EDGAR 10-K Filing

Company CIK: 707388
Filing Year: 2025
Filename: 707388_10-K_2025_0000707388-25-000040.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
Overview
Star Equity Holdings, Inc. (“Star Equity,” the “Company,” “we,” “our”) is a diversified multi-industry holding company with two divisions. Our Building Solutions division, formerly called our “Construction” division, is our largest division and operates in the construction industry, a key sector of the economy. In addition, we have an Investments division. On May 4, 2023, we completed the sale of our former healthcare division, Digirad Health, Inc. (“Digirad Health”). Until the sale of Digirad Health, we were organized into three divisions.
Our Building Solutions division is currently made up of the following operating businesses: KBS Builders, Inc. (“KBS”); EdgeBuilder, Inc. (“EdgeBuilder”), Glenbrook Building Supply, Inc. (“Glenbrook” (inclusive of Big Lake Lumber (“BLL”) which was purchased in 2023), with EdgeBuilder and Glenbrook managed together and referred to jointly as “EBGL,” and Timber Technologies Solutions, Inc. (“TT”). KBS is based in Maine and manufactures modular buildings, typically in the single and multi-family residential segments, servicing principally the New England market. EBGL is based in the Minneapolis-Saint Paul area and principally serves the Upper Midwest region. Together, the EBGL businesses manufacture and deliver structural wall panels, primarily for multi-family residential buildings, and other engineered wood-based products. EBGL also distributes building materials from two lumberyard locations primarily focused on professional builder customers. TT is based outside the Minneapolis-Saint Paul area in Colfax, WI and manufactures glue-laminated timber products (“glulam”) for various end markets and applications, including agriculture, industrial, infrastructure, and building construction (commercial and residential).
Our Investments division holds and manages our corporate-owned real estate, including one manufacturing facility in Maine that is leased to KBS and one manufacturing facility in Wisconsin that is leased to TT. The Investments division also manages internally-funded, concentrated minority investments in a number of public companies. In addition, it holds and manages a promissory note and a private equity stake in Insignia TTG Parent LLC, (“Catalyst Parent”) the parent entity of Catalyst MedTech LLC (“Catalyst”) formerly known as TTG Imaging Solutions, LLC, which we acquired in May 2023 as a result of the sale of Digirad Health. The Investments division also holds our Investments in Enservco Corporation (“Enservco”) consisting of an investment in Enservco-Common Stock, an investment in Enservco-Preferred Stock, and an investment in a call option, all of which were acquired in the third quarter of 2024.
Strategy
Star Equity
We believe our multi-industry diversified holding company structure allows Star Equity management to focus on capital allocation, strategic leadership, mergers and acquisitions, capital markets transactions, and investor relations, as well as direct management of our Investments division. Our structure frees up our operating company management teams to focus on their respective businesses, look for organic and bolt-on growth opportunities, and improve operations with less distraction and administrative burden associated with running a public company.
We continue to explore strategic alternatives to improve our market position and the profitability of our product offerings, generate additional liquidity, and enhance our valuation. We may pursue our goals through organic growth and through strategic alternatives. Some of these alternatives have included, and could continue to include, selective acquisitions of businesses, divestitures of assets or businesses, business combinations, equity offerings, debt financings, or corporate restructuring.
Operating Businesses
We believe that our Building Solutions division companies are well positioned for growth in large addressable markets. The key elements of our growth strategy include the following:
•Organic growth from our core businesses. We believe that we operate in markets and geographies that will allow our core businesses to grow, and to benefit from our scale and strengths. Our primary focus will be on markets in which we already have a presence in order to leverage our existing personnel, infrastructure, and brand recognition.
•Introduction of new services. Within our Building Solutions division companies, we will consider opportunities to augment our service offerings to better serve our customer base. We have done this in the New England market with our entry into the commercial multi-family segment. Other areas might include logistics, on site installation, and sub-component manufacturing.
•Acquisition of complementary businesses. We plan to continue to look at complementary businesses that meet our financial criteria for acquisitions to grow our Company. We believe there are many potential small public and private targets that can be acquired over time and integrated into our platform. We will also look at larger, more transformational mergers and acquisitions if we believe the appropriate mix of value, risk, and return is present for our stockholders. The timing of these potential transactions will always depend on market conditions, available capital, and valuation. In general, we want to be “value” buyers, and will not pursue any transaction unless we believe the post-transaction potential value is high for stockholders.
Business Segments
Our reportable segments are based upon our internal organizational structure, the manner in which our operations are managed, the criteria used by our Chief Executive Officer (Chief Operating Decision Maker or "CODM") to evaluate segment performance, the availability of separate financial information, and overall materiality considerations. Prior to May 2023, we had three reportable segments: Healthcare, Building Solutions, and Investments. Effective as of May 2023 with the sale of our Digirad Health business, we have two reportable segments: Building Solutions and Investments. Our corporate structure reflects the manner in which our CODM assesses performance and allocates resources.
See Note 15. Segments, within the notes to our accompanying consolidated financial statements.
Detailed Description of Our Operating Segments
Building Solutions
Our Building Solutions division services residential and commercial construction projects via our KBS, EdgeBuilder, Glenbrook, and TT brands, through which we manufacture modular housing units, structural wall panels, permanent wood foundation systems and other engineered wood products, supply general contractors and retail customers with building materials, and manufacture glue-laminated timber products (“glulam”).
KBS is a Maine-based modular builder that started operations in 2001. Today, KBS manufactures fully custom modular homes. KBS offers products for both multi-family and single-family residential buildings leveraging our in-house engineering team and design expertise. KBS markets its modular homes through a direct sales organization, which consists of inside sales and outside sales teams who work with a network of independent dealers, builders, and contractors, primarily in the New England states (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont). KBS’s outside sales organization focuses on commercial building projects, and works with developers, architects, owners, and general contractors to establish the scope of work, terms of payment, and general requirements for each project. KBS’s inside sales people focus on a network of independent dealers, builders, and contractors to accurately configure and place orders for mainly single-family residential homes. KBS’s network of independent dealers and contractors do not work with KBS exclusively, although some have KBS model homes on display at their retail centers. KBS’s backlog and pipeline, along with its market initiatives to build more student, workforce, and affordable housing, are expected to position KBS for continued growth, particularly in the multi-family segment.
EdgeBuilder is a manufacturer of structural wall panels, permanent wood foundation systems, and other engineered wood products, and conducts its operations in Prescott, Wisconsin. EdgeBuilder markets its engineered structural wall panels and permanent wood foundation systems through direct sales people and a network of builders, contractors, and developers in and around the Minneapolis-Saint Paul region. EdgeBuilder’s direct sales organization is responsible for both residential and commercial projects and works with general contractors, developers, and builders to provide bids and quotes for specific projects. Our marketing efforts include participation in industry trade shows, production of product literature, and sales support tools. These efforts are designed to generate sales leads for our independent builders and dealers, and direct salespeople.
Glenbrook (inclusive of BLL acquired in 2023) is a supplier of lumber, windows, doors, cabinets, drywall, roofing, decking, and other building materials to professional builders. Glenbrook conducts its operations in Oakdale, Minnesota and Big Lake, Minnesota with an operational facility in Hudson, Wisconsin. EdgeBuilder and Glenbrook operate as one business with a single management team and we refer to them together as EBGL.
TT manufactures glulam for various end markets and applications, including agriculture, industrial, infrastructure, and building construction (commercial and residential). Its glulam products have superior strength, durability, and environmental sustainability compared to solid timber and other building materials. Operating in a niche industry and benefiting from secular tailwinds, TT’s glulam products have been taking market share from less sustainable building materials such as steel, concrete, and aluminum.
Investments
We hold two real estate assets in our portfolio which we lease to our Building Solutions subsidiaries; one property is leased to KBS and one property is leased to TT. These properties are located in Oxford, Maine and Colfax, Wisconsin, respectively. In addition, we continue to expand our investment activities and have established minority positions in the equity securities of a small number of publicly traded companies, as well as the debt and equity holdings in Catalyst and Enservco.
Our Competitive Strengths
Building Solutions Services and Products
Our competitive strengths at KBS include our strategic location near the Greater Boston region and our ability to serve all of New England. We have the largest manufacturing capacity in New England with the ability to provide high quality wood-based modules for both single and commercial scale multi-family residential buildings. We also provide significant value through our longstanding engineering and design expertise, with a focus on customization to suit specific project requirements. We continue to develop our expertise and specialized knowledge in highly energy-efficient passive homes, which included the delivery of our first zero-energy modular homes for the affordable housing segment during 2020. Additionally, we believe there is a large opportunity in the commercial-scale multi-family modular segment and we have continued to pursue more of these projects.
At EdgeBuilder, we offer a superior product for commercial-scale multi-family projects, focusing on structural wall panels. Our engineering and design capabilities allow us to create a product that is unique to the specific project’s requirements. We also provide value with our vertically integrated in-house delivery capability, which helps us to be cost-competitive. Our production strategy is to utilize automation and the most efficient manufacturing methods and high-quality materials in all EdgeBuilder projects. Through our building products distribution business, we operate a professional lumber yard and showroom and deliver highly personalized service, knowledgeable salespeople, and attention to detail that the larger, big-box chain home stores do not provide.
At TT, we operate in a niche industry and benefit from secular tailwinds. TT’s glulam products have been taking market share from less sustainable building materials such as steel, concrete, and aluminum. TT’s glulam products have superior strength, durability, and environmental sustainability compared to solid timber and other building materials.
We expect the offsite construction industry to achieve revenue growth over the next several years driven largely by rising housing demand which can be met via modular construction. We believe our Building Solutions division is well positioned to capitalize on the growing popularity of offsite construction-both modular and panelized- in our two current target markets and the United States as a whole.
Sales
Building Solutions
KBS markets its modular homes products through both outside and inside salespeople. Our inside sales team works primarily with our network of independent dealers who source end customers for single family homes, largely in northern New England. Our outside sales team focuses on commercial scale multi-unit projects through new and established relationships with architects, designers, developers, owners, builders, general contractors, consultants, and construction managers throughout
New England. Their work involves developing and negotiating the full scope of work for KBS, terms of payment, and general requirements for each project.
EBGL markets its engineered structural wall panels and permanent wood foundation systems through direct sales people to a network of builders, contractors, and developers in the Minneapolis-Saint Paul area and the Upper Midwest states. EBGL’s direct sales organization is responsible for both residential and commercial projects. Our marketing efforts include participation in industry trade shows, production of product literature, and the use of sales support tools. Our showroom and lumber yard processes orders over the phone and services walk-in traffic, mainly focusing on serving professional builders with our highly experienced in-house sales team.
TT markets its glulam products through sales teams for agricultural, commercial, industrial and residential markets to distributors, builders, and construction related firms.
Competition
Building Solutions
The market for construction, including through offsite manufacturing, is highly competitive.
KBS. KBS is a regional manufacturer of modular housing units with a primary target market in the New England states. Several modular manufacturing competitors are located in these New England states and in nearby Pennsylvania. Some competitors have manufacturing locations in Canada and ship their products to the United States.
EBGL. EBGL is a regional manufacturer of engineered structural wall panels and permanent wood foundation systems and also has a local professional-builder-focused retail distribution business. EBGL’s market is primarily the Upper Midwest states (Iowa, Minnesota, Missouri, North Dakota, South Dakota, and Wisconsin), though largely concentrated within Minnesota and Wisconsin. Glenbrook’s professional building material distribution businesses, including BLL, compete on a local level against both small, local lumber yards, regional building supply companies, and to a certain degree, the “big box” stores such as Home Depot, Lowe’s, and Menard’s.
TT. TT’s primary market is the post frame construction market. TT manufactures a glue-laminated post with treatment on the bottom for in ground and on slab uses. TT’s competition includes organizations that nail lumber together as well as 4 to 5 nationwide companies that produce a glue-laminated wood post for the post frame market. TT also produces horizontally applied beams for structural applications and has competition from traditional glulam plants located around the country. Approximately 25 of those plants are identified throughout North America.
Intellectual Property
Intellectual property in our Building Solutions business consists of trademarks at KBS, EBGL, and TT.
Patents
We do not hold any patents within our Building Solutions business.
Raw Materials
Building Solutions. KBS, EBGL and TT operate in the wood-based construction market. The primary raw materials used in their production processes include dimensional lumber, mainly spruce-pine-fir (SPF), and sheathing/sheet goods (OSB and plywood). The majority of underlying raw material for KBS, EBGL, and TT are sourced by wholesalers and mills in the United States, though from time to time limited quantities are also sourced from Canada. These businesses depend on the reliability of the lumber supply chain and are sensitive to varying degrees to wood-based commodity price fluctuations.
Manufacturing
Building Solutions. KBS began manufacturing single family homes in 2001 and commercial modular multi-family housing units in 2008. In subsequent years, KBS expanded its product offerings to include a variety of commercial-scale multi-family buildings including apartments, condominiums, townhouses, and dormitories. The structures are built inside our climate-controlled factories and are then transported to the site where they are set, assembled, and secured to the foundation. Electrical, plumbing, and HVAC systems are inspected and tested in the factory prior to transportation to the site to ensure the modules meet all local building codes and quality requirements. Modular construction has gained acceptance and is a preferred building method by many architects and general contractors. The advantages of modular construction include: modules are constructed in a climate-controlled environment; weather conditions usually do not interrupt or delay construction; the building is protected from weather, reducing the risk of mold or other materials damage due to materials absorbing moisture from rain or snow; reduced site work; improved safety and security; reduced vandalism and attrition; and a significant reduction in overall project time.
EBGL consists of two separate companies (EdgeBuilder and Glenbrook) operating in tandem with a common management team. EdgeBuilder manufactures wall panels and permanent wood foundations (PWF) in a climate-controlled factory, then transports the panels to the construction site via flat-bed trucks. The panels are typically unloaded by crane and erected, or assembled, on site by professional framing contractors. Panelized construction, especially in large-scale, multi-unit projects, is becoming increasingly popular due to the heightened demand for construction labor. Additionally, because the wall panels are constructed in a controlled indoor environment, waste, weather-related delays, and mistakes are minimized. This shaves weeks off large, multi-unit construction schedules. Glenbrook, as a retailer of professional building products, is not directly involved in manufacturing but does often sell and ship product in tandem with EdgeBuilder wall panel deliveries. As the International Building Code® continues to evolve, KBS and EBGL, along with our professional partners in the industry, meet code changes with innovative products and a dedicated staff to ensure adherent builds.
TT started operations in 2003 and has been manufacturing glue-laminated (glulam) wood columns and beams for post frame builders since that time. Timber Technologies products include treated and untreated columns for sidewalls and end walls in post frame buildings, glue-laminated headers and beams, and architectural grade beams for high-end commercial structures.
Human Capital Resources
As of December 31, 2024, we had a total of 194 employees in all our divisions, of which 117 were employed in manufacturing, 30 in operational roles, 20 in general and administrative functions, and 27 in marketing and sales. All of our 194 employees are full-time employees. All positions are in the United States. We also utilize varying amounts of temporary workers as necessary to fulfill customer requirements. We have policies to prevent discrimination based on gender, race, disability, ethnicity, nationality, religion, sexual orientation, gender identity, or gender expression. We take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. We also take affirmative action to employ and advance veterans in employment. We have not experienced any work stoppages and consider our employee relations to be good.
Recent History of our Business Transformation
On May 4, 2023, we entered into a Stock Purchase and Contribution Agreement (the “Digirad Purchase Agreement”), by and among the Company, Digirad Health Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Digirad Health”), Catalyst, and Catalyst Parent. Pursuant to the Digirad Purchase Agreement, (i) Catalyst purchased 85% of the issued and outstanding shares of Digirad Health, on the terms and subject to the conditions set forth therein and (ii) the Company contributed to Catalyst Parent 15% of the issued and outstanding shares of stock of Digirad Health (the “Contributed Shares”) in exchange for New Units (as defined in the Digirad Purchase Agreement) of Catalyst Parent (the “Transaction”). The total aggregate consideration payable to the Company for the Transaction was $40 million, comprised of $19.7 million ($27 million less payoff of debt to Webster Bank (see Note 8. Debt) and transaction costs) in cash, a $7 million promissory note (see Note 5. Supplementary Balance Sheet Information), and $6 million of New Units in Catalyst Parent (see Note 5. Supplementary Balance Sheet Information). The Company completed the sale of Digirad Health simultaneously with entering into the Digirad Purchase Agreement. See Note 3. Discontinued Operations for further information.
On October 31, 2023, we purchased certain assets of BLL. Pursuant to this transaction, BLL sold its lumberyard and showroom facility to 791 Rose Drive LLC, a wholly-owned subsidiary of the Company, and certain related assets to Glenbrook, and rebranded the location and business operations to fall under the Glenbrook name, for a combined purchase price of $3.3 million (the “BLL Purchase Price”). The BLL Purchase Price is subject to certain post-closing adjustments including an earn-out provision of up to $0.5 million payable over two years and a hold back to satisfy certain indemnification obligations of Glenbrook under the purchase agreement. As discussed in more detail in Note 16. Mergers and Acquisitions, we recognized a gain upon the acquisition which represents the excess of the fair value of net assets acquired over the purchase price.
On May 17, 2024, we acquired substantially all of the assets of Timber Technologies Inc. and, on June 28, 2024, the real assets of Timber Properties, LLC (collectively, “TT”) for total consideration of $23.7 million consisting of cash paid at closing of $19.7 million, $1.0 million of escrow funds included in accrued liabilities, and a Term Loan Secured by a Mortgage of $3.0 million. We are also subject to payments due to the sellers contingent upon the achievement of certain EBITDA metrics over a 2-year period which may result in total payments not to exceed $4.1 million, 50% of which is payable in cash and 50% of which is payable in Series A Preferred Stock. These payments are also contingent upon the continued employment of the individual sellers. We have concluded that these payments are akin to compensation and will be recorded if and as such compensation is earned. For the twelve months ended December 31, 2024, we have accrued no amounts related to these payments as such achievement is deemed to have not been met. We have restricted $1.0 million of cash associated with the escrow funds payable to the sellers within 12 months after the acquisition as defined in the escrow agreement.
Available Information
We file electronically with the SEC, our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”). The SEC maintains a website (www.sec.gov), which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of charge on our website (www.starequity.com) as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Such reports will remain available on our website for at least 12 months and are also available free of charge by written request or by contacting Star Equity at (203) 489-9500 or our third-party Investor Relations representative at (212) 836-9611.
The contents of our website or any other website are not incorporated by reference into this Annual Report on Form 10-K.

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ITEM 1A. RISK FACTORS
ITEM 1A.RISK FACTORS
Summary of Risk Factors
The summary below provides a non-exhaustive overview of the risks that, if realized, could materially harm our business, prospects, operating results, and financial condition. This summary is qualified by reference to the full set of risk factors set forth in this Item.
•We have a history of annual net losses attributable to common stockholders which may continue and which may negatively impact our ability to achieve our growth initiatives.
•We rely on information technology in our operations, and any material failure, inadequacy, interruption, or security failure of that technology could materially harm our business.
•We may not be able to achieve the anticipated synergies and benefits from business acquisitions.
•We face risks related to health pandemics, wars, inflation, and other potential causes of global instability which could significantly disrupt our operations and impact our financial results.
•We are subject to particular risks associated with real estate ownership, which could result in unanticipated losses or expenses.
•Operating results may be adversely affected by changes in the costs and availability of supplies and materials.
•Trade tariffs or other factors affecting the commodities and materials we use in our business could have a material and adverse impact on our results of operations, financial condition and cash flows.
•Our quarterly and annual financial results are difficult to predict and are likely to fluctuate from period to period.
•We spend considerable time and money complying with federal and state laws, regulations, and other rules which may fluctuate, and if we are unable to fully comply with such laws, regulations, and other rules, we could face substantial penalties.
•Our long-term results depend upon our ability to improve existing products and services and develop, introduce, and market new products and services successfully.
•We may make financial investments in other businesses that may lose value.
•Our goodwill and other long-lived assets are subject to potential impairment that could negatively impact our earnings.
•If KBS is unable to maintain or establish its relationships with independent dealers and contractors who sell its homes, KBS revenue could decline.
•Due to the nature of our business, many of our expenses are fixed costs and if there are decreases in demand for products, it may adversely affect operating results.
•Due to the nature of the work we and our subsidiaries perform, we may be subject to significant liability claims and disputes.
•Persistent inflation could negatively impact our revenues, profitability, and borrowing costs. In addition, if our costs increase and we are not able to correspondingly adjust our commercial relationships to account for this increase, our net income would be adversely affected, and the adverse impact may be material.
•Changing rules, public disclosure regulations and stakeholder expectations on environmental, social and corporate governance (“ESG”) related matters expose us to potential liabilities, increased costs, reputational harm and other adverse effects on our business.
•Any indebtedness incurred by the Company could restrict our operations and make us more vulnerable to adverse economic conditions.
•If we are unable to generate or borrow sufficient cash to make payments on our indebtedness, our financial condition would be materially harmed, our business could fail, and stockholders may lose all of their investment.
•The market price of our common stock may be volatile, and the value of your investment could decline significantly.
•Our common stock has a low trading volume and shares available under our equity compensation plans could affect the trading price of our common stock.
•If we cannot continue to satisfy the Nasdaq Global Market continued listing standards and other Nasdaq rules, our common stock could be delisted, which would harm our business, the trading price of our common stock, our ability to raise additional capital and the liquidity of the market for our common stock.
•A possible “short squeeze” due to a sudden increase in demand of our common stock that largely exceeds supply may lead to price volatility in our common stock.
•Payment of dividends on our common stock is prohibited unless we have declared and paid (or set apart for payment) full accumulated dividends on the Series A Preferred Stock, which also has a significant liquidation value.
•If we fail to pay dividends on our Series A Preferred Stock for six or more consecutive quarters, holders of our Series A Preferred Stock will be entitled to elect two additional directors to our board of directors.
•As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze and compare our results of operations and financial prospects.
•If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, the price and trading volume of our securities could decline.
•The protective amendment contained in our Restated Certificate of Incorporation, which is intended to help preserve the value of certain income tax assets, primarily NOLs, may have unintended negative effects.
•Our stockholder rights plan, or “poison pill,” includes terms and conditions which could discourage a takeover or other transaction that stockholders may consider favorable.
•Anti-takeover provisions in our organizational documents and Delaware law may prevent or delay removal of current management or a change in control.
•We expect to be limited in our ability to utilize net operating loss carryforwards to reduce our future tax liability as a result of our January 2022 public offering.
Risks Related to Our Business and Industry
We have a history of annual net losses attributable to common stockholders which may continue and which may negatively impact our ability to achieve our growth initiatives.
Our total stockholders’ equity decreased to $54.3 million as of December 31, 2024. For the year ended December 31, 2024, we had revenue of $53.4 million, compared to revenue of $45.8 million for the comparable period in 2023. We had a net loss attributable to common stockholders of $12.5 million for the year ended December 31, 2024, compared to net income attributable to common stockholders of $23.2 million for the comparable 2023 period. There can be no assurance that, even if our revenue increases, our future operations will result in net income attributable to common stockholders. Our failure to increase our revenues or improve our gross margins will harm our business. We may not be able to sustain or increase profitability on a quarterly or annual basis in the future. If our revenues grow more slowly than we anticipate, our gross margins fail to improve or our operating expenses exceed our expectations, our operating results will suffer. The prices we charge for our products and services may decrease, which would reduce our revenues and harm our business. If we are unable to sell our products at acceptable prices relative to our costs, or if we fail to develop and introduce on a timely basis new products from which we can derive additional revenues, our financial results will suffer.
We rely on information technology in our operations, and any material failure, inadequacy, interruption, or security failure of that technology could materially harm our business.
We rely on information technology and systems, including the Internet, commercially available software, and other applications, to process, transmit, store, and safeguard information and to manage or support a variety of our business processes, including financial transactions and maintenance of records, which may include personal identifying information and other valuable or confidential information. If we experience material failures, inadequacies, or interruptions or security failures of our information technology, we could incur material costs and losses. Further, third-party vendors could experience similar events with respect to their information technology and systems that impact the products and services they provide to us or to our customers. We rely on commercially available systems, software, tools, and monitoring, as well as other applications and internal procedures and personnel, to provide security for processing, transmitting, storing, and safeguarding confidential information such as personally identifiable information related to our employees and others, information regarding financial accounts, and information regarding customers and vendors. We take various actions, and we incur significant costs, to maintain and protect the operation and security of our information technology and systems, including the data maintained in those systems. However, it is possible that these measures will not prevent the systems’ improper functioning or a compromise in security, such as in the event of a cyberattack or the improper disclosure of information. Security breaches, computer viruses, attacks by hackers, online fraud schemes, and similar breaches can create significant system disruptions, shutdowns, fraudulent transfer of assets, or unauthorized disclosure of confidential information. For example, in April 2019, we became aware that we had been a victim of criminal fraud commonly referred to as “business email compromise fraud.” The incident involved the impersonation of one of our officers and improper access to his email, wherein the transfer by us of funds to a third-party account almost occurred.
Despite any defensive measures we take to manage threats to our business, our risk and exposure to these matters remain heightened because of, among other things, the evolving nature of such threats in light of advances in computer capabilities, new discoveries in the field of cryptography, new and sophisticated methods used by criminals including phishing, social engineering, or other illicit acts, or other events or developments that we may be unable to anticipate or fail to adequately mitigate. Any failure to maintain the security, proper function and availability of our information technology and systems, or certain third-party vendors’ failure to similarly protect their information technology and systems that are relevant to our operations, or to safeguard our business processes, assets, and information could result in financial losses, interrupt our operations, damage our reputation, cause us to be in default of material contracts, and subject us to liability claims or regulatory penalties, any of which could materially and adversely affect us.
We may not be able to achieve the anticipated synergies and benefits from business acquisitions.
Part of our business strategy is to acquire businesses that we believe can complement or expand our current business activities, both financially and strategically. With these synergistic benefits in mind, we acquired KBS, EdgeBuilder and Glenbrook in 2019, BLL in 2023 and TT in 2024, and will continue to seek strategic acquisitions in line with our business activities. Acquisitions involve many complexities, including, but not limited to, risks associated with the acquired business’ past activities, loss of customers, regulatory changes that are not anticipated, difficulties in integrating personnel and human resource programs, integrating ERP systems and other infrastructures, general underperformance of the business under our control versus the prior owners, unanticipated expenses and liabilities, and the impact on its internal controls of compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002. As a result, the realization of anticipated synergies or benefits from acquisitions may be delayed or substantially reduced, and could potentially result in the impairment of our investment in these businesses.
We face risks related to health pandemics, wars, inflation, and other potential causes of global instability which could significantly disrupt our operations and impact our financial results.
Our business has been disrupted and could be further materially adversely affected by pandemics, wars, or other causes of global instability. Global concerns, such as health concerns, wars, or global conflicts, could also result in social, economic, and labor instability in the United States or countries in which we or the third parties with whom we engage operate. The future impact of global conflicts on supply chains and inflation and their effects on our business and operations are uncertain. We cannot presently predict the scope and severity of any potential business shutdowns or disruptions, including downturns in global economies and financial markets that could affect our future operating results.
Additionally, during 2022 and through 2024 the global economy experienced high levels of inflation, rising interest rates, significant fluctuations in currency values, and increasing economic uncertainty, particularly in Europe. While inflation in the United States retreated during the latter part of 2023, our results of operations may continue to be negatively impacted by higher costs of raw materials, labor and freight resulting from inflationary pressures. These factors and global events including the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, a softening economy in Europe, and fluctuating interest rates may also have a negative impact on our results.
We are subject to particular risks associated with real estate ownership, which could result in unanticipated losses or expenses.
Our business is subject to many risks that are associated with the ownership of real estate. Risks that are associated with real estate acquisition and ownership include, without limitation, the following:
•general liability, property and casualty losses, some of which may be uninsured;
•the inability to purchase or sell our assets rapidly due to the illiquid nature of real estate and the real estate market;
•leases which are not renewed or are renewed at lower rental amounts at expiration;
•the default by a tenant or guarantor under any lease;
•costs relating to maintenance and repair of our facilities and the need to make expenditures due to changes in governmental regulations, such as the Americans with Disabilities Act or remediation of unknown environmental hazards; and
•acts of God and acts of terrorism affecting our properties.
Operating results may be adversely affected by changes in the costs and availability of supplies and materials.
Our Building Solutions operating results could be adversely affected by changes in the cost and availability of raw materials. Prices and availability of raw materials used to manufacture our products can change significantly due to fluctuations in supply and demand. Additionally, availability of the raw materials used to manufacture our products may be limited at times resulting in higher prices and/or the need to find alternative suppliers. Both KBS’s and EdgeBuilder’s major material components are dimensional lumber and wood sheet products, which include plywood and oriented strand board. Lumber costs are subject to market fluctuations. Furthermore, the cost of raw materials may also be influenced by transportation costs. It is not certain that any price increases can be passed on to our customers without affecting demand or that limited availability of materials will not impact our production capabilities. The state of the financial and housing markets may also impact our suppliers and affect the availability or pricing of materials. The inability of KBS or EdgeBuilder to raise the price of their products in response to increases in prices of raw materials or to maintain a proper supply of raw materials could have an adverse effect on their revenue and earnings.
Trade tariffs or other factors affecting the commodities and materials we use in our business could have a material and adverse impact on our results of operations, financial condition and cash flows.
The use or threatened use of tariffs by the Trump administration may cause disruptions in global trade, which could negatively impact the costs of materials we use in our business and the demand for our products. Many of the commodities and materials we use in our business are imported and exported. To the extent these products become subject to tariffs, it could expose us to costs that we may not be able to recover from our customers. Existing and future trade tariffs, import duties and quotas could also materially increase our costs of procuring the commodities and materials we use and disrupt the markets for the products we handle, which in turn could have a material adverse effect on our financial position, results of operations and cash flows.
Our quarterly and annual financial results are difficult to predict and are likely to fluctuate from period to period.
We have historically experienced seasonality in all of our businesses and downturns based on the changing U.S. economy.
The construction industry is sensitive to changes in economic conditions and other factors, including, but not limited to, consumer confidence, increases in interest rates, and the cost and availability of financing. Adverse changes in any of these conditions could decrease demand and pricing for new projects in the areas in which we operate or result in customer cancellations of pending contracts, which could result in a decrease in our revenues in particular periods.
We cannot predict with certainty the overall trajectory of the construction industry or the duration of trends due to changes in conditions that are beyond our control. These conditions include, but are not limited to:
•rising interest rates;
•economic recession or downturn;
•changes in demographics and population migration that impair the demand for new housing;
•labor issues such as shortages and rising costs of labor; and
•tax law changes.
We spend considerable time and money complying with federal and state laws, regulations, and other rules which may fluctuate, and if we are unable to fully comply with such laws, regulations, and other rules, we could face substantial penalties.
Our Building Solutions businesses are subject to various federal, state and local laws and regulations. In recent years, a number of new laws and regulations have been adopted, and there has been expanded enforcement of certain existing laws and regulations by federal, state, and local agencies. These laws and regulations, and related interpretations and enforcement activity, may change as a result of a variety of factors, including political, economic or social events. Changes in, expanded enforcement of, or adoption of new federal, state or local laws and regulations governing minimum wage or living wage requirements; the classification of exempt and non-exempt employees; the distinction between employees and contractors; other wage, labor or workplace regulations; healthcare; data protection and cybersecurity; the sale and pricing of some of our products; transportation; logistics; supply chain transparency; taxes; unclaimed property; energy costs and consumption; or environmental matters could increase our costs of doing business or impact our operations.
We maintain a compliance program to identify and correct any compliance issues and remain in compliance with all applicable laws, to train employees, to audit and monitor our operations, and to achieve other compliance goals. Like most companies with compliance programs, we occasionally discover compliance concerns. In such cases, we take responsive action, including corrective measures when necessary. There can be no assurance that our responsive actions will insulate us from liability associated with any detected compliance concerns.
If our past or present operations are found to be in violation of any of the laws, regulations, rules, or policies described above or the other laws or regulations to which we or our customers are subject, we may be subject to civil and criminal penalties, damages, fines, or the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment, or restructuring of our operations could adversely affect our ability to operate our business and our financial results. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business, and damage our reputation. Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, regulations, rules, and policies, the risks cannot be entirely eliminated. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security, and fraud laws may prove costly.
Our long-term results depend upon our ability to improve existing products and services and develop, introduce, and market new products and services successfully.
Our business is dependent on the continued improvement of our existing products and services and our development of new products and services utilizing our current or other potential future technology. As we introduce new products and services or refine, improve, or upgrade versions of existing products and services, we cannot predict the level of market acceptance or the amount of market share these products and services will achieve, if any. We cannot be certain that we will not experience material delays in the introduction of new products or services in the future.
We generally sell our products and services in industries that are characterized by rapid technological changes, frequent new product introductions, and changing industry standards. If we do not develop new products and services and product enhancements based on technological innovation on a timely basis, our products and services may become obsolete over time and our revenues, cash flow, profitability, and competitive position may suffer. Even if we successfully innovate and develop new products, services and product enhancements, we may incur substantial costs in doing so, and our profitability may suffer.
We may make financial investments in other businesses that may lose value.
As we look for the best ways to deploy our capital and maximize our returns for our businesses and stockholders, we may make financial investments in other businesses or processes for purposes of enhancing our supply chain, creating financial returns, strategic developments, or other purposes. These investments may be speculative in nature, and there is no guarantee that we will experience a financial return and we may lose our entire principal balance if not successful. For example, our Investment in Enservco resulted in unrealized losses, as disclosed in Note 5. Supplementary Balance Sheet Information, to the notes to our consolidated financial statements.
Our goodwill and other long-lived assets are subject to potential impairment that could negatively impact our earnings.
A significant portion of our assets consists of goodwill and other long-lived assets, the carrying value of which may be reduced if we determine that those assets are impaired. At December 31, 2024, goodwill and net intangible assets represented $27.4 million, or 31.6% of our total assets, and at December 31, 2023, goodwill and net intangible assets represented $17.0 million, or 22.5% of our total assets. In addition, net property and equipment assets totaled $10.2 million and $7.8 million, or 11.8% and 4.6%, respectively, of our total assets at those dates. If actual results differ from the assumptions and estimates used in our goodwill and long-lived asset valuation calculations, we could incur impairment charges, which could negatively impact our earnings.
We review our reporting units for potential goodwill impairment annually or more often if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In addition, we test the recoverability of long-lived assets if events or circumstances indicate the carrying values may not be recoverable. Recoverability of long-lived assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. We conduct impairment testing based on our current business strategy in light of present industry and economic conditions, as well as future expectations. There are numerous risks that may cause the fair value of a reporting unit to fall below its carrying amount and/or the value of long-lived assets to not be recoverable, which could lead to the measurement and recognition of goodwill and/or long-lived asset impairment. These risks include, but are not limited to, significant negative variances between actual and expected financial results, lowered expectations of future financial results, failure to realize anticipated synergies from acquisitions, adverse changes in the business climate, and the loss of key personnel. If we are not able to achieve projected performance levels, future impairments could be possible, which could negatively impact our earnings.
If KBS is unable to maintain or establish its relationships with independent dealers and contractors who sell its homes, KBS revenue could decline.
KBS sells residential homes through a network of independent dealers and contractors. As is common in the modular home industry, KBS’s independent dealers may also sell homes produced by competing manufacturers and can cancel their relationships with KBS on short notice. In addition, these dealers may not remain financially solvent, as they are subject to industry, economic, demographic and seasonal trends similar to those faced by KBS. If KBS is not able to maintain good relationships with its dealers and contractors or establish relationships with new solvent dealers or contractors, KBS’s revenue could decline.
Due to the nature of our business, many of our expenses are fixed costs and if there are decreases in demand for products, it may adversely affect operating results.
Many of our expenses, particularly those relating to properties, capital equipment, and certain manufacturing overhead items, are fixed in the short term. Reduced demand for products causes fixed production costs to be allocated across reduced production volumes, which may adversely affect gross margins and profitability.
Due to the nature of the work we and our subsidiaries perform, we may be subject to significant liability claims and disputes.
We and our wholly owned subsidiaries engage in services that can result in substantial injury or damages that may expose us to legal proceedings, investigations and disputes. For example, in the ordinary course of our business, we may be involved in legal disputes regarding personal injury and wrongful death claims, employee or labor disputes, professional liability claims, and general commercial disputes, as well as other claims. An unfavorable legal ruling against us or our subsidiaries could result in substantial monetary damages. Although we have adopted a range of insurance, risk management, safety, and risk avoidance programs designed to reduce potential liabilities, there can be no assurance that such programs will protect us fully from all risks and liabilities. If we sustain liabilities that exceed our insurance coverage or for which we are not insured, it could have a material adverse impact on our results of operations and financial condition.
Persistent inflation could negatively impact our revenues, profitability and borrowing costs. In addition, if our costs increase and we are not able to correspondingly adjust our commercial relationships to account for this increase, our net income would be adversely affected, and the adverse impact may be material.
Inflation rates in the U.S. reached a 40-year high before retreating in the latter part of 2023. Increased inflation may result in decreased demand for our products, increased operating costs (including our labor costs), reduced liquidity, and volatility in financial markets which may adversely affect the Company’s business and financial condition. In an inflationary environment, we may be unable to raise the sales prices of our products at or above the rate at which our costs increase, which could reduce our profit margins and have a material adverse effect on our financial results and net income. We also may experience lower than expected sales if there is a decrease in spending on products in our industry in general or a negative reaction to our pricing. A reduction in our revenue would be detrimental to our profitability and financial condition and could also have an adverse impact on our future growth. The continued improvement of market conditions in 2025 will be dependent on several factors, including, but not limited to, a continued moderation of the pace of inflation and the ability of the U.S. Federal Reserve to continue to cut interest rates. Increases in interest rates have had, and could continue to have, a material impact on our borrowing costs. The Federal Reserve cut interest rates three times in 2024, but issued cautious guidance moving forward as a result of continued uncertainty surrounding inflation.
Changing rules, public disclosure regulations and stakeholder expectations on environmental, social and corporate governance (“ESG”) related matters expose us to potential liabilities, increased costs, reputational harm and other adverse effects on our business.
Following the decision of the U.S. Supreme Court in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023) and the election of President Trump, companies have begun to pull back from ESG and DEI initiatives in response to a changing legal and political climate. On January 21, 2025, President Trump issued an executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” mandating among other things that federal contractors cease any “affirmative action” in violation of civil rights law and calling on the Attorney General to produce and deliver a report containing “recommendations for enforcing Federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI.” As a result of these developments, companies must re-examine their DEI programs to ensure that do not run afoul of the law and risk enforcement action from the U.S. Department of Justice. In addition, in recent years “anti-ESG” sentiment has gained momentum across the U.S., with several states and Congress having proposed or enacted “anti-ESG” policies, legislation, or initiatives or issued related legal opinions.
We may be exposed to risks to our business and potential reputational harm to the extent that we may face investigations and enforcement actions stemming from DEI or ESG policies. In addition, we may incur additional compliance costs in relation to the new legal and political landscape on ESG and DEI issues, which may adversely affect our business. Stakeholders also may have very different views on where our ESG and sustainability focus should be placed, including differing views of regulators in various jurisdictions in which we operate. Any failure, or perceived failure, by us to achieve our goals, further our initiatives, adhere to our public statements, comply with federal or state ESG laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in reputational harm, loss of investor confidence, legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.
Risks Related to Indebtedness
Any indebtedness incurred by the Company could restrict our operations and make us more vulnerable to adverse economic conditions.
Any indebtedness we incur in the future could have important consequences for us and our stockholders. Our indebtedness could:
•increase our vulnerability to adverse economic and competitive pressures in our industry;
•place us at a competitive disadvantage compared to our competitors that have less debt;
•limit our flexibility in planning for, or reacting to, changes in our business and our industry; and
•limit our ability to borrow additional funds on terms that are acceptable to us or at all.
If we are unable to generate or borrow sufficient cash to make payments on our indebtedness, our financial condition would be materially harmed, our business could fail, and stockholders may lose all of their investment.
To the extent we incur indebtedness in the future, our ability to make scheduled payments on or to refinance our obligations will depend on our financial and operating performance, which will be affected by economic, financial, competitive, business, and other factors, some of which are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations to service our indebtedness or to fund our other liquidity needs. If we are unable to meet our debt obligations or fund our other liquidity needs, we may need to restructure or refinance all or a portion of our indebtedness on or before maturity or sell certain of our assets. We cannot assure you that we will be able to restructure or refinance any of our indebtedness on commercially reasonable terms, if at all, which could cause us to default on our debt obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
Risks Related to our Common Stock and our Company Preferred Stock
The market price of our common stock may be volatile, and the value of your investment could decline significantly.
The market price of our common stock has been, and we expect it to continue to be, volatile. The prices at which our shares of common stock trade depend upon a number of factors, including our historical and anticipated operating results, our financial situation, announcements of new products by us or our competitors, history of timely dividend payments, our ability or inability to raise the additional capital we may need and the terms on which we raise it, and general market and economic conditions. Some of these factors are beyond our control. Broad market fluctuations may lower the market price of our common stock and affect the volume of trading in our stock, regardless of our financial condition, results of operations, business, or prospects. It is impossible to assure you that the market price of our shares of common stock will not fall in the future.
Our common stock has a low trading volume and shares available under our equity compensation plans could affect the trading price of our common stock.
Our common stock historically has had a low trading volume. Any significant sales of our common stock may cause volatility in our stock price. We also have registered shares of common stock that we may issue under our employee benefit plans or from our treasury stock. Accordingly, these shares can be freely sold in the public market upon issuance, subject to restrictions under the securities laws. If any of these stockholders, or other selling stockholders, cause a large number of securities to be sold in the public market without a corresponding demand, the sales could reduce the trading price of our common stock. One or more stockholders holding a significant amount of our common stock might be able to significantly influence matters requiring approval by our stockholders, possibly including the election of directors and the approval of mergers or other business combination transactions.
If we cannot continue to satisfy the Nasdaq Global Market continued listing standards and other Nasdaq rules, our common stock could be delisted, which would harm our business, the trading price of our common stock, our ability to raise additional capital and the liquidity of the market for our common stock.
Our common stock is currently listed on the Nasdaq Global Market. To maintain the listing of our common stock on the Nasdaq Global Market, we are required to meet certain listing requirements, including, among others, either: (i) a minimum closing bid price of $1.00 per share, a market value of publicly held shares (excluding shares held by our executive officers, directors and 10% or more stockholders) of at least $5.0 million and stockholders’ equity of at least $10 million; or (ii) a minimum closing bid price of $1.00 per share, a market value of publicly held shares (excluding shares held by our executive officers, directors and 10% or more stockholders) of at least $15.0 million and total assets of at least $50.0 million and total revenue of at least $50.0 million (in the latest fiscal year or in two of the last three fiscal years).
There is no assurance that we will be able to maintain compliance with the minimum closing price requirement. In the event that we fail to maintain compliance with Nasdaq listing requirements for 30 consecutive trading days, Nasdaq may send us a notice stating we will be provided a period of 180 days to regain compliance with the minimum bid requirement or else Nasdaq may make a determination to delist our common stock or grant a transfer of our listing to the Nasdaq Capital Market, wherein we would be provided another 180 days to regain compliance. On February 14, 2024, we received a letter from Nasdaq stating that we had failed to meet the closing bid price requirement for the last 30 consecutive business days. On July 2, 2024, the Company received a letter from the Listing Qualifications Department of The NASDAQ Stock Market advising the Company that it had regained compliance with Nasdaq's minimum bid price requirements under Nasdaq Listing Rule 5450(a)(1) as a result of the reverse stock split the Company entered into in June 2024. If our common stock were to be delisted from Nasdaq and was not eligible for quotation or listing on another market or exchange, trading of our common stock could be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our common stock, and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline.
A possible “short squeeze” due to a sudden increase in demand of our common stock that largely exceeds supply may lead to price volatility in our common stock.
Investors may purchase our common stock to hedge existing exposure in our common stock or to speculate on the price of our common stock. Speculation on the price of our common stock may involve long and short exposures. To the extent aggregate short exposure exceeds the number of shares of our common stock available for purchase in the open market, investors with short exposure may have to pay a premium to repurchase our common stock for delivery to lenders of our common stock. Those repurchases may in turn, dramatically increase the price of our common stock until investors with short exposure are able to purchase additional common shares to cover their short position. This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in our common stock that are not directly correlated to the performance or prospects of our Company and once investors purchase the shares of common stock necessary to cover their short position the price of our common stock may decline.
Payment of dividends on our common stock is prohibited unless we have declared and paid (or set apart for payment) full accumulated dividends on the Series A Preferred Stock, which also has a significant liquidation value.
Unless full cumulative dividends on our preferred stock have been, or contemporaneously are, declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods, no dividends (other than a dividend in shares of common stock or other shares of stock ranking junior to the Series A Preferred Stock (as defined herein) as to dividends and upon liquidation) may be declared and paid or declared and set apart for payment on our common stock, nor may any shares of common stock be redeemed, purchased or otherwise acquired for any consideration by us. To the extent dividends are not paid on our preferred stock, cumulative dividends accrue as part of the liquidation value of our preferred stock, which has a liquidation value of $10.00 per share at issuance. Dividends on our preferred stock are payable out of amounts legally available therefor at a rate equal to 10.0% per annum per $10.00 of stated liquidation preference per share, or $1.00 per share of our preferred stock per year. Dividends on our preferred stock are only payable in cash. As of December 31, 2024, there were 1,915,637 shares of our Series A Preferred Stock outstanding.
If we fail to pay dividends on our Series A Preferred Stock for six or more consecutive quarters, holders of our Series A Preferred Stock will be entitled to elect two additional directors to our board of directors.
To the extent dividends are not paid on the Series A Preferred Stock in accordance with their terms, cumulative dividends will accrue as part of the liquidation value of the Series A Preferred Stock. Whenever dividends on any shares of Series A Preferred Stock are in arrears for six or more consecutive quarters, then the holders of those shares together with the holders of all other series of preferred stock equal in rank with the Series A Preferred Stock upon which like voting rights have been conferred and are exercisable, will be entitled to vote separately as a class for the election of a total of two additional directors to our board of directors. Holders of our common stock will not be entitled to vote for or against such additional directors.
As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze and compare our results of operations and financial prospects.
Currently, we are a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act. As a “smaller reporting company,” we are able to provide simplified executive compensation disclosures in our filings and have certain other decreased disclosure obligations in our filings with the SEC, including being required to provide only two years of audited financial statements in annual reports. Consequently, it may be more challenging for investors to analyze our results of operations and financial prospects.
Furthermore, we are a non-accelerated filer as defined by Rule 12b-2 of the Exchange Act, and, as such, are not required to provide an auditor attestation of management’s assessment of internal control over financial reporting, which is generally required for SEC reporting companies under Section 404(b) of the Sarbanes-Oxley Act. Because we are not required to, and have not, had our auditor provide an attestation of our management’s assessment of internal control over financial reporting, a material weakness in internal controls may remain undetected for a longer period.
If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, the price and trading volume of our securities could decline.
The trading market for our securities will be influenced by the research and reports that industry or securities analysts publish about us or our business. We currently have two securities and industry analysts providing research coverage. In the event that any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our operating results fail to meet the expectations of analysts, the price of our securities would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause the price or trading volume of our securities to decline.
The protective amendment contained in our Restated Certificate of Incorporation, which is intended to help preserve the value of certain income tax assets, primarily tax net operating loss carryforwards, may have unintended negative effects.
Pursuant to Sections 382 and 383 of the Code, use of our NOLs may be limited by an “ownership change” as defined under Section 382 of the Code and the Treasury Regulations thereunder. In order to protect our significant NOLs, we filed an amendment to our certificate of incorporation (the “Restated Certificate of Incorporation”) (as amended and extended, the “Protective Amendment”) with the Delaware Secretary of State on May 5, 2015. The Protective Amendment was approved by our stockholders at our 2021 Annual Meeting of Stockholders held on October 21, 2021, and further extended with the approval of our stockholders at our 2024 Annual Meeting of Stockholders held on October 10, 2024.
The Protective Amendment is designed to assist us in protecting the long-term value of our accumulated NOLs by limiting certain transfers of our common stock. The Protective Amendment’s transfer restrictions generally restrict any direct or indirect transfers of the common stock if the effect would be to increase the direct or indirect ownership of the common stock by any person from less than 4.99% to 4.99% or more of the common stock, or increase the percentage of the common stock owned directly or indirectly by a person owning or deemed to own 4.99% or more of the common stock. Any direct or indirect transfer attempted in violation of the Protective Amendment will be void as of the date of the prohibited transfer as to the purported transferee.
The Protective Amendment also requires any person attempting to become a holder of 4.99% or more of our common stock to seek the approval of our board of directors. This may have an unintended “anti-takeover” effect because our board of directors may be able to prevent any future takeover. Similarly, any limits on the amount of stock that a stockholder may own could have the effect of making it more difficult for stockholders to replace current management. Additionally, because the Protective Amendment may have the effect of restricting a stockholder’s ability to dispose of or acquire our common stock, the liquidity and market value of our common stock might suffer.
Our stockholder rights plan, or “poison pill,” includes terms and conditions which could discourage a takeover or other transaction that stockholders may consider favorable.
On June 2, 2021, stockholders of record at the close of business on that date received a dividend of one right (a “Right”) for each outstanding share of common stock. Each Right entitles the registered holder to purchase one one-thousandth of a share of our Series C Participating Preferred Stock (the “Series C Preferred Stock”, and together with the Series A Preferred Stock, the “Company Preferred Stock”), at a price of $12.00 per one-thousandth of a share of Series C Preferred Stock, subject to adjustment (the “Exercise Price”). The Rights are not exercisable until the Distribution Date referred to below. The description and terms of the Rights are set forth in the Rights Agreement, which has previously been filed as an exhibit to our public reports.
The Rights Agreement imposes a significant penalty upon any person or group that acquires 4.99% or more (but less than 50%) of our then-outstanding common stock without the prior approval of our board of directors. A person or group that acquires shares of our common stock in excess of the applicable threshold, subject to certain limited exceptions, is called an “Acquiring Person.” Any rights held by an Acquiring Person are void and may not be exercised. The Rights will not be exercisable until the earlier of ten days after a public announcement by us that a person or group has become an Acquiring Person and ten business days (or a later date determined by our board of directors) after a person or group begins a tender or an exchange offer that, if completed, would result in that person or group becoming an acquiring person. On the date (if any) that the Rights become exercisable (the “Distribution Date”), each Right would allow its holder to purchase one one-thousandth of a share of Preferred Stock for a purchase price of $12.00. In addition, if a person or group becomes an Acquiring Person after the Distribution Date or already is an Acquiring Person and acquires more shares after the Distribution Date, all holders of Rights, except the Acquiring Person, may exercise their rights to purchase a number of shares of the common stock (in lieu of preferred stock) with a market value of twice the Exercise Price, upon payment of the purchase price.
The Rights will expire on the earliest of (i) August 21, 2027, or such earlier date as of which our board of directors determines that the Rights Agreement is no longer necessary for the preservation of our tax assets, (ii) the time at which the rights are redeemed, (iii) the time at which the rights are exchanged, (iv) the effective time of the repeal of Section 382 of the Code or any successor statute if our board of directors determines that the Rights Agreement is no longer necessary for the preservation of our tax assets, and (v) the first day of our taxable year in which our board determines that no NOLs or other tax assets may be carried forward.
The Rights have certain anti-takeover effects, including potentially discouraging a takeover that stockholders may consider favorable. The Rights will cause substantial dilution to a person or group that attempts to acquire us on terms not approved by the board of directors.
Anti-takeover provisions in our organizational documents and Delaware law may prevent or delay removal of current management or a change in control.
Our Restated Certificate of Incorporation and Bylaws contain provisions that may delay or prevent a change in control, discourage bids at a premium over the market price of our common stock, and adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock. In addition, as a Delaware corporation, we are subject to Delaware corporate law, including Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder unless certain specific requirements are met as set forth in Section 203. These provisions, alone or together, could have the effect of deterring or delaying changes in incumbent management, proxy contests or changes in control.
We expect to be limited in our ability to utilize net operating loss carryforwards to reduce our future tax liability as a result of our January 2022 public offering.
Under Section 382 of the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We expect that the public offering we closed on January 24, 2022 (the “2022 Public Offering”), alone or in conjunction with other changes in our stock ownership that we cannot control, may result in an “ownership change.” We may also experience ownership changes in the future as a result of strategic transactions or partnerships, equity offerings and other shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change NOL carryforwards and other deferred tax assets to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, similar limitations may apply at the state level and there may be periods during which the use of NOL carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B.UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2.PROPERTIES
Our principal executive offices are in Old Greenwich, Connecticut, where we lease 2,006 square feet of office space.
In April 2019, our Investments division (through Star Real Estate, “SRE”) acquired three manufacturing facilities in Maine, which it then leased back to KBS in our Building Solutions segment. These included KBS’s 84,800 square foot main production facility in South Paris, Maine and a 92,200 square foot manufacturing facility in Oxford, Maine. We sold our Waterford, Maine production facility in June 2023. In July 2024 we sold and immediately leased back our property at South Paris, Maine.
We utilize four additional facilities in our Building Solutions businesses, related specifically to EBGL. In October 2021, we extended two existing leases, a 10,800 square foot office/sales/showroom space in Oakdale, Minnesota and a 34,200 square foot production facility in Prescott, Wisconsin. In addition, we entered into a lease in October 2021 for 22,800 square feet of lumberyard/warehouse space in Hudson, Wisconsin. With the BLL acquisition in late 2023, we acquired a fourth facility, a 22,300 square foot lumberyard/warehouse/showroom space in Big Lake, Minnesota. This property was sold and immediately leased back in July 2024. With the TT acquisition in June 2024, we acquired a 89,000 square foot manufacturing facility in Colfax, Wisconsin. In December 2024, we acquired the Prescott, Wisconsin production facility we were leasing and immediately sold it and entered into a sale leaseback transaction. See Note 10. Leases for further detail on our leases.
We believe that we have adequate space for our anticipated needs and that suitable additional space will be available at commercially reasonable prices as needed.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
See Note 9. Commitments and Contingencies, within the notes to our accompanying consolidated financial statements for a summary of any legal proceedings.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock and preferred stock are traded on the Nasdaq Global Market under the symbols “STRR” and “STRRP”, respectively.
As of March 12, 2025 there were approximately 172 holders of record of our common stock. We believe that the number of beneficial owners is substantially greater than the number of record holders because a large portion of our common stock is held of record through brokerage firms in “street name.”
Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
Period Total Number of
Shares Purchased
During the Period Average Price
Paid Per Share
for Period
Presented Total
Number of
Shares Purchased
as Part of Publicly
Announced Plans or Programs (1)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
October 1, 2024 - October 31, 2024
- $ - - 782,202.28
November 1, 2024 - November 30, 2024
- $ - - 782,202.28
December 1, 2024 - December 31, 2024
23,138 $ 2.63 23,138 721,440.00
Total 23,138 $ 2.63 23,138 721,440.00
(1)On August 7, 2024, the Board of the Company authorized a new stock repurchase program (the “2024 Stock Repurchase Program”). Under the 2024 Stock Repurchase Program, the Company is authorized to repurchase up to $1 million of its issued and outstanding shares of common stock. Repurchases under the 2024 Stock Repurchase Program may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to alternative uses of capital and prevailing market conditions, applicable legal requirements, debt covenants and other considerations. Any such repurchases may be executed using open market purchases, accelerated share repurchase programs, pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, privately negotiated agreements or other transactions, and may be funded from cash on hand, available borrowings or proceeds from potential debt or other capital markets sources. The 2024 Stock Repurchase Program may be modified, extended or terminated by the Company’s Board at any time without prior notice.
(2)For the year ended December 31, 2024, the Company repurchased a total of 73,855 shares of its common stock for a cost of $278,560 leaving $721,440 available for purchase under the 2024 Stock Repurchase Program. Of these shares, 23,138 were repurchased in December 2024, in a transaction with a certain shareholder totaling $60,763 that excludes tax withholding. Of the total shares repurchased, 50,717 shares of its common stock were repurchased on the open market for a cost of $217,797.
Securities Authorized for Issuance Under Equity Compensation Plans
See Item 12. Security Ownership of Certain Beneficial Owners and Management Related Stockholders Matters for information with respect to our compensation plans under which equity securities are authorized for issuance.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6.[RESERVED]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth previously under the caption “Risk Factors.” This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this report.
Overview
Star Equity is a multi-industry diversified holding company with two divisions. Our Building Solutions operating division focuses on the construction industry. In addition, we have an Investments division.
Our Building Solutions division is currently made up of four operating businesses: KBS, EdgeBuilder, and Glenbrook, with Edgebuilder and Glenbrook managed together and referred to jointly as “EBGL”, and Timber Technologies Solutions Inc. (“TT”). KBS is based in Maine and manufactures modular buildings, typically in the single and multi-family residential segments, servicing principally the New England market. EBGL is based in the Minneapolis-Saint Paul area and principally serves the Upper Midwest region. Together, the EBGL businesses manufacture and deliver structural wall panels, primarily for multi-family residential buildings, and other engineered wood-based products. We distribute building materials from two lumberyard locations primarily focused on professional builder customers. TT is based outside the Minneapolis-Saint Paul area in Colfax, WI and manufactures glulam for various end markets and applications, including agriculture, industrial, infrastructure, and building construction (commercial and residential).
Our Investments division holds and manages our corporate-owned real estate, including a manufacturing facility in Maine that is leased to KBS and a manufacturing facility in Wisconsin that is leased to TT. The Investments division manages internally-funded, concentrated minority investments in a number of public companies. It also holds and manages a promissory note and a private equity stake in Catalyst. We acquired these interests in May 2023 as a result of the sale of Digirad Health (see Note 3. Discontinued Operations within the notes to our accompanying consolidated financial statements, for further information). Our Investments division also holds an investment in Enservco Corporation consisting of an investment in Enservco-Common Stock, an investment in Enservco-Preferred Stock, and an investment in a call option, all of which were acquired in the third quarter of 2024 and which is discussed in Note 5. Supplementary Balance Sheet Information to the notes to our accompanying consolidated financial statements.
Current Market Conditions
The target customers for our Building Solutions division include professional home builders, general contractors, project owners, developers, and design firms. Despite a higher interest rate environment, we are continuing to see significant demand for our products, although there have been some delays in execution as customers finalize project financing. We have benefited from having implemented both price increases and margin protection language in our contracts and this had a significantly positive effect on our profitability in 2023. We experienced slower business activity in 2024 and related lower revenues, but believe this slowdown is temporary. Our sales pipelines continue to indicate strong potential demand for our services, but we can give no assurances as to our ability to compete for these opportunities, or the periods during which successfully negotiated projects will be completed.
Trends and Drivers
The Modular Building Institute has estimated that permanent modular construction increased as a percentage of the construction industry from 2.14% in 2015 to 6.64% as of the end of 2023. In turn, in our Building Solutions division, we continue to see a greater acceptance of offsite or prefab construction in single-family and multi-family residential building projects in our target market. Our modular units and structural wall panels offer builders a number of benefits over traditional onsite or “site built” construction. These include shorter time to market, higher quality, reduced waste, and potential cost savings, among others. 3D modeling software and developments in engineered wood products offer greater design flexibility for higher-end applications. The need for more affordable housing solutions also presents opportunities for the continued growth of factory built housing.
Risks arising from global economic instability and conflicts, wars, and health crises could impact our business. In addition the inflation caused by such events may impact demand for our products and services and our cost to provide products and services.
Discontinued Operations
As discussed in detail in Note 3. Discontinued Operations within the notes to our accompanying consolidated financial statements, we completed the sale of Digirad Health on May 4, 2023, for total aggregate consideration of $40 million, comprised of $27 million in cash, a $7 million promissory note (“Seller Note”), and $6 million in rollover equity in the parent
entity of Catalyst. We deemed the disposition of Digirad Health, which was our entire Healthcare business unit, to represent a strategic shift that will have a major effect on our operations and financial results. As of the date of the accompanying consolidated financial statements, the results of operations of the Healthcare business unit represent “discontinued operations” in accordance with U.S. Generally Accepted Accounting Practices (“GAAP”) (ASC 205-20-45-1B). Therefore, the assets and liabilities, as well as the earnings, of the discontinued operation are presented separately in the accompanying consolidated financial statements for all periods presented. Unless otherwise noted, discussion within the notes to the consolidated financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to continuing operations.
Goodwill Valuation
We review goodwill for impairment on an annual basis during the fourth quarter, and when events or changes in circumstances indicate that a reduction in the carrying value may not be recoverable. We recognize an impairment charge if we determine that the carrying value of the reporting unit exceeds its fair value and such loss should not exceed the total goodwill allocated to the reporting unit. No impairment of goodwill was recorded in 2024.
We also review long-lived assets for impairment when events or changes in circumstances indicate that a reduction in the carrying value may not be recoverable. Certain factors may cause the fair value of a reporting unit to fall below its carrying amount and/or the value of long-lived assets to not be recoverable. This could lead to the measurement and recognition of long-lived asset impairment charges and may cause impairment. These factors include, but are not limited to, significant negative variances between actual and expected financial results, lowered expectations of future financial results, failure to realize anticipated synergies from acquisitions, adverse changes in the business climate, and the loss of key personnel. As of December 31, 2024, we performed a qualitative assessment of our goodwill and determined that it is more likely than not that long-lived assets were not impaired.
See Note 7. Goodwill within the notes to our accompanying consolidated financial statements for further information.
2024 Financial Highlights
2024 Revenues were $53.4 million, representing an increase of $7.6 million or 16.5% versus 2023 Revenues of $45.8 million. This increase was due to the inclusion of revenues at TT and BLL in 2024, partially offset by lower revenues at KBS and the Edgebuilder and Glenbrook entities related to slower business activity, which we believe is temporary.
2024 Gross profit was $11.1 million, representing a decrease of $0.9 million or 7.3% versus 2023 Gross profit of $11.9 million. This decrease was due to fixed costs remaining at constant levels regardless of the decline in revenue at KBS and the Edgebuilder and Glenbrook entities. Gross profit and gross margin were reduced by a $574 thousand purchase price adjustment related to the step-up of inventory for TT to its fair value at the acquisition date. This adjustment resulted in an increase in the cost of sales when the acquired inventory was sold, further contributing to the decline in our gross profit margins for the year.
2024 Operating expenses were $19.5 million, representing an increase of $3.2 million or 20% versus 2023 total Operating expenses of $16.3 million. The increase of $3.2 million was driven by the inclusion of SG&A from both BLL and TT in 2024.
2024 Loss from continuing operations, net of income taxes, was $10.4 million which reflects reduced results compared to 2023 Loss from continuing operations, net of tax, of $1.9 million. The decreased results were primarily driven by the impairment of our Catalyst cost method investment of approximately $4.6 million and the unrealized losses related to the Investment in Enservco of $1.9 million. These losses were offset by the gains we recorded related to our sale leaseback transactions of $3.8 million. In addition, we experienced a decrease in gross profit of $0.9 million from our operating segments and higher operating expenses. In 2023 we benefited from a bargain purchase gain we recognized resulting from the October 2023 acquisition of BLL of approximately $1.2 million (see Note 16. Mergers and Acquisitions for further information).
Use of EBITDA (Non-GAAP measure)
Management believes earnings before interest, taxes, depreciation, and amortization (“EBITDA”) is a meaningful indicator of the Company’s performance that provides useful information to investors regarding the Company’s financial condition and results of operations. EBITDA is also considered by management as an indicator of operating performance and the most comparable measure across the regions in which we operate. Management also uses this measurement to evaluate capital needs and working capital requirements. EBITDA is a non-Generally Accepted Accounting Principles (“non-GAAP”) financial measure that is not intended to be considered in isolation from, as substitute for, or as superior to, the corresponding financial measure prepared in accordance with GAAP or as a measure of the Company’s profitability. Because of these and other limitations, EBITDA should be considered along with GAAP based financial performance measures, including operating income or net income prepared in accordance with GAAP. EBITDA is derived from net income (loss) adjusted for the provision for (benefit from) income taxes, interest expense (income), and depreciation and amortization.
The reconciliation of EBITDA from continuing operations to the most directly comparable GAAP financial measure is provided in the table below:
Year Ended December 31,
$ in thousands 2024 2023
Net income (loss) $ (10,438) $ 25,132
Adjustment for income (loss) from discontinued operations, net of income taxes - (27,039)
Loss from continuing operations (10,438) (1,907)
Adjustments to loss from continuing operations
Depreciation and amortization 3,602 2,326
Interest expense, net (633) (973)
Provision for income taxes 263 (614)
Total adjustments from income (loss) from continuing operations to EBITDA 3,232 739
EBITDA from continuing operations $ (7,206) $ (1,168)
Results of Operations
Comparison of Years Ended December 31, 2024 and 2023
The following table sets forth our results from operations for the years ended December 31, 2024 and 2023 (in thousands):
Year ended December 31, Change from Prior Year
2024 % of
Revenues 2023 % of
Revenues
Dollars Percent *
Total revenues $ 53,359 100.0 % $ 45,785 100.0 % $ 7,574 16.5 %
Total cost of revenues 42,304 79.3 % 33,859 74.0 % 8,445 24.9 %
Gross profit 11,055 20.7 % 11,926 26.0 % (871) (7.3) %
Operating expenses:
Selling, general and administrative 16,991 31.8 % 14,538 31.8 % 2,453 16.9 %
Amortization of intangible assets 2,479 4.6 % 1,734 3.8 % 745 43.0 %
Total operating expenses 19,470 36.5 % 16,272 35.5 % 3,198 19.7 %
Income (loss) from continuing operations
(8,415) (15.8) % (4,346) (9.5) % (4,069) (93.6) %
Other (expenses) income (2,393) (4.5) % 852 1.9 % (3,245) (380.9) %
Interest expense, net 633 1.2 % 973 2.1 % (340) (34.9) %
Total other income (loss) (1,760) (3.3) % 1,825 4.0 % (3,585) (196.4) %
Income (loss) from continuing operations before income taxes (10,175) (19.1) % (2,521) (5.5) % (7,654) (303.6) %
Income tax benefit (provision) (263) (0.5) % 614 1.3 % (877) (142.8) %
Income (loss) from continuing operations, net of income taxes (10,438) (19.6) % (1,907) (4.2) % (8,531) (447.4) %
Income (loss) from discontinued operations, net of income taxes - - % 27,039 59.1 % (27,039) (100.0) %
Net income (loss) $ (10,438) (19.6) % $ 25,132 54.9 % $ (35,570) (141.5) %
*Percentage may not add due to rounding
Revenues
Building Solutions
Building Solutions revenue is summarized as follows (in thousands):
Year Ended December 31,
2024 2023 $ Change % Change
Building Solutions Revenue $ 53,359 $ 45,785 $ 7,574 16.5 %
Building Solutions revenue increased 16.5% versus 2023 as a result of the inclusion of revenue from TT from the date of acquisition and the inclusion of full year revenue from BLL which we acquired in the fourth quarter of 2023. These were partially offset by slower business activity at both KBS and EBGL, exclusive of BLL. Economic headwinds, higher interest rates, and project delays contributed to the slowdown which we believe is temporary. Our backlog and sales pipeline indicate continued strong demand for new projects, and although the revenue impact and timing are uncertain, customer feedback and the improving interest rate environment make us confident in our ability to convert this pipeline into signed contracts in the coming months.
Gross Profit
Building Solutions gross profit is summarized as follows (in thousands):
Year Ended December 31,
2024 2023 % Change
Building Solutions gross profit (loss) $ 11,276 $ 12,154 (7.2) %
Building Solutions gross margin 21.1 % 26.5 %
The decrease in Building Solutions gross profit in 2024 of 7.2% was due to fixed costs remaining at constant levels regardless of the decline in revenue at KBS and EBGL as discussed above. Gross profit and gross margin were reduced by a $574 thousand purchase price adjustment related to the step-up of inventory for TT to its fair value at the acquisition date. This adjustment resulted in an increase in the cost of sales when the acquired inventory was sold, further contributing to the decline in our gross profit margins for the year.
Investments Gross Loss
Investments gross loss is summarized as follows (in thousands):
Year Ended December 31,
2024 2023 % Change
Investments gross profit (loss) $ (221) $ (228) 3.1 %
Investments gross loss relates to depreciation expense associated with the commercial facilities that we own. These include a manufacturing facility at KBS in Maine (which was part of our sale leaseback transactions in 2024), an idle facility in Maine, and a manufacturing facility at TT in Wisconsin (“TT facility”). Depreciation expense decreased in 2024 versus 2023 primarily due to the elimination of depreciation expense on our properties which were sold as part of our sale leaseback transactions, partially offset by the addition of depreciation expense related to the TT facility. Our sale leaseback transactions are discussed in Note 10. Leases. We record unrealized and realized gains on sales of our investments and real estate, as well as asset impairment, as a component of other income/expense.
Operating Expenses
Operating expenses are summarized as follows (in thousands):
Year Ended December 31, Percent of Revenues
2024 2023 $ Change % Change 2024 2023
Selling, general and administrative $ 16,991 $ 14,538 $ 2,453 16.9 % 31.8 % 31.8 %
Amortization of intangible assets 2,479 1,734 745 43.0 % 4.6 % 3.8 %
Total operating expenses $ 19,470 $ 16,272 $ 3,198 19.7 % 36.5 % 35.5 %
On a consolidated basis, total operating expenses increased by $3.2 million. Sales, general and administrative expenses increased by $2.5 million. 2024 operating expenses reflect a full year of BLL results and TT results since the date of acquisition. As a percentage of revenue, sales, general and administrative expenses remained unchanged at 31.8%, versus 31.8% in the prior year period.
Other Income (Expense)
Total other income (expense) is summarized as follows (in thousands):
Year Ended December 31,
2024 2023
Other income (expense) $ (2,393) $ 852
Interest income (expense), net 633 973
Total other income (expense) $ (1,760) $ 1,825
Other income (expense), net for the year ended December 31, 2024 and 2023 includes unrealized losses and gains from available for sale securities recorded in our Investments division and includes the impairment charges we recorded to our cost method investment of $4.6 million. In addition, total other income for the twelve months ended December 31, 2024 includes a $3.8 million gain on two of our sale and leaseback transactions which were recorded in the third quarter of 2024 and the unrealized loss on our Investment in Enservco of $1.9 million, while 2023 included the gain on the sale of our Waterford, Maine facility.
Interest income (expense), net, for the twelve months ended December 31, 2024 and 2023 is predominantly comprised of interest earned on the Catalyst Note and interest bearing assets in our Investments division, offset by interest costs and the related amortization of deferred issuance costs on our debt.
Income Tax (Expense) Benefit
Intraperiod allocation rules require us to allocate our provision for income taxes between continuing operations and other categories or comprehensive income (loss) such as discontinued operations. During the twelve months ended December 31, 2024 and 2023, we recorded a tax provision of $263 thousand and a tax benefit of $614 thousand, respectively. For the year ended December 31, 2023, we recorded a tax expense of $693 thousand for discontinued operations.
See Note 12. Income Taxes, within the notes to our accompanying consolidated financial statements for further information.
Net income (loss) from Discontinued Operations
See Note 3. Discontinued Operations, to our consolidated financial statements for information regarding discontinued operations.
Liquidity and Capital Resources
Overview
Cash Flows from Operating Activities
For the year ended December 31, 2024, net cash used in operating activities was $5.2 million, as compared to $2.7 million provided in 2023, including cash from discontinued operations. The decrease in net cash provided by operating activities is attributable to lower results from operations, particularly in our Building Solutions division, and increased net working capital expenditures.
Cash Flows from Investing Activities
For the year ended December 31, 2024, net cash used in investing activities was $12.0 million, as compared to net cash provided by investing activities of $16.2 million in 2023, including cash provided by discontinued operations. The decrease is primarily attributable to cash paid for the acquisition of TT in 2024 of $19.7 million, and $1.0 million advanced to Enservco under the terms of a note receivable, partially offset by cash received from our sale leaseback transactions of $10.5 million. Cash provided by investing activities in 2023 included cash received for the sale of Digirad of $19.7 million offset by $2.8 million paid for the acquisition of BLL.
Cash Flows from Financing Activities
For the year ended December 31, 2024, net cash provided by financing activities, was $3.9 million, as compared to net cash used in financing activities, including cash provided by discontinued operations, of $3.1 million in 2023. The increase in cash provided by financing activities relates to higher net debt utilization on our credit facilities.
Summary of Cash Flows
The following table shows cash flow information for the years ended December 31, 2024 and 2023 (in thousands):
Year Ended December 31,
2024 2023
Net cash provided by (used in) operating activities $ (5,181) $ 2,698
Net cash provided by (used in) investing activities $ (12,042) $ 16,182
Net cash provided by (used in) financing activities $ 3,908 $ (3,072)
Sources of Liquidity
Our principal sources of liquidity are our existing cash and cash equivalents and cash generated from operations. As of December 31, 2024, we had $4.0 million of cash and cash equivalents. As discussed in Note 8. Debt, we have approximately $11.3 million in debt at December 31, 2024.
Common Stock Offerings
As of December 31, 2024, of the warrants issued through the public offering we closed on May 28, 2020, 1.0 million warrants had been exercised and 1.4 million warrants remained outstanding, which represents 0.1 million shares of common stock equivalents, at an exercise price of $11.25. As of December 31, 2024, of the warrants issued through the public offering we closed on January 24, 2022, no warrants had been exercised and 10.9 million warrants remained outstanding, which represents 2.2 million shares of common stock equivalents, at an exercise price of $7.50 and no prefunded warrants outstanding. Additionally, Company issued to its underwriter 237,500 common stock purchase warrants (the “Underwriter’s Warrants”) to purchase up to 47,500 shares of Common Stock at an exercise price of $8.25 per common warrant. These warrants are outstanding at December 31, 2024.
Credit Facilities
Premier Facility
On August 16, 2023, EdgeBuilder and Glenbrook (the “EBGL Borrowers”) entered into a Revolving Credit Loan Agreement with Premier Bank (“Premier”) providing the EBGL Borrowers with a working capital line of credit of up to $4 million, which agreement was subsequently replaced and increased to $6 million on December 5, 2023 (the “Premier Loan Agreement”). Availability under the Premier Loan Agreement is based on a formula tied to the EBGL Borrowers’ eligible accounts receivable, inventory and equipment. Borrowings under the Premier Loan Agreement bear interest at the prime rate plus 0.75% (and a minimum interest rate of 6.75%), with interest payable monthly and the outstanding principal balance payable upon expiration of the term of the Premier Loan Agreement. The Premier Loan Agreement also provides for certain fees payable to Premier during its term. The initial term of the Premier Loan Agreement expired on December 5, 2024 but is able to be extended from time to time at the request of the EBGL Borrowers, subject to approval by Premier. On December 5, 2024, the Premier loan agreement was extended to December 31, 2025. The EBGL Borrowers’ obligations under the Premier Loan Agreement are guaranteed by the Company and secured by all of their inventory, equipment, accounts and other intangibles. As of December 31, 2024, availability under the Premier Loan Agreement was approximately $1.8 million.
Financial covenants associated with the Premier Loan Agreement require that the EBGL Borrowers maintain (a) a debt service coverage ratio for any calendar year of less than 1.25; (b) a debt-to-equity ratio at the end of each calendar year in excess of 1.65; (c) a fixed charge coverage ratio at the end of each calendar year of less than 1.10; (d) working capital of at least $2 million; and (e) a current ratio of at least 1.50. As of December 31, 2024, the EBGL Borrowers were in compliance with the Premier Loan Agreement covenants.
KeyBank Facility
On April 24, 2024, KBS entered into a Loan and Security Agreement (the “KeyBank Loan Agreement”) with KeyBank National Association (“KeyBank”) providing KBS with a working capital line of credit of up to $4.0 million, subject to the conditions and procedures set forth in the KeyBank Loan Agreement. All borrowings under the KeyBank Loan Agreement bear interest at the Adjusted Daily SOFR Rate (as defined in the KeyBank Loan Agreement) plus 3%, with interest payable monthly and the outstanding principal balance payable on April 30, 2025 (the “Maturity Date”). The KeyBank Loan Agreement also provides for certain fees payable to KeyBank during its term. The initial term of the KeyBank Loan Agreement expires on the Maturity Date but may be extended from time to time at the request of KBS, subject to approval by KeyBank. KBS’ obligations under the KeyBank Loan Agreement are guaranteed by the Company and secured by all of KBS’ inventory, equipment, accounts and other intangibles, and all proceeds of the foregoing. Simultaneous with the execution of the KeyBank Loan Agreement, the Company entered into that certain Guaranty, dated April 24, 2024 (the “Guaranty”), pursuant to which the Company agreed to guarantee all amounts borrowed by KBS under the KeyBank Loan Agreement.
In the fourth quarter of 2024, KeyBank modified the covenants such that KBS must (i) have EBITDA of no less than $300 thousand for the three months ended December 31, 2024, and no less than $600 thousand for the six months ended March 31, 2025 (the “EBITDA covenant”), and (ii) maintain a ratio of its Operating Cash Flow to its Total Fixed Charges of at least 1.25 to 1.0 measured quarterly for the preceding twelve month period, commencing with the fiscal quarter ending June 30, 2025, and for each subsequent fiscal quarter thereafter (“The FCCR Covenant”). As of September 30, 2024, KBS was not in compliance with the then existing FCCR covenant and had obtained a waiver of compliance as of the filing date.
As of December 31, 2024, KBS was in compliance with the EBITDA covenant. The balance outstanding under the line was $0 million at December 31, 2024. As of December 31, 2024, availability under the KeyBank Loan Agreement was approximately $4.0 million.
Term Loan Secured by Mortgage
On June 28, 2024, in connection with our acquisition of substantially all of the assets used in the business of Timber Technologies, Inc. which closed on May 17, 2024, Timber Properties, LLC (“Timber Properties”), an affiliate of the Seller, sold to 106 Bremer, LLC, a wholly-owned subsidiary of the Company (“106 Bremer”), all of Timber Properties’ Owned Real Property pursuant to a Real Estate Sales Agreement for $3.0 million plus closing costs.
In connection with the purchase of the Owned Real Property, on June 28, 2024, 106 Bremer issued a Promissory Note in the principal amount of $3.0 million (the “TT Property Note”) secured by a Mortgage (the “TT Property Mortgage”) on the Owned Real Property to Timber Properties. All borrowings under the TT Property Note bear interest at 7.50%, with interest payable quarterly and the outstanding principal balance payable on June 29, 2034.
Bridgewater Facility
In connection with the completion of the TT Acquisition, on May 17, 2024, Timber Technologies Solutions, Inc., a wholly-owned subsidiary of the Company (the “Borrower”), entered into a Loan Agreement (the “Bridgewater Loan Agreement”) with Bridgewater Bank (“Bridgewater”) and issued a Term Promissory Note to Bridgewater in the amount of $7.0 million thereunder (the “Facility”). All borrowings under the Facility bear interest at 7.85%, with interest payable monthly and the outstanding principal balance payable on May 20, 2029 (the “Maturity Date”). The Bridgewater Loan Agreement also provides for certain fees payable to Bridgewater during its term, certain of which have been prepaid at closing. The Borrower’s obligations under the Facility are guaranteed by the Company and secured by all of the Borrower’s inventory, equipment, accounts, and other intangibles, and all proceeds of the foregoing.
In connection with the Bridgewater Loan agreement, an amount of $1.0 million was required to be deposited with Bridgewater and be under the sole dominion and control of Bridgewater, and the Company shall not have any control over the use of, or any right to withdraw any amount of the restricted deposit. In the event that the Company maintains compliance with all of the financial covenants set forth in the Bridgewater Loan Agreement for four consecutive quarterly measurement dates which began in the third quarter of 2024, Bridgewater shall release a portion of the deposit. The $1.0 million deposit is recorded in Other Assets in the Consolidated Balance Sheets.
Financial covenants require that TT maintain (i) a ratio of Cash Flow to Total Fixed Charges of not less than 1.30 to 1.00 as measured on each applicable Measurement Date on a trailing twelve (12) month basis; the first Measurement Date is September 30, 2024; (ii) maintain a ratio of Senior Funded Debt to trailing twelve (12) month Adjusted EBITDA not to exceed 3.00 to 1.00 as measured on each applicable Measurement Date for a Measurement Period; the first Measurement Date is June 30, 2025; (iii) maintain a ratio of Total Funded Debt to trailing twelve (12) month adjusted EBITDA not to exceed 4.00 to 1.00 as measured on each applicable Measurement Date for a Measurement Period; the first Measurement Date is June 30, 2025. TT was not in compliance with the Cash Flow to Total Fixed Charges covenant as of December 31, 2024 TT obtained a waiver from Bridgewater at December 31, 2024.
Webster Credit Facility
On March 29, 2019, the Company entered into a Loan and Security Agreement (the “Webster Loan Agreement”) by and among certain subsidiaries of the Company, as borrowers; the Company, as guarantor; and Sterling National Bank (“Sterling”). On February 1, 2022, Sterling became part of Webster Bank, N.A. (“Webster”), and Webster became the successor in interest to the Webster Loan Agreement. In connection with the sale of our Healthcare business on May 4, 2023, the credit facility pursuant to the Webster Loan Agreement was paid in full and terminated.
eCapital Credit Facilities
The EBGL Borrowers were parties to a Loan and Security Agreement with eCapital Asset Based Lending Corp. (“eCapital”) providing for a $4.0 million credit facility with a maturity date of June 2023 and an auto-renewal of one year thereafter. KBS was a party to a Loan and Security Agreement with eCapital, providing up to $4.0 million in working capital, which was scheduled to mature and renew automatically for a period of one year moving forward. During the second quarter of 2023, we closed these two credit facilities and have no remaining debt balance with eCapital.
eCapital Term Loan
We and certain of our Investments subsidiaries were party to a Loan and Security Agreement with eCapital, as successor in interest to Gerber Finance, Inc., which provided for a credit facility with borrowing availability of up to $2.5 million, bearing interest at the prime rate plus 3.5% per annum, and maturing on January 31, 2025, unless terminated in accordance with the terms therein. During the second quarter of 2023, we closed this credit facility and have no remaining debt balance with eCapital.
Off-Balance Sheet Arrangements
As of December 31, 2024, there were no off balance sheet arrangements.
Critical Accounting Policies
Management’s discussion and analysis of our financial condition and results of operations are based upon our accompanying consolidated financial statements, which are prepared in accordance with United States generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, related disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and judgments, the most critical of which are those related to revenue recognition, business combination accounting, accounting for long term investments, goodwill valuation and income taxes. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known.
Revenue Recognition
We recognize revenue when a customer obtains control of promised goods or services. We record the amount of revenue that reflects the consideration that we expect to receive in exchange for those goods or services. We apply the following five-step model in order to determine this amount: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
Revenue recognition is evaluated on a contract basis. Performance obligations are satisfied over time as work progresses or at a point in time. From time-to-time we enter into contracts within our building solutions sector that produce assets with no alternative use and contain an enforceable right to payment, including a reasonable profit margin. Determining if an enforceable right to payment includes a reasonable profit margin requires judgment and is assessed on a contract by contract basis. For contracts requiring over time revenue recognition, the selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We use a cost-based input measurement of progress because it best depicts the transfer of assets to the customer, which occurs as costs are incurred during the manufacturing process or as services are rendered. Under the cost-based measure of progress, the extent of progress towards completion is measured based on the costs incurred to date. We had no contracts in place as of December 31, 2024 or December 31, 2023 that require recognition over time.
Business Combination Accounting
The Company accounts for business combinations using the acquisition method of accounting, and records the identifiable assets and liabilities of the acquired business at their acquisition date fair values under ASC 805, Business Combinations. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill, and, conversely, any excess of the estimated fair values of the net assets acquired over the purchase price is recorded as a bargain purchase gain. Any changes in the estimated acquisition date fair values of the net assets recorded prior to the finalization of a more detailed analysis, but not to exceed one year from the date of acquisition, could change the amount of the purchase price allocated to goodwill or bargain purchase gain. Amounts allocated to goodwill would be recorded in the Consolidated Balance Sheets and bargain purchase gains would be recorded on the Consolidated Statement of Operations. Any subsequent changes to any purchase price allocations that are material to the Company’s Consolidated Financial Statements will be adjusted retrospectively. All acquisition related costs are expensed as incurred.
The results of operations of the acquired companies are recorded in the Consolidated Statements of Operations from the date of acquisition. The application of business combination principles, including the determination of the fair value of the net assets acquired, requires the use of significant estimates and assumptions.
Accounting for Long Term Investments
As a part of the sale of Digirad Health, described further in Note 3. Discontinued Operations to the notes to our accompanying consolidated financial statements, we received common equity of Catalyst Parent, a privately held entity. We have elected the measurement alternative under ASC 321 “Accounting for Investments in Equity Securities”. The measurement alternative election allows for equity securities that do not have readily determinable fair values to be recorded at cost, with adjustments for impairment and certain observable price changes reflected in earnings. Such securities are adjusted to fair value when an observable price change occurs or impairment is identified. Each reporting period, we perform a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. Impairment indicators include, but are not limited to, significant deterioration in earnings performance, significant adverse changes in regulatory or economic environment and working capital deficiencies. If an investment is determined to be impaired, we include an impairment loss in other income (expense) equal to the difference between the fair value of the investment and its carrying amount.
On August 9, 2024, we completed an Investment in Enservco which consisted of Enservco Common Stock, Enservco Preferred Stock, and certain other options reflected in the Share Exchange Agreement, and the Enservco Note Receivable. The Investment in Enservco is required to be accounted for using the equity method of accounting under ASC 323, Equity Method Investments and Joint Ventures, as we are deemed to have significant influence over Enservco based upon GAAP rules. Pursuant to the guidance in ASC 323, we elected the fair value option pursuant to ASC 825-10-15, wherein the financial instrument is initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date, with changes in the estimated fair value recognized as other income (expense) in the consolidated statement of operations. Enservco Common Stock is publicly traded, and the fair value is determined based on Enservco’s common stock closing price as of the reporting date. The fair value of the Enservco Preferred Stock was based on the consideration of a number of objective and subjective factors, including third-party valuations and a company-specific economic outlook. To determine the fair value of the call option, the Company used the Black-Scholes option pricing model. The fair value of the Enservco Note was determined using a discounted cash flow model. Fair value assumptions are further described in Note 7 Fair Value Measurements to the notes to our financial statements. The Enservco Note was determined to be uncollectible as of December 31, 2024 and the value was reduced to zero. As described further in Note 5 Supplementary Balance Sheet Information to the notes to our financial statements, the value of the Enservco Note was fully collateralized and we called the collateral once it was determined that the note was in default.
Goodwill Valuation
We review goodwill for impairment on an annual basis during the fourth quarter, and when events or changes in circumstances indicate that a reporting unit’s carrying value may be impaired. We initially assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Upon review of the results of such assessment, we may begin performing impairment analysis by quantitatively comparing the fair value of the reporting unit to the carrying value of the reporting unit, including goodwill. An impairment charge for goodwill is recognized for the amount by which the carrying value of the reporting unit exceeds its fair value and such loss should not exceed the total goodwill allocated to the reporting unit.
There are numerous factors that may cause the fair value of a reporting unit to fall below its carrying amount and/or that may cause the value of long-lived assets to not be recoverable, which could lead to the measurement and recognition of goodwill and/or long-lived asset impairment charges. These factors include, but are not limited to, significant negative variances between actual and expected financial results, lowered expectations of future financial results, failure to realize anticipated synergies from acquisitions, adverse changes in the business climate, and the loss of key personnel. As of December 31, 2024, we performed a qualitative assessment and did not identify any triggering events that would lead to the performance of a quantitative analysis. See Note 7. Goodwill, within the notes to our accompanying consolidated financial statements, for further information.
Income Taxes
We provide for income taxes under the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the tax basis of assets or liabilities and their carrying amounts in the financial statements. We provide a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before we are able to realize their benefit. We calculate the valuation allowance in accordance with the authoritative guidance relating to income taxes, which requires an assessment of both positive and negative evidence regarding the realizability of these deferred tax assets. Significant judgment is required in determining any valuation allowance against deferred tax assets.
The authoritative guidance for income taxes defines a recognition threshold and measurement attributes for financial statement recognition and measurement of a tax provision taken or expected to be taken in a tax return. The guidance also provides direction on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Under the guidance, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. We recognize interest and penalties related to uncertain tax positions as a component of the income tax provision.
New Accounting Pronouncements
See Note 2. Basis of Presentation and Significant Accounting Policies, within the notes to our accompanying consolidated financial statements for discussion of our discussion of new accounting pronouncements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Debt obligations under the Premier Loan Agreement are subject to variable rates of interest based on the U.S. Prime Rate. A 100 basis point increase in the underlying interest rate would result in an additional annual interest expense of approximately $22 thousand, assuming related line of credit of $2 million, which is the amount of outstanding borrowings at December 31, 2024. Debt obligations under the KeyBank Loan Agreement are subject to variable rates of interest based on the SOFR rate. No amounts are outstanding at December 31, 2024.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
STAR EQUITY HOLDINGS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (Wolf & Company, P.C., Boston, MA, PCAOB ID # 392)
Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023
Consolidated Balance Sheets at December 31, 2024 and 2023
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024 and 2023
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Star Equity Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Star Equity Holdings, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity and cash flows, for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Enservco Transaction
In August 2024, the Company entered into an investment transaction with Enservco Corporation, as further described in Note 5 to the financial statements. Identifying the components of the transaction, determining the appropriate accounting model, and valuing these components required significant management judgment.
To address this matter, we performed various procedures, including: (i) reviewing the underlying agreements to understand the transaction, (ii) assessing management’s accounting for the transaction and the appropriateness of the accounting model, (iii) evaluating the qualifications of third-party experts engaged by management, (iv) engaging in discussions with management and their specialists, and (v) evaluating and testing the fair value methodologies for each identified component of the transaction.
Business Combination Accounting
As discussed in Note 16 to the financial statements, the Company completed its acquisition of Timber Technologies Inc. during 2024. This transaction qualified for treatment as a business combination. Auditing the accounting for this business combination was complex due to significant estimation uncertainty in determining the fair values of identified assets, including intangible assets.
To address this matter, we performed various procedures, including: (i) understanding management’s process for accounting for the transaction, (ii) evaluating the qualifications of third-party experts engaged by management, (iii) testing the processes used by management and the third-party experts to develop valuation models, and (iv) evaluating the significant assumptions used in these models. We considered whether these assumptions were consistent with evidence obtained in other areas of the audit and assessed their sensitivity to change.
Investment in Private Company
As discussed in Note 5, the Company holds a cost method investment in Catalyst, a privately held entity. During 2024, the Company recognized $4.6 million of impairment on the investment.
Management’s impairment assessment involved significant judgment regarding the fair value of the investment and the evaluation of various factors indicating potential impairment. The complexity of this assessment is influenced by the financial performance of the investee and the information made available to the Company.
To address this matter, we performed various procedures, including: (i) understanding management’s process for assessing the investment for impairment, (ii) understanding management’s methodology for calculating impairment on the investment, and (iii) review and testing of key assumptions and sensitivity of those assumptions.
The Company also holds a note receivable with this entity as further discussed in Note 5. Management determined this note receivable had an immaterial amount of credit loss as of December 31, 2024. Management’s assessment of credit loss involves significant judgment regarding estimated future cash flows. The complexity of this assessment is influenced by assumptions over probability of default and loss given default.
To address this matter, we performed various procedures, including: (i) testing of management’s current expected credit loss model, (ii) evaluating management’s use of a specialist and (iii) review and testing of key assumptions and sensitivity of those assumptions.
We have served as the Company's auditor since 2022.
/s/ Wolf & Company, P.C.
Boston, Massachusetts
March 21, 2025
STAR EQUITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year ended December 31,
2024 2023
Revenues:
Building Solutions** $ 53,359 $ 45,785
Investments - -
Total revenues 53,359 45,785
Cost of revenues:
Building Solutions** 42,083 33,631
Investments 221 228
Total cost of revenues 42,304 33,859
Gross profit 11,055 11,926
Operating expenses:
Selling, general and administrative 16,991 14,538
Amortization of intangible assets 2,479 1,734
Total operating expenses 19,470 16,272
Net income (loss) from continuing operations (8,415) (4,346)
Other income (expense):
Other income (expense), net (2,393) 852
Interest income (expense), net 633 973
Total other income (expense), net (1,760) 1,825
Income (loss) from continuing operations before income taxes (10,175) (2,521)
Income tax benefit (provision) (263) 614
Income (loss) from continuing operations, net of tax (10,438) (1,907)
Income (loss) from discontinued operations, net of tax - 27,039
Net income (loss) (10,438) 25,132
Dividend on Series A perpetual preferred stock (2,040) (1,916)
Net income (loss) attributable to common stockholders $ (12,478) $ 23,216
Net income (loss) per share
Net income (loss) per share, continuing operations
Basic and diluted* $ (3.32) $ (0.61)
Net income (loss) per share, discontinued operations
Basic and diluted* $ - $ 8.64
Net income (loss) per share
Basic and diluted* $ (3.32) $ 8.03
Net income (loss) per share, attributable to common shareholders
Basic and diluted* $ (3.97) $ 7.42
Weighted-average common shares outstanding***
Basic and diluted* 3,145 3,129
Dividends declared per share of Series A perpetual preferred stock 1.00 1.00
*Earnings per share may not add due to rounding
**Formerly known as Construction
***All share amounts reflect 1 for 5 reverse stock split effective June 14, 2024, retroactively.
See accompanying notes to consolidated financial statements.
STAR EQUITY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts and par value)
December 31,
2024 2023
Assets:
Current assets:
Cash and cash equivalents $ 4,003 $ 18,326
Restricted cash 1,628 620
Investments in equity securities 3,368 4,838
Lumber derivative contracts - 19
Accounts receivable, net of allowances of $360 and $191, respectively
8,048 6,004
Note receivable, current portion 335 399
Inventories, net 5,397 3,420
Other current assets 1,635 1,180
Total current assets 24,414 34,806
Property and equipment, net 10,207 7,828
Operating lease right-of-use assets, net 8,289 1,470
Intangible assets, net 18,930 12,518
Goodwill 8,453 4,438
Long term investments 2,140 6,000
Notes receivable 8,876 8,427
Other assets 1,739 9
Total assets $ 83,048 $ 75,496
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable $ 2,603 $ 1,571
Accrued liabilities 1,974 1,506
Accrued compensation 1,141 1,772
Accrued warranty 49 44
Lumber derivative contracts 7 -
Deferred revenue 2,523 1,377
Short-term debt 3,911 2,019
Operating lease liabilities 241 403
Finance lease liabilities 21 42
Total current liabilities 12,470 8,734
Long-term debt, net of current portion 7,405 -
Deferred tax liabilities 334 318
Operating lease liabilities, net of current portion 8,483 1,102
Finance lease liabilities, net of current portion 20 43
Total liabilities 28,712 10,197
Stockholders’ Equity:
Preferred stock, $0.0001 par value: 10,000,000 shares authorized: Series A Preferred Stock, 8,000,000 shares authorized, liquidation preference (10.00 per share), 1,915,637 shares issued and outstanding at 2024 and 2023. (Liquidation preference: $18,988,390 as of December 31, 2024 and 2023.)
18,988 18,988
Preferred stock, $0.0001 par value: 25,000 shares authorized; Series C Preferred stock, no shares issued or outstanding
- -
Common stock, $0.0001 par value: 50,000,000 shares authorized; 3,201,502 and 3,165,243 shares issued and outstanding (net of treasury shares) at December 31, 2024 and 2023, respectively
2 2
Treasury stock, at cost; 125,625 and 51,770 shares at December 31, 2024 and 2023, respectively
(6,007) (5,728)
Additional paid-in capital 159,880 160,126
Accumulated deficit (118,527) (108,089)
Total stockholders’ equity 54,336 65,299
Total liabilities and stockholders’ equity $ 83,048 $ 75,496
*All share amounts reflect 1 for 5 reverse stock split effective June 14, 2024, retroactively.
See accompanying notes to consolidated financial statements.
STAR EQUITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year ended December 31,
2024 2023
Operating activities
Net income (loss) $ (10,438) $ 25,132
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation of property and equipment 1,123 925
Amortization of intangible assets 2,479 1,734
Non-cash lease expense 1,170 670
Provision for bad debt, net (178) 162
Stock-based compensation 240 340
Non-cash interest income (746) 45
Gain on disposal of discontinued operations - (26,680)
Bargain purchase gain on acquisition - (1,170)
(Gain) Loss on sale of assets (3,756) (503)
Loss (gain) on remeasurement of Enservco long term investments 1,850 -
Impairment of Catalyst cost method investment 4,615 -
Deferred income taxes 16 (613)
Unrealized (gain) loss on equity securities and lumber derivatives 202 (208)
Changes in operating assets and liabilities:
Accounts receivable (1,125) 3,737
Inventories 859 1,015
Other assets (1,523) 43
Accounts payable 1,032 1,118
Accrued compensation (630) (646)
Deferred revenue 1,389 (567)
Operating lease liabilities (1,233) (490)
Other liabilities (527) (1,346)
Net cash provided (used) by operating activities (5,181) 2,698
Investing activities
Purchases of property and equipment (2,856) (698)
Proceeds from sale of discontinued operations - 19,681
Proceeds from sale of property and equipment 10,521 1,233
Purchases of equity securities (257) (1,517)
Proceeds from sales of equity securities 1,002 253
Net cash received (paid for) acquisition (19,675) (2,770)
Repayment of note receivable 223 -
Investment in note receivable
(1,000) -
Net cash provided (used) by investing activities (12,042) 16,182
Financing activities
Proceeds from borrowings 24,322 41,153
Repayment of debt (18,027) (42,105)
Net proceeds from sale of common stock and warrants 0 1
Proceeds from exercise of warrants - 4
Repurchase of common stock (279) -
Taxes paid related to net share settlement of equity awards (22) (16)
Repayment of obligations under finance leases (46) (193)
Preferred stock dividends paid (2,040) (1,916)
Net cash provided (used) by financing activities 3,908 (3,072)
Net change in cash, cash equivalents, and restricted cash including cash classified within current assets (13,315) 15,808
Less: Net (decrease) increase in cash classified within current assets-discontinued operations - 1,381
Net change in cash, cash equivalents, and restricted cash (13,315) 14,427
Cash, cash equivalents, and restricted cash at beginning of year $ 18,946 $ 4,519
Cash, cash equivalents, and restricted cash at end of year $ 5,631 $ 18,946
Reconciliation of cash, cash equivalents, and restricted cash at end of year
Cash and cash equivalents $ 4,003 $ 18,326
Restricted cash 1,628 620
Cash, cash equivalents, and restricted cash at end of period $ 5,631 $ 18,946
Supplemental Information
Cash paid during the year for interest $ 614 $ 261
Cash paid during the year for income taxes $ 236 $ 651
Non-Cash Investing and Financing Activities
Noncash note receivable $ - $ 7,000
Noncash investment in private company $ - $ 6,000
Purchase of investment in exchange for preferred stock $ 2,605 $ -
Noncash property, plant, and equipment obtained in exchange for term loan $ 3,000 $ -
Noncash right-of-use assets obtained in exchange for operating lease liabilities $ 7,895 $ -
Cancelled Issuance of Preferred Stock $ (2,605) $ -
Extinguishment of right-of use-asset and lease liability
$ (313) $ -
See accompanying notes to consolidated financial statements.
STAR EQUITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
Perpetual Preferred Stock Common stock Treasury Stock Additional
paid-in
capital Accumulated
deficit Total
stockholders’
equity
Shares Amount Shares Amount
Balance at December 31, 2022 1,916 $ 18,988 3,036 $ 1 $ (5,728) $ 161,715 $ (133,221) $ 41,755
Stock-based compensation - - - - - 340 - 340
Shares issued under stock incentive plans, net of shares withheld for employee taxes - - 64 0.5 - (16) - (16)
Equity issuance costs - - - - - - -
Dividends to holders of preferred stock ($1.00 per share)
- - - - - (1,916) - (1,916)
Proceeds from the sale of common stock, warrants, and exercise of over allotment options - - 65 0.5 - 3 - 4
Net income (loss) - - - - - - 25,132 25,132
Balance at December 31, 2023 1,916 $ 18,988 3,165 $ 2 $ (5,728) $ 160,126 $ (108,089) $ 65,299
Stock-based compensation - - - - - 240 - 240
Shares issued under stock incentive plans, net of shares withheld for employee taxes - - 31 - - (22) - (22)
Shares issued for fractional shares in conjunction with reverse stock split - - 80 - - - - -
Issuance of Preferred Stock 250 2,605 - - - - - 2,605
Share purchased through the Stock Buyback Program - - (74) - (279) - (279)
Cancelled Issuance of Preferred Stock (250) (2,605) - - - 1,576 - (1,029)
Dividends to holders of preferred stock ($1.00 per share)
- - - - - (2,040) - (2,040)
Net income (loss) - - - - - - (10,438) (10,438)
Balance at December 31, 2024 1,916 $ 18,988 3,202 $ 2 $ (6,007) $ 159,880 $ (118,527) $ 54,336
*All share amounts reflect 1 for 5 reverse stock split effective June 14, 2024, retroactively
See accompanying notes to consolidated financial statements.
STAR EQUITY HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company
Star Equity Holdings, Inc. (“Star Equity”, or the “Company”) is a diversified holding company with two divisions: Building Solutions and Investments. We previously had a Healthcare division which was sold on May 4, 2023, as further described in Note 3. Discontinued Operations. Unless the context requires otherwise, in this report the terms “we,” “us,” and, “our” refer to Star Equity and our wholly owned subsidiaries.
Building Solutions
Our Building Solutions division operates in three businesses: (i) modular building manufacturing, (ii) structural wall panel and wood foundation manufacturing, including building supply retail operations, and (iii) glue-laminated timber products (“glulam”) manufacturing. The modular building manufacturing business services the northeast United States and is operated by KBS Builders, Inc. (“KBS”) in Maine. The structural wall panel and wood foundation manufacturing business is operated by EdgeBuilder, Inc. (“EdgeBuilder”), and the retail building supplies are sold through Glenbrook Building Supply, Inc. (“Glenbrook” and together with EdgeBuilder, “EBGL”). EBGL is based in and services the Greater Minneapolis metropolitan area. Timber Technologies Solutions, Inc. (“TT”), the glue-laminated timber products manufacturing business, was acquired in the second quarter of 2024 and is based in western Wisconsin, in proximity to the Minneapolis-Saint Paul area. KBS, EdgeBuilder, Glenbrook, and TT are wholly owned subsidiaries of Star Equity and are referred to collectively herein, and together with Star Construction Holdings, Inc. (“SCH”), as the “Building Solutions Subsidiaries.”
EBGL expanded its market share of the Greater Minneapolis area via the acquisition of all of the assets of Big Lake Lumber Inc. (“BLL”) in October 2023. Since that time, BLL’s operations have been integrated into and have become part of Glenbrook’s operations. See Note 16. Mergers and Acquisitions for further information regarding the BLL and the TT acquisitions.
Investments
Investments generates intercompany revenue from the lease of commercial properties and equipment through Star Real Estate Holdings. Our Investments division is an internally-focused unit. This entity was established to hold our corporate-owned real estate, which currently includes our manufacturing facilities that are leased to KBS and TT, as well as any minority investments we make in public and private companies. Star Equity Fund GP, LLC (“Star Equity Fund”), Star Investment Management, LLC (“Star Investment”), Star Equity Investment Holdings Inc. (“SEI”), Star Real Estate Holdings USA, Inc. (“SRE”), and the subsidiaries of SRE that are included in this division are referred to collectively herein as the “Investments Subsidiaries.”
We consider our Investments segment to be ancillary to our core business, and, as a result, we record gains, losses, and impairments on investments and real estate from the Investments segment as a component of other income (expense). We record depreciation of owned real estate used in our operations as a component of cost of revenues. In the fourth quarter of 2024, we reclassified the 2024 impairments of our cost method investment from selling, general and administrative expenses to other income (expense) to align with other gains and losses in our Investments Division.
Note 2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The consolidated financial statements are prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States of America and include our wholly owned subsidiaries financial statements. All intercompany accounts and transactions have been eliminated. The divestiture of our former Healthcare division is separately presented as discontinued operations in the Consolidated Statement of Operations for the years ended December 31, 2024 and December 31, 2023. Refer to Note 3. Discontinued Operations for additional information.
On June 12, 2024, we executed a one-for-five reverse stock split which became effective June 14, 2024. All of our historical share and per share information related to issued and outstanding common stock and outstanding options and warrants exercisable for common stock in these financial statements have been adjusted retroactively (see Note 18. Equity Transactions).
Certain amounts in the consolidated financial statements and accompanying Notes may not add due to rounding. All percentages have been calculated using unrounded amounts.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and disclosures made in the accompanying notes to the consolidated financial statements. Significant estimates and judgments include those related to revenue recognition, goodwill valuation, long term investments (including impairment and fair value considerations), business combination accounting, and income taxes. Actual results could materially differ from those estimates.
Revenue Recognition
We recognize revenue when a customer obtains control of promised goods or services. We record the amount of revenue that reflects the consideration that we expect to receive in exchange for those goods or services. We apply the following five-step model in order to determine this amount: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company has elected to use the practical expedient to exclude disclosures of unsatisfied remaining performance obligations for (i) contracts having an original expected length of one year or less or (ii) contracts for which the practical expedient has been applied to recognize revenue at the amount for which it has a right to invoice.
We recognize revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Taxes collected from customers, which are subsequently remitted to governmental authorities, are excluded from revenue.
The majority of our contracts have a single performance obligation, including certain instances which we provide a series of distinct goods or services that are substantially the same and are transferred with the same pattern to the customer. For contracts with multiple performance obligations, we allocate the total transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. We use an observable price to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach when one is not available. For bill and hold sales, we determine when the customer obtains control of the product on a case-by-case basis to determine the amount of revenue to recognize each period.
Revenue recognition is evaluated on a contract by contract basis. Performance obligations are satisfied over time as work progresses or at a point in time. A performance obligation is satisfied over time when the company creates an asset with no alternative use and we have an enforceable right to payment, including a reasonable profit margin. Determining if an enforceable right to payment includes a reasonable profit margin requires judgment and is assessed on a contract by contract basis. For contracts requiring over time revenue recognition, the selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We use a cost-based input measurement of progress because it best depicts the transfer of assets to the customer, which occurs as costs are incurred during the manufacturing process or as services are rendered. Under the cost-based measure of progress, the extent of progress towards completion is measured based on the costs incurred to date.
Our products are generally not sold with a right of return and the Company does not provide significant credits or incentives, which may be variable consideration when estimating the amount of revenue to be recognized.
Building Solutions Revenue Recognition. Within the Building Solutions division, we service residential and commercial construction projects by manufacturing modular housing units and other products, supplying general contractors with building materials and providing glulam products to distributors and end users. KBS manufactures modular buildings for both single-family residential homes and larger, commercial building projects. EdgeBuilder manufactures structural wall panels, permanent wood foundation systems and other engineered wood products, and Glenbrook is a retail supplier of lumber and other building supplies. Retail sales at Glenbrook are recognized at the point of sale. TT manufactures glue-laminated timber products (“glulam”) for various end markets and applications, including agriculture, industrial, infrastructure, and building construction (commercial and residential). For bill and hold sales, we determine when the customer obtains control of the product on a case-by-case basis to determine the amount of revenue to recognize each period. Revenue is generally recognized at point in time upon delivery of product or over time by measuring progress towards completion. There are no contracts as of December 31, 2024 and 2023 that are subject to over time recognition.
Billings in excess of costs and estimated profit. We recognize billings in excess of costs and estimated profit on uncompleted contracts within current liabilities. Such amounts relate to fixed-price contracts recognized over time, and represents payments in advance of performing the related contract work. Billings in excess of costs and estimated profit on uncompleted contracts are not considered to be a significant financing component because they are generally used to meet working capital demands that can be higher in the early stages of a contract. Contract liabilities are reduced when the associated revenue from the contract is recognized, which is generally within one year. There is no liability associated with billings in excess of costs at December 31, 2024 or December 31, 2023.
Healthcare Revenue Recognition. We generated Healthcare service revenue and product and product-related sales revenue primarily from providing diagnostic services to our customers and from the sale of gamma cameras, accessories, and radiopharmaceuticals doses. Service revenues within our former Healthcare reportable segment, which is now recorded as part of discontinued operations, and, in 2023, covers the period through the date of sale of our Healthcare division as discussed in Note 3. Discontinued Operations, was derived from providing our customers with contract diagnostic services, which included use of our imaging systems, qualified personnel, radiopharmaceuticals, licensing, logistics and related items required to perform testing in their own offices. We billed customers either on a per-scan or fixed-payment methodology, depending upon the contract negotiated with the customer. We also rented cameras to customers for use in their healthcare operations. Rental revenues were structured as either a weekly or monthly payment arrangement, and were recognized in the month that rental assets were provided. Revenue related to provision of our services was recognized at the time services were performed. Revenue from product and product-related sales, which is recorded as part of discontinued operations, was derived primarily from the sale of gamma cameras, accessories, and radiopharmaceuticals doses.
Contract Costs. We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less. These costs mainly include the internal sales commissions; under the terms of these programs these are generally earned and the costs are recognized at the time the revenue is recognized. As of December 31, 2024 and 2023, there were no contract costs recognized.
Deferred Revenue. Deferred revenue represents customer deposits and advanced payments for contracts that are subject to point-in-time recognition. We have determined our contracts do not include a significant financing component.
Leases
Lessee Accounting
We determine if an arrangement is a lease at inception. Pursuant to the guidance in ASC 842, “Leases”, operating leases are included in operating lease right-of-use (“ROU”) assets, and operating lease liabilities in our Consolidated Balance Sheets. Finance leases are included in property and equipment and finance lease liabilities in our Consolidated Balance Sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We use the implicit discount rate when readily determinable; however, as most of our leases do not provide an implicit discount rate, we use an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease valuation may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
We elected to not separate lease and non-lease components of our operating leases. Additionally, we elected not to recognize ROU assets and leases liabilities that arise from short-term leases of twelve months or less.
Lessor Accounting
Prior to the sale of our Healthcare division in 2023, we were the lessors of certain equipment. We determined lease classification at the commencement date. Leases not classified as sales-type or direct financing leases were classified as operating leases. The primary accounting criteria used for lease classification are (a) review to determine if the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (b) review to determine if the lease grants the lessee a purchase option that the lessee is reasonably certain to exercise, (c) determine, using a seventy-five percent or more threshold, if the lease term is for a major part of the remaining economic life of the underlying asset (however, we did not use this classification criterion when the lease commencement date fell within the last 25 percent of the total economic life of the underlying asset) and (d) determine, using a ninety percent or more threshold, if the present value of the sum of the lease payments and any residual value guarantees equal or exceeds substantially all of the fair value of the underlying asset. We did not lease equipment of such a specialized nature that it was expected to have no alternative use to us at the end of the lease term.
We elected the operating lease practical expedient for leases to not separate non-lease components of regular maintenance services from associated lease components.
Property taxes paid by the lessor that are reimbursed by the lessee are considered to be lessor costs of owning the asset and are recorded gross with income included in other non-interest income and expense recorded in operating expenses.
We selected a lessor accounting policy election to exclude from revenue and expenses sales taxes and other similar taxes assessed by a governmental authority on lease revenue-producing transactions and collected by the lessor from a lessee.
Operating lease equipment is carried at cost less accumulated depreciation. Operating lease equipment is depreciated to its estimated residual value using the straight-line method over the lease term or estimated useful life of the asset.
Rental revenue on operating leases is recognized on a straight-line basis over the lease term unless collectability is not probable. In these cases rental revenue is recognized as payments are received.
Concentration of Credit Risk
Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. We limit our exposure to credit loss by generally placing cash in high credit quality financial institutions. Cash balances are maintained primarily at major financial institutions in the United States and a portion of which exceed the regulatory limit of $250,000 insured by the Federal Deposit Insurance Corporation (“FDIC”). We have not experienced any credit losses associated with our cash balances. Additionally, we have established guidelines regarding diversification of our investments and their maturities, which are designed to maintain principal and maximize liquidity. As of December 31, 2024, we have $0.2 million of cash in excess of FDIC insured limits.
Fair Value of Financial Instruments
The authoritative guidance for fair value measurements defines fair value for accounting purposes, establishes a framework for measuring fair value, and provides disclosure requirements regarding fair value measurements. The guidance defines fair value as an exit price, which is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level of pricing observability. Financial instruments primarily consist of cash equivalents, equity securities, accounts receivable, other current assets, restricted cash, and accounts payable. The carrying amount of short-term and long-term debt and notes payable approximates fair value because of the relative short maturity of these instruments and interest rates we could currently obtain.
The Company occasionally enters into derivative financial instruments to manage certain market risks. These derivative instruments are not designated as hedging instruments and accordingly, are recorded at fair value in the Consolidated Balance Sheets with the changes in fair value recognized in cost of revenue in the Consolidated Statements of Operations.
Variable Interest Entities
We determine at the inception of each arrangement whether an entity in which we have made an investment or in which we have other variable interests is considered a variable interest entity (“VIE”). We consolidate VIEs when we are the primary beneficiary. We are the primary beneficiary of a VIE when we have the power to direct activities that most significantly affect the economic performance of the VIE and have the obligation to absorb the significant losses or benefits. If we are not the primary beneficiary in a VIE, we account for the investment or other variable interests in a VIE in accordance with applicable GAAP.
Periodically, we assess whether any changes in our interest or relationship with the entity affect our determination of whether the entity is a VIE and, if so, whether we are the primary beneficiary. We have not identified any VIEs for which we are the primary beneficiary as of December 31, 2024 or 2023.
Cash and Cash Equivalents
We consider all investments with a maturity of three months or less when acquired to be cash equivalents.
Equity Securities
As of December 31, 2024 and 2023, securities consist of investments in equity securities that are publicly traded. These equity securities are measured at fair value and changes in fair value are recognized in net income. During the year ended December 31, 2024, we recognized unrealized losses related to changes in fair value of $177 thousand in the Consolidated Statements of Operations. During the year ended December 31, 2023, we recorded unrealized gains related to changes in fair value of $85 thousand. Investments that are strategic in nature, with the intent to hold the investment over a several year period, are classified as long term investments.
Long Term Investments
As a part of the sale of Digirad Health, described further in Note 3. Discontinued Operations to the notes to our accompanying financial statements, we received common equity in Insignia TTG Parent LLC (“Catalyst Parent”), the parent entity of Catalyst MedTech LLC (“Catalyst”) formerly known as TTG Imaging Solutions, LLC. We have elected the measurement alternative under ASC 321 “Accounting for Investments in Equity Securities”. The measurement alternative election allows for equity securities that do not have readily determinable fair values to be recorded at cost, with adjustments for impairment and certain observable price changes reflected in earnings. Such securities are adjusted to fair value when an observable price change occurs or impairment is identified. Each reporting period, we perform a qualitative and quantitative assessment considering impairment indicators to evaluate whether the investment is impaired. Impairment indicators include, but are not limited to, significant deterioration in earnings performance, significant adverse changes in regulatory or economic environment and working capital deficiencies. If an investment is determined to be impaired, we include an impairment loss as a component of other income (expense) equal to the difference between the fair value of the investment and its carrying amount. During 2024 we recognized $4.6 million of an impairment loss on this investment as further discussed in Note 5. Supplementary Balance Sheet Information.
On August 9, 2024, we completed an investment in Enservco Corporation (“Enservco”) (“Investment in Enservco”), which consisted of Enservco Common Stock, Enservco Preferred Stock, and certain other options reflected in the Share Exchange Agreement, and the Enservco Note Receivable (See Note 5. Supplementary Balance Sheet Information). The Investment in Enservco is required to be accounted for using the equity method of accounting under ASC 323, “Equity Method Investments and Joint Ventures”, as we are deemed to have significant influence over Enservco based upon GAAP rules. Pursuant to the guidance in ASC 323, we elected the fair value option pursuant to ASC 825-10-15, wherein the financial instrument is initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date, with changes in the estimated fair value recognized as other income (expense) in the statement of operations. Enservco Common Stock is publicly traded, and the fair value is determined based on Enservco’s common stock close price as of the reporting date. The fair value of the Enservco Preferred Stock was based on the consideration of a number of objective and subjective factors, including third-party valuations and a company-specific economic outlook. To determine the fair value of the call option, the Company used the Black-Scholes option pricing model. The fair value of the Enservco Note was determined using a discounted cash flow model. Fair value assumptions are further described in Note 6, Fair Value Measurements. The Enservco Note was determined to be uncollectible as of December 31, 2024 and the value was reduced to zero. As described further in Note 5 Supplementary Balance Sheet Information, the value of the Enservco Note was fully collateralized and we called the collateral once it was determined that the note was in default.
Accounts Receivable
Accounts receivable consist principally of trade receivables from customers. These are recorded at the invoiced amount and are generally unsecured and due within 30 days. Trade receivables do not bear interest. We use an expected loss methodology. This methodology includes information about past events, current economic conditions and reasonable and supportable forecasts that impact the collectibility of the reported amounts of the receivables over their lifetime. Within the Current Expected Credit Losses (“CECL”) guidelines, we utilize a “probability of default” methodology to determine expected credit losses under the CECL model. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. Our “probability of default” methodology principally entails evaluating the collectability of our trade receivables and providing reserves for doubtful accounts based on our historical experience rate, known collectability issues and disputes, and our bad debt write-off history.
Our estimates of collectability could be impacted by material amounts due to changed circumstances, such as a higher number of defaults or material adverse changes in a payor’s ability to meet its obligations. Expected credit losses related to trade accounts receivable are recorded as an allowance for doubtful accounts within accounts receivable, net in the Consolidated Balance Sheets, and the related provision for doubtful accounts is charged to general and administrative expenses. We do not have any off-balance sheet credit exposure related to our customers.
The following table summarizes the allowance for doubtful accounts from continuing operations as of and for the years ended December 31, 2024 and 2023 (in thousands):
Allowance for
Doubtful Accounts(1)
Balance at December 31, 2022 $ (270)
Provision adjustment (145)
Write-offs and recoveries, net 224
Balance at December 31, 2023 (191)
Provision adjustment (178)
Write-offs and recoveries, net 9
Balance at December 31, 2024 $ (360)
(1)The provision was charged against general and administrative expenses.
Inventory
Inventories are valued using first-in, first-out or the weighted-average inventory method; stated at the lower of cost or net realizable value. Finished goods and work-in-process inventory values include the cost of raw materials, labor and manufacturing overhead. Inventory, when written down to net realizable value, establishes a new cost basis and its value is not subsequently increased based upon changes in underlying facts and circumstances. We also make adjustments to reduce the carrying amount of inventories for estimated excess or obsolete inventories. Factors influencing these adjustments include inventories on-hand compared with historical and estimated future sales and usage for existing and new products and assumptions about the likelihood of obsolescence.
Long-Lived Assets including Finite Lived Purchased Intangible Assets
Long-lived assets consist of property and equipment and finite lived intangible assets. We generally record property and equipment at cost. We record property and equipment and intangible assets acquired in business combinations based on their fair values at the date of acquisition. We calculate depreciation on property and equipment using the straight-line method over the estimated useful life of the assets, which range from 5 to 20 years for buildings and improvements, 3 to 13 years for machinery and equipment, 1 to 10 years for computer hardware and software, and the lesser of the estimated useful life or remaining lease term for leasehold improvements. Charges related to amortization of assets recorded under finance leases are included within depreciation expense. We calculate amortization on intangible assets using either the accelerated or the straight-line method over the estimated useful life of the assets, based on when we expect to receive cash inflows generated by the intangible assets. Estimated useful lives for intangibles range from 1 to 15 years.
Impairment losses on long-lived assets used in operations are recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. No impairment was recorded on long-lived assets to be held and used during the years ended December 31, 2024 and 2023.
Goodwill Valuation
We review goodwill for impairment on an annual basis during the fourth quarter, and when events or changes in circumstances indicate that a reduction in the carrying value may not be recoverable. We initially assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The analysis includes assessing the impact of changes in certain factors including: (1) changes in forecasted operating results and comparing actual results to projections, (2) changes in the industry or our competitive environment since the acquisition date, (3) changes in the overall economy, our market share and market interest rates since the acquisition date, (4) trends in the stock price and related market capitalization and enterprise values, (5) trends in peer companies’ total enterprise value metrics, and (6) additional factors such as management turnover, changes in regulation and changes in litigation matters. Upon review of the results of such assessment, we may begin performing impairment analysis by quantitatively comparing the fair value of the reporting unit to the carrying value of the reporting unit, including goodwill. An impairment charge for goodwill is recognized for the amount by which the carrying value of the reporting unit exceeds its fair value and such loss should not exceed the total goodwill allocated to the reporting unit. We have recorded no goodwill impairments in 2024 and 2023.
Goodwill was derived from the acquisition of ATRM in 2019 and the acquisition of TT in 2024. See Note 7. Goodwill, for further information.
Business Combinations
In accordance with ASC 805, Business Combinations, the Company allocates the purchase consideration to the identifiable assets acquired and liabilities assumed in business combinations based on their fair values as of the respective acquisition date.
The excess of the purchase consideration over the amounts assigned to the identifiable assets and liabilities is recognized as goodwill, or if the fair value of the net assets acquired exceeds the purchase consideration, a bargain purchase gain is recorded within the Consolidated Statement of Operations. Factors giving rise to goodwill generally include operational synergies that are anticipated as a result of the business combination and growth expected to result in economic benefits from access to new customers and markets. The fair values of identifiable intangible assets acquired in business combinations are generally determined using an income approach, requiring financial forecasts and estimates as well as market participant assumptions.
In connection with the acquisition of BLL during the fiscal year ended December 31, 2023, the Company recorded a bargain purchase gain of $1.2 million that was recorded as a component of other income on the Consolidated Statement of Operations. The bargain purchase gain amount represents the excess of the estimated fair value of the net assets and intangibles acquired over the estimated fair value of the consideration transferred. In accordance with ASC 805, we estimated the fair value of the net assets acquired as of the acquisition date.
We accounted for the acquisition of TT as a business combination and recorded the acquired assets of TT at fair value.
The incremental financial results of the TT acquisition and the BLL acquisition are included in the Company’s consolidated financial results from the respective acquisition date. See Note 16. Mergers and Acquisitions for further information.
Restricted Cash
We maintain certain cash amounts restricted as to withdrawal or use. As of December 31, 2024 and 2023, restricted cash was $1.6 million and $0.6 million comprised of cash held for letters of credit for our real estate leases, restricted cash held in connection with the TT acquisition (See Note 16. “Mergers and Acquisitions”) and certain minimum balance requirements on our banking arrangements.
Debt Issuance Costs
We incur debt issuance costs in connection with debt financings. Debt issuance costs for line of credit are presented in other assets and are amortized over the term of the revolving debt agreements using the straight-line method. Debt issuance costs for term debt are netted against the debt and are amortized over the term of the loan using the effective interest method. Amortization of debt issuance costs are included in interest expense. As of December 31, 2024 and 2023, we have no unamortized debt issuance costs.
Shipping and Handling Fees and Costs
We record all shipping and handling costs billed to customers as revenue earned for the goods provided. Shipping and handling costs related to continuing operations are included in cost of revenues and totaled $2.6 million and $1.1 million for the years ended December 31, 2024 and 2023.
Share-Based Compensation
We account for share-based awards exchanged for employee and board services in accordance with the authoritative guidance for share-based compensation. Under this guidance, share-based compensation expense is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense, net of forfeitures, over the requisite service period.
Warranties
Within our Building Solutions division, KBS provides a limited assurance warranty on its residential homes that covers substantial defects in materials or workmanship for a period of 12 months after delivery to the owner. EBGL provides a limited warranty on the sale of its wood foundation products that covers leaks resulting from defects in workmanship for a period of twenty-five years. TT provides a limited warranty on glulam products for a period of fifty years. Estimated warranty costs are accrued in the period that the related revenue is recognized. See Note 5. Supplementary Balance Sheet Information, for further information.
Advertising Costs
Advertising costs are expensed as incurred. Total advertising costs related to continuing operations for the years ended December 31, 2024 and 2023 were $40 thousand and $85 thousand, respectively.
Basic and Diluted Net income (loss) Per Share
We present net income (loss) per share attributable to common stockholders in conformity with the two-class method required for participating securities, as the warrants are considered participating securities. We have not allocated net income (loss) attributable to common stockholders to warrants because the holders of our warrants are not contractually obligated to share in our income (loss). In periods for which there is a net loss, diluted loss per common share is equal to basic loss per common share, since the effect of including any common stock equivalents would be antidilutive.
The following weighted-average outstanding common stock equivalents were not included in the calculation of diluted net income (loss) per share because their effect was antidilutive (in thousands):
Year Ended December 31,
2024 2023
Stock options - 1
Stock warrants 2,373 2,373
Restricted stock units 4 -
Total 2,377 2,374
As of December 31, 2024, there were 1,370,460 warrants exercised and 12,567,040 warrants outstanding, which represents 2,372,954 shares of common stock equivalents, remained outstanding. See Note 18. Equity Transactions, for further information about warrants outstanding.
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
We recognize net deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
We record uncertain tax positions on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to unrecognized tax benefits within income tax expense, and any accrued interest and penalties would be included within the related tax liability. No such costs were recorded for the years ended December 31, 2024 and December 31, 2023.
Reclassifications
Certain items in the prior year financial statements were reclassified to conform with the current year presentation.
New Accounting Standards Recently Adopted and To Be Adopted
New Accounting Standards Adopted in 2024
Standard/Description Effective Date Effect on the Financial Statements
On January 1, 2024, we adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) for annual periods beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.
Fiscal years beginning after December 15, 2023 with early adoption permitted.
We applied, among other things, disclosure of detailed information related to significant expenses of the entity’s reportable segments which is regularly provided to the chief operating decision maker.
Recently Issued Accounting Standards, Not Adopted as of December 31, 2024
Standard/Description Effective Date Effect on the Financial Statements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
Fiscal years beginning after December 15, 2024 with early adoption permitted.
The new guidance requires, among other things, greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. We will apply ASU 2023-09 on January 1, 2025. It affects financial statement disclosure only and its adoption will not affect our results of operations or financial position.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” Fiscal years beginning after December 15, 2024, with early adoption permitted. The new guidance requires entities to disaggregate income statement expenses to provide users of financial statements with more detailed information about the nature and amount of expenses incurred. It affects financial statement disclosure only and its adoption will not affect our results of operations or financial position.
Note 3. Discontinued Operations
On May 4, 2023, we entered into a Stock Purchase and Contribution Agreement (the “Digirad Purchase Agreement”), by and among the Company, Digirad Health Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Digirad Health”), Catalyst, and Catalyst Parent. Pursuant to the Digirad Purchase Agreement, (i) Catalyst purchased 85% of the issued and outstanding shares of Digirad Health, on the terms and subject to the conditions set forth therein and (ii) the Company contributed to Catalyst Parent 15% of the issued and outstanding shares of stock of Digirad Health (the “Contributed Shares”) in exchange for New Units (as defined in the Digirad Purchase Agreement) of Catalyst Parent (the “Transaction”). The total aggregate consideration payable to the Company for the Transaction was $40 million, comprised of $19.7 million ($27 million less payoff of debt to Webster Bank (see Note 8. Debt) and transaction costs) in cash, a $7 million promissory note (see Note 5. Supplementary Balance Sheet Information), and $6 million of New Units in Catalyst Parent (see Note 5. Supplementary Balance Sheet Information). The Company completed the sale of Digirad Health simultaneously with entering into the Digirad Purchase Agreement. .
We deemed the disposition of Digirad Health, which operated our Healthcare business unit, to represent a strategic shift that will have a major effect on our operations and financial results. The results of operations of the Healthcare business unit represent “discontinued operations” in accordance with GAAP (ASC 205-20-45-1B). As such, the assets and liabilities, as well as the earnings, of the discontinued operation are presented separately in the consolidated financial statements for all periods presented. Unless otherwise noted, discussion within the notes to the consolidated financial statements relates to continuing operations.
Our variable interest entity (“VIE”), for which we are not the primary beneficiary, was disposed of as part of the sale of our Healthcare division. This VIE was in a small private company that is primarily involved in research related to new heart imaging technologies.
The following table presents financial results of our Healthcare division for the twelve months ended December 31, 2023 (in thousands):
Twelve Months Ended December 31,
Total revenues $ 17,962
Total cost of revenues 12,408
Gross profit 5,554
Operating expenses:
Selling, general and administrative 3,314
Amortization of intangible assets -
(Gain) loss on disposal of discontinued operations (26,680)
Total operating expenses (23,366)
Income (loss) from discontinued operations 28,920
Other (expense) income, net (1,015)
Interest expense, net (173)
Income (loss) from discontinued operations before income taxes 27,732
Income tax benefit (provision) (693)
Income (loss) from discontinued operations $ 27,039
The following table presents presents the significant operating, investing and financing activities from discontinued operations for the twelve months ended December 31, 2023 (in thousands):
Twelve Months Ended December 31,
Operating activities
Net income (loss) from discontinued operations $ 27,039
Depreciation 332
Non-cash lease expense 273
Write-off of borrowing costs 16
(Gain) loss on disposal of discontinued operations (26,680)
Share-based compensation 1
(Gain )Loss on disposal of assets 135
Provision for bad debt 17
Deferred income taxes 295
Accounts receivable 1,333
Inventory (681)
Other assets 654
Accounts payable 994
Accrued compensation (580)
Deferred revenue (101)
Operating lease liabilities (283)
Other liabilities (1,730)
Net cash provided by (used in) operating activities
1,034
Net cash provided by (used in) investing activities -
Net cash provided by (used in) financing activities 347
Net increase (decrease) in cash and cash equivalents and restricted cash $ 1,381
Following is the reconciliation of purchase price to the gain recognized in income from discontinued operations for the twelve months ended December 31, 2023 (in thousands), prior to any proposed working capital adjustments:
Proceeds of the disposition, net of transaction costs and indebtedness payoff $ 32,682
Assets of the businesses (24,071)
Liabilities of the businesses 18,069
Pre-tax gain on the disposition $ 26,680
Note 4. Revenue
Disaggregation of Revenue
The following table presents our continuing revenues disaggregated by major source for the years ended December 31, 2024 and 2023 (in thousands):
December 31, 2024
Building Solutions Total
Major Goods/Service Lines
Building Solutions Revenue from Contracts with Customers $ 53,359 $ 53,359
Total Revenues
$ 53,359 $ 53,359
Timing of Revenue Recognition
Services and goods transferred at a point in time $ 53,359 $ 53,359
Total Revenues
$ 53,359 $ 53,359
December 31, 2023
Building Solutions Total
Major Goods/Service Lines
Building Solutions revenue from Contracts with Customers $ 45,785 $ 45,785
Total Revenues $ 45,785 $ 45,785
Timing of Revenue Recognition
Services and goods transferred at a point in time $ 45,785 $ 45,785
Total Revenues $ 45,785 $ 45,785
Deferred Revenue
Changes in the deferred revenues for the year ended December 31, 2024 and 2023, is as follows (in thousands):
Balance at December 31, 2022 $ 1,673
Revenue recognized that was included in balance at beginning of the year (1,604)
Deferred revenue, net, related to contracts entered into during the year 1,308
Balance at December 31, 2023 1,377
Revenue recognized that was included in balance at beginning of the year (1,314)
Deferred revenue, net, related to contracts entered into during the year 2,460
Balance at December 31, 2024 $ 2,523
Note 5. Supplementary Balance Sheet Information
The following tables show the Consolidated Balance Sheet details as of December 31, 2024 and 2023 (in thousands):
Inventories
December 31,
2024 December 31,
Inventories:
Raw materials $ 2,644 $ 1,394
Work-in-process 735 410
Finished goods 2,018 1,616
Total inventories 5,397 3,420
Less reserve for excess and obsolete inventories - -
Total inventories, net $ 5,397 $ 3,420
Property and Equipment, net
December 31,
2024 December 31,
Property and equipment, net:
Land $ 795 $ 1,353
Buildings and leasehold improvements 5,573 5,123
Machinery and equipment 6,540 3,511
Gross property and equipment 12,908 9,987
Accumulated depreciation (2,701) (2,159)
Total property and equipment, net $ 10,207 $ 7,828
As of December 31, 2024, we held non-operating land and building in Oxford, Maine for investments which had a carrying value of $0.9 million and was included within property and equipment on the Consolidated Balance Sheets.
Depreciation expense for the years ended December 31, 2024 and 2023 was $1.1 million and 0.6 million, respectively.
Warranty Reserves
Within our Building Solutions division, KBS provides a limited assurance warranty on its residential homes that covers substantial defects in materials or workmanship for a period of 12 months after delivery to the owner. EBGL provides a limited warranty on the sale of its wood foundation products that covers leaks resulting from defects in workmanship for a period of twenty-five years. TT provides a fifty-year limited warranty to the original buyer of its products, qualified by the original buyer’s obligation to ensure that the products are properly handled, stored, and installed. Estimated future warranty costs are accrued and charged to cost of goods sold in the period that the related revenue is recognized. Warranty reserves and related activity were minimal as of and for the periods ended December 31, 2024 and December 31, 2023.
Intangible Assets
December 31, 2024
Gross Carrying Amount Accumulated Amortization Intangible Assets, Net
Intangible assets with finite useful lives:
Customer relationships $ 21,040 $ (7,686) $ 13,354
Backlog 290 (181) 109
Trademarks 7,510 (2,043) 5,467
Total intangible assets, net $ 28,840 $ (9,910) $ 18,930
December 31, 2023
Gross Carrying Amount Accumulated Amortization Intangible Assets, Net
Intangible assets with finite useful lives:
Customer relationships $ 14,400 $ (5,831) $ 8,569
Trademarks 5,540 (1,591) 3,949
Total intangible assets, net $ 19,940 $ (7,422) $ 12,518
Amortization expense for intangible assets, net for the years ended December 31, 2024 and 2023 was $2.5 million and $1.7 million, respectively.
Estimated amortization expense for intangible assets for year ended December 31, 2025 is $2.7 million, for each year ended December 31, 2026 through December 31, 2028 is $2.6 million, for the year end December 31, 2029 is $2.2 million and thereafter is $6.2 million.
Notes Receivable
Notes receivable consists of the following principal and interest balances as of December 31, 2024 and December 31, 2023 (in thousands):
December 31,
2024 December 31,
Principal and interest Principal and interest
Catalyst Note $ 8,206 $ 7,459
MDOS Note 894 1,191
KBS Customer Note 111 176
Total note receivable $ 9,211 $ 8,826
Less current portion $ (335) $ (399)
Note receivable, net of current portion $ 8,876 $ 8,427
As a part of the sale of Digirad Health, described further in Note 3. Discontinued Operations, a $7 million promissory note (the “Catalyst Note”) was entered into which represents an unsecured note receivable on our balance sheet. The note has a maturity date of May 3, 2029 with payment-in-kind (non-cash) interest on the outstanding principal balance hereof to accrue at the Interest Rate. The Interest Rate is defined as (i) during the period from the date of issuance of the note through the third anniversary of the date of issuance of the note, a per annum rate equal to the sum of (x) 5.0% per annum plus (y) the greater of 5.0% per annum and the weighted-average term SOFR-based interest rate of outstanding loans under the Senior Loan Agreement (as defined in the Digirad Purchase Agreement) during such period, and (ii) during the period following the third anniversary of the date of issuance of the note, a per annum rate equal to the sum of (x) 5.0% per annum plus (y) the greater of 7.0% per annum and the weighted-average term SOFR-based interest rate of outstanding loans under the Senior Loan Agreement during such period.
In 2021, we completed the sale of MD Office Solutions in exchange for a secured promissory note (the “MDOS Note”). The original principal amount of the MDOS Note was $1.4 million and in December 2022 the principal was modified to $1.5 million. The MDOS Note, the principal of which is approximately $0.9 million at December 31, 2024, is included in “Notes receivable, current portion” and “Notes receivable” in our Consolidated Balance Sheets at December 31, 2024 for $0.2 million and $0.7 million, respectively. The MDOS Note requires quarterly installments of $74 thousand and incurs interest at a fixed rate of 5.0% through maturity in 2028.
In 2023, KBS issued a promissory note to a customer, incurring 12% interest per annum (the “KBS Customer Note”). The KBS Customer Note is included in “Notes receivable, current portion” in the Consolidated Balance Sheets at December 31, 2024.
The balance of the Notes Receivable outstanding include any unpaid accrued interest. Interest Income recognized on Notes Receivable for the periods ended December 31, 2024 and December 31, 2023 totaled $0.7 million and $0.5 million, respectively.
The Company evaluates its notes receivable portfolio under the Current Expected Credit Loss (“CECL”) model and determined that there was no material allowance for credit losses required as of December 31, 2024
Long Term Investments
Below are the components of our Long Term Investments as of December 31, 2024 and December 31, 2023 (in thousands):
Method of Accounting December 31, 2024 December 31, 2023
Investment in Catalyst, carried at cost Cost Method $ 1,385 $ 6,000
Investment in Enservco-Common Stock Equity Method 496 -
Investment in Enservco-Preferred Stock Equity Method 191 -
Investment in Enservco-Call Option Equity Method 68 -
Total $ 2,140 $ 6,000
Investment in Catalyst
As a part of the sale of Digirad Health, we received $6.0 million in the common equity of Catalyst Parent, which is held in our Investments Segment. We have elected the measurement alternative under ASC 321, Investments-Equity Securities. The measurement alternative election allows for equity securities that do not have readily determinable fair values to be recorded at cost, with adjustments for impairment and certain observable price changes reflected in earnings. Such securities are adjusted to fair value when an observable price change occurs or impairment is identified. As of December 31, 2024, we have recorded a total impairment to the Investment in Catalyst of $4.6 million. We recorded the impairment as we considered the financial performance of Catalyst relative to the average earnings from comparable companies. This impairment is recorded as a part of other income (expense) on the Consolidated Statement of Operations.
Investment in Enservco
On August 9, 2024, we completed an investment in Enservco pursuant to the Share Exchange Agreement in which we agreed to issue 250,000 shares of 10% Series A Cumulative Perpetual Preferred Stock (“STRRP”) representing $2.6 million of value, to Enservco, in exchange for 9,023,035 Enservco Common Shares, representing 19.9% of the equity interests of Enservco, and 3,476,965 Enservco Preferred Shares and certain options included in the Share Exchange Agreement. Enservco also agreed to appoint one Company representative to the Enservco board of directors. We also issued a $1 million Note to Enservco to facilitate Enservco’s acquisition of Buckshot Trucking, LLC. The Note is collateralized by the STRRP shares issued to Enservco.
Under the Share Exchange Agreement, we have additional purchase rights (a “call option”), but not obligations, including the 12-month option to participate in any financings to maintain the pro-rata ownership interest in Enservco.and the 12-month option to exchange another $2.5 million of STRRP for additional shares of Enservco common stock.
As discussed above, we entered into a $1 million promissory note (the “Enservco Note”) which was secured by 250,000 shares of our Cumulative Perpetual Preferred Stock, par value $.0001 per share, pursuant to the terms of a pledge agreement. The Enservco Note bore interest at a rate of 20% per annum, accruing from the Issuance Date. The Principal Amount of the Enservco Note, together with all accrued but unpaid interest, was due and payable in full three months from the Issuance Date, unless extended in one month increments by mutual agreement between us and Enservco (the “Maturity Date”). The Maturity Date was to be automatically extended to four months from the Issuance Date in the event Enservco repaid a minimum of $600,000 of the Principal Amount by the third month from the Issuance Date and the Maturity Date would be automatically extended to the fifth month from the Issuance Date in the event Enservco repaid a minimum of $800,000 before four months from the Issuance Date. There were no penalties for prepayment of the Enservco Note. We determined the fair value of the Enservco Note using a discounted cash flow model. The discount rate used in the cash flow model was 15.36% and is a Level 3 fair value input, as it is unobservable. After discussions related to repayment stalled and a delay in filing of Enservco’s September 30, 2024 financial statements, in December 2024 we issued a demand for full repayment of the Enservco Note. As the Enservco note went into default we called the 250,000 shares of our Cumulative Perpetual Preferred Stock which had served as collateral for the Enservco Note. As of December 31, 2024, in connection with the collateral call, we had cancelled the issuance of outstanding shares of Cumulative Perpetual Preferred Stock and extinguished the Enservco Note, as it was determined it is no longer collectible. The value of the collateral returned was in excess of the value of the Enservco note and no gain or loss was recorded upon extinguishment.
The Investment in Enservco represents an investment in a voting interest entity (“VOE”). Under the voting interest model, for legal entities other than partnerships, the usual condition for control is ownership, directly or indirectly, of more than 50 percent of the outstanding voting shares over an entity. The Company does not have ownership of more than 50 percent of the outstanding voting shares of Enservco. As a result, the results of operations and financial position of Enservco are not included in our consolidated financial statements.
The Investment in Enservco is required to be accounted for using the equity method of accounting under ASC 323, Equity Method Investments and Joint Ventures, as we are deemed to have significant influence over Enservco based upon GAAP rules. Pursuant to the guidance in ASC 323, we elected the fair value option pursuant to ASC 825-10-15, wherein the financial instrument is initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date, with changes in the estimated fair value recognized as other income (expense) in the statement of operations.
Our initial valuation of the Investment in Enservco for the common and preferred shares was based upon the market price at the transaction date. The fair value of the preferred shares on a per-unit basis was determined to approximate the fair value of the common shares after consideration of the features and benefits of the preferred shares. In forming this determination, we considered a number of reasonable objective and subjective factors, including third-party valuations and company specific economic outlook. To determine the fair value of the call option, the Company used the Black-Scholes option pricing model taking the stock price of $0.17 at the date of acquisition and $0.06 at December 31, 2024, a twelve-month risk-free yield of 4% and a volatility of 134% observed in Enservco’s historical common stock price history. The preferred shares and the call option are included in the Level 3 of the fair value hierarchy.
Because we elected the fair value option to account for our equity method Investment in Enservco, we determined the fair value of the Common Stock using the closing price of Enservco’s common shares as of the end of the period, which is a Level 1 fair value input. The market value of our Common Stock Investment in Enservco at December 31, 2024, based on quoted market prices, was $496 thousand.
We hold the Investment in Enservco in the Investments Segment. As of December 31, 2024, we owned 9,024,035 shares of Common Stock and 3,476,965 shares of Mandatorily Convertible Preferred Stock, representing approximately 22% of the total outstanding Enservco Common Stock assuming all preferred stock was converted. At December 31, 2024, the total fair value of the Investment in Enservco was approximately $755 thousand. The unrealized loss in our consolidated statements of income related to our Investment in Enservco was $1.9 million for the year ended December 31, 2024.
See Note 6. “Financial Instruments” for further discussion of the fair value hierarchy disclosures.
Accrued Liabilities
December 31,
2024 December 31,
Accrued liabilities:
Escrow funds $ 1,000 $ -
Sales and property taxes payable 263 398
Outside services and consulting 328 -
Other accrued liabilities 231 387
Earnout Provision 152 552
Taxes Payable related to Digirad Sale - 169
Total accrued liabilities $ 1,974 $ 1,506
Note 6. Fair Value Measurements
The Financial Accounting Standards Board’s authoritative guidance for fair value measurements establishes a three-level hierarchy based upon the inputs to the valuation model of an asset or liability. Assets and liabilities presented at fair value in our Consolidated Balance Sheets are generally categorized as follows:
Level 1:Quoted prices in active markets for identical assets or liabilities.
Level 2:Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3:Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Such assets and liabilities may have values determined using pricing models, discounted cash flow methodologies, or similar techniques, and include instruments for which the determination of fair value requires significant management judgment or estimation.
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. The following table sets forth by level within the fair value hierarchy our assets and liabilities that were recorded at fair value as of December 31, 2024 and 2023 (in thousands):
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Fair Value as of December 31, 2024
Level 1 Level 2 Level 3 Total
Assets (liabilities):
Equity securities $ 3,368 $ - $ - $ 3,368
Lumber derivative contracts (7) - - (7)
Investment in Enservco 496 259 755
BLL acquisition related earn-out - - (152) (152)
Total $ 3,857 $ - $ 107 $ 3,964
Fair Value as of December 31, 2023
Level 1 Level 2 Level 3 Total
Assets (liabilities):
Equity securities $ 4,838 $ - $ - $ 4,838
Lumber derivative contracts 19 - - 19
BLL acquisition related earn-out - - (169) (169)
Total $ 4,857 $ - $ (169) $ 4,688
The investment in equity securities consists of common stock of publicly traded companies. The fair value of these securities is based on the closing prices observed on December 31, 2024 and 2023, respectively. During the years ended December 31, 2024, and 2023, we recorded an unrealized loss of $177 thousand and and unrealized gain of $85 thousand, respectively, in the Consolidated Statements of Operations.
The table below presents reconciliation for all Level 3 assets for the year ended December 31, 2024. See Note 5. Supplementary Balance sheet Information for the discussion of inputs to Level 3 assets.
Level 3 Rollforward Enservco Preferred stock Enservco Call Option Enservco Note Total
Beginning Balance $ - $ - $ - $ -
Purchases 696 656 1,000 2,352
Accrued Interest - - 28 28
Note Writeoff - - (1,028) (1,028)
Unrealized gain (loss) (505) (588) - (1,093)
Ending Balance $ 191 $ 68 $ - $ 259
The tables below present reconciliations for all Level 3 liabilities for the years ended December 31, 2024 and December 31, 2023, respectively. The Level 3 liabilities consist of the Big Lake Lumber (“BLL”) earnout liability the inputs to which are discussed in Note 16. Mergers and Acquisitions.
Level 3 Rollforward Twelve Months Ended December 31, 2024
Beginning Balance $ 169
Change in fair value of earn-out 212
Payments of earn-out (229)
Ending Balance $ 152
Level 3 Rollforward Twelve Months Ended December 31, 2023
Beginning Balance $ -
Recognition of earn out 169
Ending Balance $ 169
We enter into lumber derivative contracts in order to protect our gross profit margins from fluctuations caused by volatility in lumber prices. We recorded a total net realized and unrealized gain of $71 thousand for the twelve months ended December 31, 2024 and a total net realized and unrealized loss for the twelve months ended December 31, 2023 of $53 thousand, within cost of revenues in our Consolidated Statements of Operations. As of December 31, 2024, we had a net long (buying) position of 467,500 board feet under seventeen lumber derivatives contracts. As of December 31, 2023, we had a net long (buying) position of 605,000 board feet under twenty-two lumber derivatives contracts.
Note 7. Goodwill
Goodwill has historically been derived from the acquisition of ATRM in 2019. In 2024, goodwill increased due to the acquisition of TT. KBS, EBGL and TT carry goodwill balances of $0.5 million, $4.0 million and $4.0 million, respectively.
The carrying amount of goodwill for the years ended December 31, 2024 and 2023, by reportable segment, changed as follows (in thousands):
Building Solutions Total
Balance at December 31, 2023
$ 4,438 $ 4,438
Recognition of Goodwill as part of TT acquisition 4,015 4,015
Balance at December 31, 2024
$ 8,453 $ 8,453
Based on the annual assessment performed as of December 31, 2024, the Company concluded it was more likely than not that the estimated fair value of our reporting units exceeded their carrying value, and therefore, determined it was not necessary to perform a quantitative goodwill impairment test. None of the goodwill is expected to be deductible for tax purposes.
Note 8. Debt
A summary of debt as of December 31, 2024 and 2023 is as follows (dollars in thousands):
December 31, 2024 December 31, 2023
Amount Weighted-Average Interest Rate Amount Weighted-Average Interest Rate
Revolving Credit Facility - Premier EBGL $ 2,156 8.75% $ 2,019 9.25%
Revolving Credit Facility - KeyBank KBS - -% - -%
Total Short-Term Revolving Credit Facilities $ 2,156 8.75% $ 2,019 9.25%
Bridgewater - TT Term Loan $ 1,400 7.85% $ - -%
Term Loan Secured by Mortgage 355 7.50% - -%
Total Short-Term debt $ 3,911 8.30% $ 2,019 9.25%
Bridgewater - TT Term Loan, net of current portion $ 4,780 7.85% $ - -%
Term Loan Secured by Mortgage, net of current portion 2,625 7.50% - -%
Long-Term Debt, net of current portion $ 7,405 7.73% $ - -%
Total Debt $ 11,316 7.93% $ 2,019 9.25%
Premier Facility
On August 16, 2023, EdgeBuilder and Glenbrook (the “EBGL Borrowers”) entered into a Revolving Credit Loan Agreement with Premier Bank (“Premier”) providing the EBGL Borrowers with a working capital line of credit of up to $4 million, which agreement was subsequently replaced and increased to $6 million on December 5, 2023 (the “Premier Loan Agreement”). Availability under the Premier Loan Agreement is based on a formula tied to the EBGL Borrowers’ eligible accounts receivable, inventory and equipment. Borrowings under the Premier Loan Agreement bear interest at the prime rate plus 0.75% (and a minimum interest rate of 6.75%), with interest payable monthly and the outstanding principal balance payable upon expiration of the term of the Premier Loan Agreement. At December 31, 2024 the rate was 8.25%. The Premier Loan Agreement also provides for certain fees payable to Premier during its term. The initial term of the Premier Loan Agreement expired on December 5, 2024 but may be extended from time to time at the request of the EBGL Borrowers, subject to approval by Premier. The term of the Premier Loan Agreement has been extended to December 5, 2025. The EBGL Borrowers’ obligations under the Premier Loan Agreement are guaranteed by the Company and secured by all of their inventory, equipment, accounts and other intangibles. As of December 31, 2024, availability under the Premier Loan Agreement was approximately $1.8 million.
Financial covenants associated with the Premier Loan Agreement require that the EBGL Borrowers maintain (a) a debt service coverage ratio for any calendar year of less than 1.25; (b) a debt-to-equity ratio at the end of each calendar year in excess of 1.65; (c) a fixed charge coverage ratio at the end of each calendar year of less than 1.10; (d) working capital of at least $2 million; and (e) a current ratio of at least 1.50. As of December 31, 2024, the EBGL Borrowers were in compliance with the Premier Loan Agreement covenants.
KeyBank Facility
On April 24, 2024, KBS entered into a Loan and Security Agreement (the “KeyBank Loan Agreement”) with KeyBank National Association (“KeyBank”) providing KBS with a working capital line of credit of up to $4.0 million, subject to the conditions and procedures set forth in the KeyBank Loan Agreement. All borrowings under the KeyBank Loan Agreement bear interest at the Adjusted Daily SOFR Rate (as defined in the KeyBank Loan Agreement) plus 3%, with interest payable monthly and the outstanding principal balance payable on April 30, 2025 (the “Maturity Date”). The KeyBank Loan Agreement also provides for certain fees payable to KeyBank during its term. The initial term of the KeyBank Loan Agreement expires on the Maturity Date but may be extended from time to time at the request of KBS, subject to approval by KeyBank. KBS’ obligations under the KeyBank Loan Agreement are guaranteed by the Company and secured by all of KBS’ inventory, equipment, accounts and other intangibles, and all proceeds of the foregoing. Simultaneous with the execution of the KeyBank Loan Agreement, the Company entered into that certain Guaranty, dated April 24, 2024 (the “Guaranty”), pursuant to which the Company agreed to guarantee all amounts borrowed by KBS under the KeyBank Loan Agreement.
In the fourth quarter of 2024, KeyBank modified the covenants such that KBS (i) have EBITDA of no less than $300 thousand for the three months ended December 31, 2024, and no less than $600 thousand for the six month ended March 31, 2025 (the “EBITDA covenant”); (ii) maintain a ratio of its Operating Cash Flow to its Total Fixed Charges of at least 1.25 to 1.0 measured quarterly for the preceding twelve month period, commencing with the fiscal quarter ending June 30, 2025, and for each subsequent fiscal quarter thereafter (The FCCR Covenant”). As of September 30, 2024, KBS was not in compliance with the then existing FCCR covenant and had obtained a waiver of compliance as of the filing date.
As of December 31, 2024, KBS was in compliance with the EBITDA covenant. The balance outstanding under the line was $0 at December 31, 2024.
Term Loan Secured by Mortgage
On June 28, 2024, in connection with our acquisition of substantially all of the assets used in the business of Timber Technologies, Inc. which closed on May 17, 2024, Timber Properties, LLC (“Timber Properties”), an affiliate of the Seller, sold to 106 Bremer, LLC, a wholly-owned subsidiary of the Company (“106 Bremer”), all of Timber Properties’ Owned Real Property pursuant to a Real Estate Sales Agreement for $3.0 million plus closing costs.
In connection with the purchase of the Owned Real Property, on June 28, 2024, 106 Bremer issued a Promissory Note in the principal amount of $3.0 million (the “TT Property Note”) secured by a Mortgage (the “TT Property Mortgage”) on the Owned Real Property to Timber Properties. All borrowings under the TT Property Note bear interest at 7.50%. Interest is payable quarterly and the outstanding principal balance is payable on June 29, 2034.
Bridgewater Facility
In connection with the completion of the TT Acquisition, on May 17, 2024, Timber Technologies Solutions, Inc., a wholly-owned subsidiary of the Company (the “Borrower”), entered into a Loan Agreement (the “Bridgewater Loan Agreement”) with Bridgewater Bank (“Bridgewater”) and issued a Term Promissory Note to Bridgewater in the amount of $7.0 million thereunder (the “Facility”). All borrowings under the Facility bear interest at 7.85%, with interest payable monthly and the outstanding principal balance payable on May 20, 2029 (the “Maturity Date”). The Bridgewater Loan Agreement also provides for certain fees payable to Bridgewater during its term, certain of which have been prepaid at closing. The Borrower’s obligations under the Facility are guaranteed by the Company and secured by all of the Borrower’s inventory, equipment, accounts and other intangibles, and all proceeds of the foregoing.
In connection with the Bridgewater Loan agreement, an amount of $1.0 million was required to be deposited with Bridgewater and be under the sole dominion and control of Bridgewater, and the Company shall not have any control over the use of, or any right to withdraw any amount of the restricted deposit. In the event that the Company maintains compliance with all of the financial covenants set forth in the Bridgewater Loan Agreement for four consecutive measurement dates, Bridgewater shall release a portion of the deposit. The $1.0 million deposit is recorded in Other Assets in the Consolidated Balance Sheets.
Financial covenants require that TT maintain (i) a ratio of Cash Flow to Total Fixed Charges of not less than 1.30 to 1.00 as measured on each applicable Measurement Date on a trailing twelve (12) month basis; the first Measurement Date is September 30, 2024; (ii) maintain a ratio of Senior Funded Debt to trailing twelve (12) month Adjusted EBITDA not to exceed 3.00 to 1.00 as measured on each applicable Measurement Date for a Measurement Period; the first Measurement Date is June 30, 2025; (iii) maintain a ratio of Total Funded Debt to trailing twelve (12) month adjusted EBITDA not to exceed 4.00 to 1.00 as measured on each applicable Measurement Date for a Measurement Period; the first Measurement Date is June 30, 2025. TT was not in compliance with the Cash Flow to Total Fixed Charges covenant as of December 31, 2024. TT obtained a waiver from Bridgewater at December 31, 2024.
Webster Credit Facility
On March 29, 2019, the Company entered into a Loan and Security Agreement (the “Webster Loan Agreement”) by and among certain subsidiaries of the Company, as borrowers; the Company, as guarantor; and Sterling National Bank (“Sterling”). On February 1, 2022, Sterling became part of Webster Bank, N.A. (“Webster”), and Webster became the successor in interest to the Webster Loan Agreement. The Webster Loan Agreement was also subject to a limited guarantee by Mr. Eberwein, the Executive Chairman of our board of directors.
The Webster Loan Agreement was a five-year credit facility maturing in March 2024, with a maximum credit amount of $20.0 million for revolving loans (the “Webster Credit Facility”). In connection with the sale of our Healthcare business on May 4, 2023, we paid all amounts due and closed the Webster Credit Facility.
eCapital Credit Facilities
The EBGL Borrowers were parties to a Loan and Security Agreement with eCapital Asset Based Lending Corp. (“eCapital”) providing for a $4.0 million credit facility with a maturity date of June 2023 and an auto-renewal of one year thereafter. KBS was a party to a Loan and Security Agreement with eCapital, providing up to $4.0 million in working capital, which was scheduled to mature and renew automatically for a period of one year moving forward. During the second quarter of 2023, we closed these two credit facilities and have no remaining debt balance with eCapital.
eCapital Term Loan
We and certain of our Investments subsidiaries were party to a Loan and Security Agreement with eCapital, as successor in interest to Gerber Finance, Inc., which provided for a credit facility with borrowing availability of up to $2.5 million, bearing interest at the prime rate plus 3.5% per annum, and maturing on January 31, 2025, unless terminated in accordance with the terms therein. During the second quarter of 2023, we closed this credit facility and have no remaining debt balance with eCapital.
Note 9. Commitments and Contingencies
In the normal course of business, we have been and will likely continue to be subject to litigation or administrative proceedings incidental to our business, such as claims related to compliance with regulatory standards. customer disputes, employment practices, wage and hour disputes, product liability, professional liability, malpractice liability, commercial disputes, licensure restrictions or denials, and warranty or patent infringement. Responding to litigation or administrative proceedings, regardless of whether they have merit, can be expensive and disruptive to normal business operations. We are not able to predict the timing or outcome of these matters and currently do not expect that the resolution of these matters will have a material adverse effect on our financial position or results of operations.
The outcome of litigation and the amount or range of potential loss at particular points in time may be difficult to ascertain. Among other things, uncertainties can include how trial and appellate courts will apply the law and interpret facts, as well as the contractual and statutory obligations of other indemnifying and insuring parties. The estimated range of reasonably possible losses, and their effect on our financial position is based upon currently available information and is subject to significant judgment and a variety of assumptions, as well as known and unknown uncertainties.
Note 10. Leases
Lessee
We have operating and finance leases for corporate offices and operating locations, vehicles, and certain equipment. Our leases have remaining lease terms of 1 year to 20 years, some of which include options to extend the leases and some of which include options to terminate the leases within 1 year. Operating leases and finance leases are included separately in the Consolidated Balance Sheets.
We entered into several Sale Leaseback Transactions during 2024 (the “Sale Leasebacks”).
On July 16, 2024 we sold our facility at 300 Park Street, South Paris, Maine (the “Maine Premises”), together with any fixtures and other items of real property, to MAG Capital Partners Acquisition LLC (“300 Park Buyer”). The total net consideration, after closing costs, related to the 300 Park Sale Leaseback Agreement was $4.5 million in cash, net of closing costs, withholding taxes and security deposits, which was paid at the closing. Simultaneously we entered into a commercial single-tenant triple net lease (the “300 Park Lease Agreement”) with 300 Park Buyer, pursuant to which KBS leased back from 300 Park Buyer the Maine Property for a 20 year term, unless earlier terminated or extended for 2 renewal terms of 10 years each in accordance with the terms of the 300 Park Lease Agreement. The 300 Park Lease agreement contains certain provisions that provide the 300 Park Buyer with the right of first negotiation on future expansion, development or sale leaseback opportunities and the right of first negotiation if we wish to sell any KBS assets, stock, membership interest or other equity interest on the property. The 300 Park Lease also provides us with right of first negotiation in the event of a proposed sale of the Maine Premises. In connection with the 300 Park Lease, we paid an $879 thousand security deposit which will be repaid to us upon meeting certain EBITDA thresholds. We recognized a gain on the sale of the Maine Premises in the third quarter of 2024 of approximately $3.6 million.
On July 19, 2024, we sold our facility at 791 Rose Drive, Big Lake, Minnesota (the “Big Lake Premises”), together with any fixtures and other items of real property, to HJ Development L.L.P (“791 Rose Buyer”). The total net consideration, after closing costs, related to the 791 Rose Sale and Leaseback Agreement was $2.7 million in cash, net of closing costs, withholding taxes and security deposits, which was paid at the closing. Simultaneously we entered into a commercial single-tenant triple net lease (the “791 Rose Lease Agreement”) with 791 Rose Buyer, pursuant to which EBGL leased back from 791 Rose Buyer the Big Lake Property for a 15 year term, unless earlier terminated or extended for an additional 10 years in accordance with the terms of the 791 Rose Lease Agreement. We recognized a gain on the sale of the Big Lake Premises in the third quarter of 2024 of approximately $0.2 million.
In December 2024, we closed on each of (i) that certain purchase and sale agreement with LTI8000 LLC for the sale of real property located at 1607 Pine Street, Prescott, Wisconsin (the “Prescott Premises”) for a purchase price of $2.1 million and (ii) that certain purchase and sale agreement with DWG Capital Partners, LLC (“DWG”) for the sale of the Prescott Premises to DWG for a sale price of $2.6 million (collectively, the “Prescott Purchase Agreements”). The total net consideration related to the Prescott Purchase Agreements was $25 thousand net of closing costs, withholding taxes and security deposits, which was paid at the closing. This represents the purchase and immediate sale of the Prescott Premises.
Simultaneous with the consummation of the Prescott Purchase Agreements, Edgebuilder entered into a commercial single-tenant triple net lease (the “Lease Agreement”) with Pine St. Industrial Partners, LLC (“PineStreet Partners”) and TenNine Holdings, Inc., each affiliates of DWG and together collectively the “Buyers”, pursuant to which Edgebuilder will lease back from the Buyers the Prescott Premises for a 20 year term commencing upon the execution of the Lease Agreement, unless earlier terminated pursuant to the Lease Agreement. The term of the lease is subject to extension for up to two additional ten-year renewal periods in accordance with the terms of the Lease Agreement. Pursuant to the terms of the Lease Agreement, the Company will be responsible for an initial monthly base rent of $19,067, subject to annual increases ranging from 2.50% to 3.00%. The Company is also responsible for all monthly expenses related to the Prescott Premises, including insurance premiums, taxes, utilities, and other expenses. A security deposit of $281,088 is held by the Buyers. The security deposit may be reduced downward based on certain performance conditions.
We recognized a lease incentive of $305 thousand on the sale of the Prescott Premises as the excess of the sale price over the fair value is deemed to be an inducement granted by DWG to us in order for us to agree to the terms of the Lease Agreement and is not deemed as additional financing.
These Sale Leasebacks meet the qualification of operating leases under ASC 842, “Leases” in that (i) they do not automatically transfer title to the lessee at the end of the lease term; (ii) they do not contain a bargain purchase option; (iii) the lease term is not for a major part of the estimated remaining useful life of the asset; (iv) the present value of the lease payments does not represent substantially all of the fair value of the underlying assets; and (v) the underlying assets are not of such a specialized nature that are assumed to have no alternative use to the lessor at the end of the lease term.
We used our incremental borrowing rate as the discount rate for these sale leaseback transactions, as the rate implicit in the lease is not readily determinable. We estimated our incremental borrowing rate based on our Company credit rating, adjusted for the lease’s term and the collateralized nature of the lease obligations. Lease extensions are not reasonably certain of being exercised. As such, we have not included such extensions in determining our incremental borrowing rate or in our initial valuation of the lease assets and liabilities.
The components of lease expense for the years ended December 31, 2024 and 2023 are as follows (in thousands):
December 31,
2024 December 31,
Operating lease cost $ 947 $ 465
Finance lease cost:
Amortization of finance lease assets $ 71 $ 59
Interest on finance lease liabilities 4 11
Total finance lease cost $ 75 $ 70
Supplemental cash flow information related to leases from continuing operations were as follows (in thousands):
December 31,
2024 December 31,
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 848 $ 386
Operating cash flows from finance leases $ 4 $ 11
Financing cash flows from finance leases $ 46 $ 98
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 7,895 $ -
Finance leases $ - $ -
Supplemental balance sheet information related to leases as of December 31, 2024 and 2023 were as follows (in thousands):
December 31,
2024 December 31,
Weighted-Average Remaining Lease Term (in years)
Operating leases 17.2 4.3
Finance leases 2.3 2.2
Weighted-Average Discount Rate
Operating leases 12.90 % 5.46 %
Finance leases 5.80 % 5.86 %
We are committed to making future cash payments on non-cancelable operating leases and finance leases (including interest). The future minimum lease payments due under both non-cancelable operating leases and finance leases having initial or remaining lease terms in excess of one year as of December 31, 2024 were as follows (in thousands):
Operating
Leases Finance
Leases
2025 $ 1,289 $ 26
2026 1,270 16
2027 1,144 1
2028 1,173 -
2029 1,204 -
2030 and thereafter 18,142 -
Total future minimum lease payments 24,222 43
Less amounts representing interest 15,498 2
Present value of lease obligations $ 8,724 $ 41
Lessor
Prior to the sale of our Healthcare division, we generated lease income in the Healthcare segment from equipment rentals to customers. Rental contracts were structured as either a weekly or monthly payment arrangement and were accounted for as operating leases. Revenues were recognized on a straight-line basis over the term of the rental.
Note 11. Share-Based Compensation
At December 31, 2024, we had three active equity incentive plans, the 2011 Inducement Stock Incentive Plan (the “2011 Plan”) the 2018 Incentive Plan (the “2018 Plan”) and the 2022 Inducement Stock Incentive Plan (the “2022 Plan” and together with the 2011 Plan and 2018 Plan, the “Plans”), under which stock options, restricted stock units, and other stock-based awards may be granted to employees and non-employees, including members of our board of directors. The terms of any equity instruments granted under the Plans are approved by our board of directors. Stock options typically vest over the requisite service period of one to four years and have a contractual term of seven to ten years. Restricted stock units generally vest over one to three years. Under the Plans, we are authorized to issue an aggregate of 1,450,000 shares of common stock. As of December 31, 2024, the Plans had 143,670 shares available for future issuance. The number of shares reserved for issuance under the 2018 Plan is subject to increase by (i) the number of shares of common stock that remained available for grant under the 2014 Equity Incentive Award Plan (the “2014 Plan”) as of the effective date of the 2018 Plan, plus (ii) any shares of common stock under the 2014 Plan that are forfeited, expire, or are canceled. As of December 31, 2024, the number of shares provided for issuance under the 2018 Plan due to unissued, forfeited, expired, and canceled shares under the 2014 Plan was 13,594 shares.
Stock Options
The estimated fair value of our stock options is determined using the Black-Scholes model. All stock options were granted with an exercise price equal to the fair value of the common stock on the grant date. There were no employee stock options granted during the years ended December 31, 2024 and 2023.
At December 31, 2024, there is no unrecognized compensation cost related to unvested stock options.
Upon exercise, we issue new shares of common stock. There were no stock option exercises during the years ended December 31, 2024 and 2023, respectively. Stock options outstanding as of December 31. 2023 expired as of December 31, 2024.
Under the guidance for share-based payments, the fair value of our restricted stock units is based on the grant date fair value of our common stock. All restricted stock units were granted with no purchase price. Vesting of the restricted stock units is subject to service conditions, as well as the attainment of additional performance objectives for certain of the awards. The weighted-average grant date fair value of the restricted stock units was $4.13 per share during the year ended December 31, 2024.
A summary of our restricted stock unit activity as of and for the year ended December 31, 2024 is as follows (in thousands, except per share data):
Number of
Shares Weighted-Average
Grant Date Fair
Value Per Share
Non-vested restricted stock units outstanding at December 31, 2023
68 $ 6.04
Granted 44 $ 4.13
Forfeited (1) $ 6.90
Vested (35) $ 6.56
Non-vested restricted stock units outstanding at December 31, 2024
76 $ 4.68
The following table summarizes information about restricted stock units that vested during the years ended December 31, 2024 and 2023 based on service conditions (in thousands):
Year Ended December 31,
2024 2023
Fair value on vesting date of vested restricted stock units $ 511 $ 295
At December 31, 2024, total unrecognized compensation cost related to non-vested restricted stock units was $0.2 million, which is expected to be recognized over a weighted-average period of 1.7 years.
Allocation of Share-Based Compensation Expense
Total share-based compensation expense related to all of our share-based units for the years ended December 31, 2024 and 2023 was allocated as follows (in thousands):
Year Ended December 31,
2024 2023
Cost of revenues $ - $ -
Selling, general and administrative 240 340
Total share-based compensation expense $ 240 $ 340
Note 12. Income Taxes
Significant components of the provision for income taxes from continuing operations for the years ended December 31, 2024 and 2023 are as follows (in thousands):
Year Ended December 31,
2024 2023
Current provision:
Federal $ - $ -
State 247 -
Total current provision 247 -
Deferred provision:
Federal 10 (312)
State 6 (302)
Total deferred (benefit) provision 16 (614)
Total income tax (benefit) provision $ 263 $ (614)
Differences between the provision for income taxes and income taxes at the statutory federal income tax rate for continuing operations are for the years ended December 31, 2024 and 2023 as follows:
Year Ended December 31,
2024 2023
Income tax expense at statutory federal rate 21.0 % 21.0 %
State income tax expense, net of federal benefit 7.3 % 7.3 %
Permanent differences and other (0.3) % 0.6 %
Revaluation of deferred taxes due to change in effective state tax rates (4.6) % (10.2) %
Expiration of net operating loss and tax credit carryovers (0.5) % - %
Change in valuation allowance (25.6) % 6.2 %
Provision for income taxes (2.7) % 24.9 %
Our net deferred tax assets (liabilities) as of December 31, 2024 and 2023 consisted of the following (in thousands):
December 31,
2024 2023
Deferred tax assets:
Net operating loss carry forwards $ 10,526 $ 10,746
Tax credits 72 74
Reserves 114 66
Accrued Expenses 295 247
Operating lease liabilities 2,520 299
Impairments 1,287 -
Other, net 911 192
Total deferred tax assets 15,724 11,624
Deferred tax liabilities:
Fixed assets and other (396) (345)
Right of use assets (2,481) (418)
Intangibles (2,382) (2,898)
Total deferred tax liabilities (5,260) (3,661)
Valuation allowance for deferred tax assets (10,799) (8,281)
Net deferred tax liabilities $ (334) $ (318)
The Company recognizes federal and state deferred tax assets or liabilities based on the Company’s estimate of future tax effects attributable to temporary differences and carryovers. The Company records a valuation allowance to reduce any deferred tax assets by the amount of any tax benefits that, based on available evidence and judgment, are not expected to be realized. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. The Company considers projected future taxable income and planning strategies in making this assessment. As of December 31, 2024, as a result of a three-year cumulative loss in continuing operations and recent events, we concluded that a valuation allowance was necessary to offset deferred tax assets. We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal. The Company’s valuation allowance balance at December 31, 2024 is $10.8 million, offsetting the Company’s deferred tax assets. The valuation allowance increased by $2.5 million and decreased by $7.6 million for the years ended December 31, 2024 and 2023, respectively. The Company will continue to evaluate its deferred tax balances to determine any assets that are more likely than not to be realized.
As of December 31, 2024, we had federal and state income tax net operating loss carryforwards of $44.6 million and $17.6 million, respectively. Federal and certain state net operating losses of $7.6 million and $1.4 million, respectively, generated after 2017 carry forward without expiration. The remaining federal and state loss carryforwards will expire in 2025 through 2044 unless previously utilized. State loss carryforwards of approximately $0.8 million expired in 2024. Pursuant to Internal Revenue Code (“Code”) Sections 382 and 383, use of our net operating loss and credit carryforwards may be limited because of a cumulative change in ownership greater than 50%. The Company experienced an ownership change under Code Section 382 in January 2022 which will restrict the Company’s ability to fully utilize its net operating losses. In addition, the net operating losses acquired in the ATRM Acquisition (as defined below) are also limited under Code Section 382. The Company analyzed these limitations when scheduling the reversal of deferred tax assets and liabilities in arriving at the necessary valuation allowance as of December 31, 2024. Future ownership changes may occur which could further limit our ability to utilize tax attributes.
The following table summarizes the activity related to our unrecognized tax benefits for the years ended December 31, 2024 and 2023 (in thousands):
December 31,
2024 2023
Balance at beginning of year $ 294 $ 2,414
Write-off of tax attributes in states in which the Company no longer files - (2,120)
Balance at end of year $ 294 $ 294
Included in the unrecognized tax benefits of $0.3 million at December 31, 2024 was $0.3 million of tax benefits that, if recognized, would reduce our annual effective tax rate, subject to the valuation allowance. The Company does not expect our unrecognized tax benefits to change significantly over the next 12 months.
We file income tax returns in the U.S. and in various state jurisdictions with varying statutes of limitations. We are no longer subject to income tax examination by tax authorities for years prior to 2020; however, our net operating loss carryforwards and research credit carryforwards arising prior to that year are subject to adjustment. Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. The accrued interest as of December 31, 2024 and 2023, and interest and penalties recognized during the years ended December 31, 2024 and 2023 were of insignificant amounts.
Note 13. Employee Retirement Plan
Employees have a 401(k) retirement plan under which employees may contribute up to 100% of their annual salary, within IRS limits. Our contributions to the retirement plans totaled $0.1 million and $0.1 million for the years ended December 31, 2024 and 2023, respectively.
Note 14. Related Party Transaction
Star Equity Holdings, Inc.
As of December 31, 2024, our Executive Chairman, Jeffrey E. Eberwein, owned 816,548 shares of Common Stock, representing approximately 25.51% of our outstanding Common Stock. In addition, as of December 31, 2024, Mr. Eberwein owned 1,182,414 shares of Series A Preferred Stock.
During 2024 and 2023, as a result of our long term investments, our CEO held board positions on Enservco and Catalyst.
Note 15. Segments
Our reportable segments are based upon our internal organizational structure; the manner in which our operations are managed; the criteria used by our Chief Executive Officer, who is our CODM, to evaluate segment performance; the availability of separate financial information; and overall materiality considerations. We evaluate the performance of our reportable segments including the use of an EBITDA metric which is defined as earnings before interest, income taxes, depreciation, and amortization. In addition, certain corporate-related costs are not allocated to the segments. Under the prior period Holding Company (“Holdco”) strategy, we organized our reportable segments into three reportable segments: Healthcare, Building Solutions, and Investments. Effective with the sale of our Healthcare business on May 4, 2023, we reorganized our segments into two reportable segments to reflect the manner in which our CODM assesses performance and allocates resources:
1.Building Solutions
2.Investments
Building Solutions. Through KBS, EBGL and TT, we service residential and commercial construction projects by manufacturing modular housing units, structural wall panels, permanent wood foundation systems, other engineered wood products, and supply general contractors with building materials. KBS is a Maine-based manufacturer that started business in 2001 as a manufacturer of modular homes. KBS offers products for both commercial and residential buildings with a focus on customization to suit the project requirements and provide engineering and design expertise. Glenbrook is a retail supplier of lumber, windows, doors, cabinets, drywall, roofing, decking and other building materials and conducts its operations in Oakdale, Minnesota. EdgeBuilder is a manufacturer of structural wall panels, permanent wood foundation systems and other engineered wood products and conducts its operations in Prescott, Wisconsin. TT is based outside the Minneapolis-Saint Paul area in Colfax, Wisconsin and manufactures glue-laminated timber products (“glulam”) for various end markets and applications, including agriculture, industrial, infrastructure, and building construction (commercial and residential).
Investments. Our Investments division is an internally-funded unit. This unit holds our corporate-owned real estate, which currently includes one manufacturing facility and the equipment for another manufacturing facility in Maine that we lease back to KBS and our manufacturing facility in Wisconsin that we lease back to TT. In addition, it holds several minority equity investments in other small public companies. It also holds and manages a promissory note and a private equity stake in Catalyst Parent, the parent entity of Catalyst, We acquired these positions as a result of the sale of Digirad Health (discussed in Note 3. Discontinued Operations). The Investments Segment also holds the Investment in Enservco, discussed in Note 5. Supplementary Balance Sheet Information).
Our reporting segments have been determined based on the nature of the products and services offered to customers or the nature of their function in the organization. We evaluate performance based on the gross profit, operating income (loss) and EBITDA. Our operating costs included in our shared service functions primarily consist of senior executive officers, finance, human resources, legal, and information technology. Star Equity shared service corporate costs have been separated from the reportable segments. Prior period presentation previously disclosed conforms to current year presentation.
Segment Assets - We manage our assets on a total company basis, not operating segment, as our operating assets are shared or commingled. Therefore, our CODM does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Total assets were $83.0 million and $75.5 million as of December 31, 2024, and 2023, respectively.
Segment income statement information - In accordance with ASC 280, Segment Reporting, we have disclosed for our reportable segments the information that is reviewed by the CODM, including an EBITDA metric. ASC 280 is based on a management approach that requires segmentation based upon the Company’s internal organization and disclosure of revenue and certain expenses based upon internal accounting methods. The Company’s financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Selected income statement information by segment for the years ended December 31, 2024 and 2023 is presented as follows (in thousands):
Building Solutions Investments Corporate and Intersegment eliminations Total
For the Year Ended December 31, 2024
Revenues $ 53,359 $ 731 $ (731) $ 53,359
Cost of revenues 42,083 221 - 42,304
Gross profit 11,276 510 (731) 11,055
Selling, general and administrative 9,896 250 6,845 16,991
Amortization of intangible assets 2,479 - - 2,479
Net income (loss) from continuing operations $ (1,099) $ 260 $ (7,576) $ (8,415)
EBITDA, unaudited $ 2,264 $ (2,292) $ (7,178) $ (7,206)
Depreciation and amortization (3,338) (221) (43) (3,602)
Interest income (expense), net (504) 716 421 633
Income tax benefit (provision) - - (263) (263)
Income (loss) from continuing operations, net of tax $ (1,578) $ (1,797) $ (7,063) $ (10,438)
Building Solutions Investments Corporate and Intersegment eliminations Total
For the Year Ended December 31, 2023
Revenues $ 45,785 $ 564 $ (564) $ 45,785
Cost of revenues 33,631 228 - 33,859
Gross profit 12,154 336 (564) 11,926
Selling, general and administrative 8,325 789 5,424 14,538
Amortization of intangible assets 1,734 - - 1,734
Net income (loss) from continuing operations $ 2,095 $ (453) $ (5,988) $ (4,346)
EBITDA, unaudited $ 4,383 $ 1,185 $ (6,736) $ (1,168)
Depreciation and amortization (2,070) (227) (29) (2,326)
Interest income (expense), net (84) 466 591 973
Income tax benefit (provision) 288 - 326 614
Income (loss) from continuing operations, net of tax $ 2,517 $ 1,424 $ (5,848) $ (1,907)
1) Our CODM uses income (loss) from operations by segment to evaluate income or loss generated from segment assets (return on assets) in deciding whether to reinvest profits into a segment or into other parts such as acquisitions or to pay dividends.
2) Income (loss) from operations by segment is used to monitor budget versus actual results. The CODM also uses income (loss) from operations by segment in competitive analysis by benchmarking to the company’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and establishing management’s compensation.
3) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
Geographic Information. Our sales to customers and our long-lived assets are attributed to geographic region based on asset location, which are all located within the United States.
Note 16. Mergers and Acquisitions
Timber Technologies Solutions
On May 17, 2024, we acquired, through certain wholly owned subsidiaries, substantially all of the assets of Timber Technologies Inc. and, on June 28, 2024, the real assets of Timber Properties, LLC (collectively, “TT”) for total consideration of $23.7 million consisting of cash of $19.7 million, $1.0 million of escrow funds included in accrued liabilities, and a Term Loan Secured by a Mortgage of $3.0 million. We are also subject to payments due to the sellers contingent upon the achievement of certain EBITDA metrics over a 2-year period which may result in total payments not to exceed $4.1 million, 50% of which is payable in cash and 50% of which is payable in Series A Preferred Stock. These payments are also contingent upon the continued employment of the individual sellers. We have concluded that these payments are akin to compensation and will be recorded if and as such compensation is earned. For the twelve months ended December 31, 2024, we have accrued no amounts related to these payments as such achievement is deemed to have not been met. We have restricted $1.0 million of cash associated with the escrow funds payable to the sellers within 12 months after the acquisition as defined in the escrow agreement. The revenue and earnings of TT from May 17, 2024 through December 31, 2024 totaled $9.8 million and $0.5 million, respectively.
In accordance with ASC 805, Business Combinations, we accounted for this transaction as a business combination and recorded the acquired assets of TT at fair value. This business is reported as part of our Building Solutions segment.
The following table sets forth the purchase price allocation of TT to the estimated fair value of assets acquired as of the acquisition date (in thousands):
Accounts receivable, net $ 766
Inventory, net 2,836
Other current assets 2
Property and equipment, net 7,156
Intangibles 8,900
Net assets acquired 19,660
Goodwill 4,014
Purchase price $ 23,674
The $8.9 million of identified intangible assets was allocated as follows (in thousands):
Fair Value Useful Life
(years)
Trade Names $ 1,970 15
Customer Relationships 6,640 10
Backlog 290 1
Fair value of identified intangible assets $ 8,900
Goodwill and intangibles of $4.0 million and $8.9 million, respectively, were assigned to the Building Solutions segment. The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of TT.
The Company recognized $0.2 million of acquisition related costs including legal and accounting that were expensed in 2024.
The following represents certain information from the unaudited pro forma condensed Consolidated Statement of Operations as if TT had occurred at the beginning of fiscal 2023 (in thousands):
Twelve Months Ended December 31,
2024 2023
(unaudited)
Revenue $ 60,098 $ 64,471
Gross profit 14,599 22,105
Net income (loss) from continuing operations, net of tax (7,134) 3,434
Big Lake Lumber
On October 31, 2023, we acquired, through certain wholly owned subsidiaries, the assets and liabilities of BLL for consideration consisting of cash of $2.8 million and an earn-out provision of up to $0.5 million. As a result of this transaction, EBGL expanded its market share of the Greater Minneapolis area. BLL’s operations were integrated into and became part of Glenbrook’s operations. The earn-out provision, which is accounted for as a contingent liability, is based on a specific gross profit threshold with a measurement period of two years to begin one year after the closing date of the acquisition and can potentially amount to up to $0.3 million for each of the two years, subject to certain limitations. The estimated fair value of the earn-out, which is determined using estimates of forecasted operations and other assumptions, was $0.2 million as of the acquisition date. We recorded an increase to the fair value of the earn-out of $0.2 million which is reflected in Accrued Liabilities on our consolidated balance sheet at December 31, 2024 and is reflected in operating expenses on our Consolidated Statement.of Operations for the year ended December 31, 2024. We paid a portion of the earn-out amounting to $0.2 million in the fourth quarter of 2024.
In accordance with ASC 805, we accounted for this transaction as a business combination and recorded the assets and liabilities of BLL at fair value. The fair value of the net assets acquired amounted to approximately $4.1 million at the date of acquisition, and as a result, we recorded a gain of $1.2 million on our Consolidated Statement of Operations related to the excess of the fair value of the net assets acquired over the acquisition price. This excess is referred to as a “bargain purchase.” This bargain purchase indicates that the fair value of the net assets acquired (which represents the price that the assets would be exchanged between a willing buyer and seller) was in excess of the amount for which we acquired such net assets. As a result of the bargain purchase, we reassessed the recognition and measurement of net identifiable assets acquired and determined the valuation procedures applied and resulting measurements of the net identifiable assets were appropriate. We believe the seller was motivated to complete the sale as part of its overall business strategy of exiting the market segment. The revenue and earnings of BLL from November 1, 2023 through December 31, 2023 totaled $1.4 million and $0.4 million, respectively.
The following table sets forth the purchase price allocation of BLL to the estimated fair value of assets acquired as of the acquisition date (in thousands):
Purchase Price
Cash Paid to Sellers $ 2,770
Fair Value of Earn-out Provision 169
Total consideration 2,939
Purchase Price allocation
Inventories, net 438
Accounts receivable 578
Property and equipment 2,654
Intangible assets, 900
Deferred tax liability (461)
Fair value allocated to net assets acquired 4,109
Bargain purchase gain $ (1,170)
The following unaudited pro forma combined financial information presents our results as if the BLL acquisition had occurred at the beginning of fiscal 2023 (in thousands):
Twelve Months Ended December 31,
(unaudited)
Revenue $ 54,485
Gross Profit 13,709
Net income (loss) from continuing operations (1,307)
Note 17. Perpetual Preferred Stock
Holders of shares of our Series A Preferred Stock are entitled to receive, when, as, and if, authorized by the Company’s board of directors (or a duly authorized committee of the Company’s board of directors) and declared by the Company out of funds legally available for the payment of dividends, preferential cumulative cash dividends at the rate of 10.0% per annum of the liquidation preference of $10.00 per share. Dividends are payable quarterly, in arrears, by the last calendar day of March, June, September and December to holders of record at the close of business on the first day of each payment month. The Series A Preferred Stock is not convertible and does not have any voting rights, except when dividends are in arrears for six or more consecutive quarters, then the holders of those shares together with holders of all other series of preferred stock equal in rank would be entitled to vote separately as a class for the election of two additional directors to board of directors, until all dividends accumulated on such shares of Series A Preferred Stock for the past dividend periods and the dividend for the current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set apart for payment. The Series A Preferred Stock is not subject to redemption by the Company
On each of February 16, 2024, May 21, 2024, August 16, 2024, and November 21, 2024 our board of directors declared a cash dividend to holders of our Series A Preferred Stock of $0.25 per share, for an aggregate amount of approximately $2.0 million. The record dates for these dividend payments were March 1, 2024, June 1, 2024, September 1, 2024 and December 1, 2024, respectively, and the payment dates were March 11, 2024, June 11, 2024, September 10, 2024 and December 11, 2024, respectively. As of December 31, 2024, we have no preferred dividends in arrears.
On February 14, 2025, we announced that our board of directors declared a cash dividend to holders of our Series A Preferred Stock of $0.25 per share for an aggregate amount of approximately $0.5 million. The record date for this dividend was March 1, 2025, and the payment date was March 10, 2025.
A roll forward of the balance of Company Preferred Stock for the year ended December 31, 2024 is as follows (in thousands):
Balance at December 31, 2023
$ 18,988
Issuance of Preferred Shares, at fair value
2,605
Cancelled Issuance of Preferred Shares, at fair value
(2,605)
Balance at December 31, 2024
$ 18,988
Note 18. Equity Transactions
On June 12, 2024, we filed a Certificate of Amendment to the Company’s Restated Certificate of Incorporation (the “Amendment”) with the Secretary of State of the State of Delaware in order to effect a reverse stock split of our common stock at a ratio of one-for-five (the “Reverse Split”). The Amendment does not affect the par value of our common stock.
The Reverse Split became effective on June 14, 2024, at 5:00 p.m. Eastern Time, at which time every five shares of the Company’s issued and outstanding common stock were automatically combined into one share of common stock. Additionally, all stock options and warrants of the Company outstanding immediately prior to the Reverse Split were proportionally adjusted.
As of December 31, 2024, of the warrants issued through the public offering we closed on May 28, 2020, 1.0 million warrants were exercised and 1.4 million warrants remained outstanding, which represents 0.1 million shares of common stock equivalents, at an exercise price of $11.25. For every 1 warrant .10 of a share shall be issued.
As of December 31, 2024, of the warrants issued through the public offering we closed on January 24, 2022, there were 10.9 million warrants outstanding at an exercise price of $7.50, and no prefunded warrants outstanding. The 0.3 million prefunded warrants were exercised at $0.01 per share in the third quarter of 2023. For every 1 warrant .20 of a share shall be issued.
Additionally, Company issued to its underwriter 237,500 common stock purchase warrants (the “Underwriter’s Warrants”) to purchase up to 47,500 shares of Common Stock at an exercise price of $8.25 per common warrant. These warrants are outstanding at December 31, 2024.
On August 7, 2024, the Company’s Board authorized a stock buyback program for the repurchase of up to $1 million of the Company’s common stock. The Company repurchased $0.3 million worth, or 73,855 shares, of its common stock during the third and fourth quarter of 2024. Under the new stock repurchase program, the Company intends to repurchase shares through open market purchases, privately negotiated transactions, block purchases, or otherwise in accordance with federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934 (the “Exchange Act”).
Note 19. Preferred Stock Rights
On August 21, 2024, the Board declared a dividend to the Company’s stockholders of record as of the close of business on September 3, 2024, for each outstanding share of the Company’s common stock, of one right (a “Right”) to purchase one one-thousandth of a share of a new series of participating preferred stock of the Company. Each right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series C Participating Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”), at an exercise price of $12.00 per one one-thousandth of a share of Series C Preferred Stock, subject to adjustment.
The terms of the Rights are set forth in the Tax Benefit Preservation Plan (the “Rights Plan”). The Rights Plan is intended to diminish the risk that our ability to use our net operating loss carryforwards to reduce future federal income tax obligations may become substantially limited due to an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended.
The Company also has a provision in its Amended and Restated Certificate of Incorporation which generally prohibits transfers of its common stock that could result in an ownership change.
The rights will become exercisable following (i) 10 days after a public announcement that a person or group has become an Acquiring Person (as defined in the Rights Plan); and (ii) 10 business days (or a later date determined by the board of directors) after a person or group begins a tender or an exchange offer that, if completed, would result in that person or group becoming an Acquiring Person.
In addition, upon the occurrence of certain events, the exercise price of the rights would be adjusted and holders of the rights (other than rights owned by an acquiring person or group) would be entitled to purchase common stock at approximately half of market value. Given the potential adjustment of the exercise price of the rights, the rights could cause substantial dilution to a person or group that acquires 4.99% or more of common stock on terms not approved by the board of directors.
The Rights will expire on the earliest of (i) August 21, 2027, which is the third anniversary of the date on which our Board of Directors authorized and declared a dividend of the rights, or such earlier date as of which the Board determines that the Rights Plan is no longer necessary for the preservation of the Company’s tax benefits, (ii) the time at which the Rights are redeemed, (iii) the time at which the Rights are exchanged, (iv) the effective time of the repeal of Section 382 of the Code or any successor statute if the Board determines that the Rights Plan is no longer necessary for the preservation of the Company’s tax benefits, (v) the first day of a taxable year to which the Board determines that no NOLs or other tax benefits may be carried forward, and (vi) the day following the certification of the voting results of the Company’s 2024 annual meeting of stockholders, if stockholder approval of the Rights Plan has not been obtained prior to that date.
The Board may redeem all (but not less than all) of the Rights for a redemption price of $0.0001 per Right at any time before a person or group has become an Acquiring Person. Once the Rights are redeemed, the right to exercise the Rights will terminate, and the only right of the holders of such Rights will be to receive the redemption price. The redemption price will be adjusted if the Company declares a stock split or issues a stock dividend on common stock. There is no impact to financial results as a result of the adoption of the Rights Plan for the year ended December 31, 2024.
Note 20. Subsequent Events
Acquisition of Alliance Drilling Tools
On March 3, 2025 (the “Closing Date”), the Company entered into an Agreement with a third party seller to acquire Alliance Drilling Tools, LLC, a Wyoming limited liability company (“ADT”).
ADT operates a drilling equipment supply and repair business serving the oil and gas, geothermal, mining and water-well industries, with operations primarily in Texas and Wyoming. .In connection with the closing of the transaction, the Company paid aggregate consideration of (i) $4,900,000 (the “Cash Consideration”) and (ii) issued 775,000 STRRP shares, subject to customary adjustments for debt, cash on hand, transaction expenses and net working capital. At the closing, $1,000,000 of the Cash Consideration and 100,000 shares of the Stock Consideration was held in escrow to satisfy any claims for indemnification by the Company and an additional $250,000 of the Cash Consideration was held in escrow to satisfy amounts that may be
owing to the Company pursuant to the working capital adjustment. All escrowed funds are to be released to the sellers by no later than the eighteen month anniversary of the Closing Date and all escrowed shares STRRP are to be released to the Sellers by no later than the twelve month anniversary of the Closing Date.
In connection with this transaction, on March 3, 2025, ADT entered into a Loan and Security Agreement (the “Austin Loan Agreement”) with Austin Financial Services, Inc. (“Austin”) providing ADT with a working capital line of credit of up to $3,000,000 and a term loan of $639,000, subject to the conditions and procedures set forth in the Austin Loan Agreement. Availability under the Austin Loan Agreement is based on a formula tied to ADT’s eligible accounts receivable, inventory and equipment, and borrowings bear interest at the prime rate plus 1.75%, with interest payable monthly and the outstanding principal balance payable March 4, 2028 (the “Maturity Date”). The Austin Loan Agreement also provides for certain fees payable to Austin during its term.
As of the date these financial statements were issued, the initial accounting for the business combination is incomplete. Accordingly, certain disclosures required under ASC 805-10-50-2, including the fair values of assets acquired and liabilities assumed, have not been provided. The Company is in the process of gathering the necessary information to complete the accounting for the transaction

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A.CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of our management, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Management conducted an assessment of the effectiveness of the Company's internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based on this assessment, our management concluded that, as of December 31, 2024, our internal control over financial reporting was effective based on those criteria.
Remediation of Material Weakness
The Company and its Board of Directors are committed to maintaining a strong internal control environment. Following the identification of the material weakness described in our Quarterly Report on Form 10-Q for the three months ended September 30, 2024, related to insufficient complement of accounting resources to address complex accounting matters across all operating entities we initiated remediation measures to address the material weakness. Management believes that it has completed its updates to the design and implementation of internal controls to remediate the material weakness and enhance the Company’s internal control environment. As previously reported, the remediation plan was implemented during the fourth quarter of 2024 to update our design and implementation of controls to remediate the aforementioned deficiency and enhance the Company's internal control environment. The Company has increased its investment in a complement of accounting resources to address complex accounting matters. Management believes that such enhanced controls have been designed to address the material weakness. We completed our remediation activities by testing the operating effectiveness of the enhanced controls and found them to be effective. Based on the implementation work and results of testing performed, we have concluded that the previously identified material weakness has been remediated as of December 31, 2024.
Management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of TT, which is included in the 2024 consolidated financial statements of the Company and constituted 11% of total and 7% of net assets, as of December 31, 2024 and 18% of revenues and 5% of net income, for the year then ended.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during fourth quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
Security Trading Plans of Directors and Executive Officers
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 Company's fiscal quarter ended December 31, 2024, as such terms are defined under Item 408(a) or Regulation S-K.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our Board of Directors
The current number of directors on our board of directors is four. Under our bylaws, the number of directors on our board of directors will not be less than four, nor more than nine. The number of directors may be increased or decreased by resolution of the board of directors.
Name Age Position
Jeffrey E. Eberwein 54 Director, Executive Chairman of the Board
Todd Fruhbeis 58 Director
Jennifer Palmer 45 Director
Louis Parks 64 Director
Information about the Company’s Directors
Set forth below are descriptions of the backgrounds of each director and their principal occupations for at least the past five years and their public-company directorships. There are no family relationships among any of our directors or executive officers. All ages are as of March 20, 2025.
In addition to the information presented below regarding each director’s specific experience, qualifications, attributes and skills that led our board of directors to the conclusion that he should serve as a director, we also believe that all of our directors have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to Star Equity and our board of directors.
Jeffrey E. Eberwein Age 54
Director since 2012
Chief Executive Officer of Hudson Global Inc. (“Hudson”) and Executive Chairman of Star Equity
Mr. Eberwein was elected Executive Chairman of the board of directors of the Company on January 1, 2021, after serving as Chairman of the board of directors since February 6, 2013. Mr. Eberwein has served as a director of Hudson since May 2014 and as its Chief Executive Officer since April 1, 2018. He has 25 years of Wall Street experience and valuable public company and financial expertise gained through his employment history and directorships. Prior to founding Lone Star Value Management, LLC (“LSVM”), a Connecticut-based investment firm he founded in 2013, Mr. Eberwein was a private investor and served as a portfolio manager at Soros Fund Management from 2009 to 2011 and Viking Global Investors from 2005 to 2008. LSVM was a wholly owned subsidiary of ATRM Holdings, Inc. (“ATRM”) when ATRM, a modular building company, was acquired by the Company on September 10, 2019 (the “ATRM Acquisition”). Previously, Mr. Eberwein served as chairman of the board of Ameri Holdings, Inc. from May 2015 to August 2018. Mr. Eberwein also previously served as a director of Novation Companies, Inc. from April 2015 to March 2018; Crossroads Systems, Inc. from June 2013 to May 2016; NTS, Inc. from December 2012 to June 2014; On Track Innovations Ltd. from 2012 to 2014; and Goldfield Corporation from 2012 to 2013. Mr. Eberwein earned an M.B.A. from The Wharton School, University of Pennsylvania and a B.B.A. with High Honors from The University of Texas at Austin.
We believe Mr. Eberwein’s expertise in finance and experience in the investment community, along with his extensive experience, qualifications, attributes and skills make him well qualified to serve as a director of our Company.
On February 14, 2017, the SEC issued an order (Securities Exchange Act Release No. 80038) (the “Order”) relating to allegations that certain groups of investors failed to properly disclose ownership information during a series of five campaigns to influence or exert control over micro-cap companies. The Order alleged violations of Section 13(d)(1) of the Exchange Act and Rule 13d-1 thereunder, Section 13(d)(2) of the Exchange Act and Rule 13d-2(a) thereunder and Section 16(a) of the Exchange Act and Rules 16a-2 and 16a-3 thereunder by Mr. Eberwein and a hedge fund adviser headed by him, LSVM, a mutual fund adviser and another investor. Without admitting or denying the findings, they consented to the Order and agreed to cease and desist from committing any violations of the above-referenced Exchange Act provisions and civil penalties of $90 thousand for Mr. Eberwein, $120 thousand for LSVM, $180 thousand for the mutual fund advisor and $30 thousand for the other investor. On February 24, 2020, the SEC issued an order (Securities Exchange Act Release No. 5448) (the “Advisers Act Order”) relating to allegations, among other things, that LSVM failed to properly disclose certain specific transactions in advance and obtain client consent for these transactions prior to their completion and that LSVM failed to implement certain written policies and procedures. The Advisers Act Order alleged violations of Section 206(3) and 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) and Rule 206(4)-7 thereunder by Mr. Eberwein and LSVM. Without admitting or denying the findings, they consented to the Advisers Act Order and agreed to cease and desist from committing or causing any violations of the above-referenced Advisers Act provisions, for LSVM to be censured and to pay civil penalties of $25 thousand for Mr. Eberwein and $100 thousand for LSVM.
Todd Fruhbeis
Age 58
Director since 2024
Managing Member; Jackson House, LLC
Committees: Audit (Chairman), Compensation, and Corporate Governance
Mr. Fruhbeis has over 25 years of capital markets experience. In 2005, he joined HSBC to establish and lead a multi-asset class structured investment product business for the Americas, which went on to become a leading issuer of structured debt in the US and the top-ranked US Structured Products business for many years, as measured by Greenwich Associates. While at HSBC, he also managed the US Institutional Equity Derivatives sales team. Prior to his work in capital markets, Mr. Fruhbeis was a senior financial analyst at Harvard University. Mr. Fruhbeis has been an active real estate investor for 15 years with interests in over 45 real estate partnerships and investments throughout the US. His current investment portfolio is diversified over multi-family, office, industrial, and hospitality assets. Mr. Fruhbeis earned a B.B.A in Finance from the University of Massachusetts summa cum laude in 1989, and an M.B.A in Finance from The Wharton School of the University of Pennsylvania in 1995.
We believe that Mr. Fruhbeis’ extensive business experience in various positions throughout the finance sector, coupled with his experience in the capital markets sector makes him well qualified to serve on our board of directors. His significant real estate investing experience and related client perspective provide insight to the Company specifically regarding Star’s Building Solutions businesses.
Jennifer Palmer
Age 45
Director since 2024
CEO, JPalmer Collective
Committees: Audit, Compensation, and Corporate Governance (Chairperson)
Ms. Palmer has over 15 years of small-to-mid-size company banking experience. She is the Founder and CEO of JPalmer Collective, a firm specialized in funding high-growth companies including women-led companies and consumer brands with a special focus on sustainability and inclusivity. She was also recently President of the Secured Finance Network (SFNet), the leading trade organization in the commercial finance industry. Ms. Palmer was previously CEO of Gerber Finance, where she grew the firm’s asset-based lending portfolio by more than 140% and achieved the firm’s second most profitable year in its 25-year history amid the COVID-19 pandemic. Ms. Palmer holds a Bachelor of Arts degree from Marist College and a Doctor of Law degree from Fordham University School of Law.
We believe that Ms. Palmer’s extensive business experience in various positions throughout the finance sector makes her well qualified to serve on our board of directors. Ms. Palmer brings to Star’s Board a deep knowledge of, and connections to, financing solutions for Star’s businesses and clients.
Louis Parks
Age 64
Director since 2024
CFO and COO, Tyro Capital Management LLC
Committees: Audit, Compensation (Chairman), and Corporate Governance
Mr. Parks has over 35 years of investment management and board experience. Mr. Parks is currently Managing Member, COO & CFO at Tyro Capital Management LLC, an equity hedge fund with over $200 million in assets under management and a value-based investment approach. He is also a partner at Metropolitan Business Funding LLC, a firm that provides merchant cash advances for small businesses throughout the United States. Previously, he was COO and CCO of Krensavage Asset Management LLC, Senior Managing Director & Head of Equities at CL King & Associates, and Senior Managing Director & Head of Equity Trading at Raymond James Financial. Mr. Parks currently serves on the boards of Sunroof Software Inc., an innovative SaaS solution for optimizing customer experience, and Reliability Inc., a provider of staffing solutions for a variety of industries. Mr. Parks holds Bachelor of Arts degrees from New York University and Columbia University, a Master of Arts degree from Columbia University, and a M.B.A. degree from Columbia Business School.
We believe that Mr. Park’s extensive business experience in various positions throughout the investment management and finance sector makes him well qualified to serve on our board of directors. Mr. Parks brings significant sales, operations, and business building expertise to Star’s Board.
Executive Officers
The names of our executive officers, their ages, their positions with Star Equity, and other biographical information as of March 21, 2025, are set forth below. There are no family relationships among any of our directors or executive officers.
Name Age Position
Jeffrey E. Eberwein 54 Director, Executive Chairman of the Board of Directors
Richard K. Coleman, Jr. 68 Chief Executive Officer
David J. Noble 54 Chief Financial Officer
Thatcher Butcher 43 President of KBS Builders, Inc.
Jeffrey E. Eberwein. Mr. Eberwein’s full biographical information is provided above under the heading “Information about the Company’s Directors.”
Richard K. Coleman, Jr. was appointed as our Chief Executive Officer in April 2022. Prior to being appointed as our Chief Executive Officer, Mr. Coleman served as our Chief Operating Officer from January 2022 to March 2022. Mr. Coleman was formerly the President, Chief Executive Officer and director of Command Center, Inc., a provider of on-demand flexible employment solutions, from April 2018 to July 2019. He was also the Chairman of Hudson Global Inc., a global talent solutions company, from May 2014 to January 2022. He was the Principal Executive Officer of Crossroads Systems, Inc., a global provider of data archive solutions, from August 2017 to March 2018, and Chief Executive Officer from March 2013 to August 2017. Mr. Coleman began his career as an Air Force Telecommunications Officer managing Department of Defense R&D projects. He has also served as an adjunct professor for Regis University’s graduate management program and as a guest lecturer for Denver University’s Pioneer Leadership Program, focusing on leadership and ethics. Coleman holds a master’s degree in Business Administration from Golden Gate University and is a graduate of the United States Air Force Communications Systems Officer School. He holds a Bachelor of Science Degree from the United States Air Force Academy and also has completed leadership, technology, and marketing programs at Kansas University, UCLA, and Harvard Business School.
David J. Noble was appointed as our Chief Financial Officer in July 2019. Prior to being appointed as our Chief Financial Officer, Mr. Noble served as our Chief Operating Officer from September 2018 to January 2022 and as our Interim Chief Financial Officer from January 2019 to July 2019. Prior to joining the Company, Mr. Noble served as Managing Member of Noble Point LLC, a business and financial advisory firm. From July 2005 through September 2017, Mr. Noble was a senior investment banker at HSBC, serving as Managing Director & Head of Equity Capital Markets for the Americas for more than a decade. Prior to joining HSBC, Mr. Noble held various senior roles within Equity Capital Markets at Lehman Brothers, both in the U.S. and overseas, from August 1997 to July 2005. In his 20-year Wall Street career, Mr. Noble was involved in hundreds of equity transactions across a wide range of sectors, including healthcare, industrials, financial services, media, technology, and energy, among others. Mr. Noble earned a B.A. degree in Political Science from Yale University in 1992 and an M.B.A. in Finance from MIT’s Sloan School of Management in 1997.
Thatcher Butcher was appointed as President of KBS Builders, Inc. in May 2022. Prior to joining the Company, Mr. Butcher served as the General Manager, Mid Atlantic Division at Anthony & Sylvan Pools from September 2018 to May 2022. Prior to that, Mr. Butcher worked as Truss and Engineered Lumber Division General Manager at TW Perry from December 2009 to September 2018. Prior to joining TW Perry, Mr. Butcher held various other positions with Rocky Top Building products and Best Building Components. Mr. Butcher studied Architectural Design & Building technology at the State University of New York and completed coursework in Architecture at Clemson University. He has also completed General Management and Leadership Development training at George Mason University.
Director Nomination Process
During the fiscal year ended December 31, 2024, we made no material changes to the procedures by which stockholders may recommend nominees to our board of directors, as described in our most recent proxy statement.
Family Relationships
There are no family relationships among our executive officers and directors.
Audit Committee
The Audit Committee of the Board of Directors, established in accordance with Section 3(a)(58)(A) of the Exchange Act (the “Audit Committee”), consists of Ms. Palmer, and Messrs. Fruhbeis, and Parks,with Mr. Fruhbeis serving as chairman. All members of the Audit Committee (i) are independent directors (as currently defined in Rule 5605(a)(2) of the Nasdaq listing rules); (ii) meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act; (iii) have not participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years; and (iv) are able to read and understand fundamental financial statements Mr. Fruhbeis, Mr. Parks. and Ms. Palmer qualify as “audit committee financial experts” as defined in the rules and regulations established by the SEC. The Audit Committee is governed by a written charter approved by our Board of Directors
The functions of this committee include, among other things:
•Meeting with our management periodically to consider the adequacy of our internal controls and the objectivity of our financial reporting;
•Meeting with our independent registered public accounting firm and with internal financial personnel regarding the adequacy of our internal controls and the objectivity of our financial reporting;
•Recommending to our Board of Directors the engagement of our independent registered public accounting firm;
•Reviewing our quarterly and audited consolidated financial statements and reports and discussing the statements and reports with our management, including any significant adjustments, management judgments and estimates, new accounting policies and disagreements with management; and
•Reviewing our financial plans and reporting recommendations to our full Board of Directors for approval and to authorize action.
Compensation Committee
The Compensation Committee of the Board of Directors (the “Compensation Committee”) consists of Ms. Palmer, Messrs. Fruhbeis, and Parks with Mr. Parks serving as chairman. All members of the Compensation Committee are independent, as determined under the various Nasdaq, SEC and Internal Revenue Service qualification requirements. The Compensation Committee is governed by a written charter approved by our Board of Directors. The functions of this committee include, among other things:
•Reviewing and, as it deems appropriate, recommending to our Board of Directors, policies, practices, and procedures relating to the compensation of our directors, officers and other managerial employees and the establishment and administration of our employee benefit plans;
•Establishing appropriate incentives for officers, including the chief executive officer, to encourage high performance, promote accountability and adherence to company values and further our long-term strategic plan and long-term value; and
•Exercising authority under our employee benefit plans.
Corporate Governance Committee
The Corporate Governance Committee of the Board of Directors (the “Corporate Governance Committee”) consists of Ms. Palmer and Messrs. Fruhbeis and Parks with Ms. Palmer serving as chairman. All members of the Corporate Governance Committee are independent directors (as defined in Rule 5605(a)(2) of the Nasdaq listing rules). The Corporate Governance Committee is governed by a written charter approved by our Board of Directors. A copy of the Corporate Governance Committee Charter can be found by clicking on the “Corporate Governance” link under the Investors tab on our website at www.starequity.com. The functions of this committee include, among other things:
•Reviewing and recommending nominees for election as directors;
•Assessing the performance of our Board of Directors;
•Developing guidelines for the composition of our Board of Directors;
•Reviewing and administering our corporate governance guidelines and considering other issues relating to corporate governance; and
•Oversight of the Company compliance officer and compliance with the Company’s Code of Business Ethics and Conduct (the “Ethics Code”).
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires Star Equity’s directors, executive officers and holders of more than 10% of its common stock to file with the SEC reports (typically, Forms 3, 4, and/or 5) regarding their ownership and changes in ownership of Star Equity’s securities. Based solely on a review of Forms 3, 4, and 5 and amendments thereto filed with the SEC, we believe that during the fiscal year ended December 31, 2024, with the exception of the Form 4 filed by Thatcher Butcher on March 28, 2024, Star Equity’s directors, officers and 10% stockholders have complied with all applicable Section 16(a) filing requirements.
Code of Business Ethics and Conduct
We have adopted a Code of Business Ethics and Conduct (“Ethics Code”) that applies to all our officers, directors, employees, and contractors. The Ethics Code contains general guidelines for conducting our business consistent with the highest standards of business ethics and compliance with applicable law, and is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K. Day-to-day compliance with the Ethics Code is overseen by the Company compliance officer appointed by our board of directors. If we make any substantive amendments to the Ethics Code or grant any waiver from a provision of the Ethics Code to any director or executive officer, we will promptly disclose the nature of the amendment or waiver on our website at www.starequity.com.
Insider Trading Policy
Our Board of Directors has adopted an insider trading policy that applies to all of its officers, directors and employees. Our insider trading policy prohibits officers, directors and employees from trading in Company securities while in possession of or on the basis of material non-public information. In addition, officers, directors and employees are prohibited from engaging in any of the following types of transactions with respect to the Company’s securities: (i) short sales, including short sales “against the box”, (ii) purchases or sales of puts, calls, or other derivative securities or (iii) purchases of financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) or other similar transactions that directly hedge or offset, or are designed to directly hedge or offset, any decrease in the market value of Company securities. A copy of our insider trading policy is attached as Exhibit 19.1 to this Annual Report on Form 10-K.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11.EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides information regarding the compensation earned during the fiscal years ended December 31, 2024 and 2023 by our principal executive officer and our two other most highly compensated executive officers (the “named executive officers”) who were serving as executive officers as of December 31, 2024.
Name and Principal Position Year Salary ($) (1) Bonus ($) (2) Stock
Awards
($) (3) Nonequity
Incentive Plan
Compensation
($) All Other
Compensation
($) (4) Total
($)
Richard K. Coleman* 2024 400,000 200,000 70,001 - 2,500 672,501
Chief Executive Officer 2023 400,000 185,000 74,000 - 2,500 661,500
David J. Noble 2024 325,000 162,500 56,876 - 4,000 548,376
Chief Financial Officer 2023 325,000 125,000 50,000 - 4,000 504,000
Thatcher Butcher 2024 250,016 117,500 21,754 - 2,283 391,553
President of KBS Builders, Inc. 2023 250,016 106,731 21,347 - 1,017 379,111
__________________
* Effective April 1, 2022, Richard K. Coleman, Jr. was appointed as the Company’s Chief Executive Officer.
(1)The base salary for each executive is initially established through negotiation at the time the executive is hired, and year-to-year adjustments are made, taking into account attributes and factors described below in the Narrative Disclosure to Summary Compensation Table. Based on the factors discussed above, 2024 base salaries were as follows: Mr. Coleman’s 2024 base salary was $400,000, which has not been adjusted since it was initially set in April 2022; the total salary for 2024 was $400,000; Mr. Noble’s 2024 base salary was $325,000, which was initially set at $300,000 from his last adjustment in 2018; the total salary for 2024 was $325,000; Mr. Butcher’s 2024 base salary was initially set at $250,016, the total for 2024 was $250,016. Any differences between base and actual salary are due to pay period timing differences at year end.
(2)The executive incentive plan which provides for bonuses at the completion of each fiscal year is described below in the Narrative Disclosure to Summary Compensation Table.
(3)Represents full fair value at grant date of restricted stock units (“RSUs”), including the stock awards with performance conditions (“PSUs”) described below, representing the right to receive, at settlement, common stock of the Company, granted to our named executive officers, computed in accordance with FASB ASC Topic 718, Stock Compensation. The full grant date fair value of an equity award is the maximum value that may be received over the vesting period if all vesting conditions are satisfied, as discussed further below. Thus, there is no assurance that the value, if any, eventually received by our executive officers will correspond to the amount shown. For information regarding assumptions made in connection with this valuation, please see Note 11. Share-Based Compensation within the notes to our consolidated financial statements.
(4)Amounts shown for 2024 and 2023 include up to $2,500 matching contributions to the executives’ 401(k) retirement plans and up to $1,500 seed contribution to the executive’s Health Savings Account plans.
Narrative Disclosure to Summary Compensation Table.
Base Salary. The base salary for each executive is initially established through negotiation at the time the executive is hired, taking into account his or her scope of responsibilities, qualifications, experience, prior salary, and competitive salary information within the industry. Year-to-year adjustments to each executive officer’s base salary are determined by an assessment of his or her sustained performance against individual goals, including leadership skills and the achievement of high ethical standards, the individual’s impact on the Company’s business and financial results, current salary in relation to the salary range designated for the job, experience, demonstrated potential for advancement, and an assessment against base salaries paid to executives for comparable jobs in the marketplace.
When determining the base salary component of executive compensation for 2024, the Compensation Committee considered the achievements of the executives in 2024 based on actual financial performance of the business and achievement of the goals set by the board of directors for the individual executive, the fiscal 2024 budget and financial performance expectations, the totality of all compensation components. After due consideration, the Compensation Committee set compensation as reflected in the Summary Compensation Table above.
Annual Incentive Bonus. Payments under the Company’s executive bonus plan are based on achieving clearly defined, short-term goals. We believe that such bonuses provide incentive to achieve goals that the Company aligns with its stockholders’ interests by measuring the achievement of these goals, whenever possible, in terms of revenue, income or other financial objectives. In setting bonus levels, the Company reviews its annual business plan and financial performance objectives. After estimating the likely financial results of the business plan as submitted by management and approved by the board of directors, the Company sets financial threshold goals based on those estimated results primarily in terms of EBITDA. The Company sets the minimum performance thresholds that must be reached before any bonus is paid at levels that will take significant effort and skill to achieve. An executive officer’s failure to meet some or all of these personal goals can affect his or her bonus amount. The Company believes that offering significant potential income in the form of bonuses allows the Company to attract and retain executives and to align their interests with those of the Company’s stockholders. The Company awards incentive bonuses based on the metrics described above which provided for discretionary bonuses.
Fiscal Year 2024. In July 2024, the Company approved and adopted the fiscal year 2024 Executive Incentive Plan (“2024 Annual Plan”) for executive officers. Due to the changing nature of the Company’s business following the sale of Digirad, the 2024 Annual Plan challenged the Company’s executive team to achieve the company’s financial objectives and develop a platform for future organic growth and acquisitions. Actual cash bonus payments under the plan were based on a combination of corporate, team, and individual performance against pre-defined objectives with final payments determined by the Compensation Committee.
The cash bonus amounts under the 2024 Annual Plan were as follows.
Name and Principal Position* Percentage of
Base Salary Bonus Payout
Richard K. Coleman, Chief Executive Officer 50 % 200,000
David J. Noble, Chief Financial Officer and Chief Operating Officer 50 % 162,500
Thatcher Butcher, President of KBS Builders, Inc. 47 % 117,500
Equity Grants
In connection with the adoption of the 2024 Annual Plan, the Compensation Committee determined, as part of a long-term retention mechanism and to incentivize the executive officers to increase the Company’s stockholder value, to award RSUs effective on March 13, 2024 and November 08, 2024 (the “2024 Grant Dates”) to Messrs. Coleman, Noble and Butcher.
The RSUs granted to each of Messrs. Coleman, Noble and Butcher vest over three years in three equal installments, with each such installment vesting on each anniversary of the 2024 Grant Dates. The RSU grants to Messrs. Coleman, Noble and Butcher were made pursuant to and subject to the terms of the 2024 Annual Plan, the Company’s 2018 Incentive Plan, and the respective award agreement that sets forth the terms of the respective grants.
Name and Principal Position Cash Value of the Restricted Stock Units Granted
Richard K. Coleman, Chief Executive Officer 70,001
David J. Noble, Chief Financial Officer 56,876
Thatcher Butcher, President of KBS Builders, Inc. 21,754
Other Compensation
The Company currently maintains benefits for executive officers, that include medical, dental, vision and life insurance coverage and the ability to contribute to a 401(k) retirement plan; however, the Compensation Committee in its discretion may revise, amend or add to the officer's executive benefits if it deems it advisable. The benefits currently available to the executive officers are also available to other employees.
Outstanding Equity Awards at Fiscal Year-End
The following table presents the outstanding equity awards held by each of the named executive officers as of the fiscal year ended December 31, 2024, including the value of the stock awards.
Name Option Awards Stock Awards
Grant Date Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable Option
Exercise
Price
($) Option
Expiration
Date Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#) Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
Richard K. Coleman 1/1/2022 (1) - - - - 2,615 5,910
7/27/2023 (1) - - - - 10,102 22,831
11/08/2024 (1) - - - - 19,499 $ 44,068
David J. Noble 7/27/2023 (1) - - - - 6,826 15,427
11/8/2024 (1) - - - - 15,843 35,805
Thatcher Butcher 3/1/2023 (1) - - - - 3,429 7,750
3/13/2024 (1) - - - - 4,781 $ 10,805
____________________
(1)33-1/3% of the units vest annually on the anniversary of the grant date over a three-year period.
Potential Payments Upon Termination or Change of Control
Richard K. Coleman, Jr.
On December 16, 2021, the Company hired Richard K. Coleman, Jr. to serve as the Company’s Chief Operating Officer, effective January 1, 2022. Effective April 1, 2022, the Company entered into an amended employment agreement with Mr. Coleman (the “Coleman Employment Agreement”), pursuant to which Mr. Coleman serves as Chief Executive Officer of the Company.
Pursuant to the Coleman Employment Agreement, Mr. Coleman can be terminated for “cause,” upon death, upon disability and without “cause.” Under the Coleman Employment Agreement, termination for “cause” generally means the termination of Mr. Coleman’s employment by reason of: (A) the willful failure of Mr. Coleman to perform his duties and obligations in any material respect (other than any failure resulting from his disability), (B) intentional acts of dishonesty or willful misconduct by Mr. Coleman with respect to the Company, (C) arrest or conviction of a felony or violation of any law involving dishonesty, disloyalty, moral turpitude, or fraud, or entry of a plea of guilty or nolo contendere to such charge, (D) Mr. Coleman’s commission at any time of any act of fraud, embezzlement or willful misappropriation of material Company property, (E) repeated refusal to perform the reasonable and legal instructions of the board of directors, (F) willful and material breach of his obligations under any material agreement entered into between Mr. Coleman and the Company or any of its affiliates, or willful and material breach of the Company’s polices or procedures which causes material damage to the Company, its business or reputation, provided that for subsections (A), (E), and (F), if the breach reasonably may be cured, Mr. Coleman has been given at least thirty (30) days after his receipt of written notice of such breach from the Company to cure such breach. Termination without “cause” means termination for any reason other than death, disability, for “cause,” or for no reason at all, upon sixty (60) days’ written notice.
The Coleman Employment Agreement provides for termination of Mr. Coleman’s employment upon his election by voluntary resignation or termination for good reason. Termination by voluntary resignation means Mr. Coleman can terminate his employment with the Company at any time and for any reason whatsoever or for no reason at all in his sole discretion upon giving sixty (60) days’ written notice. A termination for good reason means Mr. Coleman can terminate his employment with the Company pursuant to the occurrence of any of the following events: (i) any material diminution in his authority, duties and responsibilities, (ii) any material reduction of his base salary, aggregate incentive compensation opportunities or aggregate benefits, unless such changes are applied to all members of the Company’s leadership team and amount to less than a 10% reduction in total, or (iii) a material breach by the Company of the Coleman Employment Agreement. In addition, either the Company or Mr. Coleman can deliver to the other party a written notice of non-renewal at least sixty (60) days prior to the applicable renewal date of the Coleman Employment Agreement.
In the event Mr. Coleman voluntarily resigns, is terminated for “cause,” is terminated upon death, or is terminated upon disability, he would be entitled to receive: (i) his then current salary accrued up to and including the date of termination or resignation, (ii) unreimbursed expenses, and (iii) any vested payment or accrued benefits under any equity or Company benefit plan (the “Coleman Accrued Obligations”). All RSU awards under the Coleman Employment Agreement vest one-third on each of the first, second and third anniversaries of the grant date.
In the event Mr. Coleman terminates his employment for good reason, his employment is terminated without “cause,” or his employment is terminated by delivery of a non-renewal notice by the Company, he would be entitled to receive: (i) the Coleman Accrued Obligations (described above), (ii) a target bonus based on the target bonus metrics used to determine actual performance at the end of the fiscal year, but prorated to reflect the number of full months worked during the fiscal year, (iii) immediate vesting of any RSUs awarded under the Coleman Employment Agreement for which the performance period has not been completed as of the date of termination based on the level of achievement of the performance goals at the end of the performance period, but pro-rated based on the number of full months worked during the performance period, and (iv) immediate vesting of any RSUs awarded under the Coleman Employment Agreement which are outstanding as of the date of termination. Notwithstanding the foregoing, if within twelve (12) months following a change of control (as defined in the Coleman Employment Agreement), the Company terminates Mr. Coleman’s employment without “cause,” he resigns from his employment with good reason, or his employment terminates due to Company’s delivery of a non-renewal notice, then the bonus payment under (ii) above shall equal the equivalent of his target bonus without proration and, in addition to (iii) and (iv) above, he shall receive (v) twelve months of his then-current base salary.
David J. Noble
On October 31, 2018, the Company entered into an employment agreement with David J. Noble, which was amended and restated on December 22, 2021 (the “Noble Employment Agreement”). On this same date, Mr. Noble agreed to relinquish the role of Chief Operating Officer, while retaining the position of Chief Financial Officer effective January 1, 2022.
Pursuant to the Noble Employment Agreement, Mr. Noble can be terminated for “cause,” upon death, upon disability and without “cause.” Under the Noble Employment Agreement, termination for “cause” generally means the termination of Mr. Noble’s employment by reason of: (A) the willful failure of Mr. Noble to perform his duties and obligations in any material respect (other than any failure resulting from his disability), (B) intentional acts of dishonesty or willful misconduct by Mr. Noble with respect to the Company, (C) arrest or conviction of a felony or violation of any law involving dishonesty, disloyalty, moral turpitude, or fraud, or entry of a plea of guilty or nolo contendere to such charge, (D) Mr. Noble’s commission at any time of any act of fraud, embezzlement or willful misappropriation of material Company property, (E) repeated refusal to perform the reasonable and legal instructions of the board of directors, (F) willful and material breach of his obligations under any material agreement entered into between Mr. Noble and the Company or any of its affiliates, or willful and material breach of the Company’s polices or procedures which causes material damage to the Company, its business or reputation, provided that for subsections (A), (E), and (F), if the breach reasonably may be cured, Mr. Noble has been given at least thirty (30) days after his receipt of written notice of such breach from the Company to cure such breach. Termination without “cause” means termination for any reason other than death, disability, for “cause,” or for no reason at all, upon sixty (60) days’ written notice.
The Noble Employment Agreement provides for termination of Mr. Noble’s employment upon his election by voluntary resignation or termination for good reason. Termination by voluntary resignation means Mr. Noble can terminate his employment with the Company at any time and for any reason whatsoever or for no reason at all in his sole discretion upon giving sixty (60) days’ written notice. A termination for good reason means Mr. Noble can terminate his employment with the Company pursuant to the occurrence of any of the following events: (i) any material diminution in his authority, duties and responsibilities, (ii) any material reduction of his base salary, aggregate incentive compensation opportunities or aggregate benefits, unless such changes are applied to all members of the Company’s leadership team and amount to less than a 10% reduction in total, or (iii) a material breach by the Company of the Noble Employment Agreement. In addition, either the Company or Mr. Noble can deliver to the other party a written notice of non-renewal at least sixty (60) days prior to the applicable renewal date of the Noble Employment Agreement.
In the event Mr. Noble voluntarily resigns, is terminated for “cause,” is terminated upon death, or is terminated upon disability, he would be entitled to receive: (i) his then current salary accrued up to and including the date of termination or resignation, (ii) unreimbursed expenses, and (iii) any vested payment or accrued benefits under any equity or Company benefit plan (the “Noble Accrued Obligations”). In March 2021, Mr. Noble agreed by letter that all future RSU awards under the Noble Employment Agreement would vest one-third on each of the first, second and third anniversaries of the grant date.
In the event Mr. Noble terminates his employment for good reason, his employment is terminated without “cause,” or his employment is terminated by delivery of a non-renewal notice by the Company, he would be entitled to receive: (i) the Noble Accrued Obligations (described above), (ii) a target bonus based on the target bonus metrics used to determine actual performance at the end of the fiscal year, but prorated to reflect the number of full months worked during the fiscal year, (iii) immediate vesting of any RSUs awarded under the Noble Employment Agreement for which the performance period has not been completed as of the date of termination based on the level of achievement of the performance goals at the end of the performance period, but pro-rated based on the number of full months worked during the performance period, and (iv) immediate vesting of any RSUs awarded under the Noble Employment Agreement which are outstanding as of the date of termination. Notwithstanding the foregoing, if within twelve (12) months following a change of control (as defined in the Noble Employment Agreement), the Company terminates Mr. Noble’s employment without “cause,” he resigns from his employment with good reason, or his employment terminates due to Company’s delivery of a non-renewal notice, then the bonus payment under (ii) above shall equal the equivalent of his target bonus without proration and, in addition to (iii) and (iv) above, he shall receive (v) twelve months of his then-current base salary.
If Mr. Noble’s employment was terminated in connection with a change of control as of December 31, 2022, he would have been entitled to receive: (i) a cash payment in the amount of $300,000, (ii) and immediate vesting of certain equity awards.
Thatcher Butcher
On April 19, 2022, the Company entered into an employment agreement with Thatcher Butcher (the “Butcher Employment Agreement”), pursuant to which Mr. Butcher serves as “President - KBS Builders, Inc.” Pursuant to the Butcher Employment Agreement, Mr. Butcher can be terminated for “cause,” upon death, upon disability and without “cause.” Under the Butcher Employment Agreement, termination for “cause” generally means the termination of Mr. Butcher’s employment by reason of: (A) the willful failure of Mr. Butcher to perform his duties and obligations in any material respect (other than any failure resulting from his disability), (B) intentional acts of dishonesty or willful misconduct by Mr. Butcher with respect to the Company, (C) arrest or conviction of a felony or violation of any law involving dishonesty, disloyalty, moral turpitude, or fraud, or entry of a plea of guilty or nolo contendere to such charge, (D) Mr. Butcher’s commission at any time of any act of fraud, embezzlement or willful misappropriation of material Company property, (E) repeated refusal to perform the reasonable and legal instructions of the board of directors, (F) willful and material breach of his obligations under any material agreement entered into between Mr. Butcher and the Company or any of its affiliates, or willful and material breach of the Company’s polices or procedures which causes material damage to the Company, its business or reputation, provided that for subsections (A), (E), and (F), if the breach reasonably may be cured, Mr. Butcher has been given at least thirty (30) days after his receipt of written notice of such breach from the Company to cure such breach. Termination without “cause” means termination for any reason other than death, disability, for “cause,” or for no reason at all, upon sixty (60) days’ written notice.
The Butcher Employment Agreement provides for termination of Mr. Butcher’s employment upon his election by voluntary resignation or termination for good reason. Termination by voluntary resignation means Mr. Butcher can terminate his employment with the Company at any time and for any reason whatsoever or for no reason at all in his sole discretion upon giving sixty (60) days’ written notice. A termination for good reason means Mr. Butcher can terminate his employment with the Company pursuant to the occurrence of any of the following events: (i) any material diminution in his authority, duties and responsibilities, (ii) any material reduction of his base salary, aggregate incentive compensation opportunities or aggregate benefits, unless such changes are applied to all members of the Company’s leadership team and amount to less than a 10% reduction in total, or (iii) a material breach by the Company of the Butcher Employment Agreement. In addition, either the Company or Mr. Butcher can deliver to the other party a written notice of non-renewal at least sixty (60) days prior to the applicable renewal date of the Butcher Employment Agreement.
In the event Mr. Butcher voluntarily resigns, is terminated for “cause,” is terminated upon death, or is terminated upon disability, he would be entitled to receive: (i) his then current salary accrued up to and including the date of termination or resignation, (ii) unreimbursed expenses, and (iii) any vested payment or accrued benefits under any equity or Company benefit plan (the “Butcher Accrued Obligations”).
In the event Mr. Butcher terminates his employment for good reason, his employment is terminated without “cause,” or his employment is terminated by delivery of a non-renewal notice by the Company, he would be entitled to receive: (i) the Butcher Accrued Obligations (described above), (ii) a target bonus based on the target bonus metrics used to determine actual performance at the end of the fiscal year, but prorated to reflect the number of full months worked during the fiscal year, (iii) salary continuation for a period of six months in accordance with the Company’s then established payroll practices, provided that payments of the consideration in (ii) and (iii) are subject to Mr. Butcher’s execution and delivery of a customary general release (that is no longer subject to revocation under applicable law) of the Company, its parents, subsidiaries and affiliates and each of their respective officers, directors, employees, agents, successors and assigns.
Equity Awards
The equity agreements of our named executive officers provide that, in case of a change of control of the Company, all equity instruments then outstanding but neither assumed nor replaced by the successor entity shall vest immediately upon the change of control event. Further, if an executive’s employment is terminated without cause within twelve (12) months of the change of control, all equity instruments then outstanding, either assumed or replaced, shall become fully vested at the time of termination. As of December 31, 2024, the value of the equity instruments of our named executive officers that would accelerate upon (i) termination without cause within twelve (12) months of a change of control in which stock options and restricted stock units are assumed or replaced by the successor entity, or (ii) a change of control in which the outstanding stock options and restricted stock units are neither assumed or replaced by the successor entity, would be as follows based on the difference between the closing price on the last trading day of the year of $2.26 per share and the exercise price of the respective options, and with regard to restricted stock units, based solely on the closing price on the last trading day of the year of $2.26:
Name Stock Award Value as of December 31, 2024
Richard K. Coleman 72,809
David J. Noble 51,232
Thatcher Butcher 18,555
COMPENSATION OF DIRECTORS
Annual Retainer
Non-employee members of our board of directors are paid an annual retainer for their service, with additional compensation for being the chairperson of the board, serving on a committee of the board of directors and chairing a committee of the board of directors. Payments are made quarterly.
The compensation paid to the members of our board of directors is indicated in the chart below:
2024 Director Compensation
Director Annual Retainer (all) (1) $ 72,000
Additional Annual Retainer to Executive Chairperson $ 100,000
Additional Annual Retainer to Audit Committee Chairperson $ 25,000
Additional Annual Retainer to Compensation Committee Chairperson $ 15,000
Additional Annual Retainer to Corporate Governance Committee Chairperson $ 10,000
Additional Annual Retainer to Audit Committee Member $ 5,000
Additional Annual Retainer to Compensation Committee Member $ 5,000
Additional Annual Retainer to Corporate Governance Committee Member $ 5,000
(1)In August 2023, the Compensation Committee of our board of directors elected to pay compensation to Directors in both cash and RSUs
For the sake of clarity, in fiscal year ended December 31, 2024, each of the Audit Committee, the Compensation Committee, and the Corporate Governance Committee, chairpersons only received an amount equal to the chairperson fee set forth in the table above and not the chairperson fee plus the member fee.
Equity Compensation
Equity compensation awards, and the amount of such awards, to non-employee members of our board of directors are at the discretion of the Compensation Committee of our board of directors. Historically, such awards have been in the form of RSUs and the Compensation Committee generally set the amount of those awards at a fair market value equal to the annual cash retainer received by non-employee members of our board of directors (the “Retainer Awards”). We believe that equity compensation helps to further align the interests of our directors with those of our stockholders because the value of directors’ share ownership will rise and fall with that of our other stockholders. In March 2021, the Compensation Committee elected to end the separate annual equity awards described above and to instead increase the size of the Retainer Awards to quarterly awards of RSUs having a fair market value (as defined in the 2023 Annual Plan) of $18,000 each. Due to the limitation in the RSUs available for issuance, in August 2022, the Compensation Committee elected to temporarily suspend all RSU compensation and to provide compensation to all Directors in cash. Beginning with the second quarter of 2023, the Compensation Committee determined to begin paying equity compensation awards partially in RSUs and partially in cash.
Timing of Certain Equity Award Grants
In accordance with Item 402(x) of Regulation S-K, we are providing information regarding our procedures related to the grant of certain equity incentive awards close in time to the release of material non-public information. Though the Company does not have a formal policy regarding the timing of equity incentive compensation, neither the Board of Directors nor the Compensation Committee grants equity awards in anticipation of the release of material nonpublic information, and the Company does not time the release of material nonpublic information based on equity award grant dates. The Company has not granted any stock options or stock appreciation rights in the fiscal year ended December 31, 2024.
Director Compensation Table
The following table sets forth summary information concerning compensation paid or accrued for services rendered to us in all capacities to the non-employee members of our board of directors for the fiscal year ended December 31, 2024.
Fees Paid
in Cash
($) Stock
Awards
($) (1)
All Other
Compensation
($) Total
($)
Jeffrey E. Eberwein $ 146,200 $ 25,800 - $ 172,000
Todd Fruhbeis 17,400 4,350 - 21,750
Jennifer Palmer 18,400 4,600 - 23,000
Louis Parks 19,400 4,850 - 24,250
John Gildea 89,050 8,700 - 97,750
Michael A. Cunnion 107,300 9,700 - 117,000
John W. Sayward 111,700 15,300 - 127,000
Mitchell I. Quain 78,300 8,200 - 86,500
____________________
(1)Represents full fair value at grant date of restricted stock units granted to our directors, computed in accordance with FASB ASC Topic 718.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of March 12, 2025 regarding the beneficial ownership of our common stock by (i) each person we know to be the beneficial owner of 5% or more of our common stock, (ii) each of our current named executive officers, (iii) each of our directors, and (iv) all of our current executive officers and directors as a group. Information with respect to beneficial ownership has been furnished by each director, executive officer or 5% or more stockholder, as the case may be. The address for all executive officers and directors is c/o Star Equity Holdings, Inc., 53 Forest Avenue Suite 101, Old Greenwich, Connecticut 06870.
Percentage of beneficial ownership is calculated based on 3,201,502 shares of common stock outstanding as of March 12, 2025. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission which generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and includes shares of our common stock issuable pursuant to the exercise of stock options, warrants or other securities that are immediately exercisable or convertible or exercisable or convertible within 60 days of March 7, 2024. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them.
Name and Address of Beneficial Owner Number of
Shares
Beneficially
Owned Percent of
Shares
Beneficially
Owned
5% Stockholders:
None
Named Executive Officers and Directors:
Jeffrey E. Eberwein (1)
1,031,548 30.19%
Richard K. Coleman (2)
48,477 1.51%
David J. Noble (3)
34,155 1.06%
Thatcher Butcher (4)
7,466 0.23%
Todd Fruhbeis(5)
3,303 0.10%
Louis Parks(6)
1,200 0.04%
All Executive Officers and Directors as a group (6 persons)(9)
1,126,148 32.80%
____________________
* Indicates beneficial ownership of less than 1% of the outstanding common stock
(1)Includes (a) 816,548 shares of common stock held by Mr. Eberwein and (b) 215,000 shares of common stock underlying warrants exercisable within
(2)60 days of March 12, 2025.
(3)Includes 39,182 shares of common stock held by Mr. Coleman and (b) 6,680 shares of common stock underlying warrants exercisable within 60 days of March 12, 2025.
(4)Includes (a) 26,155 shares of common stock held by Mr. Noble and (b) 8,000 shares of common stock underlying warrants exercisable within 60 days of March 12, 2025.
(5)Includes 5,751 shares of common stock held by Mr. Butcher (b) 0 shares underlying warrants exercisable within 60 days of March 12, 2025.
(6)Includes (a) 3,303 shares of common stock held by Mr. Fruhbeis and (b) 0 shares underlying warrants exercisable within 60 days of March 12, 2025.
(7)Includes (a) 1,200 shares of common stock held by Mr. Parks and (b) 0 shares underlying warrants exercisable within 60 days of March 12, 2025.
Securities Authorized for Issuance Under Equity Compensation Plans
Equity Compensation Plan Information
December 31, 2024
Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants, and rights Number of securities remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a))
Plan Category (a) (b) (2) (c)
Equity compensation plans approved by security holders 131,236 (1) $ - 143,670 (3)
Equity compensation plans not approved by security holders - - -
Total 131,236 $ - 143,670
____________________
(1)This amount includes the following:
•0 shares issuable upon the exercise of outstanding stock options under the Company’s 2004 Stock Incentive 7 Year Plan, the 2004 Stock Incentive Plan, and the 2014 Equity Incentive Award Plan (the “2014 Incentive Plan”).
•131,236 RSUs granted under the 2014 Incentive Plan, 2018 Incentive Plan, and 2022 Inducement Stock Incentive Plan.
(2)The 2014 Incentive Plan, 2018 Incentive Plan, and 2022 Inducement Stock Incentive Plan RSUs and PSUs have been excluded from the computation of the weighted-average exercise price since these awards have no exercise price.
(3)This amount represents the number of shares available for issuance pursuant to stock options and other awards that could be granted in the future under the 2018 Incentive Plan, as amended July 31, 2020 in order to increase the number of shares authorized for issuance thereunder. The 2018 Incentive Plan allows for issuance of up to the sum of (i) 450,000 shares, plus (ii) the number of shares of common stock of the Company which remain available for grants of options or other awards under the 2014 Incentive Plan as of April 27, 2018, plus (iii) the number of shares that, after April 27, 2018, would again become available for issuance pursuant to the reserved share replenishment provisions of the 2014 Incentive Plan as a result of, stock options issued thereunder expiring or becoming unexercisable for any reason before being exercised in full, or, as a result of restricted stock being forfeited to the Company or repurchased by the Company pursuant to the terms of the agreements governing such shares (the shares described in clauses (ii) and (iii) of this sentence, the “Carryover Shares”). As of December 31, 2024, there were 13,594 Carryover Shares.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Star Equity Holdings, Inc.
As of December 31, 2024, Jeffrey E. Eberwein, the Company’s Executive Chairman, owned 816,548 shares of Common Stock, representing approximately 25.51% of our outstanding Common Stock. In addition, as of December 31, 2024, Mr. Eberwein owned 1,182,414 shares of Series A Preferred Stock.
Director Independence
Our board of directors has determined that each of the directors, except Mr. Eberwein, are independent directors (as currently defined in Rule 5605(a)(2) of the Nasdaq listing rules). In determining the independence of our directors, our board of directors considered all transactions in which the Company and any director had any interest, including those discussed above. The independent directors meet as often as necessary to fulfill their responsibilities, including meeting at least twice annually in executive session without the presence of non-independent directors and management.
The Audit Committee currently consists of Messrs. Fruhbeis and Parks, and Ms. Palmer with Mr. Fruhbeis serving as chairman. All members of the Audit Committee are independent directors as defined in Rule 5605(a)(2) of the Nasdaq listing rules and Rule 10A-3 under the Exchange Act, and no member of the Audit Committee participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years.
The Compensation Committee currently consists of Messrs. Fruhbeis and Parks, and Ms. Palmer with Mr. Parks serving as chairman. All members of the Compensation Committee are independent directors as determined in accordance with the Compensation Committee charter and applicable Nasdaq listing rules (Rule 5605(a)(2) of the Nasdaq listing rules).
The Corporate Governance Committee currently consists of Messrs. Fruhbeis and Parks, and Ms. Palmer with Ms. Palmer serving as chairman. All members of the Corporate Governance Committee are independent directors (as defined in Rule 5605(a)(2) of the Nasdaq listing rules).

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES
In connection with the audit of the 2024 consolidated financial statements, we entered into an engagement agreement with Wolf & Company, P.C. (Boston, MA, PCAOB ID #392 (“Wolf”)) which sets forth the terms by which Wolf has performed audit and related professional services for us.
The following tables set forth the aggregate accounting fees paid by us to Wolf for the fiscal years ended December 31, 2024 and 2023.
For the years ended December 31
Type of Fee 2024
(in thousands)
Audit Fees $ 590 $ 503
Audit-Related Fees -
Tax Fees 117 205
All Other Fees - -
Totals $ 707 $ 708
No other accounting firm was retained to perform the identified accounting work for us. All non-audit related services in the tables above were pre-approved and/or ratified by the Audit Committee.
Audit Committee Pre-Approval of Services by Independent Registered Public Accounting Firm
The Audit Committee is granted the authority and responsibility under its charter to pre-approve all audit and non-audit services provided to the Company by its independent registered public accounting firm, including specific approval of internal control and tax-related services. In exercising this responsibility, the Audit Committee considers whether the provision of each professional accounting service is compatible with maintaining the audit firm’s independence.
Pre-approvals are detailed as to the category or professional service and when appropriate are subject to budgetary limits. Company management and the independent registered public accounting firm periodically report to the Audit Committee regarding the scope and fees for professional services provided under the pre-approval.
With respect to the professional services rendered, the Audit Committee had determined that the rendering of all non-audit services by our independent registered public accounting firm were compatible with maintaining the auditor’s independence and had pre-approved all such services.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
1.Financial Statements
The financial statements of Star Equity Holdings, Inc. listed below are set forth in Item 8 of this report for the year ended December 31, 2024:
-Report of Independent Registered Public Accounting Firm (Wolf & Company, P.C., Boston, MA, PCAOB ID # 392)
-Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023
-Consolidated Balance Sheets at December 31, 2024 and 2023
-Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023
-Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024 and 2023
-Notes to Consolidated Financial Statements
2. Financial Statement Schedules
All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
3. Exhibits required by Item 601 of Regulation S-K
The information required by this Section (a)(3) of Item 15 is set forth on the exhibit index below.
EXHIBIT INDEX
Exhibit
Number Description
3.1 Restated Certificate of Incorporation of Digirad Corporation (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on May 3, 2006).
3.2 Certificate of Designation of Rights, Preferences and Privileges of Series B Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 24, 2013).
3.3 Certificate of Amendment of the Restated Certificate of Incorporation of Digirad Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 5, 2015).
3.4 Certificate of Amendment of the Restated Certificate of Incorporation of Digirad Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 1, 2018).
3.5 Certificate of Amendment of the Restated Certificate of Incorporation of Digirad Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 31, 2019).
3.6 Certificate of Designations, Rights and Preferences of 10% Series A Cumulative Perpetual Preferred Stock of Digirad Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 11, 2019).
3.7 Certificate of Amendment of the Restated Certificate of Incorporation of Digirad Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 28, 2020.
3.8 Certificate of Designation of Series C Participating Preferred Stock of Star Equity Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 2, 2021).
3.9 Certificate of Amendment of the Restated Certificate of Incorporation of Star Equity Holdings, Inc. (incorporated by reference to Annex B to the Company’s Definitive Proxy Statement filed with the Commission on September 22, 2021).
3.10 Certificate of Amendment to Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 2, 2022).
3.11 Amended and Restated Certificate of Designations, Rights and Preferences of 10% Series A Cumulative Perpetual Preferred Stock of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Commission on June 2, 2022).
3.12 Amended and Restated Bylaws of Digirad Corporation dated May 4, 2007 and Amendment No. 1 to the Amended and Restated Bylaws of Digirad Corporation dated April 5, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 1, 2017).
3.13 Certificate of Amendment of the Restated Certificate of Incorporation of Star Equity Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 12, 2024).
3.14 Amended and Restated Certificate of Incorporation of Star Equity Holdings, dated October 10, 2024 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 11, 2024).
3.15 Second Amended and Restated Certificate of Designation, Rights and Preferences of 10.0% Series A Cumulative Perpetual Preferred Stock, dated October 10, 2024 (incorporated by reference to Exhibit 3.2 to Star Equity Holding, Inc.’s Current Report on Form 8K filed with the Commission on October 11, 2024).
3.16 Second Amendment to the Amended and Restated Bylaws of Star Equity Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 26, 2024).
3.11
4.1 Form of Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1 (File No. 333-113760) filed with the Commission on March 19, 2004).
4.2 Description of Registrant’s Securities (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 13, 2020).
Exhibit
Number Description
4.3 Form of Maxim Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 29, 2020, referencing Exhibit 1.1 (Underwriting Agreement) to the same Current Report on Form 8-K).
4.4 Form of Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Commission on May 29, 2020).
4.5 Warrant Agent Agreement, dated May 28, 2020, between Digirad Corporation and American Stock Transfer & Trust Company, LLC. (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed with the Commission on May 29, 2020).
4.6 Rights Agreement, dated as of June 2, 2021, by and between Star Equity Holdings, Inc. and American Stock Transfer & Trust Company, LLC, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 2, 2021).
4.7 Form of Pre-Funded Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Commission on January 25, 2022).
4.8 Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed with the Commission on January 25, 2022).
4.9 Warrant Agent Agreement, dated January 10, 2022, between Star Equity Holdings, Inc. and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed with the Commission on January 25, 2022).
4.10 Underwriter's Warrant (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 25, 2022, referencing Exhibit 1.1 of this Registration Statement (Underwriting Agreement) to the same Current Report on Form 8-K).
4.11 Rights Agreement, dated August 21, 2024 (incorporated by reference to Exhibit 4.1 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on October 11, 2024).
10.1# Form Indemnification Agreement of the Company for directors and officers (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K filed with the Commission on March 6, 2015).
10.2# Digirad Corporation 2014 Equity Incentive Award Plan (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed with the Commission on June 6, 2014).
10.3# Form of 2018 Incentive Plan, as Amended of Star Equity Holdings, Inc. (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed with the Commission on May 18, 2023).
10.4# Form of 2018 Incentive Plan Restricted Stock Unit Agreement (incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form S-8 filed with the Commission on November 6, 2018).
10.5# Form of 2018 Incentive Plan Restricted Stock Unit Agreement (Performance Based) (incorporated by reference to Exhibit 99.3 to the Company’s Registration Statement on Form S-8 filed with the Commission on November 6, 2018).
10.6# Employment Agreement, by and between Digirad Corporation and David Noble, dated October 31, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 16, 2021).
10.7# Indemnification Agreement, by and between Digirad Corporation and David Noble, dated October 25, 2018 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 5, 2018).
10.8 Consolidated Agreements, dated April 1, 2014, between DMS Health Technologies, Inc. and Philips Healthcare, a Division of Philips Electronics North America Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 3, 2017).
10.9 Amendment, dated June 9, 2015, to the Consolidated Agreements between DMS Health Technologies, Inc. and Philips Healthcare, a Division of Philips Electronics North America Corporation (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 10-Q filed with the Commission on November 3, 2017).
10.10 Lease Agreement, dated April 3, 2019, by and between KBS Builders, Inc. and 947 Waterford Road, LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on April 3, 2019). The schedules and exhibits to this Exhibit have been omitted. The Company agrees to furnish a copy of the omitted schedules and exhibits to the Commission on a supplemental basis upon its request.
10.11 Lease Agreement, dated April 3, 2019, by and between KBS Builders, Inc. and 300 Park Street, LLC (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the Commission on April 3, 2019). The schedules and exhibits to this Exhibit have been omitted. The Company agrees to furnish a copy of the omitted schedules and exhibits to the Commission on a supplemental basis upon its request.
Exhibit
Number Description
10.12 Lease Agreement, dated April 3, 2019, by and between KBS Builders, Inc. and 56 Mechanic Falls Road, LLC (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 8, 2019). The schedules and exhibits to this Exhibit have been omitted. The Company agrees to furnish a copy of the omitted schedules and exhibits to the Commission on a supplemental basis upon its request.
10.13 First Amendment to Lease, dated April 18, 2019, by and between 56 Mechanic Falls Road, LLC and KBS Builders, Inc. (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 8, 2019).
10.14 Consent and Acknowledgment Agreement and Twelfth Amendment to Loan Agreement, dated as of September 10, 2019, by and among Gerber Finance Inc., KBS Builders, Inc., ATRM Holdings, Inc. and Digirad Corporation. (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on September 11, 2019).
10.15 Third Agreement of Amendment to the Loan and Security Agreement, dated as of September 29, 2017, by and among Gerber Finance, Inc., KBS Builders, Inc. and ATRM Holdings, Inc. (incorporated by reference to Exhibit 10.3 to ATRM Holdings, Inc.’s Quarterly Report on Form 10-Q filed with the Commission on April 16, 2019).
10.16 Fourth Agreement of Amendment to Loan and Security Agreement, dated as of July 20, 2017, by and among Gerber Finance Inc., KBS Builders, Inc. and ATRM Holdings, Inc. (incorporated by reference to Exhibit 10.1 to ATRM Holdings, Inc.’s Quarterly Report on Form 10-Q filed with the Commission on April 16, 2019).
10.17 Fifth Agreement of Amendment to Loan and Security Agreement, dated as of September 29, 2017, by and among Gerber Finance Inc., KBS Builders, Inc. and ATRM Holdings, Inc. (incorporated by reference to Exhibit10.2 to ATRM Holdings, Inc.’s Quarterly Report on Form 10-Q filed with the Commission on April 16, 2019).
10.18 Sixth Agreement of Amendment to Loan and Security Agreement, dated as of December 22, 2017, by and among Gerber Finance Inc., KBS Builders, Inc. and ATRM Holdings, Inc. (incorporated by reference to Exhibit10.22 to ATRM Holdings, Inc.’s Annual Report on Form 10-K filed with the Commission on April 30, 2019).
10.19 Eighth Agreement of Amendment to Loan and Security Agreement, dated as of October 1, 2018, by and among Gerber Finance Inc., KBS Builders, Inc. and ATRM Holdings, Inc. (incorporated by reference to Exhibit 10.25 to ATRM Holdings, Inc.’s Annual Report on Form 10-K filed with the Commission on April 30, 2019).
10.20 Ninth Agreement of Amendment to Loan and Security Agreement, dated as of February 22, 2019, by and among Gerber Finance Inc., KBS Builders, Inc. and ATRM Holdings, Inc. (incorporated by reference to Exhibit 10.29 to ATRM Holdings, Inc.’s Annual Report on Form 10-K filed with the Commission on April 30, 2019).
10.21 Tenth Agreement of Amendment to Loan and Security Agreement, dated as of April 1, 2019, by and among Gerber Finance Inc., KBS Builders, Inc. and ATRM Holdings, Inc. (incorporated by reference to Exhibit 10.30 to ATRM Holdings, Inc.’s Annual Report on Form 10-K filed with the Commission on April 30, 2019).
10.22 Fifth Agreement of Amendment to Loan and Security Agreement, dated as of April 1, 2019, by and among Gerber Finance Inc., Edgebuilder, Inc., Glenbrook Building Supply Inc., ATRM Holdings, Inc. and KBS Builders, Inc. (incorporated by reference to Exhibit 10.31 to ATRM Holdings, Inc.’s Annual Report on Form 10-K filed with the Commission on April 30, 2019).
10.23 Eleventh Agreement of Amendment to Loan and Security Agreement, dated as of April 15, 2019, by and among Gerber Finance Inc., KBS Builders, Inc. and ATRM Holdings, Inc. (incorporated by reference to Exhibit 10.39 to ATRM Holdings, Inc.’s Annual Report on Form 10-K filed with the Commission on April 30, 2019).
10.24 Loan and Security Agreement, dated January 31, 2020, by and among Star Real Estate Holdings USA, Inc., 300 Park Street, LLC, 947 Waterford Road, LLC, 56 Mechanic Falls Road, LLC, ATRM Holdings, Inc., EdgeBuilder, Inc., Glenbrook Building Supply, Inc., KBS Builders, Inc., Digirad Corporation, and Gerber Finance Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on February 6, 2020). Schedules and exhibits to this Exhibit have been omitted. The Company agrees to furnish a copy of the omitted schedules and exhibits to the Commission on a supplemental basis upon its request.
10.25 Loan and Security Agreement, dated January 31, 2020, by and among EdgeBuilder, Inc., Glenbrook Building Supply, Inc., Star Real Estate Holdings USA, Inc., 300 Park Street, LLC, 947 Waterford Road, LLC, 56 Mechanic Falls Road, LLC, ATRM Holdings, Inc., KBS Builders, Inc., Digirad Corporation, and Gerber Finance Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on February 6, 2020). Schedules and exhibits to this Exhibit have been omitted. The Company agrees to furnish a copy of the omitted schedules and exhibits to the Commission on a supplemental basis upon its request.
Exhibit
Number Description
10.26 Extension and Modification Agreement, dated January 31, 2020, by and among EdgeBuilder, Inc., Glenbrook Building Supply, Inc. and Premier Bank (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on February 6, 2020).
10.27 Thirteenth Amendment to Loan and Security Agreement, dated January 31, 2020, by and among Gerber Finance Inc., KBS Builders, Inc. ATRM Holdings, Inc., and Digirad Corporation (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on February 6, 2020).
10.28 First Amendment to Loan and Security Agreement, dated February 20, 2020, by and among Star Real Estate Holdings USA, Inc., 300 Park Street, LLC, 947 Waterford Road, LLC, 56 Mechanic Falls Road, LLC and Gerber Finance Inc (incorporated by reference to Exhibit 10.63 to the Company’s Annual Report on Form 10-K filed with the Commission on March 9, 2020).
10.29 First Amendment to Loan and Security Agreement Dated January 31, 2020, dated as of March 5, 2020, by and among Gerber Finance Inc., EdgeBuilder, Inc. and Glenbrook Building Supply, Inc.; and Consent and as a Fourteenth Amendment to Loan and Security Agreement Dated February 23, 2016, by and among Gerber Finance Inc., KBS Builders, Inc., ATRM Holdings, Inc. and Digirad Corporation (incorporated by reference to Exhibit 10.64 to the Company’s Annual Report on Form 10-K filed with the Commission on March 9, 2020).
10.30 Second Amendment to Loan and Security Agreement, dated April 30, 2020, by and among Star Real Estate Holdings USA, Inc., 300 Park Street, LLC, 947 Waterford Road, LLC, 56 Mechanic Falls Road, LLC and Gerber Finance Inc. (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2020).
10.31 Fifteenth Amendment to Loan and Security Agreement dated April 1, 2020, between KBS Builders, Inc. and Gerber Finance Inc. (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2020).
10.32 Second Amendment to Loan and Security Agreement, dated July 1, 2020, by and among Gerber Finance Inc., EdgeBuilder, Inc., and Glenbrook Building Supply, Inc. (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 13, 2020).
10.33 Sixteenth Amendment to Loan and Security Agreement, dated January 5, 2021, by and among Gerber Finance Inc., KBS Builders, Inc., ATRM Holdings, Inc., and Star Equity Holdings, Inc. (incorporated by reference to Exhibit 10.78 to the Company’s Annual Report on Form 10-K filed with the Commission on March 29, 2021).
10.34 Seventeenth Amendment to Loan and Security Agreement, dated February 26, 2021, by and among Gerber Finance Inc., KBS Builders, Inc., ATRM Holdings, Inc., and Star Equity Holdings, Inc. (incorporated by reference to Exhibit 10.74 to the Company’s Annual Report on Form 10-K filed with the Commission on March 29, 2021).
10.35 Third Amendment to Loan and Security Agreement, dated January 31, 2020, by and among Gerber Finance Inc., Star Real Estate Holdings USA, Inc., 300 Park Street, LLC, 947 Waterford Road, LLC, and 56 Mechanic Falls Road, LLC. (incorporated by reference to Exhibit 10.75 to the Company’s Annual Report on Form 10-K filed with the Commission on March 29, 2021).
10.36 Third Amendment to Loan and Security Agreement, dated January 31, 2020, by and among Gerber Finance Inc., EdgeBuilder, Inc., and Glenbrook Building Supply, Inc. (incorporated by reference to Exhibit 10.75 to the Company’s Annual Report on Form 10-K filed with the Commission on March 29, 2021).
10.37 Gerber KBS Eighteenth Amendment to Loan and Security Agreement, dated July 30, 2021, by and among Gerber Finance Inc., KBS Builders, Inc., ATRM Holdings, Inc., and Star Equity Holdings, Inc. (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 10, 2021).
10.38 Gerber EBGL Fourth Amendment to Loan and Security Agreement, dated July 30, 2021, by and among Gerber Finance Inc., EdgeBuilder, Inc., and Glenbrook Building Supply, Inc. (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 10, 2021).
10.39 Gerber EBGL Amended and Restated Promissory Note, dated July 30, 2021, by and among EdgeBuilder, Inc., and Glenbrook Building Supply, Inc. (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 10, 2021).
10.40 Gerber EBGL Fifth Amendment to Loan and Security Agreement, dated October 21, 2021, by and among Gerber Finance Inc., EdgeBuilder, Inc., and Glenbrook Building Supply, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 12, 2021).
Exhibit
Number Description
10.41 Gerber EBGL Sixth Amendment to Loan and Security Agreement, dated January 20, 2022, by and among Gerber Finance Inc., EdgeBuilder, Inc., and Glenbrook Building Supply, Inc. (incorporated by reference to Exhibit 10.89 to the Company’s Annual Report on Form 10-K filed with the Commission on March 31, 2022).
10.42 Gerber EBGL Seventh Amendment to Loan and Security Agreement, dated March 8, 2022, by and among Gerber Finance Inc., EdgeBuilder, Inc., and Glenbrook Building Supply, Inc. (incorporated by reference to Exhibit 10.90 to the Company’s Annual Report on Form 10-K filed with the Commission on March 31, 2022).
10.43 Gerber KBS Nineteenth Amendment to Loan and Security Agreement, dated March 8, 2022, by and among Gerber Finance Inc. and KBS Builders, Inc. (incorporated by reference to Exhibit 10.91 to the Company’s Annual Report on Form 10-K filed with the Commission on March 31, 2022).
10.44# Employment Agreement, dated as of March 31, 2022 between Star Equity Holdings, Inc. and Richard K. Coleman, Jr. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 4, 2022).
10.45# Separation Agreement and Release between the Company and Matthew G. Molchan, dated April 19, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 22, 2022).
10.46 Form of Pre-Funded Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Commission on January 25, 2022).
10.47 Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed with the Commission on January 25, 2022).
10.48 Warrant Agent Agreement, dated January 10, 2022, between Star Equity Holdings, Inc. and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed with the Commission on January 25, 2022).
10.49 eCapital EBGL Eighth Amendment to Loan and Security Agreement, dated August 11, 2022, by and among eCapital Asset Based Lending Corp., EdgeBuilder, Inc., and Glenbrook Building Supply, Inc. (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 12, 2022).
10.50# 2022 Inducement Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 31, 2022).
10.51 eCapital EBGL Ninth Amendment to Loan and Security Agreement, dated September 1, 2022, by and among eCapital Asset Based Lending Corp., EdgeBuilder, Inc., and Glenbrook Building Supply, Inc. (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 14, 2022).
10.52 eCapital KBS Twentieth Amendment to Loan and Security Agreement, dated September 27, 2022, by and eCapital Asset Based Lending Corp. and KBS Builders, Inc. (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 14, 2022).
10.53 eCapital EBGL Eleventh Amendment to Loan and Security Agreement, dated December 31, 2022, by and among eCapital Asset Based Lending Corp., EdgeBuilder, Inc., and Glenbrook Building Supply, Inc. (incorporated by reference to Exhibit 10.104 to the Company’s Annual Report on Form 10-K filed with the Commission on March 15, 2023).
10.54 eCapital KBS Twenty-First Amendment to Loan and Security Agreement, dated December 31, 2022, by and among eCapital Asset Based Lending Corp. and KBS Builders, Inc. (incorporated by reference to Exhibit 10.105 to the Company’s Annual Report on Form 10-K filed with the Commission on March 15, 2023).
10.55 Fourth Amendment to Loan and Security Agreement, dated December 31, 2022, by and among Gerber Finance Inc., Star Real Estate Holdings USA, Inc., 300 Park Street, LLC, 947 Waterford Road, LLC, and 56 Mechanic Falls Road, LLC. (incorporated by reference to Exhibit 10.106 to the Company’s Annual Report on Form 10-K filed with the Commission on March 15, 2023).
10.56 Asset Purchase Agreement by and among Glenbrook Building Supply Inc., Big Lake Lumber Inc. and Ray Klindworth and Paul Fridgen (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 2, 2023).
10.57 Revolving Credit Loan Agreement and Promissory Note by and between Glenbrook Building Supply, Inc. EdgeBuilder, Inc., and Premier Bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 22, 2023.
Exhibit
Number Description
10.58 Stock Purchase and Contribution Agreement by and among Star Equity Holdings, Inc., Digirad Health, Inc., TTG Imaging Solutions, LLC and Insignia TTG Parent, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 5, 2023).
10.59
Lease Agreement, dated November 1, 2023, by and between Glenbrook Building Supply, Inc. and 791 Rose Drive, LLC.
10.60 2018 Incentive Plan, as amended on October 10, 2024 (incorporated by reference to Exhibit 10.1 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on October 11, 2024).
10.61 Share Exchange Agreement, dated as of August 9, 2024, by and among Star Equity Holdings, Inc. and Enservco Corporation (incorporated by reference to Exhibit 10.1 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on August 12, 2024).
10.62 Note Purchase Agreement, dated as of August 9, 2024, by and among Star Equity Holdings, Inc. and Enservco Corporation (incorporated by reference to Exhibit 10.2 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on August 12, 2024).
10.63 Promissory Note, dated as of August 9, 2024, by and among Star Equity Holdings, Inc. and Enservco Corporation (incorporated by reference to Exhibit 10.3 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on August 12, 2024).
10.64 Registration Rights Agreement, dated as of August 9, 2024, by and among Star Equity Holdings, Inc. and Enservco Corporation (incorporated by reference to Exhibit 10.4 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on August 12, 2024).
10.65 Purchase and Sale Agreement of 1607 Pine Street, dated as of October 16, 2024, by and between Star Equity Holdings, Inc. and LTI8000 LLC (incorporated by reference to Exhibit 10.1 to Star Equity Holding Inc.’s Current Report on Form 8-K filed with the Commission on October 22, 2024).
10.66 Purchase and Sale Agreement of 1607 Pine Street, dated as of October 18, 2024, by and between Star Equity Holdings, Inc. and DWG Capital Partners, LLC (incorporated by reference to Exhibit 10.2 to Star Equity Holding Inc.’s Current Report on Form 8-K filed with the Commission on October 22, 2024).
10.67 Purchase and Sale Agreement of 300 Park, dated as of May 6, 2024, by and between 300 Park Street LLC and MAG Capital Partners Acquisition LLC (incorporated by reference to Exhibit 10.1 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on May 7, 2024).
10.68 Commercial Purchase Agreement of 791 Rose, dated as of May 6, 2024, by and between Rose Drive, LLC and HJ Development L.L.P. (incorporated by reference to Exhibit 10.2 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on May 7, 2024).
10.69 Promissory Note Secured By Mortgage dated June 28, 2024, by and among Timber Technologies, LLC and 106 Bremer Ave, LLC (incorporated by reference to Exhibit 10.1 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on July 3, 2024).
10.70 Mortgage dated June 28, 2024, by and among Timber Technologies, LLC and 106 Bremer Ave, LLC (incorporated by reference to Exhibit 10.2 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on July 3, 2024).
10.71 Commercial Single-Tenant Triple Net Lease, dated as of May 6, 2024, by and between Star Equity Holdings, Inc., MAG Capital Partners Acquisition LLC and its investors, and Park Street Maine Industrial, LLC.
10.72 Commercial Single-Tenant Triple Net Lease, dated as of May 6, 2024, by and between Star Equity Holdings, Inc. and Big Lake Industrial 2024, LLC.
10.73 Lease Agreement, dated June 28, 2024, by and between Timber Technologies Solutions, Inc. and 106 Bremer Ave, LLC.
10.74 Asset Purchase Agreement, dated as of May 17, 2024, by and among Star Equity Holdings, Inc., Timber Technologies Inc., and Tom Niska and Dale Schiferl, et. al. (incorporated by reference to Exhibit 10.1 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on May 20, 2024).
10.75 Loan Agreement, dated May 17, 2024, by and between Star Equity Holdings, Inc. and Bridgewater Bank (incorporated by reference to Exhibit 10.2 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on May 20, 2024).
10.76 Term Promissory Note, dated May 17, 2024, by and between Timber Technologies Solutions, Inc. and Bridgewater Bank (incorporated by reference to Exhibit 10.3 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on May 20, 2024).
Exhibit
Number Description
10.77 Guaranty, dated May 17, 2024, by Star Equity Holdings, Inc in favor of Bridgewater Bank (incorporated by reference to Exhibit 10.4 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on May 20, 2024).
10.78 Form of Real Estate Sales Agreement (incorporated by reference to Exhibit 10.5 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on May 20, 2024).
10.79 Loan and Security Agreement, dated as of April 24, 2024, by and between KBS Builders, Inc. and Keybank National Association (incorporated by reference to Exhibit 10.1 to Star Equity Holdings, Inc.’s Current Report on Form 8-K filed with the Commission on April 26, 2024).
10.80 Guaranty, dated April 24, 2024, by Star Equity Holdings, Inc. and Keybank National Association (incorporated by reference to Exhibit 10.2 to Star Equity Holdings, Inc.’s Current Report on Form 8-K dated April 26, 2024 (File No. 001-35947).
10.81 Agreement for Purchase and Sale of 300 Park, dated as of January 22, 2024.
10.82*
Lease Agreement, dated December 31, 2024, by and between Pine St Industrial Partners, LLC, TenNine Holdings, LLC and Edgebuilder, Inc.
19.1*
Star Equity Holdings, Inc. Insider Trading Policy.
21.1* Subsidiaries of Star Equity Holdings, Inc.
23.1* Consent of Wolf & Company, P.C., Independent Registered Public Accounting Firm.
24.1* Power of Attorney (included on the signature page of this Form 10-K).
31.1* Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*+ Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*+ Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97 Star Equity Holdings, Inc. Compensation Clawback Policy (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 8, 2023).
101.INS* Inline XBRL Instance Document
101.SCH* Inline XBRL Taxonomy Extension Schema
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase
101.LAB* Inline XBRL Taxonomy Extension Labels Linkbase
101.PRE* Inline XBRL Taxonomy Presentation Linkbase
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase
104.1 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).
# Indicates management contract or compensatory plan.
* Filed herewith.
+ The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Star Equity Holdings, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filings.