Star Equity Holdings, Inc.: Form 10-Q for the period ended Sep 30, 2025

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto, included in Part I of this Form 10-Q. The reader should also refer to the Condensed Consolidated Financial Statements and notes of Hudson Global, Inc. and its subsidiaries (the “Company”) filed in its Annual Report on Form 10-K for the year ended December 31, 2024. This MD&A contains forward-looking statements. Please see “FORWARD-LOOKING STATEMENTS” for a discussion of the uncertainties, risks and assumptions associated with these statements. This MD&A also uses the non-generally accepted accounting principle measure of earnings before interest, taxes, depreciation and amortization (“EBITDA”). See Note 17 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for EBITDA segment reconciliation information. The tables and information in this MD&A were derived from exact numbers and may have immaterial rounding differences.

This MD&A includes the following sections:

• Executive Overview
• Results of Operations
• Liquidity and Capital Resources
• Contingencies
• Recent Accounting Pronouncements
• Critical Accounting Estimates
• Forward-Looking Statements

Executive Overview

Star Equity Holdings, Inc. (“Star,” the “Company,” “we,” “our”, formerly known as Hudson Global Inc. ("Hudson")) is a diversified multi-industry holding company with four divisions. Our Building Solutions division, is our largest division and operates in the construction industry. Our Business Services division delivers Recruitment Process Outsourcing (“RPO”) services consisting of recruitment and contracting solutions tailored to the individual needs of primarily mid-to-large multinational companies. Our Energy Services division consists of Alliance Drilling Tools, Inc. (“ADT’). In addition, we have an Investments segment, which holds and manages certain of our corporate-owned real estate, and manages internally-funded, concentrated minority investments in a small number of public companies.

Amendment to Certificate of Incorporation

On September 4, 2025, Star filed a certificate of amendment (the “Amendment”) to the Company’s Amended and Restated Certificate of Incorporation, as Amended (the “Charter”), to change the name of the Company from Hudson Global, Inc. to Star Equity Holdings, Inc. (the “Name Change”). The Name Change was approved by the Company’s Board of Directors (the “Board”) on September 2, 2025, and became effective at 12:01 a.m. (Eastern Time) on September 5, 2025.

Merger

On August 22, 2025, Star completed its previously announced acquisition of Star Operating Companies, Inc. ("SOC" or "Star Operating Companies", formerly known as Star Equity Holdings, Inc.) pursuant to the Agreement and Plan of Merger, dated as of May 21, 2025 (the “Merger Agreement”), by and among Star, SOC and HSON Merger Sub, Inc., a wholly owned subsidiary of Star (“Merger Sub”). Upon the terms and subject to the conditions of the Merger Agreement, on August 22, 2025, at the effective time of the Merger (the “Effective Time”), Merger Sub merged with and into SOC, with SOC continuing as the surviving corporation of the Merger under the name “Star Operating Companies, Inc." as a wholly owned subsidiary of Star. Capitalized terms used herein but not defined have the meanings set forth in the Merger Agreement.

Pursuant to the terms of the Merger Agreement, at the Effective Time, (i) each share of common stock of SOC issued and outstanding immediately prior to the Effective Time (other than certain shares as set forth in the Merger Agreement) were automatically converted into the right to receive 0.23 shares of Star common stock and (ii) each share of preferred stock of SOC issued and outstanding immediately prior to the Effective Time (other than certain shares set forth in the Merger Agreement) were automatically converted into the right to receive one (1) share of Star 10% Series A Cumulative Perpetual preferred stock (“Preferred Stock”). As a result of the Merger, former SOC common stockholders received approximately 744,291 shares of Star common stock for their SOC common shares and former SOC stockholders received approximately 2,690,637 shares of

Star Series Preferred Stock. No fractional shares of Star common stock were issued in the Merger, and SOC stockholders became entitled to receive cash in lieu of fractional shares in accordance with the Merger Agreement.

In addition, pursuant to the terms of the Merger Agreement, at the Effective Time, each award of SOC restricted stock units (“RSUs”) outstanding immediately prior to the Effective Time was converted into Star RSUs issued under the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, as amended (the “Plan”), in accordance with the Merger Agreement.

Segments

Our Building Solutions segment is currently made up of the following operating businesses: KBS Builders, Inc. (“KBS”); EdgeBuilder, Inc. (“EdgeBuilder”), and Glenbrook Building Supply, Inc. (“Glenbrook”), with the latter two managed together and referred to jointly as “EBGL,” and Timber Technologies Solutions, Inc. (“TT”). KBS is based in Maine and manufactures modular buildings, typically in the single and multi-family residential segments, servicing principally the New England market. EBGL is based in the Minneapolis-Saint Paul area and principally serves the Upper Midwest region. Together, the EBGL businesses manufacture and deliver structural wall panels and other engineered wood-based products. EBGL also distributes building materials from two lumberyard locations primarily focused on professional builder customers. TT is based outside the Minneapolis-St. Paul area and manufactures glue-laminated timber products (“glulam”) for various end markets and applications, including agriculture, industrial, infrastructure, and building construction (commercial and residential).

Our Business Services segment delivers Recruitment Process Outsourcing (“RPO”) services consisting of recruitment and contracting solutions tailored to the individual needs of primarily mid-to-large multinational companies. The Company operates directly in fifteen countries with three reportable geographic business segments: the Americas, Asia Pacific, and Europe, Middle East, and Africa ("EMEA"). The Company’s RPO delivery teams utilize recruitment process methodologies and project management expertise to meet clients’ ongoing business needs. The Company’s RPO services include complete recruitment outsourcing, project-based outsourcing, contingent workforce solutions, and recruitment consulting for clients’ permanent staff hires. Hudson’s RPO services leverage the Company’s consultants, supported by the Company’s specialists, in the delivery of its proprietary methods to identify, select, and engage the best-fit talent for critical client roles. In addition, RPO clients receive a range of outsourced professional contract staffing services and managed service provider services offered sometimes on a standalone basis and sometimes as part of a blended total talent solution. These services draw upon a combination of specialized recruiting and project management competencies to deliver a wide range of solutions. Hudson RPO-employed professionals - either individually or as a team - are placed with client organizations for a defined period of time based on specific business needs of the client. With direct operations in fifteen countries and relationships with specialized professionals and organizations around the globe, Business Services brings a strong ability to match talent with opportunities by assessing, recruiting, developing, and engaging highly successful people for client support.

Our Energy Services segment currently consists of ADT, a Wyoming and Texas based provider of drilling tools and services to the Energy industry, a key sector of the economy. ADT is a full-service downhole drilling tool company which provides sale and rental tools in the Oil & Gas, Geothermal, Mining, and Waterwells sectors. ADT is strategically located near premier oilfields in the Rockies, a geothermal and mining hub, and in Midland, TX within the Permian Basin. ADT’s business model allows for the majority of costs, such as freight, repairs, and damages to be passed directly to customers.

Our Investments segment holds and manages certain of our corporate-owned real estate, including a manufacturing facility in Maine that is leased to KBS and a manufacturing facility in Wisconsin that is leased to TT. The Investments division manages internally-funded, concentrated minority investments in a small number of public companies. It also holds and manages a promissory note and a private equity stake in Catalyst. SOC acquired these interests in May 2023 as a result of the sale of Digirad Health. Our Investments division also holds an investment in Enservco Corporation consisting of an investment in Enservco Common Stock, an investment in Enservco Preferred Stock, and an investment in a call option, all of which were acquired in the third quarter of 2024 and which is discussed in Note 18, Supplementary Balance Sheet Information to the notes to our accompanying condensed consolidated financial statements.

We continue to explore all strategic alternatives to maximize value for the Company’s stockholders, including without limitation, improving the market position and profitability of our services in the marketplace, and enhancing our valuation. We may pursue our goals through organic growth, strategic initiatives, or other alternatives. Additionally, we will continue to monitor capital markets for opportunities to repurchase shares, and consider other actions designed to enhance value to our stockholders, as well as review information regarding potential acquisitions or combinations, and provide information to third parties regarding potential dispositions of assets or business lines, from time to time.

This MD&A discusses the results of the Company’s business for the three and nine months ended September 30, 2025 and 2024.

Strategy

We believe our diversified multi-industry holding company structure allows Star management to focus on capital allocation, strategic leadership, mergers and acquisitions, capital markets, and investor relations, as well as management of our Investments division. Our structure frees up our operating company management teams to focus on their respective businesses, look for organic and bolt-on growth opportunities, and improve operations with less distraction and administrative burden associated with running a public company.

We continue to explore strategic alternatives to improve our market position and the profitability of our product offerings, generate additional liquidity, and enhance our common stock valuation. We may pursue our goals through organic growth and through strategic alternatives, such as selective acquisitions of businesses, divestitures of assets or businesses, equity offerings, debt financings, or corporate restructuring.

Operating Business

We believe that our operating companies are well positioned for growth in large addressable markets. The key elements of our growth strategy include the following:

• Organic growth from our core businesses. We believe that we operate in markets and geographies that will allow us to continue to grow our core businesses, allowing us to benefit from our scale and strengths. We plan to focus our efforts on markets in which we already have a presence in order to leverage the personnel, infrastructure, and brand recognition we have in these areas.
• Introduction of new services. In the Building Solutions division, we will consider opportunities to augment our service offerings to better serve our customer base. We have done this in the New England market with our entry into the commercial multi-family segment. Other areas might include logistics, on-site installation, and manufacturing of sub-components.
• Acquisition of complementary businesses. We plan to continue to look at complementary businesses that meet our acquisition growth criteria. We believe there are many potential small public and private targets that can be acquired over time and integrated into our platform. We will also look at larger, more transformational mergers and acquisitions if we believe the appropriate mix of value, risk, and return is present for our stockholders. The timing of these potential transactions will always depend on market conditions, available capital, and valuation. In general, we want to be “value” buyers, and will not pursue any transaction unless we believe the post-transaction potential value is high for stockholders.

Current Market Conditions

The target customers for our Building Solutions division include professional home builders, general contractors, project owners, developers, and design firms. Despite a higher interest rate environment, we are continuing to see significant demand for our products, although there have been execution delays as customers secure and finalize project financing. We have benefited from implementing both price increases and margin protection language in our contracts, and these changes have had a positive effect on our profitability. We have experienced slower business activity over the last four quarters and related lower revenues, but believe this slowdown is temporary. Our sales pipelines continue to indicate strong potential demand for our services, but we can give no assurances as to our ability to compete for these opportunities, or the periods during which successfully negotiated projects will be completed.

In our Business Services division, our clients’ demands for RPO and contracting services largely depend on the market conditions and the strength of the labor markets in the countries where we operate. In the first three quarters of 2025, the market conditions remained challenging due to persistent inflation, market uncertainty related to trade disruptions, and decreased demand for labor in certain markets. We anticipate that these challenging market conditions will continue into the final quarter of 2025.

Trends and Drivers

The Modular Building Institute has estimated that permanent modular construction increased as a percentage of the construction industry from 2.14% in 2015 to 6.64% as of the end of 2023. In turn, in our Building Solutions division, we continue to see a greater acceptance of offsite or prefab construction in single-family and multi-family residential building projects in our target markets. Our modular units and structural wall panels offer builders a number of benefits over traditional onsite or “stick built” construction. These include shorter time to market, higher quality, reduced waste, and potential cost savings. Additionally, technological advancements including 3D modeling software and developments in engineered wood products offer greater design flexibility for higher-end applications. The need for more affordable housing solutions also presents opportunities for the continued growth of factory-built housing.

The demand for our Energy Services offerings is tied in part to oil and gas prices, drilling activity, and capital expenditures by E&P companies. In June 2025, Baker Hughes reported that the total U.S. rig count was down 4% year-over-year.

Risks arising from global economic instability and conflicts, wars, and health crises could impact our business. In addition, the inflation caused by such events may impact demand for our products and services and our cost to provide products and services.

Summary of Financial Performance Highlights For The Three Months Ended September 30, 2025

• Revenue was $48.0 million for the three months ended September 30, 2025, compared to $36.9 million for the same period in 2024, an increase of $11.1 million, or 30.1%. The increase in revenue was principally driven by the inclusion of revenues from the Star Operating Companies acquisition, which contributed 30 percentage points to the revenue growth.
• On a constant currency basis, the Company’s revenue increased $11.2 million, or 30.5%, primarily due to the impact of revenue from the Star Operating Companies, which contributed 30 percentage points to the revenue growth.
• Gross profit was $20.6 million for the three months ended September 30, 2025, compared to $18.6 million million for the same period in 2024, an increase of $2.0 million, or 10.9%. The increase in gross profit was driven by the acquisition of Star Operating Companies, which increased gross profit growth by 11 percentage points.
• On a constant currency basis, gross profit increased $1.9 million, or 10.4%, due to the impact of the Star Operating Companies, which contributed 11 percentage points to the gross profit growth.
• Selling, general and administrative expenses (including salaries and related expenses) and other non-operating income (expense) (“SG&A and Non-Op”) was $21.8 million for the three months ended September 30, 2025, compared to $18.9 million for the same period in 2024, an increase of $2.9 million, or 15.5%. The acquisition of Star Operating Companies increased SG&A and Non-Op by $2.2 million, which contributed 11 percentage points to the increase.
• On a constant currency basis, SG&A and Non-Op increased $2.9 million, or 15.2%, as compared to the same period in 2024. SG&A and Non-Op as a percentage of revenue was 45.5% for the three months ended September 30, 2025, compared to 51.5% for the same period in 2024.
• EBITDA loss was $0.9 million for the three months ended September 30, 2025, compared to EBITDA loss of $0.3 million for the same period in 2024, an increase in EBITDA loss of $0.6 million. On a constant currency basis, EBITDA loss also increased $0.6 million.
• Net loss was $1.8 million for the three months ended September 30, 2025, compared to net loss of $0.8 million for the same period in 2024, an increase in net loss of $0.9 million. On a constant currency basis, net loss also increased $0.9 million.

Summary of Financial Performance Highlights For The Nine Months Ended September 30, 2025

• Revenue was $115.4 million for the nine months ended September 30, 2025, compared to $106.5 million for the same period in 2024, an increase of $8.9 million, or 8.4%. The increase in revenue was principally driven by the inclusion of revenues from the Star Operating Companies acquisition, which contributed 10 percentage points to the revenue growth.
• On a constant currency basis, the Company’s revenue increased $10.0 million, or 9.5%, primarily due to the impact of revenue from the Star Operating Companies, which contributed 10 percentage points to the revenue growth.
• Gross profit was $55.7 million for the nine months ended September 30, 2025, compared to $52.5 million for the same period in 2024, an increase of $3.1 million, or 5.9%. The increase in gross profit was driven by the acquisition of Star Operating Companies, which increased gross profit growth by 4 percentage points.
• On a constant currency basis, gross profit increased $3.2 million, or 6.1%, due to the impact of the Star Operating Companies, which contributed 4 percentage points to the gross profit growth.
• SG&A and Non-Op was $58.5 million for the nine months ended September 30, 2025, compared to $55.5 million for the same period in 2024. The acquisition of Star Operating Companies increased SG&A and Non-Op by $2.2 million, which contributed 4 percentage points to the increase.
• On a constant currency basis, SG&A and Non-Op increased $3.2 million, or 5.8%, as compared to the same period in 2024. SG&A and Non-Op as a percentage of revenue was 50.7% for the nine months ended September 30, 2025, compared to 52.5% for the same period in 2024.
• EBITDA loss was $2.6 million for the nine months ended September 30, 2025, compared to EBITDA loss of $3.0 million for the same period in 2024, for a decrease of $0.4 million in EBITDA loss. On a constant currency basis, EBITDA loss decreased $0.3 million.
• Net loss was $4.2 million for the nine months ended September 30, 2025, compared to net loss of $4.2 million for the same period in 2024, for a slight increase in net loss. On a constant currency basis, net loss increased $0.1 million.

Constant Currency (Non-GAAP Financial Measure)

The Company operates on a global basis, with the majority of its revenue generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect the Company’s results of operations. For the discussion of reportable segment results of operations, the Company uses constant currency information. Constant currency compares financial results between periods as if exchange rates had remained constant period-over-period. The Company defines the term “constant currency” to mean that financial data for a previously reported period is translated into U.S. dollars using the same foreign currency exchange rates that were used to translate financial data for the current period. Constant currency metrics should not be considered in isolation or as a substitute for reported results prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. The Company’s management reviews and analyzes business results in constant currency and believes these results better represent the Company’s underlying business trends. Changes in foreign currency exchange rates generally impact only reported earnings.

Changes in revenue, adjusted net revenue, SG&A and Non-Op, operating income (loss), net income (loss), and EBITDA (loss) include the effect of changes in foreign currency exchange rates. The tables below summarize the impact of foreign currency exchange adjustments on the Company’s operating results for the three and nine months ended September 30, 2025 and 2024.

Index

$ in thousands

(a) Represents Revenue less the Cost of revenues caption on the Condensed Consolidated Statements of Operations.

(b) SG&A and Non-Op is a measure that management uses to evaluate the segments’ expenses, which include the following captions on the Condensed Consolidated Statements of Operations: Salaries and related, Office and general, Marketing and promotion, and Other expense, net. Corporate management service allocations are included in the segments’ other income (expense).

(c) See EBITDA reconciliation in the following section.

Use of EBITDA (Non-GAAP Financial Measure)

Management believes EBITDA is a meaningful indicator of the Company’s performance that provides useful information to investors regarding the Company’s financial condition and results of operations. Management considers EBITDA to be the best indicator of operating performance and most comparable measure across the regions in which the Company operates. Management uses this measure to evaluate capital needs and working capital requirements. EBITDA should not be considered in isolation or as a substitute for operating income, or net income prepared in accordance with U.S. GAAP or as a measure of the Company’s profitability. EBITDA is derived from net income adjusted for the provision for (benefit from) income taxes, interest expense (income), and depreciation and amortization.

The reconciliation of EBITDA to the most directly comparable GAAP financial measure is provided in the table below:

$ in thousands

- 50 -

Results of Operations

Building Solutions (reported currency)

Revenue - Building Solutions

$ in millions

For the three and nine months ended September 30, 2025, Building Solutions contributed $9.6 million to the Company's revenue. Performance during the period reflects continued recovery from macroeconomic headwinds and severe Midwest flooding impacting the sector last year, which delayed project starts and impacted activity levels. Improved market conditions and consistent execution supported increased activity across the division, supported by a healthy backlog and stronger project delivery momentum. While broader demand trends improved, residential activity remains slower than anticipated as homeowners and developers continue to navigate financing and timing uncertainty.

Gross Profit - Building Solutions

$ in millions

For the three and nine months ended September 30, 2025, Building Solutions contributed $1.7 million to the Company's gross profit. Performance during the period reflects broad-based activity across the division, with higher volumes and an improved project mix supporting stronger absorption. This was supported by disciplined execution on project scope, scheduling, and cost management, alongside sustained project activity across key workflows. Residential activity continued to lag, moderating margin expansion relative to other segments.

SG&A and Non-Op - Building Solutions

$ in millions

For the three and nine months ended September 30, 2025, Building Solutions SG&A and Non-OP expenses were $1.3 million or 13% of revenue. Expenses were generally in line with normal operating levels, with lower third-party commission costs contributing to a modest reduction in overall SG&A for the period.

Operating (Loss) Income and EBITDA - Building Solutions

$ in millions

For the three and nine months ended September 30, 2025, Building Solutions generated operating income of $0.3 million and EBITDA of $0.5 million or 5% of revenue. Stronger volumes and an improved project mix, together with disciplined execution and controlled SG&A, supported the division’s operating performance during the period.

Business Services (constant currency)

Revenue - Business Services

$ in millions

For the three months ended September 30, 2025, RPO revenue increased $0.3 million, or 2%, while contracting revenue increased slightly compared to 2024, as discussed below.

In the Americas, revenue increased increased $0.3 million, or 4%, for the three months ended September 30, 2025, compared to the same period in 2024. The increase was primarily driven by RPO revenue, which increased $1.1 million, or 19%, driven by higher demand from existing clients, while contracting revenue decreased $0.8 million, or 46%, due to reduced demand from existing clients.

In Asia Pacific, revenue increased $1.5 million, or 7%, for the three months ended September 30, 2025, compared to the same period in 2024. RPO revenue increased $0.7 million, or 9%, while contracting revenue increased $0.8 million, or 6%, due to higher demand from existing clients.

In EMEA, revenue decreased $1.5 million, or 21%, for the three months ended September 30, 2025, compared to the same period in 2024, driven by a decline in RPO revenue of $1.5 million, or 33%.

For the nine months ended September 30, 2025, contracting revenue decreased by $0.8 million, or 2%, while RPO revenue declined by $0.1 million, as discussed below.

In the Americas, revenue increased $1.3 million, or 7%, for the nine months ended September 30, 2025, compared to the same period in 2024. The increase was primarily in contracting revenue, which increased by $0.9 million, or 45%, coupled with a $0.4 million, or 2% increase in RPO revenue, compared to 2024. The increases in contracting and RPO revenue were mainly due to higher demand from existing clients.

In Asia Pacific, revenue declined $0.7 million, or 1%, for the nine months ended September 30, 2025, compared to 2024. A decline in contracting revenue of $2.8 million was partially offset by an increase of $2.1 million in RPO revenue. The net decrease for the nine months ended September 30, 2025 was due to lower demand from existing clients.

In EMEA, revenue declined $1.5 million, or 8%, driven by a decline in RPO revenue of $2.6 million, partially offset by an increase in contracting revenue of $1.1 million, due to lower client demand.

Gross Profit - Business Services

$ in millions

For the three months ended September 30, 2025, gross profit decreased slightly, driven by a decline in RPO gross profit of $0.1 million, compared to the same period in 2024.

In Americas, gross profit increased by $0.4 million, or 5%, for the three months ended September 30, 2025, compared to the same period in 2024. The growth was primarily driven by a $0.5 million, or 8%, increase in RPO gross profit, partially offset by a decrease in contracting gross profit of $0.8 million, or 46%, compared to 2024.

In Asia Pacific, gross profit increased by $0.8 million, or 10%, for the three months ended September 30, 2025, compared to the same period in 2024, driven by higher RPO gross profit of $0.7 million, coupled with higher contracting gross profit of $0.1 million.

In EMEA, gross profit declined by $1.2 million, or 28%, for the three months ended September 30, 2025, compared to the same period in 2024, driven by primarily by lower RPO gross profit of $1.3 million.

Total gross profit as a percentage of revenue was 50% for the three months ended September 30, 2025, compared to 51% for the same period in 2024.

For the nine months ended September 30, 2025, contracting gross profit increased $0.9 million, or 35%, while RPO gross profit increased by $0.3 million, or 1%, compared to the same period in 2024.

In the Americas, gross profit increased by $0.5 million, or 3%, for the nine months ended September 30, 2025, compared to the same period in 2024. The growth reflects a $0.3 million, or 2%, increase in RPO gross profit, along with a $0.2 million, or 55%, increase in contracting gross profit.

In Asia Pacific, gross profit increased by $3.0 million, or 14%, for the nine months ended September 30, 2025, compared to the same period in 2024, driven by an increase in RPO gross profit of $2.2 million and an increase in contracting gross profit of $0.8 million. The increase for the nine months ended September 30, 2025 was due to higher demand from existing clients.

In EMEA, gross profit declined by $2.3 million, or 19%, for the nine months ended September 30, 2025, compared to the same period in 2024, primarily driven by a decrease in RPO gross profit of $2.2 million, or 19%. The decrease in gross profit was due to lower client demand.

Total gross profit as a percentage of revenue was 51% for the nine months ended September 30, 2025, compared to 50% for the same period in 2024. The increase in total gross profit as a percentage of revenue was attributed to a greater mix of higher margin RPO revenue to contracting revenue.

SG&A and Non-Op - Business Services

$ in millions

Business Services

- 53 -

For the three months ended September 30, 2025, SG&A and Non-Op decreased $0.1 million, or 1%, compared to the same period in 2024, while SG&A and Non-Op as a percentage of revenue decreased from 49% to 48%. The decrease in SG&A and No-Op was primarily due to lower compensation costs.

For the nine months ended September 30, 2025, SG&A and Non-Op increased $0.3 million, or 1%, compared to the same periods in 2024, while SG&A and Non-Op as a percentage of revenue increased from 49% to 50%. The increase in SG&A and No-Op was primarily due to higher professional fees, partly offset by compensation costs.

Operating Income and EBITDA - Business Services

$ in millions

For the three months ended September 30, 2025, operating income was $0.7 million, compared to operating income of $0.8 million in 2024, and EBITDA was $0.8 million, or 2% of revenue, compared to EBITDA of $0.7 million, or 2% of revenue, in 2024.

For the nine months ended September 30, 2025, operating income was $1.6 million, compared to operating income of $0.4 million in 2024, and EBITDA was $1.3 million, or 1% of revenue, compared to EBITDA of $0.3 million, or 0% of revenue, in 2024. The increases in operating income and EBITDA were principally due to the increase in gross profit, as described above.

Energy Services (reported currency)

Revenue - Energy Services

$ in millions

For the three and nine months ended September 30, 2025, Energy Services contributed $1.3 million in revenue, reflecting a gradual recovery in drilling activity across key markets. While market conditions in the sector in the first half of the year was subdued due to lower rig counts, the division continued to capture market share through competitive pricing and strong customer relationships. Activity accelerated in the third quarter, supported by growth in non-oil-and-gas demand, and focused sales efforts in high-growth areas such as the Permian.

Gross Profit - Energy Services

$ in millions

For the three and nine months ended 2025, the contribution of Energy Services to the Company's Gross Profit was $0.3 million. Margins were maintained despite trough pricing driven by lower U.S. rig counts in 2025. The division continued to gain market share through competitive pricing and strong customer relationships, helping to support gross profit during a period of softer overall pricing in the market.

SG&A and Non-Op - Energy Services

$ in millions

For the three and nine months ended September 30, 2025, Energy Services’ SG&A and non-operating expenses totaled $0.4 million or 28% of revenue. Expenses were generally in line with normal operating levels, with a slight increase in sales commissions reflecting efforts to expand market share during the period.

Operating Income and EBITDA - Energy Services

$ in millions

N/M = not meaningful

For the three and nine months ended September 30, 2025, Energy Services reported an operating loss of $0.1 million and an EBITDA gain of $0.1 million or 11% of revenue. Despite trough pricing in a softer rig environment, disciplined execution, competitive pricing, and targeted sales efforts supporting market-share gains helped the division achieve positive EBITDA for the period.

Investments (reported currency)

Revenue-Investments

$ in millions

For the three and nine months ended September 30, 2025, Investments contributed $0.05 million to the Company’s revenue, reflecting rental income from owned properties.

Gross Profit - Investments

$ in millions

For the three and nine months ended September 30, 2025, Investments contributed $0.02 million to the Company's gross profit, reflecting rental income after accounting for property depreciation.

SG&A and Non-Op - Investments

$ in millions

For the three and nine months ended 2025, Investments SG&A and Non-Op was $0.03 million.

Operating (Loss) Income and EBITDA - Investments

$ in millions

For the three months ended September 30, 2025, Investments operating loss was $0.04 million, and EBITDA loss was $0.01 million, or 11% of revenue.

The following are discussed in reported currency

Corporate Expenses, Net of Corporate Management Expense Allocations

Corporate expenses were $2.4 million for the three months ended September 30, 2025 as compared to $1.0 million for the same period in 2024, representing an increase of $1.4 million. The increase in corporate expenses was primarily due to higher professional fees, partially offset by investment-related income. The acquisition of Star Operating Companies contributed $0.5 million to corporate expenses in the quarter.

For the nine months ended September 30, 2025, corporate expenses were $4.5 million compared to $3.2 million for the same period in 2024, an increase of $1.2 million. The increase was primarily due to higher professional fees and the acquisition of Star Operating Companies.

Depreciation and Amortization Expense

Depreciation and amortization expense included in operating expenses was $0.4 million and $0.9 million for the three and nine months ended September 30, 2025, compared to $0.4 million and $1.0 million for the same periods in 2024, respectively. Depreciation and amortization expense included in cost of revenues was $0.3 million for the three and nine months ended September 30, 2025.

Interest (expense) income, Net

Interest income, net was $0.1 million and $0.2 million for the three and nine months ended September 30, 2025, respectively, compared to net interest income of $0.1 million and $0.3 million for the same periods in 2024. During the second quarter of 2025, the Company earned $0.1 million of dividend income, which was recorded in Interest (expense) income, net, from its investment in a short-term U.S. Treasury securities fund, which replaced a prior interest-bearing investment.

Other Income (expense), Net

Net other income was $0.0 million and net other expense was $0.2 million for the three and nine months ended September 30, 2025, respectively, compared to net other expense of $0.2 million and $0.3 million for the same periods in 2024.

Provision for Income Taxes

The provision for income taxes for the nine months ended September 30, 2025 was $0.6 million on $3.6 million of pre-tax loss, compared to a provision for income tax of $0.5 million on $3.7 million of pre-tax loss for the same period in 2024. The effective tax rates for the nine months ended September 30, 2025 and 2024 were negative 17% and negative 12%, respectively. For the nine months ended September 30, 2025, the effective tax rates differed from the U.S. Federal statutory rate of 21% primarily due to pretax losses for which no tax benefit can be recognized, foreign tax rate differences, and non-deductible expenses. For the nine months ended September 30, 2024, the effective tax rates differed from the U.S. Federal statutory rate of 21% primarily due to changes in valuation allowances in the U.S. and certain foreign jurisdictions, which reduces or eliminates the effective tax rate on current year profits or losses, foreign tax rate differences, and non-deductible expenses. The current year-to-date effective tax rate differs significantly from the prior period effective tax rate primarily due to the interaction of rate reconciliation items, including changes in valuation allowance.

Net Loss

Net loss was $1.8 million for the three months ended September 30, 2025, compared to net loss of $0.8 million for the three months ended September 30, 2024, an increase in net loss of $0.9 million. Basic and diluted loss per share were both $0.54 for the three months ended September 30, 2025, compared to basic and diluted loss per share of $0.28 for the same period in 2024.

Net loss was $4.2 million for the nine months ended September 30, 2025, compared to net loss of $4.2 million for the same period in 2024, for a slight increase in net loss. Basic and diluted loss per share were $1.37 for the nine months ended September 30, 2025, compared to basic and diluted loss per share of $1.39, for the same period in 2024.

Liquidity and Capital Resources

As of September 30, 2025, cash and cash equivalents and restricted cash totaled $18.5 million, compared to $17.7 million as of December 31, 2024. The following table summarizes the Company’s cash flow activities for the nine months ended September 30, 2025 and 2024:

$ in millions

*2024 does not sum due to rounding

Cash Flows from Operating Activities

For the nine months ended September 30, 2025, net cash used in operating activities was $3.4 million, compared to $4.8 million during the same period in 2024, resulting in a $1.4 million decrease in net cash used. The improvement was driven by more favorable working capital comparisons to the prior year.

Cash Flows from Investing Activities

For the nine months ended September 30, 2025, net cash provided by investing activities was $6.2 million compared to $1.1 million of net cash provided by investing activities in 2024. Net cash provided by investing activities in 2025 primarily reflects cash received in connection with the acquisition of Star Operating Companies of $7.0 million. Net cash provided by investing activities in 2024 reflects cash received from benefit payouts of $1.1 million.

Cash Flows from Financing Activities

For the nine months ended September 30, 2025, net cash used in financing activities was $2.6 million, compared to net cash used in financing activities of $3.0 million in 2024. The decrease in net cash used was attributed to net proceeds from borrowings of $0.3 million, as well as lower repurchases of shares of common stock of $2.9 million in the current year, including cash paid for tax withholdings, compared to $3.0 million in 2024.

Credit Facilities

See Note 9, Debt, in the accompanying notes to the condensed consolidated financial statements for further details.

Liquidity and Capital Resources Outlook

As of September 30, 2025, the Company had cash and cash equivalents on hand of $15.4 million, as well as our lines of credit and other debt instruments. Other than as described above, the Company has no financial guarantees, outstanding debt or other lease agreements or arrangements that could trigger a requirement for an early payment or that could change the value of our assets. The Company believes that it has sufficient liquidity to satisfy its needs through at least the next 12 months, based on the Company’s financial position as of September 30, 2025. The Company’s near-term cash requirements during 2025 are primarily related to the funding of the Company’s operations.

As of September 30, 2025, $11.2 million of the Company’s cash and cash equivalents noted above were held in the U.S. and the remainder were held outside the U.S., primarily in Philippines ($0.9 million), Australia ($0.7 million), Singapore ($0.6 million), the U.K. ($0.5 million), Hong Kong ($0.5 million), and India ($0.3 million). The majority of the Company’s offshore cash is available to it as a source of funds, net of any tax obligations or assessments.

Off-Balance Sheet Arrangements

As of September 30, 2025, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Contingencies

From time to time in the ordinary course of business, the Company is subject to compliance audits by U.S. federal, state, local, and foreign government regulatory, tax, and other authorities relating to a variety of regulations, including wage and hour laws, unemployment taxes, workers' compensation, immigration, and income, value-added, and sales taxes. The Company is also subject to, from time to time in the ordinary course of business, various claims, lawsuits, and other complaints from, for example, clients, candidates, suppliers, landlords for both leased and subleased properties, former and current employees, and regulators or tax authorities. Periodic events and management actions such as business reorganization initiatives can change the number and types of audits, claims, lawsuits, contract disputes, or complaints asserted against the Company. Such events can also change the likelihood of assertion and the behavior of third parties to reach resolution regarding such matters.

The economic conditions in the recent past have given rise to many news reports and bulletins from clients, tax authorities, and other parties about changes in their procedures for audits, payment, plans to challenge existing contracts, and other such matters aimed at being more aggressive in the resolution of such matters in their own favor. The Company believes that it has appropriate procedures in place for identifying and communicating any matters of this type, whether asserted or likely to be asserted, and it evaluates its liabilities in light of the prevailing circumstances. Changes in the behavior of third parties could cause the Company to change its view of the likelihood of a claim and what might constitute a trend. Employment laws vary in the markets in which we operate, and in some cases, employees and former employees have extended periods during which they may bring claims against the Company.

For matters that reach the threshold of probable and estimable, the Company establishes reserves for legal, regulatory, and other contingent liabilities. The Company did not have any reserves as of September 30, 2025 and December 31, 2024. Although the outcome of these matters cannot be determined, the Company believes that none of the currently pending matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, results of operations or liquidity.

Recent Accounting Pronouncements

See Note 3 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a full description of relevant accounting pronouncements, including the respective expected dates of adoption.

Critical Accounting Policies and Estimates

See “Critical Accounting Estimates” under Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on March 14, 2025 and incorporated by reference herein. There were no changes to the Company’s critical accounting policies or estimates during the nine months ended September 30, 2025.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains statements that the Company believes to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Form 10-Q, including statements regarding the Company’s future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,” “believe,” and similar words, expressions, and variations of these words and expressions are intended to identify forward-looking statements. All forward-looking statements are subject to important factors, risks, uncertainties, and assumptions, including industry and economic conditions that could cause actual results to differ materially from those described in the forward-looking statements. Such factors, risks, uncertainties, and assumptions include, but are not limited to, (1) global economic fluctuations, (2) the Company’s ability to successfully achieve its strategic initiatives, (3) risks related to potential acquisitions or dispositions of businesses by the Company, (4) risks related to the market price of the Company’s common stock relative to the value paid pursuant to the Merger Agreement, (5) unexpected costs, charges or expenses resulting from the Merger, (6) potential adverse reactions or changes to business relationships resulting from the completion of the Merger, (7) risks related to the inability of the combined company to successfully operate as a combined business, (8) risks associated with the possible failure to realize certain anticipated benefits of the proposed Merger, including with respect to future financial and operating results, (9) risks related to fluctuations in the Company’s operating results from quarter to quarter due to various factors such as rising inflationary pressures and interest rates, (10) the loss of or material reduction in our business with any of the Company’s largest customers, (11) the ability of clients to terminate their relationship with the Company at any time, (12) competition in the Company’s markets, (13) the negative cash flows and operating losses that may recur in the future, (14) risks relating to how future credit facilities may affect or restrict our operating flexibility, (15) risks associated with the Company’s investment strategy, (16) risks related to international operations, including foreign currency fluctuations, political events, trade wars, natural disasters or health crises, including the Russia-Ukraine war, and potential conflict in the Middle East, (17) the Company’s dependence on key management personnel, (18) the Company’s ability to attract and retain highly skilled professionals, management, and advisors, (19) the Company’s ability to collect accounts receivable, (20) the Company’s ability to maintain costs at an acceptable level, (21) the Company’s heavy reliance on information systems and the impact of potentially losing or failing to develop technology, (22) risks related to providing uninterrupted service to clients, (23) the Company’s exposure to employment-related claims from clients, employers and regulatory authorities, current and former employees in connection with the Company’s business reorganization initiatives, and limits on related insurance coverage, (24) the Company’s ability to utilize net operating loss carryforwards, (25) volatility of the Company’s stock price, (26) the impact of government regulations and deregulation efforts, (27) restrictions imposed by blocking arrangements, (28) risks related to the use of new and evolving technologies, (29) the adverse impacts of cybersecurity threats and attacks, (30) risks associated with our real estate ownership, (31) risks associated with the costs and availability of supplies and materials due to trade tariffs or other factors affecting the commodities and materials we use in our business, (32) risks associated with liability claims and disputes, (33) risks associated with restrictions on our operations caused by our indebtedness, (34) risks associated with the shutdown of the U.S. federal government, (35) risks associated with changes in tax laws or relations, and (36) those risks set forth in “Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.” The foregoing list should not be construed to be exhaustive. Actual results could differ materially from the forward-looking statements contained in this Form 10-Q. In view of these uncertainties, you should not place undue reliance on any forward-looking statements, which are based on our current expectations. These forward-looking statements speak only as of the date of this Form 10-Q. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the design and operation of the Company’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2025. However, such controls and procedures are designed only to provide reasonable assurance. There is no complete assurance that these controls and procedures will operate effectively under all circumstances.

Management has not yet determined whether the effectiveness of ADT’s controls will be assessed in 2025.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the nine months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, except as noted below.

On August 22, 2025 we completed the merger with Star Operating Companies ("SOC"). As a result of this transaction, we have begun integrating the operations, systems, and internal controls of SOC into our existing processes. This integration is ongoing and includes aligning accounting policies, consolidating financial reporting systems, and implementing our internal control framework across the combined entity. These activities represent a change to our internal control over financial reporting. While we do not believe these changes have materially affected our internal control over financial reporting at this time, the integration process may result in additional changes in future periods.

In evaluating us and our common stock, we urge you to carefully consider the risks and other information in this Quarterly Report on Form 10-Q, the Risk Factors disclosed in Item 1A. of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, that could materially and adversely affect our results of operations or financial condition. In addition, various risk factors applicable to us and our business are described under the headings “Risks Relating to the Merger” and “Risks Relating to the Combined Company” in the joint proxy statement/prospectus filed with the SEC on July 23, 2025, which forms part of our Registration Statement on Form S-4 (File No. 333-2888531), which risk factors are incorporated by reference into this Quarterly Report on Form 10-Q.

Risks Related to Our Business and Industry

Our business strategy includes acquisitions, and acquisitions entail numerous risks, including the risk of management diversion and increased costs and expenses, all of which could negatively affect the Company’s profitability.

Our business strategy includes, among other things, strategic acquisitions, as well as potential opportunistic acquisitions and strategic actions with respect to our existing investments, such as restructurings, strategic partnerships and collaborations, and activist activity. This overall acquisition and investment strategy entails several potential risks, including diverting management’s attention from other business concerns, incurring substantial legal and other advisory fees (including, in the case of activist activity, proxy solicitation fees), and financing such acquisitions with additional equity and/or debt. Additionally, to the extent that we are already invested in the entities that are the subject of our acquisitions and other activities, our actions may be temporarily disruptive to the value of the investments, which could adversely affect our financial condition.

In addition, once completed, acquisitions may entail further risks, including: unanticipated costs and liabilities of the acquired businesses, including environmental liabilities, that could materially adversely affect our results of operations. These include: increased regulatory compliance relating to the acquired business; difficulties in assimilating acquired businesses, their personnel and their financial reporting systems, which would prevent the expected benefits from the transaction from being realized within the anticipated timeframe; negative effects on existing business relationships with suppliers and customers; and loss of key employees of the acquired businesses. In addition, any future acquisitions could cause us to incur additional debt and related interest expense, as well as contingent liabilities and amortization expense related to intangible assets, which could have a material adverse effect on our business, financial condition, operating results and cash flows, or the issuance of additional equity, which could dilute our stockholder’s equity interests.

There can be no assurance that we will be able to negotiate any pending acquisition successfully, receive the required approvals for any acquisition or otherwise conclude any acquisition successfully, or that any acquisition will achieve the anticipated synergies or other positive results. Overall, if our acquisition strategy is not successful or if acquisitions are not well integrated into our existing operations, the Company’s profitability, business, and financial condition could be negatively affected.

We may sustain losses in our investment portfolio, which could have an adverse effect on our results of operations, financial condition and liquidity.

A portion of our assets consists of equity securities which are adjusted to fair value each period, as well as other investments. An adverse change in economic conditions or setbacks to such companies, their operations or business models may result in a decline in the value of these investments. Such declines in value are principally recognized in net income or loss in accordance with GAAP. Any adverse changes in the financial markets and declines in value of our investments may result in additional losses and could have an adverse effect on our results of operations, financial condition and liquidity.

We are subject to particular risks associated with real estate ownership, which could result in unanticipated losses or expenses.

Our business is subject to many risks that are associated with the ownership of real estate. Risks that are associated with real estate acquisition and ownership include, without limitation, the following:

• general liability, property and casualty losses, some of which may be uninsured;
• the inability to purchase or sell our assets rapidly due to the illiquid nature of real estate and the real estate market;
• leases which are not renewed or are renewed at lower rental amounts at expiration;
• the default by a tenant or guarantor under any lease;
• costs relating to maintenance and repair of our facilities and the need to make expenditures due to changes in governmental regulations, such as the Americans with Disabilities Act or remediation of unknown environmental hazards; and
• acts of God and acts of terrorism affecting our properties.

Operating results may be adversely affected by changes in the costs and availability of supplies and materials.

Our Building Solutions operating results could be adversely affected by changes in the cost and availability of raw materials. Prices and availability of raw materials used to manufacture our products can change significantly due to fluctuations in supply and demand. Additionally, availability of the raw materials used to manufacture our products may be limited at times resulting in higher prices and/or the need to find alternative suppliers. Both KBS’s and EdgeBuilder’s major material components are dimensional lumber and wood sheet products, which include plywood and oriented strand board. Lumber costs are subject to market fluctuations. Furthermore, the cost of raw materials may also be influenced by transportation costs. It is not certain that any price increases can be passed on to our customers without affecting demand or that limited availability of materials will not impact our production capabilities. The state of the financial and housing markets may also impact our suppliers and affect the availability or pricing of materials. The inability of KBS or EdgeBuilder to raise the price of their our products in response to increases in prices of raw materials or to maintain a proper supply of raw materials could have an adverse effect on their our revenue and earnings.

Trade tariffs or other factors affecting the commodities and materials we use in our business could have a material and adverse impact on our results of operations, financial condition and cash flows.

The recently imposed trade tariffs have caused disruptions in global trade, which could negatively impact the costs of materials we use in our business and the demand for our products. Many of the commodities and materials we use in our business are imported and exported. Existing and future trade tariffs, import duties and quotas could also materially increase our costs of procuring the commodities and materials we use and disrupt the markets for the products we handle, which in turn could have a material adverse effect on our financial position, results of operations and cash flows.

We spend considerable time and money complying with federal and state laws, regulations, and other rules which may fluctuate, and if we are unable to fully comply with such laws, regulations, and other rules, we could face substantial penalties.

Our Building Solutions businesses are subject to various federal, state and local laws and regulations. In recent years, a number of new laws and regulations have been adopted, and there has been expanded enforcement of certain existing laws and regulations by federal, state, and local agencies. These laws and regulations, and related interpretations and enforcement activity, may change as a result of a variety of factors, including political, economic or social events. Changes in, expanded enforcement of, or adoption of new federal, state or local laws and regulations governing minimum wage or living wage requirements; the classification of exempt and non-exempt employees; the distinction between employees and contractors; other wage, labor or workplace regulations; healthcare; data protection and cybersecurity; the sale and pricing of some of our products; transportation; logistics; supply chain transparency; taxes; unclaimed property; energy costs and consumption; or environmental matters could increase our costs of doing business or impact our operations.

We maintain a compliance program to identify and correct any compliance issues and remain in compliance with all applicable laws, to train employees, to audit and monitor our operations, and to achieve other compliance goals. Like most companies with compliance programs, we occasionally discover compliance concerns. In such cases, we take responsive action, including corrective measures when necessary. There can be no assurance that our responsive actions will insulate us from liability associated with any detected compliance concerns.

If our past or present operations are found to be in violation of any of the laws, regulations, rules, or policies described above or the other laws or regulations to which we or our customers are subject, we may be subject to civil and criminal penalties, damages, fines, or the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment, or restructuring of our operations could adversely affect our ability to operate our business and our financial results. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business, and damage our reputation. Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, regulations, rules, and policies, the risks cannot be entirely eliminated. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security, and fraud laws may prove costly.

Our long-term results depend upon our ability to improve existing products and services and develop, introduce, and market new products and services successfully.

Our business is dependent on the continued improvement of our existing products and services and our development of new products and services utilizing our current or other potential future technology. As we introduce new products and services or refine, improve, or upgrade versions of existing products and services, we cannot predict the level of market acceptance or the amount of market share these products and services will achieve, if any. We cannot be certain that we will not experience material delays in the introduction of new products or services in the future.

We generally sell our products and services in industries that are characterized by rapid technological changes, frequent new product introductions, and changing industry standards. If we do not develop new products and services and product enhancements based on technological innovation on a timely basis, our products and services may become obsolete over time and our revenues, cash flow, profitability, and competitive position may suffer. Even if we successfully innovate and develop new products, services and product enhancements, we may incur substantial costs in doing so, and our profitability may suffer.

Our goodwill and other long-lived assets are subject to potential impairment that could negatively impact our earnings.

A significant portion of our assets consists of goodwill and other long-lived assets, the carrying value of which may be reduced if we determine that those assets are impaired. At September 30, 2025, goodwill and net intangible assets represented $7.8 million, or 6.6% of our total assets, and at December 31, 2024, goodwill and net intangible assets represented $8.2 million, or 15.6% of our total assets. In addition, net property and equipment assets totaled $18.4 million and $0.2 million, or 15.5% and 0.4%, respectively, of our total assets at those dates. If actual results differ from the assumptions and estimates used in our goodwill and long-lived asset valuation calculations, we could incur impairment charges, which could negatively impact our earnings.

We review our reporting units for potential goodwill impairment annually or more often if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In addition, we test the recoverability of long-lived assets if events or circumstances indicate the carrying values may not be recoverable. Recoverability of long-lived assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. We conduct impairment testing based on our current business strategy in light of present industry and economic conditions, as well as future expectations. There are numerous risks that may cause the fair value of a reporting unit to fall below its carrying amount and/or the value of long-lived assets to not be recoverable, which could lead to the measurement and recognition of goodwill and/or long-lived asset impairment. These risks include, but are not limited to, significant negative variances between actual and expected financial results, lowered expectations of future financial results, failure to realize anticipated synergies from acquisitions, adverse changes in the business climate, and the loss of key personnel. If we are not able to achieve projected performance levels, future impairments could be possible, which could negatively impact our earnings.

Due to the nature of our building solutions business segment, many of our expenses are fixed costs and if there are decreases in demand for products, it may adversely affect operating results.

Many of our building solutions business segment expenses, particularly those relating to properties, capital equipment, and certain manufacturing overhead items, are fixed in the short term. Reduced demand for products causes fixed production costs to be allocated across reduced production volumes, which may adversely affect gross margins and profitability.

Due to the nature of the work we and our subsidiaries perform, we may be subject to significant liability claims and disputes.

We and our wholly owned subsidiaries engage in services that can result in substantial injury or damages that may expose us to legal proceedings, investigations and disputes. For example, in the ordinary course of our business, we may be involved in legal disputes regarding personal injury and wrongful death claims, employee or labor disputes, professional liability claims, and general commercial disputes, as well as other claims. An unfavorable legal ruling against us or our subsidiaries could result in substantial monetary damages. Although we have adopted a range of insurance, risk management, safety, and risk avoidance programs designed to reduce potential liabilities, there can be no assurance that such programs will protect us fully from all risks and liabilities. If we sustain liabilities that exceed our insurance coverage or for which we are not insured, it could have a material adverse impact on our results of operations and financial condition.

Risks Related to Indebtedness

Any indebtedness incurred by the Company could restrict our operations and make us more vulnerable to adverse economic conditions.

Any indebtedness we incur in the future could have important consequences for us and our stockholders. Our indebtedness could:

• increase our vulnerability to adverse economic and competitive pressures in our industry;
• place us at a competitive disadvantage compared to our competitors that have less debt;
• limit our flexibility in planning for, or reacting to, changes in our business and our industry; and
• limit our ability to borrow additional funds on terms that are acceptable to us or at all.

If we are unable to generate or borrow sufficient cash to make payments on our indebtedness, our financial condition would be materially harmed, our business could fail, and stockholders may lose all of their investment.

To the extent we incur indebtedness in the future, our ability to make scheduled payments on or to refinance our obligations will depend on our financial and operating performance, which will be affected by economic, financial, competitive, business, and other factors, some of which are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations to service our indebtedness or to fund our other liquidity needs. If we are unable to meet our debt obligations or fund our other liquidity needs, we may need to restructure or refinance all or a portion of our indebtedness on or before maturity or sell certain of our assets. We cannot assure you that we will be able to restructure or refinance any of our indebtedness on commercially reasonable terms, if at all, which could cause us to default on our debt obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

Risks Related to our Common Stock and our Company Preferred Stock

Payment of dividends on our common stock is prohibited unless we have declared and paid (or set apart for payment) full accumulated dividends on the Series A Preferred Stock, which also has a significant liquidation value.

Unless full cumulative dividends on our preferred stock have been, or contemporaneously are, declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods, no dividends (other than a dividend in shares of common stock or other shares of stock ranking junior to the Series A Preferred Stock (as defined herein) as to dividends and upon liquidation) may be declared and paid or declared and set apart for payment on our common stock, nor may any shares of common stock be redeemed, purchased or otherwise acquired for any consideration by us. To the extent dividends are not paid on our preferred stock, cumulative dividends accrue as part of the liquidation value of our preferred stock, which has a liquidation value of $10.00 per share at issuance. Dividends on our preferred stock are payable out of amounts legally available therefor at a rate equal to 10.0% per annum per $10.00 of stated liquidation preference per share, or $1.00 per share of our preferred stock per year. Dividends on our preferred stock are only payable in cash. As of September 30, 2025, there were 2,690,637 shares of our Series A Preferred Stock outstanding.

If we fail to pay dividends on our Series A Preferred Stock for six or more consecutive quarters, holders of our Series A Preferred Stock will be entitled to elect two additional directors to our board of directors.

To the extent dividends are not paid on the Series A Preferred Stock in accordance with their terms, cumulative dividends will accrue as part of the liquidation value of the Series A Preferred Stock. Whenever dividends on any shares of Series A Preferred Stock are in arrears for six or more consecutive quarters, then the holders of those shares together with the holders of all other series of preferred stock equal in rank with the Series A Preferred Stock upon which like voting rights have been conferred and are exercisable, will be entitled to vote separately as a class for the election of a total of two additional directors to our board of directors. Holders of our common stock will not be entitled to vote for or against such additional directors.

As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze and compare our results of operations and financial prospects.

Currently, we are a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act. As a “smaller reporting company,” we are able to provide simplified executive compensation disclosures in our filings and have certain other decreased disclosure obligations in our filings with the SEC, including being required to provide only two years of audited financial statements in annual reports. Consequently, it may be more challenging for investors to analyze our results of operations and financial prospects.

Furthermore, we are a non-accelerated filer as defined by Rule 12b-2 of the Exchange Act, and, as such, are not required to provide an auditor attestation of management’s assessment of internal control over financial reporting, which is generally required for SEC reporting companies under Section 404(b) of the Sarbanes-Oxley Act. Because we are not required to, and have not, had our auditor provide an attestation of our management’s assessment of internal control over financial reporting, a material weakness in internal controls may remain undetected for a longer period.

Our stockholder rights plan, or “poison pill,” includes terms and conditions which could discourage a takeover or other transaction that stockholders may consider favorable.

On October 25, 2018, stockholders of record at the close of business on that date received a dividend of one right (a “Right”) for each outstanding share of common stock. Each Right entitles the registered holder to purchase one one-hundredth of a share of the Company’s Series B Junior Participating Preferred Stock (“Series B Preferred Stock”) for a purchase price of $3.50. The description and terms of the Rights are set forth in the Rights Agreement, which has previously been filed as an exhibit to our public reports.

The Rights Agreement imposes a significant penalty upon any person or group that acquires 4.99% or more (but less than 50%) of our then-outstanding common stock without the prior approval of our board of directors. A person or group that acquires shares of our common stock in excess of the applicable threshold, subject to certain limited exceptions, is called an “Acquiring Person.” Any rights held by an Acquiring Person are void and may not be exercised. The Rights will not be exercisable until the earlier of ten days after a public announcement by us that a person or group has become an Acquiring Person and ten business days (or a later date determined by our board of directors) after a person or group begins a tender or an exchange offer that, if completed, would result in that person or group becoming an acquiring person. On the date (if any) that the Rights become exercisable (the “Distribution Date”), each Right would allow its holder to purchase one one-hundredth of a share of the Company’s Series B Preferred Stock for a purchase price of $3.50. In addition, if a person or group becomes an Acquiring Person after the Distribution Date or already is an Acquiring Person and acquires more shares after the Distribution Date, all holders of Rights, except the Acquiring Person, may exercise their rights to purchase a number of shares of the common stock (in lieu of preferred stock) with a market value of twice the Exercise Price, upon payment of the purchase price.

The Rights will expire on the earliest of (i) October 15, 2027, or such earlier date as of which our board of directors determines that the Rights Agreement is no longer necessary for the preservation of our tax assets, (ii) the time at which the rights are redeemed, (iii) the time at which the rights are exchanged, (iv) the effective time of the repeal of Section 382 of the Code or any successor statute if our board of directors determines that the Rights Agreement is no longer necessary for the preservation of our tax assets, and (v) the first day of our taxable year in which our board determines that no NOLs or other tax assets may be carried forward.

The Rights have certain anti-takeover effects, including potentially discouraging a takeover that stockholders may consider favorable. The Rights will cause substantial dilution to a person or group that attempts to acquire us on terms not approved by the board of directors.

Changes in tax laws or regulations may have a material adverse effect on our cash flow, business, financial condition, results of operations or prospects.

New tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted differently, changed, repealed or modified at any time. Any such enactment, interpretation, change, repeal or modification could adversely affect us, possibly with retroactive effect. For example, the U.S. government recently enacted legislation commonly referred to as the One Big Beautiful Bill Act, which (along with prior U.S. federal tax reform legislation) has resulted in significant changes to the taxation of business entities, including, among other changes, the imposition of minimum taxes and excise taxes, changes to the taxation of income derived from international operations, changes in the deduction and amortization of research and development expenditures, and limitations on the deductibility of business interest. Future guidance from the Internal Revenue Service and other tax authorities with respect to these and other legislation may affect us, and certain aspects of such legislation could be repealed or modified in future legislation or sunset in future years. In addition, it is uncertain if and to what extent various states will conform to federal law. We continue to evaluate the impact that these and other tax reforms may have on our business.

Risks Associated with the Shutdown of the United States Government.

The United States federal government has been shut down since October 1, 2025. When the government is not funded, non-essential federal employees are furloughed and services are limited or curtailed. A prolonged shutdown may lead to broader economic uncertainty and financial market volatility. These conditions could negatively affect our operations, and overall demand for our services and products.

A prolonged shutdown could slow permitting and regulatory approvals, reduce demand from contractors and public-sector customers, and result in hiring freezes or reduced hiring activity among clients that rely on federal contracts or are otherwise affected by economic uncertainty.

Further, a prolonged or future shutdown of the U.S. federal government could materially impact the operations of the SEC. For example, the SEC announced that during the current/ U.S. federal government shutdown, it will not declare registration statements effective. In the event of an extended shutdown, the SEC may operate with limited staff or suspend certain functions altogether, which could delay the review or effectiveness of our filings, including registration statements or other financing-related disclosures. Such delays could adversely affect our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue to fund our operations.

While we strive to mitigate these risks through contingency planning and industry government affairs efforts, the ultimate impact of any government shutdown is difficult to predict and may be outside our control. Any material adverse effects resulting from a government shutdown could have a negative impact on our business, financial position, and results of operations.