NOTE 5 - ACQUISITIONS

Star Operating Companies

On August 22, 2025, the Company completed its previously announced acquisition of SOC pursuant to the Agreement and Plan of Merger, dated as of May 21, 2025 (the “Merger Agreement”). This resulted in a business combination pursuant to ASC 805, Business Combinations.

The terms of the Merger Agreement determined consideration for the purchase as follows: at the Effective Time, (i) each share of common stock of SOC issued and outstanding immediately prior to the Effective Time (other than certain shares as set forth in the Merger Agreement) were automatically converted into the right to receive 0.23 shares of Company common stock and (ii) each share of preferred stock of SOC issued and outstanding immediately prior to the Effective Time (other than certain shares set forth in the Merger Agreement) were automatically converted into the right to receive one (1) share of Star 10% Series A Cumulative Perpetual preferred stock (“Preferred Stock”). As a result of the Merger, former SOC common stockholders received approximately 744,291 shares of Star common stock for their SOC common shares and former SOC preferred stockholders received approximately 2,690,637 shares of Star Preferred Stock. No fractional shares of Star common stock were issued in the Merger, and SOC stockholders became entitled to receive cash in lieu of fractional shares in accordance with the Merger Agreement. The total consideration paid for SOC, which represents the fair value of the common and preferred stock, totaled approximately $32,174. Prior to the completion of the Merger Agreement, the Company determined that the Merger Agreement was in the best interests of the Company and for each of the Star and the SOC stockholders.

In accordance with ASC 805, Business Combinations, the Company accounted for this transaction as a business combination and recorded the acquired assets and assumed liabilities of SOC at their respective fair values as of the acquisition date. As of June 30, 2026, the purchase price allocation has been finalized, including the valuation of property and equipment, intangible assets, inventory, income taxes, and goodwill, among other items. The fair values of assets acquired and liabilities assumed were determined using valuation techniques consistent with ASC 820, Fair Value Measurement. These fair value measurements are considered nonrecurring and were determined as of the acquisition date. As noted in Note 2, Description of Business, SOC is reported as part of our Building Solutions, Energy Services, and Investments segments. The Company incurred transaction costs related to the SOC Acquisition of $1,600 that were expensed as part of “Office and general”.

The following table sets forth the purchase price allocation of SOC to the estimated fair value of assets acquired as of the acquisition date:

 SCHEDULE OF BUSINESS COMBINATION RECOGNIZED ASSET ACQUIRED AND LIABILITY ASSUMED

The Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2026, included revenue of $18,556 and $33,612, and net loss of $384 and $2,633, respectively, from SOC.

The following represents certain information from the unaudited pro forma Condensed Consolidated Statement of Operations as if SOC had been included in the consolidated results of the Company for the three and six months ended June 30, 2025:

SCHEDULE OF BUSINESS COMBINATION INTANGIBLE ASSET ACQUIRED FINITE-LIVED 

Alpha Consulting Group Acquisition

On July 23, 2025, the Company announced that it had acquired Alpha Consulting Group (“ACG”) (“Seller”), a Japan-based provider of recruitment services. The acquisition of ACG represents the Company’s entry into the Japanese market as part of its localization strategy for its Business Services segment. In connection with the acquisition, the seller received total cash consideration of $146, subject to certain adjustments at closing.

There were no earn-out payment arrangements associated with the transaction. The ACG acquisition was accounted for as a business combination under the acquisition method of accounting. The total purchase price of $146 consisted of $200 paid in cash, net of cash acquired of $14, and a working capital adjustment of negative $68. The purchase price was allocated to the net tangible and intangible assets and liabilities based on their estimated fair values as of the acquisition date, with the excess recorded as goodwill. The Company incurred $11 of transaction costs related to the ACG Acquisition, which were expensed as part of “Office and general.”

The Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2026, included revenue of $243 and $471, and net loss of $68 and $151, respectively, from ACG.

NOTE 5 - ACQUISITIONS

Star Operating Companies

On August 22, 2025, the Company completed its previously announced acquisition of SOC pursuant to the Agreement and Plan of Merger, dated as of May 21, 2025 (the “Merger Agreement”). This resulted in a business combination pursuant to ASC 805, Business Combinations.

The terms of the Merger Agreement determined consideration for the purchase as follows: at the Effective Time, (i) each share of common stock of SOC issued and outstanding immediately prior to the Effective Time (other than certain shares as set forth in the Merger Agreement) were automatically converted into the right to receive 0.23 shares of Company common stock and (ii) each share of preferred stock of SOC issued and outstanding immediately prior to the Effective Time (other than certain shares set forth in the Merger Agreement) were automatically converted into the right to receive one (1) share of Star 10% Series A Cumulative Perpetual preferred stock (“Preferred Stock”). As a result of the Merger, former SOC common stockholders received approximately 744,291 shares of Star common stock for their SOC common shares and former SOC preferred stockholders received approximately 2,690,637 shares of Preferred Stock. No fractional shares of Star common stock were issued in the Merger, and SOC stockholders became entitled to receive cash in lieu of fractional shares in accordance with the Merger Agreement. The total consideration paid for SOC, which represents the fair value of the common and preferred stock, totaled approximately $32,174. Prior to the completion of the Merger Agreement, the Company determined that the Merger Agreement was in the best interests of the Company and for each of the Star and the SOC stockholders.

In accordance with ASC 805, Business Combinations, we accounted for this transaction as a business combination and recorded the acquired assets of SOC at their estimated fair value. The valuation of assets acquired and liabilities assumed has not yet been finalized as of December 31, 2025. The purchase price allocation is preliminary and subject to change, including the valuation of property and equipment, intangible assets, inventory, income taxes, and goodwill, among other items. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquisition date fair value. The fair values of assets acquired and liabilities assumed were determined using valuation techniques consistent with ASC 820, Fair Value Measurement. These fair value measurements are considered nonrecurring and were determined as of the acquisition date. As noted in Note 2, Description of Business, SOC is reported as part of our Building Solutions, Energy Services, and Investments segments. The Company incurred transaction costs related to the SOC Acquisition of $1,600 that were expensed as part of “Office and general”.

During the measurement period, the Company recorded adjustments to the preliminary purchase price allocation related to additional information obtained about facts and circumstances that existed as of the acquisition date. These adjustments resulted in an increase to Accrued expenses and other current liabilities of $896 and a decrease to Inventory and Accounts receivable, net of $457 and $352, respectively. In addition, Notes receivable, net of current portion increased by $1,705 to reflect updated information obtained during the measurement period regarding the terms and estimated fair value of the contingent consideration associated with the Catalyst acquisition.

The increase in Accrued expenses and other current liabilities primarily reflects the recognition of pre-acquisition obligations consisting of $180 for litigation expenses, $375 of sales tax liabilities, $65 of professional fees, and $428 of current liabilities related to inventory management system implementation and benefit cost, partially offset by a $152 state tax refund. The decrease in Accounts receivable, net relates to the write-off of a receivable that was determined not to be collectible as of the acquisition date.

In connection with the terms of the acquisition of ADT by Star Operating Companies, Inc. on March 3, 2025, the Company agreed to pay $1.0 million in cash to the former owners of ADT on or before the one-year anniversary of the acquisition date.

Related Party Considerations

As disclosed in the Registration Statement on Form S-4, which was declared effective by the SEC on July 22, 2025, and the Joint Proxy Statement/Prospectus filed with the SEC on July 23, 2025 (the “Joint Proxy Statement/Prospectus”), Jeffrey Eberwein, Hudson’s Chief Executive Officer and the holder of approximately 10% of Hudson’s common stock at the time of the Merger, was also a director and substantial stockholder of Star Operating Companies. The number of shares of common stock issued in connection with the Merger represented in excess of 5% of the shares of Hudson common stock outstanding immediately prior to the Merger, and stockholders of Star Operating Companies immediately prior to the Merger held approximately 21% of the outstanding shares of Hudson common stock following the consummation of the Merger. Mr. Eberwein continues to serve as Chief Executive Officer and remains a significant stockholder of the Company, holding approximately 27% of outstanding shares of Star Equity Holdings, Inc. as of December 31, 2025.

The following table sets forth the purchase price allocation of SOC to the estimated fair value of assets acquired as of the acquisition date:

 SCHEDULE OF BUSINESS COMBINATION RECOGNIZED ASSET ACQUIRED AND LIABILITY ASSUMED

The revenue and net income of SOC from August 22, 2025 through December 31, 2025 totaled $32,507 and $613, respectively.

Unaudited Pro Forma Financial Information

The following unaudited consolidated pro forma information gives effect to the acquisitions of SOC as if the transactions had occurred on January 1, 2024.

 SCHEDULE OF BUSINESS COMBINATION INTANGIBLE ASSET ACQUIRED FINITE-LIVED

Alpha Consulting Group Acquisition

On July 23, 2025, the Company announced that it had acquired Alpha Consulting Group (“ACG”) (“Seller”), a Japan-based provider of recruitment services. The acquisition of ACG represents the Company’s entry into the Japanese market as part of its localization strategy for its Business Services segment. In connection with the ACG acquisition, the Seller received total $146 in cash, subject to certain adjustments, at closing. There were no earn-out payment arrangements associated with the transaction. The ACG acquisition was accounted for as a business combination under the acquisition method of accounting. The total purchase price of $146 consisted of $200 paid in cash, net of cash acquired of $14, and a working capital adjustment of negative $68. The purchase price was allocated to the net tangible and intangible assets and liabilities based on their estimated fair values as of the acquisition date, with the excess recorded as goodwill. The Company incurred $11 of transaction costs related to the ACG Acquisition, which were expensed as part of “Office and general.”

The Company’s Consolidated Statements of Operations for the year ended December 31, 2025, included revenue of $254 and net loss of $136 from ACG.