Summary of Star Equity Holdings Conference Call Company Overview - **Company**: Star Equity Holdings (NasdaqGS:HSON) - **Date**: October 20, 2025 - **Revenue Projection**: Expected to exceed $250 million with strong organic growth from existing businesses [1] - **Adjusted EBITDA**: Anticipated to be at least $15 million for 2026, with a goal of reaching $40 million by the end of the decade [1][2] Core Strategies - **Three Pillars for Value Creation**: 1. Organic growth from existing businesses 2. Selective acquisitions of private or public companies 3. Effective capital allocation, including share repurchases and monetizing non-core assets [1][2] - **Acquisition Strategy**: - Focus on low maintenance CAPEX and asset-light business models - Preference for B2B businesses in fragmented industries with bolt-on acquisition targets [4][5] - Emphasis on acquiring companies with strong management teams or the ability to find such teams [4] Financial Position - **Cash and Debt**: As of June 30, the company had $27 million in cash and $13 million in debt at operating subsidiary levels [15] - **Preferred Stock**: Issued non-convertible preferred stock with a 10% cash yield, which is tax-efficient and non-dilutive to common shareholders [3][16] Market Opportunities - **Public Companies**: There are approximately 44,000 public companies in the U.S. with EBITDA under $30 million, many of which may not be suitable for public trading [6] - **Private Companies**: A significant number of private businesses lack succession plans, presenting acquisition opportunities [7][8] Business Segments - **Building Solutions Division**: Generates about $80 million in revenue and $10 million in EBITDA, with a focus on wood-based construction [11][12] - **Business Services Division**: Involves talent acquisition and advisory services, targeting Fortune 500 clients [12] - **Energy Services Division**: Focuses on mission-critical services with low maintenance CAPEX [13] Investment Philosophy - **Value Investing Approach**: The company operates similarly to a private equity firm, focusing on consolidating microcaps to reduce overhead costs and enhance value [5][18] - **Management Structure**: Maintains a small corporate team to handle public company responsibilities, allowing operating management teams to focus on growth [18][19] Conclusion - **Stock Valuation**: The company believes its stock is undervalued and encourages investment [2][20] - **Future Growth**: Plans to continue pursuing bolt-on acquisitions across its three business divisions to achieve scale and potentially be added to the Russell index [8][14]

Core Insights - The Zacks Diversified Operations industry is benefiting from strong performance in aerospace, defense, and oil & gas sectors, driven by growth in commercial aviation and demand in home and building products [1][4] - Challenges such as manufacturing sector weakness and supply-chain disruptions are impacting industry performance [2][6][7] - The industry is ranked 88 in the Zacks Industry Rank, indicating solid prospects with a positive earnings outlook [8][10] Industry Overview - The Zacks Diversified Operations industry encompasses companies in various sectors including oil & gas, industrial, electronics, aviation, and healthcare, providing a wide range of equipment and solutions [3] - Companies in this industry have a global presence, with operations in the U.S., Japan, India, China, and Canada [3] Major Trends - Strength in aerospace and defense markets is a key driver, with robust demand expected to continue due to air travel and government support [4] - Investments in innovation and technology are crucial for growth, with companies focusing on digitization to enhance operational efficiency [5] Challenges - The manufacturing sector has shown persistent weakness, with the Manufacturing Purchasing Manager's Index at 49.1% in September, indicating contraction [6] - Supply-chain disruptions, particularly in electrical and electronic components, are a concern for industry participants [7] Performance Metrics - The Zacks Diversified Operations industry has underperformed the S&P 500, declining 6.7% over the past year compared to the S&P 500's 16.5% increase [12] - The industry is currently trading at a forward P/E of 11.15X, significantly lower than the S&P 500's 23.29X [15] Notable Companies - **3M Company (MMM)**: Gained 11.3% in the past year, with strong momentum in safety and industrial segments [17][18] - **ITT Inc. (ITT)**: Shares increased by 11.7% in the past year, benefiting from demand in energy and industrial markets [21][22] - **Star Equity Holdings, Inc. (STRR)**: Expected to benefit from its Building Solutions division, with a significant earnings estimate increase of 154.5% over the past 60 days [25][26]

Core Viewpoint - Star Equity Holdings, Inc. is actively engaging with investors through presentations and meetings at the upcoming LD Micro Conference, highlighting its strategic focus on building long-term shareholder value through diversified business operations [1][2][4]. Company Overview - Star Equity Holdings, Inc. is a diversified holding company that aims to build long-term shareholder value by acquiring, managing, and growing businesses with strong fundamentals and market opportunities [4]. - The company operates through four divisions: Building Solutions, Business Services, Energy Services, and Investments [4]. Recent Developments - On August 22, 2025, the company completed the acquisition of Star Operating Companies, Inc., which was part of a merger agreement finalized on May 21, 2025. This merger resulted in the company changing its name and trading symbols on Nasdaq [5]. Division Summaries - **Building Solutions**: This division focuses on modular building manufacturing, structural wall panel and wood foundation manufacturing, and glue-laminated timber manufacturing [6]. - **Business Services**: This division provides flexible recruitment solutions to a global clientele, servicing organizations from entry-level to C-suite positions, with a focus on mid-market and enterprise organizations [7]. - **Energy Services**: This division is involved in the rental, sale, and repair of downhole tools for various industries, including oil and gas, geothermal, mining, and water-well [8]. - **Investments**: This division manages and finances the company's real estate assets and investment positions in both private and public companies [9].

Core Insights - Star Equity Holdings, Inc. announced that its subsidiary Hudson Talent Solutions (HTS) has ranked 5 in HRO Today magazine's Baker's Dozen list of top enterprise recruitment process outsourcing (RPO) providers for the 17th consecutive year, marking its highest ranking in this period [1][2] - The annual RPO Baker's Dozen list is based on a client satisfaction survey of 500 verified global customers who evaluate RPO providers on service breadth, deal size, and service quality [3] Company Overview - Hudson Talent Solutions is recognized as a global leader in talent acquisition and workforce strategy, providing customized and scalable talent solutions that integrate data, technology, employer branding, and advisory expertise [4] - Star Equity Holdings, Inc. operates through four divisions: Building Solutions, Business Services, Energy Services, and Investments, focusing on acquiring and growing businesses with strong fundamentals and market opportunities [5] Business Services Division - The Business Services division of Star Equity provides flexible and scalable recruitment solutions to a global clientele, partnering with organizations to build diverse, high-impact teams and drive business success [7]

Core Viewpoint - Star Equity Holdings, Inc. is actively engaging with investors through a presentation at the Sidoti Small Cap Virtual Conference, highlighting its strategic focus on building long-term shareholder value through diversified business operations [1][2][3]. Company Overview - Star Equity Holdings, Inc. is a diversified holding company that aims to build long-term shareholder value by acquiring, managing, and growing businesses with strong fundamentals and market opportunities [3]. - The company operates through four divisions: Building Solutions, Business Services, Energy Services, and Investments [3]. Recent Developments - On August 22, 2025, the company completed the acquisition of Star Operating Companies, Inc., which was previously known as Star Equity Holdings, Inc. This merger resulted in the company changing its name and trading symbols on Nasdaq to STRR and STRRP effective September 5, 2025 [4]. Division Summaries - **Building Solutions**: This division operates in three niches: modular building manufacturing, structural wall panel and wood foundation manufacturing, and glue-laminated timber (glulam) manufacturing [5]. - **Business Services**: This division provides flexible and scalable recruitment solutions to a global clientele, focusing on mid-market and enterprise organizations [6]. - **Energy Services**: This division is involved in the rental, sale, and repair of downhole tools used in various industries including oil and gas, geothermal, mining, and water-well [7]. - **Investments**: This division manages and finances the company's real estate assets and investment positions in both private and public companies [8].

Core Viewpoint - Star Equity Holdings, Inc. has authorized a new share repurchase program of up to $3 million following the completion of a previous $5 million program, reflecting the company's commitment to enhancing shareholder value and confidence in its long-term growth prospects [1][2]. Share Repurchase Program - The new share repurchase program allows the company to repurchase up to $3 million of its outstanding common stock, following the completion of a $5 million program initiated in August 2023 [1][2]. - Repurchases may occur through various methods, including open market transactions and privately negotiated transactions, with the timing and amount dependent on stock price and market conditions [2]. Company Overview - Star Equity Holdings, Inc. is a diversified holding company focused on building long-term shareholder value through the acquisition and management of businesses with strong fundamentals [3]. - The company operates through four divisions: Building Solutions, Business Services, Energy Services, and Investments [3]. Recent Merger - On August 22, 2025, the company completed the acquisition of Star Operating Companies, Inc., which is now a wholly owned subsidiary, following a merger agreement dated May 21, 2025 [4]. - The company changed its name to Star Equity Holdings, Inc. and its trading symbol on Nasdaq to STRR and STRRP effective September 5, 2025 [4]. Division Summaries - **Building Solutions**: Engages in modular building manufacturing, structural wall panel manufacturing, and glue-laminated timber manufacturing [5]. - **Business Services**: Provides recruitment solutions to global clients, focusing on mid-market and enterprise organizations [6]. - **Energy Services**: Involves the rental, sale, and repair of downhole tools for various industries including oil and gas [7]. - **Investments**: Manages the company's real estate assets and investment positions in both private and public companies [8].

Core Viewpoint - Star Equity Holdings, Inc. has announced the rebranding of its subsidiary Hudson RPO to Hudson Talent Solutions, reflecting an expanded vision and enhanced global capabilities [1][2][3] Company Overview - Star Equity Holdings, Inc. is a diversified holding company focused on building long-term shareholder value through the acquisition, management, and growth of businesses with strong fundamentals and market opportunities [5] - The company operates through four divisions: Building Solutions, Business Services, Energy Services, and Investments [5] Business Services Division - The Business Services division provides flexible and scalable recruitment solutions to a global clientele, focusing on mid-market and enterprise organizations [7] - This division partners with talent acquisition, HR, and procurement leaders to build diverse, high-impact teams [7] Hudson Talent Solutions - Hudson Talent Solutions is positioned as a global leader in talent acquisition and workforce strategy, offering customized, scalable talent solutions that integrate data, technology, employer branding, and advisory expertise [4] - The rebranding to Hudson Talent Solutions signifies a shift towards being a comprehensive talent partner, emphasizing data-driven and scalable solutions across the entire talent lifecycle [3][4] Strategic Objectives - The rebranding is seen as a pivotal step in HTS' evolution, enhancing its global brand identity and reinforcing the value delivered to clients [3] - With the support of Star Equity Holdings, HTS aims to accelerate growth, expand service offerings, and broaden its impact in global markets [3]

Core Viewpoint - Hudson Global, Inc. will change its corporate name to Star Equity Holdings, Inc. effective September 5, 2025, following its merger with Star Operating Companies, Inc. This change reflects the company's strategic direction towards building a diversified portfolio aimed at long-term shareholder value [1][2][4]. Company Overview - Star Equity Holdings, Inc. is a diversified holding company focused on acquiring, managing, and growing businesses with strong fundamentals and market opportunities. The company comprises four divisions: Building Solutions, Business Services, Energy Services, and Investments [4]. Leadership - The company will be led by Jeff Eberwein as Chief Executive Officer and Rick Coleman as Chief Operating Officer, with additional management including Matt Diamond as Chief Accounting Officer, Hannah Bible as Chief Legal Officer, and Shawn Miles as Executive Vice President – Finance [3]. Divisions - **Building Solutions**: This division operates in three niches: modular building manufacturing, structural wall panel and wood foundation manufacturing, and glue-laminated timber (glulam) column, beam, and truss manufacturing [5]. - **Business Services**: This division provides flexible and scalable recruitment solutions to a global clientele, focusing on mid-market and enterprise organizations, and partners with talent acquisition, HR, and procurement leaders [6]. - **Energy Services**: This division is involved in the rental, sale, and repair of downhole tools used in various industries including oil and gas, geothermal, mining, and water-well [7]. - **Investments**: This division manages and finances the company's real estate assets and investment positions in private and public companies [8].

Core Viewpoint - The merger between Hudson Global, Inc. and Star Equity Holdings, Inc. has been successfully completed, creating a larger and diversified holding company that aims to leverage its increased size, diversified revenue streams, and improved profitability to deliver compelling returns to shareholders [5][8]. Company Structure and Operations - Hudson Global now operates with four reporting segments: Building Solutions, Business Services, Energy Services, and Investments [6][10]. - The Building Solutions division includes modular building manufacturing, structural wall panel and wood foundation manufacturing, and glue-laminated timber manufacturing [11]. - The Business Services division provides flexible recruitment solutions to a global client base, focusing on mid-market and enterprise-level organizations [12]. - The Energy Services division is involved in the rental, sale, and repair of downhole tools for various industries [13]. - The Investments division manages the company's real estate assets and investment positions in both private and public companies [14]. Financial and Market Impact - The merger results in pro-forma annualized revenues of $210 million, enhancing revenue diversity and positioning the company for potential inclusion in the Russell 2000 index [5]. - The merger allows for the utilization of Hudson Global's $240 million U.S. federal net operating losses (NOLs) [5]. Stock and Trading Information - Hudson Global's common stock will continue trading under the symbol "HSON," while its 10% Series A Cumulative Perpetual Preferred Stock will begin trading under "HSONP" [2]. - Star's common and preferred stock has been suspended from trading on Nasdaq as of August 22, 2025 [2]. Management and Governance - The board of directors of Hudson Global consists of seven members, with six being independent, and is led by CEO Jeff Eberwein and COO Rick Coleman [7].

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) [Filing Details](index=1&type=section&id=Filing%20Details) This document is a Quarterly Report on Form 10-Q for the period ended June 30, 2025, filed by Star Equity Holdings, Inc. The company's securities, including Common Stock and Series A Cumulative Perpetual Preferred Stock, are registered on the NASDAQ Global Market - The report is a Quarterly Report on Form 10-Q for the period ended June 30, 2025[2](index=2&type=chunk) Registered Securities | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :-------------------------------- | :---------------- | :-------------------------------------- | | Common Stock, par value $0.0001 per share | STRR | NASDAQ Global Market | | Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share | STRRP | NASDAQ Global Market | [Registrant Status](index=1&type=section&id=Registrant%20Status) Star Equity Holdings, Inc. is classified as a non-accelerated filer and a smaller reporting company. As of August 8, 2025, the company had 3,234,978 shares of Common Stock outstanding - The registrant is a non-accelerated filer and a smaller reporting company[5](index=5&type=chunk) - As of August 8, 2025, **3,234,978 shares** of Common Stock ($0.0001 par value) were outstanding[6](index=6&type=chunk) [Important Information Regarding Forward-Looking Statements](index=4&type=section&id=IMPORTANT%20INFORMATION%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclosure](index=4&type=section&id=Forward-Looking%20Statements%20Disclosure) This section highlights that the report contains forward-looking statements based on current beliefs and expectations, particularly in 'Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations'. These statements are subject to risks and uncertainties that could cause actual results to differ materially, as described in 'Item 1A — Risk Factors'. The company does not undertake to update or revise these statements unless required by law - The report includes forward-looking statements, especially in 'Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations'[9](index=9&type=chunk) - Forward-looking statements are identified by words like 'believe,' 'expect,' 'anticipate,' 'project,' 'could,' 'would,' and similar expressions[9](index=9&type=chunk) - Actual results may differ materially due to risks, uncertainties, and factors described in 'Item 1A — Risk Factors'[9](index=9&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including the Statements of Operations, Balance Sheets, Statements of Cash Flows, and Statements of Stockholders' Equity, along with detailed notes explaining the basis of presentation, significant accounting policies, revenue recognition, earnings per share, balance sheet information, leases, fair value measurements, debt, commitments, income taxes, segment information, mergers and acquisitions, related party transactions, preferred stock, and equity transactions [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the three months ended June 30, 2025, Star Equity Holdings, Inc. reported a net income of $3.451 million, a significant improvement from a net loss of $3.787 million in the prior year. Total revenues increased by 75.8% to $23.708 million, driven by growth in Building Solutions and the new Energy Services segment. Gross profit surged by 182.2% to $6.253 million, while operating expenses increased by 21.5% Condensed Consolidated Statements of Operations (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change (2025 vs 2024) | | :----------------------------------- | :----- | :----- | :-------------------- | | Revenues | $23,708 | $13,483 | +$10,225 (+75.8%) | | Cost of revenues | $17,455 | $11,267 | +$6,188 (+54.9%) | | Gross profit | $6,253 | $2,216 | +$4,037 (+182.2%) | | Operating expenses | $7,205 | $5,929 | +$1,276 (+21.5%) | | Income (loss) from operations | $(952) | $(3,713) | +$2,761 (+74.4%) | | Total other income (expense), net | $4,860 | $(113) | +$4,973 (+4400.9%) | | Income (loss) before income taxes | $3,908 | $(3,826) | +$7,734 (+202.1%) | | Income tax benefit (provision) | $(457) | $39 | $(496) (-1271.8%) | | Net Income (loss) | $3,451 | $(3,787) | +$7,238 (+191.1%) | | Net income (loss) attributable to common shareholders | $2,778 | $(4,266) | +$7,044 (+165.1%) | | Basic EPS attributable to common shareholders | $0.87 | $(1.34) | +$2.21 | | Diluted EPS attributable to common shareholders | $0.86 | $(1.34) | +$2.20 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, total assets increased to $102.414 million from $83.048 million at December 31, 2024, primarily driven by increases in current assets, property and equipment, and intangible assets. Total liabilities also increased to $39.801 million from $28.712 million, mainly due to higher accounts payable, accrued liabilities, and short-term debt. Total stockholders' equity grew to $62.613 million Condensed Consolidated Balance Sheets (in thousands) | Asset/Liability/Equity | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Total current assets | $35,185 | $24,414 | +$10,771 | | Property and equipment, net | $16,653 | $10,207 | +$6,446 | | Intangible assets, net | $20,399 | $18,930 | +$1,469 | | Goodwill | $9,922 | $8,453 | +$1,469 | | Total assets | $102,414 | $83,048 | +$19,366 | | Total current liabilities | $23,284 | $12,470 | +$10,814 | | Total liabilities | $39,801 | $28,712 | +$11,089 | | Total stockholders' equity | $62,613 | $54,336 | +$8,277 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash used in operating activities decreased to $1.144 million from $4.265 million in 2024, primarily due to improved operating results. Net cash used in investing activities significantly decreased to $4.550 million from $18.944 million, mainly reflecting lower acquisition-related cash payments compared to the prior year. Net cash provided by financing activities also decreased to $3.532 million from $8.322 million, due to lower net debt utilization and less acquisition funding Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | Change (2025 vs 2024) | | :----------------------------------- | :----- | :----- | :-------------------- | | Net cash provided (used) by operating activities | $(1,144) | $(4,265) | +$3,121 | | Net cash provided (used) by investing activities | $(4,550) | $(18,944) | +$14,394 | | Net cash provided (used) by financing activities | $3,532 | $8,322 | $(4,790) | | Net change in cash, cash equivalents, and restricted cash | $(2,162) | $(14,887) | +$12,725 | | Cash, cash equivalents, and restricted cash at end of period | $3,469 | $4,059 | $(590) | - Cash paid for interest increased to **$394 thousand** in 2025 from **$146 thousand** in 2024[19](index=19&type=chunk) - Issuance of Preferred Stock as a non-cash financing activity amounted to **$7.045 million** in 2025[19](index=19&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=11&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY) Total stockholders' equity increased from $54.336 million at December 31, 2024, to $62.613 million at June 30, 2025. This increase was primarily driven by the issuance of preferred shares as part of an acquisition ($7.045 million) and net income for the period ($3.451 million), partially offset by preferred stock dividends Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Item | Balance at Dec 31, 2024 | Balance at Jun 30, 2025 | Change | | :----------------------------------- | :---------------------- | :---------------------- | :----- | | Perpetual Preferred Stock Amount | $18,988 | $26,033 | +$7,045 | | Common stock Amount | $2 | $2 | $0 | | Treasury Stock | $(6,007) | $(6,007) | $0 | | Additional paid-in capital | $159,880 | $158,837 | $(1,043) | | Accumulated deficit | $(118,527) | $(116,252) | +$2,275 | | Total stockholders' equity | $54,336 | $62,613 | +$8,277 | - Issuance of Preferred Shares as part of acquisition contributed **$7.045 million** to equity in Q1 2025[20](index=20&type=chunk) - Net income for the six months ended June 30, 2025, was **$2.275 million**, reducing the accumulated deficit[13](index=13&type=chunk)[20](index=20&type=chunk) [Note 1. Basis of Presentation and Significant Policies](index=12&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Significant%20Policies) The unaudited condensed consolidated financial statements are prepared in accordance with SEC instructions for Form 10-Q and U.S. GAAP, with all material adjustments included. Star Equity Holdings, Inc. is a multi-industry diversified holding company with three divisions: Building Solutions, Investments, and the newly established Energy Services (following the ADT acquisition on March 3, 2025). A significant development is the proposed merger with Hudson Global, Inc., which, if consummated, would make Star Equity a wholly-owned subsidiary of Hudson and delist it from NASDAQ - The Company completed a merger with Alliance Drilling Tools, Inc. (ADT) on March 3, 2025, establishing the Energy Services division[24](index=24&type=chunk)[25](index=25&type=chunk) - Star Equity Holdings, Inc. entered into a Merger Agreement with Hudson Global, Inc. on May 21, 2025, under which Star Equity would become a wholly-owned subsidiary of Hudson and be delisted from NASDAQ, pending stockholder approval[26](index=26&type=chunk)[27](index=27&type=chunk) - The Company is evaluating new accounting standards ASU 2024-03 and ASU 2025-01 regarding expense disaggregation disclosures, effective for fiscal years beginning after December 15, 2026[30](index=30&type=chunk) [Note 2. Revenue](index=13&type=section&id=Note%202.%20Revenue) Total revenues for the three months ended June 30, 2025, were $23.708 million, with Building Solutions contributing $20.384 million and Energy Services (newly acquired ADT) contributing $3.324 million. For the six months ended June 30, 2025, total revenues were $36.632 million. The majority of revenue is recognized at a point in time, with Energy Services also recognizing revenue over time for equipment rentals Revenue Disaggregation (Three Months Ended June 30, 2025, in thousands) | Segment | Revenue from Contracts with Customers | | :-------------------- | :------------------------------------ | | Building Solutions | $20,384 | | Energy Services | $3,324 | | **Total Revenues** | **$23,708** | Revenue Disaggregation (Six Months Ended June 30, 2025, in thousands) | Segment | Revenue from Contracts with Customers | | :-------------------- | :------------------------------------ | | Building Solutions | $32,502 | | Energy Services | $4,130 | | **Total Revenues** | **$36,632** | - Energy Services revenue includes equipment rental, sales of new/used drilling tools, parts, supplies, and repair services. Revenue from 'lost-in-hole' reimbursements totaled **$385 thousand** for the six months ended June 30, 2025[33](index=33&type=chunk)[35](index=35&type=chunk) [Note 3. Basic and Diluted Net Income (Loss) Per Share](index=15&type=section&id=Note%203.%20Basic%20and%20Diluted%20Net%20Income%20(Loss)%20Per%20Share) For the three months ended June 30, 2025, basic net income per share attributable to common shareholders was $0.87, and diluted was $0.86. This is a significant improvement from a basic and diluted loss per share of $(1.34) in the prior year. For the six months ended June 30, 2025, basic and diluted EPS were $0.35, compared to $(2.20) in 2024. Common stock equivalents were excluded from diluted EPS calculations in periods of net loss as they were antidilutive Net Income (Loss) Per Share Attributable to Common Shareholders | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common shareholders (in thousands) | $2,778 | $(4,266) | $1,123 | $(6,969) | | Basic EPS | $0.87 | $(1.34) | $0.35 | $(2.20) | | Diluted EPS | $0.86 | $(1.34) | $0.35 | $(2.20) | - For the three and six months ended June 30, 2025, **2.2 million** stock warrants were excluded from EPS calculations as they were antidilutive[38](index=38&type=chunk) [Note 4. Supplementary Balance Sheet Information](index=15&type=section&id=Note%204.%20Supplementary%20Balance%20Sheet%20Information) This note provides detailed breakdowns of inventories, property and equipment, warranty reserves, notes receivable, and long-term investments. Inventories increased to $9.207 million, and net property and equipment rose to $16.653 million, largely due to acquisitions. The company holds significant notes receivable, including the Catalyst Note ($8.603 million) and MDOS Note ($0.745 million). Long-term investments include a cost method investment in Catalyst and a fair value elected investment in Enservco, which experienced an unrealized loss of $491 thousand for the six months ended June 30, 2025 Inventories (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Raw materials | $4,494 | $2,644 | | Work-in-process | $557 | $735 | | Finished goods | $4,156 | $2,018 | | **Total inventories, net** | **$9,207** | **$5,397** | Property and Equipment, Net (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Gross property and equipment | $20,590 | $12,908 | | Accumulated depreciation | $(3,937) | $(2,701) | | **Total property and equipment, net** | **$16,653** | **$10,207** | - Long-term investments include a **$953 thousand** cost method investment in Catalyst (after a **$0.4 million** impairment in 2025) and a **$264 thousand** fair value elected investment in Enservco, which incurred a **$491 thousand** unrealized loss for the six months ended June 30, 2025[48](index=48&type=chunk)[49](index=49&type=chunk)[57](index=57&type=chunk) [Note 5. Leases](index=19&type=section&id=Note%205.%20Leases) The company has operating and finance leases for corporate offices, vehicles, and equipment, with remaining terms ranging from 1 to 20 years. Operating lease costs for the six months ended June 30, 2025, were $763 thousand, significantly higher than $233 thousand in the prior year. The weighted-average remaining lease term for operating leases is 17.0 years, with a weighted-average discount rate of 12.94% Lease Expense (Six Months Ended June 30, in thousands) | Lease Type | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Operating lease cost | $763 | $233 | | Total finance lease cost | $34 | $40 | Weighted Average Lease Metrics (June 30, 2025) | Metric | Operating Leases | Finance Leases | | :-------------------------------- | :--------------- | :------------- | | Weighted average remaining lease term (in years) | 17.0 | 2.3 | | Weighted average discount rate | 12.94 % | 5.80 % | - Total future minimum lease payments for operating leases amount to **$23.579 million**, with a present value of **$8.619 million**[60](index=60&type=chunk) [Note 6. Fair Value Measurements](index=20&type=section&id=Note%206.%20Fair%20Value%20Measurements) The company categorizes its financial assets and liabilities measured at fair value into a three-level hierarchy. As of June 30, 2025, total assets measured at fair value were $1.967 million (Level 1) and $73 thousand (Level 3), while liabilities included a Level 3 earn-out liability of $(167) thousand. A significant realized gain of $5.5 million was recognized from the sale of Servotronics, Inc. common shares during the quarter Assets and Liabilities Measured at Fair Value (June 30, 2025, in thousands) | Item | Level 1 | Level 2 | Level 3 | Total | | :-------------------------- | :------ | :------ | :------ | :---- | | Equity securities | $1,763 | $— | $— | $1,763 | | Lumber derivative contracts | $13 | $— | $— | $13 | | Investment in Enservco | $191 | $— | $73 | $264 | | BLL acquisition related earn-out | $— | $— | $(167) | $(167) | | **Total** | **$1,967** | **$—** | **$(94)** | **$1,873** | - A **$5.5 million** realized gain was recognized on equity securities, primarily from the Servotronics tender offer, for the three months ended June 30, 2025[68](index=68&type=chunk) - Lumber derivative contracts resulted in a total gain of **$86 thousand** for the three months ended June 30, 2025, and a total loss of **$23 thousand** for the six months ended June 30, 2025[70](index=70&type=chunk) [Note 7. Debt](index=23&type=section&id=Note%207.%20Debt) Total debt increased to $14.333 million at June 30, 2025, from $11.316 million at December 31, 2024, with a weighted-average interest rate of 7.67%. This increase is primarily due to new revolving credit facilities and term loans, including the Austin Loan Agreement for ADT and the Bridgewater Facility for Timber Technologies Solutions. The company maintains compliance with its debt covenants Debt Summary (in thousands) | Debt Type | June 30, 2025 Amount | June 30, 2025 Weighted-Average Interest Rate | December 31, 2024 Amount | December 31, 2024 Weighted-Average Interest Rate | | :----------------------------------- | :------------------- | :------------------------------------ | :------------------- | :------------------------------------ | | Total Short-term Revolving Credit Facilities | $5,430 | 8.42% | $2,156 | 8.75% | | Total Short-term debt | $7,345 | 8.29% | $3,911 | 8.30% | | Long Term Debt, net of current portion | $6,988 | 7.81% | $7,405 | 7.73% | | **Total Debt** | **$14,333** | **7.67%** | **$11,316** | **7.93%** | - ADT entered into an Austin Loan Agreement on March 3, 2025, providing a working capital line of credit up to **$3.0 million** and a term loan up to **$0.8 million**[72](index=72&type=chunk) - The Premier Loan Agreement for EBGL was extended to December 5, 2025, with **$2.0 million** availability as of June 30, 2025. KBS's KeyBank Loan Agreement was extended to July 29, 2026[73](index=73&type=chunk)[75](index=75&type=chunk) [Note 8. Commitments and Contingencies](index=25&type=section&id=Note%208.%20Commitments%20and%20Contingencies) The company is subject to various legal and administrative proceedings in the normal course of business, including claims related to regulatory compliance, customer disputes, employment practices, and product liability. While the timing and outcome of these matters are unpredictable, management does not currently expect them to have a material adverse effect on the company's financial position or results of operations - The company is subject to litigation and administrative proceedings, such as claims related to regulatory standards, customer disputes, and employment practices[83](index=83&type=chunk) - Management does not currently expect the resolution of these matters to have a material adverse effect on financial position or results of operations[83](index=83&type=chunk) [Note 9. Income Taxes](index=25&type=section&id=Note%209.%20Income%20Taxes) For the six months ended June 30, 2025, the company recorded an income tax benefit of $1.7 million, a significant increase from $4 thousand in the prior year. This benefit includes a discrete benefit of $2.0 million related to the valuation allowance release associated with Star's pre-existing tax attributes due to the ADT acquisition. The company maintains a full valuation allowance against its deferred tax assets and had $300 thousand in unrecognized tax benefits related to uncertain tax positions Income Tax Benefit (Provision) (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30, | $(457) | $39 | | Six Months Ended June 30, | $1,733 | $4 | - The six-month income tax benefit for 2025 includes a **$2.0 million** discrete benefit from the valuation allowance release due to the ADT acquisition[88](index=88&type=chunk) - As of June 30, 2025, unrecognized tax benefits related to uncertain tax positions amounted to approximately **$300 thousand**[89](index=89&type=chunk) [Note 10. Segments](index=25&type=section&id=Note%2010.%20Segments) Star Equity Holdings, Inc. operates through three reportable segments: Building Solutions, Energy Services (newly established with the ADT acquisition), and Investments. Segment performance is evaluated based on gross profit and operating income (loss). For the six months ended June 30, 2025, Building Solutions generated $32.502 million in revenue and $8.172 million in gross profit, while Energy Services, from its acquisition date, generated $4.130 million in revenue and $1.366 million in gross profit - The company's three reportable segments are Building Solutions, Energy Services, and Investments[91](index=91&type=chunk) Segment Performance (Six Months Ended June 30, 2025, in thousands) | Segment | Revenues | Cost of Revenues | Gross Profit | Income (loss) from operations | | :---------------- | :------- | :--------------- | :----------- | :---------------------------- | | Building Solutions | $32,502 | $24,330 | $8,172 | $567 | | Energy Services | $4,130 | $2,764 | $1,366 | $117 | | Investments | $316 | $149 | $167 | $33 | | Corporate and Intersegment eliminations | $(316) | $— | $(316) | $(4,516) | | **Total** | **$36,632** | **$27,243** | **$9,389** | **$(3,799)** | - EBITDA for the six months ended June 30, 2025, was **$3.386 million**, with Building Solutions contributing **$2.545 million** and Investments contributing **$4.605 million**[94](index=94&type=chunk) [Note 11. Mergers and Acquisitions](index=27&type=section&id=Note%2011.%20Mergers%20and%20Acquisitions) Star Equity completed two significant acquisitions: Alliance Drilling Tools (ADT) on March 3, 2025, for $12.568 million, establishing the Energy Services segment, and Timber Technologies Solutions (TT) on May 17, 2024, for $23.7 million, enhancing the Building Solutions segment. Both acquisitions involved cash and preferred shares/mortgage debt, and their purchase price allocations are preliminary. Pro forma results indicate that these acquisitions significantly increased revenue and gross profit for the respective periods - Acquired Alliance Drilling Tools (ADT) on March 3, 2025, for a total consideration of **$12.568 million**, including cash payments and preferred shares[95](index=95&type=chunk)[97](index=97&type=chunk) - ADT acquisition resulted in **$1.468 million** in goodwill and **$3.1 million** in identified intangible assets (Trade Names and Customer Relationships) assigned to the Energy Services segment[99](index=99&type=chunk) - Acquired Timber Technologies Solutions (TT) on May 17, 2024, for **$23.7 million**, including cash and a Term Loan Secured by a Mortgage[102](index=102&type=chunk) [Note 12. Related Party Transactions](index=30&type=section&id=Note%2012.%20Related%20Party%20Transactions) As of June 30, 2025, Mr. Eberwein, the Executive Chairman, owned approximately 25.43% of the company's outstanding Common Stock and 1,182,414 shares of Series A Preferred Stock. Additionally, the CEO, Richard Coleman, held board positions at Catalyst (2025 and 2024) and Enservco (2024) due to the company's long-term investments - Mr. Eberwein, Executive Chairman, owned **820,374 shares (25.43%)** of Common Stock and **1,182,414 shares** of Series A Preferred Stock as of June 30, 2025[106](index=106&type=chunk) - CEO Richard Coleman held board positions at Catalyst (2025, 2024) and Enservco (2024) due to company investments[106](index=106&type=chunk) [Note 13. Perpetual Preferred Stock](index=30&type=section&id=Note%2013.%20Perpetual%20Preferred%20Stock) Holders of Series A Preferred Stock are entitled to preferential cumulative cash dividends at 10.0% per annum of the $10.00 liquidation preference, payable quarterly. The stock is not convertible or redeemable by the company and has limited voting rights only if dividends are in arrears for six or more consecutive quarters. The company declared and paid two quarterly dividends of $0.25 per share in Q1 and Q2 2025, totaling approximately $0.5 million and $0.7 million respectively, and is current on payments - Series A Preferred Stock holders receive **10.0%** per annum cumulative cash dividends on a **$10.00** liquidation preference, payable quarterly[107](index=107&type=chunk) - Dividends of **$0.25 per share** were declared and paid in March and June 2025, totaling approximately **$0.5 million** and **$0.7 million**, respectively[108](index=108&type=chunk) - The Series A Preferred Stock is not convertible and not subject to redemption by the Company[107](index=107&type=chunk) [Note 14. Equity Transactions](index=30&type=section&id=Note%2014.%20Equity%20Transactions) A one-for-five reverse stock split of common stock became effective on June 14, 2024, proportionally adjusting all outstanding stock options and warrants. As of June 30, 2025, 10.9 million warrants (representing 2.2 million common stock equivalents) with an exercise price of $7.50 remained outstanding and will expire in January 2027. The company also repurchased $0.3 million (73,855 shares) of its common stock in 2024 under a $1 million buyback program - A one-for-five reverse stock split of common stock became effective on June 14, 2024[109](index=109&type=chunk)[110](index=110&type=chunk) - As of June 30, 2025, **10.9 million** warrants (**2.2 million** common stock equivalents) with a **$7.50** exercise price were outstanding, expiring in January 2027[111](index=111&type=chunk) - The company repurchased **$0.3 million (73,855 shares)** of common stock in 2024 under a **$1 million** buyback program[112](index=112&type=chunk) [Note 15. Preferred Stock Rights](index=31&type=section&id=Note%2015.%20Preferred%20Stock%20Rights) On August 21, 2024, the Board declared a dividend of one right per common stock share to purchase one one-thousandth of a Series C Participating Preferred Stock share at an exercise price of $12.00. This Rights Plan aims to preserve the company's net operating loss carryforwards by diminishing the risk of an 'ownership change' under Section 382 of the Internal Revenue Code. The rights become exercisable upon certain triggering events and can cause substantial dilution to an acquiring person - The Board declared a dividend of one right per common stock share to purchase Series C Participating Preferred Stock, with an exercise price of **$12.00** per one one-thousandth of a share[113](index=113&type=chunk) - The Rights Plan is intended to preserve net operating loss carryforwards by mitigating the risk of an 'ownership change' under Section 382 of the Internal Revenue Code[114](index=114&type=chunk) - The rights will expire on the earliest of August 21, 2027, redemption by the Board, exchange, repeal of Section 382, or determination of no NOLs[118](index=118&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year. It covers an overview of the company's diversified divisions (Building Solutions, Energy Services, Investments), strategic goals, market conditions, and detailed analysis of revenues, gross profit, operating expenses, other income/expense, income taxes, and liquidity. Key highlights include significant revenue and gross profit growth driven by acquisitions and improved operational efficiencies, alongside a proposed merger with Hudson Global, Inc [Overview](index=32&type=section&id=Overview) Star Equity Holdings, Inc. is a diversified multi-industry holding company with three divisions: Building Solutions (modular buildings, wall panels, glulam, building materials), Energy Services (drilling tools and services via ADT acquisition), and Investments (real estate, public and private equity stakes). A proposed merger with Hudson Global, Inc. would make Star Equity a wholly-owned subsidiary of Hudson, leading to delisting from NASDAQ - Star Equity operates three divisions: Building Solutions (KBS, EdgeBuilder, Glenbrook, TT), Energy Services (ADT), and Investments[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - The Energy Services division was newly created following the acquisition of Alliance Drilling Tools, Inc. (ADT) in Q1 2025[122](index=122&type=chunk)[124](index=124&type=chunk) - A merger agreement with Hudson Global, Inc. is in place, which would result in Star Equity becoming a wholly-owned subsidiary of Hudson and delisting from NASDAQ[126](index=126&type=chunk)[127](index=127&type=chunk) [Strategy](index=33&type=section&id=Strategy) Star Equity's strategy leverages its holding company structure to focus on capital allocation, strategic leadership, M&A, and investor relations, while operating companies concentrate on organic growth, operational improvements, and bolt-on acquisitions. The company aims to improve market position and profitability through organic growth and strategic alternatives like selective acquisitions, divestitures, equity offerings, debt financings, or corporate restructuring, prioritizing 'value' acquisitions - The holding company structure allows Star Equity management to focus on capital allocation, strategic leadership, M&A, and investor relations[128](index=128&type=chunk) - The company explores strategic alternatives, including organic growth, selective acquisitions, divestitures, equity offerings, debt financings, or corporate restructuring[129](index=129&type=chunk) - Acquisition strategy prioritizes 'value' buyers, pursuing transactions only if post-transaction potential value for stockholders is high[133](index=133&type=chunk) [Operating Business](index=33&type=section&id=Operating%20Business) The operating companies are positioned for growth in large markets, focusing on organic expansion in existing geographies, introducing new services (e.g., commercial multi-family segment, logistics), and acquiring complementary businesses. Despite economic uncertainties and higher interest rates, the Building Solutions division sees strong demand and improved profitability from price increases and margin protection. The Energy Services demand is tied to oil and gas prices and drilling activity, with the total U.S. rig count down 4% year-over-year in June 2025 - Building Solutions benefits from increased acceptance of offsite/prefab construction, offering shorter time to market, higher quality, and cost savings[131](index=131&type=chunk) - The demand for Energy Services is linked to oil and gas prices and drilling activity; the total U.S. rig count was down **4%** year-over-year in June 2025[132](index=132&type=chunk) - Growth strategy includes organic growth in core businesses, introduction of new services (e.g., logistics, on-site installation), and acquisition of complementary businesses[133](index=133&type=chunk) [Segments](index=34&type=section&id=Segments) The company's three reportable segments are Building Solutions (KBS, EdgeBuilder, Glenbrook, TT), Energy Services (ADT), and Investments. Building Solutions manufactures modular housing, structural wall panels, and glulam, and supplies building materials. Energy Services provides drilling tools and services to the oil & gas, geothermal, mining, and water-well industries. The Investments division manages corporate-owned real estate and minority equity investments - Building Solutions includes KBS (modular buildings), EdgeBuilder (structural wall panels, wood foundations), Glenbrook (building materials), and TT (glue-laminated timber products)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Energy Services, consisting of ADT, provides sale and rental tools and services to the Oil & Gas, Geothermal, Mining, and Waterwells sectors[143](index=143&type=chunk) - Investments division holds real estate leased to subsidiaries and manages minority investments in public companies, as well as debt and equity holdings in Catalyst and Enservco[144](index=144&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The preparation of financial statements requires management to make significant estimates, assumptions, and judgments impacting revenue, net income/loss, and asset/liability values. Key areas include revenue recognition, goodwill valuation, asset impairment, business combination accounting, and income taxes, which are considered critical accounting policies - Significant estimates and judgments are made in revenue recognition, goodwill valuation, asset impairment, business combination accounting, and income taxes[145](index=145&type=chunk) - These critical accounting policies and estimates have the greatest potential impact on the financial statements[145](index=145&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) The company experienced significant financial improvements for both the three and six months ended June 30, 2025, compared to 2024. Total revenues increased by 75.8% and 62.1% respectively, driven by the ADT acquisition and improved performance in Building Solutions. Gross profit saw substantial growth, while operating expenses increased at a slower rate relative to revenue. Net income turned positive, largely due to a realized gain on equity securities and an income tax benefit [Comparison of the Three Months Ended June 30, 2025 and 2024](index=35&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) For the three months ended June 30, 2025, total revenues increased by 75.8% to $23.708 million, and gross profit surged by 182.2% to $6.253 million. The company reported a net income of $3.451 million, a significant turnaround from a $3.787 million net loss in the prior year, primarily due to a $5.5 million realized gain on equity securities and improved operational performance Key Financial Highlights (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change (Dollars) | Change (Percent) | | :----------------------------------- | :----- | :----- | :--------------- | :--------------- | | Total revenues | $23,708 | $13,483 | $10,225 | 75.8 % | | Gross profit | $6,253 | $2,216 | $4,037 | 182.2 % | | Income (loss) from operations | $(952) | $(3,713) | $2,761 | 74.4 % | | Net income (loss) | $3,451 | $(3,787) | $7,238 | 191.1 % | - Building Solutions revenues increased due to the inclusion of TT revenues and improved activity at KBS and EBGL[147](index=147&type=chunk) - A **$5.5 million** realized gain from the sale of Servotronics, Inc. common shares was the largest component of Other income (expense) in Q2 2025[154](index=154&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=37&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) For the six months ended June 30, 2025, total revenues grew by 62.1% to $36.632 million, and gross profit increased by 147.7% to $9.389 million. The company achieved a net income of $2.275 million, a substantial improvement from a $6.011 million net loss in the prior year, supported by a $1.7 million income tax benefit and realized gains on investments Key Financial Highlights (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change (Dollars) | Change (Percent) | | :----------------------------------- | :----- | :----- | :--------------- | :--------------- | | Total revenues | $36,632 | $22,601 | $14,031 | 62.1 % | | Gross profit | $9,389 | $3,790 | $5,599 | 147.7 % | | Income (loss) from operations | $(3,799) | $(6,675) | $2,876 | 43.1 % | | Net income (loss) | $2,275 | $(6,011) | $8,286 | 137.8 % | - Building Solutions revenues increased by **43.8%** to **$32.502 million**, driven by TT inclusion and improved results at KBS and EBGL[158](index=158&type=chunk) - Energy Services generated **$4.130 million** in revenue and **$1.366 million** in gross profit from its acquisition date[160](index=160&type=chunk)[162](index=162&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity sources include cash and cash equivalents, cash from operations, and credit facilities. As of June 30, 2025, cash and cash equivalents were $3.5 million, and total debt was $14.3 million. Net cash used in operating activities decreased significantly to $1.1 million for the six months ended June 30, 2025, due to improved operating results. Net cash used in investing activities also decreased, reflecting lower acquisition funding compared to the prior year Summary Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Net cash provided (used) by operating activities | $(1,144) | $(4,265) | | Net cash provided (used) by investing activities | $(4,550) | $(18,944) | | Net cash provided (used) by financing activities | $3,532 | $8,322 | - As of June 30, 2025, the company had **$3.5 million** in cash and cash equivalents and **$14.3 million** in total debt[172](index=172&type=chunk) - Net cash used in investing activities in 2025 was primarily for the ADT acquisition (**$4.2 million**), significantly less than the **$19.1 million** used for the TT acquisition in 2024[170](index=170&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - The company has no applicable quantitative and qualitative disclosures about market risk[177](index=177&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025. The internal control over financial reporting was also deemed effective based on the COSO framework. No material changes in internal control over financial reporting occurred during the most recent fiscal quarter - Disclosure controls and procedures were effective as of June 30, 2025[178](index=178&type=chunk) - Internal control over financial reporting was effective as of June 30, 2025, based on the COSO framework[179](index=179&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[181](index=181&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8, 'Commitments and Contingencies,' for a summary of legal proceedings, indicating no new material information beyond what is already disclosed in the financial notes - Legal proceedings information is summarized in Note 8, 'Commitments and Contingencies,' of the condensed consolidated financial statements[184](index=184&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) The company reiterates the importance of considering risks from this 10-Q and its Annual Report on Form 10-K. New risks highlighted include those associated with the company's acquisition strategy, such as management diversion, increased costs, unanticipated liabilities, integration difficulties, and potential negative effects on business relationships. Losses in the investment portfolio are also identified as a risk that could adversely affect financial results - Risks from the company's acquisition strategy include management diversion, increased costs, unanticipated liabilities, integration difficulties, and negative effects on business relationships[186](index=186&type=chunk)[187](index=187&type=chunk) - There is no assurance that acquisitions will be successful or achieve anticipated synergies[188](index=188&type=chunk) - Losses in the investment portfolio, recognized in net income, could adversely affect results of operations, financial condition, and liquidity[189](index=189&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section states that there were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities to report for the period - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities were reported[190](index=190&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities to report - No defaults upon senior securities were reported[191](index=191&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[192](index=192&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements were adopted or terminated by the company's directors or executive officers during the fiscal quarter ended June 30, 2025 - None of the company's directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025[193](index=193&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Merger Agreement with Hudson Global, Inc., related support agreements, certifications from the Principal Executive and Financial Officers, and XBRL interactive data files - Exhibit 2.1 is the Agreement and Plan of Merger with Hudson Global, Inc., dated May 21, 2025[196](index=196&type=chunk) - Includes certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[196](index=196&type=chunk) - XBRL Instance Document and Taxonomy Extension files are included as exhibits[196](index=196&type=chunk) [SIGNATURES](index=45&type=section&id=SIGNATURES) [Signatures](index=45&type=section&id=Signatures) The report is duly signed on behalf of Star Equity Holdings, Inc. by Richard K. Coleman, Jr., Chief Executive Officer (Principal Executive Officer), and David J. Noble, Chief Financial Officer (Principal Financial and Accounting Officer), dated August 13, 2025 - The report was signed by Richard K. Coleman, Jr., Chief Executive Officer, and David J. Noble, Chief Financial Officer[199](index=199&type=chunk) - The signing date for the report is August 13, 2025[199](index=199&type=chunk)