Star Equity Holdings Inc.
11/12/2026 | Press release | Distributed by Public on 11/12/2026 15:23
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto, included in Part I of this Form 10-Q. The reader should also refer to the Condensed Consolidated Financial Statements and notes of Star Equity Holdings, Inc. and its subsidiaries (the "Company") filed in its Annual Report on Form 10-K for the year ended December 31, 2025. This MD&A contains forward-looking statements. Please see "FORWARD-LOOKING STATEMENTS" for a discussion of the uncertainties, risks and assumptions associated with these statements. This MD&A also uses the non-generally accepted accounting principle measure of earnings before interest, taxes, depreciation, and amortization ("EBITDA"). See Note 17 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for EBITDA segment reconciliation information. The tables and information in this MD&A were derived from exact numbers and may have immaterial rounding differences.
This MD&A includes the following sections:
•Executive Overview
•Results of Operations
•Liquidity and Capital Resources
•Contingencies
•Recent Accounting Pronouncements
•Critical Accounting Estimates
•Forward-Looking Statements
Executive Overview
Star Equity Holdings, Inc. ("Star," the "Company," "we," "our", formerly known as Hudson Global, Inc. ("Hudson")) is a diversified multi-industry holding company with four segments. Our Building Solutions segment operates in the construction industry. Our Business Services segment delivers Recruitment Process Outsourcing ("RPO") services consisting of recruitment and contracting solutions tailored to the individual needs of primarily mid-to-large multinational companies. Our Energy Services segment consists of Alliance Drilling Tools, Inc. ("ADT"). In addition, we have an Investments segment, which holds and manages certain of our corporate-owned real estate, and manages internally funded, concentrated minority investments in a small number of public companies.
Amendment to Certificate of Incorporation
On September 4, 2025, Star filed a certificate of amendment (the "Amendment") to the Company's Amended and Restated Certificate of Incorporation, as Amended (the "Charter"), to change the name of the Company from Hudson Global, Inc. to Star Equity Holdings, Inc. (the "Name Change"). The Name Change was approved by the Company's Board of Directors (the "Board") on September 2, 2025, and became effective at 12:01 a.m. (Eastern Time) on September 5, 2025.
Star-Hudson Merger
On August 22, 2025, Star completed its previously announced acquisition of Star Operating Companies, Inc. ("SOC" or "Star Operating Companies", formerly known as Star Equity Holdings, Inc.) pursuant to the Agreement and Plan of Merger, dated as of May 21, 2025 (the "Merger Agreement"), by and among Star, SOC and HSON Merger Sub, Inc., a wholly owned subsidiary of Star ("Merger Sub"). Upon the terms and subject to the conditions of the Merger Agreement, on August 22, 2025, at the effective time of the Merger (the "Effective Time"), Merger Sub merged with and into SOC, with SOC continuing as the surviving corporation of the Merger under the name "Star Operating Companies, Inc." as a wholly owned subsidiary of Star. Capitalized terms used herein but not defined have the meanings set forth in the Merger Agreement.
Pursuant to the terms of the Merger Agreement, at the Effective Time, (i) each share of common stock of SOC issued and outstanding immediately prior to the Effective Time (other than certain shares as set forth in the Merger Agreement) were automatically converted into the right to receive 0.23 shares of Star common stock and (ii) each share of preferred stock of SOC issued and outstanding immediately prior to the Effective Time (other than certain shares set forth in the Merger Agreement) were automatically converted into the right to receive one (1) share of Star Preferred Stock. As a result of the Merger, former SOC common stockholders received approximately 744,291 shares of Star common stock for their SOC common shares and former SOC preferred stockholders received approximately 2,690,637 shares of Star Preferred Stock. No fractional shares of
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Star common stock were issued in the Merger, and SOC stockholders became entitled to receive cash in lieu of fractional shares in accordance with the Merger Agreement.
In addition, pursuant to the terms of the Merger Agreement, at the Effective Time, each award of SOC restricted stock units ("RSUs") outstanding immediately prior to the Effective Time was converted into Star RSUs issued under the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, as amended (the "Plan"), in accordance with the Merger Agreement.
Segments
Our Building Solutions segment is currently made up of the following operating businesses: KBS Builders, Inc. ("KBS"); EdgeBuilder, Inc. ("EdgeBuilder"), and Glenbrook Building Supply, Inc. ("Glenbrook"), with the latter two managed together and referred to jointly as "EBGL," and Timber Technologies Solutions, Inc. ("TT"). KBS is based in Maine and manufactures modular buildings, typically in the single and multi-family residential segments, servicing principally the New England market. EBGL is based in the Minneapolis-Saint Paul area and principally serves the Upper Midwest region. Together, the EBGL businesses manufacture and deliver structural wall panels and other engineered wood-based products. EBGL also distributes building materials from two lumberyard locations primarily focused on professional builder customers. TT is based outside the Minneapolis-St. Paul area and manufactures glue-laminated timber products ("glulam") for various end markets and applications, including agriculture, industrial, infrastructure, and building construction (commercial and residential).
Our Business Services segment delivers Recruitment Process Outsourcing ("RPO") services consisting of recruitment and contracting solutions tailored to the individual needs of primarily mid-to-large multinational companies. The Company operates directly in eighteen countries with three geographic regions: the Americas, Asia Pacific, and Europe, Middle East, and Africa ("EMEA"). The Company's RPO delivery teams utilize recruitment process methodologies and project management expertise to meet clients' ongoing business needs. The Company's RPO services include complete recruitment outsourcing, project-based outsourcing, contingent workforce solutions, and recruitment consulting for clients' permanent staff hires. RPO services leverage the Company's consultants, supported by the Company's specialists, in the delivery of its proprietary methods to identify, select, and engage the best-fit talent for critical client roles. In addition, RPO clients receive a range of outsourced professional contract staffing services and managed service provider services offered sometimes on a standalone basis and sometimes as part of a blended total talent solution. These services draw upon a combination of specialized recruiting and project management competencies to deliver a wide range of solutions. Hudson RPO-employed professionals - either individually or as a team - are placed with client organizations for a defined period of time based on specific business needs of the client. With direct operations in eighteen countries and relationships with specialized professionals and organizations around the globe, Business Services brings a strong ability to match talent with opportunities by assessing, recruiting, developing, and engaging highly successful people for client support.
Our Energy Services segment currently consists of ADT, a Wyoming and Texas based provider of drilling tools and services to the Energy industry, a key sector of the economy. ADT is a full-service downhole drilling tool company which provides sale and rental tools in the Oil & Gas, Geothermal, Mining, and Waterwells sectors. ADT is strategically located near premier oilfields in the Rockies, a geothermal and mining hub, and in Midland, TX within the Permian Basin. ADT's business model allows for the majority of costs, such as freight, repairs, and damages, to be passed directly to customers.
Our Investments segment holds and manages certain of our corporate-owned real estate, including a manufacturing facility in Maine that is leased to KBS and a manufacturing facility in Wisconsin that is leased to TT. The Investments segment manages internally funded, concentrated minority investments in a small number of public companies. It also holds and manages a promissory note and a private equity stake in Catalyst. SOC acquired these interests in May 2023 as a result of the sale of Digirad Health. Our Investments segment also holds an investment in Enservco Corporation consisting of an investment in Enservco Common Stock, an investment in Enservco Preferred Stock, and an investment in a call option, all of which were acquired in the third quarter of 2024 and are discussed in Note 18, Supplementary Balance Sheet Information to the notes to our accompanying condensed consolidated financial statements.
We continue to explore all strategic alternatives to maximize value for the Company's stockholders, including without limitation, improving the market position and profitability of our services in the marketplace, and enhancing our valuation. We may pursue our goals through organic growth, strategic initiatives, or other alternatives. Additionally, we will continue to monitor capital markets for opportunities to repurchase shares, and consider other actions designed to enhance value to our stockholders, as well as review information regarding potential acquisitions or combinations, and provide information to third parties regarding potential dispositions of assets or business lines, from time to time. On August 14, 2026, the Company, HH Merger Sub, and Harte Hanks entered into the HH Merger Agreement providing for the HH Merger. See Note 5, Acquisitions, within the notes to our Condensed Consolidated Financial Statements for a summary of the HH Merger Agreement.
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This MD&A discusses the results of the Company's business for the three and nine months ended September 30, 2026 and 2025.
Strategy
Star Equity Holdings, Inc.
We believe our diversified multi-industry holding company structure allows Star management to focus on capital allocation, strategic leadership, mergers and acquisitions, capital markets, and investor relations, as well as management of our Investments segment. Our structure frees up our operating company management teams to focus on their respective businesses, look for organic and bolt-on growth opportunities, and improve operations with less distraction and administrative burden associated with running a public company.
We continue to explore strategic alternatives to improve our market position and the profitability of our product offerings, generate additional liquidity, and enhance our common stock valuation. We may pursue our goals through organic growth and through strategic alternatives, such as selective acquisitions of businesses, divestitures of assets or businesses, equity offerings, debt financings, or corporate restructuring.
On August 14, 2026, the Company, HH Merger Sub, and Harte Hanks entered into the HH Merger Agreement, pursuant to which HH Merger Sub will merge with and into Harte Hanks, with Harte Hanks surviving as a wholly owned subsidiary of the Company. Under the terms of the HH Merger Agreement, Harte Hanks stockholders will be entitled to receive, at their election and subject to proration, either (i) $5.00 in cash, (ii) 0.5 shares of the Company's Preferred Stock, or (iii) a combination thereof, for each outstanding share of Harte Hanks common stock. Aggregate cash consideration is limited to $19.2 million. Assuming the maximum cash consideration is paid, the aggregate merger consideration would consist of $19.2 million in cash and approximately 1.92 million in shares of the Company's Preferred Stock. Completion of the HH Merger remains subject to customary closing conditions, including approval by Harte Hanks stockholders, receipt of certain third-party consents, and obtaining the financing necessary to fund the cash portion of the merger consideration. The financing is expected to be provided by a drawdown on Harte Hanks' existing $25 million asset-based revolving credit facility with Texas Capital Bank (with the drawdown not to exceed $15 million), under which $13.8 million was available as of September 30, 2026 after giving effect to outstanding letters of credit. See Note 5, Acquisitions, within the notes to our Condensed Consolidated Financial Statements for a summary of the HH Merger and HH Merger Agreement.
Operating Business
We believe that our operating companies are well positioned for growth in large addressable markets. The key elements of our growth strategy include the following:
•Organic growth from our core businesses. We believe that we operate in markets and geographies that will allow us to continue to grow our core businesses, allowing us to benefit from our scale and strengths. We plan to focus our efforts on markets in which we already have a presence in order to leverage the personnel, infrastructure, and brand recognition we have in these areas.
•Introduction of new services. In the Building Solutions segment, we will consider opportunities to augment our service offerings to better serve our customer base. We have done this in the New England market with our entry into the commercial multi-family segment. Other areas might include logistics, on-site installation, and manufacturing of sub-components.
•Acquisition of complementary businesses. We plan to continue to look at complementary businesses that meet our acquisition growth criteria. We believe there are many potential small public and private targets that can be acquired over time and integrated into our platform. We will also look at larger, more transformational mergers and acquisitions if we believe the appropriate mix of value, risk, and return is present for our stockholders. The timing of these potential transactions will always depend on market conditions, available capital, and valuation. In general, we want to be "value" buyers, and will not pursue any transaction unless we believe the post-transaction potential value is high for stockholders.
Current Market Conditions and Trends
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The target customers for our Building Solutions segment include professional home builders, general contractors, project owners, developers, and design firms. Despite a higher interest rate environment, we continue to experience meaningful demand for our products; however, certain projects have been delayed as customers secure and finalize financing. We have benefited from implementing both price increases and margin protection language in our contracts, and these changes have had a positive effect on our profitability. Although we have experienced slower business activity and lower revenues this quarter, we believe this slowdown is temporary. Our sales pipelines continue to indicate strong potential demand for our services, but we can give no assurances as to our ability to compete for these opportunities, or the periods during which successfully negotiated projects will be completed.
The Modular Building Institute has estimated that permanent modular construction increased as a percentage of the construction industry from 2.14% in 2015 to 6.64% as of the end of 2023. In turn, in our Building Solutions segment, we continue to see a greater acceptance of offsite or prefab construction in single-family and multi-family residential building projects in our target markets. Our modular units and structural wall panels offer builders a number of benefits over traditional onsite or "stick built" construction. These include shorter time to market, higher quality, reduced waste, and potential cost savings. Additionally, technological advancements including 3D modeling software and developments in engineered wood products offer greater design flexibility for higher-end applications. The need for more affordable housing solutions also presents opportunities for the continued growth of factory-built housing.
In our Business Services segment, our clients' demands for RPO and contracting services largely depend on the market conditions and the strength of the labor markets in the countries where we operate. In the first nine months of 2026, the market conditions remained challenging due to persistent inflation, market uncertainty related to trade disruptions, and decreased demand for labor in certain markets. We anticipate that these challenging market conditions will continue through the remainder of 2026.
In our Energy Services segment, demand for our products is closely tied to oil prices, as customer drilling activity and capital spending are influenced by prevailing market conditions. Higher and stable oil prices generally support increased drilling and tool utilization, while lower or volatile prices may reduce activity and negatively impact our revenues and operating results. The demand for our Energy Services offerings is tied in part to oil and gas prices, drilling activity, and capital expenditures by E&P companies. During the first nine months of 2026, improved oil prices contributed to increased customer activity, and the segment delivered strong performance.
Economic conditions in many of the world's major markets remained uncertain throughout 2026. While inflationary pressures moderated in certain regions, elevated interest rates and tighter credit conditions continued to impact market activity. Changes in trade policies, including tariffs and related trade restrictions, may also affect our international operations and the demand for our products and services. These conditions contributed to wage pressures, higher operating costs, staffing challenges, fluctuating consumer confidence, and constrained access to capital markets, each of which affected our business. In connection with this environment, some customers reduced demand for our services, and certain others temporarily deferred or permanently discontinued engagements. Ongoing macroeconomic uncertainty, including the potential for renewed inflationary pressures or changes in interest rate policy, could have material adverse effects on various aspects of our business in future periods.
Risks arising from global economic instability and conflicts, wars, and health crises could impact our business. In addition, the inflation caused by such events may impact demand for our products and services and our cost to provide products and services. Economic uncertainty has also continued to contribute to volatility in global currency markets. Fluctuations in foreign exchange rates relative to the U.S. dollar during reporting periods impact the translation of our foreign operations' results into U.S. dollars and may affect comparability of reported results.
We continue to explore all strategic alternatives to maximize value for the Company's stockholders, including without limitation, improving the market position and profitability of our services in the marketplace, and enhancing our valuation. We may pursue our goals through organic growth, strategic initiatives, or other alternatives. Additionally, we will continue to monitor capital markets for opportunities to repurchase shares, and consider other actions designed to enhance value to our stockholders, as well as review information regarding potential acquisitions or combinations, and provide information to third parties regarding potential dispositions of assets or business lines, from time to time.
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Summary of Financial Performance Highlights For The Three Months Ended September 30, 2026
• Revenue was $53.9 million for the three months ended September 30, 2026, compared to $48.0 million for the same period in 2025, an increase of $6.0 million, or 12.4%. The increase in revenue was principally driven by the inclusion of revenues from the Star Operating Companies acquisition, which contributed 19 percentage points to the revenue growth.
• Gross profit was $23.2 million for the three months ended September 30, 2026, compared to $20.6 million for the same period in 2025, an increase of $2.6 million, or 12.6%. The increase in gross profit was driven by the acquisition of Star Operating Companies, which increased gross profit growth by 15 percentage points.
• Selling, general and administrative expenses (including salaries and related expenses) and other non-operating income (expense) ("SG&A and Non-Op") was $24.5 million for the three months ended September 30, 2026, compared to $21.8 million for the same period in 2025, an increase of $2.7 million, or 12.3%. The acquisitions of our Building Solutions, Energy Services, and Investments segments collectively contributed 11 percentage points to the increase in SG&A and Non-Op.
• Net loss was $1.6 million for the three months ended September 30, 2026, compared to net loss of $1.8 million for the same period in 2025, a decrease in net loss of $0.2 million.
• EBITDA loss was $0.7 million for the three months ended September 30, 2026, compared to EBITDA loss of $0.9 million for the same period in 2025, a decrease in EBITDA loss of $0.2 million.
Summary of Financial Performance Highlights For The Nine Months Ended September 30, 2026
• Revenue was $158.9 million for the nine months ended September 30, 2026, compared to $115.4 million for the same period in 2025, an increase of $43.6 million, or 37.8%. The increase in revenue was principally driven by the inclusion of revenues from the Star Operating Companies acquisition, which contributed 37 percentage points to the revenue growth.
• Gross profit was $66.6 million for the nine months ended September 30, 2026, compared to $55.7 million for the same period in 2025, an increase of $10.9 million, or 19.6%. The increase in gross profit was driven by the acquisition of Star Operating Companies, which increased gross profit growth by 20 percentage points.
• Selling, general and administrative expenses (including salaries and related expenses) and other non-operating income (expense) ("SG&A and Non-Op") was $72.8 million for the nine months ended September 30, 2026, compared to $58.5 million for the same period in 2025, an increase of $14.3 million, or 24.5%. The acquisitions of our Building Solutions, Energy Services, and Investments segments collectively contributed 20 percentage points to the increase in SG&A and Non-Op.
• Net loss was $7.2 million for the nine months ended September 30, 2026, compared to net loss of $4.2 million for the same period in 2025, an increase in net loss of $3.0 million.
• EBITDA loss was $4.5 million for the nine months ended September 30, 2026, compared to EBITDA loss of $2.6 million for the same period in 2025, an increase in EBITDA loss of $1.9 million.
Use of EBITDA (Non-GAAP Financial Measure)
Management believes EBITDA is a meaningful indicator of the Company's performance that provides useful information to investors regarding the Company's financial condition and results of operations. Management considers EBITDA to be the best indicator of operating performance and most comparable measure across the regions in which the Company operates. Management uses this measure to evaluate capital needs and working capital requirements. EBITDA should not be considered in isolation or as a substitute for operating income, or net income prepared in accordance with U.S. GAAP or as a measure of the Company's profitability. EBITDA is derived from net income adjusted for the provision for (benefit from) income taxes, interest expense (income), and depreciation and amortization.
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The reconciliation of EBITDA to the most directly comparable GAAP financial measure is provided in the table below:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| $ in thousands | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Net loss attributable to common shareholders | $ | (2,204) | $ | (1,831) | $ | (9,040) | $ | (4,275) | ||||||||||||||||||
| Dividends on Preferred Stock | 615 | 67 | 1,810 | 67 | ||||||||||||||||||||||
| Net loss | (1,589) | (1,764) | $ | (7,230) | $ | (4,208) | ||||||||||||||||||||
| Adjustments to Net loss | ||||||||||||||||||||||||||
| (Benefit from) provision for income taxes | (21) | 249 | (17) | 626 | ||||||||||||||||||||||
| Interest (income) expense, net | - | (81) | 13 | (206) | ||||||||||||||||||||||
| Depreciation and amortization expense-within cost of revenues | 562 | 262 | 1,803 | 262 | ||||||||||||||||||||||
| Depreciation and amortization expense -within selling, general and administrative expense | 331 | 404 | 966 | 932 | ||||||||||||||||||||||
| Total adjustments from net loss to EBITDA | 872 | 834 | 2,765 | 1,614 | ||||||||||||||||||||||
| EBITDA (loss) | $ | (717) | $ | (930) | $ | (4,465) | $ | (2,594) | ||||||||||||||||||
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Results of Operations
Building Solutions
Results for the three and nine months ended September 30, 2025 include only the period from August 22, 2025, the date of the merger of Star Equity Holdings, Inc. and Hudson Global, Inc., through September 30, 2025.
Revenue - Building Solutions
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions | As reported | As reported | As reported | As reported | |||||||||||||||||||||||||||||||||||||||||||
| Building Solutions | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 16.3 | $ | 9.6 | $ | 6.7 | 70 | % | $ | 42.6 | 9.6 | $ | 33.0 | 344 | % | ||||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, Building Solutions contributed $16.3 million to the Company's revenue. The segment faced several headwinds during the quarter that constrained revenue generation. Project timing delays affected certain large projects, as customer-driven schedule changes shifted revenue recognition into subsequent periods. Additionally, challenging macroeconomic conditions weighed on customer demand, resulting in extended sales cycles and delayed capital spending decisions.
For the nine months ended September 30, 2026, Building Solutions contributed $42.6 million to the Company's revenue. The drivers of the revenue performance for the nine months ended September 30, 2026 were the same factors noted for the three months ended September 30, 2026 above.
Gross Profit - Building Solutions
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions | As reported | As reported | As reported | As reported | |||||||||||||||||||||||||||||||||||||||||||
| Building Solutions | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit | $ | 3.3 | $ | 1.7 | $ | 1.6 | 98 | % | $ | 8.1 | $ | 1.7 | $ | 6.4 | 383 | % | |||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, Building Solutions contributed $3.3 million to the Company's gross profit. Margins were pressured by rising input costs in a competitive pricing environment, along with lower production volumes.
For the nine months ended September 30, 2026, Building Solutions contributed $8.1 million to the Company's gross profit. Margin for the nine months ended September 30, 2026 was affected largely by the same dynamics that pressured the three months ended September 30, 2026, with the earlier part of the year also seeing volume impacted by weather-related project delivery disruptions.
SG&A and Non-Op - Building Solutions
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions | As reported | As reported | As reported | As reported | |||||||||||||||||||||||||||||||||||||||||||
| Building Solutions | |||||||||||||||||||||||||||||||||||||||||||||||
| SG&A and Non-Op | $ | 3.2 | $ | 1.3 | $ | 2.0 | 156 | % | $ | 9.7 | $ | 1.3 | $ | 8.4 | 672 | % | |||||||||||||||||||||||||||||||
| SG&A and Non-Op as a percentage of revenue | 20 | % | 13 | % | N/A | N/A | 23 | % | 13 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, Building Solutions SG&A and Non-Op expenses were $3.2 million or 20% of revenue. The segment demonstrated effective cost management during the quarter, controlling discretionary spending and maintaining operational efficiency despite the challenging revenue environment. The focus on expense discipline helped partially offset the impact of lower sales volumes on overall profitability.
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For the nine months ended September 30, 2026, Building Solutions SG&A and Non-Op expenses were $9.7 million or 23% of revenue. The segment kept a disciplined approach to spending through the first nine months of the year, working to preserve operating flexibility as it navigates a competitive pricing environment and softer demand.
Operating (Loss) Income and EBITDA - Building Solutions
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions | As reported | As reported | As reported | As reported | |||||||||||||||||||||||||||||||||||||||||||
| Building Solutions | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 0.4 | $ | 0.4 | $ | - | 5 | % | $ | (0.6) | $ | 0.4 | $ | (1.0) | (264) | % | |||||||||||||||||||||||||||||||
| EBITDA (loss) | $ | 0.3 | $ | 0.5 | $ | (0.2) | (44) | % | $ | (1.1) | $ | 0.5 | $ | (1.6) | (313) | % | |||||||||||||||||||||||||||||||
| EBITDA (loss) as a percentage of revenue | 2 | % | 5 | % | N/A | N/A | (2) | % | 5 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, Building Solutions generated operating income of $0.4 million and EBITDA of $0.3 million or 2% of revenue. Profitability for the quarter was primarily impacted by lower volume and margin pressure resulting from rising material costs and the competitive environment. While the segment maintained effective cost management and expense discipline on the SG&A side, the revenue shortfall and resulting margin pressure were the primary drivers of the near-breakeven EBITDA performance.
For the nine months ended September 30, 2026, Building Solutions generated operating loss of $0.6 million and EBITDA loss of $1.1 million or 2% of revenue. The segment maintained effective cost management on the SG&A side; however, lower volume and margin pressure from the competitive environment remained a challenge through the first nine months of the year.
Business Services
Revenue - Business Services
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions |
As reported |
As reported |
As reported |
As reported |
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| Business Services | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 33.8 | $ | 37.0 | $ | (3.2) | (9) | % | $ | 105.2 | $ | 104.4 | $ | 0.8 | 1 | % | |||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, RPO revenue decreased $0.3 million, or 2%, while contracting revenue decreased $2.9 million, or 15% compared to 2025.
In the Americas, revenue decreased slightly for the three months ended September 30, 2026, compared to the same period in 2025. The decrease was driven by a decline in contracting revenue, which decreased $0.2 million, or 24%, due to reduced demand from existing clients. This decline was mainly offset by an increase in RPO revenue of $0.2 million, or 3%, driven by higher demand from existing clients.
In Asia Pacific, revenue decreased $2.9 million, or 12%, for the three months ended September 30, 2026, compared to the same period in 2025. Contracting revenue decreased $2.4 million, or 15%, due to lower demand from existing clients, coupled with a decline in RPO revenue of $0.5 million, or 6%, due to a reduction in demand from existing clients.
In EMEA, revenue decreased $0.3 million, or 6%, for the three months ended September 30, 2026, compared to the same period in 2025, driven by a decline in contracting revenue of $0.3 million, or 10%, and a decline in RPO revenue of $0.1 million, or 2%.
For the nine months ended September 30, 2026, RPO revenue increased $0.4 million, or 1%, while contracting revenue increased $0.4 million, or 1% compared to 2025.
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In the Americas, revenue increased $1.5 million, or 7%, for the nine months ended September 30, 2026, compared to the same period in 2025. The increase was primarily driven by RPO revenue, which increased $2.6 million, or 14%, driven by higher demand from existing clients, while contracting revenue decreased $1.1 million, or 36%, due to reduced demand from existing clients.
In Asia Pacific, revenue increased $0.6 million, or 1%, for the nine months ended September 30, 2026, compared to the same period in 2025. Contracting revenue increased $2.6 million, or 6%, due to higher demand from existing clients, partly offset by a decline in RPO revenue of $1.9 million, or 9%, due to a reduction in demand from existing clients.
In EMEA, revenue decreased $1.4 million, or 8%, for the nine months ended September 30, 2026, compared to the same period in 2025, driven by a decline in contracting revenue of $1.1 million, or 13%, and a decline in RPO revenue of $0.3 million, or 3%.
Gross Profit - Business Services
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions |
As reported |
As reported |
As reported |
As reported |
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| Business Services | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | $ | 18.2 | $ | 18.6 | $ | (0.5) | (2) | % | $ | 53.4 | $ | 53.7 | $ | (0.2) | - | % | |||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, gross profit decreased $0.5 million, or 2%, driven by a decrease in RPO gross profit of $0.2 million, coupled with a decrease in contracting gross profit of $0.2 million, compared to the same period in 2025.
In Americas, gross profit increased by $0.2 million, or 4%, for the three months ended September 30, 2026, compared to the same period in 2025. The growth was primarily driven by an increase of $0.4 million, or 5%, in RPO gross profit, partially offset by a decrease in contracting gross profit of $0.1 million, or 69%, compared to 2025.
In Asia Pacific, gross profit decreased by $0.4 million, or 5%, for the three months ended September 30, 2026, compared to the same period in 2025, driven by lower RPO gross profit of $0.5 million.
In EMEA, gross profit decreased by $0.3 million, or 9%, for the three months ended September 30, 2026, compared to the same period in 2025, driven by lower RPO gross profit of $0.1 million and lower contracting gross profit of $0.1 million.
For the nine months ended September 30, 2026, gross profit decreased $0.2 million, or 0.4%, driven by a decrease in contracting gross profit of $0.7 million, partly offset by an increase in RPO gross profit of $0.5 million, compared to the same period in 2025.
In Americas, gross profit increased by $2.2 million, or 11%, for the nine months ended September 30, 2026, compared to the same period in 2025. The growth was primarily driven by an increase of $2.7 million, or 14%, in RPO gross profit, partially offset by a decrease in contracting gross profit of $0.5 million, or 80%, compared to 2025.
In Asia Pacific, gross profit decreased by $2.1 million, or 9%, for the nine months ended September 30, 2026, compared to the same period in 2025, driven by lower RPO gross profit of $2.0 million, coupled with lower contracting gross profit of $0.1 million.
In EMEA, gross profit decreased by $0.3 million or 3%, for the nine months ended September 30, 2026, compared to the same period in 2025, driven primarily by lower RPO gross profit of $0.2 million.
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Index
SG&A and Non-Op - Business Services
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions |
As reported |
As reported |
As reported |
As reported |
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| Business Services | |||||||||||||||||||||||||||||||||||||||||||||||
| SG&A and Non-Op | $ | 18.1 | $ | 17.8 | $ | 0.3 | 2 | % | $ | 54.3 | $ | 52.4 | $ | 1.9 | 4 | % | |||||||||||||||||||||||||||||||
| SG&A and Non-Op as a percentage of revenue | 54 | % | 48 | % | N/A | N/A | 52 | % | 50 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, SG&A and Non-Op increased $0.3 million compared to the same period in 2025, while SG&A and Non-Op as a percentage of revenue increased from 48% in the prior year to 54% in the current year. The increase in SG&A and Non-Op was primarily due to higher compensation costs.
For the nine months ended September 30, 2026, SG&A and Non-Op increased $1.9 million or 4%, compared to the same period in 2025, while SG&A and Non-Op as a percentage of revenue increased from 50% in the prior year to 52%.
Operating Income and EBITDA - Business Services
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions |
As reported |
As reported |
As reported |
As reported |
|||||||||||||||||||||||||||||||||||||||||||
| Business Services | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 0.2 | $ | 0.7 | $ | (0.5) | (70) | % | $ | (0.4) | $ | 1.6 | $ | (2.1) | (128) | % | |||||||||||||||||||||||||||||||
| EBITDA (loss) | $ | - | $ | 0.8 | $ | (0.8) | (95) | % | $ | (0.9) | $ | 1.3 | $ | (2.2) | (172) | % | |||||||||||||||||||||||||||||||
| EBITDA (loss) as a percentage of revenue | - | % | 2 | % | N/A | N/A | (1) | % | 1 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, operating income was $0.2 million, compared to operating income of $0.7 million in 2025, and EBITDA was $0.04 million, or 0.1% of revenue, compared to EBITDA of $0.8 million, or 2% of revenue, in 2025.
For the nine months ended September 30, 2026, operating loss was $0.4 million, compared to operating income of $1.6 million in 2025, and EBITDA loss was $0.9 million, or 1% of revenue, compared to EBITDA of $1.3 million, or 1% of revenue, in 2025.
Energy Services
Results for the three and nine months ended September 30, 2025 include only the period from August 22, 2025, the date of the merger of Star Equity Holdings, Inc. and Hudson Global, Inc., through September 30, 2025.
Revenue - Energy Services
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions |
As reported |
As reported |
As reported |
As reported | |||||||||||||||||||||||||||||||||||||||||||
| Energy Services | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 3.7 | $ | 1.3 | $ | 2.4 | 183 | % | 11.1 | 1.3 | $ | 9.8 | 745 | % | |||||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, Energy Services contributed $3.7 million in revenue. The segment demonstrated positive momentum during the quarter, in both the geothermal and oil & gas markets, where activity levels accelerated as the segment continued to capture market share through strong customer relationships and new customer wins.
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Index
For the nine months ended September 30, 2026, Energy Services contributed $11.1 million in revenue. Activity remained strong across both the Permian and Rockies regions through the first nine months of the year, driving momentum across markets.
Gross Profit - Energy Services
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions |
As reported |
As reported |
As reported |
As reported | |||||||||||||||||||||||||||||||||||||||||||
| Energy Services | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | $ | 1.8 | $ | 0.3 | $ | 1.5 | 421 | % | $ | 5.2 | $ | 0.3 | $ | 4.9 | N/M | ||||||||||||||||||||||||||||||||
N/M = not meaningful
For the three months ended September 30, 2026, the contribution of Energy Services to the Company's Gross Profit was $1.8 million. The segment delivered strong margin performance during the quarter. The combination of increased activity levels and improved cost absorption supported profitability as the segment executed on opportunities across both traditional energy markets and diversified non-oil-and-gas applications.
For the nine months ended September 30, 2026, the contribution of Energy Services to the Company's Gross Profit was $5.2 million. The drivers of the margin performance for the nine months ended September 30, 2026 were the same factors noted for the three months ended September 30, 2026 above.
SG&A and Non-Op - Energy Services
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions |
As reported |
As reported |
As reported |
As reported | |||||||||||||||||||||||||||||||||||||||||||
| Energy Services | |||||||||||||||||||||||||||||||||||||||||||||||
| SG&A and Non-Op | $ | 1.2 | $ | 0.4 | $ | 0.8 | 220 | % | $ | 3.4 | $ | 0.4 | $ | 3.1 | 830 | % | |||||||||||||||||||||||||||||||
| SG&A and Non-Op as a percentage of revenue | 32 | % | 28 | % | N/A | N/A | 31 | % | 28 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, Energy Services' SG&A and non-operating expenses totaled $1.2 million or 32% of revenue. Expenses were generally in line with normal operating levels, with a slight increase in sales commissions reflecting efforts to expand market share during the period.
For the nine months ended September 30, 2026, Energy Services' SG&A and non-operating expenses totaled $3.4 million or 31% of revenue. Spend levels tracked the segment's normal operating range for the first nine months of the year, with sales commissions representing a modest share of the total as the segment worked to grow its customer base.
Operating Income and EBITDA - Energy Services
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions |
As reported |
As reported |
As reported |
As reported | |||||||||||||||||||||||||||||||||||||||||||
| Energy Services | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 0.7 | $ | (0.1) | $ | 0.7 | N/M | $ | 1.9 | $ | (0.1) | $ | 2.0 | N/M | |||||||||||||||||||||||||||||||||
| EBITDA (loss) | $ | 1.0 | $ | 0.1 | $ | 0.8 | 585 | % | $ | 2.9 | $ | 0.1 | $ | 2.8 | N/M | ||||||||||||||||||||||||||||||||
| EBITDA (loss) as a percentage of revenue | 26 | % | 11 | % | N/A | N/A | 26 | % | 11 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||
N/M = not meaningful
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Index
For the three months ended September 30, 2026, Energy Services reported operating income of $0.7 million and EBITDA of $1.0 million or 26% of revenue. The segment's profitability reflects the positive momentum established during the quarter, with strong margin performance and increased activity levels driving EBITDA generation.
For the nine months ended September 30, 2026, Energy Services reported operating income of $1.9 million and EBITDA of $2.9 million or 26% of revenue. Results for the first nine months of the year were underpinned by sustained activity across the Permian and Rockies regions and continued strength in geothermal markets, translating into solid EBITDA generation for the segment.
Investments
Results for the three and nine months ended September 30, 2025 include only the period from August 22, 2025, the date of the merger of Star Equity Holdings, Inc. and Hudson Global, Inc., through September 30, 2025.
Revenue-Investments
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions | As reported | As reported | As reported | As reported | |||||||||||||||||||||||||||||||||||||||||||
| Investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 0.2 | $ | 0.1 | $ | 0.1 | 202 | % | $ | 0.5 | $ | 0.1 | $ | 0.4 | 801 | % | |||||||||||||||||||||||||||||||
For the three and nine months ended September 30, 2026, Investments contributed $0.2 million and $0.5 million, respectively, to the Company's revenue, reflecting rental income from owned properties.
Gross Profit - Investments
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions | As reported | As reported | As reported | As reported | |||||||||||||||||||||||||||||||||||||||||||
| Investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit | $ | 0.1 | $ | - | $ | 0.1 | 324 | % | $ | 0.3 | $ | - | $ | 0.2 | N/M | ||||||||||||||||||||||||||||||||
N/M = not meaningful
For the three and nine months ended September 30, 2026, Investments contributed $0.1 million and $0.3 million, respectively, to the Company's gross profit, reflecting rental income after accounting for property depreciation.
SG&A and Non-Op - Investments
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions | As reported | As reported | As reported | As reported | |||||||||||||||||||||||||||||||||||||||||||
| Investments | |||||||||||||||||||||||||||||||||||||||||||||||
| SG&A and Non-Op | $ | (0.2) | $ | - | $ | (0.2) | N/M | $ | 0.1 | $ | - | $ | 0.1 | 103 | % | ||||||||||||||||||||||||||||||||
| SG&A and Non-Op as a percentage of revenue | (129) | % | N/M | N/A | N/A | 25 | % | N/M | N/A | N/A | |||||||||||||||||||||||||||||||||||||
N/M = not meaningful
For the three and nine months ended September 30, 2026, Investments SG&A and Non-Op was $(0.2) million and $0.1 million, respectively.
Operating (Loss) Income and EBITDA - Investments
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Index
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | Change in amount | Change in % | 2026 | 2025 | Change in amount | Change in % | ||||||||||||||||||||||||||||||||||||||||
| $ in millions | As reported | As reported | As reported | As reported | |||||||||||||||||||||||||||||||||||||||||||
| Investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | - | $ | - | $ | - | N/M | $ | (0.1) | $ | - | $ | (0.1) | N/M | |||||||||||||||||||||||||||||||||
| EBITDA (loss) | $ | 0.4 | $ | - | $ | 0.4 | N/M | $ | 0.4 | $ | - | $ | 0.4 | N/M | |||||||||||||||||||||||||||||||||
| EBITDA (loss) as a percentage of revenue | 229 | % | (11) | % | N/A | N/A | 75 | % | (11) | % | N/A | N/A | |||||||||||||||||||||||||||||||||||
N/M = not meaningful
Investments operating loss was $0.0 million and $0.1 million for three and nine months ended September 30, 2026, respectively, with EBITDA of $0.4 million, or 229% of revenue for the three months ended September 30, 2026 and $0.4 million, or 75% of revenue for the nine months ended September 30, 2026.
Corporate Expenses, Net of Corporate Management Expense Allocations
Corporate expenses were $2.4 million for the three months ended September 30, 2026, representing a slight increase compared to $2.4 million for the same period in 2025. The increase in corporate expenses was primarily driven by higher compensation costs, reflecting increased salaries and related expenses associated with the acquisition of Star Operating Companies.
For the nine months ended September 30, 2026, corporate expenses were $5.8 million compared to $4.5 million for the same period in 2025, representing an increase of $1.3 million. The increase in corporate expenses was primarily driven by higher compensation costs, reflecting increased salaries and related expenses associated with the acquisition of Star Operating Companies.
Depreciation and Amortization Expense
Depreciation and amortization expense included in operating expenses was $0.3 million and $1.0 million for the three and nine months ended September 30, 2026, compared to $0.4 million and $0.9 million for the same periods in 2025. Depreciation and amortization expense included in cost of revenues was $0.6 million and $1.8 million for the three and nine months ended September 30, 2026 and $0.3 million for each of the three and nine months ended September 30, 2025.
Interest (expense) income, Net
Interest expense, net was $0.0 million for each of the three and nine months ended September 30, 2026, compared to net interest income of $0.1 million and $0.2 million for the same periods in 2025.
Other Income (expense), Net
Net other income was $0.2 million and net other expense was $0.0 million for the three and nine months ended September 30, 2026, compared to net other income of $0.0 million and net other expense of $0.2 million for the same periods in 2025, respectively.
Provision for Income Taxes
The benefit from income taxes for the nine months ended September 30, 2026 was $0.0 million on $7.2 million of pre-tax loss, compared to a provision for income tax of $0.6 million on $3.6 million of pre-tax loss for the same period in 2025. The effective tax rates for the nine months ended September 30, 2026 and 2025 were 0% and negative 17%, respectively. For the nine months ended September 30, 2026, the effective tax rates differed from the U.S. Federal statutory rate of 21% primarily due to pretax losses for which no tax benefit can be recognized, foreign tax rate differences, and non-deductible expenses. For the nine months ended September 30, 2025, the effective tax rates differed from the U.S. Federal statutory rate of 21% primarily due to pretax losses for which no tax benefit can be recognized, foreign tax rate differences, and non-deductible expenses. The current year-to-date effective tax rate differs significantly from the prior period effective tax rate primarily due to the interaction of rate reconciliation items, including changes in valuation allowance.
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Index
Net Loss
Net loss attributable to common shareholders was $2.2 million for the three months ended September 30, 2026, compared to net loss of $1.8 million for the three months ended September 30, 2025, an increase in net loss of $0.4 million. Basic and diluted loss per share were both $0.60 for the three months ended September 30, 2026, compared to basic and diluted loss per share of $0.56 for the same period in 2025.
Net loss attributable to common shareholders was $9.0 million for the nine months ended September 30, 2026, compared to net loss of $4.3 million for the nine months ended September 30, 2025, an increase in net loss of $4.8 million. Basic and diluted loss per share were both $2.43 for the nine months ended September 30, 2026, compared to basic and diluted loss per share of $1.39 for the same period in 2025.
Liquidity and Capital Resources
As of September 30, 2026, cash and cash equivalents and restricted cash totaled $7.8 million, compared to $13.4 million as of December 31, 2025. The following table summarizes the Company's cash flow activities for the nine months ended September 30, 2026 and 2025:
| For the Nine Months Ended September 30, | ||||||||||||||
| $ in millions | 2026 | 2025 | ||||||||||||
| Net cash used in operating activities | $ | (2.2) | $ | (3.4) | ||||||||||
| Net cash provided by investing activities | 0.6 | 6.2 | ||||||||||||
| Net cash used in financing activities | (3.9) | (2.6) | ||||||||||||
| Effect of exchange rates on cash, cash equivalents, and restricted cash | (0.1) | 0.7 | ||||||||||||
| Net (decrease) increase in cash, cash equivalents, and restricted cash | $ | (5.6) | $ | 0.9 | ||||||||||
Cash Flows from Operating Activities
For the nine months ended September 30, 2026, net cash used in operating activities was $2.2 million, compared to $3.4 million during the same period in 2025, resulting in a $1.2 million decrease in net cash used. The decrease was primarily driven by favorable changes in working capital, principally accounts receivable, partly offset by the Company's higher net loss in 2026 compared to 2025.
Cash Flows from Investing Activities
For the nine months ended September 30, 2026, net cash provided by investing activities was $0.6 million compared to $6.2 million of net cash provided by investing activities in 2025. Investing activities in 2026 primarily reflects $3.2 million of proceeds from a sale-leaseback of real estate, $2.0 million from sales of equity securities, $1.0 million from the sale of lost-in-hole equipment, and $0.2 million from note receivable repayments, partially offset by $3.6 million of capital expenditures and $2.2 million of equity security purchases.
Cash Flows from Financing Activities
For the nine months ended September 30, 2026, net cash used in financing activities was $3.9 million, compared to net cash used in financing activities of $2.6 million in 2025. Net cash used in 2026 primarily reflects preferred stock dividends paid of $1.8 million in the current year, treasury stock repurchases of $1.2 million, and net debt repayments of $1.6 million, partially offset by $0.8 million of proceeds from the issuance of preferred stock under the Company's at-the-market program.
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Index
Credit Facilities
See Note 9, Debt, in the accompanying notes to the condensed consolidated financial statements for further details.
Liquidity and Capital Resources Outlook
As of September 30, 2026, the Company had cash and cash equivalents on hand of $6.2 million, as well as our lines of credit and other debt instruments. During the nine months ended September 30, 2026, the Company raised $0.8 million in net proceeds through sales of shares of its 10% Series A Cumulative Perpetual Preferred Stock under an At Market Issuance Sales Agreement entered into in May 2026. The Company believes that it has sufficient liquidity to satisfy its needs through at least the next 12 months, based on the Company's financial position as of September 30, 2026. The Company's near-term cash requirements during 2026 are primarily related to the funding of the Company's operations.
As of September 30, 2026, $2.3 million of the Company's cash and cash equivalents noted above were held in the U.S. and the remainder were held outside the U.S., primarily in Singapore ($1.0 million), Hong Kong ($0.7 million), the Philippines ($0.5 million), the U.K. ($0.4 million), Germany ($0.3 million), and India ($0.3 million). The majority of the Company's offshore cash is available to it as a source of funds, net of any tax obligations or assessments.
Off-Balance Sheet Arrangements
As of September 30, 2026, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Contingencies
From time to time in the ordinary course of business, the Company is subject to compliance audits by U.S. federal, state, local, and foreign government regulatory, tax, and other authorities relating to a variety of regulations, including wage and hour laws, unemployment taxes, workers' compensation, immigration, and income, value-added, and sales taxes. The Company is also subject to, from time to time in the ordinary course of business, various claims, lawsuits, and other complaints from, for example, clients, candidates, suppliers, landlords for both leased and subleased properties, former and current employees, and regulators or tax authorities. Periodic events and management actions such as business reorganization initiatives can change the number and types of audits, claims, lawsuits, contract disputes, or complaints asserted against the Company. Such events can also change the likelihood of assertion and the behavior of third parties to reach resolution regarding such matters.
The economic conditions in the recent past have given rise to many news reports and bulletins from clients, tax authorities, and other parties about changes in their procedures for audits, payment, plans to challenge existing contracts, and other such matters aimed at being more aggressive in the resolution of such matters in their own favor. The Company believes that it has appropriate procedures in place for identifying and communicating any matters of this type, whether asserted or likely to be asserted, and it evaluates its liabilities in light of the prevailing circumstances. Changes in the behavior of third parties could cause the Company to change its view of the likelihood of a claim and what might constitute a trend. Employment laws vary in the markets in which we operate, and in some cases, employees and former employees have extended periods during which they may bring claims against the Company.
For matters that reach the threshold of probable and estimable, the Company establishes reserves for legal, regulatory, and other contingent liabilities. The Company had $0.2 million of legal reserves as of both September 30, 2026 and December 31, 2025. Although the outcome of these matters cannot be determined, the Company believes that none of the currently pending matters, individually or in the aggregate, will have a material adverse effect on the Company's financial condition, results of operations or liquidity.
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Index
Recent Accounting Pronouncements
See Note 3 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a full description of relevant accounting pronouncements, including the respective expected dates of adoption.
Critical Accounting Policies and Estimates
See "Critical Accounting Estimates" under Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 20, 2026 and incorporated by reference herein. There were no changes to the Company's critical accounting policies or estimates during the nine months ended September 30, 2026.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains statements that the Company believes to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Form 10-Q, including statements regarding the Company's future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "predict," "believe," and similar words, expressions, and variations of these words and expressions are intended to identify forward-looking statements. All forward-looking statements are subject to important factors, risks, uncertainties, and assumptions, including industry and economic conditions that could cause actual results to differ materially from those described in the forward-looking statements. Such factors, risks, uncertainties, and assumptions include, but are not limited to, (1) global economic fluctuations, (2) changes in the cost and availability of commodities, materials, and equipment, (3) risks related to providing uninterrupted service to clients, (4) the ability of clients to terminate their relationship with the Company at any time, (5) risks associated with real estate ownership, (6) the Company's ability to successfully achieve its strategic initiatives, (7) risks related to fluctuations in the Company's operating results from quarter to quarter, (8) risks related to potential acquisitions or dispositions of businesses by the Company, including risks related to the proposed HH Merger, such as the possibility that required financing, stockholder approval or other closing conditions may not be obtained or satisfied and that the HH Merger may be delayed or not completed; difficulties, delays or unexpected costs in integrating the businesses and managing the combined company's expanded operations; the failure to realize anticipated benefits and cost savings; disruption of business operations and relationships with customers and employees, loss of key employees and diversion of management attention; increased indebtedness and reduced financial flexibility; and substantial transaction and integration costs, including transaction costs payable regardless of whether the HH Merger is completed, (9) our profitability and growth being tied to the success of our operating businesses, (10) risks associated with our financial investments in other businesses, (11) our ability to improve existing products and services and develop, introduce, and market new products and services successfully, (12) the loss of or material reduction in our business with any of the Company's largest customers, (13) competition in the Company's markets, (14) risks related to potential decreases in demand for products, (15) our ability to maintain costs at an acceptable level, (16) the negative cash flows and operating losses that may recur in the future, (17) risks related to international operations, including foreign currency fluctuations, political events, trade wars, natural disasters or health crises, including the Russia-Ukraine war and conflict in the Middle East, (18) risks relating to how future credit facilities may affect or restrict our operating flexibility, (19) our ability to generate or borrow sufficient cash to make payments on our indebtedness, (20) risks related to indebtedness, (21) risks associated with the Company's investment strategy, (22) the Company's dependence on key management personnel, (23) the Company's ability to attract and retain highly skilled professionals, management, and advisors, (24) the Company's ability to collect accounts receivable, (25) the Company's exposure to legal proceedings, investigations and disputes, and limits on related insurance coverage, (26) the Company's ability to utilize net operating loss carryforwards, (27) the potential for goodwill impairment, (28) volatility of the Company's stock price, (29) risks related to our historically low trading volume, (30) risks related to securities or industry analysts, (31) the Company's ability to declare dividends, (32) risks associated with failure to pay dividends on our Preferred Stock, (33) risks related to compliance with federal and state laws, regulations, and other rules, (34) our exposure to employment-related claims, legal liability, and costs from clients, employees, and regulatory authorities, (35) risks related to the imposition of licensing or tax requirements or new regulations, (36) the effect of Anti-takeover provisions in our organizational documents, (37) the effect of the protective amendment contained in our Restated Certificate of Incorporation, (38) the impact of our stockholder rights plan, or "poison pill," on stockholder decision making, (39) risks related to our scaled disclosure requirements as a smaller reporting company, (40) the Company's heavy reliance on information systems and the impact of potentially losing or failing to develop technology, (41) the adverse impacts of cybersecurity threats and attacks, and (42) risks related to the use of new and evolving technologies. The foregoing list should not be construed to be exhaustive. Actual results could differ materially from the forward-looking statements contained in this Form 10-Q. In view of these uncertainties, you should not place undue reliance on any forward-looking statements, which are based on our current expectations. These forward-looking statements speak only as of the date of this Form 10-Q. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.
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