue such opportunities could be materially and adversely affected.

Cash provided by operating activities consists of net (loss) income adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, interest expense, and provision for credit losses, impairment losses, contingent consideration adjustment, and the effect of working capital changes.losses. The primary drivers of cash inflows and outflows are accounts receivable, transition services payable, other current assets, and accrued payroll and expenses, prepaid expenses and other current assets.expenses.

During Fiscal 2023,2025, net cash provided by continuing operating activities was $20.4$0.1 million, ana increasedecrease of $23.7$19.3 million compared with $3.3$19.4 million net cash usedprovided inby continuing operating activities for Fiscal 2022.2024. This increasedecrease is primarily attributable to paymentsdecreased receipts on accounts receivable, increased payments on accrued payroll and expenses, andincreased payments ofon deferredtransition employerservices FICA forpayable, the CARESrecording Actof inan escrow receivable related to the sale of BGSF Professional, and decreased payments on other current liabilities in Fiscal 2022.assets.

During Fiscal 2022,2024, net cash usedprovided inby continuing operating activities was $3.3$19.4 million, aan decreaseincrease of $4.7$6.5 million compared with $1.4$12.9 million net cash provided by continuing operating activities for Fiscal 2021.2023. This decreaseincrease is primarily attributable to fieldincreased talentreceipts on accounts receivable and teamdecreased memberpayments compensation disbursements including bonuses, commissions, and related taxes for services rendered inon accrued payroll and expenses, an increase in accounts receivable, and payments of deferred employer FICA for the CARES Act in other current liabilities.expenses.

Cash usedprovided inby investing activities consists primarily of cash paid for businesses acquired net of cash required, cash received for businessesbusiness sold,sold and capital expenditures.

In Fiscal 2024, we made capital expenditures of $1.6$1.2 million from continuing operations mainly related to continued IT improvements.

In Fiscal 2023, we paid $6.8 million in connection with the Arroyo Consulting acquisition, funded a working capital payment of $0.1 million in connection with the Horn Solutions acquisition, and made capital expenditures of $2.6$2.1 million from continuing operations mainly related to continued IT improvements and for software and computer equipment purchased in the ordinary course of business.

Cash flows from financing activities consisted principally of borrowings and paymentsrepayments under our credit agreement, paymentspecial cash dividends, repurchases of dividends,our paymentcommon of issuance costs,stock, and contingent consideration paid.

For Fiscal 2024,2025, we reducedpaid off our Revolvingcredit Facility by $18.5 million, we made a paymentagreement of $4.3$42.9 million and the convertible unsecured promissory note of $4.4 million. We paid $1.4 million of contingent consideration related to the Arroyo Consulting Acquisition using the funds borrowed on our Term Loan,Consulting, we paid down $1.7 million on the Term Loan, we disbursed $1.6$22.4 million in cash dividends on our common stock, and werepurchased paid $1.3$1.5 million inof debtour issuancecommon costs.stock.

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

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

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

Thirteen Week Fiscal Period Ended MarchJune 29,28, 2026 (“Fiscal 2026”) Compared with Thirteen Week Fiscal Period Ended MarchJune 30,29, 2025 (“Fiscal 2025”)

Selling, General, and Administrative Expenses: Selling, general, and administrative expenses decreased $0.2$3.6 million (2.2%29.0%)., primarily due to reduced compensation costs on less headcount and is reflective of cost reduction activities that occurred during 2025 and continued into 2026 to align our administrative costs with our lower revenue following the sale of BGSF Professional. The components of selling, general, and administrative expense are detailed in the following table:

Depreciation and Amortization: Depreciation and amortization charges decreased $0.2$0.1 million (52.0%30.5%) primarily due to lower amortization of intangible assets for computer software.

Interest Expense,Income (Expense), net: Interest expense,income (expense), net decreasedincreased $1.1$2.1 million (99.7%112.7%) due to short-term investment income in Fiscal 2026 following the payoffsale of BGSF Professional compared to expense on the BMO Bank, N.A. (“BMO”) balance on the existing term loan commitment,commitment and revolving credit facility using the proceeds from the sale of BGSF Professional in SeptemberFiscal 2025.

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

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

(2 )Adjusted EBITDA from discontinued operations for the thirteen and twenty-six weeks ended June 29, 2025 includes $1.4$1.3 million and $2.7 million of depreciation and amortizationamortization, respectively, and $0.5$0.2 million and $0.7 million of income tax expense.expense, respectively.

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

Our primary sources of liquidity were cash generated from operationsoperations, and borrowings under an agreement with BMO thatwhich was paid on September 8, 2025. We paid a $2.00 per share special dividend on September 30, 2025, which means we currently hold approximately $19.0 million in available cash and short-term investmentsused to fund the business. Our primary uses of cash are payments to field talent,talent and team members, related payroll liabilities, operating expenses, capital expenditures, cash interest, cash taxes, contingent consideration, and note payments. We believe that cash on hand, short-term investments, and the cash generated from operations, will be sufficient to meet our normal working capital needs for at least the next twelve months, including investments made, and expenses incurred, in connection with opening new markets throughout the next year. Our ability to continue to fund these items may be affected by general economic, competitive and other factors, many of which are outside of our control. During Fiscal 2025, we received cash proceeds from the sale of BGSF Professional on September 8, 2025, which allowed us to fully payoff and retire the borrowings under an agreement with BMO and pay a $2.00 per share special dividend on September 30, 2025, which means we currently hold approximately $18.2 million in available cash and short-term investments to fund the business. If our future cash flow from operations and other capital resources are insufficient to fund our liquidity needs, we may be forced to obtain new debt or equity capital.

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

During Fiscal 2026, net cash providedused byin operating activities from continuing operations decreasedincreased by $1.0$3.1 million compared to Fiscal 2025. The decreaseincrease is primarily due to decreased receipts on accounts receivable and decreasedincreased payments on accrued payroll and expenses and accounts payable.payable, which was partially offset by a decrease in other current assets for CARES Act receipts.

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

For Fiscal 2026, we purchased $5.0$17.4 million of short-term investments and minimal capital expenditures, which were partially offset by $0.9 million of additional funds received for the final settlement of working capital from the sale of BGSF Professional. In Fiscal 2025, capital expenditures were minimal.

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

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