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What changed in DLH Holdings Corp.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of DLH Holdings Corp.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+141 added−135 removedSource: 10-K (2025-12-10) vs 10-K (2024-12-04)

Top changes in DLH Holdings Corp.'s 2025 10-K

141 paragraphs added · 135 removed · 95 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

20 edited+15 added−17 removed16 unchanged
Biggest changeBusiness – Major Contracts . 27 Results of Operations Fiscal Year Ended September 30, 2024 as Compared to Fiscal Year Ended September 30, 2023 The following table summarizes, for the years indicated, consolidated statements of operations data expressed (in thousands except for per share amounts, and as percentages of revenue): Year Ended September 30, 2024 2023 Change Revenue $ 395,937 100.0 % $ 375,872 100.0 % $ 20,065 Cost of operations Contract costs 317,026 80.1 % 296,016 78.8 % 21,010 General and administrative costs 36,959 9.3 % 37,795 10.1 % (836) Impairment loss of long-lived asset — — % 7,673 2.0 % (7,673) Corporate development costs — — % 1,735 0.5 % (1,735) Depreciation and amortization 17,052 4.3 % 15,562 4.1 % 1,490 Total operating costs 371,037 93.7 % 358,781 95.5 % 12,256 Income from operations 24,900 6.3 % 17,091 4.5 % 7,809 Interest expense 17,153 4.3 % 16,271 4.3 % 882 Income before provision for income tax (benefit) expense 7,747 2.0 % 820 0.2 % 6,927 Provision for income tax expense (benefit) 350 0.1 % (641) (0.2) % 991 Net income $ 7,397 1.9 % $ 1,461 0.4 % $ 5,936 Net income per share - basic $ 0.52 $ 0.11 $ 0.41 Net income per share - diluted $ 0.51 $ 0.10 $ 0.41 Revenue For the year ended September 30, 2024 revenue was $395.9 million, an increase of $20.1 million or 5.3% over the prior year period.
Biggest changeBusiness – Major Contracts for additional detail 27 Results of Operations Fiscal Year Ended September 30, 2025 as Compared to Fiscal Year Ended September 30, 2024 The following table summarizes, for the years indicated, consolidated statements of operations data expressed (in thousands except for per share amounts, and as percentages of revenue): Year Ended September 30, 2025 2024 Change Revenue $ 344,497 100.0 % $ 395,937 100.0 % $ (51,440) Cost of Operations Contract costs 279,333 81.0 % 318,447 80.4 % (39,114) General and administrative costs 31,199 9.1 % 35,538 9.0 % (4,339) Depreciation and amortization 17,179 5.0 % 17,052 4.3 % 127 Total operating costs 327,711 95.1 % 371,037 93.7 % (43,326) Income from operations 16,786 4.9 % 24,900 6.3 % (8,114) Interest expense 15,031 4.4 % 17,153 4.3 % (2,122) Income before provision for income taxes 1,755 0.5 % 7,747 2.0 % (5,992) Provision for income taxes 393 0.1 % 350 0.1 % 43 Net income $ 1,362 0.4 % $ 7,397 1.9 % $ (6,035) Net income per share Basic $ 0.09 $ 0.52 $ (0.43) Diluted $ 0.09 $ 0.51 $ (0.42) Revenue For the year ended September 30, 2025 revenue was $344.5 million, a decrease of $51.4 million over the prior year period.
Any consideration paid by the option holders to purchase shares is credited to capital stock. New Accounting Pronouncements A discussion of recently issued accounting pronouncements is described in Note 3 of the accompanying notes to our consolidated financial statements contained elsewhere in this Annual Report, and we incorporate such discussion by reference.
Any consideration paid by the option holders to purchase shares is credited to capital stock. New Accounting Pronouncements A discussion of recently issued accounting pronouncements is described in Note 3 of the accompanying notes to our consolidated financial statements contained elsewhere in this Annual Report, and we incorporate such discussion by reference. 32
On January 31, 2023, we executed an additional floating-to-fixed interest rate swap with FNB; the notional amount as of September 30, 2024 is $80.0 million, it matures in January 2026, and the fixed rate is 4.1%.
On January 31, 2023, we executed an additional floating-to-fixed interest rate swap with FNB; the notional amount as of September 30, 2025 is $74.0 million, it matures in January 2026, and the fixed rate is 4.1%.
The Company accessed funds from the secured revolving line of credit during the year, and had $12.1 million outstanding balance at September 30, 2024. The secured term loan and secured revolving line of credit are secured by liens on substantially all of the assets of the Company.
The Company accessed funds from the secured revolving line of credit during the year, and had $8.1 million outstanding balance at September 30, 2025. The secured term loan and secured revolving line of credit are secured by liens on substantially all of the assets of the Company.
As a result of entering interest rate swap agreements, for the twelve months ended September 30, 2024, interest expense has been decreased by approximately $1.3 million. (a) Represents the principal amounts payable on our secured term loan, which is secured by liens on substantially all of the assets of the Company.
As a result of entering interest rate swap agreements, for the twelve months ended September 30, 2025, interest expense has been decreased by approximately $0.2 million. (a) Represents the principal amounts payable on our secured term loan, which is secured by liens on substantially all of the assets of the Company.
Credit Facilities A summary of our credit facilities as of September 30, 2024 is as follows (in millions): Lender Arrangement Loan Balance Interest * Maturity Date First National Bank of Pennsylvania Secured term loan (a) $ 142.5 SOFR1 + 4.1% December 8, 2027 First National Bank of Pennsylvania Secured revolving line of credit (b) $ 12.1 SOFR1 + 4.1% December 8, 2027 1 Secured Overnight Financing Rate ("SOFR") as of September 30, 2024 was 5.2%.
Credit Facilities A summary of our credit facilities as of September 30, 2025 is as follows (in millions): Lender Arrangement Loan Balance Interest * Maturity Date First National Bank of Pennsylvania Secured term loan (a) $ 123.5 SOFR1 + 4.1% December 8, 2027 First National Bank of Pennsylvania Secured revolving line of credit (b) $ 8.1 SOFR1 + 4.1% December 8, 2027 1 Secured Overnight Financing Rate ("SOFR") as of September 30, 2025 was 4.3%.
The principal of the secured term loan is payable in quarterly installments with the remaining balance due on December 8, 2027. (b) As of September 30, 2024 the secured revolving line of credit had a borrowing base of $32.5 million.
The principal of the secured term loan is payable in quarterly installments with the remaining balance due on December 8, 2027. (b) As of September 30, 2025 the secured revolving line of credit had a borrowing base of $50.0 million.
Sources of Cash As of September 30, 2024, our immediate sources of liquidity include cash of approximately $0.3 million, accounts receivable, and access to our secured revolving line of credit. This credit facility provides us with access of up to $32.5 million subject to certain conditions including eligible accounts receivable.
Sources of Cash As of September 30, 2025, our immediate sources of liquidity include cash of approximately $0.1 million, accounts receivable, and access to our secured revolving line of credit. This credit facility provides us with access of up to $50.0 million subject to certain conditions including eligible accounts receivable.
As of September 30, 2024, we had unused borrowing capacity of $18.1 million. The Company's present operating liabilities are largely predictable and consist of vendor and payroll related obligations.
As of September 30, 2025, we had unused borrowing capacity of $23.6 million. The Company's present operating liabilities are largely predictable and consist of vendor and payroll related obligations.
These non-GAAP measures of performance are used by management to conduct and evaluate its business during its review of operating results for the periods presented. Management and the Company's Board utilize these non-GAAP measures to make decisions about the use of the Company's resources, analyze performance between periods, develop internal projections and measure management performance.
This non-GAAP measure of our performance is used by management to conduct and evaluate its business during its regular review of operating results for the periods presented. Management and our Board utilize this non-GAAP measure to make decisions about the use of our resources, analyze performance between periods, develop internal projections and measure management's performance.
EBITDA and Adjusted EBITDA are not recognized measurements under accounting principles generally accepted in the United States, or GAAP, and when analyzing our performance investors should (i) evaluate each adjustment in our reconciliation to the nearest GAAP financial measures and (ii) use the aforementioned non-GAAP measures in addition to, and not as an alternative to, revenue, operating income, or net income, as measures of operating results, each as defined under GAAP.
EBITDA is not a recognized measurement under accounting principles generally accepted in the United States, or GAAP, and when analyzing our performance investors should (i) evaluate adjustments in our reconciliation to the nearest GAAP financial measures and (ii) use non-GAAP measures in addition to, and not as an alternative to, measures of our operating results as defined under GAAP.
A summary of the change in cash is presented below for the years ended September 30, 2024 and 2023 (in thousands): Year Ended September 30, 2024 2023 Net cash provided by operating activities $ 27,366 $ 31,033 Net cash used in investing activities (836) (181,197) Net cash (used in) provided by financing activities (26,403) 150,151 Net change in cash $ 127 $ (13) 30 Cash flows from operations totaled approximately $27.4 million and $31.0 million for the years ended September 30, 2024 and 2023, respectively.
A summary of the change in cash is presented below for the years ended September 30, 2025 and 2024 (in thousands): Year Ended September 30, 2025 2024 Net cash provided by operating activities $ 23,216 $ 27,366 Net cash used in investing activities (241) (836) Net cash used in financing activities (23,192) (26,403) Net change in cash $ (217) $ 127 29 Cash provided by operations totaled approximately $23.2 million and $27.4 million for the years ended September 30, 2025 and 2024, respectively.
The provisions of the secured term loan and secured revolving line of credit, including financial covenants, as amended, are fully described in Note 8 to the consolidated financial statements. 31 Contractual Obligations as of September 30, 2024 Payments Due By Period Next 12 2-3 4-5 More than 5 (Amounts in thousands) Total Months Years Years Years Debt obligations $ 154,558 $ 12,058 $ 42,750 $ 99,750 $ — Facility operating leases 18,538 3,536 6,011 5,203 3,788 Contractual obligations $ 173,096 $ 15,594 $ 48,761 $ 104,953 $ 3,788 Critical Accounting Policies and Estimates Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
The provisions of the secured term loan and secured revolving line of credit, including financial covenants, as amended, are fully described in Note 8 to the consolidated financial statements. 30 Contractual Obligations as of September 30, 2025 Payments Due By Period Next 12 2-3 4-5 More than 5 (Amounts in thousands) Total Months Years Years Years Debt obligations $ 131,567 $ 8,067 $ 123,500 $ — $ — Facility operating leases 20,525 3,993 7,059 6,776 2,697 Contractual obligations $ 152,092 $ 12,060 $ 130,559 $ 6,776 $ 2,697 Critical Accounting Policies and Estimates Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
For the year ended September 30, 2024, depreciation and amortization costs were $0.6 million and $16.5 million, respectively, as compared to $0.8 million and $14.8 million for the year ended September 30, 2023, respectively, an aggregate increase of $1.5 million which is primary due to the December 2022 acquisition. 28 Interest Expense Interest expense includes items such as interest expense and amortization of deferred financing costs on debt obligations.
For the year ended September 30, 2025, depreciation and amortization costs were $0.7 million and $16.5 million, respectively, as compared to $0.6 million and $16.5 million for the year ended September 30, 2024, respectively. Interest Expense Interest expense includes items such as interest expense and amortization of deferred financing costs on debt obligations.
General and administrative costs are for employees and third parties not directly providing services to our customers, including but not limited to executive management, bid and proposal, accounting, and human resources. These costs decreased as compared to the prior fiscal year by $0.8 million to approximately $37.0 million as the company achieved operating leverage following the December 2022 acquisition.
General and administrative costs are for employees and third parties not directly providing services to our customers, including but not limited to executive management, bid and proposal, accounting, and human resources. These costs decreased as compared to the prior fiscal year by $4.3 million, primarily due to a reduction in support costs proportionally with the change in revenue volume.
Cash used in financing activities during the fiscal year ended September 30, 2024 was approximately $26.4 million and cash provided by financing activities during the fiscal year ended September 30, 2023 was $150.2 million, respectively.
Cash used in financing activities during the fiscal years ended September 30, 2025 and September 30, 2024 were approximately $23.2 million and $26.4 million, respectively. The cash used in financing activities was primarily due to the prepayment of term debt.
Provision for Income Taxes Provision for Income taxes for the fiscal year ended September 30, 2024 was a tax expense of $0.4 million, an increase of approximately $1.0 million from the prior fiscal year. The increase was primarily due to the impairment of real estate assets in fiscal 2023 that did not impact fiscal 2024.
The decrease in interest expense was primarily due to the prepayment of debt and a decrease in the interest rate. 28 Provision for Income Taxes Provision for income taxes for the fiscal year ended September 30, 2025 increased approximately $43.0 thousand from the prior fiscal year.
We believe that these non-GAAP measures are useful to investors in evaluating the Company's ongoing operating and financial results and understanding how such results compare with the Company's historical performance. These supplemental performance measurements may vary from and may not be comparable to similarly titled measures by other companies in our industry.
We believe that this non-GAAP measure is useful to investors in evaluating our ongoing operating and financial results and understanding how such results compare with our historical performance. By providing this non-GAAP measure as a supplement to GAAP information, we believe this enhances investors understanding of our business and results of operations.
The increase in revenue is principally due to the December 2022 acquisition. Cost of Operations Contract costs primarily include the costs associated with providing services to our customers. These costs are generally comprised of direct labor and associated fringe benefit costs, subcontract cost, other direct costs, and the related management and infrastructure costs.
These costs are generally comprised of direct labor and associated fringe benefit costs, subcontract cost, other direct costs, and the related management and infrastructure costs. For the year ended September 30, 2025, the contract costs decreased as compared to the prior fiscal year by $39.1 million, primarily due to the decrease in revenue volume, most notably non-labor costs.
The decrease in cash from operations was principally due to a decrease in current liabilities, specifically lease liabilities. We used $0.8 million and $181.2 million of cash in investing activities during fiscal years 2024 and 2023, respectively. The cash utilized was predominantly due capital expenditures and the December 2022 acquisition in fiscal years 2024 and 2023, respectively.
The decrease in cash provided by operating activities is primarily due to a decrease in revenue volume as compared to the prior year. Cash used in investing activities totaled $0.2 million and $0.8 million for the years ended September 30, 2025 and 2024, respectively. The cash utilized was predominantly for capital expenditures in fiscal years 2025 and 2024, respectively.
Removed
For the year ended September 30, 2024, the contract costs increased as compared to the prior fiscal year by $21.0 million to approximately $317.0 million primarily due to the increase in revenue volume.
Added
The decrease in revenue was due primarily to the conversion of certain contracts in our HHS, VA and DOD portfolios to small business contractors. The revenue decrease from small business conversion was partially offset by contributions from new contract awards. Cost of Operations Contract costs primarily include the costs associated with providing services to our customers.
Removed
Non-labor costs, which consist primarily of subcontract and other direct costs and inherently carry a lower margin, increased as a percentage of revenue in fiscal 2024 as compared to the prior fiscal year.
Added
Interest expense decreased $2.1 million for the year ended September 30, 2025 compared to the prior fiscal year.
Removed
In the 2023 fiscal year there were two costs that did not recur in fiscal 2024 which impacted the Company’s operating income and net income. These costs consisted of an impairment loss of a long-lived asset of $7.7 million and corporate development costs of $1.7 million. The impairment charge resulted from the consolidation of under utilized real estate assets.
Added
The effective tax rate was 21.3% for the fiscal year ending September 30, 2025 and 4.5% for the fiscal year ending September 30, 2024. The tax provision from the prior year period was positively impacted by the exercise of non-qualifying stock options.
Removed
The corporate development costs were incurred to complete the December 2022 acquisition and include legal counsel, financial due diligence, customer market analysis and representation and warranty insurance premiums.
Added
Non-GAAP Financial Measures The Company uses Earnings Before Interest, Tax, Depreciation, and Amortization ("EBITDA") as a supplemental non-GAAP measure of our performance. DLH defines EBITDA as net income excluding (i) depreciation and amortization, (ii) interest expense, and (iii) provision for income tax expense.
Removed
For the year ended September 30, 2024, interest expense was $17.2 million compared to interest expense of $16.3 million in the prior year, an increase of approximately $0.9 million over the prior year period. The increase in interest expense was primarily due to the increase in debt associated with the December 2022 acquisition.
Added
On a non-GAAP basis, EBITDA for years ended September 30, 2025 and 2024 was approximately $34.0 million and $42.0 million, respectively. The decrease was primarily due to the decrease in revenue volume driven by conversion of certain VA and DoD contracts to small business contractors, partially offset by revenue from new contract awards.
Removed
The effective tax rate was a positive 4.5% for the fiscal year ending September 30, 2024 and a negative 72.2% for the fiscal year ending September 30, 2023. Non-GAAP Financial Measures The Company is presenting additional non-GAAP measures regarding its financial performance for years ended September 30, 2024 and 2023.
Added
Reconciliation of GAAP net income to EBITDA and Adjusted EBITDA, non-GAAP measures (in thousands): Year Ended September 30, 2025 2024 Change Net income $ 1,362 $ 7,397 $ (6,035) Depreciation and amortization 17,179 17,052 127 Interest expense $ 15,031 $ 17,153 (2,122) Provision for income taxes 393 350 43 EBITDA $ 33,965 41,952 $ (7,987) Liquidity and Capital Management Cash was approximately $0.1 million and $0.3 million for the years ended September 30, 2025 and 2024, respectively.
Removed
The measures presented are Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”), and Adjusted EBITDA. In calculating Adjusted EBITDA, we have added the corporate development costs associated with completing the December 2022 acquisition to our results for fiscal year 2023 and removed the impairment loss on certain real estate assets.
Added
Credit facility availability was approximately $23.6 million and $32.5 million as of September 30, 2025 and 2024, respectively.
Removed
These resulting measures present the annual financial performance compared to results delivered in the prior year period. Definitions of these additional non-GAAP measures are set forth below. We have prepared these additional non-GAAP measures to eliminate the impact of items that we do not consider indicative of ongoing operating performance due to their inherently unusual or extraordinary nature.
Added
The assessed useful lives of the assets are 10 years. 31 Goodwill Impairment Testing The qualitative assessment of goodwill at September 30, 2025 determined a triggering event occurred requiring that we conduct additional quantitative analyses. The triggering event was primarily due to the decrease in the Company's share price resulting in a decline in market capitalization.
Removed
We have defined these non-GAAP measures as follows: "EBITDA" represents net income before income taxes, interest, depreciation and amortization. “Adjusted EBITDA” represents net income before income taxes, interest, depreciation and amortization and the corporate costs associated with completing the acquisition and the impairment loss on the right of use asset.
Added
Management's assessment was that the market capitalization at the end of the 4th quarter was not indicative of the Company's fair value. The Company performed a quantitative assessment to determine its fair value. The quantitative assessment blended multiple methods so as to have a reasonable and complete assessment of fair value.
Removed
Reconciliation of GAAP net income to EBITDA and Adjusted EBITDA, non-GAAP measures (in thousands): 29 Year Ended September 30, 2024 2023 Change Net income $ 7,397 $ 1,461 $ 5,936 Interest expense, net $ 17,153 $ 16,271 882 Provision for income tax expense (benefit) 350 (641) 991 Depreciation and amortization 17,052 15,562 1,490 EBITDA $ 41,952 32,653 $ 9,299 Impairment loss of long-lived asset (a) — 7,673 (7,673) Corporate development costs (b) — 1,735 (1,735) Adjusted EBITDA $ 41,952 42,061 $ (109) (a): Represents impairment loss of certain long-lived real estate assets associated with a reduction of the fair value of an asset prompted by a triggering event.
Added
The methods used included both market and income-based approaches with all methods utilizing publicly available information in their respective calculations. Management assessed the relevance and reliability of the information utilized in each method.
Removed
During the fourth quarter of fiscal 2023, DLH reduced its leased office space requirement by consolidating underutilized premises as part of an ongoing facility rationalization effort, to accurately reflect the operational needs of the business.
Added
Significant estimates in the market-based method included identifying similar companies with comparable business factors such as service offerings, customers, size, growth, profitability, risk and return on investment, as well as assessing comparable market multiples and control premiums in estimating the fair value of the Company.
Removed
As a result, the Company has determined that its Right of Use Assets experienced a reduction in fair value below its associated carrying value and recorded a $7.7 million loss of fair value. (b): Represents corporate development costs we incurred to complete the December 2022 transaction.
Added
The income-based method is a discounted cash flow analysis and the significant estimates included expected growth rates, profitability and the weighted average cost of capital. For the market-based methods, the Company used the average market capitalization over the current quarter with the inclusion of a control premium as one estimation of fair value.
Removed
These costs primarily include legal counsel, financial due diligence, customer market analysis and representation and warranty insurance premiums. Liquidity and Capital Management Cash is approximately $0.3 million and $0.2 million for the period ended September 30, 2024 and 2023 respectively. Credit facility availability was approximately $32.5 million and $32.0 million for the period ended September 30, 2024 and 2023, respectively.
Added
The other market-based method used publicly available market multiples of relevant publicly traded companies applied to our EBITDA and revenue for fiscal 2025 to estimate the Company's fair value. For the income-based method, the Company calculated its expected future cash flows. Those cash flows were then discounted to present value using a weighted average cost of capital.
Removed
The cash used in financial activities during the fiscal year ended September 30, 2024, was primarily due to the early repayment of principal on our secured term loan. The activity in the fiscal year ended September 30, 2023 was primarily due to finance the December 2022 acquisition.
Added
The weighted average of the three assessments indicated that the Company's fair value was greater than its book equity value. As a result of these quantitative assessments, the Company determined that its goodwill was not impaired at the end of the year.
Removed
The assessed useful lives of the assets are 10 years. 32 Goodwill The Company continues to review its goodwill for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value.
Added
Management will continue to evaluate market conditions and perform qualitative interim assessments to determine if a triggering event has occurred. Should a triggering event occur, the Company will perform a quantitative assessment to estimate fair value.
Removed
At September 30, 2024, we performed an internal goodwill impairment evaluation with a qualitative assessment of factors to determine whether it was necessary to perform the goodwill impairment test.
Removed
Based on the results of the work performed, the Company has concluded that no impairment loss was warranted at September 30, 2024, as no change in business conditions occurred which would have a material adverse effect on the valuation of goodwill.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

61 edited+21 added−9 removed158 unchanged
Biggest changeWith the current pace of inflation our standard approach to moderate annual price escalations in our bids for multi-year work may be insufficient to counter inflationary cost pressures. This could result in reduced profits, or even losses, as inflation increases, particularly for fixed priced contracts and our longer-term multi-year contracts.
Biggest changeWe generate a portion of our revenues through various fixed price and multi-year government contracts which anticipate moderate increases in costs over the term of the contract. With the current pace of inflation our standard approach to moderate annual price escalations in our bids for multi-year work may be insufficient to counter inflationary cost pressures.
Further, as a government contractor subject to the types of regulatory schemes described above, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which private 21 sector companies are not, the result of which could have a material adverse effect on our operating results, cash flows and financial condition.
Further, as a government contractor subject to the types of regulatory schemes described above, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which private sector companies are not, the result of which could have a material adverse effect on our operating results, cash flows and financial condition.
In the competitive environment in which we operate as a government contractor, the lack of pricing leverage and ability to renegotiate long-term, multi-year contracts, could reduce our profits, disrupt our business, or otherwise materially adversely affect our results of operations. 20 Our profits and revenues could suffer if we are involved in legal proceedings, investigations, and disputes.
In the competitive environment in which we operate as a government contractor, the lack of pricing leverage and ability to renegotiate long-term, multi-year contracts, could reduce our profits, disrupt our business, or otherwise materially adversely affect our results of operations. Our profits and revenues could suffer if we are involved in legal proceedings, investigations, and disputes.
Any of these factors could adversely affect our ability to perform and subject us to additional liabilities, which could have a material adverse effect on our relationships with clients and on our results of operations. Risks Relating to Our Information Technology Systems and Intellectual Property We are highly dependent on the proper functioning of our information systems.
Any of these factors could adversely affect our ability to perform and subject us to additional liabilities, which could have a material adverse effect on our relationships with clients and on our results of operations. 15 Risks Relating to Our Information Technology Systems and Intellectual Property We are highly dependent on the proper functioning of our information systems.
The federal government’s appropriation process and other factors may delay the collection of our receivables, and our business may be adversely affected if we cannot collect our receivables in a timely manner. We depend on the collection of our receivables to generate cash flow, provide working capital, pay debt and continue our business operations.
The federal government’s appropriation process and other factors may delay the collection of our receivables, and our business may be adversely affected if we cannot collect our receivables in a timely manner. 14 We depend on the collection of our receivables to generate cash flow, provide working capital, pay debt and continue our business operations.
Any of these risks could cause our actual results to differ materially and adversely from those anticipated. We may have difficulty integrating the operations of companies we acquire, which could cause actual results to differ materially and adversely from those anticipated. The success of a potential future acquisition strategy depends upon our ability to successfully integrate the businesses.
Any of these risks could cause our actual results to differ materially and adversely from those anticipated. 17 We may have difficulty integrating the operations of companies we acquire, which could cause actual results to differ materially and adversely from those anticipated. The success of a potential future acquisition strategy depends upon our ability to successfully integrate the businesses.
Failure to adequately protect, maintain, or enforce our rights in our intellectual property may adversely limit our competitive position. We rely upon a combination of nondisclosure agreements and other contractual arrangements, as well as copyright, trademark, and trade secret laws to protect our proprietary information.
Failure to adequately protect, maintain, or enforce our rights in our intellectual property may adversely limit our competitive position. 16 We rely upon a combination of nondisclosure agreements and other contractual arrangements, as well as copyright, trademark, and trade secret laws to protect our proprietary information.
We have also purchased representations and warranties insurance in connection with the acquisition, but there is no assurance that those policies will cover any losses we might experience from 16 breaches of the sellers’ representations and warranties or otherwise arising from the acquisition.
We have also purchased representations and warranties insurance in connection with the acquisition, but there is no assurance that those policies will cover any losses we might experience from breaches of the sellers’ representations and warranties or otherwise arising from the acquisition.
Consistent with guidance from the SEC, our consolidated financial statements reflect our estimates of the tax effects of the current tax laws and regulations. We are exposed to increased costs and risks associated with complying with increasing and new regulation of corporate governance and disclosure standards.
Consistent with SEC guidance, our consolidated financial statements reflect our estimates of the tax effects of the current tax laws and regulations. We are exposed to increased costs and risks associated with complying with increasing and new regulation of corporate governance and disclosure standards.
RISK FACTORS As provided for under the Private Securities Litigation Reform Act of 1995 ("1995 Reform Act"), we wish to caution shareholders and investors that the following important factors, among others discussed throughout this Annual Report on Form 10-K for the fiscal year ended September 30, 2024, have affected, and in some cases could affect, our actual results of operations and cause our results to differ materially from those anticipated in forward looking statements made herein.
RISK FACTORS As provided for under the Private Securities Litigation Reform Act of 1995 ("1995 Reform Act"), we wish to caution shareholders and investors that the following important factors, among others discussed throughout this Annual Report on Form 10-K for the fiscal year ended September 30, 2025, have affected, and in some cases could affect, our actual results of operations and cause our results to differ materially from those anticipated in forward looking statements made herein.
As of September 30, 2024, our executive officers, directors and largest shareholder (Wynnefield Capital, Inc. and its affiliates) own approximately 41% of our outstanding common stock. Within this amount, Wynnefield Capital, Inc. and its affiliates own approximately 26% of our outstanding common stock.
As of September 30, 2025, our executive officers, directors and largest shareholder (Wynnefield Capital, Inc. and its affiliates) own approximately 41% of our outstanding common stock. Within this amount, Wynnefield Capital, Inc. and its affiliates own approximately 26% of our outstanding common stock.
These matters might include proxy contests, tender offers, mergers or other purchases of common stock that could give our stockholders the opportunity to realize a premium over the then-prevailing market price for shares of our common stock. In addition, persons associated with Wynnefield Capital, Inc. currently serve on our Board of Directors.
These matters might include proxy contests, tender offers, mergers or other purchases of common stock that could give our stockholders the opportunity to realize a premium over the then-prevailing market price for shares of our common stock. In addition, a person associated with Wynnefield Capital, Inc. currently serves on our Board of Directors.
Following our acquisition of DLH, LLC (formerly, Grove Resource Solutions, LLC) in December 2022, we amended and restated our credit agreement with First National Bank of Pennsylvania and certain other lenders (the “Credit Agreement”) and incurred additional indebtedness.
Following our acquisition of DLH, LLC (formerly, Grove Resource Solutions, LLC) in December 2022, we amended and restated our credit agreement with First National Bank of Pennsylvania and certain other lenders and incurred additional indebtedness.
At present, we derive 98% of our revenue from agencies of the Federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors. In addition, substantially all accounts receivable, including unbilled accounts receivable, are from agencies of the U.S. Government as of September 30, 2024 and 2023.
At present, we derive 99% of our revenue from agencies of the Federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors. In addition, substantially all accounts receivable, including unbilled accounts receivable, are from agencies of the U.S. Government as of September 30, 2025 and 2024.
The effect of these set-aside provisions may limit our ability to compete for prime contractor positions on programs that we have targeted for growth and to maintain our prime contractor position as current contracts are subject to renewal. 9 Loss of our GSA schedule contracts or other contracting vehicles could impair our ability to win new business and perform under existing contracts.
The effect of these set-aside provisions may limit our ability to compete for prime contractor positions on programs that we have targeted for growth and to maintain our prime contractor position as current contracts are subject to renewal. Loss of our contracting vehicles could impair our ability to win new business and perform under existing contracts.
Future write-offs of goodwill may have the effect of decreasing our earnings or increasing our losses. We have obtained growth through acquisitions of other companies and businesses. Under existing accounting standards, we are required to periodically review goodwill for possible impairment.
We have a substantial amount of goodwill on our balance sheet. Future write-offs of goodwill may have the effect of decreasing our earnings or increasing our losses. We have obtained growth through acquisitions of other companies and businesses. Under existing accounting standards, we are required to periodically review goodwill for possible impairment.
As previously reported, various agencies within the federal government have policies that support small business goals, including the adoption of the “Rule of Two” by the VA, which provides that the agency shall award contracts by restricting competition for the contract to service-disabled or other veteran owned businesses.
As previously reported and described elsewhere herein in further detail, various agencies within the federal government have policies that support small business goals, including the adoption of the “Rule of Two” by the VA, which provides that the agency shall award contracts by restricting competition for the contract to service-disabled or other veteran owned businesses.
VA programs, which accounted for approximately 35.3% and 36.9% of the Company’s revenue for the years ended September 30, 2024 and 2023, respectively, were exempt from the spending caps established under Federal government sequestration targets enacted in 2013.
VA programs, which accounted for approximately 33.8% and 35.3% of the Company’s revenue for the years ended September 30, 2025 and 2024, respectively, were exempt from the spending caps established under Federal government sequestration targets enacted in 2013.
Our increased indebtedness could adversely affect us in a number of other ways, including: • causing us to be less able to take advantage of business opportunities, such as other acquisition opportunities, and to react to changes in market or industry conditions; • increasing our vulnerability to adverse economic, industry, or competitive developments; • affecting our ability to pay or refinance debts as they become due during adverse economic, financial market, and industry conditions; • requiring us to use a larger portion of cash flow for debt service, reducing funds available for other purposes; • decreasing our profitability and/or cash flow; • causing us to be disadvantaged compared to competitors with less leverage; and • limiting our ability to borrow additional funds in the future to fund working capital, capital expenditures, and other general corporate purposes. 18 Risks Relating to Our Corporate Structure and Capital Stock Our stock price has been volatile and your investment in our common stock may suffer a decline in value.
Our increased indebtedness could adversely affect us in a number of other ways, including: 18 • causing us to be less able to take advantage of business opportunities, such as other acquisition opportunities, and to react to changes in market or industry conditions; • increasing our vulnerability to adverse economic, industry, or competitive developments; • affecting our ability to pay or refinance debts as they become due during adverse economic, financial market, and industry conditions; • requiring us to use a larger portion of cash flow for debt service, reducing funds available for other purposes; • decreasing our profitability and/or cash flow; • causing us to be disadvantaged compared to competitors with less leverage; and • limiting our ability to borrow additional funds in the future to fund working capital, capital expenditures, and other general corporate purposes.
If we are ultimately unable to successfully or efficiently integrate our operations with those of the acquired business, we may incur unanticipated liabilities and be unable to realize the revenue growth, synergies, and other anticipated benefits resulting from the acquisition, and our business, results of operations, and financial condition could be materially adversely affected. 17 We have a substantial amount of goodwill on our balance sheet.
If we are ultimately unable to successfully or efficiently integrate our operations with those of the acquired business, we may incur unanticipated liabilities and be unable to realize the revenue growth, synergies, and other anticipated benefits resulting from the acquisition, and our business, results of operations, and financial condition could be materially adversely affected.
We may encounter other risks in regard to making acquisitions, including: • increased competition for acquisitions may increase the costs of our acquisitions; • non-discovery or non-disclosure of material liabilities during the due diligence process, including omissions by prior owners of any acquired businesses or their employees in complying with applicable laws or regulations, or their inability to fulfill their contractual obligations to the federal government or other customers; and • acquisition financing may not be available on reasonable terms or at all.
We may encounter other risks in regard to making acquisitions, including: • increased competition for acquisitions may increase the costs of our acquisitions; • unforeseen expenses, delays, or conditions imposed in connection with regulatory or contractual approvals; • challenges in retaining key employees, business partners, or customers of an acquired company; • non-discovery or non-disclosure of material liabilities during the due diligence process, including omissions by prior owners of any acquired businesses or their employees in complying with applicable laws or regulations, or their inability to fulfill their contractual obligations to the federal government or other customers; and • acquisition financing may not be available on reasonable terms or at all.
Our revenue and operating results could differ materially and adversely from those anticipated if any such prime contractor or teammate chooses to offer directly to the customer services of the type that we provide or if they team with other companies to provide those services.
Our revenue and operating results could differ materially and adversely from those anticipated if any such prime contractor or teammate chooses to offer directly to the customer services of the type that we provide or if they team with other companies to provide those services. Our earnings and margins may vary based on the mix of our contracts and programs.
Moreover, the terms upon which we will be able to obtain additional equity capital may be adversely affected, since the holders of these securities can be expected to exercise them at a time when we would, in all likelihood, be able to obtain any needed capital on terms more favorable to us than the exercise terms provided by those securities.
Moreover, the terms upon which we will be able to obtain additional equity capital may be adversely affected, since the holders of these securities can be expected to exercise them at a time when we would, in all likelihood, be able to obtain any needed capital on terms more favorable to us than the exercise terms provided by those securities. 19 Anti-takeover provisions in our Articles of Incorporation make a change in control of our Company more difficult.
Depending on the level of clearance, security clearances can be difficult and time-consuming to obtain. If we or our employees lose or are unable to obtain necessary security clearances, we may not be able to win new business and our existing customers could terminate their contracts with us or decide not to renew them.
If we or our employees lose or are unable to obtain necessary security clearances, we may not be able to win new business and our existing customers could terminate their contracts with us or decide not to renew them.
Our earnings and margins may vary depending on the relative mix of contract types, the costs incurred in their performance, the achievement of other performance objectives and the stage of performance at which the right to receive fees, particularly under incentive and award fee contracts, is finally determined. 13 Our employees, or those of our teaming partners, may engage in misconduct or other improper activities which could harm our business.
Our earnings and margins may vary depending on the relative mix of contract types, the costs incurred in their performance, the achievement of other performance objectives and the stage of performance at which the right to receive fees, particularly under incentive and award fee contracts, is finally determined.
A federal government shutdown could, however, result in our incurrence of substantial labor or other costs without reimbursement under customer contracts, the delay or cancellation of programs or the delay of contract payments, which could have a negative effect on our cash flows and adversely affect our future results of operations. 10 The markets in which we operate are highly competitive, and many of the companies we compete against have substantial resources.
In general, a federal government shutdown could result in our incurrence of substantial labor or other costs without reimbursement under customer contracts, the delay or cancellation of programs or the delay of contract payments, which could have a negative effect on our cash flows and adversely affect our future results of operations.
Further, as the reputation and relationships that we have established and currently maintain with government personnel and agencies are important to our ability to maintain existing business and secure new business, damage to our reputation or relationships could have a material adverse effect on our revenue and operating results.
Further, as the reputation and relationships that we have established and currently maintain with government personnel and agencies are important to our ability to maintain existing business and secure new business, damage to our reputation or relationships could have a material adverse effect on our revenue and operating results. 12 Federal government contracts may be terminated at will and may contain other provisions that may be unfavorable to us.
Currently, the U.S. government is operating under a continuing resolution (CR) which expires on December 20, 2024. When the U.S. government operates under a CR, delays can occur in the procurement of the services and solutions that we provide and may result in new initiatives being canceled.
The U.S. government had been operating under a continuing resolution (CR) which expired on September 30, 2025. 10 When the U.S. government operates under a CR, delays can occur in the procurement of the services and solutions that we provide and may result in new initiatives being canceled.
The resulting delay in the startup and funding of the work under these contracts may cause our actual results to differ materially and adversely from those anticipated, and there can be no assurance that such protest process or implementation delays will not have a material adverse effect on our financial condition or results of operations in the future.
The resulting delay in the startup and funding of the work under these contracts may cause our actual results to differ materially and adversely from those anticipated, and there can be no assurance that such protest process or implementation delays will not have a material adverse effect on our financial condition or results of operations in the future. 11 Our business may suffer if we or our employees are unable to obtain and maintain the necessary security clearances or other qualifications required to perform services for our customers.
If we are unable to attract qualified personnel, our business may be negatively affected. We rely heavily on our ability to attract and retain qualified employees and other personnel who possess the skills, experience, and licenses necessary in order to provide our solutions for our assignments. Our business is materially dependent upon the continued availability of such qualified personnel.
We rely heavily on our ability to attract and retain qualified employees and other personnel who possess the skills, experience, and licenses necessary in order to provide our solutions for our assignments. Our business is materially dependent upon the continued availability of such qualified personnel. Our inability to secure qualified personnel would have a material adverse effect on our business.
We may be subject to fines, penalties and other sanctions if we do not comply with laws governing our business. Our business lines operate within a variety of complex regulatory schemes, including but not limited to the FAR, Federal Cost Accounting Standards, the Truth in Negotiations Act, as well as the regulations governing accounting standards.
Our business lines operate within a variety of complex regulatory schemes, including but not limited to the FAR, Federal Cost Accounting Standards, the Truth in Negotiations Act, as well as the regulations governing accounting standards.
If the government terminates a contract for default, we may be unable to recover even those amounts and instead may be liable for excess costs incurred by the government in procuring undelivered items and services from another source.
If the government terminates a contract for default, we may be unable to recover even those amounts and instead may be liable for excess costs incurred by the government in procuring undelivered items and services from another source. Depending on the value of a contract, such termination could cause our actual results to differ materially and adversely from those anticipated.
Historically, our customers’ missions have received bipartisan support from the legislative and executive branches of the federal government. However, we anticipate that the President-Elect and new Congress will seek to implement their budget priorities, which may impact our customers’ projects and budgets.
Congressional seats may change during election years, and the balance of spending priorities may change along with them. Historically, our customers’ missions have received bipartisan support from the legislative and executive branches of the federal government. However, we anticipate that the current administration and Congress will seek to implement their budget priorities, which may impact our customers’ projects and budgets.
We expect that many of the opportunities we will seek in the foreseeable future will be awarded through competitive bidding. Furthermore, budgetary pressures and developments in the procurement process have caused many government customers to increasingly purchase goods and services through IDIQ contracts, GSA schedule contracts and other government-wide acquisition contracts.
Furthermore, budgetary pressures and developments in the procurement process have caused many government customers to increasingly purchase goods and services through IDIQ contracts, GSA schedule contracts and other government-wide acquisition contracts.
Since our ability to incorporate such increases into our fees to our customers is constrained by contractual arrangements with our customers, a delay could occur before such increases could be reflected in our fees, which may reduce our profit margin. As a result, such increases could have a material adverse effect on our financial condition, results of operations and liquidity.
Since our ability to incorporate such increases into our fees to our customers is constrained by contractual arrangements with our customers, a delay could occur before such increases could be reflected in our fees, which may reduce our profit margin.
Government may modify, curtail or terminate its contracts and subcontracts for convenience and to the extent that a contract award contemplates one or more option years, the Government may decline to exercise such option periods.
Many of the U.S. Government programs in which we participate as a contractor or subcontractor may extend for several years. The U.S. Government may modify, curtail or terminate its contracts and subcontracts for convenience and to the extent that a contract award contemplates one or more option years, the Government may decline to exercise such option periods.
Precautions to prevent and detect this activity may not be effective in controlling such risks or losses. As a result of employee misconduct, we could face fines and penalties, loss of security clearance and suspension or debarment from contracting with the federal government, which could materially and adversely affect our business, results of operations, financial condition, cash flows, and liquidity.
As a result of employee misconduct, we could face fines and penalties, loss of security clearance and suspension or debarment from contracting with the federal government, which could materially and adversely affect our business, results of operations, financial condition, cash flows, and liquidity. If we are unable to attract qualified personnel, our business may be negatively affected.
In certain circumstances, we may defer recognition of costs incurred at the inception of a contract. Such action assumes that we will be able to recover these costs over the life of the contract.
In certain circumstances, we may defer recognition of costs incurred at the inception of a contract. Such action assumes that we will be able to recover these costs over the life of the contract. To the extent that a project does not perform as anticipated, these deferred costs may not be considered recoverable resulting in an impairment charge.
To the extent we cannot obtain or maintain the required security clearances for our employees working on a particular contract, we may not derive the revenue anticipated from the contract, which could cause our results to differ materially and adversely from those anticipated. 11 Our business is regulated by complex federal procurement and contracting laws and regulations, and we are subject to periodic compliance reviews by governmental agencies.
To the extent we cannot obtain or maintain the required security clearances for our employees working on a particular contract, we may not derive the revenue anticipated from the contract, which could cause our results to differ materially and adversely from those anticipated.
Cybersecurity threats are constantly expanding and evolving, becoming increasingly sophisticated and complex, increasing the difficulty of detecting and defending against them and maintaining effective security measures and protocols. 15 Our systems and networks may be subject to cybersecurity breaches.
Cybersecurity threats are constantly expanding and evolving, becoming increasingly sophisticated and complex, increasing the difficulty of detecting and defending against them and maintaining effective security measures and protocols. Our systems and networks may be subject to cybersecurity breaches, data privacy failures, or other security incidents that could harm our reputation, expose us to liability, and adversely affect our business.
We currently hold multiple GSA schedule contracts, including a Federal supply schedule contract for professional and allied healthcare services and the logistics worldwide services contract. If we were to lose one or more of these contracts or other contracting vehicles, we could lose a significant revenue source and our operating results and financial condition could be materially and adversely affected.
We currently hold multiple contracting vehicles, which our customers utilize to award contracts. If we were to lose one or more of these contracts or other contracting vehicles, we could lose a significant revenue source and our operating results and financial condition could be materially and adversely affected.
Further, the U.S. Government contract bid process is highly competitive, complex and sometimes lengthy, and is subject to protest and implementation delays. The markets in which we operate are highly competitive. Further, many of our contracts and task orders with the Federal government are awarded through a competitive bidding process, which is complex and sometimes lengthy.
The markets in which we operate are highly competitive, and many of the companies we compete against have substantial resources. Further, the U.S. Government contract bid process is highly competitive, complex and sometimes lengthy, and is subject to protest and implementation delays. The markets in which we operate are highly competitive.
Accordingly, our backlog may not result in actual revenue in any particular period, or at all, which could cause our actual results to differ materially and adversely from those anticipated. Our business growth and profitable operations require that we develop and maintain strong relationships with other contractors with whom we partner or otherwise depend on.
Any reduction in the government’s use of private contractors to provide federal services could cause our actual results to differ materially and adversely from those anticipated. 13 Our business growth and profitable operations require that we develop and maintain strong relationships with other contractors with whom we partner or otherwise depend on.
The COVID-19 pandemic and the mitigation efforts to control its spread created significant volatility, uncertainty and economic disruption and adversely impacted the U.S. and global economies.
The occurrence of a pandemic and the mitigation efforts to control its spread would be expected to create significant volatility, uncertainty and economic disruption and adversely impact the U.S. and global economies.
Among other things, these provisions: • require certain super majority votes; and • establish certain advance notice procedures for nomination of candidates for election as directors and for shareholders' proposals to be considered at shareholders' meetings. 19 In addition, the New Jersey Business Corporation Act contains provisions that, under certain conditions, prohibit business combinations with 10% shareholders and any New Jersey corporation for a period of five years from the time of acquisition of shares by the 10% shareholder.
In addition, the New Jersey Business Corporation Act contains provisions that, under certain conditions, prohibit business combinations with 10% shareholders and any New Jersey corporation for a period of five years from the time of acquisition of shares by the 10% shareholder.
Our earnings and margins may vary based on the mix of our contracts and programs. At September 30, 2024, our backlog includes cost reimbursable, time-and-materials, and firm-fixed-price contracts.
At September 30, 2025, our backlog includes cost reimbursable, time-and-materials, and firm-fixed-price contracts.
Our results of operations, cash flows and financial condition would be materially adversely affected if we were unable to continue our relationship with either of these customers, if we were to lose any of our material current contracts, or if the amount of services we provide to them is materially reduced.
Our results of operations, cash flows and financial condition will be further adversely affected if we were unable to continue our relationship with either of these customers, if we were to lose any more of our material current contracts, or if the amount of services we provide to them is further reduced. 9 The U.S. government may prefer veteran-owned, minority-owned, women-owned and small disadvantaged businesses; therefore, we may have fewer opportunities to bid for or could lose a portion of our existing work to small businesses.
Changes to U.S. tax laws may adversely affect our financial condition or results of operations and create the risk that we may need to adjust our accounting for these changes. The accounting treatment of these tax law changes is complex, and some of the changes may affect both current and future periods.
Changes to U.S. tax laws may adversely affect our financial condition or results of operations and create the risk that we may need to adjust our accounting for these changes. Changes in tax rates or exposure to additional tax liabilities or assessments could affect our profitability, and audits by tax authorities could lead to additional tax payments.
To the extent that management is involved in identifying acquisition opportunities or integrating new acquisitions into our business, our management may be diverted from operating our core business. Without acquisitions, we may not grow as rapidly otherwise, which could cause our actual results to differ materially and adversely from those anticipated.
Without acquisitions, we may not grow as rapidly otherwise, which could cause our actual results to differ materially and adversely from those anticipated.
Therefore, period-to-period comparisons of our operating results may not be a good indication of our future performance. An increase in the prices of goods and services could raise the costs associated with providing our services, diminish our ability to compete for new contracts or task orders and/or reduce customer buying power.
An increase in the prices of goods and services could raise the costs associated with providing our services, diminish our ability to compete for new contracts or task orders and/or reduce customer buying power. 20 We may experience an increase in the costs in our supply and labor markets due to global inflationary pressures and other various geopolitical factors.
Changes in federal government budgetary priorities or actions taken to address government budget deficits, the national debt, and/or prevailing economic conditions, could directly affect our financial performance . Further, congressional seats may change during election years, and the balance of spending priorities may change along with them.
Changes in federal government budgetary priorities or actions taken to address government budget deficits, the national debt, and/or prevailing economic conditions, including government closures or shutdowns, could result in projects being reduced in scope or price, or being terminated, and may directly affect our financial performance .
Our ability to improve or maintain our profitability is dependent on our being able to successfully manage our costs, including taking actions to reduce certain costs and optimize our business. Our cost management strategies include maintaining appropriate alignment between the demand for our services and solutions and the workforce needed to deliver them.
Our profitability could suffer if our cost-management strategies are unsuccessful, and we may not be able to improve our profitability . Our ability to improve or maintain our profitability is dependent on our being able to successfully manage our costs, including taking actions to reduce certain costs and optimize our business.
Through acquisitions, we may be able to expand our base of customers, increase the range of solutions we offer to our customers and deepen our penetration of existing markets and customers. We may not identify and execute suitable acquisitions.
Through acquisitions, we may be able to expand our base of customers, increase the range of solutions we offer to our customers and deepen our penetration of existing markets and customers. We may be unable to identify or complete attractive strategic transactions for many reasons, including competition from other acquirers, and high valuations of potential targets.
The government may face restrictions from new legislation, regulations or government union pressures on the nature and amount of services the government may obtain from private contractors (i.e., insourcing versus outsourcing). Any reduction in the government’s use of private contractors to provide federal services could cause our actual results to differ materially and adversely from those anticipated.
We derive a significant amount of revenues from service contracts with the federal government. The government may face restrictions from new legislation, regulations, or government union pressures, on the nature and amount of services the government may obtain from private contractors (i.e., insourcing versus outsourcing).
We are exposed to risk from misconduct or fraud by our employees, or employees of our teaming partners. Such violations could include intentional disregard for Federal government procurement regulations, engaging in unauthorized activities, seeking reimbursement for improper expenses, or falsifying time records.
Such violations could include intentional disregard for Federal government procurement regulations, engaging in unauthorized activities, seeking reimbursement for improper expenses, or falsifying time records. Employee misconduct could also involve the improper use of our customers' sensitive or classified information and result in a serious harm to our reputation.
Depending on the value of a contract, such termination could cause our actual results to differ materially and adversely from those anticipated. 12 Certain contracts also contain organizational conflict of interest (OCI) clauses that limit our ability to compete for or perform certain other contracts.
Certain contracts also contain organizational conflict of interest (OCI) clauses that limit our ability to compete for or perform certain other contracts.
Our success to date has resulted in part from the significant contributions of our executive officers. Our executive officers are expected to continue to make important contributions to our success. As of September 30, 2024, certain of our officers are under employment contracts. However, we do not maintain "key personnel" life insurance on any of our executive officers.
From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, potentially disrupting our business. As of September 30, 2025, certain of our officers are under employment contracts. However, we do not maintain "key personnel" life insurance on any of our executive officers.
DLH submitted revised proposals with its SDVOSB partner as prime contractor on certain of the opportunities. During the fiscal year ended September 30, 2024, the VA awarded one of the task orders to a SDVOSB that is unaffiliated with DLH.
DLH submitted revised proposals with its SDVOSB partner as prime contractor on certain of the opportunities. During this solicitation process, the VA has awarded three task orders to SDVOSBs unaffiliated with DLH. While the acquisition process is being conducted, DLH continues to operate as the prime contractor for the remaining CMOP locations that it currently manages.
Restrictions on or other changes to the federal government’s use of service contracts may harm our operating results. We derive virtually all of our revenue from service contracts with the federal government.
Accordingly, our backlog may not result in actual revenue in any particular period, or at all, which could cause our actual results to differ materially and adversely from those anticipated. Restrictions on or other changes to the federal government’s use of service contracts may harm our operating results.
Employee misconduct could also involve the improper use of our customers' sensitive or classified information and result in a serious harm to our reputation. While we have appropriate policies in effect to deter illegal activities and promote proper conduct, it is not always possible to deter employee misconduct.
While we have appropriate policies in effect to deter illegal activities and promote proper conduct, it is not always possible to deter employee misconduct. Precautions to prevent and detect this activity may not be effective in controlling such risks or losses.
Our business may suffer if we or our employees are unable to obtain and maintain the necessary security clearances or other qualifications required to perform services for our customers. Many federal government contracts require us to have security clearances and employ personnel with specified levels of education, work experience and security clearances.
Many federal government contracts require us to have security clearances and employ personnel with specified levels of education, work experience and security clearances. Depending on the level of clearance, security clearances can be difficult and time-consuming to obtain.
Removed
While the acquisition process is being conducted, DLH continues to operate as the prime contractor for the seven CMOP locations that it currently manages.
Added
However, in 2025, the U.S. administration began efforts to reduce federal spending and the size of the federal workforce. In addition, the General Services Administration ("GSA") has instructed all federal agencies to review their contracts with consulting firms and technology product resellers contracting with the U.S. federal government.
Removed
The U.S. government may prefer veteran-owned, minority-owned, women-owned and small disadvantaged businesses; therefore, we may have fewer opportunities to bid for or could lose a portion of our existing work to small businesses.
Added
These and similar spending reductions and contract reviews have resulted in and are likely to continue to result in contract terminations, delays and cancellations of new procurements, and reductions in price and contract scope, which have had an adverse effect on our results, and could in the future have a material impact on our results of operations or financial condition.
Removed
Federal government contracts may be terminated at will and may contain other provisions that may be unfavorable to us. Many of the U.S. Government programs in which we participate as a contractor or subcontractor may extend for several years. The U.S.
Added
In addition, our performance under a contract with HHS in support of its Head Start program was completed as of October 31, 2025 and the customer transitioned services to a new small business prime contractor unaffiliated with us.
Removed
Our inability to secure qualified personnel would have a material adverse effect on our business.
Added
In light of the decisions by these customers to award contracts to new prime contractors on a set-aside basis, our results of operations, cash flows and financial condition have been be adversely affected.
Removed
To the extent that a project does not perform as anticipated, these deferred costs may not be considered recoverable resulting in an impairment charge. 14 Our profitability could suffer if our cost-management strategies are unsuccessful, and we may not be able to improve our profitability .
Added
Further, political and economic factors, such as pending elections, the outcome of recent elections, changes in leadership among key executive or legislative decision makers, and revisions to governmental tax or other policies can affect the quantity and terms of new government contracts signed or the speed at which new contracts are signed, decrease future levels of spending and authorizations for programs that we bid, shift spending priorities to programs in areas for which we do not provide services and/or lead to changes in enforcement or how compliance with relevant rules or laws is assessed.
Removed
With respect to our acquisition of DLH, LLC (formerly, Grove Resource Solutions, LLC) in December 2022, the benefits of the acquisition will depend, in part, on our ability to successfully combine our businesses and realize the anticipated benefits, including business opportunities and growth prospects from combining our businesses.
Added
Subsequent to the expiration of the CR that transpired on September 30, 2025, the U.S. government ceased operations until November 12, 2025 when a new stopgap spending bill was passed by Congress and signed into law by the President. This current funding measure provides funding to support U.S. government operations through January 30, 2026.
Removed
We may not achieve these objectives within the anticipated time frame or may never realize these benefits and the value of our common stock may be harmed. The acquisition involves the integration of the acquired business with our existing business, which was a costly and time-consuming process.
Added
During a shutdown our customers may issue stop work orders, delay new contract awards, withhold payments, or limit access to government facilities and systems. Although certain of our programs may be deemed essential and continue, others could be delayed or suspended, creating significant unreimbursed costs and deferred revenue.
Removed
Anti-takeover provisions in our Articles of Incorporation make a change in control of our Company more difficult.
Added
A prolonged shutdown or repeated lapses in funding could also postpone new procurements, reduce activity under existing contracts, and extend the time needed to resume normal operations once funding is restored. These events could materially and adversely affect our business, financial condition, and results of operations.
Removed
We may experience an increase in the costs in our supply and labor markets due to global inflationary pressures and other various geopolitical factors. We generate a portion of our revenues through various fixed price and multi-year government contracts which anticipate moderate increases in costs over the term of the contract.
Added
Further, many of our contracts and task orders with the Federal government are awarded through a competitive bidding process, which is complex and sometimes lengthy. We expect that many of the opportunities we will seek in the foreseeable future will be awarded through competitive bidding.
Added
Our business is regulated by complex federal procurement and contracting laws and regulations, and we are subject to periodic compliance reviews by governmental agencies.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES We do not own any real estate or other properties. As of September 30, 2024, we operate seven locations in the U.S. and one location in Kampala, Uganda: occupying a total of approximately 93.7 thousand square feet.
Biggest changeITEM 2. PROPERTIES We do not own any real estate or other properties. As of September 30, 2025, we operate seven locations in the U.S., occupying a total of approximately 162.3 thousand square feet.
For the fiscal year ended September 30, 2024, our total lease expense was approximately $4.0 million . See Note 6. Leases in Part II of this Annual Report on Form 10-K for additional information.
For the fiscal year ended September 30, 2025, our total lease expense was approximately $4.1 million . See Note 6. Leases in Part II of this Annual Report on Form 10-K for additional information.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−1 removed2 unchanged
Biggest changeThe table set forth below discloses outstanding and available awards under our equity compensation plans as of September 30, 2024. All grants of equity securities made to executive officers and directors are presently made under the 2016 Omnibus Equity Incentive Plan (the “2016 Plan”).
Biggest changeThe table set forth below discloses outstanding and available awards under our equity compensation plans as of September 30, 2025. All grants of equity securities made to executive officers and directors are now made under the 2025 Equity Incentive Plan (the “2025 Plan”). Our shareholders approved the adoption of the 2025 Plan at the Annual Meeting held in March 2025.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Principal Market Our common stock is currently traded on The Nasdaq Capital Market under the symbol "DLHC." Equity Holders As of September 30, 2024, the number of shareholders of our common stock of record was approximately 100 persons.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Principal Market Our common stock is currently traded on The Nasdaq Capital Market under the symbol "DLHC." Equity Holders As of September 30, 2025, the number of shareholders of our common stock of record was approximately 100 persons.
Equity Compensation Plan Information Plan Category (a) Number of Securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted Average exercise price of outstanding options, warrants and rights (or fair value at date of grant) (c) Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a)) Equity Compensation Plans Approved by Security Holders: Employee stock options 1,236,000 $ 9.28 1,123,015
Equity Compensation Plan Information Plan Category (a) Number of Securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted Average exercise price of outstanding options, warrants and rights (or fair value at date of grant) (c) Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a)) Equity Compensation Plans Approved by Security Holders: Employee stock options 937,400 $ 9.65 1,231,554
Removed
Prior to the adoption of the 2016 Plan, awards of equity securities were made under the 2006 Long Term Incentive Plan.
Added
The 2025 Plan governs the awarding of equity securities and replaced the 2016 Omnibus Equity Incentive Plan upon approval.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur primary focus within the defense agency markets includes cyber security, military service members' and veterans' requirements for telehealth services, behavioral healthcare, medication therapy management, process management, clinical systems support, and healthcare delivery. Our primary focus within the civilian agency markets includes digital transformation, IT modernization, healthcare and social programs delivery and readiness.
Biggest changeOur primary focus within the defense agency markets includes cyber security, digital transformation, Artificial Intelligence/Machine Learning (AI/ML) and data analytics, C5ISR (Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance & Reconnaissance), cloud enablement and migration, telehealth, behavioral health, medication therapy management, and clinical systems support for military service members and veterans Within the civilian agency market, we focus on healthcare and social program delivery, IT modernization, systems engineering and integration, data-driven program management, and technology solutions that improve outcomes for underserved and at-risk populations.
The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and business. Our actual results could differ materially from the results contemplated by these forward-looking statements. Business Overview: DLH Holdings Corp.
The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and business. Our actual results could differ materially from the results contemplated by these forward-looking statements. Overview and Background: DLH Holdings Corp.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward Looking and Cautionary Statements You should read the following discussion in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K for the year ended September 30, 2024.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward Looking and Cautionary Statements You should read the following discussion in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K for the year ended September 30, 2025.
We derive 98% of our revenue from agencies of the Federal government, providing services to several agencies including the HHS, VA, DoD, and DHS.
We derive 99% of our revenue from agencies of the Federal government, providing services to several agencies including the HHS, VA, and DoD.
During the fiscal year ended September 30, 2024, we generated revenues of approximately $140.0 million from our set of contracts in support of the VA's Consolidated Mail Outpatient Pharmacy ("CMOP") program.
During the fiscal year ended September 30, 2025, we generated revenues of approximately $116.4 million from our set of contracts in support of the VA's Consolidated Mail Outpatient Pharmacy ("CMOP") program.
The following table summarizes the revenues by customer for the years ended September 30, 2024 and 2023, respectively (in thousands): 2024 2023 Revenue Percent of total revenue Revenue Percent of total revenue Department of Health and Human Services $ 184,544 46.6 % $ 161,311 42.9 % Department of Veterans Affairs 139,945 35.3 % 138,862 37.0 % Department of Defense 64,128 16.2 % 70,325 18.7 % Customers with less than 10% share of total revenue 7,320 1.9 % 5,374 1.4 % Revenue $ 395,937 100.0 % $ 375,872 100.0 % Forward Looking Business Trends: Our mission is to expand our position as a trusted provider of technology-enabled healthcare and public health services, medical logistics, and readiness enhancement services to active duty personnel, veterans, and civilian populations and communities.
The following table summarizes the revenues by customer for the years ended September 30, 2025 and 2024, respectively (in thousands and percent): 2025 2024 Revenue Percent of total revenue Revenue Percent of total revenue Department of Health and Human Services $ 171,717 49.8 % $ 184,544 46.6 % Department of Veterans Affairs 116,422 33.8 % 139,945 35.3 % Department of Defense 53,241 15.5 % 64,128 16.2 % Customers with less than 10% share of total revenue 3,117 0.9 % 7,320 1.9 % Revenue $ 344,497 100.0 % $ 395,937 100.0 % Forward Looking Business Trends: Our mission is to expand our position as a trusted provider of technology-enabled healthcare and public health services, medical logistics, and readiness enhancement services to active duty personnel, veterans, and civilian populations and communities.
In these cases, the Company may elect to join a team with an eligible contractor as prime for specific pursuits that align with our core markets and corporate growth strategy.
The effect of set-aside provisions may limit our ability to compete for prime contractor positions on programs that we recompete or that we have targeted for growth. In these cases, the Company may elect to join a team with an eligible contractor as prime for specific pursuits that align with our core markets and corporate growth strategy.
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These include compliance monitoring on large scale programs, technology-enabled program management, consulting, and digital communications solutions ensuring that education, health, and social standards are being achieved within underserved and at-risk populations. We believe these business development priorities will position the Company to expand within top national priority programs and funded areas.
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We believe these priorities position the Company to expand within key national programs and mission-critical areas of health and national security. 26 Federal budget outlook for fiscal year 2026 : The U.S. budget and regulatory landscape remains uncertain, and this uncertainty is expected to continue.
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Federal budget outlook for fiscal year 2025 : While Congress has not completed the final appropriation bills for the government’s 2025 fiscal year, the Company continues to believe that its key programs benefit from bipartisan support and does not expect a material impact on its current business 26 base from budget negotiations.
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The company’s performance depends on overall federal spending levels and how well its capabilities align with government priorities. The administration is reviewing agency spending to improve efficiency and productivity, which has already led to some contract reductions, cancellations, and price renegotiations for the company. Future reviews may cause further adjustments or mandates to cut costs.
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If the appropriations bills are not timely enacted, government agencies operate under a continuing resolution ("CR"), which may negatively impact our business due to delays in new program starts, delays in contract award decisions, and other factors. On September 26, 2024, the President signed a continuing resolution (CR, H.R. 9747).
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The company closely monitors federal budget, legislative, and contracting developments to adapt its strategies accordingly. While defense and national security spending enjoy bipartisan support amid global tensions, uncertainty persists around the timing and passage of annual appropriations bills.
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The CR extends fiscal year 2025 funding for all 12 annual spending bills, including the Defense, Labor, Health and Human Services, and Education bills, through December 20, 2024.
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We continue to align the Company’s capabilities with well-funded budget priorities and take steps to maintain a competitive cost structure in line with our expectations of future business opportunities. In light of these actions, as well as the budgetary environment discussed above, we believe we are well positioned to continue to win new business in our addressable market.
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When a CR expires, unless appropriations bills have been passed by Congress and signed by the President, or a new CR is passed and signed into law, the government must cease operations, or shutdown, except in certain emergency situations or when the law authorizes continued activity.
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On October 1, 2025, the U.S. government entered a shutdown which persisted until November 12, 2025, when Congress passed and the President signed an appropriations bill to fund certain agencies and extend funding at current levels for the remaining agencies until January 30, 2026.
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We are monitoring impact the new Presidential Administration will have on government funding negotiations as their legislative and political priorities . We continuously review our operations in an attempt to identify programs potentially at risk from CRs so that we can consider appropriate contingency plans.
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Unless full year appropriation bills or a CR are passed and signed at the end of the current CR, the federal government will shutdown operations until legislation has been enacted.
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Historically, our customers’ missions have received bipartisan support from the legislative and executive branches of the federal government. However, we anticipate that the President-Elect and new Congress will seek to implement their budget priorities, which may impact our customers’ projects and budgets.
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As previously disclosed, the VA issued solicitations for performance of the CMOP program by separate contracts for each of its eight locations, with the awards limited to service-disabled veteran owned small business (“SDVOSB”) prime contractors.
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The Company believes that its past performance in this market and track record of success provide a competitive advantage. However, the effect of set-aside provisions may limit our ability to compete for prime contractor positions on programs that we recompete or that we have targeted for growth.
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As this acquisition evaluation is continuing with respect to the remaining locations, we were awarded a new sole-source Indefinite Quantity/Indefinite Delivery contract effective October 28, 2025. The IDIQ has ceiling value of $90.0 million, and a maximum ordering period through October 28, 2026, In addition, we performed monitoring, evaluation and compliance services for the Office of Head Start.
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As previously reported, the VA has been soliciting proposals for new contracts covering this work with a preference for a Service-Disabled Veteran Owned Small Business, or SDVOSB, to perform as the prime contractor. During the 2024 fiscal year, the VA awarded one contract to a SDVOSB that was not affiliated with DLH.
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The contract term for these services ended on October 31, 2025 and following the procurement for the renewal of these services on a set aside basis, performance transitioned to unaffiliated contractors at the end of the contract term. See
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Should awards for the locations for which we have submitted a proposal be offered to a partner of DLH, we expect to continue to perform a significant amount of those contracts' volume of business as a subcontractor.
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While the acquisition process is being conducted, DLH continues to operate as the prime contractor for all CMOP locations other than the Chelmsford location. For more information concerning the status of this procurement effort, see

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIf interest rates rise due to inflation-related pressures in the economy, we expect to continue to use interest rate swaps to mitigate our cash risk of rising rates. We have determined that a 1.0% increase to SOFR would impact our interest expense by approximately $0.7 million per year.
Biggest changeThe remaining balance of our debt is subject to floating interest rates. We have determined that a 1.0% increase to SOFR would impact our interest expense by approximately $0.6 million per year. As of September 30, 2025, the interest rate on the floating interest rate debt was 8.38%.
The Company has limited foreign operations and therefore is not materially subject to fluctuations in foreign exchange rates, commodity prices or other market rates or prices from market sensitive instruments.
The Company has limited foreign operations and therefore is not materially subject to fluctuations in foreign exchange rates, commodity prices or other market rates or prices from market sensitive instruments. We have executed a set of floating-to-fixed interest rate swaps with a total notional amount of $74.0 million on September 30, 2025.
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On January 31, 2023, we executed a floating-to-fixed interest rate swap with FNB; the notional amount as of September 30, 2024 is $80.0 million, it matures in January 31, 2026, and the fixed rate is 4.10%. The total floating-to-fixed swap balance as of September 30, 2024 is $80.0 million.
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As of September 30, 2024, the interest rate on the floating interest rate debt was 9.30%. 33

Other DLHC 10-K year-over-year comparisons