DLHC

New in FY2025

• RISK FACTORS As provided for under the Private Securities Litigation Reform Act of 1995 ("1995 Reform Act"), we wish to caution shareholders and investors that the following important factors, among others discussed throughout this Annual Report on Form 10-K for the fiscal year ended September 30, 2025, have affected, and in some cases could affect, our actual results of operations and cause our results to differ materially from those anticipated in forward looking statements made herein.
• At present, we derive 99% of our revenue from agencies of the Federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors.
• Government as of September 30, 2025 and 2024.
• However, in 2025, the U.S. administration began efforts to reduce federal spending and the size of the federal workforce.
• In addition, the General Services Administration ("GSA") has instructed all federal agencies to review their contracts with consulting firms and technology product resellers contracting with the U.S. federal government.
• These and similar spending reductions and contract reviews have resulted in and are likely to continue to result in contract terminations, delays and cancellations of new procurements, and reductions in price and contract scope, which have had an adverse effect on our results, and could in the future have a material impact on our results of operations or financial condition.
• During this solicitation process, the VA has awarded three task orders to SDVOSBs unaffiliated with DLH.
• While the acquisition process is being conducted, DLH continues to operate as the prime contractor for the remaining CMOP locations that it currently manages.
• In addition, our performance under a contract with HHS in support of its Head Start program was completed as of October 31, 2025 and the customer transitioned services to a new small business prime contractor unaffiliated with us.
• In light of the decisions by these customers to award contracts to new prime contractors on a set-aside basis, our results of operations, cash flows and financial condition have been be adversely affected.
• Our results of operations, cash flows and financial condition will be further adversely affected if we were unable to continue our relationship with either of these customers, if we were to lose any more of our material current contracts, or if the amount of services we provide to them is further reduced.
• As previously reported and described elsewhere herein in further detail, various agencies within the federal government have policies that support small business goals, including the adoption of the “Rule of Two” by the VA, which provides that the agency shall award contracts by restricting competition for the contract to service-disabled or other veteran owned businesses.
• Loss of our contracting vehicles could impair our ability to win new business and perform under existing contracts.
• We currently hold multiple contracting vehicles, which our customers utilize to award contracts.
• Changes in federal government budgetary priorities or actions taken to address government budget deficits, the national debt, and/or prevailing economic conditions, including government closures or shutdowns, could result in projects being reduced in scope or price, or being terminated, and may directly affect our financial performance .
• Further, political and economic factors, such as pending elections, the outcome of recent elections, changes in leadership among key executive or legislative decision makers, and revisions to governmental tax or other policies can affect the quantity and terms of new government contracts signed or the speed at which new contracts are signed, decrease future levels of spending and authorizations for programs that we bid, shift spending priorities to programs in areas for which we do not provide services and/or lead to changes in enforcement or how compliance with relevant rules or laws is assessed.
• Congressional seats may change during election years, and the balance of spending priorities may change along with them.
• However, we anticipate that the current administration and Congress will seek to implement their budget priorities, which may impact our customers’ projects and budgets.
• VA programs, which accounted for approximately 33.8% and 35.3% of the Company’s revenue for the years ended September 30, 2025 and 2024, respectively, were exempt from the spending caps established under Federal government sequestration targets enacted in 2013.
• The U.S. government had been operating under a continuing resolution (CR) which expired on September 30, 2025.
• Subsequent to the expiration of the CR that transpired on September 30, 2025, the U.S. government ceased operations until November 12, 2025 when a new stopgap spending bill was passed by Congress and signed into law by the President.
• This current funding measure provides funding to support U.S. government operations through January 30, 2026.
• In general, a federal government shutdown could result in our incurrence of substantial labor or other costs without reimbursement under customer contracts, the delay or cancellation of programs or the delay of contract payments, which could have a negative effect on our cash flows and adversely affect our future results of operations.
• During a shutdown our customers may issue stop work orders, delay new contract awards, withhold payments, or limit access to government facilities and systems.
• Although certain of our programs may be deemed essential and continue, others could be delayed or suspended, creating significant unreimbursed costs and deferred revenue.
• A prolonged shutdown or repeated lapses in funding could also postpone new procurements, reduce activity under existing contracts, and extend the time needed to resume normal operations once funding is restored.
• These events could materially and adversely affect our business, financial condition, and results of operations.
• We derive a significant amount of revenues from service contracts with the federal government.
• At September 30, 2025, our backlog includes cost reimbursable, time-and-materials, and firm-fixed-price contracts.
• Our systems and networks may be subject to cybersecurity breaches, data privacy failures, or other security incidents that could harm our reputation, expose us to liability, and adversely affect our business.
• We may be unable to identify or complete attractive strategic transactions for many reasons, including competition from other acquirers, and high valuations of potential targets.
• Even when we identify suitable candidates and reach agreement on terms, regulatory approvals, antitrust reviews, and other legal or contractual restrictions may delay or prevent completion.
• We may encounter other risks in regard to making acquisitions, including: • increased competition for acquisitions may increase the costs of our acquisitions; • unforeseen expenses, delays, or conditions imposed in connection with regulatory or contractual approvals; • challenges in retaining key employees, business partners, or customers of an acquired company; • non-discovery or non-disclosure of material liabilities during the due diligence process, including omissions by prior owners of any acquired businesses or their employees in complying with applicable laws or regulations, or their inability to fulfill their contractual obligations to the federal government or other customers; and • acquisition financing may not be available on reasonable terms or at all.
• Following our acquisition of DLH, LLC (formerly, Grove Resource Solutions, LLC) in December 2022, we amended and restated our credit agreement with First National Bank of Pennsylvania and certain other lenders and incurred additional indebtedness.
• We amended our credit agreement (as amended, the “Credit Agreement”) in November 2024 to modify the financial covenants and adjust the borrowing capacity of the revolving credit facility.
• As of September 30, 2025, our executive officers, directors and largest shareholder (Wynnefield Capital, Inc. and its affiliates) own approximately 41% of our outstanding common stock.
• In addition, a person associated with Wynnefield Capital, Inc. currently serves on our Board of Directors.
• Our success to date has resulted in part from the significant contributions of our executive officers, who have been instrumental in shaping the strategic direction of the Company.
• From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, potentially disrupting our business.
• As of September 30, 2025, certain of our officers are under employment contracts.

and 5 more.

Gone since FY2024

• RISK FACTORS As provided for under the Private Securities Litigation Reform Act of 1995 ("1995 Reform Act"), we wish to caution shareholders and investors that the following important factors, among others discussed throughout this Annual Report on Form 10-K for the fiscal year ended September 30, 2024, have affected, and in some cases could affect, our actual results of operations and cause our results to differ materially from those anticipated in forward looking statements made herein.
• At present, we derive 98% of our revenue from agencies of the Federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors.
• Government as of September 30, 2024 and 2023.
• During the fiscal year ended September 30, 2024, the VA awarded one of the task orders to a SDVOSB that is unaffiliated with DLH.
• While the acquisition process is being conducted, DLH continues to operate as the prime contractor for the seven CMOP locations that it currently manages.
• Our results of operations, cash flows and financial condition would be materially adversely affected if we were unable to continue our relationship with either of these customers, if we were to lose any of our material current contracts, or if the amount of services we provide to them is materially reduced.
• As previously reported, various agencies within the federal government have policies that support small business goals, including the adoption of the “Rule of Two” by the VA, which provides that the agency shall award contracts by restricting competition for the contract to service-disabled or other veteran owned businesses.
• Loss of our GSA schedule contracts or other contracting vehicles could impair our ability to win new business and perform under existing contracts.
• We currently hold multiple GSA schedule contracts, including a Federal supply schedule contract for professional and allied healthcare services and the logistics worldwide services contract.
• Changes in federal government budgetary priorities or actions taken to address government budget deficits, the national debt, and/or prevailing economic conditions, could directly affect our financial performance .
• Further, congressional seats may change during election years, and the balance of spending priorities may change along with them.
• However, we anticipate that the President-Elect and new Congress will seek to implement their budget priorities, which may impact our customers’ projects and budgets.
• VA programs, which accounted for approximately 35.3% and 36.9% of the Company’s revenue for the years ended September 30, 2024 and 2023, respectively, were exempt from the spending caps established under Federal government sequestration targets enacted in 2013.
• Currently, the U.S. government is operating under a continuing resolution (CR) which expires on December 20, 2024.
• A federal government shutdown could, however, result in our incurrence of substantial labor or other costs without reimbursement under customer contracts, the delay or cancellation of programs or the delay of contract payments, which could have a negative effect on our cash flows and adversely affect our future results of operations.
• We derive virtually all of our revenue from service contracts with the federal government.
• At September 30, 2024, our backlog includes cost reimbursable, time-and-materials, and firm-fixed-price contracts.
• Our systems and networks may be subject to cybersecurity breaches.
• We may not identify and execute suitable acquisitions.
• We may encounter other risks in regard to making acquisitions, including: • increased competition for acquisitions may increase the costs of our acquisitions; • non-discovery or non-disclosure of material liabilities during the due diligence process, including omissions by prior owners of any acquired businesses or their employees in complying with applicable laws or regulations, or their inability to fulfill their contractual obligations to the federal government or other customers; and • acquisition financing may not be available on reasonable terms or at all.
• With respect to our acquisition of DLH, LLC (formerly, Grove Resource Solutions, LLC) in December 2022, the benefits of the acquisition will depend, in part, on our ability to successfully combine our businesses and realize the anticipated benefits, including business opportunities and growth prospects from combining our businesses.
• We may not achieve these objectives within the anticipated time frame or may never realize these benefits and the value of our common stock may be harmed.
• The acquisition involves the integration of the acquired business with our existing business, which was a costly and time-consuming process.
• Following our acquisition of DLH, LLC (formerly, Grove Resource Solutions, LLC) in December 2022, we amended and restated our credit agreement with First National Bank of Pennsylvania and certain other lenders (the “Credit Agreement”) and incurred additional indebtedness.
• As of September 30, 2024, our executive officers, directors and largest shareholder (Wynnefield Capital, Inc. and its affiliates) own approximately 41% of our outstanding common stock.
• In addition, persons associated with Wynnefield Capital, Inc. currently serve on our Board of Directors.
• Our success to date has resulted in part from the significant contributions of our executive officers.
• As of September 30, 2024, certain of our officers are under employment contracts.
• The accounting treatment of these tax law changes is complex, and some of the changes may affect both current and future periods.
• Consistent with guidance from the SEC, our consolidated financial statements reflect our estimates of the tax effects of the current tax laws and regulations.
• The COVID-19 pandemic and the mitigation efforts to control its spread created significant volatility, uncertainty and economic disruption and adversely impacted the U.S. and global economies.