Star Equity Holdings (STRR) FY2025 10-K Risk Factors: 31 New, 8 Dropped

What the changes say

Star Equity expanded its risk disclosure to cover new segments like Building Solutions and Energy Services alongside Business Services.
Global macro risks including inflation, interest rates, tariffs, and geopolitical conflicts now heavily influence operations.
Customer concentration and competitive bidding cycles remain critical threats to revenue.

What changed since the prior 10-K

New

NewRisks Related to Our Business and Industry
Our business is sensitive to global economic conditions and fluctuations, including inflation, interest rates, and geopolitical uncertainty, which may reduce demand for our services and adversely affect our costs, profitability, and liquidity
Global economic conditions, interest rates, inflation, and geopolitical conflicts like the war in Ukraine and Middle East tensions may reduce demand for our Building Solutions, Business Services, and Energy Services.
NewRisks Related to Our Business and Industry
also result in social, economic, and labor disruption, negatively impacting customer demand, supply chains, labor markets, and financial markets
Elevated inflation and higher interest rates increase our labor, raw material, and borrowing costs while potentially limiting our ability to raise prices.
NewRisks Related to Our Business and Industry
Our operating results may be adversely affected by changes in the cost and availability of commodities, materials, and equipment, including as a result of trade tariffs, supply‑chain disruptions, and market conditions, which could increase costs and reduce demand for our products and services
Trade policies and tariffs could increase procurement costs and disrupt the supply of raw materials and commodities used in our Building Solutions and Energy Services segments.
NewRisks Related to Our Business and Industry
demand for our services. This could have a material adverse effect on our business, financial condition, and results of operations
Frequent open bid processes by larger clients for recruitment process outsourcing require us to constantly compete on price and criteria to retain or win business.
NewRisks Related to Our Business and Industry
We are subject to particular risks associated with real estate ownership, which could result in unanticipated losses or expenses
Real estate ownership exposes us to property losses, illiquidity, tenant defaults, maintenance expenses, and regulatory compliance costs under the Americans with Disabilities Act.
NewRisks Related to Our Business and Industry
We have historically experienced seasonality in all of our businesses and downturns based on the changing U.S. economy
Our businesses experience seasonality from Asia Pacific and Americas vacation periods, winter weather affecting Building Solutions transport, and oil price fluctuations impacting Energy Services.
NewRisks Related to Our Business and Industry
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, and decrease demand for future contracts, which could result in a decrease in our revenues in particular periods
Adverse economic shifts, demographic changes, oil price volatility, and rising labor costs could decrease pricing and demand for new projects and result in customer cancellations.
NewRisks Related to Our Business and Industry
Our growth strategy includes acquisitions and dispositions, but we may not realize the anticipated benefits of these transactions, which could adversely affect our business, financial condition, and results of operations
Acquisition and disposition activities may involve unforeseen liabilities, integration challenges for ERP platforms, compliance under the Sarbanes-Oxley Act, and underperformance of acquired businesses.
NewRisks Related to Our Business and Industry
Our profitability and growth may depend on the success of our operating businesses which include Buildings Solutions and construction related products, global Business Services, and drilling products and other Energy Services, which businesses are subject to a variety of business risks and uncertainties
Our profitability relies on maintaining client relationships, attracting new clients, and generating sufficient cash across our Building Solutions, Business Services, and Energy Services segments.
NewRisks Related to Our Business and Industry
We may make financial investments in other businesses that may lose value
Financial investments made in other businesses to enhance supply chains or generate returns may be speculative and result in the loss of our entire principal balance.
NewRisks Related to Our Business and Industry
Our long-term results depend upon our ability to improve existing products and services and develop, introduce, and market new products and services successfully
Failure to successfully develop and introduce new products and services in fast-changing industries could render our offerings obsolete and harm our competitive position.
NewRisks Related to Our Business and Industry
Our business is highly dependent on a limited number of significant customers and distribution relationships, and the loss, reduction, or non‑renewal of these relationships, could materially adversely affect our revenues, financial condition, and results of operations
Our business depends on a limited number of significant customers and accounts receivable concentrations who can terminate engagements on short notice without penalty.
NewRisks Related to Our Business and Industry
Due to the nature of our businesses, many of our expenses are fixed costs and if there are decreases in demand for products, it may adversely affect operating results
NewRisks Related to Our Business and Industry
The impact of the Russian invasion of Ukraine, and the US-Iran war, on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations
NewRisks Related to Indebtedness
All our businesses in the Building Solutions and Energy Solutions segments are supported by credited facilities. See Note 9 – Debt to the consolidated financial statements included in Part II, Item 8 of this Form 10-K
NewRisks Related to Indebtedness
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
NewRisks Related to Indebtedness
Any indebtedness incurred by the Company could restrict our operations and make us more vulnerable to adverse economic conditions
NewRisks Related to Indebtedness
Due to the nature of the work we perform, we may be subject to significant liability claims and disputes
NewRisks Related to Indebtedness
Our goodwill and other long-lived assets are subject to potential impairment that could negatively impact our earnings
NewRisks Related to our Common Stock and Preferred Stock
The market price of our common and preferred stock may be volatile, and the value of your investment could decline significantly
NewRisks Related to our Common Stock and Preferred Stock
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
NewRisks Related to our Common Stock and Preferred Stock
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
NewRisks Related to our Common Stock and Preferred 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
NewRisks Related to our Common Stock and Preferred Stock
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
NewRisks Related to our Common Stock and Preferred Stock
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
NewRegulatory and Compliance Risks
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
NewRegulatory and Compliance Risks
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
NewRegulatory and Compliance Risks
transfer attempted in violation of the Protective Amendment will be void as of the date of the prohibited transfer as to the purported transferee
NewRegulatory and Compliance Risks
Our stockholder rights plan, or “poison pill,” includes terms and conditions which could discourage a takeover or other transaction that stockholders may consider favorable
NewRegulatory and Compliance Risks
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
NewRegulatory and Compliance Risks
information, as well as certain consumer information and credit information. We operate in an environment of significant risk of cybersecurity incidents, whether from unintentional events or deliberate attacks by third parties or insiders, which may exploit sophisticated methods or obscure vulnerabilities

Dropped

Dropped
Our operations will be affected by global economic fluctuations
Operations affected by global economic fluctuations and geopolitical events.
Dropped
We may face risks related to potential or current acquisitions or dispositions of businesses
Dropped
Our profitability and growth depend on the success of our global RPO business, which is subject to a variety of business risks and uncertainties
Risks related to potential or current acquisitions or dispositions of businesses.
Dropped
Our business is highly dependent upon our largest customers, and the loss of any of those customers, or any material reduction in our business with those customers, could materially and adversely affect our financial condition and results of operations
Profitability and growth depend on the success of our global RPO business.
Dropped
We have no significant proprietary technology that would preclude or inhibit competitors from entering the
High dependence on top clients generating over 85% of revenue.
Dropped
There may be volatility in our stock price
Dropped
Improper access to, misappropriation, destruction or disclosure of confidential, personal or proprietary data could result in significant harm to our reputation or the reputation of any of the businesses we own
Dropped
One of our significant responsibilities is to maintain the security and privacy of our employees’ and clients’ confidential and proprietary information and the confidential information about clients’ employees’ compensation, health and benefits information and other personally identifiable information
Lack of significant proprietary technology in the recruitment outsourcing market.

Reworded

100% rewrittenRisks Related to Indebtedness
Our credit facilities may restrict our operating flexibility in the future
Removed specific details regarding the Australian NAB facility and Singapore HSBC facility credit agreements, shifting to a broader statement on credit facility restrictions.
99% rewrittenRisks Related to Indebtedness
Our ability to utilize net operating loss carryforwards may be limited
Updated U.S. net operating loss carryforward rules to clarify the distinction between pre-2018 expiration limits and post-2017 indefinite carryforwards.
85% rewrittenRegulatory and Compliance Risks
Provisions in our organizational documents and Delaware law will make it more difficult for someone to remove current management and to acquire control of us
Added specific mention that the Board of Directors is authorized to issue preferred stock without stockholder approval to deter takeover attempts.
Was: Provisions in our organizational documents and Delaware law will make it more difficult for someone to acquire control of us
78% rewrittenRisks Related to Our Business and Industry
Our Business Services revenue can vary because our clients often run bid processes for RPO functions and can terminate their relationship with us at any time with limited or no penalty
Shortened heading and text regarding RPO client termination risks, removing duplicate details regarding open bid processes.
Was: Our revenue can vary because our clients often run bid processes for RPO functions and can terminate their relationship with us at any time with limited or no penalty
68% rewrittenRisks Related to Indebtedness
Our investment strategy subjects us to risks
Added international geopolitical risks such as the Russian invasion of Ukraine and Middle East conflicts to the investment strategy risk.
64% rewrittenRisks Related to Our Business and Industry
Our markets are highly competitive
Expanded the competition risk to explicitly name competitors by segment: modular and stick builders for Building Solutions, and drilling providers for Energy Services.
41% rewrittenRegulatory and Compliance Risks
We face risks related to our international operations
Narrowed international operations metrics to specify that 80% of Business Services segment revenue was earned outside the U.S. in fiscal 2025.
40% rewrittenRisks Related to Indebtedness
We face risks in collecting our accounts receivable
Updated accounts receivable collection risks to apply to both services and products, broadening third-party vendor managers to generic third parties.
30% rewrittenRegulatory and Compliance Risks
We rely on our information systems, and if we lose our information processing capabilities or fail to further develop our technology, our business could be adversely affected
25% rewrittenRegulatory and Compliance Risks
Issues relating to the use of new and evolving technologies, such as Artificial Intelligence (“AI”) and Machine Learning (“ML”) present challenges for our business and may result in liability
23% rewrittenRegulatory and Compliance Risks
Our future earnings could be reduced as a result of the imposition of licensing or tax requirements or new regulations that prohibit, or restrict certain types of services we offer in the U.S. and foreign countries
Was: Our future earnings could be reduced as a result of the imposition of licensing or tax requirements or new regulations that prohibit, or restrict certain types of employment services we offer in the U.S. and foreign countries
23% rewrittenRisks Related to Our Business and Industry
We may not be able to successfully execute our strategic initiatives or meet our long-term financial goals

All 49 risk factors

Headings as the filing states them, in filing order.

Risks Related to Our Business and Industry

01Our business is sensitive to global economic conditions and fluctuations, including inflation, interest rates, and geopolitical uncertainty, which may reduce demand for our services and adversely affect our costs, profitability, and liquidityNew
02also result in social, economic, and labor disruption, negatively impacting customer demand, supply chains, labor markets, and financial marketsNew
03Our operating results may be adversely affected by changes in the cost and availability of commodities, materials, and equipment, including as a result of trade tariffs, supply‑chain disruptions, and market conditions, which could increase costs and reduce demand for our products and servicesNew
04Our business depends on uninterrupted service to clients
05Our Business Services revenue can vary because our clients often run bid processes for RPO functions and can terminate their relationship with us at any time with limited or no penalty78% rewritten
06demand for our services. This could have a material adverse effect on our business, financial condition, and results of operationsNew
07We are subject to particular risks associated with real estate ownership, which could result in unanticipated losses or expensesNew
08We may not be able to successfully execute our strategic initiatives or meet our long-term financial goals23% rewritten
09We have historically experienced seasonality in all of our businesses and downturns based on the changing U.S. economyNew
10Adverse 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, and decrease demand for future contracts, which could result in a decrease in our revenues in particular periodsNew
11Our growth strategy includes acquisitions and dispositions, but we may not realize the anticipated benefits of these transactions, which could adversely affect our business, financial condition, and results of operationsNew
12Our profitability and growth may depend on the success of our operating businesses which include Buildings Solutions and construction related products, global Business Services, and drilling products and other Energy Services, which businesses are subject to a variety of business risks and uncertaintiesNew
13We may make financial investments in other businesses that may lose valueNew
14Our long-term results depend upon our ability to improve existing products and services and develop, introduce, and market new products and services successfullyNew
15Our business is highly dependent on a limited number of significant customers and distribution relationships, and the loss, reduction, or non‑renewal of these relationships, could materially adversely affect our revenues, financial condition, and results of operationsNew
16Our markets are highly competitive64% rewritten
17Due to the nature of our businesses, many of our expenses are fixed costs and if there are decreases in demand for products, it may adversely affect operating resultsNew
18If we are unable to maintain costs at an acceptable level, our operations could be adversely impacted
19We have had periods of negative cash flows and operating losses that may recur in the future
20The impact of the Russian invasion of Ukraine, and the US-Iran war, on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operationsNew

Risks Related to Indebtedness

21Our credit facilities may restrict our operating flexibility in the future100% rewritten
22All our businesses in the Building Solutions and Energy Solutions segments are supported by credited facilities. See Note 9 – Debt to the consolidated financial statements included in Part II, Item 8 of this Form 10-KNew
23If 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 investmentNew
24Any indebtedness incurred by the Company could restrict our operations and make us more vulnerable to adverse economic conditionsNew
25Our investment strategy subjects us to risks68% rewritten
26We depend on our key management personnel
27Failure to attract and retain qualified personnel, management and advisors could negatively impact our business, financial condition, and results of operations
28We face risks in collecting our accounts receivable40% rewritten
29Due to the nature of the work we perform, we may be subject to significant liability claims and disputesNew
30Our ability to utilize net operating loss carryforwards may be limited99% rewritten
31Our goodwill and other long-lived assets are subject to potential impairment that could negatively impact our earningsNew

Risks Related to our Common Stock and Preferred Stock

32The market price of our common and preferred stock may be volatile, and the value of your investment could decline significantlyNew
33Our common stock has a low trading volume and shares available under our equity compensation plans could affect the trading price of our common stockNew
34If 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 declineNew
35Payment 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 valueNew
36If 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 directorsNew
37We 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 initiativesNew

Regulatory and Compliance Risks

38We face risks related to our international operations41% rewritten
39We 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 penaltiesNew
40We may be exposed to employment-related claims, legal liability, and costs from clients, employees, and regulatory authorities that could adversely affect our business, financial condition, or results of operations, and our insurance coverage may not cover all of our potential liability
41Our future earnings could be reduced as a result of the imposition of licensing or tax requirements or new regulations that prohibit, or restrict certain types of services we offer in the U.S. and foreign countries23% rewritten
42Provisions in our organizational documents and Delaware law will make it more difficult for someone to remove current management and to acquire control of us85% rewritten
43The 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 effectsNew
44transfer attempted in violation of the Protective Amendment will be void as of the date of the prohibited transfer as to the purported transfereeNew
45Our stockholder rights plan, or “poison pill,” includes terms and conditions which could discourage a takeover or other transaction that stockholders may consider favorableNew
46As 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 prospectsNew
47We rely on our information systems, and if we lose our information processing capabilities or fail to further develop our technology, our business could be adversely affected30% rewritten
48information, as well as certain consumer information and credit information. We operate in an environment of significant risk of cybersecurity incidents, whether from unintentional events or deliberate attacks by third parties or insiders, which may exploit sophisticated methods or obscure vulnerabilitiesNew
49Issues relating to the use of new and evolving technologies, such as Artificial Intelligence (“AI”) and Machine Learning (“ML”) present challenges for our business and may result in liability25% rewritten

Other Star Equity Holdings 10-Ks

FY2024 10-K risk factors
26 risks
The company relies heavily on a small group of top clients and international RPO operations across sixteen countries. Profitability faces pressure from intense competition, historical operating losses, and strict debt covenants. Growth depends on executing strategic initiatives, managing acquisitions, and adopting new technologies safely.
Filed Mar 14, 2025

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The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.