BGSF · Read the filing

Item 7. Management’s Discussion and Analysis of Financial Condition andResults of Operations.

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

Our historical financial information may not be indicative of our future performance.

Company Overview

We provide workforce solutions through the Property Management (apartment communities and commercial buildings) segment that operates primarily within the United States of America (“U.S.”). With the acquisitions of BG Personnel, LP and B G Staff Services Inc., we laid the foundation for our entrance into the Property Management (“PM”) staffing industry. Through a series of acquisitions, we diversified into the professional services markets, which included consulting and staffing solutions for both information technology and finance and accounting as well as managed solutions services, which included both workforce solutions and fixed fee arrangements. We have continuing operations in one industry segment, Property Management, and have discontinued operations the Light Industrial and Professional segments.

On May 8, 2024, the Company announced that our Board had initiated a process to evaluate potential strategic alternatives and engaged financial advisors in an endeavor to maximize shareholder value (“Strategic alternatives review”). During December 2024, the Company announced a cost restructuring plan as part of the strategic review process. On June 14, 2025, the Company entered into an Equity Purchase Agreement with INSPYR Solutions Intermediate, LLC, pursuant to which the Company sold substantially all of the outstanding equity and net assets pertaining to the Professional segment (“BGSF Professional”) on September 8, 2025. The BGSF Professional financial results for periods prior to the sale have been reflected as discontinued operations in the Unaudited Consolidated Financial Statements, see “Note 4 - Discontinued Operations.”

The Property Management segment provides office and maintenance talent in 44 states and D.C., to property management companies responsible for the apartment communities’ and commercial buildings’ day-to-day operations.

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

Results of Operations

The following tables summarize key components of our results from continuing operations for the periods indicated, both in dollars and as a percentage of revenues, and have been derived from our consolidated financial statements.

Fiscal Years Ended

(dollars in thousands)

Contingent consideration adjustment (450) — —

Loss before income taxes from continuing operations (13,414) (10,788) (2,906)

Income tax benefit from continuing operations 1,881 2,084 831

Net loss from continuing operations $ (11,533) $ (8,704) $ (2,075)

Fiscal Years Ended

Selling, general, and administrative expenses 44.1 41.1 36.3

Contingent consideration adjustment (0.5) — —

Depreciation and amortization 1.7 1.3 1.0

Operating (loss) income (9.6) (5.6) 2.5

Interest expense, net (4.8) (4.7) (4.8)

Loss before income taxes from continuing operations (14.4) (10.3) (2.3)

Income tax benefit from continuing operations 2.1 2.0 0.7

Net loss from continuing operations (12.3) % (8.3) % (1.6) %

Fifty-two Week Fiscal Year Ended December 28, 2025 (Fiscal 2025) Compared with Fifty-two Week Fiscal Year Ended December 29, 2024 (Fiscal 2024)

Revenues:

Fiscal Years Ended

(dollars in thousands)

Gross profit percentage 35.7 % 36.8 %

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

Gross Profit: Gross profit decreased approximately $5.1 million (13.1%) which is in line with revenues with a partial offset by higher permanent placement business that have no cost of service.

Selling, General, and Administrative Expenses: Selling, general and administrative (“SGA”) expenses decreased $1.8 million (4.1%) primarily due to reduced compensation costs on less headcount offset by an increase in strategic alternatives review. The components of SGA expense are detailed in the following table:

Fiscal Years Ended

Amount % of Revenue Amount % of Revenue $Change %Change

(dollars in thousands)

General and administrative:

Contingent consideration adjustment: As a result of the certain business developments in Fiscal 2025, the Company recognized a $0.5 million contingent consideration adjustment related to the sale of BGSF Professional, see “Note 4 - Discontinued Operations.”

Depreciation and Amortization: Depreciation and amortization charges increased approximately $0.2 million (16.2%) primarily due to higher amortization of intangible assets for computer software depreciation.

Interest Expense, net: Interest expense, net decreased $0.4 million (8.3%) primarily from paying the balance on the amended and restated credit agreement with BMO, using the proceeds from the sale of BGSF Professional, which was partially offset by the write off of amortization of debt issuance costs from the BMO May 2025 Waiver and Amendment.

Income Tax Benefit: Income tax benefit decreased $0.2 million (9.7%) primarily due to an increased net loss before taxes and a lower effective tax rate in Fiscal 2025, which was partially offset by a $1.5 million valuation allowance recorded during Fiscal 2025 against certain net deferred tax assets generated in the sale of BGSF Professional and lower state tax expense.

Fifty-two Week Fiscal Year Ended December 29, 2024 (Fiscal 2024) Compared with Fifty-three Week Fiscal Year Ended December 31, 2023 (Fiscal 2023)

Revenues:

Fiscal Years Ended

(dollars in thousands)

Gross profit percentage 36.8 % 39.8 %

Revenues: Revenues decreased approximately $20.7 million (16.5%). The decrease was primarily due to a reduction in billed hours, which was driven by a combination of increased competition in certain markets and lower demand from cost pressures at the property management companies.

Gross Profit: Gross profit decreased approximately $11.4 million (22.9%). The decrease was primarily due to to a reduction in revenue, which was driven by a combination of increased competition in certain markets, lower demand from cost pressures at the property management companies and lower permanent placement business, which has no cost of service.

Selling, General, and Administrative Expenses: SGA expenses decreased $2.5 million (5.5%) versus prior year, primarily due to expense reduction and cost control efforts in response to the decline in revenues. The components of SGA expense are detailed in the following table:

Fiscal Years Ended

Amount % of Revenue Amount % of Revenue $Change %Change

(dollars in thousands)

General and administrative:

Strategic alternatives review 962 0.9 — — 962 — %

Depreciation and Amortization: Depreciation and amortization charges were flat due to the increase in software amortization that was partially offset by the decrease in computer equipment.

Interest Expense, net: Interest expense, net decreased $1.1 million (17.7%) primarily due to reduced accretion in Fiscal 2024 on contingent consideration associated with Arroyo Consulting and the lower average balance on the Revolving Facility, which was partially offset by the increase in debt issuance costs.

Income Tax Benefit: Income tax benefit increased $1.3 million (150.8%) primarily due to a lower taxable loss in Fiscal 2023.

Liquidity and Capital Resources

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

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

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

A summary of our working capital, operating, investing, and financing activities are shown in the following table:

Fiscal Years Ended

(dollars in thousands)

Net cash (used in) provided by continuing operations:

Cash and cash equivalents, beginning of year 32 — —

Net change in cash and cash equivalents, continuing operations $ 19,018 $ 32 $ —

(1)The 2023 working capital amount includes the movement of the balances from long-term to current liabilities related to the amended credit agreement with BMO Harris Bank, N.A. (“BMO”) which would have matured on July 16, 2024.

Operating Activities

Cash provided by operating activities consists of net loss adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, interest expense, and provision for credit losses. The primary drivers of cash inflows and outflows are accounts receivable, transition services payable, other current assets, and accrued payroll and expenses.

During Fiscal 2025, net cash provided by continuing operating activities was $0.1 million, a decrease of $19.3 million compared with $19.4 million net cash provided by continuing operating activities for Fiscal 2024. This decrease is primarily attributable to decreased receipts on accounts receivable, increased payments on accrued payroll and expenses, increased payments on transition services payable, the recording of an escrow receivable related to the sale of BGSF Professional, and decreased payments on other current assets.

During Fiscal 2024, net cash provided by continuing operating activities was $19.4 million, an increase of $6.5 million compared with $12.9 million net cash provided by continuing operating activities for Fiscal 2023. This increase is primarily attributable to increased receipts on accounts receivable and decreased payments on accrued payroll and expenses.

During Fiscal 2023, net cash provided by continuing operating activities was $12.9 million, an increase of $16.2 million compared with $3.3 million net cash used in continuing operating activities for Fiscal 2022. This increase is primarily attributable to receipts on accounts receivable, payments on accrued payroll and expenses, and payments of deferred employer FICA for the CARES Act in other current liabilities in Fiscal 2022.

Investing Activities

Cash provided by investing activities consists primarily of cash received for business sold and capital expenditures.

In Fiscal 2025, cash provided by investing activities from continuing operations consists primarily of net proceeds from the sale of BGSF Professional of approximately for $91.4 million, which was partially offset by minimal capital expenditures.

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

In Fiscal 2023, we made capital expenditures of $2.1 million from continuing operations mainly related to continued IT improvements and for software and computer equipment purchased in the ordinary course of business.

Financing Activities

Cash flows from financing activities consisted principally of borrowings and repayments under our credit agreement, special cash dividends, repurchases of our common stock, and contingent consideration paid.

For Fiscal 2025, we paid off our credit agreement of $42.9 million and the convertible unsecured promissory note of $4.4 million. We paid $1.4 million of contingent consideration related to Arroyo Consulting, we paid $22.4 million in cash dividends on our common stock, and repurchased $1.5 million of our common stock.

For Fiscal 2024, we reduced our credit agreement by $15.9 million, we disbursed $1.6 million in cash dividends on our common stock, and we paid $1.3 million in debt issuance costs.

For Fiscal 2023, we disbursed $6.5 million in cash dividends on our common stock and we reduced our Credit Agreement by $4.7 million.

Credit Agreements

On September 8, 2025, we paid the balance on the existing Term Loan and Revolving Facility using the proceeds from the sale of BGSF Professional.

On July 16, 2019, we entered into a Credit Agreement. We entered into four amendments from August 18, 2022 through May 19, 2023, which changed the interest rate component from LIBOR (“London Interbank Offered Rate”) to the Secured Overnight Financing Rate (“SOFR”), exercised the option to borrow $40 million, required 2.5% of the original principal balance of the new term loan, permitted a foreign entity acquisition, modified the distributions terms, and increased a revolving credit facility by $6.0 million.

On March 12, 2024, the Credit Agreement was amended and restated (the “Restated Agreement”), which provided for a Revolving Facility which permitted us to borrow funds in an aggregate amount up to $40 million. The Restated Agreement also provided for a term loan commitment, which permitted us to borrow funds from time to time (the “Term Loan”). In July 2024, we exercised the option to borrow on a delayed draw term loan of $4.3 million related to payments on the Arroyo Consulting Acquisition's working capital “true up”, hold backs, and year one contingent consideration. On November 6, 2024, we entered into the First Amendment to Restated Agreement, which reduced the availability on the Revolving Facility an aggregate amount up to $20 million.

On March 13, 2025, we entered into a Waiver and Second Amendment to Restated Agreement in which the lenders unanimously waived noncompliance with the covenants as of December 29, 2024 and March 30, 2025 and a new definition of

Applicable Margin, a reduction of the swing line sublimit to zero, and limiting the aggregate revolving credit borrowings to $8.0 million. On May 7, 2025, we entered into a Waiver and Amendment in which the lenders unanimously waived noncompliance on the requirement of least $2.0 million in cash equity contributions by extending the deadline and adding the option of subordinated debt. On August 4, 2025, we entered into a Waiver and Amendment in which the lenders unanimously waived noncompliance with the foregoing covenants as of June 29, 2025 and that provided that we would finalize and close the sale BGSF Professional no later than September 30, 2025.

We were required to repay the Term Loan in quarterly principal installments equal to 2.5% of the aggregate principal balance. We paid an unused commitment fee on the daily average unused amount of Revolving Facility. Our obligations were secured by a first priority security interest in substantially all our tangible and intangible property. We obtained the waivers described above for the non compliance with the foregoing financial covenants and certain affirmative covenants as of the quarters ended December 29, 2024, March 30, 2025, and June 29, 2025.

Contractual Obligations

The following table summarizes our cash contractual obligations as of December 28, 2025.

Payments due by period

Total Less than 1 year 1–3 years 3–5 years

(dollars in thousands)

Note payable $ 449 $ 449 $ — $ —

Off-Balance Sheet Arrangements

Letter of Credit

In conjunction with a previous acquisition, we entered into a standby letter of credit arrangement, which expired, for purposes of protecting a lessor against default on lease payments. As of December 29, 2024, we had a maximum financial exposure from this standby letter of credit totaling $0.1 million and no liability had been recorded, all of which was considered usage against our Revolving Facility. On September 8, 2025, we assigned the related lease in the sale of BGSF Professional.

Critical Accounting Policies and Estimates

We have identified the policies listed below as critical to our business and the understanding of our results of operations. For a detailed discussion of the application of these and other accounting policies, see Note 2 in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K.

Revenue Recognition

We derive our revenues from continuing operations by providing workforce solutions and placement services. Revenues are recognized when promised solutions are delivered to client partners, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We recognize revenue through the following types of services: workforce solutions and contingent placements.

Intangible Assets

We hold intangible assets with finite lives. Intangible assets with finite useful lives are amortized over their respective estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is realized. We develop and implement software modifications to our information technology infrastructure with direct internal payroll costs and external costs capitalized. Minor upgrades and enhancements to software systems are are expensed in the period incurred as software maintenance and training costs.

Goodwill

Goodwill represents the difference between the enterprise value or consideration exchanged less the fair value of all recognized net asset fair values including identifiable intangible asset values in a business combination. We review goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

Income Taxes

The current provision for income taxes represents estimated amounts payable or refundable on tax returns filed or to be filed for the year. We recognizes any penalties when necessary as part of selling, general and administrative expenses. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts are classified net as noncurrent in the consolidated balance sheets. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. When appropriate, we will record a valuation allowance against net deferred tax assets to offset future tax benefits that may not be realized. We follow the guidance of Accounting Standards Codification (“ASC”) Topic 740, Accounting for Uncertainty in Income Taxes.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements and their potential effect on our results of operations and financial condition, refer to Note 2 in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to certain market risks from transactions we enter into in the normal course of business. Our primary market risk exposure relates to interest rate risk and inflation risks. Through the current period, we have been able to moderate the negative impacts of an inflationary market by adjusting our pricing model.

Interest Rates

At December 28, 2025, we had paid the balance on the existing credit agreement led by BMO using the proceeds from the sale of BGSF Professional. See “Note 11 - Debt” in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K. An increase in interest rates would have no impact on our annual interest expense.

Item 8. Financial Statements and Supplementary Data.

Page

Audited Consolidated Financial Statements of BGSF, Inc.

Consolidated Balance Sheets as of December 28, 2025 and December 29, 2024 39

Notes to Consolidated Financial Statements 45

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of BGSF, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of BGSF, Inc., and its subsidiaries (the “Company”) as of December 28, 2025 and December 29, 2024, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 28, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 28, 2025 and December 29, 2024, and the results of their operations and cash flows for each of the three years in the period ended December 28, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 28, 2025, based on criteria established in 2013 Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 30, 2026 expressed an adverse opinion.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

Assessment of Realizability of Deferred Tax Assets

Critical Audit Matter Description

As disclosed in Note 2 and Note 10 to the consolidated financial statements, the Company recognizes deferred income taxes for tax attributes and for differences between the financial statement and tax carrying amounts of assets and liabilities at enacted statutory tax rates in effect for the years in which the deferred tax liability or asset are expected to be settled or realized. The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for the valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets. Future sources of taxable income are also considered in determining the amount of the recorded valuation allowance. As of December 28, 2025, the Company has deferred tax assets of approximately $9.5 million. Auditing management’s assessment of recoverability of deferred tax assets involved subjective estimation and complex auditor judgment in determining whether sufficient future taxable income, including projected pre-tax income, will be generated to support the realization of the existing deferred tax assets before expiration.

How We Addressed the Matter

We evaluated the assumptions used by the Company to develop projections of future taxable income, including the pre-tax income, by income tax jurisdiction and tested the completeness and accuracy of the underlying data used in the projections. For example, we compared the projections of, and inputs used to calculate pre-tax income with the actual results of prior periods, as well as management’s consideration of current industry and economic trends. We also compared the projections of future pre-tax income with other forecasted financial information prepared by the Company. We also performed a sensitivity analysis on the significant assumption to evaluate how changes in those assumptions would impact the utilization of the deferred tax assets.

We evaluated the methodology and models used in management’s forecasting of the reversal of deferred income tax assets and liabilities in order to determine whether such methodologies were consistent with GAAP, including management’s consideration of definite-lived deferred income tax balances and indefinite-lived deferred income tax balances.

/s/ Whitley Penn LLP

We have served as the Company’s auditor since 2013.

Plano, Texas

March 30, 2026

BGSF, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

ASSETS

Current assets

Cash and cash equivalents $ 19,018 $ 32

Escrow receivable 4,950 —

Current assets of discontinued operations — 24,354

Property and equipment, net 244 608

Other assets

Right-of-use asset - operating leases, net 630 1,083

Noncurrent assets of discontinued operations — 83,694

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable $ 503 $ 80

Transition services payable 3,064 —

Accrued interest — 223

Income taxes payable 76 212

Note payable 449 —

Convertible note — 4,368

Severance payable, current portion 392 —

Lease liabilities, current portion 409 544

Current liabilities of discontinued operations — 11,824

Line of credit (net of debt issuance costs of $0 and $770, respectively) — 5,625

Severance payable, less current portion 100 —

Lease liabilities, less current portion 298 698

Noncurrent liabilities of discontinued operations — 3,072

Commitments and contingencies

(Accumulated deficit) retained earnings (21,874) 11,956

Total liabilities and stockholders’ equity $ 57,837 $ 150,111

The accompanying notes are an integral part of these consolidated financial statements.

BGSF, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share and dividend amounts)

Years ended December 28, 2025, December 29, 2024, and December 31, 2023

Contingent consideration adjustment (450) — —

Loss before income taxes from continuing operations (13,414) (10,788) (2,906)

Income tax benefit from continuing operations 1,881 2,084 831

Income (loss) from discontinued operations:

Loss on sale (3,723) — —

Net (loss) income per share - basic and diluted:

Net loss from continuing operations $ (1.05) $ (0.80) $ (0.20)

Net income (loss) from discontinued operations:

Loss on sale (0.34) — —

Income tax (expense) benefit (0.05) (0.16) 0.20

Net loss per share - basic and diluted $ (1.04) $ (0.31) $ (0.95)

Weighted average shares outstanding:

Cash dividends declared per common share $ 2.00 $ 0.15 $ 0.60

The accompanying notes are an integral part of these consolidated financial statements.

BGSF, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

Years ended December 28, 2025, December 29, 2024, and December 31, 2023

Common Stock

Share-based compensation from continuing operations — — — — 957 — 957

Share-based compensation from discontinued operations — — — — 72 — 72

Issuance of ESPP shares — 54 — — 512 — 512

Exercise of common stock options — 5 — — 30 — 30

Cash dividends declared — — — — — (6,507) (6,507)

Net loss from continuing operations — — — — — (10,223) (10,223)

Share-based compensation from continuing operations — — — — 908 — 908

Share-based compensation from discontinued operations — — — — 81 — 81

Issuance (cancellation) of restricted shares — 51 1 — (1) — —

Issuance of ESPP shares — 61 — — 459 — 459

Exercise of common stock options — 39 — — 262 — 262

Cash dividends declared — — — — — (1,639) (1,639)

Net loss from continuing operations — — — — — (3,338) (3,338)

The accompanying notes are an integral part of these consolidated financial statements.

BGSF, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)

(in thousands)

Years ended December 28, 2025, December 29, 2024, and December 31, 2023

Common Stock

Share-based compensation from continuing operations — — — — 1,006 — 1,006

Share-based compensation from discontinued operations — — — — 47 — 47

Issuance (cancellation) of restricted shares — 157 2 — (2) — —

Issuance of ESPP shares — 31 — — 134 — 134

Cash dividends declared — — — — — (22,400) (22,400)

The accompanying notes are an integral part of these consolidated financial statements.

BGSF, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Years ended December 28, 2025, December 29, 2024, and December 31, 2023

Cash flows from operating activities

Net (income) loss from discontinued operations (3,826) (5,366) 8,148

Loss on sale of discontinued operations 3,723 — —

Loss on disposal of property and equipment 164 3 10

Contingent consideration adjustment (450) — —

Interest expense on note payable 136 — —

Net changes in operating assets and liabilities, net of effects of acquisitions:

Escrow receivable (4,950) — —

Transition services payable 3,064 — —

Severance payable 492 — —

Other current liabilities — — (1,000)

Operating leases (82) (85) (23)

Net cash (used in) provided by continuing operating activities 117 19,385 12,922

Net cash provided by discontinued operating activities 25 4,994 7,464

Net cash (used in) provided by operating activities 142 24,379 20,386

Cash flows from investing activities

Proceeds from business sold 91,528 — —

Net cash used in discontinued investing activities (193) (423) (7,362)

Net cash provided by (used in) investing activities 91,197 (1,640) (9,514)

The accompanying notes are an integral part of these consolidated financial statements.

BGSF, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(in thousands)

Years ended December 28, 2025, December 29, 2024, and December 31, 2023

Cash flows from financing activities

Proceeds from issuance of long-term debt — 4,250 —

Payments of convertible note (4,368) — —

Issuance of shares under the 2013 Long-Term Incentive Plan — 262 (10)

Note payable paid (1,392) — —

Payments of debt issuance costs (29) (1,289) (69)

Repurchase of common stock (1,521) — —

Net cash used in discontinued financing activities — (4,250) (102)

Net change in cash and cash equivalents, continuing operations 18,818 353 —

Cash and cash equivalents, beginning of year, continuing operations 32 — —

Cash and cash equivalents, end of year, continuing operations $ 19,018 $ 32 $ —

Supplemental cash flow information:

Cash paid for interest, net - continuing operations $ 3,266 $ 4,475 $ 4,668

Cash paid for taxes (state), net of refunds

Total cash paid for taxes (state), net of refunds $ 505 $ 685 $ 1,378

The accompanying notes are an integral part of these consolidated financial statements.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF OPERATIONS

BGSF, Inc. (the “Company”) provides workforce solutions through the Property Management segment that operates primarily within the United States of America (“U.S.”). The Property Management segment provides office and maintenance talent in 44 states and D.C., to property management companies responsible for the apartment communities’ and commercial buildings’ day-to-day operations.

On April 24, 2023, the Company acquired substantially all of the assets and assumed certain liabilities of Arroyo Consulting, LLC (“Arroyo Consulting”). See “Note 3 - Acquisitions.”

On May 8, 2024, the Company announced that our board of directors (“Board”) had initiated a process to evaluate potential strategic alternatives and engaged financial advisors in an endeavor to maximize shareholder value (“Strategic alternatives review”). During December 2024, the Company announced a cost restructuring plan as part of the strategic review process. On June 14, 2025, the Company entered into an Equity Purchase Agreement with INSPYR Solutions Intermediate, LLC, pursuant to which the Company sold substantially all of the outstanding equity and assets pertaining to the Professional segment (“BGSF Professional”) on September 8, 2025. The BGSF Professional financial results for periods prior to the sale have been reflected as discontinued operations in the Consolidated Financial Statements, see “Note 4 - Discontinued Operations.”

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of the Company. All significant intercompany transactions and balances have been eliminated in consolidation.

Fiscal Year

The Company has a 52/53 week fiscal year. Fiscal years for the consolidated financial statements included herein are for the 52 weeks ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively, referred as Fiscal 2025, 2024, and 2023, respectively.

Reclassifications

Certain reclassifications have been made to the 2024 and 2023 financial statements to conform with the 2025 presentation.

Management Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the consolidated financial statements include the allowance for credit losses, goodwill, intangible assets, lease liabilities, and income taxes. Additionally, the valuation of share-based compensation expense uses a model based upon interest rates, stock prices, maturity estimates, volatility and other factors. The Company believes these estimates and assumptions are reliable. However, these estimates and assumptions may change in the future based on actual experience as well as market conditions.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Instruments

The Company uses fair value measurements in areas that include, but are not limited to, the allocation of purchase price consideration to tangible and identifiable intangible assets and convertible debt. The carrying values of accounts receivable, accounts payable, accrued payroll and expenses, and other current assets and liabilities approximate their fair values because of the short-term nature of these instruments. The carrying value of bank debt approximates fair value due to the variable nature of the interest rates under the credit agreement with BMO Bank, N.A. (“BMO”) that provided for a revolving credit facility and term loan and current rates available to the Company for debt with similar terms and risk. On September 8, 2025, the Company paid the balance on the existing Term Loan and Revolving Facility using the proceeds from the sale of BGSF Professional. See “Note 11 - Debt.”

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less.

Concentration of Credit Risk

Concentration of credit risk is limited due to the Company’s diverse client partner base and their dispersion across many different industries and geographic locations nationwide. No single client partner accounted for more than 10% of the Company’s accounts receivable as of December 28, 2025 and December 29, 2024 or revenue from continuing operations in fiscal years 2025, 2024, and 2023. Geographic revenue from continuing operations in excess of 10% of the Company’s consolidated revenue in fiscal year 2025 and the related percentage for fiscal years 2024 and 2023 was generated in the following area:

Consequently, weakness in economic conditions in these regions could have a material adverse effect on the Company’s financial position and results of future operations.

Accounts Receivable

The Company extends credit to its client partners in the normal course of business. Accounts receivable represents unpaid balances due from client partners. The Company maintains an allowance for credit losses for expected losses resulting from client partners’ non-payment of balances due to the Company. The Company’s determination of the allowance for uncollectible amounts is based on management’s judgments and assumptions, including general economic conditions, portfolio composition, historical credit losses, evaluation of credit risk related to certain individual client partners and the Company’s ongoing examination process. During Fiscal 2025 and Fiscal 2024, the Company identified additional risk pools related to the Property Management segment, which increased the estimate of expected credit losses. The additional risk pool and increased expected credit losses that were identified during 2024 have been resolved. Receivables are written off after they are deemed to be uncollectible after all reasonable means of collection have been exhausted. Recoveries of receivables previously written off are recorded as income when received.Changes in the allowance for credit losses from continuing operations are as follows (in thousands):

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and Equipment

The Company depreciates the cost of property and equipment over the estimated useful lives of the assets using the straight-line method ranging from five to seven years. The costs of leasehold improvements are amortized over the shorter of the estimated useful life or lease term. The cost of normal maintenance and repairs is charged to operating expenses as incurred. Material expenditures that increase the life of an asset are capitalized and depreciated over the estimated remaining useful life of the asset. The cost of properties sold, or otherwise disposed of, and the related accumulated depreciation or amortization, are removed from the accounts, and any gains or losses are reflected in current operations.

Deposits

The Company maintains guaranteed costs policies for workers’ compensation coverage in monopolistic states and minimal loss retention coverage in all other states. Under these policies, the Company is required to maintain refundable deposits of $1.8 million, which are included in Deposits in the accompanying consolidated balance sheets, as of December 28, 2025 and December 29, 2024, respectively.

Software as a Service

The Company capitalizes direct costs incurred in cloud computing implementation costs from hosting arrangements, which are categorized as long-lived assets, and are reported as a Software as a service in the accompanying consolidated balance sheets. All other internal-use software development costs are capitalized and reported as a component of computer software within Intangible assets. Capitalized costs are amortized on a straight-line basis over the estimated useful life of the related software and the amortization is recorded within operating expenses in the accompanying consolidated statements of operations.

The Company reviews its long-lived assets, primarily Property and equipment and Software as a service, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company looks primarily to the undiscounted future cash flows in its assessment of whether or not long-lived assets have been impaired. There were no impairment triggering events identified with respect to long-lived assets during Fiscal 2025, 2024, or 2023.

Leases

The Company leases all their office space through operating leases, which expire at various dates through 2030. Many of the lease agreements obligate the Company to pay real estate taxes, insurance and certain maintenance costs, which are accounted for separately. Certain of the Company’s lease arrangements contain renewal provisions for 5 years, exercisable at the Company’s option. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Contracts with lease and non-lease components are accounted for on a combined basis.

The Company determines if an arrangement is an operating lease at inception. Leases and subleases with an initial term of 12 months or less are not recorded on the balance sheet. All other leases and subleases are recorded on the balance sheet as right-of-use assets and lease liabilities for the lease term.

Right-of-use lease assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined using the incremental borrowing rate based on the information available at lease commencement date, unless the implicit rate in the lease is readily determinable. The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is recorded in selling, general, and administrative expenses.

Intangible Assets

The Company holds intangible assets with finite lives. Intangible assets with finite useful lives are amortized over their respective estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective Intangible asset is realized.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Identifiable Intangible assets recognized in conjunction with acquisitions are recorded at fair value. Significant unobservable inputs are used to determine the fair value of the identifiable Intangible assets based on the income approach valuation model whereby the present worth and anticipated future benefits of the identifiable Intangible assets are discounted back to their net present value.

The Company develops and implements software to enhance the performance and capabilities of the information technology infrastructure. Direct internal payroll costs and external costs for the development of software are capitalized from the time internal-use software is considered probable until the software is deployed. All other preliminary and planning stage costs are expensed as incurred. Minor upgrades and enhancements to software systems are are expensed in the period incurred as software maintenance and training costs.

The Company evaluates the recoverability of Intangible assets whenever events or changes in circumstances indicate that an Intangible asset’s carrying amount may not be recoverable. The Company considered the current and expected future economic and market conditions and its impact on each of the reporting units. The Company annually evaluates the remaining useful lives of all Intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. In Fiscal 2023, management decided to eliminate the use of various trade names and go to market under the BGSF brand. Management’s rebranding created an impairment charge of $22.5 million included in discontinued operations. There were no impairment indicators identified during Fiscal 2025 or 2024.

Goodwill

Goodwill represents the difference between the total consideration paid less the fair value of all recognized net asset fair values including identifiable intangible asset values in a business combination. The Company reviews goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Based on annual testing, the Company has determined there was no impairment indicators for goodwill assets during Fiscal 2025, 2024, or 2023.

The Company first evaluates qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of the reporting unit is less than its carrying amount, including goodwill. If after qualitatively assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then further testing is unnecessary. If after assessing the totality of events or circumstances, the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company then estimates the fair value of the reporting unit and compares the fair value of the reporting unit with its carrying amount, including goodwill, as discussed below.

In assessing whether it is more likely than not that an indefinite-lived intangible asset is impaired, the Company assesses relevant events and circumstances that could affect the significant inputs used to determine the fair value.

The quantitative impairment test for an indefinite-lived intangible asset consists of a comparison of the fair value of the asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, a reporting unit shall recognize an impairment loss in an amount equal to that excess.

The quantitative goodwill impairment test involves a two-step process. In the first step, the Company compares the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, the Company must perform the second step of the impairment test to measure the amount of impairment loss. In the second step, the reporting unit’s fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss.

Debt Issuance Costs

Debt issuance costs are amortized into interest expense using the effective interest method over the term of the respective loans. Debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contingent Consideration

The Company has obligations, to be paid in cash, related to its acquisitions if certain operating and financial goals are met. The fair value of this contingent consideration is determined using expected cash flows and present value technique. The fair value calculation of the expected future payments uses a discount rate commensurate with the risks of the expected cash flow. The resulting discount is amortized as interest expense over the outstanding period using the effective interest method.

Revenue Recognition

The Company derives its revenues from continuing operations by providing workforce solutions and placement services through the Property Management segment. Revenues are recognized when promised services are delivered to client partners, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Revenues from continuing operations as presented on the consolidated statements of operations represent services rendered to client partners less sales adjustments and allowances. Reimbursements, including those related to out-of-pocket expenses, are also included in revenues, and the related amounts of reimbursable expenses are included in cost of services.

The Company records revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company (i) has the risk of identifying and hiring qualified field talent, (ii) has the discretion to select the field talent and establish their price and duties and (iii) bears the risk for services that are not fully paid for by client partners.

Contract field talent revenues - Field talent revenues from contracts with client partners are recognized over time in the amount to which the Company has a right to invoice, as the services are rendered by the Company’s field talent.

Contingent placement revenues - Any revenues associated with workforce solutions that are provided on a contingent basis are recognized at a point in time once the contingency is resolved, as this is when control is transferred to the client partner, usually when employment candidates start their employment.

The Company estimates the effect of placement candidates who do not remain with its client partners through the guarantee period (generally 90 days) based on historical experience. Allowances, recorded as a liability, are established to estimate these losses. Fees to client partners are generally calculated as a percentage of the new worker’s annual compensation. No fees for placement workforce solutions are charged to employment candidates. These assumptions determine the timing of revenue recognition for the reported period.

Refer to Note 18 for disaggregated revenues by functional specialization and segment.

Payment terms in the Company’s contracts vary by the type and location of its client partner and the workforce solutions offered. The term between invoicing and when payment is due is not significant. There were no unsatisfied performance obligations as of December 28, 2025 or December 29, 2024. There were no revenues recognized during Fiscal 2025 related to performance obligations satisfied or partially satisfied in previous periods. There are no contract costs capitalized. The Company did not recognize any contract impairments during Fiscal 2025, 2024, and 2023. The opening balance of accounts receivable at December 31, 2023, was $29.6 million.

Advertising

The Company recognizes advertising expense in selling, general, and administrative expenses as the services are incurred. Total advertising expense from continuing operations was $0.7 million for Fiscal 2025 and Fiscal 2024, respectively, and $0.8 million for Fiscal 2023.

Share-Based Compensation

The Company recognizes compensation expense in selling, general, and administrative expenses over the service period for common stock options or restricted stock that are expected to vest and records adjustments to compensation expense at the end of the service period if actual forfeitures differ from original estimates.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share

Basic earnings per common share are computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period adjusted to reflect potentially dilutive securities. Antidilutive shares are excluded from the calculation of earnings per share.The following is a reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the respective periods (in thousands):

Stock options and restricted stock 668 902 812

Income Taxes

The current provision for income taxes represents estimated amounts payable or refundable on tax returns filed or to be filed for the year. The Company recognizes any penalties when necessary as part of selling, general, and administrative expenses. As a matter of operation, the Company first calculated the effective tax on continuing operations, and then allocated the remaining taxes to our discontinued operations, in accordance with Accounting Standards Codification (“ASC”) Topic 740.

Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts are classified as noncurrent in the consolidated balance sheets. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. The overall change in deferred tax assets and liabilities for the period measures the deferred tax expense or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to tax expense in the period of enactment. As of December 28, 2025, the Company's deferred tax assets are primarily composed of $6.8 million relating to net operating loss carryforwards and $2.2 million relating to interest expense carryovers. To the extent there is an ownership change in the Company of 50 percent or greater, as defined by Section 392 of the Internal Revenue Code, the ability to utilize these tax attributes, as well as others, against taxable income may be limited. The Company does not anticipate this limitation to apply.

When appropriate, the Company will record a valuation allowance against net deferred tax assets to offset future tax benefits that may not be realized. In determining whether a valuation allowance is appropriate, the Company considers whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based in part upon management’s judgments regarding future events and past operating results. During Fiscal 2025, the Company recorded a $1.5 million valuation allowance recorded against the certain net deferred tax assets related specifically to the sale of BGSF Professional to offset future tax benefits that may not be realized. The valuation allowances recorded relate to capital losses and stock-based compensation. If these items are ultimately utilized, the Company will recognize a tax benefit up to the full amount of the valuation allowance.

The Company follows the guidance of ASC Topic 740, Accounting for Uncertainty in Income Taxes. ASC Topic 740 prescribes a more-likely-than-not measurement methodology to reflect the financial statement impact of uncertain tax positions taken or expected to be taken in a tax return.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic ASC 740) Income Taxes. The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 with early adoption permitted. As of December 28, 2025, we adopted this standard and it has been applied prospectively. This change did not have a significant impact on the Company’s financial statements and disclosures. The Company’s income tax disclosures have been updated to comply with the new requirements, including enhanced disaggregation in the rate reconciliation and additional information regarding income taxes paid by jurisdiction. See “Note 10 - Income Taxes,” for further discussion.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In November 2024, FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, which will require the Company to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization, as applicable, included in certain expense captions in the Consolidated Statements of Operations The new guidance is effective for fiscal years beginning after December 15, 2026, early adoption is permitted. The Company is evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses: Measurements of Credit Losses for Accounts Receivable and Contract Assets. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. The new guidance is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software, which amends the guidance in ASC 350-40, Intangibles—Goodwill and Other—Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. The new guidance is effective for fiscal years beginning after December 15, 2027 and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11.

NOTE 3 - ACQUISITIONS

Arroyo Consulting

On April 24, 2023, the Company acquired substantially all of the assets, and assumed certain of the liabilities, of Arroyo Consulting for cash consideration of $6.8 million. Certain post-closing liabilities were held back of $0.4 million and a partial security for any indemnification obligation was held back for one year of $0.9 million. The purchase agreement further provided for contingent consideration of up to $8.5 million based on the performance of the acquired business for the two years following the date of acquisition. The purchase price at closing was paid out of funds under the Company’s credit agreement led by BMO, see “Note 11 - Debt”. The purchase agreement contained a provision for a “true up” of acquired working capital, which was paid on July 1, 2024, out of the delayed draw funds under the Company's credit agreement along with the hold backs and the year one payment of $4.3 million for contingent consideration.

The acquired business was assigned to the Professional segment. The acquisition of Arroyo Consulting allowed the Company to provide clients a cost effective alternative offering nearshore and offshore IT resources specializing in IT and software development with operations in the United States, Colombia, and India.

The Fiscal 2023 consolidated statement of operations included thirty-six weeks for approximately $14.8 million of revenue and $4.0 million of discontinued operations income, which included $0.7 million in discontinued amortization expense on acquisition intangibles.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The final purchase price was allocated to the discontinued assets acquired and discontinued liabilities as follows (in thousands):

Preliminary Adjustments Final

Prepaid expenses and other assets — 72 72

Property and equipment, net — 145 145

Right-of-use asset - operating leases 141 — 141

Lease liability - operating leases (140) 55 (85)

Hold back, working capital* 350

Hold back, indemnities* 850

Working capital adjustment* 679

Fair value of contingent consideration 7,609

Total fair value of consideration transferred for acquired business $ 16,288

*Included in Other current liabilities

The allocation of the discontinued intangible assets was as follows (in thousands):

Estimated FairValue Estimated Useful Lives

Covenants not to compete $ 356 5 years

Computer software 170 5 years

The Company incurred costs of $0.6 million in Fiscal 2024 and 2023 related to the Arroyo Consulting acquisition. These costs were expensed as incurred in discontinued selling, general, and administrative expenses.

Supplemental Unaudited Pro Forma Information

The Company estimates what would have been reported if the revenues and net loss from discontinued operations had taken place on the first day of the Company’s Fiscal 2023 (in thousands, except income per share):

Gross profit $ 64

Net loss $ 11

Net loss per share - basic and diluted $ 1.01

Pro forma discontinued net loss includes amortization of primarily client partner lists, interest expense on additional borrowings on the new term loan and the revolving facility (the “Revolving Facility”) (see “Note 11 - Debt”) at a rate of 7.1%. The tax benefit of the pro forma adjustments at an effective tax rate of 22.3%. The pro forma operating results include adjustments to Arroyo Consulting related to synergy adjustments for expenses that would be duplicative and other non-recurring, non-operating and out of period expense items once integrated with the Company. There were no material nonrecurring adjustments.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts set forth above are not necessarily indicative of the results that would have been attained had the Arroyo Consulting acquisition taken place on the first day of Fiscal 2023 or of the results that may be achieved by the combined enterprise in the future.

NOTE 4 – DISCONTINUED OPERATIONS

On June 14, 2025, the Company entered into an Equity Purchase Agreement (“EPA”) with INSPYR Solutions Intermediate, LLC (“INSPYR”), pursuant to which the Company sold to INSPYR substantially all of the outstanding equity and assets pertaining to BGSF Professional. The sale closed on September 8, 2025, for cash proceeds of $91.5 million (which includes a $2.3 million working capital adjustment as provided in the EPA) plus $5.2 million in holdback escrow accounts. Under the terms of the EPA, INSPYR acquired certain assets and equity interests, and assumed certain liabilities and obligations of the Company pertaining to BGSF Professional. In March 2026, the Company received one holdback escrow payment and the working capital adjustment totaling approximately $4.4 million.

The EPA contained customary representations and warranties, covenants (including certain non-competition and non-solicitation covenants restricting the Company with respect to the professional staffing business), closing conditions, and indemnification provisions. The EPA also included a payment obligation related to the June 10, 2025 letter agreement with Arroyo Consulting, LLC related to the payout of $2.5 million in contingent consideration where by the Company assumed a portion of this obligation and paid $1.2 million at closing and the remaining $0.6 million in monthly installments (“Note payable”). After the close of the transaction, the Company began providing certain back-office services to INSPYR for a limited period of time.

The BGSF Professional financial results for periods prior to the sale have been reflected in our Consolidated Balance Sheet, Consolidated Statements of Operations, Consolidated Statement of Changes in Stockholders’ Equity and Consolidated Statements of Cash Flows as discontinued operations. The financial results of BGSF Professional are as follows (in thousands):

Years Ended

Gain on contingent consideration — (1,452) —

Impairment loss — — 22,545

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The preliminary carrying amount of assets, liabilities, and equity included as part of discontinued operations (in thousands):

Cash and cash equivalents $ 321

Accounts receivable (net of allowance for credit losses of $223) 23,046

Prepaid expenses 885

Other current assets 102

Total current assets 24,354

Property and equipment, net 529

Deposits 88

Software as a service, net 370

Deferred income taxes, net 607

Right of-use-assets-operating leases, net 3,891

Intangible assets, net 20,131

Total assets classified as discontinued operations $ 108,048

Accrued payroll and expenses $ 8,133

Contingent consideration, current portion 2,662

Lease liabilities, current portions 1,029

Total current liabilities 11,824

Lease liabilities, less current portion 3,072

Total noncurrent liabilities 3,072

Other long-term liabilities (intercompany) 32,195

Total liabilities classified as discontinued operations 47,091

Total liabilities and equity classified as discontinued operations $ 108,048

NOTE 5 - OTHER CURRENT ASSETS

Other current assets consist of the following at (in thousands):

State payroll tax receivable 322 —

Federal payroll tax receivable 399 —

CARES Act Receivable

The Employee Retention Credit (“ERC”) was established by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act allows relief to businesses affected by the coronavirus pandemic, by providing payment to employers for qualified wages and health insurance benefits for team members. The CARES Act applies to taxes incurred from March 27, 2020, through the second quarter of 2021. ERC claims are subject to examination by the Internal Revenue Service (“IRS”). The Company’s claims may be audited by the IRS until the expiration of the applicable statute of limitations, which may extend for several years from the date the original or amended payroll tax returns were filed. As of Fiscal 2025, the Company has not received notice of examination related to its ERC claims and received $1.4 million.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following at (in thousands):

Leasehold improvements $ 351 $ 349

Property and equipment, net $ 244 $ 608

Total depreciation expense from continuing operations in Fiscal 2025, 2024, and 2023 was $0.1 million, $0.2 million, and $0.2 million, respectively.

NOTE 7 - LEASES

The Company’s future continuing operating lease obligations that have not yet commenced are immaterial. Short-term leases and subleases were immaterial. The supplemental balance sheet and cash flow information related to the Company's operating leases were as follows at (dollars in thousands):

Weighted average discount rate for continuing operating leases 8.3 % 7.8 % 7.5 %

Cash paid for continuing operating leases $ 610 $ 726 $ 485

Continuing operating lease expense $ 528 $ 641 $ 462

The undiscounted annual future minimum lease payments of continuing operations consist of the following at (in thousands):

Total lease payment 786

Imputed interest (79)

Present value of lease liabilities $ 707

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS

Goodwill and intangible assets consisted of the following (in thousands):

Gross Value AccumulatedAmortization NetCarryingValue

Indefinite lives:

Finite lives:

Client partner lists $ 905 $ 905 $ —

Gross Value AccumulatedAmortization NetCarryingValue

Indefinite lives:

Finite lives:

Client partner lists $ 905 $ 905 $ —

Estimated future amortization expense for the next five years and thereafter is as follows (in thousands):

Fiscal Years Ending:

Total amortization expense from continuing operations for Fiscal 2025, 2024, and 2023 was $1.4 million, $1.2 million and $1.1 million, respectively. In Fiscal 2025, the Company reclassified $0.1 million from property and equipment related to the new features on the IT infrastructure.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - ACCRUED PAYROLL AND EXPENSES AND TRANSITION SERVICES PAYABLE

Accrued payroll and expenses consist of the following at (in thousands):

Bonuses and commissions 664 375

Accrued payroll and expenses $ 4,441 $ 4,868

Transition services payable consists of the following:

Subsequent to the closing of the sale of BGSF Professional (See “Note 4 - Discontinued Operations”), the Company provided certain transitional back-office services to INSPYR for a limited period. These services included processing and paying accounts payable and payroll, and collecting trade accounts receivable through the Company's bank accounts. The transition service payable account balance represents the amount either due to or due from INSPYR. Due to changing cash inflows and outflows, the balance swings between a receivable and a payable. As of December 28, 2025, the account balance of $3.1 million represented a payable to INSPYR. The account will only be settled when both parties agreed the expected cash flows were representative of a long term trend.

NOTE 10 - INCOME TAXES

The Company derives its revenue from operations in the United States and any foreign activity from discontinued operations is immaterial. For the fiscal years ended, December 28, 2025, December 29, 2024, and December 31, 2023, the Company incurred a loss before income tax provision from continuing operations of $13.4 million, $10.8 million, and $2.9 million, respectively. The Company’s income tax benefit (expense) for the fiscal years are comprised of the following at (in thousands):

Current:

Deferred:

Federal from discontinued operations (494) (895) 1,857

State from discontinued operations (103) (819) 248

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the provision for income taxes to the tax computed at statutory federal rate after the adoption of ASU 2023-09 is as follows (in thousands):

U.S. federal statutory tax rate $ 2,817 21 %

State and local income taxes, net of federal 388 3

Work Opportunity Tax Credit, net 396 3

Changes in valuation allowance

Unrealized capital loss carryforward (1,029) (8)

Unrealized share based compensation (491) (3)

Nontaxable and nondeductible items (200) (1)

Income tax benefit from continuing operations 1,881 15

Income tax expense from discontinued operations (597) (5)

Income tax benefit $ 1,284 10 %

A reconciliation of the provision for income taxes to the tax computed at statutory federal rate before the adoption of ASU 2023-09 is as follows (in thousands):

State and local income taxes, net of federal 216 2 (29) (1)

Work Opportunity Tax Credit, net — — 299 10

Nontaxable or nondeductible items (397) (3) (49) (2)

Income tax benefit from continuing operations 2,084 20 831 28

Income tax (expense) benefit from discontinued operations (1,714) (10) 2,105 (5)

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant components of the Company’s deferred income taxes are as follows at (in thousands):

Deferred tax assets from continuing operations:

Allowance for credit losses $ 290 $ 239

Goodwill and intangible assets 249 7,130

Accrued payroll and expenses 714 564

Operating lease liabilities 132 160

Business interest expense carryforward 2,215 1,385

Share-based compensation 581 514

Net operating loss carry forward 6,768 767

Deferred tax liabilities from continuing operations:

Prepaid expenses and other current assets (282) (610)

Property and equipment (527) (2,119)

Operating lease assets (153) (181)

Valuation allowance (491) —

Net deferred income taxes from continuing operations 9,496 7,849

Net deferred income taxes from discontinued operations — 606

Net deferred income taxes $ 9,496 $ 8,455

NOTE 11 - DEBT

On September 8, 2025, the Company paid the balance on the existing Term Loan and Revolving Facility using the proceeds from the sale of BGSF Professional. See “Note 4 - Discontinued Operations.”

On July 16, 2019, the Company entered into a credit agreement (the “Credit Agreement”), which would have matured on July 16, 2024 and subsequently canceled, led by BMO, as lead administrative agent, lender, letters of credit issuer, and swing line lender. The Company entered into four amendments from August 18, 2022 through May 19, 2023, which changed the interest rate component from LIBOR to the Secured Overnight Financing Rate (“SOFR”), exercised the option to borrow $40 million, required 2.5% of the original principal balance of the new term loan, permitted a foreign entity acquisition, modified the distributions terms, and increased a revolving credit facility (the "Revolving Facility") by $6.0 million.

On March 12, 2024, the Credit Agreement was amended and restated (the “Restated Agreement”) with a maturity, which provided for a Revolving Facility which permitted the Company to borrow funds in an aggregate amount up to $40 million. The Restated Agreement also provided for a term loan commitment, which permitted the Company to borrow funds from time to time (the “Term Loan”). In July 2024, the Company exercised the option to borrow on a delayed draw term loan of $4.3 million related to payments on the Arroyo Consulting Acquisition's working capital “true up”, hold backs, and year one contingent consideration. On November 6, 2024, the Company entered into the First Amendment to Restated Agreement, which reduced the availability on the Revolving Facility an aggregate amount up to $20 million.

On March 13, 2025, the Company entered into a Waiver and Second Amendment to Restated Agreement in which the lenders unanimously waived noncompliance with the covenants as of December 29, 2024 and March 30, 2025 and established a new definition of Applicable Margin, a reduction of the swing line sublimit to zero, and limiting the aggregate revolving credit borrowings to $8.0 million. On May 7, 2025, the Company entered into a Waiver and Amendment which provided that the lenders unanimously waived noncompliance on the requirement of at least $2.0 million in cash equity contributions by extending the deadline and adding the option of issuing subordinated debt in the amount of $2.0 million. On August 4, 2025, the Company entered into a Waiver and Amendment in which the lenders unanimously waived noncompliance with the foregoing covenants as of June 29, 2025 and the Company would finalize and close the sale BGSF Professional no later than September 30, 2025. During Fiscal 2025, the Company recognized into interest expense approximately $0.8 million related to the amendments on unamortized debt issuances costs.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company was required to repay the Term Loan in quarterly principal installments equal to 2.5% of the aggregate principal balance. The Company paid an unused commitment fee on the daily average unused amount of Revolving Facility. The Company’s obligations were secured by a first priority security interest in substantially all tangible and intangible property of the Company’s and its subsidiaries. The Company obtained the waivers described above for the non compliance with the foregoing financial covenants and certain affirmative covenants as of the quarters ended December 29, 2024, March 30, 2025, and June 29, 2025.

Letter of Credit

In conjunction with a previous acquisition, the Company entered into a standby letter of credit arrangement, which expired, for purposes of protecting a lessor against default on lease payments. As of December 29, 2024, the Company had a maximum financial exposure from this standby letter of credit totaling $0.1 million and no liability had been recorded, all of which was considered usage against the Revolving Facility. On September 8, 2025, the Company assigned the related lease in the sale of BGSF Professional.

Line of Credit

On September 8, 2025, the Company paid the balance on the facility using the proceeds from the sale of BGSF Professional and subsequently cancelled the facility. At December 29, 2024, $6.4 million was outstanding on the revolving facilities. The average daily balance while the debt was outstanding for Fiscal 2025, 2024, and 2023 was $7.2 million, $12.4 million, and $23.1 million, respectively. Borrowings under the revolving facilities consisted of and bore interest at (in thousands):

Long-Term Debt

Long-term debt consisted of and bore interest at (in thousands):

Convertible Note

At December 29, 2024, the Company had a two-year convertible unsecured promissory note of $4.4 million due to the seller with an annual interest rate of 6%, with interest paid quarterly related to the 2022 Horn Solutions acquisition. The promissory note was convertible into shares of our common stock at any time after the one-year anniversary of the promissory note at a conversion price equal to $17.12 per share, prior to the maturity date of December 12, 2024. On January 30, 2025, the Company amended the promissory note which increased the interest rate to 7% and extended the maturity date to December 12, 2025. The Company incurred interest expense related to the convertible note of approximately $0.2 million and $0.3 million for Fiscal 2025 and 2024, respectively. On September 8, 2025, the Company paid the balance on the promissory note using the proceeds from the sale of BGSF Professional.

NOTE 12 - FAIR VALUE MEASUREMENTS

The accounting standard for fair value measurements defines fair value and establishes a market-based framework or hierarchy for measuring fair value. The standard is applicable whenever assets and liabilities are measured at fair value. The fair value hierarchy established prioritizes the inputs used in valuation techniques into three levels as follows:

Level 1 - Observable inputs - quoted prices in active markets for identical assets and liabilities;

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Level 2 - Observable inputs other than the quoted prices in active markets for identical assets and liabilities - includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets, for substantially the full term of the financial instrument; and

Level 3 - Unobservable inputs - includes amounts derived from valuation models where one or more significant inputs are unobservable and requires the Company to develop relevant assumptions.

There were no transfers between the respective Levels during Fiscal 2025. In connection with the sale of BGSF professional, see “Note 4 - Discontinued Operations”, the Level 3 contingent consideration obligation was converted into a Level 1 note payable. The following table summarizes the financial liabilities measured at fair value on a recurring basis and the level they fall within the fair value hierarchy (in thousands):

Financial Statement Classification Fair Value Hierarchy December 29,2024

Convertible note Level 2 $ 4,368

On September 8, 2025, the Company paid the balance on the convertible note using the proceeds from the sale of BGSF Professional. Key inputs in determining the fair value of the convertible note as of December 29, 2024 included current stock price, the conversion price, and the maturity date. Key inputs in determining the fair value of the contingent consideration, which is included in discontinued operations, as of December 29, 2024 included discount rates of approximately 7% as well as management's estimates of future sales volumes and EBITDA. Before the sale of BGSF Professional, we recognized a gain of $0.5 million on contingent consideration in Fiscal 2025.

NOTE 13 - CONTINGENCIES

The Company is engaged from time to time in legal matters and proceedings arising out of its normal course of business. The Company establishes a liability related to its legal proceedings and claims when it has determined that it is probable that the Company has incurred a liability and the related amount can be reasonably estimated. If the Company determines that an obligation is reasonably possible, the Company will, if material, disclose the nature of the loss contingency and the estimated range of possible loss, or include a statement that no estimate of the loss can be made. No provision has been recorded for any claims as of December 28, 2025 or December 29, 2024.

The Company insures against, subject to and upon the terms and conditions of various insurance policies, claims or losses from workers’ compensation, general liability, automobile liability, property damage, professional liability, employment practices, fiduciary liability, fidelity losses, crime and cyber risk, and director and officer liability. Under the Company's bylaws, the Company’s directors and officers are indemnified against certain liabilities arising out of the performance of their duties to the Company. The Company also has an insurance policy for our directors and officers to insure them against liabilities arising from the performance of their positions with the Company or its subsidiaries. The Company has also entered into indemnification agreements with its directors and certain officers.

Employment Agreements

The employment agreement for CFO and Co-CEO's, Keith Schroeder was effective as of February 24, 2025 and the agreement remains in effect through December 31, 2027 with successive one-year extensions unless terminated pursuant to its terms. In the event that his employment is terminated by the Company without cause or by him for good reason, he will be entitled to (i) twelve months of base salary, (ii) accrued bonus, and (iii) eighteen months of COBRA premiums for him and his dependents. Additionally, he will become 100% vested in any awards outstanding under the Company’s 2013 Long-Term Incentive Plan, as amended, (“2013 Plan”) or similar plan. Should there be a sale of the Company that results in the termination of his employment, he will be entitled to all of the amounts listed above, however, base salary shall equal eighteen months.

The employment agreement for Co-CEO's, Kelly Brown was effective as of February 24, 2026 and the agreement remains in effect through December 31, 2027 with successive one-year extensions unless terminated pursuant to its terms. In the event that her employment is terminated by the Company without cause or by her for good reason, she will be entitled to (i) twelve months of base salary, (ii) accrued bonus, and (iii) eighteen months of COBRA premiums for her and her dependents. Additionally, she will become 100% vested in any awards outstanding under the 2013 Plan or similar plan. Should there be a sale of the Company that results in the termination of her employment, she will be entitled to all of the amounts listed above, however, base salary shall equal eighteen months.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - EQUITY

Authorized capital stock consists of 19,500,000 shares of common stock, par value $0.01 per share and 500,000 shares of undesignated preferred stock, par value $0.01 per share.

Repurchase of Common Stock

On November 5, 2025, the Company's Board approved a stock repurchase program under which the Company may repurchase up to $5.0 million of its common stock. The repurchase program does not have an expiration date and may be suspended, terminated, or modified at any time for any reason. During Fiscal 2025, the Company repurchased 351,200 shares at a weighted average price of $4.33 per share. The repurchased shares are recorded as part of treasury stock and are account for under the cost method. The repurchase program has been used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. As of December 28, 2025, the Company has approximately $3.5 million available for repurchases under this program.

Restricted Stock

The Company issued net restricted common stock of 157 thousand, 51 thousand, and 57 thousand shares to team members and non-team member (non-employee) directors in Fiscal 2025, Fiscal 2024, and Fiscal 2023, respectively. The restricted shares of $0.01 par value per share were issued under the 2013 Plan and contain a three-year service condition. The restricted stock constitutes issued and outstanding shares of the Company’s common stock, except for the right of disposal, for all purposes during the period of restriction including voting rights and dividend distributions.

In connection with the vesting portions of the restricted stock, -0-, -0-, and 2,085 shares of company stock, or treasury stock were withheld, to satisfy the withholding obligation in connection with the vesting of a portion of the restricted stock for Fiscal 2025, 2024, and 2023, respectively.

Dividends

For Fiscal 2025, the Company's Board declared a special cash dividend of $2.00 per share of common stock. The dividend was paid on September 30, 2025 to all stockholders of record as of the close of business on September 23, 2025. The Company paid a $22.4 million in the aggregate with respect to this special cash dividend.

For Fiscal 2024, the Company’s Board declared a cash dividend in the amount of $0.15 per share of common stock and disbursed $1.6 million in cash dividend on our common stock.

For Fiscal 2023, the Company's Board declared quarterly cash dividends in the amount aggregate amount of $0.60 per share of common stock and disbursed $6.5 million in cash dividends on our common stock.

BGSF, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - SHARE-BASED COMPENSATION

Stock Options

In December 2013, the Board adopted the original 2013 Plan. Under the original 2013 Plan team members, directors and consultants of the Company may receive incentive stock options and other awards. To the extent any option or award expires unexercised or is canceled, terminated or forfeited in any manner without the issuance of common stock thereunder, such shares shall again be available for issuance under the original 2013 Plan. As of December 28, 2025, a total of approximately 1.3 million shares remain available for issuance under the 2013 Plan.

The term of each option is determined by the Board but cannot exceed 10 years. Unless otherwise specified in an option agreement, options vest and become exercisable on the following schedule: 20% immediately and 20% on each anniversary date of the grant date. Each option shall be designated as an incentive stock option (“ISO”) or a non-qualified option (“NQO”). The exercise price of an ISO shall not be less than the fair market value of the stock covered by the ISO at the grant date; provided, however, the exercise price of an ISO granted to any person who owns, directly or indirectly, stock of the Company constituting more than 10% of the total combined voting power of all classes of outstanding stock of the Company or of any affiliate of the Company, shall not be less than 110% of such fair market value.

The fair value of each option award was estimated on the date of grant using a Black-Scholes option pricing model and the assumptions in the following table. Because this option valuation model incorporates ranges of assumptions for inputs, those ranges are disclosed below. The Company bases the estimate of expected volatility on the historical volatilities of the Company for a period equal to the expected life of the option.

The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company expects to use historical data to estimate team member termination within the valuation model; separate groups of team members that have similar historical termination behavior are considered separately for valuation purposes. The Company believes these estimates and assumptions are reasonable. However, these estimates and assumptions may change in the future based on actual experience as well as market conditions.

For Fiscal 2025, 2024, and 2023, the Company recognized $0.4 million of compensation expense from continuing operations related to stock awards, respectively. Unamortized share-based compensation expense from continuing operations as of December 28, 2025 amounted to $0.3 million, which is expected to be recognized over the next 2.2 years. The following assumptions were used to estimate the fair value of stock options for the years ended:

Weighted-average fair value of awards $ 3.58 $ 5.95 $ 3.00

Weighted-average risk-free interest rate 4.2 % 4.0 % 4.2 %

Weighted-average volatility factor 56.1 % 52.2 % 52.8 %

Weighted-average expected life 10.0 yrs 10.0 yrs 10.0 yrs

Bgsf, Inc. BGSF US Equity

BGSF · 10-K · period ended 2025-12-28

Item 7. Management’s Discussion and Analysis of Financial Condition andResults of Operations.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Item 8. Financial Statements and Supplementary Data.

Bgsf, Inc. BGSF US Equity☆

BGSF · 10-K · period ended 2025-12-28

Item 7. Management’s Discussion and Analysis of Financial Condition andResults of Operations.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Item 8. Financial Statements and Supplementary Data.

Bgsf, Inc. BGSF US Equity