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

THE U.S. ECONOMY CURRENTLYHAS ISRECENTLY BEINGBEEN NEGATIVELY IMPACTED BY HISTORICALLY SIGNIFICANT INFLATION, AELEVATED LOOMINGINTEREST RESCESSION,RATES, AND RELATED DISRUPTIONS IN SUPPLY AND THE WORKFORCE; RECENT GLOBAL SOCIOECONOMIC TRENDS, INCLUDING THE WARS IN UKRAINE AND THE MIDDLE EAST AND U.S. RELATIONS WITH CERTAIN FOREIGN POWERS MAY HAVE A FURTHER ADVERSE EFFECTIMPACTS ON THE U.S. ECONOMY AND OUR BUSINESS.

The U.S. and larger global economies experienced historically high inflation during 2022, which has continued into 2024.2025. The Federal Reserve and other Central Banks already have raised interest rates more aggressively and to their highest levels in decades. Although inflation and interest rates have begun to subside, the prospect for a recession is considered by many to be possible. Some sources have declared that the U.S. already has experienced a recession. Consumer prices, including basic costs of food, fuel, utilities, healthcare, mortgage and personal loan rates, and other non-discretionary and discretionary consumer items have risen significantly and remain high. Wages are up, however, increases in wages have lagged price inflation resulting in a net decline in real personal incomes relative to consumer spending. Volatility continues to existsexist in the workforce making it more difficult and costly for employers to recruit, hire and/or retain workers. U.S. unemployment remains relatively low, however the labor utilization rate and ratio of workers to the total population also remain low. Shortages in the workforce have been a significant factor in supply shortages relative to demand and also help fuel inflation. On the global stage, two wars are now being waged, the first led by the invasion of Ukraine by Russia, and the second, following the recent invasion of Israel by Hamas terrorists. These and overtures by China over Taiwan and the South China Sea, also add instability to the uncertainty driving socioeconomic forces, which in turn, impact the U.S. economy and the Company’s and its subsidiaries’ operations.operations, accordingly.

The present conditions and state of our U.S. and global economies make it difficult to predict the extent to which a recession has occurred or will occur or worsen in the near future, and we and other members of the U.S. Staffing Industry already have seen significant declines in business insince 2023 and 2024.2023. In the event of recurring or worsening conditions, in which the U.S. economy remains uncertain or contracts, we expect that our business will continue to be negatively impacted, accordingly. The Company has taken significant actions to shore up its resources and means in order to mitigate the negative effects of economic downturns; however, should economic conditions remain uncertain or worsen in the future, one may expect either scenario to continue to have an adverse effect on the business of the Company and its subsidiaries.

GEE Group Inc. and its subsidiaries, Agile Resources, Inc., Access Data Consulting Corporation, BMCH,Hornet Inc., GEE Group Portfolio,Staffing, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., and Triad Personnel Services, Inc., and Triad Logistics, Inc. are co-borrowers under 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 matures on the fifth anniversary of the closing date (May 14, 2026). The Facility contains some restrictions and limitations that might inhibit our ability to engage in certain activities and transactions that may otherwise be in our long-term best interests. The affirmative and negative covenants contained in the Credit Agreement that may adversely affect our ability to operate our business include covenants that limit and restrict, among other things, our ability to incur additional indebtedness, transfer or sell certain assets, issue stock of subsidiaries, pay dividends on, repurchase or make distributions with respect to our capital stock or make other restricted payments, incur or permit liens or other encumbrances on assets, make certain investments, loans and advances, acquire other businesses, merge, consolidate, sell or otherwise dispose of all or substantially all of our assets, enter into certain transactions with our affiliates and amend certain agreements, without amendment of the Facility or the express approval of FCB. Under the Facility, advances are subject to a borrowing base formula based on 85% of eligible accounts receivable of the Company and subsidiaries, as defined, and subject to certain other criteria, conditions, and applicable reserves, including any additional eligibility requirements as determined by the administrative agent. Although the stated face amount of the Facility is $20 million, the borrowing base formula significantly limits amounts available for us to borrow.

The Company is required to evaluate its goodwill annually or when one or more triggering events or circumstances indicate that assets might be impaired. The other long-lived assets, including definite-lived intangible assets, have to be tested for impairment only when triggering events occur or circumstances indicate that these assets might be impaired. The Company has recognized impairments of its goodwill and its other long-lived assets, including most recently during the thirdsecond quarter of its fiscal year ended September 30, 2024.2025. In testing for impairments, management applies one or more valuation techniques to estimate the fair values of the reporting units,unit, individual assets or groups of individual assets, as required under the circumstances. These valuation techniques rely on assumptions and other factors, such as the estimated future cash flows, the discount rates used to determine the present value of associated cash flows, and the market comparable assumptions. Changes to input assumptions and other factors used or considered in the analysis could result in materially different evaluations of impairment.

The valuation techniques utilized by management for impairment testing, including estimated future cash flows, fundamentally include the inherent underlying assumption that the economy, the markets served by the Company, and the Company itself, will continue to grow. In the event the assumptions relied upon by management are not achieved, including assumed future growth rates, impairments of goodwill or other long-lived assets could be recorded and such amounts could be material to the consolidated financial statements. A reduction in the projected long-term operating performance of one or both of the Company’s reporting unitsunit or other long-lived assets, future market declines, changes in discount rates or other conditions also could result in material impairments in the future. Thus, there can be no assurance that the Company’s goodwill or other long-lived assets will not become impaired in the future.

We focus on providing professional and light industrial personnel on a temporary assignment-by-assignment basis, which customers can generally terminate at any time or reduce their level of use when compared to prior periods. To avoid large placement agency fees, large companies may use in-house personnel staff, current employee referrals, or human resources consulting companies to find and hire new personnel. Because placement agencies typically charge fees as a mark-up to the hourly pay rate or based on a percentage of the first year’s salary of a new worker, companies with many jobs to fill may have a large financial incentive to avoid agencies.

Staffing Industry Analysts, a leading industry trade organization, recently published in its September 20242025 U.S. Staffing Industry Forecast update, that the U.S. Staffing Industry as a whole is expected to decline by 10%3% in 2024.2025. This follows a 10%12% decline already experienced in 2023.2024. The SIA report cites that the forecasted 20242025 decline is expected due to widespread client cautioncaution, a slow labor market, reduced employee churn and project delays, a depressed manufacturing sector, fallingflat bill rates in sectors such as healthcare, and employer and worker heightened preferences for permanent positions over temporary positions.rates.

OUR STRATEGY OF GROWING THROUGH ACQUISIIONSACQUISITIONS MAY BE IMPEDED BY A LACK OF FINANCIAL RESOURCES AND IMPACT OUR BUSINESS IN UNEXPECTED WAYS. WE COULD BE ADVERSELY AFFECTED BY RISKS ASSOCIATED WITH ACQUISITIONS.

Under Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have not completed a study to assess whether an “ownership change” has occurred or whether there have been multiple ownership changes since we became a “loss corporation” as defined in Section 382. Future changes in our stock ownership, which may be outside of our control, may trigger an “ownership change”. In addition, future equity offerings or acquisitions that have equity as a component of the purchase price could result in an “ownership change.” If an “ownership change” has occurred or does occur in the future, utilization of the NOL carryforwards or other tax attributes may be limited, which could potentially result in increased future tax liability to us.

Although our common stock is listed on the New York Stock Exchange (“NYSE”) American, we cannot assure you that an active public market will develop for our common stock. There has been relatively limited trading volume in the market for our common stock, and a more active, liquid public trading market may not develop or may not be sustained. Limited liquidity in the trading market for our common stock may adversely affect a shareholder’s ability to sell its shares of common stock at the time it wishes to sell them or at a price that it considers acceptable. If a more active, liquid public trading market does not develop, we may be limited in our ability to raise capital by selling shares of common stock and our ability to acquire other companies or assets by using shares of our common stock as consideration. In addition, if the relatively limited trading volumes for our stock persists, the market price for our common stock may fluctuate significantly more than the stock market as a whole. Without large enough trading volumes, our common stock may be expected to remain less liquid than the stock of other more actively traded companies and, as a result, the trading prices of our common stock may be more volatile. Furthermore, the stock market is subject to significant price and volume fluctuations, and the price of our common stock could fluctuate widely in response to several factors, including:

We intend to retain a substantial portion of future earnings for use in the development of our business and do not anticipate paying any cash dividends on our common stock in the near future. We are presently repurchasing our own common shares in the open market, under authorization of our board of directors and in accordance with applicable Federal and state laws, regulations and rules. However, any future determination to pay dividends will be made at the discretion of our board of directors, subject to applicable laws. It will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual, legal, tax and regulatory restrictions, general business conditions, and other factors that our board of directors may deem relevant. In addition, our ability to pay cash dividends is restricted by the terms of our debt financing arrangements, and any future debt financing arrangement likely will contain terms restricting or limiting the amount of dividends that may be declared or paid on our common stock. As a result, you may not receive any return on an investment in our common stock unless you sell your common stock for a price greater than that which you paid for it.

War, geopolitical uncertainties, public health issues (such as the COVID-19 pandemic) and other business interruptions have caused and could cause damage or disruption to commerce and the economy, and thus could have a material adverse effect on us and our customers. Two wars are now being waged at the global level, the first led by the invasion of Ukraine by Russia, and the second, following the recent invasion of Israel by Hamas terrorists. These and continuing overtures by China over Taiwan and the South China Sea, also add instability to the uncertainty driving socioeconomic forces, which in turn, impact the Company’s and its subsidiaries’ operations. Our business operations also are subject to interruption by, among others, inclement weather, natural disasters, whether as a result of climate change or otherwise, fire, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks, civil unrest and other hostile acts, labor disputes, public health issues and other events beyond our control. Such events could decrease demand for our services.

In March and April 2023, certain specialized banking institutions with elevated concentrations of uninsured deposits experienced large deposit outflows coupled with insufficient liquidity to meet withdrawal demands, resulting in the institutions being placed into Federal Deposit Insurance Corporation (“FDIC”) receiverships. In the aftermath, there has been market disruption and indications that diminished depositor confidence could spread across the banking industry, leading to deposit outflows and other destabilizing results. The Federal Reserve Board announced that it would provide funding to ensure that banks have sufficient liquidity to meet the needs of their depositors, but there can be no assurance whether such funding will be adequate to fully address these issues. The Company currently has bank deposits with financial institutions in the U.S. that exceed FDIC insurance limits. However, the Company has taken measures to diversify its deposit base that are intended to mitigate and minimize its potential exposure to losses as a result of maintaining cash deposits in accounts that exceed FDIC insurance limits. Among these, during fiscalDuring 2023, the Company established,entered andinto initiallyenhanced deposit arrangements with two financial institutions in which monies are deposited $13 million of its excess cash, underthrough a brokerage arrangement with a major financial advisory institution that managesaccount and depositsare thesefurther fundsplaced underon adeposit specialized program wherebyby the fundsbroker areamongst allocated among FDIC insuredU.S. banks pre-screened by the broker in amounts per bank that individually do not exceed the establishedindividual $250 thousand FDIC insuredper limitdepositor limit. The aggregate amount of $250all thousand.funds on deposit under these accounts was $15,087 thousand and $14,515 thousand as of September 30, 2025 and 2024, respectively. The Company also holds funds in various other bank accounts that may exceed FDIC insured limits. These uninsured amounts, in aggregate, were $5.1 million and $5.2 million as of September 30, 2024.2025 and 2024, respectively. To date, the Company has not experienced any material loss as a result of the failure of any financial institution in which it has funds or other assets on deposit.

Management’s discussion and analysis (“MD&A”) contains forward-looking statements that are provided to assist in the understanding of anticipated future performance. However, future performance involves risks and uncertainties which may cause actual results to differ materially from those expressed in the forward-looking statements. Item 7 should be read in conjunction with the information contained in “Forward-Looking Statements” at the beginning of this report and with the consolidated financial statements and notes thereto included in Item 8. References such as the “Company,” “we,” “our” and “us” refer to GEE Group Inc. and its consolidated subsidiaries.

GEE Group Inc. and its wholly owned material operating subsidiaries, Access Data Consulting Corporation, Agile Resources, Inc., BMCH,Hornet Staffing, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., Triad Logistics, Inc., and Triad Personnel Services, Inc. are providers of permanent and temporary professional and industrial staffing and placement services in and near several major U.SU.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)record services for emergency departments, specialty physician practices and clinics, and provide temporary staffing services for our industrial clients. The acquisitions of Scribe Solutions, Inc., a Florida corporation (“Scribe”) in April 2015, Agile Resources, Inc., a Georgia corporation (“Agile”) in July 2015, Access Data Consulting Corporation, a Colorado corporation (“Access”) in October 2015, Paladin Consulting Inc. (“Paladin”) in January 2016, and SNI Companies, Inc., a Delaware corporation (“SNI”) in April 2017, expanded our geographical footprint within the professional placement and contract staffing verticals or end markets of information technology, accounting, finance, office, engineering professionals, and medical scribes.clinics.

TheWe Companymarket markets itsour services using the trade names Access Data Consulting, Agile Resources, Ashley Ellis, GEE Group (Columbus), General EmploymentEmployment, Enterprises,Hornet Staffing, Omni One, AshleyPaladin Ellis, Agile Resources,Consulting, Scribe Solutions Inc., Access Data Consulting Corporation, Paladin Consulting Inc.,Solutions, SNI Companies (including Staffing Now,Companies, Accounting Now, andStaffing Now®, SNI Banking, SNI Certes)®, TriadSNI PersonnelEnergy®, ServicesSNI Financial® and TriadSNI Staffing.Technology®. As of September 30, 2024,2025, we operated from locations in eleventen (1110) states, including twenty-threenineteen (2319) branch offices in downtown or suburban areas of major U.S. cities and threefour (34) additional U.S. locations utilizing local staff members working remotely. We have offices or serve markets remotely, as follows; (i) one office in each of Connecticut, Georgia, Illinois, and New Jersey, and one remote local market presence in each of Georgia and Virginia; (ii) two offices each in Massachusetts and Colorado; (iv) twothree offices and one additional local market presencespresence in Texas; (v) six offices and one additional local market presence in Florida; and (vi) seventwo offices in Ohio.

Management has ana on-goinglong-term business strategy,strategy whichthat includes organic and acquisition growth components. Management’s organic growth strategy includes seeking out and winning new client business, as well as expansion of existing client business and on-going cost reduction and productivity improvement efforts in operations. Management’s acquisition growth strategy includes identifying strategic, accretive acquisitions, financed primarily through a combination of cash and debt, including seller financing, the issuance of equity in appropriate circumstances, and the use of earn-outs where efficient to improve the overall profitability and our cash flows of the Company.flows.

ContractProfessional contract staffing services contributed $104,300,$84,686 or approximately 90%,88% of consolidated revenue and direct hire placement services contributed $12,183,$11,818, or approximately 10%,12%, of consolidated revenue for fiscal 2024.2025. This compares to professional contract staffing services revenue of $133,051,$94,753, or approximately 87%,89%, of consolidated revenue and direct hire placement revenue of $19,392,$12,183, or approximately 13%,11%, of consolidated revenue for fiscal 2023.2024.

Direct hire placement revenue for fiscal 20242025 decreased by $7,209,$365, or 37%,approximately over3%, as compared to fiscal 2023.2024. Direct hire opportunities tend to be highly cyclical and demand dependent,dependent and may be expected to rise during times of economic recovery and decline during downturns. Demand for the Company’s direct hire services was higher in fiscal 2023, following record highs in fiscal 2022, driven by post-COVID employment recovery trends at that time,downturns and is down for fiscal 2024 as a resultperiods of lingering negative economic conditions.uncertainty.

Staffing Industry Analysts,Analysts (“SIA”), a leading industry trade organization, recently published in its September 20242025 U.S. Staffing Industry Forecast update, that the U.S. Staffing Industry as a whole is expected to decline by 10%3% in 2024.2025. This follows a 10%12% decline already experienced in 2023.2024. The SIA report cites that the forecasted 20242025 decline is expected due to widespread client cautioncaution, a slow labor market, reduced employee churn and project delays, a depressed manufacturing sector, fallingflat bill rates in sectors such as healthcare, and employer and worker heightened preferences for permanent positions over temporary positions.rates. While our businesses service clients of all sizes, a substantial number of our clients are small and medium sizedmedium-sized enterprises (SMEs), which have less financial flexibility to absorb rising costs and higher borrowing expenses, making them more likely to reduce or postpone usage of our services and contract employees. We believe this is a key reason why our 20242025 revenue declines have exceeded those forecasted by SIA for the staffing industry overall.

Cost of contract services includes wages and related payroll taxes, employee benefits of the Company's contract services employees, and certain other contract employee-related costs, while they workworking on contract assignments. Cost of contract services for fiscal 20242025 decreased by approximately 21%11% to $78,837$63,132 compared to $99,571$70,794 for fiscal 2023.2024. The $20,734$7,662 decrease in cost of contract services is consistent with the decrease in revenues as discussed above.

Selling, general and administrative expenses (“SG&A”) include the following categories:

SG&A includes certain non-cash costs and non-operational costs and expenses incurred related to acquisition, integration andintegration, 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 $1,106$474 and $838$1,120 for fiscal 20242025 and 2023,2024, respectively, and include mainly expenses associated with former closed and consolidated locations, legal expenses related to other than routine matters, and personnel costs associated with eliminated positions.

The CompanyWe performed an evaluation of itsour intangible assets as of June 30, 2024, and determined that certain asset groups associated with the Company’sour intangible assets including certain customer lists and tradenames are currentlywere producing negative or sufficiently low gross cash flows and that their estimated future discounted cash flows indicateindicated impairments of the remaining unamortized balances. As a result, the Companywe recorded a non-cash impairment charge of $5,209 on intangible assets during fiscal 2024.

The Company performs a goodwill impairment assessment at least annually but may perform interim assessments in the event of a triggering event that may indicate the fair value of a reporting unit decreased below its carrying value. The Company completed its most recent annual assessment as of September 30, 2024,2025 and determined that its goodwill was not further impaired. Prior to this, as of JuneMarch 30,31, 2024,2025, an interim assessment was performed due toas the declineestimated infair operatingvalue results and market capitalization experienced inof the nine-month period ended June 30, 2024, which in management’s view, represented one or more triggering events that could indicate an impairment in the Company’s goodwill. The results of this interim assessment indicated the Company’s goodwill assigned to both its Professional and Industrial Services reporting unitsunit was impaired.determined to have decreased and indicated that the reporting unit’s carrying value exceeded its estimated fair value. As a result, thea Company reduced itsnon-cash goodwill associatedimpairment withcharge of $22,000 was recognized during fiscal 2025, as determined by the Professionalinterim andevaluations Industrial Services reporting units by $14,202 and $1,083, respectively, with corresponding non-cash impairment charges recognized in its consolidated statementsmade of operationsour forgoodwill fiscalas 2024.of March 31, 2025.

For purposes of performing itsour annual goodwill impairment assessments as of September 30, 20242025 and 2023,2024, and the interim testing performed as of March 31, 2025 and June 30, 20242024, and March 31, 2024 the Companywe applied generally accepted valuation methods and techniques in order to estimate the fair value of itsour Professional and Industrial Services reporting unitsunit and considered discounted cash flows, guideline public company results, guideline transactions, revenues and earnings, recent trends in the Company’sour stock price, implied control or acquisition premiums, and other possible factors and their effects on estimated fair value of the Company’sour reporting units.unit. The estimated fair value of the Professional Services reporting unit resulting from the September 30, 20242025 assessment exceeded the reporting unit’s adjusted carrying value, net of the impairment recorded during the JuneMarch 30,31, 20242025 interim assessment, by approximately 10%,39%, or approximately $5.5$12.7 million. Should industry conditions remain consistently negative, or worsen, 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’sour Professional Services reporting unit as compared to its remaining carrying value, leading to an impairment in the future.

Income (Loss) from Operations

Income (loss)Loss from operations was $(27,05725,310) and $2,033$(25,701) for fiscal 20242025 and 2023,2024, respectively. ThisThese decreaselosses isare mainlyprimarily attributablethe toresult of the non-cash impairment charges,charges included in loss from operations for fiscal 2025 and 2024. Excluding these, the decrease$2,981 improvement in revenues,fiscal especially2025 inwas directattributable hireto placements,certain andcost reductions made by the Company as well as the other relatedmatters items as explaineddiscussed in the preceding paragraphs.

Interest expense was $322$333 and $336$315 for fiscal 20242025 and 2023,2024, respectively, and was comprised mainly of fees associated with theour Company’s asset-backed credit facilityFacility including unused capacity fees, facility administrative charges, and the amortization of related debt issuance costs. No advances were taken on the Company’sour Facility during the fiscal years ended September 30, 20242025 and 2023.2024.

The CompanyWe recognized income tax benefits(expense) benefit of $2,555$(9,588) and $7,249$2,619 for fiscal 20242025 and 2023,2024, respectively. TheOur effective tax raterates for fiscal 20242025 is lower than the statutory rate primarily due to the effect of permanent differences related to the goodwill impairment charge recorded in the third quarter of fiscaland 2024 and the change in valuation allowance on the net deferred tax asset (“DTA”) position. The effective tax rate for 2023 isare lower than the statutory rate primarily due to the effect of the change in valuation allowance on theour net deferred tax asset (“DTA”) position.position and the differences in the U.S. GAAP and tax basis effects associated with goodwill impairments.

TheOur Company’sconsolidated net incomeloss was $(loss34,747) wasand $(24,102) and $9,418 for fiscal 20242025 and 2023,2024, respectively. The decreaseincrease ofin $33,520consolidated net loss is primarily the result of the non-cashprovision impairmentfor chargesincome duringtax expense for fiscal 2024,2025 a substantial increase in net income duringincluding the fiscalvaluation 2023allowance asrecorded therelated resultto ofour the reduction of thenet deferred tax assets valuation allowance previously recognized, and decreases in revenues and related net results for fiscal 2024, compared with fiscal 2023, and other related itemsassets, as explained in the preceding paragraphs.

TheOur primary sources of liquidity for the Company are revenues earned and collected from itsour clients for the placement of contract employees and independent contractors on a temporary basis and permanent employment candidates and borrowings available under itsour asset-based senior secured revolving credit facility. Uses of liquidity include primarily the costs and expenses necessary to fund operations, including payment of compensation to the Company’sour contract and permanent employees, and employment-related expenses, operating costs and expenses, taxes and capital expenditures.

The following table sets forth certain consolidated statementsstatement of cash flows datadata, including cash flows from discontinued operations:

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 SolutionsSolutions, Inc. under SNI’sthe Staffing Now division.division of SNI Companies, Inc.

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 MarchJune 31,30, 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,Colorado and Ohio; (viii) four offices in Florida; and (viiv) , and one remote local market presence in each of Florida, Georgia, Illinois, Texas and Virginia.

We incurred net income (losses) from continuing operations of $14$566 thousand and $(33401) millionthousand for the three-month periods ended MarchJune 31,30, 2026 and 2025, respectively. We incurred net income (losses) from continuing operations of $(136)$430 thousand and $($33.634.0) million for the six-monthnine-month periods ended MarchJune 31,30, 2026 and 2025, respectively.

The netNet income for the fiscal secondthird quarter and year-to-date periods ended MarchJune 31,30, 2026 and the net loss for the six-month period ended March 31, 2026 havehas 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.

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$2.2 million and $5.1$7.3 million, and contributed approximately $199$172 thousand and $683$855 thousand to income from operations, net of direct expenses, that offset the losses from operations during the three and six-monthnine-month periods ended MarchJune 31,30, 2025, respectively.

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.

Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

Professional contract staffing services contributed $16,294$17,019 or approximately 84%82% of consolidated revenue and direct hire placement services contributed $3,187,$3,746, or approximately 16%,18%, of consolidated revenue for the three months ended MarchJune 31,30, 2026. This compares to professional contract staffing services revenue of $21,495,$21,301, or approximately 88%,87%, of consolidated revenue and direct hire placement revenue of $3,000,$3,222, or approximately 12%,13%, of consolidated revenue for the three months ended MarchJune 31,30, 2025.

Direct hire placement revenue for the three months ended MarchJune 31,30, 2026 increased $187,$524, or approximately 6%,16%, as compared to the three months ended MarchJune 31,30, 2025, and $471,$559, or approximately 17%,18%, as compared to the prior sequential quarter ended DecemberMarch 31, 2025.2026. 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. And whileWhile 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.

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 MarchJune 31,30, 2026 decreased by approximately 25%21% to $12,066$12,484 compared to $16,135$15,842 for the three months ended MarchJune 31,30, 2025. The $4,069$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 MarchJune 31,30, 2026 are proportionally higher relative to revenue than those for the three months ended MarchJune 31,30, 2025.

Our combined gross profit margin, including direct hire placement services, for the three-month periods ended MarchJune 31,30, 2026 and 2025 were approximately 38.1%39.9% and 34.1%,35.4%, respectively. Our professional contract staffing services gross margins for the three-month periods ended MarchJune 31,30, 2026 and 2025 were approximately 25.9%26.6% and 24.9%,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.

Our SG&A expenses for the three months ended MarchJune 31,30, 2026 decreased by $1,898$1,114 as compared to the three months ended MarchJune 31, 2025. SG&A, as a percentage of revenues, were approximately 38% for both the three months ended March 31,2026 and March 31,30, 2025. SG&A expenses as a percentage of revenues remainedwere consistentapproximately among37.7% bothand periods,36.5% asfor the decreasethree months ended June 30, 2026 and 2025, respectively. The increase in SG&A expenses as a percentage of revenues during the three months ended MarchJune 31,30, 2026 was large enoughattributable to offsetlower revenues in relation to fixed costs, including certain personnel and occupancy costs, and an increase in incentive compensation resulting from the increase normally associated with the decline in revenue.direct Thishire wasrevenues. mainlyThese duewere toprimarily offset by certain cost reductions and productivity improvement initiatives made during the latter portion of ourthe fiscal year ended September 30, 2025. These cost reductions contributed approximately $1,336$1,144 to the net decrease in SG&A expenses for the three months ended MarchJune 31,30, 2026.

SG&A includesexpenses 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 $14$97 and $226$68 for the three-month periods ended MarchJune 31,30, 2026 and 2025, respectively, and include mainly advisory and legal fees related to other than routine mattersmatters, severance costs associated with eliminated positions, and expenses associated with former closed or consolidated locations.

Amortization expense was $20$21 and $225 for the three-month periods ended MarchJune 31,30, 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 $50$49 for the three-month periods ended MarchJune 31,30, 2026 and 2025, respectively.

Income (Loss) from Operations

LossIncome (loss) from operations was $(57)$378 and $(23,220544) for the three-month periods ended MarchJune 31,30, 2026 and 2025, respectively. The improvement in lossoperating from operationsresults 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.above.

Interest expense was $66$119 and $89$112 for the three-month periods ended MarchJune 31,30, 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 MarchJune 31,30, 2026 and 2025.

Interest income earned was $116$112 and $139$140 for the three-month periods ended MarchJune 31,30, 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.

We recognized income tax (expense) (benefit) of $(211) and $9,786$115 for the three-month periods ended MarchJune 31,30, 2026 and 2025, respectively. Our effective tax rates for the three-month periods ended MarchJune 31,30, 2026 and 2025 differ from the statutory rate primarily due to the effect of changes in the valuation allowance on our net DTA position.

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 $(16322) for the three months ended MarchJune 31,30, 2025.

Our consolidated net income (loss) was $14$566 and $(33,119423) for the three-month periods ended MarchJune 31,30, 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.above.

SixNine Months Ended MarchJune 31,30, 2026 Compared to the SixNine Months Ended MarchJune 31,30, 2025

Professional contract staffing services contributed $34,094$51,113 or approximately 85%84% of consolidated revenue and direct hire placement services contributed $5,903,$9,649, or approximately 15%,16%, of consolidated revenue for the sixnine months ended MarchJune 31,30, 2026. This compares to professional contract staffing services revenue of $43,009,$64,310, or approximately 89%,88%, of consolidated revenue and direct hire placement revenue of $5,511,$8,733, or approximately 11%,12%, of consolidated revenue for the sixnine months ended MarchJune 31,30, 2025.

Direct hire placement revenue for the sixnine months ended MarchJune 31,30, 2026 increased $392,$916, or approximately 7%,10%, as compared to the sixnine months ended MarchJune 31,30, 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. And whileWhile 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.

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 sixnine months ended MarchJune 31,30, 2026 decreased by approximately 22% to $25,177$37,661 compared to $32,234$48,076 for the sixnine months ended MarchJune 31,30, 2025. The $7,057$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 sixnine months ended MarchJune 31,30, 2026 are proportionally higher relative to revenue than those for the sixnine months ended MarchJune 31,30, 2025.

Our combined gross profit margin, including direct hire placement services, for the six-monthnine-month periods ended MarchJune 31,30, 2026 and 2025 were approximately 37.1%38.0% and 33.6%,34.2%, respectively. Our professional contract staffing services gross margins for the six-monthnine-month periods ended MarchJune 31,30, 2026 and 2025 were approximately 26.2%26.3% and 25.1%,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.

Our SG&A expenses for the sixnine months ended MarchJune 31,30, 2026 decreased by $2,629$3,743 as compared to the sixnine months ended MarchJune 31,30, 2025. SG&A expenses for the sixnine months ended MarchJune 31,30, 2026,2026 as a percentage of revenues,revenues were approximately 37.8% compared to approximately 36.6%36.5% for the sixnine months ended MarchJune 31,30, 2025. The increase in SG&A expenses as a percentage of revenues during the sixnine months ended MarchJune 31,30, 2026 was attributable to lower revenues in relation to fixed costs, including certain personnel,personnel and occupancy and costs associated with applicant tracking systemscosts, and joban boards.increase in incentive compensation resulting from the increase in direct hire revenues. This was offset,primarily in part,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 $2,389$3,534 to the net decrease in SG&A expenses for the sixnine months ended MarchJune 31,30, 2026.

SG&A includesexpenses 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 $108$205 and $317$385 for the six-monthnine-month periods ended MarchJune 31,30, 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.

Amortization expense was $80$101 and $430$655 for the six-monthnine-month periods ended MarchJune 31,30, 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 $91$136 and $105$154 for the six-monthnine-month periods ended MarchJune 31,30, 2026, and 2025, respectively.

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 sixnine months ended MarchJune 31,30, 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.

Loss from operations was $(46688) and $(23,99324,537) for the six-monthnine-month periods ended MarchJune 31,30, 2026 and 2025, respectively. The improvement in loss from operations is primarily attributable to the goodwill impairment charge included in results for the sixnine months ended MarchJune 31,30, 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.

Interest expense was $131$250 and $155$267 for the six-monthnine-month periods ended MarchJune 31,30, 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 six-monthnine-month periods ended MarchJune 31,30, 2026 and 2025.

Interest income earned was $244$356 and $294$434 for the six-monthnine-month periods ended MarchJune 31,30, 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.

Other income was $196$392 for the sixnine months ended MarchJune 31,30, 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.consideration, Underwhich 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 arewere contingent upon the achievement of minimum averageAGP gross profit (“AGP”) requirements by Hornet over the first two annual periods prior to closing.requirements. The first installments of the Promissory Notes have beenwere 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.

We recognized income tax expensebenefit (benefitexpense) of $(21)$20 and $9,786$(9,671) for the six-monthnine-month periods ended MarchJune 31,30, 2026 and 2025, respectively. Our effective tax rates for the six-monthnine-month periods ended MarchJune 31,30, 2026 and 2025 differ from the statutory rate primarily due to the effect of the change in valuation allowance on our net DTA position.

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 $(171193) for the sixnine months ended MarchJune 31,30, 2025.

Consolidated Net Income (Loss)

Our consolidated net income (loss) was $(136)$430 and $(33,81134,234) for the six-monthnine-month periods ended MarchJune 31,30, 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 sixnine months ended MarchJune 31,30, 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.

As of MarchJune 31,30, 2026, we had $20,331$20,272 of cash, a decrease of $1,033$1,092 from $21,364 as of September 30, 2025. As of MarchJune 31,30, 2026, we had working capital of $23,769$24,392 compared to $23,993 as of September 30, 2025. Cash flows used in operating activities improved $279$57 during the quarter ended June 30, 2026 due to positive cash flow from operating activities during the quarter ended March 31, 2026.activities.

The primary use of cash for investing activities was forDuring the acquisition of property and equipment during the sixnine months ended MarchJune 31, 2026. During the six months ended March 31,30, 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 arewere subject to reduction in the event Hornet Staffing doesdid 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 beenwere entirely eliminated as of December 31, 2025 due to the minimum AGP requirements not being met,met. andThe 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 beingare required to be made to Hornet’s former shareholders underon the formerPromissory first installments,Notes, accordingly.

The cash flows used in financing activities were primarily for payments made on finance leases during the six-monthnine-month periods ended MarchJune 31,30, 2026 and 2025.

We had $4,895$5,181 in availability for borrowings under our facilityFacility as of MarchJune 31,30, 2026. There were no outstanding borrowings on the Facility as of MarchJune 31,30, 2026, or September 30, 2025, except for certain accrued incidental carrying fees and costs, which are included in other current liabilities in the accompanying unaudited condensed consolidated balance sheets.

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. The Amendment No. 4 also contains two new requirements. First, during the term of the facility,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 the Amendment No. 4, the Company has agreed 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 notno less than $12 million (or such lesser amount that FCB may, in its sole discretion, otherwise consent to in writing).

On December 2, 2025, we reissued 592 additional 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 our common stock,stock; therefore, while our total number of outstanding shares of common stock increased as a result of each issuance, our total number of issued shares of common stock did not increase. Of the 592 shares reissued on December 2, 2025, 135 shares were returned to the Company on January 7, 2026,2026 to satisfy statutory income tax obligations of the recipients on the vested restricted stock awards.

All our office facilities are leased. Minimum lease payments under all our lease agreements for the twelve-month period commencing after the close of business on MarchJune 31,30, 2026, are approximately $1,159.$1,154. There are no minimum debt service principal payments due during the twelve-month period commencing after the close of business on MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, there were no transactions, agreements or other contractual arrangements to which an unconsolidated entity was a party, under which the Company (a) had any direct or contingent obligation under a guarantee contract, derivative instrument or variable interest in the unconsolidated entity, or (b) had a retained or contingent interest in assets transferred to the unconsolidated entity.