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What changed in BGSF, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BGSF, INC.'s 2023 and 2024 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 2024 report.

+200 added−203 removedSource: 10-K (2025-03-17) vs 10-K (2023-03-16)

Top changes in BGSF, INC.'s 2024 10-K

200 paragraphs added · 203 removed · 146 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

48 edited+4 added−15 removed41 unchanged
Biggest changeWe continue to operate under the American Partners trade name. • In June 2013, we acquired substantially all of the assets and assumed certain liabilities of InStaff Holding Corporation and InStaff Personnel, LLC, a wholly owned subsidiary of InStaff Holding Corporation (collectively, “InStaff”). • In March 2015, we acquired substantially all of the assets and assumed certain liabilities of D&W Talent, LLC (“D&W”), which specialized in providing part-time and full-time workforce solutions of accounting and finance personnel and secretarial and administrative personnel to client partners in Texas and Louisiana.
Biggest changeWe continue to operate under the Extrinsic trade name. • In December 2012, we acquired substantially all of the assets and assumed certain liabilities of American Partners, Inc., which specialized in providing IT workforce solutions to client partners within the U.S. 5 • In June 2013, we acquired substantially all of the assets and assumed certain liabilities of InStaff Holding Corporation and InStaff Personnel, LLC, a wholly owned subsidiary of InStaff Holding Corporation (collectively, “InStaff”). • In March 2015, we acquired substantially all of the assets and assumed certain liabilities of D&W Talent, LLC (“D&W”), which specialized in providing part-time and full-time workforce solutions of accounting and finance personnel and secretarial and administrative personnel to client partners in Texas and Louisiana. • In October 2015, we acquired substantially all of the assets and assumed certain liabilities of Vision Technology Services, Inc., Vision Technology Services, LLC, and VTS-VM, LLC (collectively, “VTS”), which provided IT workforce solutions and project management workforce solutions. • In April 2017, we acquired substantially all of the assets and assumed certain liabilities of Zycron, Inc.
We will make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we have filed or furnished such material to the SEC.
We will make available free of charge through our website 11 our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we have filed or furnished such material to the SEC.
We are organized to handle many of the administrative functions at our home office location so that our segment operations can focus on business development and the effective recruiting and assignment of field talent. 8 We continue to invest in technology and process improvements, as necessary, to ensure that we are operating at optimal productivity and performance.
We are organized to handle many of the administrative functions at our home office location so that our segment operations can focus on business development and the effective recruiting and assignment of field talent. We continue to invest in technology and process improvements, as necessary, to ensure that we are operating at optimal productivity and performance.
Our consulting workforce solutions place field talent with client partners for extended time-periods or for an indefinite time period. This type of arrangement may involve outsourcing an entire department in a large corporation or providing the workforce for a large project. Managed services are a combination of both workforce solutions and fixed fee arrangements.
Our consulting workforce solutions place field talent with client partners for extended time-periods or for an indefinite time period. This type of arrangement may involve outsourcing an entire department in a large corporation or providing the workforce for a large project. Managed Solutions are a combination of both workforce solutions and fixed fee arrangements.
This focus will extend to our collaboration with client partners, selection of vendor partners, engagement in our communities and prioritization of overall work-life harmony. Our commitment to diversity, equity and inclusion does not sit with a singular individual, but with every team member at BGSF.
This focus will extend to our collaboration with client partners, selection of vendor partners, engagement in our communities and prioritization of overall work-life harmony. Our commitment to diversity, equity and inclusion does not sit with a singular individual, but with every BGSF team member.
Professional Segment Our Professional segment provides highly skilled IT professionals with expertise in SAP, Workday, Peoplesoft, Hyperion, Oracle, One Stream, cyber, project management and other IT workforce solutions to client partners on a national basis. Additionally, we provide finance, accounting, legal, human resource and related support personnel.
Professional Segment Our Professional segment provides highly skilled IT professionals with expertise in SAP, Workday, Peoplesoft, Hyperion, Oracle, One Stream, cyber, project management, managed services, and other IT workforce solutions to client partners on a national basis. Additionally, we provide finance, accounting, legal, human resource and related support personnel.
We commenced operations on October 17, 2007 and since 2009 have began an on-going growth and diversification initiative. Since 2010, we have acquired thirteen businesses: • In June 2010, we purchased the interests of BG Personnel Services, LP and BG Personnel, LP, and purchased the common stock of B G Staff Services, Inc.
We commenced operations on October 17, 2007 and since 2009 have began an on-going growth and diversification initiative. Since 2010, we have acquired fourteen businesses: • In June 2010, we purchased the interests of BG Personnel Services, LP and BG Personnel, LP, and purchased the common stock of B G Staff Services, Inc.
Our workforce solutions consist of on-demand or short-term assignments, consulting services, managed services, and on-site management administration.
Our workforce services consist of on-demand or short-term assignments, consulting services, managed services and on-site management administration.
The essential work of VIIBE has continued to align it's work with the development of foundational pillars of excellence that promote this philosophy. We are focused on how we source, recruit, develop, appreciate, and leverage perspectives and experiences of underrepresented talent.
The essential work of VIIBE has continued to align its work with the development of foundational pillars of excellence that promote this philosophy. We are focused on how we source, recruit, develop, appreciate, and leverage perspectives and experiences of underrepresented talent.
We refer to our continuing operations as the Real Estate and Professional segments, and discontinuing operations as the Light Industrial segment. We operate separate profit centers within each segment and provide managers considerable operational autonomy and financial incentives. Managers focus on business opportunities within their markets and are provided centralized support to achieve success in those markets.
We refer to our continuing operations as the Property Management and Professional segments, and discontinuing operations as the Light Industrial segment. We operate separate profit centers within each segment and provide managers considerable operational autonomy and financial incentives. Managers focus on business opportunities within their markets and are provided centralized support to achieve success in those markets.
Demand for our Real Estate workforce solutions typically increase in the second quarter and is highest during the third quarter of the year due to the increased turns in multifamily units during the summer months when schools are not in session. Overall first quarter demand can be affected by adverse weather conditions in the winter months.
Demand for our Property Management workforce solutions typically increase in the second quarter and is highest during the third quarter of the year due to the increased turns in multifamily units during the summer months when schools are not in session. Overall first quarter demand can be affected by adverse weather conditions in the winter months.
Kushner & Associates, EdgeRock, EdgeRock Technology Partners, EdgeRock Technology Partners & Design, Momentum Solutionz, Creative Data Solutions, Horn Solutions, bgsf.com, bgstaffing.com, bgstaffinggroup.com, bgpersonnel.com, bgpersonnel.net, bgstaffing.net, bgcompanies.net, bgmail.com, ltnstaffing.com, milwaukeetemps.com, milwaukeetmepsinc.com, extrinsicllc.com, extrinsicgroup.com, extrinsicresources.com, jnastaffing.com, therightpeoplerightnow.com, rightpeoplerightnow.com, americanpartnersinc.com, instaff.com, donwat.com, vistechs.com, zycron.com, smartstaffing.com, accountablesearch.com, executiveassistantsearch.com, ljkushner.com, edgerock.com, edgerock.net, edgerockblue.com, edgerockcares.com, edgerockcares.net, edgerockconsultants.com, edgerockit.com, edgerockpartners.com, edgerockperm.com, edgerockred.com, edgerocksearch.com, edgerocksolutions.com, edgerockstaffing.com, edgerocktech.com, edgerocktech.net, edgerocktechnologies.com, etphome.com, joinedgerock.com, myedgerock.com, momentumsolutionz.com, and hornsolutions.net.
Kushner & Associates, EdgeRock, EdgeRock Technology Partners, EdgeRock Technology Partners & Design, Momentum Solutionz, Creative Data Solutions, Horn Solutions, Arroyo Consulting, Arroyo IT Solutions, AC, bgsf.com, bgstaffing.com, bgstaffinggroup.com, bgpersonnel.com, bgpersonnel.net, bgstaffing.net, bgcompanies.net, bgmail.com, ltnstaffing.com, milwaukeetemps.com, milwaukeetmepsinc.com, extrinsicllc.com, extrinsicgroup.com, extrinsicresources.com, jnastaffing.com, therightpeoplerightnow.com, rightpeoplerightnow.com, americanpartnersinc.com, instaff.com, donwat.com, vistechs.com, zycron.com, smartstaffing.com, accountablesearch.com, executiveassistantsearch.com, ljkushner.com, edgerock.com, edgerock.net, edgerockblue.com, edgerockcares.com, edgerockcares.net, edgerockconsultants.com, edgerockit.com, edgerockpartners.com, edgerockperm.com, edgerockred.com, edgerocksearch.com, edgerocksolutions.com, edgerockstaffing.com, edgerocktech.com, edgerocktech.net, edgerocktechnologies.com, etphome.com, joinedgerock.com, myedgerock.com, momentumsolutionz.com, hornsolutions.net, arroyoconsulting.net, and micro-talent.net.
Growth Strategy We are committed to growing our operations. We have grown from $35 million of Light Industrial revenue in 2009 to $298 million of revenue from continuing operations in 2022, by using a growth strategy reliant upon both acquisitions and organic growth.
Growth Strategy We are committed to growing our operations and have grown from $35 million of Light Industrial revenue in 2009 to $272 million of revenue from continuing operations in 2024, by using a growth strategy reliant upon both acquisitions and organic growth.
In 2022, team members recognized our BGSF values through our “BIG Deal” platform by sending over 2,500 awards to their fellow team members. Learning and Development We emphasize team member development and learning as a priority for the organization. We believe learning and development are key elements to overall retention, engagement, and team member experience strategy.
In 2024, team members recognized our BGSF values through our “BIG Deal” platform by sending over 3,300 awards to their fellow team members. Learning and Development We emphasize team member development and learning as a priority for the organization. We believe learning and development are key elements to overall retention, engagement, and team member experience strategy.
In addition to cash and equity compensation, we also offer team members competitive benefits such as life and health (medical, dental and vision) insurance, paid time off including volunteer time off, wellness benefits, education/tuition reimbursement, a defined contribution retirement plan with BGSF matching contributions, and an Employee Stock Purchase Plan.
In addition to cash and equity compensation, we also offer team members competitive benefits such as life and health (medical, dental and vision) insurance, paid time off including volunteer time off, wellness benefits, education/tuition reimbursement, a defined contribution retirement plan with BGSF matching contributions, and our 2020 ESPP.
ITEM 1. BUSINESS. Overview and History BGSF, Inc. (“BGSF,” “we,” or the “Company”) is a leading national provider of consulting, managed services, and professional workforce solutions with continuing operations that, along with its wholly owned subsidiaries, operate primarily within the U.S. in two industry segments Real Estate and Professional, with discontinued operations in the Light Industrial segment.
ITEM 1. BUSINESS. Overview and History BGSF, Inc. (“BGSF,” “we,” or the “Company”) is a leading national provider of consulting, managed services, and professional workforce solutions with continuing operations that, along with its wholly owned subsidiaries, operate primarily within the U.S. in two industry segments: Property Management and Professional.
On March 21, 2022, we completed the sale to Sentech Engineering Services, Inc. of substantially all of the assets pertaining to our Light Industrial segment. The Light Industrial segment provided field talent primarily to manufacturing, distribution, logistics, and call center client partners needing a flexible workforce and operated under the “InStaff” trade name.
On March 21, 2022, we completed the sale to Sentech Engineering Services, Inc. of substantially all of the assets pertaining to our Light Industrial segment providing field talent primarily to manufacturing, distribution, logistics, and call center client partners which operated under the “InStaff” trade name.
Shortly after the purchase, we relocated our home office to Dallas, Texas. We operate under the BG Multifamily and BG Talent trade names. • In December 2010, we purchased substantially all of the assets and assumed certain liabilities of JNA Staffing Inc., which specialized in providing light industrial workforce solutions within the State of Wisconsin.
Shortly after the purchase, we relocated our home office to Dallas, Texas. • In December 2010, we purchased substantially all of the assets and assumed certain liabilities of JNA Staffing Inc., which specialized in providing light industrial workforce solutions within the State of Wisconsin.
Financial Information about Segments Refer to Note 19 in the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated by reference.
Financial Information about Segments Refer to Note 19 in the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated by reference. 7 Financial Information about Geographic Areas Refer to Notes 1 and 2 in the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated by reference.
While the specific laws and regulations vary among these jurisdictions, some require some form of licensing and often have statutory requirements for workplace safety and notice of change in obligation of workers’ compensation coverage in the event of contract termination.
We are subject to the laws and regulations of the jurisdictions within which we operate. While the specific laws and regulations vary among these jurisdictions, some require some form of licensing and often have statutory requirements for workplace safety and notice of change in obligation of workers’ compensation coverage in the event of contract termination.
A significant portion of our total marketing efforts comes from direct marketing via telephone solicitation. Promotions consists of digital display, search engine marketing, social media, trade publications, job boards and events.
A significant portion of our total marketing efforts comes from direct marketing via email and telephone solicitation. Promotions consists of pay per click advertising, search engine marketing, social media, trade publications, job boards and events.
This direction is led by our Vice President of Diversity and Development. Our strategy is designed to empower team members to reach their full potential, and we provide a wide range of development programs, opportunities, and resources needed to be successful.
Our strategy is designed to empower team members to reach their full potential, and we provide a wide range of development programs, opportunities, and resources needed to be successful.
These workforce solutions also enable the client partner to rapidly respond to changes in business conditions, and in some cases to convert fixed labor costs to variable costs. Workforce solution companies act as intermediaries in matching available field talent to client partner assignments.
These workforce solutions also enable the client partner to rapidly respond to changes in business conditions, and in some cases to convert fixed labor costs to variable costs. Workforce solution companies act as intermediaries in matching available field talent to client partner assignments. 6 The workforce solution market is subject to volatility based on overall economic conditions.
Team Members As of February 13, 2023, we employed approximately 540 team members working remotely or in our various market locations in the United States. 9 Field Talent In addition to our team members, BGSF matches talent with our client partners. In 2022, we placed approximately 14,500 individuals in positions with our client partners.
Team Members As of February 5, 2025, we employed approximately 405 team members working remotely or in our various market locations in the United States. Field Talent In addition to our team members, BGSF matches talent with our client partners. In 2024, we placed approximately 13,300 individuals in positions with our client partners.
As of October 14, 2022, we employed approximately 3,025 people, of which 14% were internal team members and 86% were field talent supporting our client partners across the country. • Women represented 36% of all team members, and underrepresented minorities (“URMs”, defined as those who identify as Black/African American, Hispanic/Latinx, Native American/Alaska Native, Asian, Native Hawaiian/Pacific Islander and/or two or more races) represented 72% of our all of our reporting team members (3% of team members in contingent roles chose not to disclose this information); • Women represented 62% of our internal team members and 57% of internal team members in managerial and leadership roles; and • URMs represent 40% of our internal team members and 21% of internal team members in managerial and leadership roles identified as URMs.
As of August 1, 2024, we employed approximately 3,456 people, of which 13% were internal team members and 87% were field talent supporting our client partners across the country. • Women represented 36% of all team members, and underrepresented minorities (“URMs”, defined as those who identify as Black/African American, Hispanic/Latinx, Native American/Alaska Native, Asian, Native Hawaiian/Pacific Islander and/or two or more races) represented 71% of our all of our reporting team members (8% of team members in contingent roles chose not to disclose this information); • Women represented 61% of our internal team members and 50% of internal team members in managerial and leadership roles; and • URMs represent 39% of our internal team members and 20% of internal team members in managerial and leadership roles identified as URMs.
Our client partners include large Fortune 500 companies, medium and small companies, as well as consulting firms engaged in systems integration projects. We operate our professional segment remotely and from our offices in Arizona, Florida, Illinois, Maryland, 7 Massachusetts, New Jersey, North Carolina, Rhode Island, Tennessee, and Texas.
Our client partners include large Fortune 500 companies, medium and small companies, as well as consulting firms engaged in systems integration projects. We operate our professional segment remotely and from our offices in Florida, Illinois, Maryland, Massachusetts, New Jersey, North Carolina, Rhode Island, Tennessee, and Texas. The IT division provides additional nearshore/offshore field talent solutions in Colombia and India.
In second quarter 2022, we completed the board of directors authorized three year plan to enhance our processes through the information technology improvement project. These workstreams included improvements to applications in front office, middle office, back office, modern workplace, IT infrastructure and project management. Competition The workforce solutions market is highly competitive with limited barriers to entry.
In 2022, we completed the board of directors authorized three year plan to enhance our processes through the information technology improvement project. These workstreams included improvements to applications in front office, middle office, back office, modern workplace, IT infrastructure, and project management.
We continue to operate under the Zycron trade name. • In September 2017, we acquired substantially all of the assets and assumed certain liabilities of Smart Resources Inc. and Accountable Search, LLC (collectively, “Smart”), which specialized in providing part-time and full-time workforce solutions of accounting and finance personnel and secretarial and administrative personnel to client partners in Chicago market.
(“Zycron”), which provided IT workforce solutions and project management workforce solutions. • In September 2017, we acquired substantially all of the assets and assumed certain liabilities of Smart Resources Inc. and Accountable Search, LLC (collectively, “Smart”), which specialized in providing part-time and full-time workforce solutions of accounting and finance personnel and secretarial and administrative personnel to client partners in Chicago market. • In December 2019, we acquired substantially all of the assets and assumed certain liabilities of L.J.
The workforce solution industry is large and highly fragmented with approximately 25,000 competing companies, while only 186 firms exceeded $100 million in annual revenues during 2021 according to Staffing Industry Analysts (“SIA”). As of September 2022, SIA estimated the 2023 U.S. temporary service market will be an estimated $216.8 billion, which is up from an estimated $212.2 billion in 2022.
The workforce solution industry is large and highly fragmented with approximately 25,000 competing companies, while only 241 firms exceeded $100 million in annual revenues during 2023, which is down from 251 in 2022 according to Staffing Industry Analysts (“SIA”). SIA stated the 2023 U.S. temporary service market reported $145.2 billion, which is down from $168.8 billion in 2022.
Our Segments Our continuing operations are organized into the Real Estate and Professional segments, and our discontinued operations is the Light Industrial segment. Real Estate Segment Our Real Estate segment is a leading provider of office and maintenance field talent to various apartment communities and commercial buildings. We currently operate in 36 states and D.C.
Our Segments Our continuing operations are organized into the Property Management and Professional segments, and our discontinued operations is the Light Industrial segment. Property Management Segment Our Property Management segment is a leading provider of office and maintenance talent. We currently operate in 40 states and D.C.
Our focus is to ensure BGSF is cultivating equality and equity, while recognizing and celebrating our differences at work, in our homes, and out in the communities. Community Involvement We consider sustainability to be a guiding principle in strengthening the relationship with our workforce, vendor partners and client partners.
Our focus is to ensure BGSF is cultivating equality and equity, while recognizing and celebrating our differences at work, in our homes, and out in the communities. Community Involvement In 2024, we were committed to sustainability initiatives which guided our interactions with our workforce, vendor partners, and client partners.
Marketing and Recruiting We believe a key component of our success is the ability to recruit and maintain a pool of qualified field talent and regularly place them into desirable and appropriate positions.
No client partner accounted for more than 10% of our revenues in fiscal 2024, 2023, or 2022. Marketing and Recruiting We believe a key component of our success is the ability to recruit and maintain a pool of qualified field talent and regularly place them into desirable and appropriate positions.
As is common in the industry, our engagements to provide workforce solutions to our client partners are generally of a non-exclusive, short-term nature and subject to termination by the client partner with little or no notice. No client partner accounted for more than 10% of our revenues in 2022, 2021, or 2020.
Our Client Partners We currently provide workforce solutions to small and medium-sized companies as well as divisions of Fortune 500 companies. As is common in the industry, our engagements to provide workforce solutions to our client partners are generally of a non-exclusive, short-term nature and subject to termination by the client partner with little or no notice.
Therefore, the speed at which we place prospective field talent and the availability of appropriate assignments are important factors in our ability to complete assignments of qualified field talent.
We believe that many potential candidates seeking assignments through us may also be pursuing assignments through other means. Therefore, the speed at which we place prospective field talent and the availability of appropriate assignments are important factors in our ability to complete assignments of qualified field talent.
In early 2023, the Board of Directors approved management's plan to rebrand as BGSF, eliminating various current trade names. We intend to complete this rebranding by the end of the second quarter of 2023. 11 Regulation We are subject to regulation by numerous federal, state and local regulatory agencies, including but not limited to the U.S.
In 2023, the Board of Directors approved, and we completed, management’s plan to rebrand as BGSF, eliminating various current trade names. Regulation We are subject to regulation by numerous foreign, federal, state and local regulatory agencies, including but not limited to the U.S. Department of Labor, which sets employment practice standards for workers, and similar state and local agencies.
We are committed to the organization's overall health and providing career progression by providing individual development, readiness, and transition plans as a part of our talent review and succession planning process.
We are committed to the organization’s overall health and providing career progression by providing individual development, readiness, and transition plans as a part of our talent review and succession planning process. In 2024, we had over 10,000 hours spent in upskilling the workforce, with over 3,200 going through our training programs.
We compete in national, regional and local markets with full-service and specialized workforce solution companies. Some of our competitors have significantly more marketing and financial resources than we do. Price competition in the industry is intense. We expect that the level of competition will remain high, which could limit our ability to maintain or increase our market share or profitability.
Competition With about 25,000 staffing and recruiting companies, the workforce solutions market is highly competitive with limited barriers to entry. We compete in national, regional and local markets with full-service and specialized workforce solution companies. Some of our competitors have significantly more marketing and financial resources than we do. Price competition in the industry is intense.
Our team member resource groups are designed to create a strong sense of belonging within our work culture, to provide awareness and gain collaborative support from allies, and to help drive equitable opportunities throughout our organization for all.
Our team member resource groups focus on creating a strong sense of belonging within our work culture, raising awareness about obstacles standing in the way of team member success, gaining collaborative support from allies, and driving equitable opportunities throughout the organization for all.
We also offer our talent access to competitive health and benefit programs while they are working with us. Compensation and Benefits BGSF is committed to providing competitive, equitable and fiscally responsible total rewards programs to our team members.
Also, working with us gives our talent access to competitive health and benefit programs. Eligible talent can participate in a defined contribution plan and the 2020 Employee Stock Purchase Plan (“2020 ESPP”). 9 Compensation and Benefits BGSF is committed to providing competitive, equitable and fiscally responsible total rewards programs to our team members.
VIIBE is chaired by our Vice President of Diversity and Development. In August 2022, we launched our first two team member resource groups: African American/Black Employees & Allies and Working Parents and Allies. Later in 2023, we expect to launch our third team member resource group, with the name to be determined.
In August 2022, we launched our first two team member resource groups: African American/Black Employees & Allies and Working Parents and Allies. During 2023, we launched our third team member resource group, Pride and Allies.
We continue to operate under the EdgeRock Technology Partners trade name. • In February 2021, we acquired substantially all of the assets and assumed certain liabilities of Momentum Solutionz LLC (the “Momentum Solutionz”), which provided IT consulting and managed workforce solutions for organizations utilizing ERP systems.
(“EdgeRock”), which provides specialized IT consultants and focuses on the sourcing and placement of technology professionals specialized in leading software and data ecosystems. • In February 2021, we acquired substantially all of the assets and assumed certain liabilities of Momentum Solutionz LLC (the “Momentum Solutionz”), which provided IT consulting and managed workforce solutions for organizations utilizing ERP systems. • In December 2022, we acquired substantially all of the assets and assumed certain liabilities of Horn Solutions, Inc. and Horn Solutions, Dallas, LLC (collectively, “Horn Solutions”).
We continue to operate under the Accountable Search and Smart Resources trade names. • In December 2019, we acquired substantially all of the assets and assumed certain liabilities of L.J. Kushner & Associates, L.L.C. (“LJK”), which provided cybersecurity retained search workforce solutions specializing in recruiting high and mid-level IT security professionals. We continue to operate under the L.J.
Kushner & Associates, L.L.C. (“LJK”), which provided cybersecurity retained search workforce solutions specializing in recruiting high and mid-level IT security professionals. • In February 2020, we acquired 100% of the equity of EdgeRock Technology Holdings, Inc.
Team Engagement As part of BGSF’s continued initiative to provide its team members with feedback opportunities, in 2022, we conducted several pulse surveys to understand team member needs and provide support.
Our global investment in professional development initiatives delivered over 10,000 educational hours to 2,200 individuals. During 2025, we will remain dedicated to sustainability, employee development, and community impact. 10 Team Engagement As part of BGSF’s continued initiative to provide its team members with feedback opportunities, in 2024, we conducted several pulse surveys to understand team member needs and provide support.
Horn Solutions provides services to clients in a variety of industries including, but not limited to energy, financial services, healthcare, real estate and construction, service, manufacturing, and software industries. We continue to operate under the Horn Solutions trade names.
Horn Solutions provides services to clients in a variety of industries including, but not limited to energy, financial services, healthcare, real estate and construction, service, manufacturing, and software industries. • In April 2023, we acquired substantially all of the assets and assumed certain liabilities, of Arroyo Consulting LLC (“Arroyo Consulting”), which provides nearshore and offshore workforce solutions specializing in IT and software development with operations in the United States, Colombia, and India.
Instaff's financial results for periods prior to the sale have been reflected in our Consolidated Statements of Operations and Comprehensive Income and Consolidated Statements of Cash Flows as discontinued operations. Additionally, the related assets and liabilities associated with the discontinued operations in the prior periods are classified as discontinued operations in our Consolidated Balance Sheets.
Instaff’s financial results have been reflected in our Consolidated Statements of Operations and Comprehensive (Loss) Income and Consolidated Statements of Cash Flows as discontinued operations. See “Note 4 - Discontinued Operations” in our Consolidated Financial Statements included elsewhere in this report for additional information.
The principal competitive factors in attracting qualified candidates for assignments are pay rates, availability of assignments, duration of assignments and responsiveness to requests for placement. We believe that many potential candidates seeking assignments through us may also be pursuing assignments through other means.
We expect that the level of competition will remain high, which could limit our ability to maintain or increase our market share or profitability. 8 The principal competitive factors in attracting qualified candidates for assignments are pay rates, availability of assignments, duration of assignments and responsiveness to requests for placement.
During recessionary periods, the number of companies has decreased through consolidation, bankruptcies, or other events. The workforce solution industry is experiencing increased demand in relation to total job growth as client partners have placed a greater priority on maintaining a more flexible workforce.
Historically, in periods of economic growth, the number of companies providing workforce solutions has increased due to low barriers to entry. During recessionary periods, the number of companies has decreased through consolidation, bankruptcies, or other events.
The Real Estate segment utilizes Virtual Talent Acquisition Center (“TAC”) with team members located in various locations throughout the United States. All open field talent positions nationally are recruited from this TAC. The field talent we assign to our Real Estate client partners are our employees, although our client partners provide on-the-job direction, control and supervision.
The field talent we assign to our Property Management client partners are our employees, although our client partners generally provide on-the-job direction, control and supervision.
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We continue to operate under the Extrinsic trade name. 5 • In December 2012, we acquired substantially all of the assets and assumed certain liabilities of American Partners, Inc., which specialized in providing IT workforce solutions to client partners within the U.S.
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The Company currently operates primarily within the United States of America (“U.S.”) through the Property Management and Professional segments. Our Industry The workforce solution industry supplies field talent to client partners helping them minimize the cost and effort of workforce planning.
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We continue to operate under the Donovan & Watkins trade name. • In October 2015, we acquired substantially all of the assets and assumed certain liabilities of Vision Technology Services, Inc., Vision Technology Services, LLC, and VTS-VM, LLC (collectively, “VTS”), which provided IT workforce solutions and project management workforce solutions.
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Through our volunteering time off program, we had 144 individuals volunteer over 1,400 hours and donated over $60,000 for philanthropic purposes, including volunteer hours from our first Service Week, which was spearheaded by our Employee Resource Groups (ERGs).
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We continue to operate under the Vision Technology Services trade name. • In April 2017, we acquired substantially all of the assets and assumed certain liabilities of Zycron, Inc. (“Zycron”), which provided IT workforce solutions and project management workforce solutions.
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Our ongoing dedication to community service was also emphasized by adding an “S” for Service to our GIIFTS (Growth Integrity Innovation Fun Teamwork Service).
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Kushner & Associates trade name. • In February 2020, we acquired 100% of the equity of EdgeRock Technology Holdings, Inc. (“EdgeRock”), which provides specialized IT consultants and focuses on the sourcing and placement of technology professionals specialized in leading software and data ecosystems.
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Focusing on impactful community events, we continued sponsorship of the State Fair of Texas’s Youth Agricultural Job Interview Contest, the Heart Walk with the American Heart Association and the Steps of Success 5K for the Transformation Life Center. We also continued to be involved with student development through the Junior Achievement organization.
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We continue to operate under the Momentum Solutionz trade name. • In December 2022, we acquired substantially all of the assets and assumed certain liabilities of Horn Solutions, Inc. and Horn Solutions, Dallas, LLC (collectively, “Horn Solutions”).
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See “Note 4 - Discontinued Operations” in our Consolidated Financial Statements included elsewhere in this report for additional information. 6 We now operate across 46 states and D.C. We do not currently have any significant foreign operations. Our Industry The workforce solution industry supplies field talent to client partners helping them minimize the cost and effort of workforce planning.
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The demand for a flexible workforce continues to grow with competitive and economic pressures to reduce costs and respond to changing market conditions. The workforce solution market is subject to volatility based on overall economic conditions. Historically, in periods of economic growth, the number of companies providing workforce solutions has increased due to low barriers to entry.
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Financial Information about Geographic Areas Refer to Notes 1 and 2 in the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated by reference. Our Client Partners We currently provide workforce solutions to small and medium-sized companies as well as divisions of Fortune 500 companies.
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Through our programs and initiatives, we seek to contribute to improving the quality of life of our team 10 members, their families, as well as the communities in which they operate. Designed on the concept of social investment, our approach ensures the creation of future development capacities instead of aiding on isolated occasions.
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Supporting our communities has always been an important part of how we uphold our company values. To this end, we support volunteerism through two paid days so team members can serve their charity, cause or not-for-profit organization of choice. Our 2021 launch of Philanthropy Cloud, powered by Salesforce.org, improves the giving experience by connecting employees with their charity of choice.
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The platform also greatly enhances our transparency in impact reporting, tracking, and engagement. In 2022, “BG'ers” donated more than $38,500 to charity and served over 1,375 volunteer hours to support to support causes that are close to their hearts, as well as BGSF-organized volunteer projects.
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In 2022, BGSF served as the Presenting Sponsor of the State Fair of Texas’s Youth Agricultural Job Interview Contest, bringing together BG volunteers to facilitate the contest for high school students from across Texas competing for scholarship awards BGSF.
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The team also continued to support the Junior Achievement charity, furthering the organization’s mission to prepare students for successful futures by providing work-readiness, entrepreneurship, and financial literacy learning programs.
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In early 2023, BGSF created the Darrell Freeman Fellowship program which will educate and support students at Nashville State Community College who want to successfully enter the Information Technology field after graduation.
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Department of Labor, which sets employment practice standards for workers, and similar state and local agencies. We are subject to the laws and regulations of the jurisdictions within which we operate.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.
Biggest changeFurther, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Our certificate of incorporation contains provisions that have the same effect as Section 203, except that they generally provide that Taglich Private Equity LLC, Taglich Brothers, Inc. or any of their respective affiliates or associates, including any investment funds or portfolio companies managed by any of the foregoing, or any other person with whom any of the foregoing act as a group for the purpose of acquiring, voting or disposing 20 of our shares, or any person that becomes an interested stockholder as a result of a transfer of 5% or more of our voting stock by the forgoing persons to such person, will be excluded from the “interested stockholder” definition in our certificate of incorporation and will therefore not be subject to the restrictions set forth therein that have the same effect as Section 203.
Our certificate of incorporation contains provisions that have the same effect as Section 203, except that they generally provide that Taglich Private Equity LLC, Taglich Brothers, Inc. or any of their respective affiliates or associates, including any investment funds or portfolio companies managed by any of the foregoing, or any other person with whom any of the foregoing act as a group for the purpose of acquiring, voting or disposing of our shares, or any person that becomes an interested stockholder as a result of a transfer of 5% or more of our voting stock by the forgoing persons to such person, will be excluded from the “interested stockholder” definition in our certificate of incorporation and will therefore not be subject to the restrictions set forth therein that have the same effect as Section 203.
There can also be no assurance that the insurance policies we have purchased to insure against certain risks will be adequate or that insurance coverage will remain available on commercially reasonable terms or be sufficient in amount or scope of coverage. U.S. federal tax regulations and interpretations could adversely affect us.
There can also be no assurance that the insurance policies we have purchased to insure against certain risks will be adequate or that insurance coverage will remain available on commercially reasonable terms or be sufficient in amount or scope of coverage. 16 U.S. federal tax regulations and interpretations could adversely affect us.
When demand drops, our operating profit is typically impacted unfavorably as we experience a deleveraging of our selling and administrative expense base as expenses may not decline as quickly as revenues. In periods of decline, we can only reduce selling and administrative expenses to a certain level without negatively impacting the long-term potential of our brands.
When demand drops, our operating profit is typically impacted unfavorably as we experience a deleveraging of our selling, general, and administrative expense base as expenses may not decline as quickly as revenues. In periods of decline, we can only reduce selling, general, and administrative expenses to a certain level without negatively impacting the long-term potential of our brands.
If we are unable to execute these tasks effectively, we may not be able to attract a significant number of new client partners and our existing client partners base could decrease, either or both of which could have a materially adverse impact on our revenues. Acquisitions and new business initiatives may not be successful.
If we are unable to execute these tasks effectively, we may not be able to attract a significant number of new client partners and our existing client partners base could decrease, either or both of which could have a materially adverse impact on our revenues. 13 Acquisitions and new business initiatives may not be successful.
If all or any of the foregoing risks occur, it would have a material adverse effect on our company. 18 We cannot predict whether an active trading market for our common stock will continue. Even if an active trading market continues, the market price of our common stock may remain volatile.
If all or any of the foregoing risks occur, it would have a material adverse effect on our company. We cannot predict whether an active trading market for our common stock will continue. Even if an active trading market continues, the market price of our common stock may remain volatile.
We depend on our ability to attract qualified field talent who possess the skills and experience necessary to meet the workforce solution requirements of our client partners. We must continually evaluate our base of available qualified personnel to keep pace with changing client partner needs.
We depend on our ability to attract and retain qualified field talent. We depend on our ability to attract qualified field talent who possess the skills and experience necessary to meet the workforce solution requirements of our client partners. We must continually evaluate our base of available qualified personnel to keep pace with changing client partner needs.
In order to compete effectively in our markets, we must target our potential client partners carefully, continue to improve our efficiencies and the scope and quality of our workforce solutions, and rely on our service quality, innovation, education and 12 program clarity.
In order to compete effectively in our markets, we must target our potential client partners carefully, continue to improve our efficiencies and the scope and quality of our workforce solutions, and rely on our service quality, innovation, education and program clarity.
Whether or not there is alternative health care legislation enacted in 16 the U.S., there is likely to be significant disruption to the health care market in the coming months and years and the costs of our health care expenditures may increase.
Whether or not there is alternative health care legislation enacted in the U.S., there is likely to be significant disruption to the health care market in the coming months and years and the costs of our health care expenditures may increase.
Our workers’ compensation insurance policies are renewed annually. We cannot be certain we will be able to obtain appropriate types or levels of insurance in the future or that adequate replacement policies will be available on commercially reasonable terms. The loss of our workers’ compensation insurance coverage would prevent us from doing business in the majority of our markets.
We cannot be certain we will be able to obtain appropriate types or levels of insurance in the future or that adequate replacement policies will be available on commercially reasonable terms. The loss of our workers’ compensation insurance coverage would prevent us from doing business in the majority of our markets.
Even if an active market for our common stock continues, of which no assurances can be given, the market price for our common stock may be volatile and subject to wide fluctuations in response to factors including the following: • actual or anticipated fluctuations in our quarterly or annual operating results; • changes in financial or operational estimates or projections; • duration and impact of the COVID-19 pandemic and efforts to mitigate its spread; • changes in the economic performance or market valuations of companies similar to ours; • conditions in markets generally; • sales of significant amounts of our common stock; and • general economic or political conditions in the United States or elsewhere.
Even if an active market for our common stock continues, of which no assurances can be given, the market price for our common stock may be volatile and subject to wide fluctuations in response to factors including the following: • actual or anticipated fluctuations in our quarterly or annual operating results; • changes in financial or operational estimates or projections; • changes in the economic performance or market valuations of companies similar to ours; • conditions in markets generally; • sales of significant amounts of our common stock; and • general economic or political conditions in the United States or elsewhere.
Risks Related to Our Information Technology, Cybersecurity and Data Protection Our results of operations and ability to grow could be materially negatively affected if we cannot successfully keep pace with technological changes impacting the development and implementation of our workforce solutions and the evolving needs of our client partners. 17 Our success depends on our ability to keep pace with rapid technological changes affecting both the development and implementation of our workforce solutions and the needs of our client partners.
Risks Related to Our Information Technology, Cybersecurity and Data Protection Our results of operations and ability to grow could be materially negatively affected if we cannot successfully keep pace with technological changes impacting the development and implementation of our workforce solutions and the evolving needs of our client partners.
We may issue additional shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock in connection with hiring or retaining personnel, option exercises, future acquisitions or future placements of our securities for capital-raising or other business purposes.
We may issue additional shares of our common stock or securities convertible into or exchangeable or exercisable for our common stock in connection with hiring or retaining personnel, option exercises, restricted stock awards, 2020 ESPP purchases, future acquisitions or future placements of our securities for capital-raising or 18 other business purposes.
Geographic revenue in excess of 10% of our consolidated revenue from continuing operations in fiscal year 2022 and the related percentage for fiscal years 2021 and 2020 was generated in the following areas: 2022 2021 2020 Tennessee 10 % 12 % 16 % Texas 23 % 23 % 15 % Consequently, weakness in economic conditions in these regions could have a material adverse effect on our financial position and results of future operations.
Geographic revenue in excess of 10% of our consolidated revenue from continuing operations in fiscal year 2024 and the related percentage for fiscal years 2023 and 2022 was generated in the following areas: 2024 2023 2022 Tennessee 17 % 13 % 10 % Texas 23 % 25 % 23 % 12 Consequently, weakness in economic conditions in these regions could have a material adverse effect on our financial position and results of future operations.
We are subject to the laws and regulations of the jurisdictions within which we operate. While the specific laws and regulations vary among these jurisdictions, some require some form of licensing and often have statutory requirements for workplace safety and notice of change in obligation of workers’ compensation coverage in the event of contract termination.
While the specific laws and regulations vary among these jurisdictions, some require some form of licensing and often have statutory requirements for workplace safety and notice of change in obligation of workers’ compensation coverage in the event of contract termination.
In accordance with generally accepted accounting principles, we are required to review our goodwill and intangible assets for impairment at least annually. Our goodwill and intangibles assets from continuing operations were $55.2 million and $47.6 million, respectively, at the end of fiscal year 2022. An unfavorable evaluation could cause us to write-off these assets in future periods.
In accordance with generally accepted accounting principles, we are required to review our goodwill and intangible assets for impairment at least annually. Our goodwill and intangibles assets were $59.2 million and $24.5 million, respectively, at the end of fiscal year 2024. An unfavorable evaluation could cause us to write-off these assets in future periods.
If our working capital needs increase in the future, we may be forced to seek additional sources of capital, which may not be available on commercially reasonable terms, or at all.
We believe that our current sources of capital are adequate to meet our working capital needs. However, our available sources of capital are limited. If our working capital needs increase in the future, we may be forced to seek additional sources of capital, which may not be available on commercially reasonable terms, or at all.
Our business is subject to federal, state and local labor and employment laws and a failure to comply could materially harm our business. We are subject to regulation by numerous federal, state and local regulatory agencies, including but not limited to the U.S. Department of Labor, which sets employment practice standards for workers, and similar state and local agencies.
Our business is subject to foreign, federal, state and local labor and employment laws and a failure to comply could materially harm our business. We are subject to regulation by numerous foreign, federal, state and local regulatory agencies, including but not limited to the U.S.
Any future write-offs could have a material adverse impact on our results of operations. For example, at the February, 2023 Board of Director's meeting, management's plan was approved to rebrand as BGSF, eliminating various current trade names. See “Note 8 - Intangible Assets” in our Consolidated Financial Statements included elsewhere in this report for additional information.
Any future write-offs could have a material adverse impact on our results of operations. For example, in 2023, the Board of Director approved management’s plan to rebrand as BGSF, eliminating various current trade names. See “Note 2 - Summary of Significant Accounting Policies” in our Consolidated Financial Statements included elsewhere in this report for additional information.
If we are forced to refinance our credit agreement, there can be no assurance that such refinancing would be available or that such refinancing would not have a material adverse effect on our business and financial condition.
There can be no assurances that any lender will waive defaults that may occur in the future. If we are forced to refinance our credit agreement, there can be no assurance that such refinancing would be available or that such refinancing would not have a material adverse effect on our business and financial condition.
While we have declared and paid dividends for the prior thirty-three quarterly periods, we are limited in our ability to pay dividends by our credit agreement, and therefore, we cannot be certain if we will pay any cash dividends to holders of our common stock in the future.
We are limited in our ability to pay dividends by our credit agreement, and therefore, we cannot be certain if we will pay any cash dividends to holders of our common stock in the future.
We maintain insurance with respect to many of such claims; however, there can be no assurance that we will continue to be able to obtain insurance at a cost that does not have a material adverse effect upon us or that such claims (whether by reason of us not having sufficient insurance or by reason of such claims being outside the scope of our insurance) will not have a material adverse effect upon us.
The potential risk of security breaches and cyber-attacks may increase as we introduce new workforce solution offerings. 17 We maintain insurance with respect to many of such claims; however, there can be no assurance that we will continue to be able to obtain insurance at a cost that does not have a material adverse effect upon us or that such claims (whether by reason of us not having sufficient insurance or by reason of such claims being outside the scope of our insurance) will not have a material adverse effect upon us.
The maximum amount we are entitled to borrow under our revolving credit facility is currently $35.0 million and the availability of unused funds is affected by financial, business, economic and other factors, as well as by the daily timing of cash collections and cash outflows.
At the end of fiscal 2024, the maximum amount we were entitled to borrow under our revolving credit facility was $20 million and the availability of unused funds was affected by financial, business, economic and other factors, as well as by the daily timing of cash collections and cash outflows.
Failure to comply with restrictive covenants under our credit agreement could trigger prepayment obligations or additional costs. Our credit agreement includes various financial and other covenants with which we have to comply in order to maintain borrowing availability and avoid default interest, including minimum fixed charge coverage ratio and maximum leverage ratio.
Our credit agreement includes various financial and other covenants with which we have to comply in order to maintain borrowing availability and avoid default interest, including minimum fixed charge coverage ratio and maximum leverage ratio. 14 Any future failure to comply with our covenants which may occur under our credit agreement could result in an event of default which, if not cured or waived, could trigger prepayment obligations.
Should such systems fail to detect or prevent error or fraud, it would leave us without the ability to reliably compile financial information about our company and significantly impair our ability to prevent or detect errors and fraud, all of which would have a negative impact on our company from many perspectives. 19 Moreover, we do not expect that disclosure controls or internal control over financial reporting, even if established, will prevent all errors and fraud.
Should such systems fail to detect or prevent error or fraud, it would leave us without the ability to reliably compile financial information about our company and significantly impair our ability to prevent or detect errors and fraud, all of which would have a negative impact on our company from many perspectives.
If an actual or perceived breach of our security occurs, we could be liable and the market perception of our workforce solutions could be harmed or result in increased costs or loss of revenue. The potential risk of security breaches and cyber-attacks may increase as we introduce new workforce solution offerings.
If an actual or perceived breach of our security occurs, we could be liable and the market perception of our workforce solutions could be harmed or result in increased costs or loss of revenue.
Our operations and financial success depend significantly on our leadership management team and team members. The loss of any key members of this group could have a material adverse effect on our business, financial condition and results of operations. We depend on our ability to attract and retain qualified field talent.
We would be adversely affected by the loss of key personnel. Our operations and financial success depend significantly on our leadership management team and team members. The loss of any key members of this group could have a material adverse effect on our business, financial condition and results of operations.
We cannot be sure we will pay dividends in the future, and consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
Failure of our control systems to prevent and detect errors or fraud could materially adversely impact us. We cannot be sure we will pay dividends in the future, and consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
Certain provisions of our certificate of incorporation and bylaws may have the effect of delaying or preventing changes in control if our board of directors determines that such changes in control are not in the best interests of us and our stockholders.
Certain provisions of our organizational documents may make it difficult for stockholders to change the composition of our board of directors and may discourage hostile takeover attempts that some of our stockholders may consider to be beneficial. 19 Certain provisions of our certificate of incorporation and bylaws may have the effect of delaying or preventing changes in control if our board of directors determines that such changes in control are not in the best interests of us and our stockholders.
The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Care Reform Laws”) include various health-related provisions that took effect during 2014 and established new regulations on health plans.
Increased government regulation of the workplace or of the employer-employee relationship, or judicial or administrative proceedings related to such regulation, could also materially harm our business. 15 The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Care Reform Laws”) include various health-related provisions that took effect during 2014 and established new regulations on health plans.
We require significant amounts of working capital to operate our business. If we experience a significant and sustained drop in operating profits, or if there are unanticipated reductions in cash inflows or increases in cash outlays, we may be subject to cash shortfalls.
If we experience a significant and sustained drop in operating profits, or if there are unanticipated reductions in cash inflows or increases in cash outlays, we may be subject to cash shortfalls. If such a shortfall were to occur for even a brief period of time, it may have a significant adverse effect on our business.
Technological advances such as artificial intelligence, machine learning, and automation are impacting industries served by all our lines of business. In addition, our business relies on a variety of technologies, including those that support hiring and tracking, order management, billing, and client data analytics.
In addition, our business relies on a variety of technologies, including those that support hiring and tracking, order management, billing, and client data analytics.
We could also be less able to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions, or we may be disadvantaged compared to competitors with less leverage. 14 We have significant working capital needs and if we are unable to satisfy those needs from cash generated from our operations or borrowings under our revolving credit facility, we may not be able to meet payroll requirements.
We have significant working capital needs and if we are unable to satisfy those needs from cash generated from our operations or borrowings under our revolving credit facility, we may not be able to meet payroll requirements. We require significant amounts of working capital to operate our business.
Depending on future changes in collateral requirements, we could be required to seek additional sources of capital in the future, which may not be available on commercially reasonable terms, or at all. 15 We are dependent on workers’ compensation insurance coverage at commercially reasonable terms. We provide workers’ compensation insurance for our team members and field talent.
We believe that our current sources of liquidity are adequate to satisfy our immediate needs for these obligations; however, our available sources of capital are limited. Depending on future changes in collateral requirements, we could be required to seek additional sources of capital in the future, which may not be available on commercially reasonable terms, or at all.
Generally, we pay our field talent on a weekly basis while we receive payments from our client partners 30 to 90 days after billing. As a result, we must maintain sufficient cash availability to pay team members and field talent and fund related payroll liabilities prior to receiving payment from client partners.
In particular, we use working capital to pay expenses relating to our team members and field talent and to satisfy our workers’ compensation and tax liabilities. Generally, we pay our field talent on a weekly basis while we receive payments from our client partners 30 to 90 days after billing.
We derive working capital for our operations through cash generated by our operating activities and borrowings under our revolving credit facility. We believe that our current sources of capital are adequate to meet our working capital needs. However, our available sources of capital are limited.
As a result, we must maintain sufficient cash availability to pay team members and field talent and fund related payroll liabilities prior to receiving payment from client partners. We derive working capital for our operations through cash generated by our operating activities and borrowings under our revolving credit facility.
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Our rebranding plan may take a significant amount of time and involve substantial costs and may not be favorably received by our client partners. In early 2023, our board of directors approved our management’s plan to rebrand as BGSF, eliminating various current trade names. We intend to complete this rebranding by the end of the second quarter of 2023.
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We could also be less able to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions, or we may be disadvantaged compared to competitors with less leverage.
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We may incur substantial costs as a result of the rebranding and may not be able to achieve or maintain brand name recognition or status that is comparable to the recognition and status previously enjoyed by certain of our brands.
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Failure to comply with restrictive covenants under our credit agreement could trigger prepayment obligations or additional costs.
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The failure of our rebranding initiative could adversely affect our ability to attract and retain client partners, which could cause us not to realize some or all of the anticipated benefits contemplated by the rebranding. 13 We would be adversely affected by the loss of key personnel.
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We are dependent on workers’ compensation insurance coverage at commercially reasonable terms. We provide workers’ compensation insurance for our team members and field talent. Our workers’ compensation insurance policies are renewed annually.
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If such a shortfall were to occur for even a brief period of time, it may have a significant adverse effect on our business. In particular, we use working capital to pay expenses relating to our team members and field talent and to satisfy our workers’ compensation and tax liabilities.
Added
Department of Labor, which sets employment practice standards for workers, and similar state and local agencies. We are subject to the laws and regulations of the jurisdictions within which we operate.
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Any future failure to comply with our covenants which may occur under our credit agreement could result in an event of default which, if not cured or waived, could trigger prepayment obligations. There can be no assurances that any lender will waive defaults that may occur in the future.
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Our success depends on our ability to keep pace with rapid technological changes affecting both the development and implementation of our workforce solutions and the needs of our client partners. Technological advances such as artificial intelligence, machine learning, and automation are impacting industries served by all our lines of business.
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We believe that our current sources of liquidity are adequate to satisfy our immediate needs for these obligations; however, our available sources of capital are limited.
Added
Moreover, we do not expect that disclosure controls or internal control over financial reporting, even if established, will prevent all errors and fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
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Increased government regulation of the workplace or of the employer-employee relationship, or judicial or administrative proceedings related to such regulation, could also materially harm our business.
Added
Our strategic alternatives review process may not be successful, may be costly, time-consuming, and complex, and may not yield the desired results. On May 8, 2024, we announced that our Board of Directors had initiated a process to evaluate potential strategic alternatives and had engaged Houlihan Lokey as its financial advisors.
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Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Failure of our control systems to prevent and detect errors or fraud could materially adversely impact us.
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We have not set a timetable for completion of this strategic alternatives review process, and our Board of Directors has not approved a definitive course of action. There can be no assurance that this strategic alternatives review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms, or at all.
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Certain provisions of our organizational documents may make it difficult for stockholders to change the composition of our board of directors and may discourage hostile takeover attempts that some of our stockholders may consider to be beneficial.
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Any potential transaction would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, the interest of third parties, and stockholder support. The process of evaluating strategic alternatives may be costly, time-consuming, and complex.
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Speculation regarding any developments related to the review of strategic alternatives and perceived uncertainties related to the future of the Company could cause our stock price to fluctuate significantly or otherwise materially impact our stockholder, employee, customer, supplier, and other business relationships.
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Even if we successfully consummate a transaction from our review of strategic alternatives, we may fail to realize all of the anticipated benefits of any transaction, those benefits may take longer to realize than expected, or we may encounter integration or other difficulties. 20 Cost restructuring plans may be costly, time-consuming, and complex, and may not yield the desired results.
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We implemented a cost restructuring plan during the fourth fiscal quarter of 2024 designed to reduce costs, improve operating performance, and position the Company for profitable growth, and we may implement or modify cost restructuring plans in the future. Any such cost restructuring plans may be costly, time-consuming, and complex.
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Speculation and uncertainties regarding any developments related to any cost restructuring plans may cause our stock price to fluctuate significantly or otherwise materially impact our stockholder, employee, customer, supplier, and other business relationships.
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Even if we successfully implement or modify any cost restructuring plan, we may fail to realize all of the anticipated benefits of any cost restructuring plan, those benefits may take longer to realize than expected, or we may encounter implementation or other difficulties.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. Our home office is located at 5850 Granite Parkway, Suite 730, Plano, Texas 75024, and our telephone number is 972-692-2400. We lease our home office, which is approximately 6,200 square feet of space. We now operate across 46 states and D.C.
Biggest changeITEM 2. PROPERTIES. Our home office is located at 5850 Granite Parkway, Suite 730, Plano, Texas 75024, and our telephone number is 972-692-2400. We lease our home office, which is approximately 6,200 square feet of space. In the U.S., we operate across 46 states and D.C.
We lease all of our offices, which are located throughout the U.S., through operating leases with terms that range from six months to five years. We also have month to month leases. We believe that our facilities are adequate for our current needs.
We lease all of our offices, which are primarily located throughout in the U.S., through operating leases with terms that range from six months to five years. We also have month to month leases. We believe that our facilities are adequate for our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe principal risks that we insure against, subject to and upon the terms and conditions of our various insurance policies, are workers’ compensation, general liability, automobile liability, property damage, professional liability, employment practices, crime and cyber risk, directors and officer liability, fiduciary liability and fidelity losses.
Biggest changeThe principal risks that we insure against, subject to and upon the terms and conditions of our various insurance policies, are workers’ compensation, general liability, automobile liability, property damage, professional liability, employment practices, crime and cyber risk, directors and officer liability, umbrella and excess, fiduciary liability, and fidelity losses.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends The board of directors has declared and we have paid the following cash dividends during the fiscal years ended 2022, 2021, and 2020: Declared Date Record Date Distribution Date Dividend per Share Amount Paid January 30, 2020 February 10, 2020 February 18, 2020 $0.30 $ 3,092,771 May 7, 2020 May 20, 2020 May 27, 2020 $0.05 515,349 August 5, 2020 August 18, 2020 August 25, 2020 $0.05 515,349 November 5, 2020 November 16, 2020 November 23, 2020 $0.10 1,031,679 Total $ 5,155,148 February 8, 2021 February 18, 2021 February 26, 2021 $0.10 $ 1,033,597 May 6, 2021 May 17, 2021 May 24, 2021 $0.10 1,034,334 August 5, 2021 August 16, 2021 August 23, 2021 $0.12 1,248,183 November 3, 2021 November 15, 2021 November 22, 2021 $0.12 1,251,025 Total $ 4,567,139 February 3, 2022 February 14, 2022 February 22, 2022 $0.15 $ 1,564,649 April 27, 2022 May 17, 2022 May 24, 2022 $0.15 1,572,332 August 3, 2022 August 15, 2022 August 22, 2022 $0.15 1,574,992 November 2, 2022 November 14, 2022 November 21, 2022 $0.15 1,577,709 Total $ 6,289,682 On February 13, 2023, the Company's board of directors declared a cash dividend in the amount of $0.15 per share of common stock to be paid on March 2, 2023 to all shareholders of record as of the close of business on February 23, 2023.
Biggest changeDividends The board of directors has declared and we have paid the following cash dividends during the fiscal years ended 2024, 2023, and 2022: Declared Date Record Date Distribution Date Dividend per Share Amount Paid February 3, 2022 February 14, 2022 February 22, 2022 $0.15 $ 1,564,649 April 27, 2022 May 17, 2022 May 24, 2022 $0.15 1,572,332 August 3, 2022 August 15, 2022 August 22, 2022 $0.15 1,574,992 November 2, 2022 November 14, 2022 November 21, 2022 $0.15 1,577,709 Total $ 6,289,682 February 13, 2023 February 23, 2023 March 2, 2023 $0.15 $ 1,618,485 May 4, 2023 May 15, 2023 May 22, 2023 $0.15 1,625,816 August 9, 2023 August 21, 2023 August 28, 2023 $0.15 1,629,676 November 8, 2023 November 20, 2023 November 28, 2023 $0.15 1,633,272 Total $ 6,507,249 February 8, 2024 February 20, 2024 February 27, 2024 $0.15 $ 1,639,315 Total $ 1,639,315 Our ability to pay dividends is restricted under the terms of our credit agreement and may be restricted under other agreements governing our outstanding indebtedness from time to time.
Recent Sales of Unregistered Securities In December 2022, we issued 254,455 shares of common stock in a private placement for a value of $3.4 million, and a convertible two-year promissory note of $4.4 million with an annual interest rate of 6% that is convertible into common shares at any time after one year at a conversion price of $17.12 per share at the closing of the Horn Solutions acquisition.
Recent Sales of Unregistered Securities In December 2022, we issued 254,455 shares of common stock in a private placement for a value of $3.3 million, and a convertible two-year promissory note of $4.4 million with an annual interest rate of 6% that is convertible into common shares at any time after one year at a conversion price of $17.12 per share at the closing of the Horn Solutions acquisition.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Stock Performance Graph The following graph compares, through January 1, 2023, the cumulative total return of the Company’s common stock, a peer group index of certain publicly traded workforce solutions companies, and the Russell 3000.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Stock Performance Graph The following graph compares, through December 29, 2024, the cumulative total return of the Company’s common stock, a peer group index of certain publicly traded workforce solutions companies, and the Russell 3000.
Any future determination with respect to the payment of dividends, including whether to declare a dividend, and, if so, the amount thereof, will be at the discretion of our board of directors and will be dependent upon, among other things, our financial condition, results of operations, capital requirements, the terms of our then existing indebtedness, contractual restrictions, future prospects, general economic conditions and other factors considered relevant by our board of directors. 23 Equity Compensation Plans The following equity compensation plan information is provided as of January 1, 2023: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Equity Compensation Plans Approved by Security Holders 2013 Long-Term Incentive Plan 883,699 $15.81 129,268 2020 Employee Stock Purchase Plan — $0.00 158,718 Total 883,699 $15.81 287,986 A description of the equity compensation plan is incorporated by reference to Note 16 in the Notes to Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.
Any future determination with respect to the payment of dividends, including whether to declare a dividend, and, if so, the amount thereof, will be at the discretion of our board of directors and will be dependent upon, among other things, our financial condition, results of operations, capital requirements, the terms of our then existing indebtedness, contractual restrictions, future prospects, general economic conditions and other factors considered relevant by our board of directors. 24 Equity Compensation Plans The following equity compensation plan information is provided as of December 29, 2024: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Equity Compensation Plans Approved by Security Holders 2013 Long-Term Incentive Plan 976,432 $15.00 149,058 2020 Employee Stock Purchase Plan — $0.00 31,719 Total 976,432 $15.00 180,777 A description of the equity compensation plan is incorporated by reference to Note 16 in the Notes to Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.
During 2021, we repurchased 610 shares of the Company's common stock at a cost of $8,442 and a weighted average price of $13.84 upon the vesting of restricted stock to satisfy statutory minimum tax withholding requirements. 24
During 2023, we repurchased 2,085 shares of the Company’s common stock at a cost of $19,019 and a weighted average price of $9.69 upon the vesting of restricted stock to satisfy statutory minimum tax withholding requirements.
The foregoing issuance of securities was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. Share Repurchases During 2022, there were no stock repurchases.
On January 30, 2025, the convertible note was amended to increase the interest rate to 7% and extend the maturity date to December 12, 2025. The foregoing issuance of securities was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. Share Repurchases During 2024, there were no stock repurchases.
As of February 13, 2023, there were approximately 3,402 holders of record of our common stock.
As of February 5, 2025, there were approximately 2,386 holders of record of our common stock.
The table below contains the market range of high and low prices for our common stock. 22 Quarter Ended: High Low January 1, 2023 $ 15.49 $ 10.30 September 25, 2022 $ 13.33 $ 11.88 June 26, 2022 $ 13.62 $ 11.65 March 27, 2022 $ 15.10 $ 12.80 December 26, 2021 $ 15.65 $ 11.61 September 26, 2021 $ 13.99 $ 11.55 June 27, 2021 $ 14.77 $ 11.45 March 28, 2021 $ 16.91 $ 12.24 As of February 13, 2023, our common stock closing price was $15.69 per share.
The table below contains the market range of high and low prices for our common stock. 23 Quarter Ended: High Low December 29, 2024 $ 6.18 $ 6.07 September 27, 2024 $ 7.25 $ 7.06 June 28, 2024 $ 8.67 $ 8.35 March 28, 2024 $ 10.50 $ 10.18 December 31, 2023 $ 9.49 $ 9.37 October 1, 2023 $ 9.62 $ 9.45 July 2, 2023 $ 9.59 $ 9.50 April 2, 2023 $ 11.06 $ 10.44 As of February 5, 2025, our common stock closing price was $5.19 per share.
Removed
Our ability to pay dividends is restricted under the terms of our credit agreement and may be restricted under other agreements governing our outstanding indebtedness from time to time.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

11 edited+6 added−1 removed7 unchanged
Biggest changeFiscal Years Ended January 1, 2023 December 26, 2021 December 27, 2020 December 29, 2019 December 31, 2018 (dollars in thousands, except per share data) Statement of Operations Data: Revenues $ 298,422 $ 239,027 $ 207,125 $ 219,764 $ 206,174 Gross profit $ 103,548 $ 80,941 $ 66,040 $ 69,826 $ 64,520 Selling, general and administrative expenses $ 83,211 $ 65,115 $ 55,244 $ 50,222 $ 44,787 Gain on contingent consideration $ — $ (2,403) $ (76) $ — $ (3,775) Impairment losses $ — $ — $ 7,240 $ — $ — Depreciation and amortization $ 4,054 $ 3,698 $ 4,861 $ 4,718 $ 4,833 Operating income (loss) $ 16,283 $ 14,531 $ (1,229) $ 14,886 $ 18,675 Loss on extinguishment of debt $ — $ — $ — $ 541 $ — Interest expense, net $ 1,363 $ 1,433 $ 1,584 $ 1,569 $ 2,850 Income (loss) from continuing operations before income taxes $ 14,920 $ 13,098 $ (2,813) $ 12,776 $ 15,825 Income tax expense (benefit) from continuing operations $ 3,659 $ 2,640 $ (741) $ 3,135 $ 2,855 Income (loss) from continuing operations $ 11,261 $ 10,458 $ (2,072) $ 9,641 $ 12,970 Income from discontinued operations, net of tax $ 14,100 $ 3,651 $ 3,513 $ 3,606 $ 4,579 Net income $ 25,361 $ 14,109 $ 1,441 $ 13,247 $ 17,549 Basic income (loss) per share: Continuing operations $ 1.08 $ 1.01 $ (0.20) $ 0.94 $ 1.35 Income from discontinued operations: Income 0.12 0.44 0.46 0.46 0.58 Gain on Sale 1.69 — — — — Income tax expense (0.46) (0.09) (0.12) (0.11) (0.10) Net income per share – basic $ 2.43 $ 1.36 $ 0.14 $ 1.29 $ 1.83 Diluted income (loss) per share: Continuing operations $ 1.07 $ 1.00 $ (0.20) $ 0.93 $ 1.32 Income from discontinued operations: Income 0.12 0.44 0.46 0.46 0.57 Gain on Sale 1.69 — — — — Income tax expense (0.46) (0.09) (0.12) (0.11) (0.10) Net income per share – diluted $ 2.42 $ 1.35 $ 0.14 $ 1.28 $ 1.79 25 Weighted average shares outstanding – basic 10,427 10,367 10,312 10,239 9,577 Weighted average shares outstanding – diluted 10,473 10,417 10,338 10,351 9,808 Other Financial Data: Adjusted EBITDA from continuing operations (1) $ 21,693 $ 14,970 $ 12,197 $ 21,609 $ 21,256 Cash dividends declared per common share $ 0.60 $ 0.44 $ 0.50 $ 1.20 $ 1.15 Balance Sheet Data from Continuing Operations: Working capital $ 47,955 $ 25,851 $ 17,960 $ 20,532 $ 13,079 Total assets $ 194,673 $ 148,294 $ 130,278 $ 100,378 $ 84,316 Total outstanding borrowings, net $ 66,670 $ 39,450 $ 34,634 $ 27,494 $ 20,089 Total other long-term liabilities $ 3,059 $ 7,240 $ 14,224 $ 6,068 $ 654 Stockholders’ equity $ 100,737 $ 76,592 $ 65,458 $ 68,457 $ 65,702 (1) We present Adjusted EBITDA (defined below), a measure that are not in accordance with accounting principles generally accepted in the United States of America (“non-GAAP”), in this Annual Report on Form 10-K to provide investors with a supplemental measure of our operating performance.
Biggest changeThe statement of operations data for the fiscal years ended 2021 and 2020 and the balance sheet data as of January 1, 2023, December 26, 2021, and December 27, 2020 set forth below were derived from our audited financial statements not included in this Annual Report on Form 10-K. 25 Fiscal Years Ended December 29, 2024 December 31, 2023 January 1, 2023 December 26, 2021 December 27, 2020 (dollars in thousands, except per share data) Statement of Operations Data: Revenues $ 272,499 $ 313,167 $ 298,422 $ 239,027 $ 207,125 Gross profit $ 92,863 $ 111,784 $ 103,548 $ 80,941 $ 66,040 Selling, general, and administrative expenses $ 85,333 $ 88,650 $ 83,211 $ 65,116 $ 55,244 Gain on contingent consideration $ (1,452) $ — $ — $ (2,403) $ (76) Impairment losses $ — $ 22,545 $ — $ — $ 7,240 Depreciation and amortization $ 7,769 $ 7,774 $ 4,054 $ 3,698 $ 4,861 Operating income (loss) $ 1,213 $ (7,185) $ 16,283 $ 14,530 $ (1,229) Interest expense, net $ (4,921) $ (5,976) $ (1,363) $ (1,433) $ (1,584) (Loss) income before income taxes from continuing operations $ (3,708) $ (13,161) $ 14,920 $ 13,097 $ (2,813) Income tax benefit (expense) from continuing operations $ 370 $ 2,938 $ (3,659) $ (2,639) $ 741 (Loss) income from continuing operations $ (3,338) $ (10,223) $ 11,261 $ 10,458 $ (2,072) Income from discontinued operations, net of tax $ — $ — $ 14,100 $ 3,651 $ 3,513 Net (loss) income $ (3,338) $ (10,223) $ 25,361 $ 14,109 $ 1,441 Net (loss) income per share - basic: Continuing operations $ (0.31) $ (0.95) $ 1.08 $ 1.01 $ (0.20) Income from discontinued operations: Income — — 0.12 0.44 0.46 Gain on Sale — — 1.69 — — Income tax expense — — (0.46) (0.09) (0.12) Net (loss) income per share – basic $ (0.31) $ (0.95) $ 2.43 $ 1.36 $ 0.14 Net (loss) income per share - diluted: Continuing operations $ (0.31) $ (0.95) $ 1.07 $ 1.00 $ (0.20) Income from discontinued operations: Income — — 0.12 0.44 0.46 Gain on Sale — — 1.69 — — Income tax expense — — (0.46) (0.09) (0.12) Net (loss) income per share – diluted $ (0.31) $ (0.95) $ 2.42 $ 1.35 $ 0.14 Weighted average shares outstanding – basic 10,896 10,766 10,427 10,367 10,312 Weighted average shares outstanding – diluted 10,896 10,766 10,473 10,417 10,338 26 Fiscal Years Ended December 29, 2024 December 31, 2023 January 1, 2023 December 26, 2021 December 27, 2020 (dollars in thousands, except per share data) Other Financial Data: Adjusted EBITDA from continuing operations (1) $ 10,475 $ 25,858 $ 22,353 $ 15,288 $ 12,350 Same Day EBITDA from continuing operations (1) $ 10,475 $ 25,858 $ 21,943 $ 15,288 $ 12,350 Cash dividends declared per common share $ 0.15 $ 0.60 $ 0.60 $ 0.44 $ 0.50 Balance Sheet Data from Continuing Operations: Working capital (2) $ 19,427 $ (18,144) $ 47,955 $ 25,851 $ 17,960 Total assets $ 150,111 $ 178,517 $ 194,673 $ 148,294 $ 130,278 Total outstanding borrowings, net $ 46,321 $ 63,114 $ 66,671 $ 39,450 $ 34,634 Total other long-term liabilities $ 3,770 $ 7,926 $ 3,059 $ 7,240 $ 14,224 Stockholders’ equity $ 82,269 $ 85,536 $ 100,736 $ 76,592 $ 65,458 (1) We present Adjusted EBITDA and Same Day EBITDA (defined below), measure that are not in accordance with accounting principles generally accepted in the United States of America (“non-GAAP”), in this Annual Report on Form 10-K to provide investors with a supplemental measure of our operating performance.
Our board and management also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance and for evaluating on a quarterly and annual basis actual results against such expectations, and as a performance evaluation metric in determining achievement of certain compensation programs and plans for our management.
Our board and management also use Adjusted EBITDA and Same Day EBITDA as one of the primary methods for planning and forecasting overall expected performance and for evaluating on a quarterly and annual basis actual results against such expectations, and as a performance evaluation metric in determining achievement of certain compensation programs and plans for our management.
Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from that term or by unusual or non-recurring items.
Our presentation of Adjusted EBITDA and Same Day EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from that term or by unusual or non-recurring items.
We believe that Adjusted EBITDA is a useful performance measures and is used by us to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under accounting principles generally accepted in the United States of America (“GAAP”) can provide alone.
We believe that Adjusted EBITDA and Same Day EBITDA are useful performance measures and are used by us to facilitate comparisons of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under accounting principles generally accepted in the United States of America (“GAAP”) can provide alone.
(2) In the Professional segment, we recognized a $3.7 million trade name impairment loss and a $3.5 million client partner list impairment loss during the thirteen week period ended June 28, 2020. 27
(2) In the Professional segment, we recognized a $3.7 million trade name impairment loss and a $3.5 million client partner list impairment loss during the thirteen week period ended June 28, 2020. We recognized a $22.5 million trade name impairment loss during the thirteen week period ended April 2, 2023.
Adjusted EBITDA should not be considered as an alternative to net income for the periods indicated as a measure of our performance. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Same Day EBITDA should not be considered as an alternative to net income for the periods indicated as a measure of our performance. Other companies in our industry may calculate Adjusted EBITDA or Same Day EBITDA differently than we do, limiting their usefulness as comparative measures.
The statement of operations data for the fiscal years ended 2022, 2021, and 2020 and the balance sheet data as of January 1, 2023 and December 26, 2021 set forth below are derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The statement of operations data for the fiscal years ended 2024, 2023, and 2022 and the balance sheet data as of December 29, 2024 and December 31, 2023 set forth below are derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The use of Adjusted EBITDA has limitations as analytical tool, and you should not consider this performance measure in isolation from, or as an alternative to, GAAP measures such as net income. Adjusted EBITDA is not a measure of liquidity under GAAP or otherwise, and is not an alternative to cash flow from continuing operating activities.
The use of Adjusted EBITDA and Same Day EBITDA have limitations as analytical tools, and you should not consider these performance measure in isolation from, or as an alternative to, GAAP measures such as net income.
Fiscal Years Ended January 1, 2023 December 26, 2021 December 27, 2020 December 29, 2019 December 31, 2018 (dollars in thousands) Net income (loss) from continuing operations $ 11,261 $ 10,458 $ (2,072) $ 9,641 $ 12,970 Income tax expense (benefit) from continuing operations (1) 3,659 2,640 (741) 3,135 2,855 Interest expense, net 1,363 1,433 1,584 1,569 2,850 Loss on extinguishment of debt — — — 541 — Operating income (loss) 16,283 14,531 (1,229) 14,886 18,675 Depreciation and amortization 4,054 3,698 4,861 4,718 4,833 Gain on contingent consideration — (2,403) (76) — (3,775) Impairment losses (2) — — 7,240 — — CARES Act credit — (2,084) — — — Share-based compensation 1,085 1,058 786 850 1,015 Transaction fees 271 170 615 434 508 Adjusted EBITDA from continuing operations 21,693 14,970 12,197 20,888 21,256 (1) 2020 Included a $3.3 million re-measurement of the net deferred tax assets as a result of the TCJA.
Fiscal Years Ended December 29, 2024 December 31, 2023 January 1, 2023 December 26, 2021 December 27, 2020 (dollars in thousands) (Loss) income from continuing operations $ (3,338) $ (10,223) $ 11,261 $ 10,458 $ (2,072) Income tax (benefit) expense from continuing operations (1) (370) (2,938) 3,659 2,639 (741) Interest expense, net 4,921 5,976 1,363 1,433 1,584 Operating income (loss) 1,213 (7,185) 16,283 14,530 (1,229) Depreciation and amortization 7,769 7,774 4,054 3,698 4,861 Gain on contingent consideration (1,452) — — (2,403) (76) Impairment losses (2) — 22,545 — — 7,240 CARES Act credit — — — (2,084) — Share-based compensation 989 1,029 1,085 1,058 786 Strategic alternatives review 962 — — — — Cost restructuring plan 230 — — — — Software as a service (3) 716 720 660 319 153 Transaction fees 48 975 271 170 615 Adjusted EBITDA from continuing operations 10,475 25,858 22,353 15,288 12,350 Same day adjustment — — (410) — — Same day EBITDA from continuing operations $ 10,475 $ 25,858 $ 21,943 $ 15,288 $ 12,350 (1) 2020 Included a $3.3 million re-measurement of the net deferred tax assets as a result of the TCJA.
In addition, the financial covenants in our credit agreement are based on EBITDA as defined in the credit agreement. We define “Adjusted EBITDA” as earnings before interest expense, income taxes, depreciation and amortization expense, impairment losses, transaction fees, and certain non-cash expenses such as share-based compensation expense.
We define “Adjusted EBITDA” as earnings before interest expense, income taxes, depreciation and amortization expense, impairment losses, costs associated with the evaluation of potential strategic alternatives (“Strategic alternatives review”), transaction fees, software as a service costs, and certain non-cash expenses such as share-based compensation expense.
The limitations of Adjusted EBITDA include: (i) it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) it does not reflect changes in, or cash requirements for, our working capital needs; (iii) it does not reflect income tax payments we may be required to make; and (iv) it does not reflect the cash requirements necessary to service interest or principal payments associated with indebtedness. 26 To properly and prudently evaluate our business, we encourage you to review our consolidated financial statements included elsewhere in this Annual Report on Form 10-K and the reconciliation to Adjusted EBITDA from net income, the most directly comparable financial measure presented in accordance with GAAP, set forth in the following table.
To properly and prudently evaluate our business, we encourage you to review our consolidated financial statements included elsewhere in this Annual Report on Form 10-K and the reconciliation to Adjusted EBITDA and Same Day EBITDA from net (loss) income, the most directly comparable financial measure presented in accordance with GAAP, set forth in the following table.
Removed
The statement of operations data for the fiscal years ended 2019 and 2018 and the balance sheet data as of December 27, 2020, December 29, 2019, and December 31, 2018 set forth below were derived from our audited financial statements not included in this Annual Report on Form 10-K.
Added
In addition, the financial covenants in our credit agreement are based on EBITDA as defined in the credit agreement. (2) The 2023 working capital amount includes the movement of the balances from long-term to current liabilities related to the amended credit agreement with BMO Harris Bank, N.A. (“BMO”), which had a maturity date of July 16, 2024.
Added
Adjusted EBITDA should not be considered as an alternative to net income for the periods indicated as a measure of our performance. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. We define “Same Day EBITDA” as Adjusted EBITDA on a fifty-two week fiscal year basis.
Added
Omitting the additional revenue days in a fifty-three week fiscal year ended provides a financial measure that facilitates comparisons of our results of operations with those of our fifty-two week fiscal year and comparisons of our results with those companies having same number of days.
Added
Adjusted EBITDA and Same Day EBITDA are not measures of liquidity under GAAP or otherwise, and are not alternatives to cash flow from continuing operating activities.
Added
The limitations of Adjusted EBITDA and Same Day EBITDA include: (i) they do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) they do not reflect changes in, or 27 cash requirements for, our working capital needs; (iii) they do not reflect income tax payments we may be required to make; and (iv) they do not reflect the cash requirements necessary to service interest or principal payments associated with indebtedness.
Added
(3) We capitalizes direct costs incurred in cloud computing implementation costs from hosting arrangements, which are reported as a Software as a service and are expensed as incurred in selling, general and administrative expenses. 28

Item 7. Management's Discussion & Analysis

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

38 edited+30 added−31 removed14 unchanged
Biggest changeThe components of SGA expense are detailed in the following table: Fiscal Year Ended January 1, 2023 December 26, 2021 Amount % of Revenue Amount % of Revenue $ Change % Change (dollars in thousands) Compensation and related $ 64,782 21.7 % $ 53,332 22.5 % $ 11,450 21.5 % Advertising and recruitment 1,987 0.7 % 1,379 0.6 % 608 44.1 % Occupancy and office operations 2,773 0.9 % 3,128 1.3 % (355) (11.3) % Travel, meals and entertainment 1,044 0.3 % 389 0.2 % 655 168.4 % Software 5,751 1.9 % 2,538 1.2 % 3,213 126.6 % Liability insurance 991 0.3 % 740 0.3 % 251 33.9 % Professional fees 1,647 0.6 % 1,111 0.8 % 536 48.2 % Public company related costs 734 0.2 % 727 0.3 % 7 1.0 % Bad debt 315 0.1 % 145 0.1 % 170 117.2 % Share-based compensation 1,085 0.4 % 1,058 0.4 % 27 2.6 % Transaction fees 271 0.1 % 170 0.1 % 101 59.4 % Workers' compensation loss retention return (117) — % (348) (0.1) % 231 (66.4) % CARES Act credit — — % (2,083) (0.9) % 2,083 — % Other 1,948 0.7 % 2,829 0.5 % (881) (31.1) % Total $ 83,211 27.9 % $ 65,115 27.2 % $ 18,096 27.8 % Gain on contingent consideration: There were no contingent gains in Fiscal 2022.
Biggest changeFiscal Year Ended December 31, 2023 January 1, 2023 Amount % of Revenue Amount % of Revenue $ Change % Change (dollars in thousands) Compensation and related $ 68,536 22 % $ 64,782 22 % $ 3,754 6 % Advertising and recruitment 2,111 1 1,987 1 124 6 Occupancy and office operations 3,310 1 2,773 1 537 19 Travel, meals and entertainment 1,349 — 1,044 — 305 29 Software 5,339 2 5,751 2 (412) (7) Liability insurance 1,140 — 991 — 149 15 Professional fees 1,413 — 1,647 1 (234) (14) Public company related costs 851 — 734 — 117 16 Bad debt 798 — 315 — 483 153 Share-based compensation 1,029 — 1,085 — (56) (5) Transaction fees 974 — 271 — 703 259 Workers’ compensation loss retention return (491) — (117) — (374) 320 Other 2,291 1 1,948 1 343 18 Total $ 88,650 28 % $ 83,211 28 % $ 5,439 7 % Impairment losses: In Fiscal 2023, managements’s plan to eliminate the use of various trade names was approved by the Board of Directors.
For Fiscal 2022, we received $40.0 million on the issuance of the New Term Loan, we paid down $26.9 million on the Term Loan, as discussed below, we paid $6.3 million in cash dividends on our common stock, we paid $1.1 million of contingent consideration related to the Momentum acquisition, and borrowed $9.8 million on our Revolving Facility for increased working capital needs.
For Fiscal 2022, we received $40.0 million on the issuance of the New Term Loan, we paid down $26.9 million on the Term Loan, as discussed below, we disbursed $6.3 million in cash dividends on our common stock, we paid $1.1 million of contingent consideration related to the Momentum acquisition, and borrowed $9.8 million on our Revolving Facility for increased working capital needs.
Our primary uses of cash are payments to field talent, team members, related payroll liabilities, operating expenses, capital expenditures, cash interest, cash taxes, dividends and contingent consideration and debt payments.
Our primary uses of cash are payments to field talent, team members, related payroll liabilities, operating expenses, capital expenditures, cash interest, cash taxes, contingent consideration, and debt payments.
In Fiscal 2022, we received $30.7 million in connection with the sale of InStaff, we paid $33.9 million in connection with the Horn Solutions acquisition, and we made capital expenditures of $5.7 million mainly related to the the information technology improvement project and for software and computer equipment purchased in the ordinary course of business.
In Fiscal 2022, we received $30.7 million in connection with the sale of InStaff, we paid $33.9 million in connection with the Horn Solutions acquisition, and we made capital expenditures of $5.7 million mainly related to the the IT improvement project and for software and computer equipment purchased in the ordinary course of business.
Company Overview We provide workforce solutions to our client partners in a variety of industries through our various divisions in IT, Cyber, Finance & Accounting, Managed Services, and Real Estate (apartment communities and commercial buildings) and have completed a series of acquisitions including the acquisition of BG Personnel, LP and B G Staff Services Inc. in June 2010, substantially all of the assets of JNA Staffing, Inc. in December 2010, Extrinsic, LLC in December 2011, American Partners, Inc. in December 2012, InStaff in June 2013, D&W in March 2015, VTS in October 2015, Zycron in April 2017, Smart in September 2017, and LJK in December 2019, 100% of the equity of EdgeRock in February 2020, Momentum Solutionz in February 2021, and substantially all of the assets of Horn Solutions in 2022.
Company Overview We provide workforce solutions to our client partners in a variety of industries through our various divisions in IT, Finance & Accounting, Managed Solutions, and Property Management (apartment communities and commercial buildings) and have completed a series of acquisitions including the acquisition of BG Personnel, LP and B G Staff Services Inc. in June 2010, substantially all of the assets of JNA Staffing, Inc. in December 2010, Extrinsic, LLC in December 2011, American Partners, Inc. in December 2012, InStaff in June 2013, D&W in March 2015, VTS in October 2015, Zycron in April 2017, Smart in September 2017, and LJK in December 2019, 100% of the equity of EdgeRock in February 2020, Momentum Solutionz in February 2021, Horn Solutions in 2022, and Arroyo Consulting in 2023.
Financing Activities Cash flows from financing activities consisted principally of borrowings and payments under our credit agreement, payment of dividends, and contingent consideration paid.
Financing Activities Cash flows from financing activities consisted principally of borrowings and payments under our credit agreement, payment of dividends, payment of issuance costs, and contingent consideration paid.
As of January 1, 2023, we had a maximum financial exposure from this standby letter of credit totaling $0.1 million, all of which is considered usage against our Revolving Facility. Critical Accounting Policies and Estimates We have identified the policies listed below as critical to our business and the understanding of our results of operations.
As of December 29, 2024, we had a maximum financial exposure from this standby letter of credit totaling $0.1 million, all of which is considered usage against our Revolving Facility. Critical Accounting Policies and Estimates We have identified the policies listed below as critical to our business and the understanding of our results of operations.
For a detailed discussion of the application of these and other accounting policies, see Note 2 in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K. Revenue Recognition We derive our revenues from continuing operations in Real Estate and Professional segments. We provide workforce solutions and placement services.
For a detailed discussion of the application of these and other accounting policies, see Note 2 in the Notes to the Consolidated Financial Statements of this Annual Report on Form 10-K. 37 Revenue Recognition We derive our revenues from continuing operations in our Property Management and Professional segments. We provide workforce solutions, placement services, and managed services.
See “Note 4 — Discontinued Operations” of our audited consolidated financial statements for information regarding our discontinued operations. The Real Estate segment provides office and maintenance field talent to various apartment communities and commercial buildings in 36 states and D.C., via property management companies responsible for the apartment communities' and commercial buildings' day-to-day operations.
See “Note 4 — Discontinued Operations” of our audited consolidated financial statements for information regarding our discontinued operations. The Property Management segment provides office and maintenance talent in 40 states and D.C., to property management companies responsible for the apartment communities’ and commercial buildings’ day-to-day operations.
Software maintenance and training costs are expensed in the period incurred. Goodwill Goodwill represents the difference between the enterprise value/cash paid less the fair value of all recognized net asset fair values including identifiable intangible asset values in a business combination.
Minor upgrades and enhancements to software systems are are expensed in the period incurred as software maintenance and training costs. Goodwill Goodwill represents the difference between the enterprise value or consideration exchanged less the fair value of all recognized net asset fair values including identifiable intangible asset values in a business combination.
Intangible assets with finite useful lives are amortized over their respective estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is realized. We capitalize purchased software and internal payroll costs directly incurred in the modification of software for internal use.
Intangible assets with finite useful lives are amortized over their respective estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is realized. We develop and implement software modifications to our IT infrastructure with direct internal payroll costs and external costs capitalized.
The primary drivers of cash inflows and outflows are accounts receivable and accrued payroll and expenses. During Fiscal 2022, net cash used in continuing operating activities was $3.3 million, a decrease of $4.7 million compared with $1.4 million net cash provided by continuing operating activities for Fiscal 2021.
During Fiscal 2022, net cash used in continuing operating activities was $3.3 million, a decrease of $4.7 million compared with $1.4 million net cash provided by continuing operating activities for Fiscal 2021.
For Fiscal 2021, we borrowed $6.8 million on our Revolving Facility for increased working capital needs and to fund the Momentum acquisition, paid $4.6 million in cash dividends on our common stock, and paid down $2.1 million on the Term Loan, as defined below.
For Fiscal 2023, we disbursed $6.5 million in cash dividends on our common stock, we paid down $6.0 million on the Term Loan, we paid $1.1 million of contingent consideration related to the Momentum acquisition, and borrowed $2.3 million on our Revolving Facility for increased working capital needs.
Payments due by period Total Less than 1 year 1–3 years 3–5 years More than 5 years (dollars in thousands) Long-term debt obligations $ 62,562 $ 4,000 $ 58,562 $ — $ — Contingent consideration 1,110 1,110 — — — Convertible note 4,368 — 4,368 — — Operating lease obligations 5,336 2,043 2,344 781 168 Contractual cash obligations $ 73,376 $ 7,153 $ 65,274 $ 781 $ 168 Off-Balance Sheet Arrangements Letter of Credit In March 2020, in conjunction with the 2020 EdgeRock acquisition, we entered into a standby letter of credit arrangement, which expires December 31, 2024, for purposes of protecting a lessor against default on lease payments.
Payments due by period Total Less than 1 year 1–3 years 3–5 years More than 5 years (dollars in thousands) Long-term debt obligations $ 42,945 $ 3,825 $ 39,120 $ — $ — Contingent consideration 2,750 2,750 — — — Convertible note 4,368 4,368 — — — Operating lease obligations 6,165 1,880 2,849 1,317 119 Contractual cash obligations $ 56,228 $ 12,823 $ 41,969 $ 1,317 $ 119 Off-Balance Sheet Arrangements Letter of Credit In March 2020, in conjunction with the 2020 EdgeRock acquisition, we entered into a standby letter of credit arrangement, which expires December 31, 2024, for purposes of protecting a lessor against default on lease payments.
Revenues are recognized when promised workforce solutions are delivered to client partners, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
Revenues are recognized when promised workforce solutions are delivered to client partners, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We recognize revenue through the following types of services: workforce solutions, contingent placements, and managed services. Intangible Assets We hold intangible assets with finite lives.
This decrease is primarily attributable to increased accounts receivable and payments on accrued payroll and expenses, which were partially offset by an increase in the accrual in other long-term liabilities from deferred employer FICA for the CARES Act in Fiscal 2020.
This increase is primarily attributable to payments on accounts receivable, payments on accrued payroll and expenses, and payments of deferred employer FICA for the CARES Act in other current liabilities in Fiscal 2022.
Fiscal Year Ended January 1, 2023 December 26, 2021 (dollars in thousands) Gross Profit by Segment: Real Estate $ 47,695 46.1 % $ 34,969 43.2 % Professional 55,853 53.9 % 45,972 56.8 % Total Gross Profit $ 103,548 100.0 % $ 80,941 100.0 % Fiscal Year Ended Gross Profit Percentage by Segment: January 1, 2023 December 26, 2021 Real Estate 39.4 % 38.0 % Professional 31.5 % 31.3 % Company Gross Profit Percentage 34.7 % 33.9 % Overall, our gross profit increased approximately $22.6 million (27.9%).
Fiscal Year Ended December 31, 2023 January 1, 2023 (dollars in thousands) Gross Profit by Segment: Property Management $ 49,785 44.5 % $ 47,695 46.1 % Professional 61,999 55.5 % 55,853 53.9 % Total Gross Profit $ 111,784 100.0 % $ 103,548 100.0 % Fiscal Year Ended December 31, 2023 January 1, 2023 Gross Profit Percentage by Segment: Property Management 39.8 % 39.4 % Professional 33.0 % 31.5 % Company Gross Profit Percentage 35.7 % 34.7 % Total gross profit increased approximately $8.2 million (8.0%).
This decrease is primarily attributable to field talent and team member compensation disbursements including bonuses, commissions, and related taxes for services rendered in accrued payroll and expenses, and payments of deferred employer FICA for the CARES Act in other current liabilities. 34 During Fiscal 2021, net cash provided by continuing operating activities was $1.4 million, a decrease of $18.3 million compared with $19.7 million for Fiscal 2020.
This decrease is primarily attributable to field talent and team member compensation disbursements including bonuses, commissions, and related taxes for services rendered in accrued payroll and expenses, an increase in accounts receivable, and payments of deferred employer FICA for the CARES Act in other current liabilities.
Credit Agreements On July 16, 2019, we entered into a Credit Agreement (the “Credit Agreement”), maturing July 16, 2024, led by BMO, as lead administrative agent, lender, letters of credit issuer, and swing line lender. The Credit Agreement provides for the Revolving Facility permitting us to borrow funds from time to time in an aggregate amount up to $35 million.
Credit Agreements On July 16, 2019, we entered into a Credit Agreement (the “Credit Agreement”), which would have matured on July 16, 2024, led by BMO, as lead administrative agent, lender, letters of credit issuer, and swing line lender.
The Real Estate segment currently operates through two divisions, BG Multifamily and BG Talent. The Professional segment provides specialized talent and business consultants on a nationwide basis for information technology (“IT”), managed services, finance, accounting, legal and human resource client partner projects.
The Professional segment provides specialized talent and business consultants for information technology (“IT”), managed services, finance, accounting, legal and human resource.
In Fiscal 2021, we paid $3.8 million in connection with the Momentum acquisition and we made capital expenditures of $3.2 million mainly related to the information technology improvement project and for software and computer equipment purchased in the ordinary course of business.
In Fiscal 2023, we paid $6.8 million in connection with the Arroyo Consulting acquisition, funded a working capital payment of $0.1 million in connection with the Horn Solutions acquisition, and made capital expenditures of $2.6 million mainly related to continued IT improvements and for software and computer equipment purchased in the ordinary course of business.
Investing Activities Cash used in investing activities consists primarily of cash paid for businesses acquired, cash received for businesses sold, and capital expenditures.
Investing Activities Cash used in investing activities consists primarily of cash paid for businesses acquired net of cash required, cash received for businesses sold, and capital expenditures. In Fiscal 2024, we made capital expenditures of $1.6 million mainly related to continued IT improvements.
Kushner & Associates, EdgeRock Technology Partners, Momentum Solutionz, and Horn Solutions. 28 Results of Operations The following tables summarize key components of our results from continuing operations for the periods indicated, both in dollars and as a percentage of revenues, and have been derived from our consolidated financial statements.
The segment operates across the U.S. in three divisions, IT, Managed Solutions, and Finance & Accounting, with the IT division providing additional nearshore and offshore solutions in Colombia and India. 29 Results of Operations The following tables summarize key components of our results from continuing operations for the periods indicated, both in dollars and as a percentage of revenues, and have been derived from our consolidated financial statements.
Fiscal Year Ended January 1, 2023 December 26, 2021 December 27, 2020 (dollars in thousands) Revenues $ 298,422 $ 239,027 $ 207,125 Cost of services 194,874 158,086 141,085 Gross Profit 103,548 80,941 66,040 Selling, general and administrative expenses 83,211 65,115 55,244 Gain on contingent consideration — (2,403) (76) Impairment losses — — 7,240 Depreciation and amortization 4,054 3,698 4,861 Operating income (loss) 16,283 14,531 (1,229) Interest expense, net (1,363) (1,433) (1,584) Income (loss) from continuing operations before income taxes 14,920 13,098 (2,813) Income tax (expense) benefit from continuing operations (3,659) (2,640) 741 Income (loss) from continuing operations 11,261 10,458 (2,072) Income from discontinued operations: Income 1,235 4,570 4,767 Gain on sale 17,675 — — Income tax expense (4,810) (919) (1,254) Net income $ 25,361 $ 14,109 $ 1,441 Fiscal Year Ended January 1, 2023 December 26, 2021 December 27, 2020 Revenues 100.0 % 100.0 % 100.0 % Cost of services 65.3 66.1 68.1 Gross Profit 34.7 33.9 31.9 Selling, general and administrative expenses 27.8 27.2 26.7 Gain on contingent consideration — (1.0) — Impairment losses — — 3.5 Depreciation and amortization 1.4 1.5 2.3 Operating income (loss) 5.5 6.1 (0.6) Interest expense, net (0.5) (0.6) (0.8) Income (loss) from continuing operations before income taxes 5.0 5.5 (1.4) Income tax (expense) benefit from continuing operations (1.2) (1.1) 0.4 Income (loss) from continuing operations 3.8 % 4.4 % (1.0) % 29 Fifty-three Week Fiscal Year Ended January 1, 2023 (Fiscal 2022) Compared with Fifty-two Week Fiscal Year Ended December 26, 2021 (Fiscal 2021) Revenues: Fiscal Year Ended January 1, 2023 December 26, 2021 (dollars in thousands) Revenues by Segment: Real Estate $ 121,093 40.6 % $ 92,018 38.5 % Professional 177,329 59.4 % 147,009 61.5 % Total Revenues $ 298,422 100.0 % $ 239,027 100.0 % Real Estate Revenues : Real Estate revenues increased approximately $29.1 million (31.6%).
Fiscal Year Ended December 29, 2024 December 31, 2023 January 1, 2023 (dollars in thousands) Revenues $ 272,499 $ 313,167 $ 298,422 Cost of services 179,636 201,383 194,874 Gross Profit 92,863 111,784 103,548 Selling, general, and administrative expenses 85,333 88,650 83,211 Gain on contingent consideration (1,452) — — Impairment losses — 22,545 — Depreciation and amortization 7,769 7,774 4,054 Operating income (loss) 1,213 (7,185) 16,283 Interest expense, net (4,921) (5,976) (1,363) (Loss) income before income taxes from continuing operations (3,708) (13,161) 14,920 Income tax benefit (expense) from continuing operations 370 2,938 (3,659) (Loss) income from continuing operations (3,338) (10,223) 11,261 Income from discontinued operations: Income — — 1,235 Gain on sale — — 17,675 Income tax expense — — (4,810) Net (loss) income $ (3,338) $ (10,223) $ 25,361 Fiscal Year Ended December 29, 2024 December 31, 2023 January 1, 2023 Revenues 100.0 % 100.0 % 100.0 % Cost of services 65.9 64.3 65.3 Gross Profit 34.1 35.7 34.7 Selling, general, and administrative expenses 31.3 28.3 27.8 Gain on contingent consideration (0.5) — — Impairment losses — 7.2 — Depreciation and amortization 2.9 2.5 1.4 Operating income (loss) 0.4 (2.3) 5.5 Interest expense, net (1.8) (1.9) (0.5) (Loss) income before income taxes from continuing operations (1.4) (4.2) 5.0 Income tax benefit (expense) from continuing operations 0.2 0.9 (1.2) (Loss) income from continuing operations (1.2) % (3.3) % 3.8 % 30 Fifty-two Week Fiscal Year Ended December 29, 2024 (Fiscal 2024) Compared with Fifty-two Week Fiscal Year Ended December 31, 2023 (Fiscal 2023) Revenues: Fiscal Year Ended December 29, 2024 December 31, 2023 (dollars in thousands) Revenues by Segment: Property Management $ 104,402 38.3 % $ 125,077 39.9 % Professional 168,098 61.7 % 188,090 60.1 % Total Revenues $ 272,500 100.0 % $ 313,167 100.0 % Property Management Revenues : Property Management revenues decreased approximately $20.7 million (16.5%).
Our obligations under the Second Credit Amendment are secured by a first priority security interest in substantially all tangible and intangible property of the Company and its subsidiaries.
The First Credit Amendment provides for interest either at the Base Rate plus the Applicable Margin, or the Adjusted Term SOFR plus the Applicable Margin (as defined in the First Credit Amendment). Our obligations are secured by a first priority security interest in substantially all our tangible and intangible property.
We have continuing operations in two industry segments Real Estate and Professional, and discontinued operations in the Light Industrial segment. We primarily operate within the United States of America across 46 states and D.C. On March 21, 2022, we sold substantially all of the assets and certain liabilities of InStaff to Sentech Engineering Services, Inc.
We have continuing operations in two industry segments Property Management and Professional, and had discontinued operations in the Light Industrial segment. We primarily operate within the United States of America.
For Fiscal 2020, we borrowed $22.5 million on our Term Loan, as defined below, to fund the EdgeRock acquisition and pay down the Revolving Facility, we reduced $14.4 million on our Revolving Facility, paid $5.2 million in cash dividends on our common stock, and paid down $1.1 million on the Term Loan.
For Fiscal 2024, we reduced our Revolving Facility by $18.5 million, we made a payment of $4.3 million of contingent consideration related to the Arroyo Consulting Acquisition using the funds borrowed on our Term Loan, we paid down $1.7 million on the Term Loan, we disbursed $1.6 million in cash dividends on our common stock, and we paid $1.3 million in debt issuance costs.
The InStaff financial results for periods prior to the sale have been reflected in our Consolidated Statements of Operations and Comprehensive Income and Consolidated Statements of Cash Flows as discontinued operations. Additionally, the related assets and liabilities associated with the discontinued operations in the periods presented are classified as discontinued operations in our Consolidated Balance Sheets.
The Light Industrial segment provided field talent primarily to manufacturing, distribution, logistics, and call center client partners needing a flexible workforce. The InStaff financial results for periods prior to the sale have been reflected in our Consolidated Statements of Operations and Comprehensive (Loss) Income and Consolidated Statements of Cash Flows as discontinued operations.
The Credit Agreement also provided for a term loan commitment (the “Term Loan”) permitting us to borrow funds from time to time in an aggregate amount not to exceed $30 million with principal payable quarterly, based on an annual percentage of the original principal amount as defined in the Credit Agreement, all of which has been funded.
The Restated Agreement provided for a Revolving Facility which permitted 36 us to borrow funds in an aggregate amount up to $40 million. The Restated Agreement also provided for a term loan commitment, which permitted us to borrow funds from time to time (the “Term Loan”).
Liquidity and Capital Resources Our working capital requirements are primarily driven by field talent payments, tax payments and client partner accounts receivable receipts. Since receipts from client partners lag payments to field talent, working capital requirements increase substantially in periods of growth.
Same Day Gross Profit increased $10.3 million (10.2%) to $111.8 million in Fiscal 2023. Same Day Gross Profit and GAAP gross profit were equal for Fiscal 2023. 34 Liquidity and Capital Resources Our working capital requirements are primarily driven by field talent payments, tax payments, and client partner accounts receivable receipts.
These increases were partially offset by a decrease in the IT division of approximately $11.6 million in revenue and a decrease of 0.2% in average bill rate. Gross Profit: Gross profit represents revenues from workforce solutions less cost of services expenses, which consist of payroll, payroll taxes, payroll-related insurance, field talent costs, and reimbursable costs.
Horn Solutions and the existing professional business declined $4.1 million (2.3%), primarily due to fewer hours billed and lower permanent placement revenue. Gross Profit: Gross profit represents revenues from workforce solutions less cost of services expenses, which consist of payroll, payroll taxes, payroll-related insurance, field talent costs, and reimbursable costs.
Our primary sources of liquidity are cash generated from operations and borrowings under our credit agreement lead by BMO Harris Bank, N.A. (“BMO”), that provides for a revolving credit facility maturing July 16, 2024 (the “Revolving Facility”).
Since receipts from client partners lag payments to field talent, working capital requirements increase substantially in periods of growth. Our primary sources of liquidity are cash generated from operations and borrowings under our first amendment under our amended and restated credit agreement with BMO, that provides for a revolving credit facility maturing December 31, 2026 (the “Revolving Facility”).
Interest Expense, net: Interest expense, net decreased $0.1 million (4.9%) primarily due to the pay down of the balance on the Term Loan in March 2022, which was partially offset by the New Term Loan starting in December 2022 and the higher average balance on the Revolving Facility.
Interest Expense, net: Interest expense, net decreased $1.1 million (17.7%) primarily due to reduced accretion in 2024 on contingent consideration associated with Arroyo Consulting and the lower average balance on the Revolving Facility, which was partially offset by the increase in debt issuance costs.
A summary of our working capital, operating, investing and financing activities are shown in the following table: Fiscal Year Ended January 1, 2023 December 26, 2021 December 27, 2020 (dollars in thousands) Working capital from continuing operations $ 47,955 $ 25,851 $ 17,960 Net cash provided by (used in) continuing operations: Operating activities $ (3,300) $ 1,358 $ 19,680 Investing activities (8,898) (6,990) (24,078) Financing activities 15,934 473 1,890 Net change in cash and cash equivalents discontinued operations (3,848) 5,271 2,508 Net change in cash and cash equivalents $ (112) $ 112 $ — Operating Activities Cash used in by operating activities consists of net income adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, interest expense on contingent consideration payable, and the effect of working capital changes.
A summary of our working capital, operating, investing, and financing activities are shown in the following table: Fiscal Year Ended December 29, 2024 December 31, 2023 January 1, 2023 (dollars in thousands) Working capital from continuing operations (1) $ 19,427 $ (18,144) $ 47,955 Net cash provided by (used in) continuing operations: Operating activities $ 24,379 $ 20,386 $ (3,300) Investing activities (1,640) (9,514) (8,898) Financing activities (22,386) (10,872) 15,934 Net change in cash and cash equivalents discontinued operations — — (3,848) Net change in cash and cash equivalents $ 353 $ — $ (112) (1) The 2023 working capital amount includes the movement of the balances from long-term to current liabilities related to the amended credit agreement with BMO Harris Bank, N.A.
As a percentage of revenue, gross profit has increased to 33.9% from 31.9%, primarily due to higher gross profits across all our segments.
As a percentage of revenue, gross profit has increased to 35.7% from 34.7%, with both segments contributing to the increase.
The Credit Agreement bore interest either at the Base Rate plus the Applicable Margin or LIBOR plus the Applicable Margin through August 17, 2022 (as such terms are defined in the Credit Agreement). We pay an unused commitment fee on the daily average unused amount of Revolving Facility.
The First Credit Amendment provides for amended financial covenants with a maximum Leverage Ratio, a minimum Fixed Charge Coverage Ratio, and a minimum EBITDA (as such terms are defined in the First Credit Amendment). We will pay an unused commitment fee on the daily average unused amount of Revolving Facility.
The components of SGA expense are detailed in the following table: Fiscal Year Ended December 26, 2021 December 27, 2020 Amount % of Revenue Amount % of Revenue $ Change % Change (dollars in thousands) Compensation and related $ 53,332 22.5 % $ 41,563 20.0 % $ 11,769 28.3 % Advertising and recruitment 1,379 0.6 % 1,552 1.0 % (173) (11.1) % Occupancy and office operations 3,128 1.3 % 3,456 2.0 % (328) (9.5) % Travel, meals and entertainment 389 0.2 % 321 — % 68 21.2 % Software 2,538 1.2 % 2,044 1.0 % 494 24.2 % Liability insurance 740 0.3 % 584 — % 156 26.7 % Professional fees 1,111 0.8 % 1,143 1.0 % (32) (2.8) % Public company related costs 727 0.3 % 691 — % 36 5.2 % Bad debt 145 0.1 % 344 — % (199) (57.8) % Share-based compensation 1,058 0.4 % 786 — % 272 34.6 % Transaction fees 170 0.1 % 615 — % (445) (72.4) % Workers' compensation loss retention return (348) (0.1) % (464) — % 116 (25.0) % CARES Act credit (2,083) (0.9) % — — % (2,083) — % Other 2,829 0.5 % 2,609 1.0 % 220 8.4 % Total $ 65,115 27.2 % $ 55,244 27.0 % $ 9,871 17.9 % Gain on contingent consideration: As a result of the certain business developments in Fiscal 2021, the Company recognized a $2.4 million gain on contingent consideration related to the 2019 LJK acquisition.
The components of SGA expense are detailed in the following table: Fiscal Year Ended December 29, 2024 December 31, 2023 Amount % of Revenue Amount % of Revenue $ Change % Change (dollars in thousands) Compensation and related $ 62,954 23 % $ 68,536 22 % $ (5,582) (8) % Advertising and recruitment 2,099 1 2,111 1 (12) (1) Occupancy and office operations 3,200 1 3,310 1 (110) (3) Travel, meals and entertainment 1,215 — 1,349 — (134) (10) Software 5,445 2 5,339 2 106 2 Liability insurance 1,136 — 1,140 — (4) — Professional fees 2,113 1 1,413 — 700 50 Public company related costs 1,056 — 851 — 205 24 Bad debt 2,066 1 798 — 1,268 159 Share-based compensation 989 — 1,029 — (40) (4) Strategic alternatives review 962 — — — 962 100 Cost restructuring plan 230 — — — 230 100 Transaction fees 48 — 974 — (926) (95) Workers’ compensation loss retention return (95) — (491) — 396 (81) Other 1,915 1 2,291 1 (376) (16) Total $ 85,333 31 % $ 88,650 28 % $ (3,317) (4) % Gain on contingent consideration: As a result of the certain business developments in Fiscal 2024, the Company recognized a $1.5 million gain on contingent consideration related to the 2023 Arroyo Consulting acquisition.
Income Taxes: Income tax expense increased $1.0 million primarily due to higher pre-tax 2022 income and a higher effective tax rate in Fiscal 2022, offset by a higher Work Opportunity Tax Credit in 2021. 31 Fifty-two Week Fiscal Year Ended December 26, 2021 (Fiscal 2021) Compared with Fifty-two Week Fiscal Year Ended December 27, 2020 (Fiscal 2020) Revenues: Fiscal Year Ended December 26, 2021 December 27, 2020 (dollars in thousands) Revenues by Segment: Real Estate $ 92,018 38.5 % $ 68,755 33.2 % Professional 147,009 61.5 % 138,370 66.8 % Total Revenues $ 239,027 100.0 % $ 207,125 100.0 % Real Estate Revenues : Real Estate revenues increased approximately $23.3 million (33.8%).
Income Taxes: Income tax benefit decreased $2.6 million (87.4%) primarily due to a higher taxable loss in 2023 related to the trade name impairment. 32 Fifty-two Week Fiscal Year Ended December 31, 2023 (Fiscal 2023) Compared with Fifty-three Week Fiscal Year Ended January 1, 2023 (Fiscal 2022) Revenues: Fiscal Year Ended December 31, 2023 January 1, 2023 (dollars in thousands) Revenues by Segment: Property Management $ 125,077 39.9 % $ 121,093 40.6 % Professional 188,090 60.1 % 177,329 59.4 % Total Revenues $ 313,167 100.0 % $ 298,422 100.0 % Property Management Revenues : Property Management revenues increased approximately $4.0 million (3.3%), primarily due to an 8.5% increase in average bill rate.
Removed
(“Sentech”) for a sale price of approximately $30.3 million cash at closing and an additional $2 million one year following the date of the acquisition. The sale resulted in a pre-tax gain on sale of discontinued operations of $17.3 million.
Added
On May 8, 2024, we announced that our Board of Directors has initiated a process to evaluate potential strategic alternatives and engaged financial advisors in an endeavor to maximize shareholder value (“Strategic alternatives review”). On March 21, 2022, we sold substantially all of the assets and certain liabilities of InStaff to Sentech Engineering Services, Inc.
Removed
The Light Industrial segment provided field talent primarily to manufacturing, distribution, logistics, and call center client partners needing a flexible workforce out of 11 locations and 13 on-sites in 11 states.
Added
The decrease was primarily due to a reduction in billed hours, which was driven by a combination of increased competition in certain markets and lower demand from cost pressures at the property management companies. Professional Revenues : Professional revenues decreased approximately $20.0 million (10.6%).
Removed
The Professional segment currently operates through three divisions, IT Consulting, Managed Services, and Finance and Accounting under various trade names including Extrinsic, American Partners, Donovan & Watkins, Vision Technology Services, Zycron, Smart Resources, L.J.
Added
The April 2023 Arroyo Consulting acquisition contributed $5.6 million of incremental revenues with thirty-six weeks in prior period compared to fifty-two weeks in current period.
Removed
We believe that the financial results of 2022 were not materially impacted by the additional week.
Added
The remaining Professional segment decrease of $25.6 million (13.6%) is primarily due to a decline in billed hours in the Finance and Accounting division, as clients continued to delay projects or expand project timelines using less field talent in the IT division. The Professional segment decrease was partially offset by growth in the Managed Solutions division.
Removed
The increase was due to a 18.6% increase in billed hours, and a 11.0% increase in average bill rate.
Added
Fiscal Year Ended December 29, 2024 December 31, 2023 (dollars in thousands) Gross Profit by Segment: Property Management $ 38,369 41.3 % $ 49,785 44.5 % Professional 54,494 58.7 % 61,999 55.5 % Total Gross Profit $ 92,863 100.0 % $ 111,784 100.0 % Fiscal Year Ended December 29, 2024 December 31, 2023 Gross Profit Percentage by Segment: Property Management 36.8 % 39.8 % Professional 32.4 % 33.0 % Company Gross Profit Percentage 34.1 % 35.7 % Total Company gross profit decreased approximately $18.9 million (16.9%) due to reduced customer demand in both segments.
Removed
Professional Revenues : Professional revenues increased approximately $30.3 million (20.6%), primarily due to growth in the IT division of $27.6 million, and the 2022 Horn Solutions acquisition which contributed $1.4 million of new revenues, while Managed Services increased $3.9 million or 110.1%. Billed hours increased 7.9% coupled with an 11.8% increase in average bill rate.
Added
As a percentage of revenue, gross profit has decreased to 34.1% from 35.7%, primarily due to the margin decline in Property Management. Property Management Gross Profit: Property Management gross profit decreased approximately $11.4 million (22.9%).
Removed
As a percentage of revenue, gross profit has increased to 34.7% from 33.9%, primarily due to higher gross profits across all our segments. We determine spread as the difference between bill rate and pay rate.
Added
The decrease was primarily due to to a reduction in revenue, which was driven by a combination of increased competition in 31 certain markets, lower demand from cost pressures at the property management companies and lower permanent placement business, which has no cost of service. Professional Gross Profit: Professional gross profit decreased approximately $7.5 million (12.1%).
Removed
Real Estate Gross Profit: Real Estate gross profit increased approximately $12.7 million (36.4%) consistent with the increase in revenue, and an 15.0% increase in average spread. 30 Professional Gross Profit: Professional gross profit increased approximately $9.9 million (21.5%) consistent with an increase in revenue, the Horn Solutions acquisition which provided gross profit of $0.6 million, and an overall increase of 12.6% in average spread.
Added
The April 2023 Arroyo Consulting acquisition contributed $1.8 million of incremental gross profit with thirty-six weeks in prior period compared to fifty-two weeks in current period. The remaining Professional segment declined $9.3 million (15.0%) primarily due to lower revenue, which was partially offset by growth in the Managed Solutions division.
Removed
Selling, General and Administrative Expenses: Selling, general and administrative expenses ("SGA") as a percent of revenue increased 70 basis points to 27.9%. Total SGA increased $18.1 million (27.8%), primarily due to additional compensation generated from increased overall gross profit and the Horn Solutions acquisition, which were partially offset by the CARES ACT credit in 2021.
Added
Selling, General, and Administrative Expenses: Selling, general and administrative (“SGA”) expenses decreased $3.3 million (3.7%) primarily due to expense reduction and cost control efforts in response to the decline in revenues.
Removed
As a result of the certain business developments in Fiscal 2021, the Company recognized a $2.4 million gain on contingent consideration related to the 2019 LJK acquisition.
Added
Depreciation and Amortization: Depreciation and amortization charges were flat due to the increase in software amortization that was partially offset by the decrease in client partner lists amortization.
Removed
Depreciation and Amortization: Depreciation and amortization charges increased $0.4 million (9.6%) primarily due to increases from the information technology improvement project and the Horn Solutions acquisition, which were offset by lower amortization related to the 2020 Edgerock and the 2019 LJK acquisitions.
Added
Professional Revenues : Professional revenues increased approximately $10.8 million (6.1%). The 2023 Arroyo Consulting acquisition contributed $14.8 million of new revenues. The Horn Solutions acquisition, which was integrated with the organic business, added revenue that was not enough to offset the decline in the existing professional business.
Removed
The increase was due to a 20.1% increase in billed hours and a 11.0% increase in average bill rate.
Added
Property Management Gross Profit: Property Management gross profit increased approximately $2.1 million (4.4%), consistent with a 3.3% increase in revenues, partially offset by lower permanent placement revenue, which has no cost of services. 33 Professional Gross Profit: Professional gross profit increased approximately $6.1 million (11.0%). The Arroyo Consulting acquisition contributed $5.1 million in gross profit.
Removed
Professional Revenues : Professional revenues increased approximately $8.6 million (6.2%), primarily due to the 2020 EdgeRock acquisition which contributed fifty-two weeks of revenue in Fiscal 2021 vs. forty-seven weeks in Fiscal 2020, the 2021 Momentum acquisition which contributed $3.5 million of new revenues, an increase in permanent placements revenue of $1.2 million, and billed hours increased 5.5%.
Added
The Horn Solutions acquisition, which was integrated with the organic business, added growth to offset the decline experienced in the existing professional business. Selling, General, and Administrative Expenses: SGA expenses increased $5.4 million (6.5%) versus prior year. The overall increase slightly outpaced revenue growth adding 40 bps to total SGA expense as a percent of revenue.
Removed
Fiscal Year Ended December 26, 2021 December 27, 2020 (dollars in thousands) Gross Profit by Segment: Real Estate $ 34,969 43.2 % $ 25,813 39.1 % Professional 45,972 56.8 % 40,227 60.9 % Total Gross Profit $ 80,941 100.0 % $ 66,040 100.0 % Fiscal Year Ended December 26, 2021 December 27, 2020 Gross Profit Percentage by Segment: Real Estate 38.0 % 37.5 % Professional 31.3 % 29.1 % Company Gross Profit Percentage 33.9 % 31.9 % Overall, our gross profit increased approximately $14.9 million (22.6%).
Added
Acquisition transaction fees increased $0.7 million over the prior year.
Removed
We determine spread as the difference between bill rate and pay rate. 32 Real Estate Gross Profit: Real Estate gross profit increased approximately $9.1 million (35.5%) consistent with the increase in revenue, and an 11.6% increase in average spread.
Added
The decision to rebrand as BGSF created a $22.5 million write-off in trade names. Depreciation and Amortization: Depreciation and amortization charges increased $3.7 million (91.8%). The increase in deprecation and amortization is primarily due to the amortization of intangible assets related to the 2022 Horn Solutions acquisition and the 2023 Arroyo Consulting acquisition.
Removed
Professional Gross Profit: Professional gross profit increased approximately $5.8 million (14.3%) from the 2020 EdgeRock acquisition which contributed fifty-two weeks of gross profit in Fiscal 2021 vs. forty-seven weeks in Fiscal 2020, the Momentum acquisition which provided gross profit of $1.7 million, and an overall increase of 1.4% in average spread.
Added
Interest Expense, net: Interest expense, net increased $4.6 million primarily due to the increased debt balances related to the 2022 Horn Solutions acquisition, the 2023 Arroyo Consulting acquisition, and higher interest rates.
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These increases were partially offset by a decrease in the IT division of approximately $2.4 million in gross profit.
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Income Taxes: We recorded a tax benefit of approximately $2.9 million primarily due impairment losses on the trade names in the first quarter versus a tax expense of $3.7 million in 2022. Non-GAAP Same Day Revenues: Same Day Revenues are defined as a fifty-three week fiscal year ended January 1, 2023 (Fiscal 2022) revenues less five revenue days.
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Selling, General and Administrative Expenses: SGA expenses increased approximately $9.9 million (17.9%), primarily due to additional compensation generated from increased overall gross profit, from the EdgeRock acquisition with fifty-two weeks in Fiscal 2021 vs. forty-seven weeks in Fiscal 2020, and the Momentum acquisition.
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The Fiscal 2022 revenues of $298.4 million would be less $5.9 million for five revenue days resulting in Same Day Revenues of $292.5 million. Same Day Revenues increased $20.7 million (7.1%) to $313.2 million in Fiscal 2023. Same Day Revenues and GAAP revenues were equal for Fiscal 2023.
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Depreciation and Amortization: Depreciation and amortization charges decreased approximately $1.2 million (23.9%). The decrease in depreciation and amortization is primarily due to the Professional segment with a decrease related to the 2015 Vision Technology Services acquisition, which was partially offset by an increase related to the information technology improvement project.
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Non-GAAP Same Day Gross Profit: Same Day Gross Profit is defined as a fifty-three week fiscal year ended January 1, 2023 (Fiscal 2022) gross profit less five gross profit days. The Fiscal 2022 gross profit of $103.5 million would be less $2.1 million for five gross profit days resulting in Same Day Gross Profit of $101.5 million.
Removed
Impairment loss: As a result of the certain business developments in Fiscal 2020 and changes in the Company's long-term projections, the Company calculated the quantitative impairment test of the finance and accounting group using the relief from royalty method for the indefinite-lived intangible assets and residual method for the definite-lived intangible assets by asset group.
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(“BMO”) which would have matured on July 16, 2024. Operating Activities Cash provided by operating activities consists of net (loss) income adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, interest expense, provision for credit losses, impairment losses, contingent consideration adjustment, and the effect of working capital changes.
Removed
In the Professional segment, the Company recognized a $3.7 million trade name impairment loss and a $3.5 million client partner list impairment loss in Fiscal 2020.
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The primary drivers of cash inflows and outflows are accounts receivable, accrued payroll and expenses, prepaid expenses and other current assets. During Fiscal 2024, net cash provided by continuing operating activities was $24.4 million, an increase of $4.0 million compared with $20.4 million net cash provided by continuing operating activities for Fiscal 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAccordingly, future interest rate increases could potentially put us at risk for an adverse impact on future earnings and cash flows. 37
Biggest changeThrough the current period, we have been able to moderate the negative impacts of an inflationary market by adjusting our pricing model. Interest Rates Our Revolving Facility and Term Loan are priced at variable interest rates. Accordingly, future interest rate increases could potentially put us at risk for an adverse impact on future earnings and cash flows. 38
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. We are exposed to certain market risks from transactions we enter into in the normal course of business. Our primary market risk exposure relates to interest rate risk. Interest Rates A portion of our Revolving Facility and New Term Loan are priced at variable interest rates.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. We are exposed to certain market risks from transactions we enter into in the normal course of business. Our primary market risk exposure relates to interest rate risk and inflation risks.

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