Because the Company focuses its attention on professional staffing positions, it competes by providing highly qualified candidates who are well matched for the position, by responding quickly to client requests, and by establishing offices in convenient locations. As part of its service, the Company provides for professional reference checking, scrutiny of candidates’ work experience and optional background checks. In general, pricing is considered to be secondary to quality of service as a competitive factor. During slow hiring periods, however, competition can put pressure on the Company’s pricing.

The success of the CompanyCompany’s professional staffing services is highly dependent on its ability to obtain qualified candidates. Prospective employment candidates are generally recruited through telephone contact by the Company’s employment consultants or through postings on the Internet. For Internet postings, the Company maintains its own web page at www.generalemployment.com and uses other Internet job posting bulletin board services. The Company maintains database records of applicants’ skills to assist in matching them with job openings. The Company screens and interviews applicants who are presented to its clients.  The Company’s agricultural service employees are generally seasonal migrant workers, which are typically recurring workers or are directly recruited by the customers.

As of September 30, 2009,2010, the Company had approximately 6068 regular employees and 110103 contract service employees.

Not applicable.

Not applicable.

The Company’s policy is to lease commercial office space for all of its offices. The Company’s headquarters are located in a modern 31-story building near Chicago, Illinois. The Company leases 8,200 square feet of space at that location under a lease that will expire in 2015. The lease may be cancelled by the Company in 2012 under certain conditions.

The Company’s staffing offices are located in downtown and suburban business centers in eight states. Established

offices are operated from leased space ranging from 800 to 2,000 square feet, generally for initial lease periods of three to five years, with cancellation clauses after certain periods of occupancy in some cases. Management believes that existing facilities are adequate for the Company’s current needs and that its leasing strategies provide the Company with sufficient flexibility to open or close offices to accommodate business needs.

The Company’s common stock is listed on the NYSE Amex stock exchange and is traded under the symbol JOB. The following table sets forth the quarterly high and low sales prices per share of the Company’s common stock on the consolidated market for each quarter within the last two fiscal years.

There were 665661 holders of record on December 31, 2009.September 30, 2010.

On November 19, 2007,No dividends were declared or paid during the Company declared a $.10 per share cash dividend on its common stock, payable on January 11, 2008 to shareholders of record as of December 14, 2007.  In the past,three month period ended September 30, 2010.  We do not anticipate paying any cash dividends have been declared atfor the discretion of the Board of Directors.  There is no assurance that dividends will be paid in the future, since they are dependent on the Company’s earnings, financial condition and other factors.foreseeable future.

Information concerning securities authorized for issuance under equity compensation plans is presented in Item 12 of this annual report.

During the three months ended September 30, 2009,2010, no equity securities of the Company were purchased by the Company.

Not Applicable.

The Company provides contract and placement staffing services for business and industry, primarily specializing in the placement of information technology, engineering and accounting professionals.  With the acquisition of On-Site Services, Inc. (On-Site) in June 2010, the Company also began to provide contract staffing services for the agricultural industry. On June 1, 2010, the Company entered into an asset purchase agreement to purchase certain assets of On-Site Services, Inc. which qualified as a business combination. This business is located in Florida and provides labor and human resource solutions, including temporary staffing, to the agricultural industry. The results of operations of On-Site are included in the Company’s statement of operations from the date of the acquisition. As of September 30, 2009,2010, the CompanyCompan y operated tentwelve offices located in eight states.

The Company’s professional staffing services business is highly dependent on national employment trends in general and on the demand for professional staff in particular.  As an indicator of employment conditions, the national unemployment rate was 9.6% in September 2010 and 9.8% in September 2009 and 6.2% in September 2008.  The change2009.  This indicates a trend toward a lowerrelatively flat level of employmentunemployment in the United States during the last twelve months.

During the year ended September 30, 2009,2010, the U.S. economy experienced a period of continued uncertainty stemming from problems in the housing and credit markets.  According to the U.S. Department of Labor, the national employment level declined by approximately 6.0six million jobs during the period.  Management believes that employers becamehave remained extremely cautious about hiring during the period.  As a result, the Company experienced sharp declines in both the number of billable contract hours and the number of placements.

Consolidated net revenues for the year ended September 30, 2009 decreased 32%2010 increased 14.6% compared with the prior year.year due to the acquisition of On-Site.  Contract service revenues, were down 16%including On-Site, increased by 43.6%, andwhile placement service revenues were down 47%decreased by 29.6%.  The effectsDue to the restructuring of its corporate and field operations during the third quarter of fiscal 2009, and the Company’s efforts to reduce selling, general, and administrative expenses, the Company was able to lower consolidated net revenues resulted in a $4,178,000its loss from operations thisfrom $4,228,000 in the prior year compared with a $1,843,000 loss from operations lastto $1,556,000 in the current year.

Consolidated net revenues forare comprised of the year ended September 30, 2009 were down $4,841,000 (32%following:

Consolidated net revenues increased by $1,523,000 (14.6%) from the prior year.  Contract service revenuesyear and was primarily due to the acquisition of On-Site in June 2010, which contributed $2,803,000 in revenue for fiscal 2010.  The increase was offset by lower professional contract and permanent placement services.  Professional contract and placement services decreased $1,196,000 (16%by $63,000 (1%) and placement service revenues decreased $3,645,000 (47%$1,217,000 (29.6%). from the prior year, respectively.  As a result of the weaker economic conditions that prevailed during the year ended September 30, 2009,2010, the Company experienced less demand for itsthese services.  The decline in consolidated net revenues was the result

The cost of contract services includes wages and the related payroll taxes and employee benefits of the Company’s employees while they work on contract assignments.  There are no direct costs associated with placement service revenues.  The cost of contract services for the year ended September 30, 2009 was down $663,000 (13%2010 increased by $2,737,000 (63%) as a resultdue to the acquisition of the lower volume of contract business.  The gross profit margin on contract business was 30.4%, which was 2.2 percentage points less than 32.6% for the prior year dueOn-Site in June 2010.  Due to competitive pricing pressures during the period.period, the gross profit margin on the professional contract services business decreased from 30.4% in the prior year to 29.1% in the current year.  The gross profit margin of the On-Site business was 3.5% for the four months ended September 30, 2010.  The lower margin of the On-Site business was the primary reason for the decrease in the consolidated contract service gross profit margin from 30.4% in the prior year to 21.1% in the current year.

Selling, general and administrative expenses include the following categories:

The Company’s largest selling, general and administrative expense is for compensation in the operating divisions.  Most of the Company’s employment consultants are paid on a commission basis and receive advances against future commissions.  Advances are expensed when paid.  When commissions are earned, prior advances are applied against them and the consultant is paid the net amount.  At that time, the Company recognizes the full amount as commission expense, and advance expense is reduced by the amount recovered.  Thus, the Company’s advance expense represents the net amount of advances paid, less amounts applied against commissions.

Selling, general and administrative expenses for the year ended September 30, 20092010 decreased $1,843,000 (15%$3,881,000 (38.1%).  Compensation in the operating divisions was down 33%decreased by $955,000 (46.5%), reflecting lower commission expense on the lower volume of placement business.  Administrative compensation was up 32%decreased by $1,491,000 (65.9)%, reflecting the $1,070,000 of additional compensation recorded under the consulting agreement of the former CEO.  All other administrative compensation was down 31% for the period, reflecting executive pay reductions, staff reductions and lower deferred compensation expense.  OccupancyAdditionally, in fiscal 2009, the Company recorded an administrative compensation provision of $1,070,000 for a consulting agreement signed with its former Chief Executive Officer (see Liquidity section below).  No additional provisions have been recorded in fiscal 2010 related to this agreement, as the obligation is getting paid out ratably over the next five years.  Branch occupancy costs were down 22%decreased by $664,000 (55.9%) for the period because of operating fewer branch offices than last year.  Recruitment advertising also decreased 11%$508,000 (57.9)% due to lower utilization of job board posting services.  The fiscal 20092010 results also include a provision for70.4% increase in professional fees.  Legal and accounting fees increased by $256,000 over the cost of closing branch offices of $330,000.

InvestmentInterest income for the year ended September 30, 20092010 was down $87,000$37,000 from last year due to a combination of lower funds available for investment and a lower average rate of return on investments.  Returns in both periods were adversely affected by losses on trading securities.

There were no credits for income taxes as a result of the pretax losses incurred during the periods because there was not sufficient assurance that future tax benefits would be realized.

As of September 30, 2009,2010 the Company had cash and cash equivalents of $2,810,000,$945,000, which was a decrease of $1,355,000$1,865,000 from September 30, 2008.2009.  Net working capital at September 30, 20092010 was $2,609,000,$1,209,000, which was a decrease of $1,676,000$1,400,000 from September 30, 2008,2009 and the current ratio was 2.81.9 to 1.  Shareholders’ equity as of September 30, 20092010 was $2,604,000$1,592,000 which represented 56%46.9% of total assets.

During the year ended September 30, 2009, the2010, net cash used by operating activities was $2,695,000.$1,865,000.  The net loss for the period, adjusted for depreciation and other non-cash charges, used $3,016,000,$1,256,000, while working capital items provided $321,000.

There was no cash used in investing activities during fiscal 2010. The Company does not expect any significant use of cash for capital expenditures in fiscal 2011. During fiscal 2010, the Company recordedacquired certain assets of On-Site Services, Inc through the saleissuance of 7,700,000 newly-issued1,476,015 shares of its common stock. Additionally, the former owner of On-Site is entitled to earn-out payments over the next four years totaling up to $1,020,000; $600,000 of which is payable in cash and $420,000 of which is payable in either cash or common stock to PSQ for $1,925,000or any combination  thereof, in cash.the Company’s sole discretion, upon the attainment of certain aggregate performance targets. The net proceeds toCompany has determined that the fair value of the contingent consideration that could be paid under this earn-out agreement is zero based on the estimated probability of any payment being made.

In November 2010, the Company frompurchased certain assets of RFFG of Cleveland and DMCC Staffing, LLC (“DMCC”) and entered into a management agreement with RFFG, LLC (the previous parent company of RFFG of Cleveland and DMCC Staffing, LLC) to provide services to RFFG to operate its day-to-day business, including services related to accounting, sales, finance, workers compensation, benefits, physical locations, IT, and employees. Thomas J. Bean, a 10% shareholder of the shareCompany (prior to consideration of common shares issued in this transaction), is the owner of RFFG.

In consideration of the services provided under the management agreement, RFFG will pay the Company approximately 6% of its gross revenues. Gross revenues of RFFG are expected to approximate $18 million on an annual basis, resulting in an expected management fee of approximately $1 million per year. The Company will need to add employees to provide the services required under the management agreement. The assets purchased related to RFFG of Cleveland and DMCC Staffing , LLC constitute businesses and as such the acquisition of these assets will be accounted for as a business combination. In consideration for the assets acquired and the rights under the management contract, the Company paid $2.4 million through the issuance after deducting related costs, were $1,384,000.of its common stock. In addition, the purchase agreement requires the Company to make additional payments of up to $2. 4 million over the next four years if certain performance targets are achieved. These earn-out payments will be paid 50% in cash and 50% through the issuance of the Company’s common stock. Under the terms of the agreement, the maximum amount payable under the earn-out agreement for fiscal 2011 is $350,000.

All of the Company’s office facilities are leased.  As of September 30, 2009,2010, future minimum lease payments under noncancelablenon-cancelable lease commitments having initial terms in excess of one year, including closed offices, totaled $1,351,000.$1,674,000.  At that date, the Company also had contractual obligations to purchase approximately $680,000$446,000 of recruitment advertising through December 2011.

In connection with the completion of the sale of shares of common stock to PSQ in the prior year, the Company’s Chairman, Chief Executive Officer and President (the “former CEO”) resigned from those positions and his employment agreement with the Company was replaced by a new consulting agreement.  Under the consulting agreement, the Company became obligated to pay an annual consulting fee of $180,000 over a five-year period and to issue 500,000 shares of common stock to the former CEO for no additional consideration, and the Company recorded a liability for the net present value of the future fee payments in the amount of $790,000.  As of September 30, 2010, $611,000 remains payable under this agreement and is included in accrued expenses on the Company’s balance sheet.

As of September 30, 2009,2010, there were approximately $7,400,000$8,900,000 of losses available to reduce federal taxable income in future years through 2029, and there were approximately $6,800,000$7,000,000 of losses available to reduce state taxable income in future years, expiring from 2010 through 2029.  Due to the sale of shares of common stock to PSQ during fiscal 2009, it is likely that the Company will be limited by Section 382 of the Internal Revenue Code as to the amount of net operating losses that may be used in future years.  The Company is currently evaluating the effects of any such limitation.  Future realization of the tax benefits of net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period.  Based on the weight of available evidence, the Company determined that it is more likely than not that all of the deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of September 30, 2009.  See “Income Taxes” in the Notes to Consolidated Financial Statements for additional information.

As of September 30, 2009,2010, and during the year then ended, there were no transactions, agreements or other contractual arrangements to which an unconsolidated entity was a party, under which the Company (a) had any direct or contingent obligation under a guarantee contract, derivative instrument or variable interest in the unconsolidated entity, or (b) had a retained or contingent interest in assets transferred to the unconsolidated entity.

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and the rules of the United States Securities and Exchange Commission.

Management makes estimates and assumptions that can affect the amounts of assets and liabilities reported as of the date of the financial statements, as well as the amounts of reported revenues and expenses during the periods presented. Those estimates and assumptions typically involve expectations about events to occur subsequent to the balance sheet date, and it is possible that actual results could ultimately differ from the estimates. If differences were to occur in a subsequent period, the Company would recognize those differences when they became known. Significant matters requiring the use of estimates and assumptions include deferred income tax valuation allowances and accounts receivable allowances. Management believes that its estimates and assumptions are reasonable, based on information that is available at the time they are made.

The following accounting policies are considered by management to be “critical” because of the judgments and uncertainties involved, and because different amounts would be reported under different conditions or using different assumptions.

Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized as a tax benefit in the future. If the Company were to change its determination about the future realization of tax benefits, the valuation allowance would be adjusted as a provision or credit to income taxes in the period in which the determination is made. Judgment is required in assessing the likelihood that tax assets will be realized. These judgments are based on estimates about future taxable income, which is inherently uncertain.

An allowance for placement falloffs is recorded, as a reduction of revenues, for estimated losses due to applicants not remaining employed for the Company’s guarantee period. An allowance for doubtful accounts is recorded, as a charge to bad debt expense, where collection is considered to be doubtful due to credit issues. These allowances reflect management’s estimate of potential losses inherent in the accounts receivable balances, based on historical loss statistics.statistics and known current factors impacting its customers.

In December 2007, the FASB issued guidance on business combinations.  Under the FASBthis guidance, an entity is required to recognize the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value on the acquisition date. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred, restructuring costs generally be expensed in periods subsequent to the acquisition date, and changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expense. The Company will adoptadopted this guidance on October 1, 2009.  The Company’s acquisition of On-Site Services, Inc. on June 1, 2010 was accounted for under this guidance – refer to t he Acquisition Footnote of our consolidated financial statements.

In June 2009, the FASB issued authoritative guidance which amended the existing guidance for business combinationsthe consolidation of variable interest entities, to address the elimination of the concept of a qualifying special purpose entity. The guidance also replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a prospective basis beginningvariable interest entity, and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, the guidance requires any enterprise that holds a variable interest in a variable interest entity to provide enhanced disclosures that will provide users of financial statements with more transparent infor mation about an enterprise's involvement in a variable interest entity. The guidance is effective for the first quarter of fiscalCompany commencing October 1, 2010. The Company is currently evaluating the impact, if any, the guidance will have on its consolidated financial statements.

As a matter of policy, the Company does not provide forecasts of future financial performance.  The statements made in this Form 10-K Annual Report which are not historical facts are forward-looking statements.  Such forward-looking statements often contain or are prefaced by words such as “will” and “expect.” As a result of a number of factors, our actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause our actual results to differ materially from those in the forward-looking statements include, without limitation, general business conditions, the demand for the Company’s services, competitive market pressures, the ability of the Company to attract and retain qualified personnel for regular full-time placement and contractcon tract assignments, the possibility of incurring liability for the Company’s business activities, including the activities of its contract employees and events affecting its contract employees on client premises, and the ability to attract and retain qualified corporate and branch management.  The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

See notes to consolidated financial statements.

General Employment Enterprises, Inc. (the “Company”) operates in one industry segment, providingprovides staffing services through a network of branch offices located in major metropolitan areas throughout the United States. The Company specializes in providingCompany’s professional staffing services provide information technology, engineering and accounting professionals to clients on either a regular placement basis or a temporary contract basis. The Company’s agricultural staffing services provide agricultural workers for farms and groves. The portion of consolidated net revenues derived from the Company’s two largest customers together was approximately 17% in fiscal 2010 and 21% in fiscal 2009, and 11% in fiscal 2008, and no other customer accounted for more than 4%7% of net revenues during either year.

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and the rules of the United States Securities and Exchange Commission.

The consolidated financial statements include the accounts and transactions of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions are eliminated in consolidation.

Management makes estimates and assumptions that can affect the amounts of assets and liabilities reported as of the date of the financial statements, as well as the amounts of reported revenues and expenses during the periods presented. Those estimates and assumptions typically involve expectations about events to occur subsequent to the balance sheet date, and it is possible that actual results could ultimately differ from the estimates. If differences were to occur in a subsequent period, the Company would recognize those differences when they became known. Significant matters requiring the use of estimates and assumptions include deferred income tax valuation allowances and accounts receivable allowances. Management believes that its estimates and assumptions are reasonable, based on information that is available at the time they are made.m ade.

Placement service revenues are recognized when applicants accept offers of employment, less a provision for estimated losses due to applicants not remaining employed for the Company’s guarantee period. Contract service revenues are recognized when services are rendered.

The cost of contract services includes the wages and the related payroll taxes and employee benefits of the Company’s employees while they work on contract assignments.

Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized as a tax benefit in the future.

Basic income or loss per share is based on the average number of common shares outstanding. Diluted income per share is based on the average number of common shares and the dilutive effect of stock options. Stock options are not considered to be dilutive during loss periods.  The diluted net loss per share does not include the effect of 388,000 stock options in fiscal 2010 and 630,000 stock options in fiscal 2009, and 603,000 stock options in fiscal 2008, because including them would have had an anti-dilutive effect.