~~For the quarterly period ended~~ ~~December 31, 2017~~

For the quarterly period ended March 31, 2022

~~184 Shuman Blvd.,~~7751 Belfort Parkway, Suite ~~420, Naperville, IL 60563~~150, Jacksonville, FL 32256

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x ☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x ☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o ☐ No x☒

The number of shares outstanding of the registrant’s common stock as of ~~February 14, 2018~~May 13, 2022 was ~~10,444,567~~114,100,455.

As a matter of policy, the Company does not provide forecasts of future financial performance. The statements made in this quarterly report on Form 10-Q, which are not historical facts, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements often contain or are prefaced by words such as ~~"believe"~~“believe”, ~~"will"~~“will” and ~~"expect."~~“expect.” These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. 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 the ~~Company's~~Company’s actual results to differ materially from those in the forward-looking statements include, without limitation, the negative effects of the Coronavirus Pandemic (“COVID-19”), including uncertainties regarding economic recovery and changed socioeconomic norms, general business conditions, the demand for the ~~Company's~~Company’s services, competitive market pressures, the ability of the Company to attract and retain qualified personnel for regular full-time placement and contract assignments, the possibility of incurring liability for the ~~Company's~~Company’s business activities, including the activities of its contract employees and events affecting its contract employees on client premises, cyber risks, including network security intrusions and/or loss of information, and the ability to attract and retain qualified corporate and branch management, as well as those risks discussed in the ~~Company's annual report~~Company’s Annual Report on Form 10-K for the year ended September 30, ~~2017,~~2021, and in other documents which we file with the Securities and Exchange Commission. See additional risk factors included below in Part II – Other Information, Item 1A. Any forward-looking statements speak only as of the date on which they are made, and 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.

~~The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.~~

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

GEE Group Inc. ~~(the “Company”, “us”, “our” or “we”)~~ was incorporated in the State of Illinois in 1962 and is the successor to employment offices doing business since 1893. WeGEE Group Inc. and its wholly owned material operating subsidiaries, Access Data Consulting Corporation, Agile Resources, Inc., BMCH, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., Triad Logistics, Inc., and Triad Personnel Services, Inc. (collectively referred to as the “Company”, “us”, “our”, or “we”) are ~~a provider~~providers of permanent and temporary professional ~~industrial~~ and ~~physician assistant~~industrial staffing and placement services in and near several major U.S cities. We specialize in the placement of information technology, accounting, finance, office, engineering, ~~medical~~ and ~~accounting~~medical professionals for direct hire and contract staffing for our professional clients and provide temporary staffing services for our ~~commercial~~industrial clients.

The primary sources of liquidity for the Company are revenues earned and collected from its clients for the placement of contractors and permanent employment candidates and borrowings available under its current and former asset-based senior secured revolving credit facilities. Uses of liquidity include primarily the costs and expenses necessary to fund operations, including payment of compensation to the Company’s contract and permanent employees, payment of operating costs and expenses, payment of taxes, payment of interest and principal under its debt agreement, and capital expenditures.

On April 19, 2021, the Company completed the initial closing of a follow-on public offering of 83,333 shares of common stock at a public offering price of $0.60 per share. Gross proceeds of the offering totaled $50,000, which after deducting the underwriting discount, legal fees, and offering expenses, resulted in net proceeds of $45,478. On April 27, 2021, the underwriters of the Company’s follow-on public offering exercised, in full, their 15% over–allotment option to purchase an additional 12,500 common shares (the “option shares”) of the Company at the public offering price of $0.60 per share. The Company closed the transaction on April 28, 2021 and received net proceeds from the sale of the option shares of approximately $6,937, after deducting the applicable underwriting discount.

On April 20, 2021, as the result of the completion of the public offering, the Company repaid $56,022 in aggregate outstanding indebtedness under its then existing Revolving Credit, Term Loan and Security Agreement, dated as of March 31, 2017, as amended, including accrued interest, using the net proceeds of its recent underwritten public offering and available cash. The repaid debt was originally obtained from investors led by MGG Investment Group LP (“MGG”) on April 21, 2017 and had a maturity date of June 30, 2023. The MGG debt was comprised of a revolving credit facility with a principal balance on the date of repayment of approximately $11,828, which was subject to an annual interest rate comprised of the greater of the London Interbank Offering Rate (“LIBOR”) or 1%, plus a 10% margin (approximately 11% per annum), and a term loan with a principal balance on the date of repayment of approximately $43,735, which was subject to an annual interest rate of the greater of LIBOR or 1% plus a 10% margin. The term loan also had an annual payment-in-kind (“PIK”) interest rate of 5% in addition to its cash interest rate, which was being added to the term loan principal balance (cash and PIK interest rate combined of approximately 16% per annum). Accrued interest of approximately $459 was paid in connection with the principal repayments.

On May 14, 2021, the Company entered a Loan, Security and Guaranty Agreement for a $20 million asset-based senior secured revolving credit facility with CIT Bank, N.A. (the “CIT Facility”). Concurrent with the May 14, 2021 closing of the CIT Facility, the Company borrowed $5,326 and utilized these funds to pay all remaining unpaid Exit and Restructuring Fees due to its former senior lenders in the amount of $4,978, with the remainder going to direct fees and costs associated with the CIT Facility. Additional information regarding the CIT Facility is presented in Note 8.

Management believes that the Company has adequate cash and working capital and can generate adequate liquidity to meet its obligations for the foreseeable future and at least for one year after the date that these unaudited condensed consolidated financial statements are issued.

Coronavirus Pandemic (“COVID-19”), Paycheck Protection Program Loans and Deferral of Federal Payroll Taxes under the CARES Act

In approximately mid-March 2020, the Company began to experience the severe negative effects of the economic disruptions resulting from COVID-19. These included abrupt reductions in demand for the Company’s primary sources of revenue, its temporary and direct hire placements, lost productivity due to business closings both by clients and at the Company’s own operating locations, and the significant disruptive impacts to many other aspects of normal operations. Some effects of COVID-19 and the subsequent variants of the virus continue to be felt, although to a lesser extent, with the most severe impacts being felt in the commercial (“Industrial”) segment and, to a lesser extent, in the professional segment including finance, accounting and office clerical (“FAO”) contract staffing service end markets.

Between April 29 and May 7, 2020, the Company and eight of its operating subsidiaries obtained loans in the aggregate amount of $19,927 from BBVA USA (now known as PNC Bank), as lender, pursuant to the Paycheck Protection Plan (“PPP”), which was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). These funds were the only source of financing available to our companies and businesses and were critical to our ability to maintain operations, including the employment of our temporary and full-time employees, in order to provide our services and meet our liquidity requirements in the midst of the worldwide Coronavirus Pandemic. The PPP loans were used primarily to restore employee pay-cuts, recall furloughed or laid-off employees, support the payroll costs for existing employees, hire new employees, and for other allowable purposes including interest costs on certain business mortgage obligations, rent and utilities. The Company accounted for the PPP loans as a debt (see Note 9) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 470, Debt. Accordingly, the PPP loans were recognized as current debt in the Company’s accompanying condensed consolidated financial statements as of September 30, 2021.

The Company and its operating subsidiaries have been granted forgiveness of their respective outstanding PPP loans, including the Company’s last four remaining PPP loans and interest for GEE Group Inc., BMCH, Inc., Paladin Consulting, Inc., and SNI Companies, Inc., in the amounts of $2,024, $2,630, $1,956, and $10,163, respectively, which were forgiven by the SBA in December 2021. The Company recognized net gains of $16,773, in aggregate, during the six months ended March 31, 2022.

The PPP loans obtained by GEE Group Inc., and its operating subsidiaries together as an affiliated group, have exceeded the $2,000 audit threshold established by the SBA, and therefore, also will be subject to audit by the SBA in the future. If any of the nine forgiven PPP loans are reinstated in whole or in part as the result of a future audit, a charge or charges would be incurred, accordingly, and they would need to be repaid. If the companies are unable to repay the portions of their PPP loans that ultimately may be reinstated from available liquidity or operating cash flow, we may be required to raise additional equity or debt capital to repay the PPP loans.

The Company and its subsidiaries, under the CARES Act, also were eligible to defer paying $3,654, in aggregate, of applicable payroll taxes incurred during fiscal 2020. One half of the deferred deposits of the employer’s share of Social Security tax were required to be paid on or before December 31, 2021 to be considered timely (and avoid a failure to deposit penalty), and the remaining fifty percent (50%) of the eligible deferred amounts are required to be paid similarly by December 31, 2022. The first half of the required deferred deposits payments totaling $1,827, in aggregate, were paid prior to December 31, 2021, as required. The remaining deferred amounts are included in other current liabilities on the accompanying unaudited condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and ~~footnotes~~notes required by ~~accounting principles generally accepted in the United States of America~~U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the ~~three-month~~six-month period ended ~~December~~March 31, ~~2017~~2022 are not necessarily indicative of the results that may be expected for the year ending September 30, ~~2018.~~2022. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and ~~footnotes~~notes thereto included in the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended September 30, ~~2017~~2021, as filed on December ~~28, 2017.~~

The Company has experienced significant losses and negative cash flows from operations in the past. Management has implemented a strategy which includes cost reduction efforts, consolidation of certain back office activities to gain efficiencies as well as identifying strategic acquisitions, financed primarily through the issuance of preferred and common stock and convertible debt, to improve the overall profitability and cash flows of the Company.

After the close of business on March 31, 2017, the Company and its subsidiaries, as borrowers, entered into a Revolving Credit, Term Loan and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association (“PNC”), and certain investment funds managed by MGG Investment Group LP (“MGG”). All funds were distributed on April 3, 2017 (the “Closing Date”).

On October 2, 2017, the Company, the other borrower entities and guarantor entities named therein (collectively, the “Loan Parties”), PNC, and certain investment funds managed by MGG (collectively the “Lenders”) entered into a First Amendment and Waiver (the “Amendment”) to the Revolving Credit, Term Loan and Security Agreement dated as of March 31, 2017 (the “Credit Agreement”) by and among the Loan Parties and the Lenders.

The Amendment, which was effective as of October 2, 2017, modified the required principal repayment schedule with respect to the Term Loans. The Amendment also modified the ability of the Loan Parties to repay or make other payments with respect to certain other loans that are subordinated in right of payment to the indebtedness under the Credit Agreement.

Pursuant to the Amendment the Lenders also waived any Event of Default arising out of the Loan Parties’ failure to deliver, on or before October 3, 2017, the materials satisfying the requirements of clauses (i) and (ii) of Section 5 of the Waiver to Revolving Credit, Term Loan and Security Agreement, dated as of August 14, 2017, as amended.

On November 14, 2017, the Company and its subsidiaries, as Borrowers, each subsidiary of the Company listed as a “Guarantor” on the signature pages thereto (together with each other Person joined thereto as a guarantor from time to time, collectively, the “Guarantors”, and each a “Guarantor”, and together with the Borrowers, collectively, the “Loan Parties” and each a “Loan Party”), certain lenders which now are or which thereafter become a party thereto that make Revolving Advances thereunder (together with their respective successors and assigns, collectively, the “Revolving Lenders” and each a “Revolving Lender”), the lenders which now are or which thereafter become a party thereto that made or acquire an interest in the Term Loans (together with their respective successors and assigns, collectively, the “Term Loan Lenders” and each a “Term Loan Lender”, and together with the Revolving Lenders, collectively, the “Lenders” and each a “Lender”), MGG, as administrative agent for the Lenders (together with its successors and assigns, in such capacity, the “Administrative Agent”), as collateral agent for the Lenders (together with its successors and assigns, in such capacity, the “Collateral Agent”), and as term loan agent (together with its successors and assigns, in such capacity, the “Term Loan Agent” and together with the Administrative Agent and the Collateral Agent, each an “Agent” and, collectively, the “Agents”), entered into a second amendment (the “Second Amendment”) to the Revolving Credit, Term Loan and Security Agreement, dated as of March 31, 2017 (the “Credit Agreement”).

Pursuant to the Second Amendment the Borrowers agreed, among other things, to use commercially reasonable efforts to prepay, or cause to be prepaid, $10,000,000 in principal amount of Advances (as defined in the Credit Agreement) outstanding, which amount shall be applied to prepay the Term Loans in accordance with the applicable terms of the Credit Agreement. Any prepayment to the term loan is contingent upon a future financing, non-operational cash flow or excess cash flow as defined in the agreement. The Borrowers also agreed to amend (i) the applicable minimum Fixed Charge Coverage Ratios required to be maintained by the Company as set forth in the Second Amendment, (ii) the minimum EBITDA required to be maintained by the Company, as set forth in the Second Amendment and (iii) the maximum senior leverage ratios required to be maintained by the Company, as set forth in the Second Amendment. The Borrowers agreed to pay to the Administrative Agent for the account of the Revolving Lenders, an amendment fee of $364,140, in connection with their execution and delivery of the Second Amendment. Such fee is payable on the earlier of (a) June 30, 2018 and (b) the first date on which all of the Obligations (as defined in the Credit Agreement) are paid in full in cash and the Total Commitment (as defined in the Credit Agreement) of the Lenders is terminated.

The loans under the credit agreement for the period commencing on the Amendment No. 2 Effective Date up to and including May 31, 2018, (i) so long as the Senior Leverage Ratio is equal to or greater than 3.75 to 1.00, an amount equal to 9.75% for Advances consisting of Domestic Rate Loans and 10.75% for Advances consisting of LIBOR Rate Loans and (ii) so long as the Senior Leverage Ratio is less than 3.75 to 1.00, an amount equal to 9.00% for Advances consisting of Domestic Rate Loans and 10.00% for Advances consisting of LIBOR Rate Loans.

The loans under the credit agreement for the period commencing on June 1, 2018 up to and including August 31, 2018, (i) so long as the Senior Leverage Ratio is equal to or greater than 4.00 to 1.00, an amount equal to 14.00% for Advances consisting of Domestic Rate Loans and 15.00% for Advances consisting of LIBOR Rate Loans and (ii) so long as the Senior Leverage Ratio is less than 4.00 to 1.00, an amount equal to 9.75% for Advances consisting of Domestic Rate Loans and 10.75% for Advances consisting of LIBOR Rate Loans.

The loans under the credit agreement for the period commencing on September 1, 2018 through the remainder of the Term, (i) so long as the Senior Leverage Ratio is equal to or greater than 3.50 to 1.00, an amount equal to 14.00% for Advances consisting of Domestic Rate Loans and 15.00% for Advances consisting of LIBOR Rate Loans and (ii) so long as the Senior Leverage Ratio is less than 3.50 to 1.00, an amount equal to 9.00% for Advances consisting of Domestic Rate Loans and 10.00% for Advances consisting of LIBOR Rate Loans.

~~At December 31, 2017, approximately $8,000,000 of the Revolving Credit facility was fixed for a three-month period at an interest of approximately 11.3%.~~

~~At December 31, 2017, the Company had approximately $5,800,000 available on the Revolving Credit facility.~~

~~The Company was in compliance with the newly amended financial covenants of the loan for December 31, 2017, the first measurement date under the Amendment.~~

As of December 31, 2017, the Company had cash of approximately $3,480,000, which was an increase of approximately $695,000 from approximately $2,785,000 at September 30, 2017. Working capital at December 31, 2017 was approximately $630,000, as compared to working capital of approximately $1,588,000 for September 30, 2017. The net loss for the three months ended December 31, 2017, was approximately $1,791,000.

~~At December 31, 2017 there was approximately $999,000 of accrued interest that was payable with the Company’s common stock.~~

~~On January 4, 2018, the Company issued approximately 41,000 shares of common stock to JAX Legacy related to the accrued interest of approximately $105,000 on the subordinated note.~~

~~On January 4, 2018, the Company issued approximately 280,602 shares of common stock to the SNI Sellers related to accrued interest of approximately $894,000 on the subordinated note.~~

~~Management believes that the future cash flow from operations and the availability under the Revolving Credit Facility will have sufficient liquidity for the next 12 months.~~

The unaudited condensed consolidated financial statements include the accounts and transactions of the Company and its ~~wholly-owned~~wholly owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation.

~~Management makes~~The preparation of financial statements in conformity with U.S. GAAP for interim financial information and with the instructions to Article 8 of Regulation S-X requires management to make estimates and assumptions that ~~can~~ affect the reported amounts of assets and liabilities ~~reported as~~and the disclosure of contingent assets and liabilities at the date of the ~~condensed consolidated~~ financial statements ~~as well as~~and the reported 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~~reporting period. Actual results could ~~ultimately~~ differ from ~~the~~those 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, but may not be limited to, deferred income tax valuation allowances, accounts receivable allowances, accounting for acquisitions, accounting for derivatives and evaluation of impairment. Management believes that its estimates and assumptions are reasonable, based on information that is available at the time they are made.

Revenues from contracts with customers are generated from direct hire placement services, professional contract services, and industrial contract services. Revenues are recognized when promised services are performed for customers, and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Our revenues are recorded net of variable consideration such as sales adjustments or allowances.

Direct hire placement service revenues from contracts with customers are recognized when ~~applicants~~employment candidates accept offers of employment, less a provision for estimated ~~losses due~~credits or refunds to customers as the result of applicants not remaining employed for the ~~Company's~~entirety of the Company’s guarantee ~~period. Contract~~period (referred to as “falloffs”). The Company’s guarantee periods for permanently placed employees generally range from 60 to 90 days from the date of hire. Fees associated with candidate placement are generally calculated as a percentage of the new employee’s annual compensation. No fees for permanent placement services are charged to employment candidates.

Temporary staffing service revenues from contracts with customers are recognized ~~when~~in amounts the Company has a right to invoice as the services are ~~rendered.~~rendered by the Company’s temporary employees. The Company records temporary staffing revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company controls the specified service before that service is performed for a customer. The Company has the risk of identifying and hiring qualified employees (as opposed to client employees), has the discretion to select the employees and establish their price, and bears the risk for services that are not fully paid for by customers.

Falloffs and refunds during the period are reflected in the unaudited condensed consolidated statements of operations as a reduction of direct hire placement service revenues and were approximately ~~$625,000~~$803 and ~~$90,000~~$1,497, and $470 and $773 for the ~~three-month period~~three and six-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021, respectively. Expected future falloffs and refunds are reflected in the unaudited condensed consolidated balance sheet as a reduction of accounts receivable ~~and were approximately $911,000~~ as ~~of December 31, 2017 and $997,000 as of September 30, 2017, respectively.~~described under Accounts Receivable, below.

Payment terms in our contracts vary by the type and location of our customer and the services offered. The terms between invoicing and when payments are due are not significant.

The cost of contract services includes the wages and the related payroll taxes, ~~and~~ employee benefits and certain other employee-related costs of the ~~Company's~~Company’s contract service employees, while they work on contract assignments.

~~Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. At December 31, 2017 and September 30, 2017, there were no cash equivalents.~~ The Company maintains deposits in ~~financial institutions in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. Cash and cash equivalents are maintained at~~ financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. Highly liquid investments with a maturity of three months or less when purchased, if any, are considered to be cash equivalents. As of March 31, 2022 and September 30, 2021, there were no cash equivalents.

The Company extends credit to its various customers based on evaluation of the ~~customer's~~customer’s financial condition and ability to pay the Company in accordance with the payment terms. An allowance for placement ~~fall-offs~~falloffs is recorded as a reduction of revenues for estimated losses due to applicants not remaining employed ~~for~~during the ~~Company's~~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 taken together reflect ~~management's~~management’s estimate of the potential losses inherent in the accounts receivable balances based on historical loss statistics and known factors impacting ~~its customers. The~~our clients. Management believes that the nature of the contract ~~service~~services business, ~~where~~wherein client companies are generally dependent on our contract employees in the same manner as permanent employees for their production cycles and the ~~production cycle allows for~~conduct of their respective businesses contributes to a relatively small accounts receivable allowance. ~~Based on management's review~~

As of ~~accounts receivable, an~~March 31, 2022 and September 30, 2021, the allowance for doubtful accounts ~~of approximately $1,659,000 is considered necessary as of December 31, 2017~~was $763 and ~~$1,712,000 at September 30, 2017,~~$286, respectively. The Company charges off uncollectible accounts ~~against the allowance~~ once the invoices are deemed unlikely to be collectible. The ~~reserve~~allowance also includes ~~the $911,000 reserve~~reserves for permanent placement falloffs ~~considered necessary~~of $233 and $115 as of ~~December~~March 31, ~~2017~~2022 and ~~$997,000 as of~~ September 30, ~~2017,~~2021, respectively.

Property and equipment are recorded at cost. Depreciation expense is calculated on a straight-line basis over estimated useful lives of five years for computer equipment and two to ten years for office equipment, furniture and fixtures. The Company capitalizes computer software purchased or developed for internal use and amortizes it over an estimated useful life of five years. The carrying value of property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that it may not be recoverable. If the carrying amount of an asset group is greater than its estimated future undiscounted cash flows, the carrying value is written down to the estimated fair value. There was no impairment of property and equipment for the ~~three-months~~three and six-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~2016.~~2021.

~~Goodwill represents~~The Company determines if a contractual arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the ~~excess~~Company’s unaudited condensed consolidated balance sheet. The Company evaluates and classifies leases as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of ~~cost~~the renewal option is reasonably certain or failure to exercise such option results in an economic penalty. All the Company’s real estate leases are classified as operating leases. Also, the Company elected the practical expedient which allows aggregation of non-lease components with the related lease components when evaluating accounting treatment.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the ~~fair~~lease term. The lease payments included in the present value are fixed lease payments. As most of the Company’s leases do not provide an implicit rate, the Company estimates its collateralized incremental borrowing rate, based on information available at the commencement date, in determining the present value of ~~the net assets acquired in the various acquisitions.~~lease payments. The Company ~~assesses~~applies the portfolio approach in applying discount rates to its classes of leases. The operating lease ROU assets include any payments made before the commencement date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not currently have subleases. The Company also does not currently have residual value guarantees or restrictive covenants in its leases.

The Company evaluates its goodwill for possible impairment as prescribed by FASB ASU 2017-04, Intangibles — Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment at least ~~annually. Testing goodwill for impairment allows the Company to first assess qualitative factors to determine whether the existence of~~annually, and more frequently when one or more triggering events or circumstances ~~leads to a determination~~indicate that itthe goodwill might be impaired. Under this guidance, annual or interim goodwill impairment testing is ~~more likely than not that~~performed by comparing the estimated fair value of a reporting unit ~~is less than~~with its carrying amount. ~~If the entity determines that this threshold is not met, then performing the two-step impairment test is unnecessary.~~The Company allocates its goodwill among two reporting units: its Professional Services reporting unit and its Industrial Services reporting unit for purposes of evaluation for impairments. An impairment ~~loss would be~~charge is recognized for the amount by which the carrying amount exceeds a reporting unit’s estimated fair value, not to ~~the extent~~exceed the carrying value of ~~goodwill exceeds its implied~~goodwill. In testing for impairments, management applies one or more valuation techniques to estimate the fair ~~value.~~values of the reporting units, individual assets or groups of individual assets, as required under the circumstances. These valuation techniques rely on assumptions and other factors, such as industry multiples applied to earnings, estimated future cash flows, the discount rates used to determine the present value of associated cash flows, and market comparable assumptions.

Separately identifiable intangible assets held in the form of customer lists, non-compete agreements, customer relationships, management agreements and trade names were recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives ranging from two to ten years using both accelerated and straight-line methods.

The Company recognizes an impairment of long-lived intangible assets used in operations, other than goodwill, when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method. The Company did not recognize and record any impairments of long-lived intangible assets used in operations during the three and six-month periods ended March 31, 2022 and 2021.

The Company follows the provisions of ~~the accounting standard~~FASB ASC 820, Fair Value Measurement, which defines fair value, establishes a framework for measuring fair value and enhances fair value measurement disclosure. Under these provisions, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the ~~"exit price"~~“exit price”) in an orderly transaction between market participants at the measurement date.

The standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use onof unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the ~~Company's~~Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the ~~circumstances.~~circumstances when observable inputs are not available. The hierarchy is described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The fair value of the Company’s current assets and current liabilities approximate their carrying values due to their short-term nature. The ~~carrying~~fair value disclosures of the Company’s long-term liabilities ~~represents~~approximate their respective fair values based on current yield for debt instruments with similar terms. The Company has no assets or liabilities which are measured at fair value ~~based~~ on ~~level 3 inputs. The~~a recurring basis. Fair value measurements utilized in evaluating the Company’s goodwill and other intangible assets for impairments are measured at fair value on a non-recurring basis using ~~level~~a combination of Level 2 and Level 3 ~~inputs, as discussed in Note 5.~~inputs.

Basic earnings and loss per share isare computed by dividing net income or loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings and loss per share isare computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the vesting of restricted shares granted but unissued, and exercise of stock options and warrants. The dilutive effect of outstanding warrants and options is reflected in earnings and loss per share by use of the ~~conversion~~treasury stock method.

Common stock equivalents, which are excluded because their effect is anti-dilutive, were approximately 1,639 and 1,693, and 2,745 and 2,768 for the three and six-months ended March 31, 2022 and 2021, respectively. For the three and six-month periods ended March 31, 2022, the weighted average dilutive incremental shares, or common stock equivalents, included in the calculations of ~~notes payable to common stock. In~~dilutive shares were 1,542 and 1,492. For the three and six-month periods ended March 31, 2021, in which a net loss ~~has been~~was incurred, all potentially dilutive common shares are considered ~~anti-dilutive~~antidilutive and thus are excluded from the calculation. Common share equivalents of approximately 546,118 was included in the computation of diluted earnings per share for the three months ended December 31, 2016. There were approximately 10,274,000 and 475,100 of common stock equivalents excluded for the three months ended December 31, 2017 and December 31, 2016, respectively because their effect is anti-dilutive.

~~Most~~The Company expenses the costs of ~~the Company's advertising expense budget is used to support the Company's business. Most of the advertisements are in~~ print orand internet media ~~with expenses recorded~~advertising and promotions as ~~they are incurred. For the three months ended December 31, 2017~~incurred and ~~2016, included~~reports these costs in selling, general and administrative ~~expenses was~~expenses. For the three and six-month periods ended March 31, 2022 and 2021, advertising expense ~~totaling approximately $599,000~~totaled $484 and ~~$288,000,~~$1,001, and $458 and $882 respectively.

Customer lists, non-compete agreements, customer relationships, management agreements and trade names were recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives ranging from two to ten years using both accelerated and straight-line methods.

The Company records an impairment of long-lived assets used in operations, other than goodwill, when events or circumstances indicate that the asset might be impaired and the estimated undiscounted cash flows to be generated by those assets over their remaining lives are less than the carrying amount of those items. The net carrying value of assets not recoverable is reduced to fair value, which is typically calculated using the discounted cash flow method. The Company did not record any impairment during the three months ended December 31, 2017 and 2016.

The Company accounts for ~~stock-based~~share-based awards to employees in accordance with ~~applicable accounting principles,~~FASB ASC 718, Compensation-Stock Compensation, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock ~~options.~~options or restricted stock grants. The grant date fair value of stock options is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For all employee stock options ~~we recognize~~and restricted stock grants, the Company recognizes expense ~~over the requisite service period on an accelerated basis~~ over the employee’s requisite service period (generally the vesting period of the equity grant). The Company’s option pricing model requires the input of ~~highly~~ subjective assumptions, including the expected stock price volatility, expected term, and forfeiture rate. Any changes in these ~~highly~~ subjective assumptions significantly impact ~~stock-based~~our share-based compensation expense.

~~Options awarded~~See Note 11 for the assumptions used to ~~purchase shares~~calculate the fair value of common stock issued to non-employees in exchange for services are accounted for as variable awards in accordance with applicable accounting principles. Such options are valued using the Black-Scholes option pricing model.

share-based employee and non-employee compensation. Upon the exercise of options, it is the ~~Company's~~Company’s policy to issue new shares rather than utilizing treasury shares.

~~We account~~The Company accounts for income taxes under the asset and liability method, FASB ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, ~~we determine~~ deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities by 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~~The Company recognizes deferred tax assets to the extent that ~~we believe that~~it is believed these assets are more likely than not to be realized. In making such a determination, ~~we consider~~ all available positive and negative evidence is considered, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If ~~we determine~~it’s determined that wethe Company would be able to realize ~~our~~ deferred tax assets in the future in excess of ~~their~~the net recorded amount, wean adjustment would ~~make an adjustment~~be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

~~We record~~The Company records uncertain tax positions ~~in accordance with ASC 740~~ on the basis of a two-step process in which (1) ~~we determine~~determines 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 Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

~~We recognize interest~~Interest and penalties related to unrecognized tax benefits are recognized on the income tax expense line in the accompanying unaudited condensed consolidated statement of operations. As of ~~December~~March 31, ~~2017~~2022 and September ~~30, 2017,~~31, 2021, no accrued interest or penalties are included on the related tax liability line in the accompanying unaudited condensed consolidated balance sheet.

Certain reclassifications have been made to the financial statements as of and for the three months ended December 31, 2016 to conform to the current year presentation. There is no effect on assets, liabilities, equity or net income.

The Company provides the following distinctive services: (a) direct hire placement services, (b) temporary professional services staffing in the fields of information technology, engineering, medical, and accounting, and (c) temporary light industrial staffing. These distinct services can be divided into two reportable segments, Industrial Staffing Services and Professional Staffing Services. Selling, general and administrative expenses are not completely separately allocated among light industrial services and professional staffing services. Operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Other factors, including type of business, type of employee, length of employment and revenue recognition are considered in determining these operating segments.

On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date of the new standard from January 1, 2017 to January 1, 2018. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. This ASU permits the use of either the retrospective or cumulative effect transition method. The new standard is effective for the Company beginning October 1, 2018. The Company is in the process of evaluating the impact of adoption of this guidance on its financial statements.

In November 2015, the FASB issued authoritative guidance which changes how deferred taxes are classified on a company’s balance sheet. The new guidance eliminates the current requirement for companies to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, companies will be required to classify all deferred tax assets and liabilities as noncurrent. The new guidance is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. The guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively (i.e., by reclassifying the comparative balance sheet). If applied prospectively, entities are required to include a statement that prior periods were not retrospectively adjusted. If applied retrospectively, entities are also required to include quantitative information about the effects of the change on prior periods. Except for balance sheet classification requirements related to deferred tax assets and liabilities, the Company does not expect this guidance to have an effect on its financial statements. The adoption of this guidance had no material effect on the Company as of December 31, 2017.

In February 2016, the FASB issued authoritative guidance which changes financial reporting as it relates to leasing transactions. Under the new guidance, lessees will be required to recognize a lease liability, measured on a discounted basis; and a right-of-use asset, for the lease term. The new guidance is effective for annual and interim periods beginning after December 15, 2018. Early application is permitted for all entities upon issuance. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is in the process of evaluating the impact of adoption of this guidance on its financial statements.

~~In March~~June 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this guidance had no effect on the Company as of December 31, 2017.

~~In August 2016, the FASB issued~~2016-13, Financial Instruments-Credit Losses, authoritative guidance ~~designed to address diversity in~~amending how entities will measure credit losses for most financial assets and certain ~~cash receipts and cash payments~~other instruments that are ~~presented and classified in~~not measured at fair value through net income. The guidance requires the ~~statement~~application of ~~cash flows, including: i) contingent consideration payments made after~~ a ~~business combination; ii) proceeds from the settlement of insurance claims; and iii) proceeds from the settlement of corporate-owned life insurance policies.~~current expected credit loss model, which is a new impairment model based on expected losses. The new guidance is effective ~~for the Company~~ for fiscal years beginning after December 15, ~~2017,~~2022. The Company has not yet determined the impact of the new guidance on its condensed consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU simplifies accounting for income taxes by removing the following exceptions: (1) exception to the Incremental approach for intra-period tax allocation, (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments, and (3) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also improves financial statement preparers’ application of income tax related guidance for franchise taxes that are partially based on income; transactions with a government that result in a step up in the tax basis of goodwill; separate financial statements of legal entities that are not subject to tax; and enacted changes in tax laws in interim periods. The ASU is effective for public business entities for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. ~~Early adoption is permitted in any interim or annual period. The Company believes~~ASU 2019-12 became effective for the ~~adoption of this guidance will not have a~~three-month period ended December 31, 2021 and had no material impact on ~~its~~our consolidated financial statements. The Company will continue to monitor the impact of the ASU on our condensed consolidated financial statements in the future.

In ~~January 2017,~~March 2020, the FASB issued ASU ~~2017-01, Business Combinations~~2020-04, Reference Rate Reform (Topic ~~805)~~848): ~~Clarifying~~Facilitation of the ~~Definition~~Effects of ~~a Business, which clarifies~~Reference Rate Reform on Financial Reporting. This ASU provides temporary optional expedients and exceptions to the ~~definition of a business~~U.S. GAAP guidance on contract modifications and hedge accounting to ~~assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard will be~~ease the financial reporting burdens related to the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates. This ASU is effective for ~~the Company in the first quarter~~all entities beginning as of ~~2019. Early adoption~~its date of effectiveness, March 12, 2020. The guidance is ~~permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.~~

temporary and can be applied through December 31, 2022. In January ~~2017,~~2021, the FASB issued ASU ~~2017-04, “Intangibles - Goodwill~~2021-01, Reference Rate Reform (Topic 848): Scope, to provide supplemental guidance and ~~Other (Topic 350): Simplifying~~to further clarify the ~~Test for Goodwill Impairment”.~~scope of the amended guidance. The ~~update simplifies how an entity is required~~guidance has not impacted the condensed consolidated financial statements to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. The new rules will be effective for the Company in the first quarter of 2021. Early adoption is permitted.date. The Company ~~is currently evaluating~~will continue to monitor the impact of ~~adopting this~~the ASU on ~~its~~our condensed consolidated financial ~~statements.~~statements in the future.

No other recent accounting pronouncements were issued by the FASB and the SEC that are believed by management to have a material impact on the Company’s present or future financial statements.

Depreciation expense for ~~the three- month~~three and six-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021 was ~~approximately $97,000~~$94 and ~~$79,000,~~$180, and $77 and $150, respectively.

The ~~following table sets forth activity~~Company leases space for all its branch offices, which are generally located either in ~~goodwill~~downtown or suburban business centers, and for its corporate headquarters. Branch offices are generally leased over periods ranging from ~~September 2016 through December 31, 2017. See Note 12~~three to five years. The corporate office lease expires in 2026. The Company’s leases generally provide for ~~details~~payment of ~~acquisitions that occurred during the year ended September 30, 2017. (in thousands)~~

~~During the three months ended December 31, 2017~~basic rent plus a share of building real estate taxes, maintenance costs and ~~the year ended September 30, 2017 the Company did not record any impairment of goodwill.~~utilities.

~~Intangible Assets~~Operating lease expenses were $543 and $1,077, and $562 and $1,123 for the three and six-month periods ended March 31, 2022 and 2021, respectively.

AsSupplemental cash flow information related to leases consisted of ~~December 31, 2017~~the following:

Supplemental balance sheet information related to leases consisted of the following:

AsThe table below reconciles the undiscounted future minimum lease payments under non-cancelable lease agreements having initial terms in excess of one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of March 31, 2022, including certain closed offices are as follows:

The Company completed its most recent annual goodwill impairment assessment, as of September 30, ~~2017~~

2021, and determined that its goodwill was not impaired. The ~~amortization expense attributable to~~amount of discount inherent in the ~~amortization~~Company’s market capitalization reported on the NYSE American exchange when compared with consolidated stockholders’ equity, or net book value, had increased since September 30, 2021; therefore, the Company performed an interim assessment of ~~identifiable intangible assets was approximately $1,396,000~~its goodwill for impairment as of December 31, 2021. The estimated fair values of its Professional Services and ~~$369,000 for~~Industrial Services reporting units were adjusted based on qualitative and quantitative analysis so that they reconcile more precisely with the Company’s market capitalization as of December 31, 2021, plus an assumed control premium. As a result, the Company recognized a non-cash impairment charge of $2,150 during three-months ended December 31, ~~2017~~2021. The Company reassessed the qualitative and ~~2016, respectively.~~quantitative analysis at March 31, 2022 and determined there was no additional impairment during the three-month period ended March 31, 2022.

The following tables set forth the costs, accumulated amortization and net book value of the Company’s separately identifiable intangible assets as of March 31, 2022 and September 30, 2021 and estimated future amortization expense.

The trade names are amortized on a ~~straight – line~~straight-line basis over ~~the~~their respective estimated useful ~~life~~lives of between five and ten years. ~~Customer~~Intangible assets that represent customer relationships are amortized ~~based~~ on the basis of estimated future undiscounted cash flows or ~~straight – line~~using the straight-line basis over estimated remaining useful lives of five to ten years. ~~Non-compete agreements are amortized based on a straight-line basis over the term of the non-compete agreement, typically five years. Over the next five years and thereafter, annual~~

The amortization expense for ~~these finite life~~ intangible assets ~~will total approximately $33,653,000, as follows: fiscal 2018 - $4,186,000, fiscal 2019 - $5,586,000, fiscal 2020 - $5,005,000, fiscal~~was $1,015 and $2,029, and $1,015 and $2,059 for three and six-month periods ended March 31, 2022 and 2021, ~~- $4,148,000, fiscal 2022 - $3,469,000 and thereafter - $11,259,000.~~respectively.

Long-lived assets, such as purchased intangibles subject to amortization, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company regularly evaluates whether events7. Former Revolving Credit Facility and circumstances have occurred that indicate possible impairment and relies on a number of factors, including operating results, business plans, economic projections, and anticipated future cash flows. The Company uses an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether the assets are recoverable. Term Loan

~~After the close of business on March 31, 2017, the~~The Company and its subsidiaries, as borrowers, ~~entered into~~were parties to a Revolving Credit, Term Loan and Security Agreement (the ~~“Credit~~“Former Credit Agreement”) with ~~PNC, and~~ certain investment funds managed by MGG. ~~All funds~~The principal and remaining unpaid accrued interest and fee balances under the Revolving Credit Facility and Term Loan balances outstanding under the Former Credit Agreement, as amended, were ~~distributed~~fully repaid and the Former Credit Agreement was retired on April ~~3, 2017 (the “Closing Date”).~~20, 2021. Additional information regarding the repayment of the Former Credit Agreement is presented in Note 1.

~~Under the terms of the Credit~~8. Senior Bank Loan, Security and Guarantee Agreement the Company may borrow up to $73,750,000 consisting of a four-year term loan in the principal amount of $48,750,000 and revolving loans in a maximum amount up to the lesser of (i) $25,000,000 or (ii) an amount determined pursuant to a borrowing base that is calculated based on the outstanding amount of the Company’s eligible accounts receivable, as described in the Credit Agreement. The loans under the Credit Agreement mature on March 31, 2021.

On October 2, 2017, the Company, the other borrower entities and guarantor entities named therein (collectively, the “Loan Parties”), PNC, and certain investment funds managed by MGG (collectively the (“Lenders”) entered into a First Amendment and Waiver (the “Amendment”) to the Revolving Credit, Term Loan and Security Agreement dated as of March 31, 2017 (the “Credit Agreement”) by and among the Loan Parties, and the Lenders.

Pursuant to the Second Amendment the Borrowers agreed, among other things, to use commercially reasonable efforts to prepay, or cause to be prepaid, $10,000,000 in principal amount of Advances (as defined in the Credit Agreement) outstanding, which amount shall be applied to prepay the Term Loans in accordance with the applicable terms of the Credit Agreement. Any prepayment to the term loan is contingent upon a future financing, non-operational cash flow or excess cash flow as defined in the agreement. The Borrowers also agreed to amend (i) the applicable minimum Fixed Charge Coverage Ratios required to be maintained by the Company as set forth in the Second Amendment, (ii) the minimum EBITA required to be maintained by the Company, as set forth in the Second Amendment and (iii) the maximum senior leverage ratios required to be maintained by the Company, as set forth in the Second Amendment. The Borrowers agreed to pay to the Administrative Agent for the account of the Revolving Lenders, an amendment fee of $364,140, in connection with their execution and delivery of the Second Amendment. Such fee is payable on the earlier of (a) June 30, 2018 and (b) the first date on which all of the Obligations (as defined in the Credit Agreement) are paid in full in cash and the Total Commitment (as defined in the Credit Agreement) of the Lenders is terminated.

~~At December 31, 2017, approximately $8,000,000 of the Revolving Credit facility was fixed for a three-month period at an interest of approximately 11.3%.~~

~~At December 31, 2017, the Company had approximately $5,800,000 available on the Revolving Credit facility.~~

The Revolving Credit Facility is secured by all of the Company’s property and assets, whether real or personal, tangible or intangible, and whether now owned or hereafter acquired, or in which it now has or at any time in the future may acquire any right, title or interests.

~~The Revolving Credit Facility has the same covenants as the Term-loan (See note 7).~~

~~After the close of business on March 31, 2017,~~2021, the Company and its subsidiaries ~~as borrowers,~~ entered ~~into~~ a ~~Revolving Credit, Term~~ Loan, Security and ~~Security~~Guaranty Agreement ~~(the “Credit Agreement”)~~for a $20 million asset-based senior secured revolving credit facility with ~~PNC,~~CIT Bank, N.A.. The CIT Facility is collateralized by 100% of the assets of the Company and ~~certain investment funds managed by MGG. All funds were distributed~~its subsidiaries who are co-borrowers and/or guarantors. The CIT Facility matures on ~~April 3, 2017 (the “Closing Date”)~~the fifth anniversary of the closing date (May 14, 2026).

As of March 31, 2022, the Company had $0 in outstanding borrowings and $14,057 available for borrowing under the terms of the CIT Facility. The Company also had $637 in unamortized debt issue cost associated with the CIT Facility. The amortization expense of these debt costs totaled $38 and $76 for the three and six-month periods ended March 31, 2022, respectively.

Under the terms of the Credit Agreement, the Company may borrow up to $73,750,000 consisting of a four-year term loan in the principal amount of $48,750,000 and revolving loans in a maximum amount up to the lesser of (i) $25,000,000 or (ii) an amount determined pursuantCIT Facility, advances will be subject to a borrowing base formula that is ~~calculated~~computed based on 85% of eligible accounts receivable of the Company and subsidiaries as defined in the CIT Facility, and subject to certain other criteria, conditions, and applicable reserves, including any additional eligibility requirements as determined by the administrative agent. The CIT Facility is subject to usual and customary covenants and events of default for credit facilities of this type. The interest rate, at the Company’s election, will be based on either the Base Rate, as defined, plus the applicable margin; or LIBOR (or any successor thereto) for the applicable interest period, subject to a 1% floor, plus the applicable margin. The CIT Facility also contains provisions addressing the potential future replacement of LIBOR utilized and referenced in the loan agreement, in the event LIBOR becomes no longer available. In addition to interest costs on advances outstanding, the CIT Facility will provide for an unused line fee ranging from 0.375% to 0.50% depending on the amount of undrawn credit, original issue discount and certain fees for diligence, implementation, and administration.

Between April 29 and May 7, 2020, the Company obtained PPP loans for each of its operating subsidiaries. The PPP loans were used primarily to restore employee pay-cuts, recall furloughed or laid-off employees, support the payroll costs for existing employees, hire new employees, and for other allowable purposes including interest costs on certain business mortgage obligations, rent and utilities. Each of the Company’s ~~eligible accounts receivable, as described in the Credit Agreement. The~~subsidiaries executed a separate promissory note evidencing unsecured loans under the ~~Credit Agreement mature on~~PPP. The following promissory notes were executed by the Company and its subsidiaries: GEE Group, Inc. for $1,992; Scribe Solutions, Inc. for $277; Agile Resources, Inc. for $1,206; Access Data Consulting Corporation for $1,456; Paladin Consulting, Inc. for $1,925; SNI Companies, Inc. for $10,000; Triad Personnel Services, Inc. for $404; Triad Logistics, Inc. for $78; and BMCH, Inc. for $2,589.

(Amounts borrowed under the Credit Agreement may be used by the Company to repay existing indebtedness, to partially fund capital expenditures, to fund a portion of the purchase price for the acquisition of all of the issued and outstanding stock of SNI Holdco Inc. pursuant to that certain Agreement and Plan of Merger dated March 31, 2017 (the “Merger Agreement”) (see note 12), to provide for on-going working capital needs and general corporate needs, and to fund future acquisitions subject to certain customary conditions of the lenders. On the closing date of the Credit Agreement, the Company borrowed $48,750,000 from term-loans and borrowed approximately $7,476,316 from the Revolving Credit Facility for a total of $56,226,316 which was used by the Company to repay existing indebtedness, to pay fees and expenses relating to the Credit Agreement, and to pay a portion of the purchase price for the acquisition of all of the outstanding stock of SNI Holdco Inc. pursuant to the Merger Agreement.

Pursuant to the Second Amendment the Borrowers agreed, among other things, to use commercially reasonable efforts to prepay, or cause to be prepaid, $10,000,000 in principal amount of Advances (as defined in the Credit Agreement) outstanding, which amount shall be applied to prepay the Term Loans in accordance with the applicable terms of the Credit Agreement. Any prepayment to the term loan is contingent upon a future financing, non-operational cash flow or excess cash flow as defined in the agreement. The Borrowers also agreed to amend (i) the applicable minimum Fixed Charge Coverage Ratios required to be maintained by the Company as set forth in the Second Amendment, (ii) the minimum EBITA required to be maintained by the Company, as set forth in the Second Amendment and (iii) the maximum senior leverage ratios required to be maintained by the Company, as set forth in the Second Amendment. The Borrowers agreed to pay to the Administrative Agent for the account of the Revolving Lenders, an amendment fee of $364,140, in connection with their execution and delivery of the Second Amendment. Such fee is payable on the earlier of (a) June 30, 2018 and (b) the first date on which all of the Obligations (as defined in the Credit Agreement) are paid in full in cash and the Total Commitment (as defined in the Credit Agreement) of the Lenders is terminated.thousands except per share data, unless otherwise stated)

The PPP loans ~~under~~obtained by GEE Group Inc., as a public company, and some of its operating subsidiaries, together as an affiliated group, have exceeded the ~~credit agreement for~~$2,000 audit threshold established by the ~~period commencing on~~SBA, and therefore, also will be subject to audit by the ~~Amendment No. 2 Effective Date up to and including May 31, 2018, (i) so long~~SBA in the future. If any of the nine forgiven PPP loans are reinstated in whole or in part as the ~~Senior Leverage Ratio is equal~~result of a future audit, a charge or charges would be incurred, accordingly, and they would need to be repaid. If the companies are unable to repay the portions of their PPP loans that ultimately may be reinstated from available liquidity or ~~greater than 3.75~~operating cash flow, we may be required to ~~1.00, an amount equal~~raise additional equity or debt capital to ~~9.75% for Advances consisting of Domestic Rate Loans and 10.75% for Advances consisting of LIBOR Rate Loans and (ii) so long as~~repay the ~~Senior Leverage Ratio is less than 3.75 to 1.00, an amount equal to 9.00% for Advances consisting of Domestic Rate Loans and 10.00% for Advances consisting of LIBOR Rate Loans.~~PPP loans.

The Credit Agreement is secured by all of the Company’s property and assets, whether real or personal, tangible or intangible, and whether now owned or hereafter acquired, or in which it now has or at any time in the future may acquire any right, title or interests.

The Term Loans were advanced on the Closing Date and are, with respect to principal, payable as follows, subject to acceleration upon the occurrence of an Event of Default under the Credit Agreement or termination of the Credit Agreement and provided that all unpaid principal, accrued and unpaid interest and all unpaid fees and expenses shall be due and payable in full on March 31, 2021. Principal payments are required as follows: Fiscal year 2018 – $3,636,000, Fiscal year 2019 – $7,728,000, Fiscal year 2020 – $8,337,000 and Fiscal year 2021 - $28,440,000.

The Company shall prepay the outstanding amount of the Term-loans in an amount equal to the Specified Excess Cash Flow Amount (as defined in the agreement) for the immediately preceding fiscal year, commencing with the fiscal year ending September 30, 2018, payable following the delivery to the Agents of the financial statements referred to in the Agreement for such fiscal year but in any event not later than one hundred five (105) days after the end of each such fiscal year (the “Excess Cash Flow Prepayment Date”); provided that (i) if the Specified Term-loan Prepayment Conditions shall not be satisfied on any Excess Cash Flow Prepayment Date, Borrowers shall (A) on the Excess Cash Flow Prepayment Date, pay such portion of the Specified Excess Cash Flow Amount then due for such period that does not cause Borrowers to breach the Specified Term Loan Prepayment Conditions, (B) on the date on which the next Borrowing Base Certificate is due to be delivered to Agents pursuant to the Agreement (the “Borrowing Base Reference Date”), pay the remaining portion of such Specified Excess Cash Flow Amount (or such portion thereof that does not cause Borrowers to breach the Specified Term Loan Prepayment Conditions) and (C) if any Specified Excess Cash Flow Amount for such period remains due and owing after payment of the amount described in preceding clause (ii), on the next Borrowing Base Reference Date and each Borrowing Base Reference Date thereafter, pay such portion of the unpaid Specified Excess Cash Flow Amount that does not cause Borrowers to breach the Specified Term Loan Prepayment Conditions until such Specified Excess Flow Amount then due for such period is paid in full, and (ii) the failure of the Borrowers to make a prepayment of all or any portion of the Specified Excess Cash Flow Amount pursuant the Agreement solely as a result of Borrowers’ failure to satisfy the Specified Term Loan Prepayment Conditions shall not constitute an Event of Default.

~~The amended Credit Agreement contains certain covenants including the following:~~

~~Fixed Charge Coverage Ratio~~. The Company shall cause to be maintained as of the last day of each fiscal quarter, a Fixed Charge Coverage Ratio for itself and its subsidiaries on a Consolidated Basis of not less the amount set forth in the Credit Agreement of 1.25 to 1.0.

~~Minimum EBITDA~~. The Company shall cause to be maintained as of the last day of each fiscal quarter, EBITDA for itself and its subsidiaries on a Consolidated Basis of not less than the amount set forth in the Credit Agreement for each fiscal quarter specified therein, in each case, measured on a trailing four (4) quarter basis as set in the Credit Agreement, which ranges from $11,000,000 to $14,000,000 over the term of the Credit Agreement.

~~Senior Leverage Ratio~~. The Company shall cause to be maintained as of the last day of each fiscal quarter, a Senior Leverage Ratio for itself and its subsidiaries on a Consolidated Basis of not greater than the amount set forth in the Credit Agreement for each fiscal quarter, in each case, measured on a trailing four (4) quarter basis as set in the agreement, which ranges from 5.25 to 1.0 to 2.5 to 1.0 over the term of the Credit Agreement.

In addition to these financial covenants, the Credit Agreement includes other restrictive covenants. The Credit Agreement permits capital expenditures up to a certain level, and contains customary default and acceleration provisions. The Credit Agreement also restricts, above certain levels, acquisitions, incurrence of additional indebtedness, and payment of dividends.

~~The Company was in compliance with the non-financial covenants and with the newly amended financial covenants of the loan for December 31, 2017, the first measurement date under the Amendment.~~

In connection with the Credit Agreement (the Revolving Credit Facility and the Term-loan), the Company agreed to pay an original discount fee of approximately $901,300, a closing fee for the term loan of approximately $75,000, a finder’s fee of approximately $1,597,000 and a closing fee for the revolving credit facility of approximately $500,000. The total of the loan fees paid is approximately $3,073,300. The Company has recorded this as a reduction of the term-loan and amortized as interest expense over the term of the loans. During the period ended, December 31, 2017, the Company amortized approximately $192,000 of the debt discount.

Accrued Compensation ~~includes~~is comprised of accrued wages, the related payroll taxes, employee benefits of the ~~Company's~~Company’s employees, ~~while they work~~including those working on contract assignments, commissions earned and not yet paid and estimated ~~commission~~commissions and bonuses payable.

The Company has authorized 20,000 shares of preferred stock of which 1,000 shares have been designated Series A Preferred Stock, and no shares are issued or outstanding; 5,950 shares have been designated Series B Preferred Stock, of which 5,926 shares were issued and sold the Subordinated Note to JAX Legacy – Investment 1, LLC (the “Jax”, “Investor”) pursuant to a Subscription Agreement dated October 2, 2015 between the Company and the Investor (the “Subscription Agreement”) in the amount of $4,185,000. The Subordinated Note was due on October 2, 2018. The Company paid fees of approximately $25,000none remain outstanding, and 3,000 shares have been designated Series C Preferred Stock, of ~~common stock to the Investor, valued at approximately $23,000. In addition, the Company had approximately $33,000~~which 2,093 shares were issued and none remain outstanding as of ~~legal fees related to the transaction. Total discount recorded at issuance was approximately $647,000. Total amortization of debt discount for the year ended~~March 31, 2022 and September 30, ~~2017 was approximately $107,000, and the remaining $322,000 was written off to loss on extinguishment of debt.~~

On April 3, 2017, the Company and Jax amended and restated the Subordinated Note in its entirety in the form of a 10% Convertible Subordinated Note (the “10% Note”) in the aggregate principal amount of $4,185,000. The 10% Note matures on October 3, 2021 (the “Maturity Date”). The 10% Note is convertible into shares of the Company’s Common Stock at a conversion price equal to $5.83 per share. All or any portion of the 10% Note may be redeemed by the Company for cash at any time on or after April 3, 2018 that the average daily VWAP of the Company’s Common Stock reported on the principal trading market for the Common Stock exceeds the then applicable Conversion Price for a period of 20 trading days. The redemption price shall be an amount equal to 100% of the then outstanding principal amount of the 10% Note being redeemed, plus accrued and unpaid interest thereon. The Company agreed to issue to the investors in Jax approximately 77,775 shares of common stock, at a value of approximately $385,000 which was expensed as loss on the extinguishment of debt during the year ended September 30, 2017. On December 13, 2017 the Company issued 135,655 shares of common stock for both the conversion and paid in kind interest through September 30, 2017.

On October 4, 2015, the Company issued to the sellers of Access Data Consulting Corporation a Promissory Note. Interest on the outstanding principal balance of the Promissory Note is payable at the rate of 5.5% per annum. The principal and interest amount of the Promissory Note is payable as follows: (i) for the first twelve months commencing on November 4, 2015 and ending on October 4, 2016, a monthly payment of approximately $57,000 in principal and interest, (ii) on October 4, 2016 a balloon payment of principal of $1,000,000, (iii) for the next twelve months commencing on November 4, 2016 and ending on October 4, 2017, a monthly payment of approximately $28,000 in principal and interest, (iv) on October 4, 2017 a balloon payment of principal of $1,202,000 and (v) on October 4, 2017 any and all amounts of previously unpaid principal and accrued interest. The Credit Agreement requires this loan to be subordinated to PNC and MGG, however the sellers of Access Data Consulting Corporation have not agreed to the subordination.

On October 4, 2017, the Company executed an Amended and Restated Non-Negotiable Promissory Note in favor of William Daniel Dampier and Carol Lee Dampier (sellers of Access Data Consulting Corporation) in the amount of $1,202,405 (the “Note”). This Note amends and, as so amended, restates in its entirety and replaces that certain Subordinated Nonnegotiable Promissory Note dated October 4, 2015, issued by the Company to William Daniel Dampier and Carol Lee Dampier in the original principal amount of $3,000,000. The Company agreed to pay William Daniel Dampier and Carol Lee Dampier 12 equal installments of $107,675, commencing on November 4, 2017 and ending on October 4, 2018. The entire loan is classified as current and subordinate to the senior debt.

On January 20, 2017, the Company entered into Addendum No. 1 (the “Addendum”) to the Stock Purchase Agreement dated as of January 1, 2016 (the “Paladin Agreement”) by and among the Company and Enoch S. Timothy and Dorothy Timothy (collectively, the “Sellers”). Pursuant to the terms of the Addendum, the Company and the Sellers agreed (a) that the conditions to the “Earnouts” (as defined in the Paladin Agreement) had been satisfied or waived and (b) that the amounts payable to the Sellers in connection with the Earnouts shall be amended and restructured as follows: (i) the Company paid $250,000 in cash to the Sellers prior to January 31, 2017 (the “Earnout Cash Payment”) and (ii) the Company shall issue to the Sellers a subordinated promissory note in the principal amount of $1,000,000 (the “Subordinated Note”), The Subordinated Note shall bear interest at the rate of 5.5% per annum. Interest on the Subordinated Note shall be payable monthly, principle can only be paid in stock until the term-loan and Revolving Credit Facility are repaid. The Subordinated Note shall have a term of three years and may be prepaid without penalty. The principal of and interest on the Subordinated Note may be paid, at the option of the Company, either in cash or in shares of common stock of the Company or in any combination of cash and common stock. The Sellers have agreed that all payments and obligations under the Subordinated Note shall be subordinate and junior in right of payment to any “Senior Indebtedness” (as defined in the Paladin Agreement) now or hereafter existing to “Senior Lenders” (current or future) (as defined in the Paladin Agreement).

On April 3, 2017, the Company issued and paid to certain SNIH Stockholders as part of the Merger Consideration (see note 12) an aggregate of $12.5 million in aggregate principal amount of its 9.5% Notes. The 9.5% Notes mature on October 3, 2021 (the “Maturity Date”). The 9.5% Notes are convertible into shares of the Company’s Common Stock at a conversion price equal to $5.83 per share. Interest on the 9.5% Notes accrues at the rate of 9.5% per annum and shall be paid quarterly in arrears on June 30, September 30, December 31 and March 31, beginning on June 30, 2017, on each conversion date with respect to the 9.5% Notes (as to that principal amount then being converted), and on the Maturity Date (each such date, an “Interest Payment Date”). At the option of the Company, interest may be paid on an Interest Payment Date either in cash or in shares of Common Stock of the Company, which Common Stock shall be valued based2021. Based on the terms of the ~~agreement, subject~~Series B Convertible Preferred Stock, if certain fundamental transactions were to ~~certain limitations defined in~~occur, the ~~loan agreement. Each~~Series B Convertible Preferred Stock would require redemption, which would preclude permanent equity classification on the accompanying condensed consolidated balance sheets. The Series C Convertible Preferred Stock has a Liquidation Value equal to $1.00 per share and ranks pari passu with the Company’s Series B Convertible Preferred Stock and senior to all “Junior Securities” (including the Company’s Common Stock) with respect to any distribution of ~~the 9.5% Notes is subordinated in payment to the obligations~~assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary.

As of March 31, 2022, there were stock options outstanding under the Company’s Amended and Restated 2013 Incentive Stock Plan (the “Plan”). During fiscal 2021, the 2013 Incentive Stock Plan was amended to increase the ~~lenders parties~~total shares available for restricted stock and stock options grants by 10,000 to ~~that certain Revolving Credit, Term Loan~~a total of 15,000 (7,500 restricted stock shares and ~~Security Agreement, dated~~7,500 stock option shares). The Plan authorizes the Compensation Committee of the Board of Directors to grant either incentive or non-statutory stock options to employees. Vesting periods are established by the Compensation Committee at the time of grant. As of March 31, 2022, there were 10,636 shares available to be granted under the Plan (5,778 shares available for stock option grants and 4,858 shares available for restricted stock grants).

The Company granted 100 shares of restricted common stock during the six-month period ended March 31, 2022. Share-based compensation expense attributable to restricted stock was $76 and $148, and $163 and $336 during the three and six-month periods ended March 31, 2022 and 2021, respectively. As of March 31, 2022, there was approximately $467 of unrecognized compensation expense related to restricted stock outstanding, and the weighted average vesting period for those options was 3.08 years.

The Company had 77 warrants outstanding as of March 31, ~~2017 by~~2022 and ~~among the Company, the Company’s subsidiaries named as borrowers therein (collectively~~September 30, 2021 with ~~the Company, the “Borrowers”), the senior lenders named therein~~a weighted average exercise price per share of $2. The outstanding warrants had a weighted average remaining contractual life of 3.01 and PNC Bank, National Association, as administrative agent and collateral agent (the “Agent”) for the senior lenders (the “Senior Credit Agreement”), pursuant to those certain Subordination and Intercreditor Agreements, each dated3.50 as of March 31, ~~2017 by~~2022 and ~~among~~September 30, 2021, respectively. No warrants were granted or expired during the ~~Company, the Borrowers, the Agent~~three and ~~each of the holders of the 9.5% Notes.~~six-month periods ended March 31, 2022 and 2021.

None of the 9.5% Notes issued to the SNIH Stockholders are registered under the Securities Act of 1933, as amended (the “Securities Act”). Each of the SNIH Stockholders who received 9.5% Notes is an accredited investor. The issuance of the 9.5% Notes to such SNIH Stockholders is exempt from the registration requirements of the Act in reliance on an exemption from registration provided by Section 4(2) of the Act.

Future minimum payments of subordinated debt will total approximately $18,698,000 as follows: fiscal 2018 - $1,013,000, fiscal 2019 - $0, fiscal 2020 - $1,000,000, fiscal 2021- $0 and fiscal 2022 - $16,685,000.

OnAll stock options outstanding as of March 31, ~~2017, the Company issued approximately 500,000 shares of common stock upon exercise of warrants by two officers and received cash of $1,000,000.~~

On November 27, 2017, the Company issued approximately 135,655 shares of common stock to JAX Legacy related to the amendment and restatement of the Subordinated Note and the interest through October 4, 2017, of approximately $553,000.

~~On January 4, 2018, the Company issued approximately 41,000 shares of common stock to JAX Legacy related to the interest on the Subordinated Note through January 4, 2018, of approximately $105,000.~~

On January 4, 2018, the Company issued approximately 280,602 shares of common stock to the SNI Sellers related to the accrued interest of approximately $894,000 on the Subordinated Note through January 4, 2018.

~~On January 25, 2018, the Company issued approximately 110,083 shares of common stock to a SNI Sellers for the conversion of approximately 110,083 shares of series B preferred shares.~~

~~At December 31, 2017, there were exercisable options granted to purchase approximately 497,000 shares of common stock and exercisable warrants to purchase approximately 497,000 shares of common stock.~~

(Number of Warrants in Thousands)

Number of Shares

Exercise Price

Expiration

Outstanding at September 30, 2017

497

$ 3.84

Warrants exercised

-

-

Warrants granted

-

-

Outstanding at December 31, 2017

497

$ 3.84

~~The weighted average exercise price of outstanding warrants was $3.84 at December 31, 2017~~2022 and September 30, ~~2017, with~~2021 were non-statutory stock options, had exercise prices equal to the market price on the date of grant, and had expiration dates ~~ranging~~ten years from ~~February 7, 2020 to April 1, 2025.~~the date of grant.

~~The Company has recognized~~Share-based compensation expense ~~in the amount of approximately $293,000~~attributable to stock options and ~~$194,000 during~~warrants was $76 and $151, $130 and $268 for the three ~~months~~and six-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~2016, respectively, related to the issuance~~2021, respectively. As of ~~stock options.~~

~~During the three-month period ended December~~March 31, 2017, there were options granted to purchase 120,000 shares of common stock with a weighted average price of approximately $2.80 per common share. This estimated value was made using the Black-Scholes option pricing model and approximated $305,000. The stock options vest over a period between a one to a four-year period. The average expected life (years) of the options were 10 years, the estimated stock price volatility was 104% and the risk-free interest rate was 2.2%. At December 31, 2017,2022, there was approximately ~~$2,083,000~~$328 of ~~unamortized compensation.~~unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was 3.56 years.

~~At December 31, 2017, there were exercisable options granted to purchase approximately 497,000 shares of common stock and exercisable warrants to purchase approximately 375,000 shares of common stock.~~

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 financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by 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 deferred tax assets to the extent that we believe that 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 our 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 in accordance with ASC 740 on the basis of a two-step process in which (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 percent likely to be realized upon ultimate settlement with the related tax authority.

We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. As of September 30, 2017, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheet.

The following table presents the provision for income taxes and our effective tax rate for the three ~~months~~and six-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~2016:~~2021:

	Three Months Ended, December 31,						Three Months Ended, March 31,						Six Months Ended, March 31,
	2017			2016			2022			2021			2022			2021
Provision for Income Taxes		(28	)		66		$	(8	)	$	117		$	(37	)	$	(277	)
Effective Tax Rate		2	%		56	%		0	%		-7	%		0	%		12	%

The effective income tax rate on operations is based upon the estimated income for the year and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies.

Our effective tax rate for the three ~~months~~and six-month period ended ~~December~~March 31, ~~2017~~2022 and 2021, is lower than the statutory tax rate primarily due to ~~a tax provision for state income taxes and an increase in~~the effect of the valuation allowance on the net DTA position. Other than the deferred tax liability ~~related~~relating to indefinite lived assets, ~~being offset by~~the Company is maintaining a ~~discrete tax benefit recorded for~~valuation allowance against the ~~impact from the US Tax Reform. The tax provision for the three months ended December 31, 2017 includes discrete tax benefit totaling $0.4 million relating to the US Tax Reform.~~remaining net DTA position.

~~Our effective tax rate for the three months ended December 31, 2016 was higher than the statutory rate primarily due to change in valuation allowance.~~13. Commitments and Contingencies

On ~~December 22,~~March 23, 2022, the Company settled a legal matter involving two separate, but related lawsuits, filed by plaintiff Sands Brothers Venture Capital II, LLC. These two lawsuits and others in which the Company was not a named party, involved a dispute amongst certain former affiliate and non-affiliate entities, and certain former officers and directors of the Company, stemming from a series of transactions that allegedly occurred during the period 2008 through 2010. The Company was sued in 2014 and 2017, ~~President Trump signed into law~~based on the ~~“Tax Cuts~~allegation that it was a participant and ~~Jobs Act” ("US Tax Reform"). The US Tax Reform provides for significant changes~~aided and abetted in the ~~U.S. Internal Revenue Code~~fraudulent conveyance of ~~1986, as amended. Certain provisions~~funds. The plaintiff was a creditor of an unaffiliated now defunct entity whose assets the Company is alleged to have received. Given the facts and circumstances of the ~~US Tax Reform will be effective during our fiscal year ending September 30, 2018 with all provisions of~~case, it has been the US Tax Reform effective as of the beginning of our fiscal year ending September 30, 2019. As the US Tax Reform was enacted after our year end of September 30, 2017, it had no impact on our fiscal 2017 financial results. The US Tax Reform contains provisions with separate effective dates but is generally effective for taxable years beginning after December 31, 2017.

~~Beginning on January 1, 2018, the US Tax Reform lowers the US corporate income tax rate to 21% from that date~~Company’s belief and ~~beyond. We estimate~~assessment that the ~~revaluation~~lawsuits were meritless, and that the likelihood of ~~our US deferred tax assets and liabilities~~a material adverse resolution was remote. GEE Group’s ongoing legal expenses including depositions, court filings, etc. incurred over the years to defend itself from the claims made by the plaintiff in the respective lawsuits, have, for the most part, been either paid directly to the ~~21% corporate tax rate will reduce our net deferred tax liability~~law firms or reimbursed by ~~approximately $0.4 million and is reflected as a tax benefit in our results for the quarter ending December 31, 2017.~~

Although we believe we have accounted for the parts of the US Tax Reform that will have the most significant impact on our financials, the ultimate impact of the US Tax Reform on our reported results in 2018 may differ from the estimates provided herein, due to, among other things, changes in interpretations and assumptions we have made, guidance that may be issued, and other actions we may take as a result of the US Tax Reform different from that presently contemplated.

The Company continues to believe that its defenses were meritorious and that the final results of litigation would, overall, have been favorable on the merits. However, given the age of the matter, the potential future significant ongoing uninsured portions of legal and other costs to be incurred, including the extraordinary expenses of flying and housing witnesses and experts for the trial, and the future time, attention and effort necessary by management to satisfactorily resolve the matter through the courts, the Company made the business decision to take advantage of an opportunity to settle the case. In this regard, the Company entered into ana Confidential Settlement Agreement and ~~Plan~~Mutual Release, dated March 23, 2022, with the plaintiff for both lawsuits. Under the terms of ~~Merger dated as of March 31, 2017 (the “Merger Agreement”) by~~the agreement and ~~among~~release, neither the plaintiff nor the Company ~~GEE Group Portfolio, Inc.,~~have admitted or conceded to any wrongdoing, and the matter has been settled in its entirety for a ~~Delaware corporation~~one-time, payment to the plaintiff of approximately $1,175, of which the Company’s portion is $975, with insurance paying the balance. This payment was due and ~~a wholly owned subsidiary of~~paid by April 8, 2022, and the Company, (“GEE Portfolio”), SNI Holdco Inc., a Delaware corporation (“SNIH”), Smith Holdings, LLC a Delaware limited liability company, Thrivent Financial for Lutherans, a Wisconsin corporation, organizedexpense has been recognized as a ~~fraternal benefits society (“Thrivent”), Madison Capital Funding, LLC, a Delaware limited liability company (“Madison”) and Ronald R. Smith,~~pre-tax charge in his capacity as a stockholder (“Mr. Smith” and collectively with Smith Holdings, LLC, Thrivent and Madison, the “Principal Stockholders”) and Ronald R. Smith in his capacity as the representative of the SNIH Stockholders (“Stockholders’ Representative”). As a result of the merger, GEE Portfolio became the owner of 100% of the outstanding capital stock of SNI Companies, Inc., a Delaware corporation and a wholly-owned subsidiary of SNI Holdco (“SNI Companies” and collectively with SNI Holdco, the “Acquired Companies”). The aggregate consideration paid for the shares of SNI Holdco (the “Merger Consideration”) was approximately $66,300,000.

~~The following unaudited pro forma combined financial information is based on the historical financial statements of the Company and SNI Companies, Inc., after giving effect to~~ the Company’s ~~acquisition as if the acquisition occurred on April 3, 2017.~~

The following unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisitions occurred on October 1, 2016, nor is the financial information indicative of the results of future operations. The following table represents the unaudited consolidated pro forma results of operations for the three months ended December 31, 2016 as if the acquisition occurred on October 1, 2016. The pro forma results of operations for the three months ended December 31, 2016 only include SNI Companies, as all other acquisitions either occurred prior to October 1, 2016 or had an immaterial effect on pro forma balances. Operating expenses have been increased for the amortization expense associated with the estimated fair value adjustment as of each acquisition during the respective period for the expected definite lived intangible assets. Operating expenses have been increased for the amortization expense associated with the fair value adjustment of definite lived intangible assets of approximately $1,000,000 for the three months ended December 31, 2016 for the SNI acquisition.

~~The proforma results of operations for the three months ended December 31, 2016, included approximately $27,595,000 of sales, and approximately $376,000 of net income, respectively of SNI Companies.~~

~~The Company's~~condensed consolidated financial statements for the ~~three months~~three-month period ended ~~December~~March 31, ~~2017 include the actual results of all acquisitions.~~

The Company ~~leases space~~and its subsidiaries are involved in various other litigation that arises in the ordinary course of business. There are no other pending significant legal proceedings to which the Company is a party for ~~all of its branch offices,~~ which are located either in downtown or suburban business centers, and for its corporate headquarters. Branch offices are generally leased over periods from three to five years. The corporate office lease expires in 2018. The leases generally provide for payment of basic rent plusmanagement believes the ultimate outcome would have a ~~share of building real estate taxes, maintenance costs and utilities.~~material adverse effect on the Company’s financial position.

Rent expense was approximately $873,000 and $272,000 for the three-month periods ended December 31, 2017 and 2016, respectively. As of December 31, 2017, future minimum lease payments due under non-cancelable lease agreements having initial terms in excess of one year, including certain closed offices, totaled approximately $6,277,000 as follows: fiscal 2018 - $2,132,000, fiscal 2019 - $2,329,000, fiscal 2020 - $1,219,000, fiscal 2021 - $341,000 fiscal 2022 - $203,000 and thereafter - $53,000.

The Company retained approximately $1,500,000 of the purchase price, in cash, as a guarantee from the sellers of the SNI Companies that would provide a minimum of $9,200,000 of working capital, as defined in the purchase agreement. As of December 31, 2017, the Company and the sellers of the SNI Companies have not agreed to the provided working capital and the amount continues to be retained by the Company.

The Company provides the following distinctive services: (a) direct hire placement services, (b) temporary professional services staffing in the fields of information technology, accounting, finance and office, engineering, ~~medical,~~ and ~~accounting,~~medical, and (c) temporary ~~light~~ industrial staffing. These ~~distinct~~ services can be divided into two reportable ~~segments, Industrial~~segments: Professional Staffing Services and ~~Professional~~Industrial Staffing Services. ~~Selling,~~Some selling, general and administrative expenses are not ~~completely separately~~fully allocated among ~~light industrial services~~Industrial Services and ~~professional staffing services.~~Professional Staffing Services.

Unallocated ~~Corporate~~corporate expenses primarily include certain executive compensation expenses and salaries, certain administrative salaries, corporate legal expenses, stock ~~amortization~~compensation expenses, consulting expenses, audit fees, corporate rent and facility costs, board fees, acquisition, integration and restructuring expenses, and interest expense.

The Company provides a defined contribution plan (the “401(k) Plan”) for the benefit of its eligible core and field personnel, including those assigned to provide staffing services for clients. The 401(k) Plan allows participants to make contributions subject to applicable statutory limitations. The Company matches participants’ contributions with 10% of the first 10% of a participant’s contribution. The Company match contributed $28 and $37, and $20 and $30, respectively, from continuing operations to the 401(k) Plan for the three-month and six-month periods ended March 31, 2022 and March 31, 2021.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

GEE Group Inc. and its wholly owned material operating subsidiaries, Access Data Consulting Corporation, Agile Resources, Inc., BMCH, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., Triad Logistics, Inc., and Triad Personnel Services, Inc. (collectively referred to as the “Company”, “us”, “our”, or “we”) are providers of permanent and temporary professional and industrial staffing and placement services in and near several major U.S cities. We specialize in the placement of information technology, ~~engineering,~~accounting, finance, office, and ~~accounting~~engineering professionals for direct hire and contract staffing for our clients, data entry assistants (medical scribes) who specialize in electronic medical records (EMR) services for emergency departments, specialty physician practices and clinics, and provide temporary staffing services for our ~~light~~ industrial clients. The acquisitions of Agile Resources, Inc., a Georgia corporation (“Agile”), Access Data Consulting Corporation, a Colorado corporation (“Access”), Paladin Consulting Inc.~~, a Texas corporation~~ (“Paladin”) and SNI Companies, Inc., a Delaware corporation (“SNI”) expanded our geographical footprint within the placement and contract staffing verticals or end markets of information ~~technology.~~technology, accounting, finance, office and engineering professionals.

The Company markets its services using the trade names General Employment Enterprises, Omni One, Ashley Ellis, Agile Resources, Scribe Solutions Inc., Access Data Consulting Corporation, Paladin Consulting Inc., SNI Companies ~~Inc.~~(including Staffing Now, Accounting Now, and Certes), Triad Personnel Services and Triad Staffing. As of ~~December~~March 31, ~~2017,~~2022, we operated ~~forty-four~~twenty-eight (28) branch offices in downtown or suburban areas of major U.S. cities in ~~sixteen states.~~eleven (11) states and serve four (4) additional U.S. locations utilizing local staff members working remotely. We have offices or serve markets remotely, as follows; (i) one office ~~located~~ in each of ~~Arizona,~~ Connecticut, Georgia, ~~Iowa, Maryland,~~ Minnesota, ~~Pennsylvania, Washington DC~~ and ~~Virginia,~~New Jersey; (ii) two offices each in ~~New Jersey,~~Illinois and Massachusetts; (iii) three offices in Colorado; (iv) four offices and two additional local market presences in ~~Colorado, Massachusetts, Illinois~~Texas; (v) six offices and ~~Texas,~~one additional local market presence in Florida; (vi) seven offices in ~~Ohio~~Ohio; and ~~ten offices~~(vii) one remote local market presence in ~~Florida.~~Virginia.

Management has implemented a strategy which ~~included~~includes organic and acquisition growth components. Management’s organic growth strategy includes seeking out and winning new client business, as well as expansion of existing client business and on-going cost reduction and productivity improvement efforts ~~as well as~~in operations. Management’s acquisition growth strategy includes identifying strategic acquisitions, financed primarily through a combination of cash and the issuance of equity ~~and~~and/or debt to improve the overall profitability and cash flows of the Company.

The Company’s contract and placement services are principally provided under two operating divisions or segments: Professional Staffing Services and Industrial Staffing Services. We believe our current segments and array of businesses and brands within our segments complement one another and position us for future growth.

On February 1, 2022, the Company detected and stopped a network security incident. An unauthorized third party gained access into our network, encrypted various systems, and demanded money to decrypt the affected systems and to delete and not publicly release stolen information. The Company’s IT professionals immediately disconnected and isolated the affected systems to prevent any further compromise. The senior executive management team was immediately notified who in turn reported the network security incident to the Company’s Audit Committee chairman who has board oversight authority for these types of matters. The Company’s audit committee and board of directors were fully briefed and a special committee of the board of directors was appointed to assist and oversee management in the investigations, response and full remediation of the incident. The Company engaged third party cyber security experts to assist its internal IT professionals and conducted a comprehensive investigation to determine the extent of the unauthorized activity. The Company also notified law enforcement and its cyber liability insurance carrier about the incident.

The Company’s investigation determined that the unauthorized third party acquired a relatively small amount of data maintained on the encrypted servers, to include in some cases, individual personal information such as names, social security numbers, passport and driver license information. Our forensic investigation has been concluded and we believe we have reasonably determined the scope of the incident. Individuals affected by this incident are in the process of being notified in accordance with applicable state and federal laws. The cost of investigating and resolving the incident thus far has been immaterial. Based on what management and the Company’s third-party cyber security experts have determined in their investigation, the Company also does not foresee this incident having any future material detrimental effect on our business or financial position. The Company has in place cyber liability insurance coverage, subject to certain policy limitations and deductibles. The Company had also immediately notified the cyber insurance carrier of the network security incident, who worked with management and the Company’s third-party cyber security experts on this matter.

The Company’s network environment is fully operational and additional security measures have been added and/or are being evaluated to prevent further intrusions. The Company has not observed any additional malicious activity on the network to date. The Company’s operations were only minimally impacted by the incident, and we were able to serve our clients and other stakeholders without issue throughout.

In approximately mid-March 2020, the Company began to experience the severe negative effects of the economic disruptions resulting from the Coronavirus Pandemic (“COVID-19”). These have included abrupt reductions in demand for the Company’s primary sources of revenue, its temporary and direct hire placements, and lost productivity due to business closings both by clients and at the Company’s own operating locations. Some effects of COVID-19 and the subsequent variants of the virus continue to be felt to an extent, with the most severe impacts being felt in the industrial segment and, to a lesser extent, in the finance, accounting, and office clerical (“FAO”) end markets within the professional segment. In response to the crisis, in April 2020 we took a series of proactive actions including a temporary 10% pay cut for full-time salaried employees, temporary furloughing and redeployment of some employees, reduction of discretionary expenses and projects, and obtaining funds under CARES Act Paycheck Protection Program (“PPP”). These actions allowed us to generate cost savings and time with which to mitigate the impacts of the COVID-19 pandemic on our businesses and brands. Our businesses have continued their recoveries to a significant extent during the six months ended March 31, 2022. While we have experienced significant recovery and in recent quarters returned to or exceeded pre-COVID-19 levels of results and performance, the rate of future recovery and growth is still somewhat uncertain as potential resurgences and negative impacts of COVID-19 and variants thereof have continued to have negative impacts on the U.S. economy in 2021 and 2022, including in some cases, certain markets and clients we serve.

Three Months Ended ~~December~~March 31, ~~2017~~2022 Compared to the Three Months Ended ~~December~~March 31, ~~2016~~2021

	Three Months Ended December 31,										Three Months
(In thousands)	2017		2016		$ change			% change
Direct hire placement services	$	5,771	$	1,150	$	4,621			402	%
											Ended March 31,
											2022		2021		Change			Change
Professional contract services		33,589		13,875		19,714			142		$	30,009	$	27,040	$	2,969			11	%
Industrial contract services		5,872		5,981		(109	)		(2	)		3,736		4,023		(287	)		-7	%
Consolidated Net Revenues	$	45,232	$	21,006	$	24,226			115	%
Total professional and industrial contract services												33,745		31,063		2,682			9	%

Direct hire placement services												5,884		3,655		2,229			61	%
Consolidated net revenues											$	39,629	$	34,718	$	4,911			14	%

~~Consolidated net~~Contract staffing services contributed $33,745, or approximately 85%, of consolidated revenues ~~increased approximately $24,226,000 or 115% compared with the same period last year. The Company acquired SNI as of March 31, 2017, which increased the~~and direct hire placement services bycontributed $5,884, or approximately ~~$4,315,000~~15%, of consolidated revenues for the three-month period ended March 31, 2022. This compares to contract staffing services revenues of $31,063, or approximately 89%, of consolidated revenues and direct hire placement revenues of $3,655, or approximately 11%, of consolidated revenues for the three-month period ended March 31, 2021.

The overall increase in contract staffing services revenues of $2,682, or 9%, for the three-month period ended March 31, 2022 compared to the three-month period ended March 31, 2021 was primarily attributable to increased demand for employment in our professional contract services markets, resulting in an increase in revenues of $2,969, or 11%, as the negative effects of COVID-19 lessen and the U.S. economy and workforce continue on recovery paths toward pre-COVID-19 conditions. Industrial staffing services for the quarter decreased by ~~approximately $19,945,000.~~ $287, or 7%, due mainly to reoccurrence of adverse conditions associated with COVID-19 variants, which continued to cause some disruptions in the industrial markets we serve resulting in a decrease in demand for our industrial staffing services.

Direct hire placement revenue for the three-month period ended March 31, 2022 increased by $2,229, or approximately 61% as compared to the three-month period ended March 31, 2021. Demand for the Company’s direct hire services ~~excluding SNI is down~~increased due to increased employment opportunities and placement orders in our professional services markets. In addition, as the ~~total number~~negative effects of ~~recruiters~~COVID-19 continue to lessen, the U.S. economy and ~~sales professionals are down~~workforce continues to trend closer to pre-COVID-19 conditions.

Management believes that the significant net growth in ~~the Company, however management does expect to increase hiring in the following quarter. Industrial contract services remained consistent with only a slight decrease~~revenues during the three months ended ~~December~~March 31, ~~2017. Executive management~~2022, compared to the three months ended March 31, 2021, is generally in line with the recovery trends being experienced in the overall U.S. economy. The Company continues to observe, analyze and, where considered appropriate, make modifications and changes to its business model and practices in response to the COVID-19 pandemic and related health and safety concerns, including most recently, those associated with its variants. These include, but are not limited to, implementation of preventative policies and procedures in observance of Federal, state and/or local guidelines with regard to COVID-19 and its variants, use of personal protective equipment (principally, protective masks), and others. The Company also continues to take advantage of flexible and hybrid work-from-home employment arrangements and has ~~started~~converted some of its former branch office locations to ~~hire additional national sales force that can be serviced by the expanded geographical service area.~~virtual locations.

Cost of contract services includes wages and related payroll taxes and employee benefits of the ~~Company's~~Company’s contract services employees, and certain other contract employee-related costs, while ~~they work~~working on contract assignments. Cost of contract services for the three months ended March 31, 2022 totaled $25,115, as compared to $23,810 for the three months ended March 31, 2021. This increase of $1,305, or approximately 5%, is consistent with the increase in contract service revenues as discussed further above.

The Company’s combined gross profit margin, including direct hire placement services (recorded at 100% gross margin) for the three-month periods ended March 31, 2022 and 2021 were approximately 36.6% and 31.4%, respectively. The overall improvement in the Company’s combined gross profit margin is largely due to the increase in and higher mix of direct hire revenues.

In the professional contract services segment, the gross margin (excluding direct hire placement services) was approximately 26.9% for three-month period ended ~~December~~March 31, ~~2017 increased by approximately 89%~~2022 compared to approximately $29,458,000 compared with the prior period of approximately $15,563,000. The increase includes approximately $14,245,000 in cost of contract services related to SNI. The Cost of contract services, as a percentage of contract revenue,25.5% for the three-month period ended ~~December~~March 31, ~~2017 decreased approximately 9%~~2021. This increase is primarily due to ~~65% compared~~price increases associated with wage increases necessary to attract or retain contract services employees and the ~~prior period of approximately 74%.~~resulting increased spreads and margins for services performed in our Professional Services segment contract business. The ~~change~~Company’s gross margins also were impacted by shifts in the ~~contract revenue gross margin is related to several factors, including the increased permanent placement services from SNI, improved gross margins~~amounts and mix of business towards higher end markets in terms of billing rates and margins.

The Company’s industrial contract services ~~and overall improved~~gross margin for the three-month period ended March 31, 2022 was approximately 14.7% versus approximately 8.8% for the three-month period ended March 31, 2021. The low industrial staffing services gross margin reported for the three months ended March 31, 2021 is due to a charge taken for a decrease in the estimated amount of premium refunds the Company’s industrial business is eligible to receive under the Ohio Bureau of Workers’ Compensation retrospectively rated insurance program. The industrial contract services gross margins normalized for the effects of these items were consistent at approximately 14.2% and 14.2% for the three months ended March 31, 2022 and 2021, respectively.

(Amounts in ~~the professional contract services.~~ thousands except per share data, unless otherwise stated)

~~(1) Includes gross profit from direct hire placements, which all associated costs are recorded as selling, general and administrative expenses.~~

Selling, general and administrative expenses (“SG&A”) include the following categories:

	·	Compensation and benefits in the operating divisions, which includes salaries, wages, and commissions earned by the ~~Company's~~Company’s employment consultants, recruiters, and branch managers on permanent and temporary ~~placements.~~placements;


	·	Administrative compensation, which includes salaries, wages, payroll taxes and employee benefits associated with general management and the operation of ~~the~~corporate functions, including principally, finance, ~~legal,~~ human resources, ~~and~~ information technology ~~functions.~~and administrative functions;


	·	Occupancy costs, which includes office rent, depreciation and amortization, and other office operating ~~expenses.~~expenses;


	·	Recruitment advertising, which includes the cost of identifying and tracking job ~~applicants.~~applicants;

	·
	·	Other selling, general and administrative expenses, which includes travel, bad debt expense, fees for outside professional services, and ~~administrative~~other corporate-level expenses ~~which includes travel, bad debt expense, fees for outside professional services~~such as business insurance and ~~other corporate-level expenses such as business insurance and~~ taxes.

The Company’s ~~largest selling, general~~SG&A for the three-month period ended March 31, 2022, increased by $3,049 as compared to the three-month period ended March 31, 2021. SG&A for the three-month period ended March 31, 2022, as a percentage of revenues, were approximately 31% compared to approximately 26% for the three-month period ended March 31, 2021. In addition to overall growth of the business, resulting in additional incentive compensation and ~~administrative~~bonuses, the increase in SG&A expenses and ratios were affected by an increase of $413 in bad debt expense ~~is for compensation in the operating divisions. Most~~associated with one of the Company’s ~~sales agents~~light industrial customers and ~~recruiters~~the settlement of a legal matter totaling $975. In addition, share-based compensation declined to $152 for the three-months ended March 31, 2022, as compared to $293 for the three-months ended March 31, 2021. This decline was attributable to awards being forfeited or becoming fully vested during fiscal 2021.

SG&A includes certain non-cash costs and expenses incurred related to acquisition, integration and restructuring, and other non-recurring activities, such as certain corporate legal and general expenses associated with capital markets activities that either are ~~paid~~not directly associated with core business operations or have been eliminated on a ~~commission basis~~going forward basis. These costs were estimated to be $1,005 and ~~receive advances against future commissions. When commissions are earned, prior advances are applied against them~~$39 for the three-month periods ended March 31, 2022 and 2021, respectively, and include mainly expenses associated with former closed and consolidated locations, and personnel costs associated with eliminated positions. The legal settlement described above contributed $975 to these costs for the ~~sales agent or recruiter~~three-month period ended March 31, 2022.

Depreciation expense was $94 and $77 for the three-month periods ended March 31, 2022, and 2021, respectively. The increase in depreciation expense is ~~paid~~due to fixed assets additions.

Amortization expense was $1,015 for both of the three-month periods ended March 31, 2022 and 2021, respectively.

The income from operations increased by $540 for the three-month period ended March 31, 2022 compared to the three-month period ended March 31, 2021. The lower than proportional increase relative to increases in revenues, gross profit and gross margins is due to the factors described above, including notably, increases in bad debt expense of $413, a legal settlement of $975, and higher incentive compensation and bonuses.

Interest expense was $98 for the three-month period ended March 31, 2022, which decreased by $2,436 compared to the three-month period ended March 31, 2021. The decrease in interest expense is mainly attributable to the interest expense incurred under the Former Credit Agreement included in the three-month period ended March 31, 2021. The Company’s Former Credit Agreement contributed $2,040 in cash interest and $445 in amortization of capitalized and other debt related costs during the three-month period ended March 31, 2021. On April 20, 2021, the Company retired and fully repaid its remaining principal and accrued interest and fee balances due and retired its Former Credit Agreement.

The Company recognized a tax benefit of $8 for the three-month period ended March 31, 2022. Our effective tax rate for the three-month period ended March 31, 2022 and 2021 is lower than the statutory rate primarily due to the effect of the valuation allowance on the net ~~amount. The~~DTA position. Other than the deferred tax liability relating to indefinite lived assets, the Company ~~recognizes~~is maintaining a valuation allowance against the ~~full amount as commission expense, and advance expense is reduced by the amount recovered. Thus, the Company’s advance expense represents the~~remaining net ~~amount of advances paid, less amounts applied against commissions, plus commission accruals for billed but uncollected revenue.~~DTA position.

The Company’s net income (loss) was $1,087 and $(1,735) for the three-month periods ended March 31, 2022 and 2021, respectively. The lower than proportional improvement relative to the increases in revenue and gross profit and lower interest expense described above is largely due to factors described under SG&A above, including notably, increases in bad debt expense of $413, a legal settlement of $975, and higher incentive compensation and bonuses.

Six Months Ended March 31, 2022 Compared to the Six Months Ended March 31, 2021

Contract staffing services contributed $70,429, or approximately 85%, of consolidated revenue and direct hire placement services contributed $12,047, or approximately 15%, for the six-month period ended March 31, 2022. This compares to contract staffing services revenue of $62,311, or approximately 90%, of consolidated revenue and direct hire placement revenue of $7,050, or approximately 10%, of consolidated revenue for the three-month period ended March 31, 2021.

The overall increase in contract staffing services revenues of $8,118, or 13%, for the six-month period ended March 31, 2022 compared to the six-month period ended March 31, 2021 was primarily attributable to increased demand for employment in our professional contract services markets, resulting in an increase in revenues of $9,428, or 18%, as the negative effects of COVID-19 lessen and the U.S. economy and workforce continue on recovery paths toward pre-COVID-19 conditions. Revenues for the six-month period ended March 31, 2022 also include staffing support for vaccination and testing facilities and locations established to respond to COVID-19 and its variants. Industrial staffing services revenues decreased by $1,310, or 14%, due mainly to reoccurrence of adverse conditions associated with COVID-19 variants, which caused significant disruptions in the industrial markets we serve and resulting in a decrease in demand for our industrial staffing services.

Direct hire placement revenue for the six-month period ended March 31, 2022 increased by $4,997, or approximately 71%, over the six-month period ended March 31, 2021. Demand for the Company’s direct hire services also increased due to increased employment opportunities and placement orders in our professional services markets associated with the lessening negative effects of COVID-19 and as the U.S. economy and workforce continue to improve toward pre-COVID-19 conditions.

Management believes that the significant net growth in revenues during the six months ended March 31, 2022, compared to the six months ended March 31, 2021, is in line with the recovery trends being experienced in the overall U.S. economy.

Cost of contract services includes wages and related payroll taxes and employee benefits of the Company’s contract services employees, and certain other contract employee-related costs, while working on contract assignments. Cost of contract services for the six months ended March 31, 2022 totaled $52,380 as compared to $45,873 for the six months ended March 31, 2021. This increase of $6,507, or approximately 14%, is consistent with the increase in revenues as discussed further above.

The Company’s combined gross profit margins, including direct hire placement services (recorded at 100% gross margin) for the six-month period ended March 31, 2022 and 2021 were approximately 36.5% and 33.9%, respectively.

In the professional contract services segment, the gross margin (excluding direct hire placement services) was approximately 27.0% for the six-month period ended March 31, 2022 compared to approximately 25.9% for the six-month period ended March 31, 2021. This increase is primarily due to price increases associated with wage increases necessary to attract or retain contract services employees and the resulting increased spreads and margins for services performed in our professional contract services segment. The Company’s gross margins also were impacted by shifts in the amounts and mix of business towards higher end markets in terms of billing rates and margins.

The Company’s industrial contract services gross margin for the six-month period ended March 31, 2022 was approximately 15% versus approximately 29.3% for the six-month period ended March 31, 2021. The decrease in industrial contract services gross margin is mainly due to the amount of additional premium refunds in the form of policy distributions the Company’s industrial business was eligible to receive under the Ohio Bureau of Workers’ Compensation retrospectively rated insurance program. Results for the six months ended March 31, 2022 and 2021 included $37 and $1,318 of such premium refunds, respectively. The Industrial Services gross margins excluding the effects of these refunds and distributions were approximately 14.5% and 14.9% for the six months ended March 31, 2022 and 2021, respectively. The decreases in industrial services revenues and gross margins, excluding the effects of the workers compensation premium refunds and distributions, is mainly attributable to the Industrial segment being more heavily affected by new COVID-19 variants in this year’s first fiscal quarter.

Selling, general and administrative expenses (“SG&A”) include the following categories:

The Company’s SG&A for the ~~three months~~six-month period ended ~~December~~March 31, ~~2017~~2022 increased by ~~approximately $8,271,000 or approximately 184%~~$5,922 as compared to the ~~same~~six-month period ~~last year.~~ended March 31, 2021. SG&A for the six-month period ended March 31, 2022, as a percentage of revenues, were approximately 30% compared to approximately 27% for the six-month period ended March 31, 2021. In addition to overall growth of the business, resulting in additional incentive compensation and bonuses, the increase in SG&A expenses and ratios were affected by an increase of $413 in bad debt expense associated with one of the Company’s light industrial customers, a legal settlement of $975, and a charge associated with a severance agreement of $509. In addition, share-based compensation declined to $299 for the six-months ended March 31, 2022, as compared to $604 for the six-months ended March 31, 2021. This decline was attributable to awards being forfeited or becoming fully vested during fiscal 2021.

SG&A includes certain non-cash costs and expenses incurred related to acquisition, integration and restructuring and other non-recurring activities, such as certain corporate legal and general expenses associated with capital markets activities that either are not directly associated with core business operations or have been eliminated on a going forward basis. These costs were estimated to be $1,531 and $181 for the six-month periods ended March 31, 2022 and 2021, respectively, and include mainly expenses associated with former closed and consolidated locations, and personnel costs associated with eliminated positions. The legal settlement and severance agreement described above contributed $975 and $509, respectively, to these costs for the six-month period ended March 31, 2022.

Depreciation expense was $180 and $150 for the six-month period ended March 31, 2022 and 2021, respectively. The increase ~~was primarily related~~in depreciation expense is due to the inclusion of selling, general and administrative expenses of SNI following the acquisition by the Company. Management continues efforts to reduce general and administrative expenses as the Company consolidates the back office and can capitalize on the Company’s growth.fixed assets additions.

Amortization expense was $2,029 and $2,059 for the ~~three months~~six-month period ended March 31, 2022 and 2021, respectively. The decrease is due to intangible assets related to non-compete agreements becoming fully amortized during fiscal 2021.

The Company completed its most recent annual goodwill impairment assessment, as of September 30, 2021, and determined that its goodwill was not impaired. The amount of discount inherent in the Company’s market capitalization reported on the NYSE American exchange when compared with consolidated stockholders’ equity, or net book value, had increased since September 30, 2021; therefore, the Company performed an interim assessment of its goodwill for impairment as of December 31, 2021. The estimated fair values of its Professional Services and Industrial Services reporting units were adjusted based on qualitative and quantitative analysis so that they reconcile more precisely with the Company’s market capitalization as of December 31, 2021, plus an assumed control premium. As a result, the Company recognized a non-cash impairment charge of $2,150 during the three-months ended December 31, ~~2017, increased $1,027,000, or 278%~~2021. The Company reassessed the qualitative and quantitative analysis at March 31, 2022 and determined there was no additional impairment during the three-month period ended March 31, 2022.

The income from operations decreased by $1,464 for the six-month period ended March 31, 2022 compared to the six-month period ended March 31, 2021. The decrease is due to factors described above, including notably, increases of $413 in bad debt expense associated with ~~the prior period, primarily as a result~~one of the ~~acquisition~~Company’s light industrial customers, a legal settlement of ~~SNI~~$975, and a charge associated with a severance agreement of $509. Additionally, the non-cash goodwill impairment charge of $2,150 taken during the six-month period ended March 31, 2022 offset increases in ~~April 2017 and~~revenue during the ~~related amortization of their identified intangible assets.~~period.

Interest expense was $205 for the ~~three months~~six-month period ended ~~December~~March 31, ~~2017, increased~~2022, which decreased by ~~approximately $2,934,000 or 815%~~$5,015 compared ~~with~~to the ~~same~~six-month period ~~last year primarily as a result of the newly obtained long-term debt,~~ended March 31, 2021. The decrease in interest expense is mainly attributable to the interest expense ~~for acquisition payments and higher average borrowings~~ related to the ~~new acquisitions.~~Former Credit Agreement that was included in the six-month period ended March 31, 2021. The Company’s Former Credit Agreement contributed $4,225 in cash interest expense and $890 in amortization of capitalized and other debt related costs during the six-month period ended March 31, 2021. On April 20, 2021, the Company repaid its remaining principal and accrued interest balances under its Former Credit Agreement, after which time interest expense ceased to accrue.

The Company recognized a tax benefit of $37 for the six-month period ended March 31, 2022. Our effective tax rate for the six-month period ended March 31, 2022 and 2021 is lower than the statutory rate primarily due to the effect of the valuation allowance on the net DTA position. Other than the deferred tax liability relating to indefinite lived assets, the Company is maintaining a valuation allowance against the remaining net DTA position.

The Company’s net income (loss) was $17,755 and $(2,050) for the six-month periods ended March 31, 2022 and 2021, respectively. The increase is primarily due to gains of $16,773 from forgiveness and extinguishment of the Company’s remaining PPP loans during the six-month period ended March 31, 2022 and the growth in revenues and gross profit discussed above. These were offset to an extent by an increase in bad debt expense of $413, a legal settlement of $975, a charge associated with a severance agreement of $509, and the non-cash goodwill impairment charge of $2,150.

The Company continues to seek opportunities to increase revenue and closely manage costs, including opportunities to selectively add revenue producing resources in key markets and industry verticals. The Company also seeks to organically grow its professional contract services revenue and direct hire placement revenue, including business from staff augmentation, permanent placement, statement of work (SOW) and other human resource solutions in the information technology, engineering, healthcare and finance and accounting higher margin staffing specialties. The Company’s strategic plans to achieve this goal involve setting aggressive new business growth targets, initiatives to increase services to existing customers, increasing its numbers of revenue producing core professionals, including primarily, business development managers and recruiters, and assessments of the effectiveness of compensation, commission and bonus plans to identify enhancements to incentivize producers. Senior management also has frequent interaction with the field and facilitates collaboration among brands and locations to identify and share growth opportunities, and to monitor and motivate growth. The Company’s strategic plan contains both internal and acquisition growth objectives to increase revenue in the aforementioned higher margin and more profitable professional services sectors of staffing.

The primary sources of liquidity for the Company are revenues earned and collected from its clients for the placement of contractors and permanent employment candidates and borrowings available under its current and former asset-based senior secured revolving credit facilities. Uses of liquidity include primarily the costs and expenses necessary to fund operations, including payment of compensation to the Company’s contract and permanent employees and employment-related expenses, operating costs and expenses, taxes and capital expenditures.

The following table sets forth certain consolidated statements of cash flows ~~data (in thousands):~~data:

	For the three months ended December 31, 2017			For the three months ended December 31, 2016			Six Months
Cash flows used in operating activities	$	(249	)	$	(696	)
							Ended March 31,
							2022			2021
Cash flows provided by operating activities							$	4,383		$	196
Cash flows used in investing activities	$	(128	)	$	(67	)	$	(155	)	$	(12	)
Cash flows provided by financing activities	$	1,072		$	428		$	-		$	-

As of ~~December~~March 31, ~~2017,~~2022, the Company had ~~cash~~$14,175 of ~~approximately $3,480,000,~~cash, which was an increase of ~~approximately $695,000~~$4,228 from ~~approximately $2,785,000 at~~$9,947 as of September 30, ~~2017. Working capital at December~~2021. The significant increase in cash flows from operating activities is primarily the result of the elimination of cash interest expense on the Company’s high-cost Former Credit Facility, which was fully repaid and retired on April 20, 2021. As of March 31, ~~2017 was approximately $630,000, as compared to~~2022, the Company had working capital of ~~approximately $1,588,000 for~~$22,388 compared to $2,528 of working capital as of September 30, ~~2017.~~2021. The ~~net loss for~~increase in working capital is mainly attributable to the ~~three months ended December 31, 2017, was approximately $1,791,000.~~

~~At December 31, 2017 there was approximately $999,000~~forgiveness of ~~accrued interest that was payable with~~ the Company’s ~~common stock,~~last remaining PPP loans and interest during the six-month period ended March 31, 2022, which ~~was settled~~were reflected in ~~stock on January 9, 2018.~~current liabilities in the aggregate amount of $16,741 as of September 30, 2021.

Net cash ~~used in~~provided by operating activities for the ~~three months~~six-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~2016~~2021 was ~~approximately $(249,000)~~$4,383 and ~~$(696,000),~~$196, respectively. The ~~fluctuation is due to~~positive operating cash flow in the ~~significant loss from operations,~~six-month period ended March 31, 2022 corresponds with the increase in ~~accrued interest, increase~~net income and other net changes in ~~accounts payable, decrease in accrued compensation, account receivable and increase in other current assets~~working capital.

The primary uses of cash for investing activities were for the ~~quarter~~acquisition of property and equipment in the six-month periods ended ~~December~~March 31, ~~2017~~2022 and ~~offset by non-cash related expense for depreciation, amortization and stock compensation.~~

Net cash used in investing activities for the three months ended December 31, 2017 and 2016 was approximately $(128,000) and $(67,000), respectively. The primary use of cash was for acquisition of furniture and equipment for new offices.

~~Net~~There were no cash flows ~~provided by~~used in financing activities for the ~~three months~~six-month period ended ~~December~~March 31, 2017 was approximately $1,072,000 compared to approximately $428,000 in the three months ended December 31, 2016. Fluctuations in financing activities are attributable to the net borrowings of the revolving credit facility, offset by payment of debt.2022 and 2021.

All of the ~~Company's~~Company’s office facilities are leased. ~~As of December 31, 2017, future minimum~~Minimum lease payments under ~~non-cancelable~~all the Company’s lease ~~commitments having initial terms more than one year, including closed offices, totaled~~agreements for the twelve-month period commencing after the close of business on March 31, 2022, are approximately ~~$6,277,000.~~$1,788. There are no minimum debt service principal payments due during the twelve-month period commencing after the close of business on March 31, 2022.

On ~~March 31, 2017,~~April 19, 2021, the Company ~~and its subsidiaries, as borrowers, entered into~~completed the initial closing of a Revolving Credit, Term Loan and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association (“PNC”), and certain investment funds managed by MGG Investment Group LP (“MGG”).

~~Under the terms~~follow-on public offering of 83,333 shares of common stock at a public offering price of $0.60 per share. Gross proceeds of the ~~Credit Agreement,~~offering totaled $50,000, which after deducting the ~~Company may borrow up to $73,750,000 consisting~~underwriting discount, legal fees, and offering expenses, resulted in net proceeds of ~~a four-year term loan in~~$45,478. On April 27, 2021, the principal amount of $48,750,000 and revolving loans in a maximum amount up to the lesser of (i) $25,000,000 or (ii) an amount determined pursuant to a borrowing base that is calculated based on the outstanding amountunderwriters of the Company’s ~~eligible accounts receivable, as described~~April 19, 2021, public offering exercised in full their 15% over–allotment option to purchase an additional 12,500 common shares (the “option shares”) of the ~~Credit Agreement.~~Company at the public offering price of $0.60 per share. The ~~loans under~~Company closed the ~~Credit Agreement mature~~transaction on ~~March 31, 2021.~~April 28, 2021 and received net proceeds from the sale of the option shares of approximately $6,937, after deducting the applicable underwriting discount.

Amounts borrowed under the Credit Agreement may be used by the Company to repay existing indebtedness, to partially fund capital expenditures, to fund a portion of the purchase price for the acquisition of all of the issued and outstanding stock of SNI Holdco Inc. pursuant to that certain Agreement and Plan of Merger dated March 31, 2017 (the “Merger Agreement”), to provide for on-going working capital needs and general corporate needs, and to fund future acquisitions subject to certain customary conditions of the lenders. On the closing date of the Credit Agreement, the Company borrowed $48,750,000 from term-loans and borrowed approximately $7,476,316 from the Revolving Credit Facility for a total of $56,226,316 which was used by the Company to repay existing indebtedness, to pay fees and expenses relating to the Credit Agreement, and to pay a portion of the purchase price for the acquisition of all of the outstanding stock of SNI Holdco Inc. pursuant to the Merger Agreement.

The loans under the Credit Agreement will bear interest at rates at the Company’s option of LIBOR rate plus 10% or PNC’s floating base rate plus 9%. The Term Loans may consist of Domestic Rate Loans or LIBOR Rate Loans, or a combination thereof. At September 30, 2017 the interest rate was approximately 13%.

The Term Loans were advanced on April 3, 2017 and are, with respect to principal, payable as follows, subject to acceleration upon the occurrence of an Event of Default under the Credit Agreement or termination of the Credit Agreement and provided that all unpaid principal, accrued and unpaid interest and all unpaid fees and expenses shall be due and payable in full on March 31, 2021. Principal payments are required pursuant to the credit agreement, as amended, as follows: Fiscal year 2018 – $3,636,000, Fiscal year 2019 – $7,728,000, Fiscal year 2020 – $8,337,000 and Fiscal year 2021 - $28,440,000.

On ~~August 31, 2017,~~April 20, 2021, as the result of the completion of the public offering, the Company entered into a Consent to Extension of Waiver to Revolving Credit, Term Loan and Security Agreement (the “Waiver”). Under the terms of the Waiver, the Lenders and the Agents agreed to extend to October 3, 2017 the deadline by which the Borrowers must deliver to the Agents and the Lenders, (i) updated financial information and projections of the Loan Partiesrepaid $56,022 in form and substance satisfactory to the Agents and the Lenders to amend the financial covenant levels set forth in Section 6.5 to the Loan Agreement in a manner acceptable to the Agents and the Lenders in their sole discretion, and (ii) a fully executed amendment to the Loan Agreement that amends the financial covenant levels set forth in Section 6.5 of the Loan Agreement in a manner acceptable to the Agents and the Lenders and any other terms and conditions required by the Agents and the Lenders in their sole discretion. Additionally, the Borrowers paid a $73,500 consent fee to the Agents for the pro rata benefit of the Lenders, in connection with the Waiver.

~~In addition, on August 31, 2017, the Company received a waiver (“Additional Waiver”) made to the~~aggregate outstanding indebtedness under its then existing Revolving Credit, Term Loan and Security Agreement, dated as of March 31, 2017, ~~(the “Credit Agreement”), by~~as amended, including accrued interest, using the net proceeds of its recent underwritten public offering and among the Company, the Loan Parties, Administrative Agent and the Term Loan Agent, pursuant to which the Administrative Agent agreed, and the Administrative Agent has been advised that the Term Loan Agent has agreed, that notwithstanding the terms of Section 6.17(d) of the Credit Agreement, the due date for the Borrowers to deliver to the Agents the Subordination Agreement (Dampier) (as defined in the Credit Agreement) and an amended Subordinated Note (Dampier) (as defined in the Credit Agreement), in each case duly executed by the Persons party thereto and in form and substance satisfactory to the Agents, shall be extendedavailable cash. The repaid debt was originally obtained from ~~August 31, 2017 to October 3, 2017.~~

On October 2, 2017, the Company, the other borrower entities and guarantor entities named therein (collectively, the “Loan Parties”), PNC Bank, National Association (“PNC”), and certain investment funds managedinvestors led by MGG Investment Group LP (“MGG”) ~~(collectively~~on April 21, 2017 and had a maturity date of June 30, 2023. The MGG debt was comprised of a revolving credit facility with a principal balance on the date of repayment of approximately $11,828, which was subject to an annual interest rate comprised of the greater of the London Interbank Offering Rate (“~~Lenders”~~LIBOR”) ~~entered into~~or 1%, plus a ~~First Amendment~~10% margin (approximately 11% per annum), and ~~Waiver (the “Amendment”~~a term loan with a principal balance on the date of repayment of approximately $43,735, which was subject to an annual interest rate of the greater of LIBOR or 1% plus a 10% margin. The term loan also had an annual payment-in-kind (“PIK”) interest rate of 5% in addition to its cash interest rate, which was being added to the ~~Revolving Credit, Term Loan~~term loan principal balance (cash and ~~Security Agreement dated as~~PIK interest rate combined of ~~March 31, 2017 (the “Credit Agreement”) by and among~~approximately 16% per annum). Accrued interest of approximately $459 was paid in connection with the ~~Loan Parties, and the Lenders.~~

principal repayments. The ~~Amendment,~~Company took a one-time charge of $4,004 which ~~was effective as of October 2, 2017, modified the required principal repayment schedule~~represents unamortized debt issue costs associated with respect to the Term Loans. The Amendment also modified the ability of the Loan Parties to repay or make other payments with respect to certain other loans that are subordinated in right of payment to the indebtedness under theits Former Credit Agreement.

~~Pursuant to the Amendment the Lenders also waived any Event of Default arising out~~On May 14, 2021, GEE Group Inc. and its subsidiaries, Agile Resources, Inc., Access Data Consulting Corporation, BMCH, Inc., GEE Group Portfolio, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., Triad Personnel Services, Inc., and Triad Logistics, Inc. entered a Loan, Security and Guaranty Agreement for a $20 million asset-based senior secured revolving credit facility with CIT Bank, N.A. (the “CIT Facility”). The CIT Facility is collateralized by 100% of the ~~Loan Parties’ failure to deliver, on or before October 3, 2017, the materials satisfying the requirements~~assets of ~~clauses (i) and (ii) of Section 5 of the Waiver to Revolving Credit, Term Loan and Security Agreement, dated as of August 14, 2017, as amended.~~

~~On November 14, 2017,~~ the Company and its subsidiaries ~~as Borrowers, each subsidiary~~who are co-borrowers and/or guarantors. The CIT Facility matures on the fifth anniversary of the closing date (May 14, 2026). Concurrent with the May 14, 2021 closing of the CIT Facility, the Company initially borrowed $5,326 and utilized these funds to pay all remaining unpaid Exit and Restructuring Fees due to its former senior lenders in the amount of $4,978, with the remainder going to direct fees and costs associated with the CIT Facility.

Under the CIT Facility, advances will be subject to a borrowing base formula that is computed based on 85% of eligible accounts receivable of the Company ~~listed~~and subsidiaries as defined in the CIT Facility, and subject to certain other criteria, conditions, and applicable reserves, including any additional eligibility requirements as determined by the administrative agent. The CIT Facility is subject to usual and customary covenants and events of default for credit facilities of this type. The interest rate, at the Company’s election, will be based on either the Base Rate, as defined, plus the applicable margin; or the London Interbank Offering Rate (“LIBOR” or any successor thereto) for the applicable interest period, subject to a ~~“Guarantor”~~1% floor, plus the applicable margin. The CIT Facility also contains provisions addressing the potential future replacement of LIBOR utilized and referenced in the loan agreement, in the event LIBOR becomes no longer available. In addition to interest costs on advances outstanding, the CIT Facility will provide for an unused line fee ranging from 0.375% to 0.50% depending on the ~~signature pages thereto (together with each other Person joined thereto as a guarantor from time to time, collectively, the “Guarantors”,~~amount of undrawn credit, original issue discount and ~~each a “Guarantor”,~~certain fees for diligence, implementation, and together with the Borrowers, collectively, the “Loan Parties” and each a “Loan Party”), certain lenders which now are or which thereafter become a party thereto that make Revolving Advances thereunder (together with their respective successors and assigns, collectively, the “Revolving Lenders” and each a “Revolving Lender”), the lenders which now are or which thereafter become a party thereto that made or acquire an interestadministration.

The Company had approximately $14,057 in the Term Loans (together with their respective successors and assigns, collectively, the “Term Loan Lenders” and each a “Term Loan Lender”, and together with the Revolving Lenders, collectively, the “Lenders” and each a “Lender”), MGG Investment Group LP (“MGG”), as administrative agentavailability for the Lenders (together with its successors and assigns, in such capacity, the “Administrative Agent”), as collateral agent for the Lenders (together with its successors and assigns, in such capacity, the “Collateral Agent”), and as term loan agent (together with its successors and assigns, in such capacity, the “Term Loan Agent” and together with the Administrative Agent and the Collateral Agent, each an “Agent” and, collectively, the “Agents”), entered into a second amendment (the “Second Amendment”) to the Revolving Credit, Term Loan and Security Agreement, datedborrowings as of March 31, ~~2017 (the “Credit Agreement”).~~2022. There were no outstanding borrowings outstanding on the CIT Facility as of March 31, 2022, or September 30, 2021, except for certain accrued carrying fees and costs, which are included in other current liabilities in the accompanying consolidated balance sheets.

~~Pursuant~~Management believes that the Company has adequate cash and working capital and can generate adequate liquidity to meet its obligations for the foreseeable future and at least for one year after the date this Quarterly Report on Form 10-Q is filed.

Coronavirus Pandemic (“COVID-19”), Paycheck Protection Program Loans and Deferral of Federal Payroll Taxes under the CARES Act

In approximately mid-March 2020, the Company began to experience the severe negative effects of the economic disruptions resulting from COVID-19. These included abrupt reductions in demand for the Company’s primary sources of revenue, its temporary and direct hire placements, lost productivity due to business closings both by clients and at the Company’s own operating locations, and the significant disruptive impacts to many other aspects of normal operations. Some effects of COVID-19 and the subsequent variants of the virus continue to be felt, although to lesser extent, with the most severe impacts being felt in the commercial (Industrial) segment and, to a lesser extent, in the finance, accounting and office clerical (“FAO”) contract staffing services end markets within the professional segment.

Between April 29 and May 7, 2020, the Company and eight of its operating subsidiaries obtained loans in the aggregate amount of $19,927 from BBVA USA (now known as PNC Bank), as lender, pursuant to the ~~Second Amendment~~Paycheck Protection Plan (the “PPP”), which was established under the ~~Borrowers agreed, among other things,~~Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). These funds were the only source of financing available to ~~use commercially reasonable efforts~~our companies and businesses and were critical to ~~prepay, or cause~~our ability to ~~be prepaid, $10,000,000~~maintain operations, including the employment of our temporary and full-time employees, in ~~principal amount of Advances (as defined~~order to provide our services and meet our liquidity requirements in the ~~Credit Agreement) outstanding, which amount shall be applied to prepay the Term Loans in accordance with the applicable terms~~midst of the ~~Credit Agreement. Any prepayment to the term loan is contingent upon a future financing, non-operational cash flow or excess cash flow~~worldwide Coronavirus Pandemic. The PPP loans were recognized as ~~defined~~current debt in the ~~agreement. The Borrowers also agreed to amend (i) the applicable minimum Fixed Charge Coverage Ratios required to be maintained by the Company~~Company’s accompanying unaudited condensed consolidated financial statements as set forth in the Second Amendment, (ii) the minimum EBITDA required to be maintained by the Company, as set forth in the Second Amendment and (iii) the maximum senior leverage ratios required to be maintained by the Company, as set forth in the Second Amendment. The Borrowers agreed to pay to the Administrative Agent for the account of ~~the Revolving Lenders, an amendment fee of $364,140, in connection with their execution and delivery of the Second Amendment. Such fee is payable on the earlier of (a) June~~September 30, 2018 and (b) the first date on which all of the Obligations (as defined in the Credit Agreement) are paid in full in cash and the Total Commitment (as defined in the Credit Agreement) of the Lenders is terminated.2021.

The Company ~~believes~~and its operating subsidiaries have been granted forgiveness of their respective outstanding PPP loans, including the Company’s last four remaining PPP loans and interest for GEE Group Inc., BMCH, Inc., Paladin Consulting, Inc., and SNI Companies, Inc., in the amounts of $2,024, $2,630, $1,956, and $10,163, respectively, which were forgiven by the SBA in December 2021. The Company recognized net gains of $16,773, in aggregate, during the six months ended March 31, 2022 as a result of the forgiveness of its last four PPP loans.

The Company and its ~~current cash on hand~~subsidiaries, under the CARES Act, also were eligible to defer paying $3,654, in aggregate, of applicable payroll taxes incurred during fiscal 2020. The deferred deposits of the employer’s share of Social Security tax are required be paid to be considered timely (and avoid a failure to deposit penalty) by December 31, 2021, fifty (50) percent of the eligible deferred amount, and the ~~borrowing availability under~~remaining amount by December 31, 2022. During the ~~new PNC Credit Agreement will be adequate to fund its working capital needs and provide sufficient cash for~~six-month period ending March 31, 2022, the ~~next twelve months from~~first payments on these deferred amounts were made totaling $1,827, in aggregate. The remaining deferred amounts are included in short-term liabilities on the ~~date of this report.~~accompanying unaudited condensed consolidated financial statements.

On October 2, 2015, the Company issued and sold a Subordinated Note in the aggregate principal amount of $4,185,000 to JAX Legacy – Investment 1, LLC (“Jax”) pursuant to a Subscription Agreement dated October 2, 2015 between the Company and Jax. On April 3, 2017, the Company and Jax amended and restated the Subordinated Note in its entirety in the form of the 10% Convertible Subordinated Note (the “10% Note”) in the aggregate principal amount of $4,185,000. The 10% Note matures on October 3, 2021 (the “Maturity Date”). The 10% Note is convertible into shares of the Company’s Common Stock at a conversion price equal to $5.83 per share (subject to adjustment as provided in the 10% Note upon any stock dividend, stock combination or stock split or upon the consummation of certain fundamental transactions) (the “Conversion Price”). The 10% Note is subordinated in payment to the obligations of the Company to the lenders parties to the Credit Agreement, pursuant to a Subordination and Intercreditor Agreements, dated as of March 31, 2017 by and among the Company, the Borrowers, the Agent and Jax. The 10% Note issued to Jax is not registered under the Securities Act of 1933, as amended (the “Securities Act”). Jax is an accredited investor. The issuance of the 10% Note to Jax is exempt from the registration requirements of the Act in reliance on an exemption from registration provided by Section 4(2) of the Act.

On January 20, 2017, the Company entered into Addendum No. 1 (the “Addendum”) to the Paladin Agreement Pursuant to the terms of the Addendum, the Company and the Sellers agreed (a) that the conditions to the “Earnouts” (as defined in the Paladin Agreement) had been satisfied or waived and (b) that the amounts payable to the Sellers in connection with the Earnouts shall be amended and restructured as follows: (i) the Company shall pay $250,000 in cash to the Sellers on or prior to January 31, 2017 (the “Earnout Cash Payment”) and (ii) the Company shall issue to the Sellers a subordinated promissory note in the principal amount of $1,000,000 (the “Subordinated Note”), The Subordinated Note shall bear interest at the rate of 5.5% per annum. Interest on the Subordinated Note shall be payable monthly. The Subordinated Note shall have a term of three years and may be prepaid without penalty. The principal of and interest on the Subordinated Note may be paid, at the option of the Company, either in cash or in shares of common stock of the Company or in any combination of cash and common stock. The Sellers have agreed that all payments and obligations under the Subordinated Note shall be subordinate and junior in right of payment to any “Senior Indebtedness” (as defined in the Paladin Agreement) now or hereafter existing to “Senior Lenders” (current or future) (as defined in the Paladin Agreement). The Company has paid the $250,000 cash payment to the Sellers.

On April 3, 2017, the Company agreed to issue to certain SNIH Stockholders upon receipt of duly executed letters of transmittal as part of the Merger Consideration, an aggregate of approximately 5,926,000 shares of its Series B Convertible Preferred Stock as part of the Merger Consideration. The Series B Convertible Preferred Stock has a liquidation preference equal to $4.86 per share and ranks senior to all “Junior Securities” (including the Company’s Common Stock) with respect to any distribution of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary. In the event that the Company declares or pays a dividend or distribution on its Common Stock, whether such dividend or distribution is payable in cash, securities or other property, including the purchase or redemption by the Company or any of its subsidiaries of shares of Common Stock for cash, securities or property, the Company is required to simultaneously declare and pay a dividend on the Series B Convertible Preferred Stock on a pro rata basis with the Common Stock determined on an as-converted basis assuming all Shares had been converted as of immediately prior to the record date of the applicable dividend or distribution. On April 3, 2017, the Company filed a Statement of Resolution Establishing its Series B Convertible Preferred Stock with the State of Illinois. (the “Resolution Establishing Series”). Except as set forth in the Resolution Establishing Series, the holders of the Series B Convertible Preferred Stock have no voting rights. Pursuant to the Resolution Establishing Series, without the prior written consent of holders of not less than a majority of the then total outstanding Shares of Series B Convertible Preferred Stock, voting separately as a single class, the Company shall not create, or authorize the creation of, any additional class or series of capital stock of the Company (or any security convertible into or exercisable for any class or series of capital stock of the Company) that ranks pari passu with or superior to the Series B Convertible Preferred Stock in relative rights, preferences or privileges (including with respect to dividends, liquidation or voting). Each share of Series B Convertible Preferred Stock is convertible at the option of the holder thereof into one share of Common Stock at an initial conversion price equal to $4.86 per share, each as subject to adjustment in the event of stock splits, stock combinations, capital reorganizations, reclassifications, consolidations, mergers or sales, as set forth in the Resolution Establishing Series.

None of the shares of Series B Preferred Stock issued to the SNIH Stockholders are registered under the Securities Act. Each of the SNIH Stockholders who received shares of Series B Preferred Stock is an accredited investor. The issuance of the shares of Series B Preferred Stock to such SNIH Stockholders is exempt from the registration requirements of the Act in reliance on an exemption from registration provided by Section 4(2) of the Act.

On April 3, 2017, the Company issued and paid to certain SNIH Stockholders as part of the Merger Consideration (see note 10) an aggregate of $12.5 million in aggregate principal amount of its 9.5% Notes. The 9.5% Notes mature on October 3, 2021 (the “Maturity Date”). The 9.5% Notes are convertible into shares of the Company’s Common Stock at a conversion price equal to $5.83 per share. Interest on the 9.5% Notes accrues at the rate of 9.5% per annum and shall be paid quarterly in arrears on June 30, September 30, December 31 and March 31, beginning on June 30, 2017, on each conversion date with respect to the 9.5% Notes (as to that principal amount then being converted), and on the Maturity Date (each such date, an “Interest Payment Date”). At the option of the Company, interest may be paid on an Interest Payment Date either in cash or in shares of Common Stock of the Company, which Common Stock shall be valued based on the terms of the agreement, subject to certain limitations defined in the loan agreement. Each of the 9.5% Notes is subordinated in payment to the obligations of the Company to the lenders parties to the Credit Agreement, pursuant to those certain Subordination and Intercreditor Agreements, each dated as of March 31, 2017 by and among the Company, the other borrowers under the Credit Agreement, the Agent under the Credit Agreement and each of the holders of the 9.5% Notes.

In recent years, the Company has incurred significant losses and negative cash flows from operations. Management has implemented a strategy which included cost reduction efforts as well as identifying strategic acquisitions, financed primarily through the issuance of common stock, to improve the overall profitability and cash flows of the Company. Management believes with the availability under the Credit Agreement and its current cash, the Company will have sufficient liquidity for the next 12 months.

As of ~~December~~March 31, ~~2017,~~2022, 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.

As of ~~December~~March 31, ~~2017,~~2022, the ~~Company's~~Company’s management evaluated, with the participation of its principal executive officer and its principal financial officer, the effectiveness of the ~~Company's~~Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended ~~(the~~(“the Exchange ~~Act"~~Act”). Based on that evaluation, the ~~Company's~~Company’s principal executive officer and its principal financial officer concluded that the ~~Company's~~Company’s disclosure controls and procedures were effective as of ~~December~~March 31, ~~2017.~~2022.

There were no changes in the ~~Company's~~Company’s internal control over financial reporting or in any other factors that could significantly affect these controls, during the ~~Company's first quarter~~Company’s three-month period ended ~~December~~March 31, ~~2017,~~2022, that have materially affected, or are reasonably likely to materially affect, the ~~Company's~~Company’s internal control over financial reporting.

On February 1, 2022, the Company detected and stopped a network security incident. The senior executive management team was immediately notified who in turn reported the network security incident to the audit committee chairman who has board oversight authority for these types of matters. The Company’s Audit Committee and Board of Directors have been fully briefed and a special committee of the board was appointed to assist and oversee management in the on-going investigations, response and full remediation of the incident. The cost of investigating and resolving the incident thus far has been immaterial. Based on what management and the Company’s third-party cyber security experts have determined in their investigation, the Company also does not foresee this incident having any future material detrimental effect on our business or financial position. No additional malicious activity has been observed on the network to date. The Company’s operations were minimally impacted, and we continue to serve our clients without issue.

The Company’s investigation and analysis of the incident are largely completed. The scope of investigation and analysis of the incident have included identification of vulnerabilities or weaknesses in our security and, also, the design and implementation of additional protective measures and controls to prevent future incidents such as this one.

Based on our current assessments, we also have not identified any material weaknesses in our internal controls, including our disclosure controls and procedures as a result of the incident.

~~None.~~On March 23, 2022, the Company settled a legal matter involving two separate, but related lawsuits, filed by plaintiff Sands Brothers Venture Capital II, LLC. These two lawsuits and others in which the Company was not a named party, involved a dispute amongst certain former affiliate and non-affiliate entities, and certain former officers and directors of the Company, stemming from a series of transactions that allegedly occurred during the period 2008 through 2010. The Company was sued in 2014 and 2017, based on the allegation that it was a participant and aided and abetted in the fraudulent conveyance of funds. The plaintiff was a creditor of an unaffiliated now defunct entity whose assets the Company is alleged to have received. Given the facts and circumstances of the case, it has been the Company’s belief and assessment that the lawsuits were meritless and that the likelihood of a material adverse resolution was remote. GEE Group’s ongoing legal expenses including depositions, court filings, etc. incurred over the years to defend itself from the claims made by the plaintiff in the respective lawsuits, have, for the most part, been either paid directly to the law firms or reimbursed by insurance.

In evaluating us and our common stock, in addition to the risk factors below, we urge you to carefully consider the risks and other information in this Quarterly Report on Form 10-Q, as well as the risk factors disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended September 30, 2021 (“2021 Form 10-K”) filed with the SEC on December 23, 2021 and the risk factors disclosed in Item 1A of our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2021 filed with the SEC on February 14, 2022 (“Q1 Form 10-Q”). Any of the risks discussed in this Quarterly Report on Form 10-Q or any of the risks disclosed in Item 1A of Part I of our 2021 Form 10-K, in Item 1A of our Q1 Form 10-Q, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations or financial condition.

We recently experienced a network security incident affecting our IT network, information systems and stored information. Network security incidents affecting our systems and information technology such as this one or others could adversely impact our ability to operate and have wider-reaching material adverse effects on our business and financial position and results.

Our business is highly dependent on communications and information systems. Any failure or interruption of our systems could cause delays or other problems in the delivery of our services or security of our proprietary and confidential information, which could have a material adverse effect on our operating results and negatively affect the market price of our common stock. We face threats to our computer systems of unauthorized access, computer hackers, computer viruses, malicious code, organized cyber-attacks and other security problems and system disruptions, including possible unauthorized access to our and our clients’ proprietary or classified information. We rely on industry-accepted security measures and technology to securely maintain all confidential and proprietary information on our information systems and to detect and isolate suspicious activity. While we devote significant resources to the security of our computer systems, we are still vulnerable to these threats. Our controls, therefore, include technology to detect and isolate suspicious activity and disclosure controls and procedures in place to communicate any such threats or activity detected to responsible personnel, including our senior officers and directors, for timely response.

Unauthorized users who circumvent data security measures, including the threat actors involved in our recently experienced network security incident, may access and possibly misappropriate confidential or proprietary information, including information regarding us, our personnel and/or our clients, or cause interruptions or malfunctions in operations. As a result, we may be required to expend significant resources to protect against the threat of these system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches. Any of these events could possibly damage our reputation and potentially have a material adverse effect on our business, financial condition, results of operations and cash flows. Although the aggregate impact of the aforementioned incident on our operations and financial condition has not been material, it is reasonable to expect that the prevalence of cyber security threats and breaches of systems utilized by businesses will continue or even accelerate as the level of sophistication and knowledge of the perpetrators increases.

Our business, results of operations, and financial condition have been and may continue to be adversely impacted in material respects by the coronavirus pandemic, and future adverse impacts could be material and difficult to predict.

Our business, results of operations, and financial condition have been, and may continue to be, adversely impacted in material respects by COVID-19 and by related government actions (including declared states of emergency and quarantine, “shelter in place” orders, or similar orders), non-governmental organization recommendations, and public perceptions, all of which have led and may continue to lead to disruption in global economic and labor markets. These effects have had a significant impact on our business, including reduced demand for our services and workforce solutions, early terminations or reductions in projects, and hiring freezes, and a shift of a portion of our workforce to remote operations, all of which have contributed to a decline in revenues and other significant adverse impacts on our financial results. Other potential impacts of COVID-19 could include future closures or reductions of operations with respect to our client partners’ operations or facilities, the possibility our client partners will not be able to pay for our services or workforce solutions, or attempt to defer payments owed to us, either of which could materially impact our liquidity, the possibility that the uncertain nature of the pandemic may not yield the increase in certain of our workforce solutions that we have historically observed during periods of economic downturn, and the possibility that various government-sponsored programs to provide economic relief may be inadequate. Further, we may continue to experience adverse financial impacts, some of which may be material, if we cannot offset revenue declines with cost savings through expense-related initiatives, human capital management initiatives, or otherwise. As a result of these observed and potential developments, we expect that our business, results of operations, and financial condition could continue to be negatively affected in the future.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Illinois		36-6097429
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	JOB	NYSE American

Large accelerated filer	¨☐	Accelerated filer	¨☐
Non-accelerated ~~filer~~Filer	¨☒	Smaller reporting company	x☒
		Emerging Growth Company	¨☐

Item 1.	Financial Statements(unaudited)	4
	Condensed Consolidated Balance Sheets ~~at December 31, 2017 and September 30, 2017~~	4
	Condensed Consolidated Statements of Operations ~~for the three months ended December 31, 2017 and December 31, 2016~~	5
	Condensed Consolidated Statements of Shareholders’ Equity ~~for the three months ended December 31, 2017 and year ended September 30, 2017~~	6
	Condensed Consolidated Statements of Cash Flows ~~for the three months ended December 31, 2017 and December 31, 2016~~	7
	Notes to Condensed Consolidated Financial Statements	~~8-25~~8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2622
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3335
Item 4.	Controls and Procedures	3335

Item 1.	Legal Proceedings	3436
Item 1A.	Risk Factors	3436
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3438
Item 3.	Defaults Upon Senior Securities	3438
Item 4.	Mine Safety Disclosures	3438
Item 5.	Other Information	3438
Item 6.	Exhibits	3539
	Signatures	3640

~~Illinois~~		~~36-6097429~~GEE GROUP INC.
(~~State or other jurisdiction~~Exact name of ~~incorporation or organization)~~registrant as specified in its charter)

			December 31,			September 30,
			2017			2017

ASSETS
	CURRENT ASSETS:
		Cash	$	3,480		$	2,785
		Accounts receivable, less allowances (December - $1,659 and September - $1,712)		22,669			23,178
		Other current assets		1,399			3,014
		Total current assets		27,548			28,977
		Property and equipment, net		945			914
		Other long-term assets		282			282
		Goodwill		76,593			76,593
		Intangible assets, net		33,653			35,049
	TOTAL ASSETS		$	139,021		$	141,815
LIABILITIES AND SHAREHOLDERS' EQUITY
	CURRENT LIABILITIES:
		Revolving credit facility	$	10,000		$	7,904
		Acquisition deposit for working capital guarantee		1,500			1,500
		Accrued interest		1,995			2,175
		Accounts payable		2,073			3,243
		Accrued compensation		6,127			7,394
		Other current liabilities		223			515
		Short-term portion of subordinated debt		1,013			1,225
		Short-term portion of term-note, net of discount		3,987			3,433
		Total current liabilities		26,918			27,389
		Deferred rent		120			334
		Deferred taxes		930			958
		Term-loan, net of debt discounts		40,844			42,018
		Subordinated debt		1,000			1,000
		Subordinated convertible debt		16,685			16,685
		Other long-term liabilities		31			35
		Total long-term liabilities		59,610			61,030

		Commitments and contingencies

MEZZANINE EQUITY
	Preferred stock; no par value; authorized - 20,000 shares; issued and outstanding - 5,926
		Preferred series A stock - 160 authorized; issued and outstanding - none		-			-
		Preferred series B stock - 5,950 authorized; issued and outstanding - 5,926
		Liquidation value of the preferred series B stock is approximately $28,800		29,333			29,333
SHAREHOLDERS' EQUITY
	Common stock, no-par value; authorized - 200,000 shares; issued and outstanding - 10,015
		shares at December 31, 2017 and 9,879 shares at September 30, 2017, respectively		-			-
	Additional paid in capital			40,405			39,517
	Accumulated deficit			(17,245	)		(15,454	)
		Total shareholders' equity		23,160			24,063
	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	139,021		$	141,815

ASSETS	March 31, 2022			September 30, 2021
CURRENT ASSETS
Cash	$	14,175		$	9,947
Accounts receivable, less allowances ($763 and $286, respectively)		21,199			23,070
Prepaid expenses and other current assets		817			668
Total current assets		36,191			33,685
Property and equipment, net		1,060			765
Goodwill		61,293			63,443
Intangible assets, net		12,725			14,754
Right-of-use assets		3,522			3,920
Other long-term assets		831			1,022
TOTAL ASSETS	$	115,622		$	117,589

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,697		$	2,257
Accrued compensation		5,823			6,413
Current Paycheck Protection Program loans		0			16,741
Current operating lease liabilities		1,612			1,681
Other current liabilities		4,138			4,065
Total current liabilities		13,270			31,157
Deferred taxes		482			591
Noncurrent operating lease liabilities		2,498			3,006
Other long-term liabilities		549			2,066
Total long-term liabilities		3,529			5,663

Commitments and contingencies (Note 13)

SHAREHOLDERS' EQUITY
Common stock, no-par value; authorized - 200,000 shares; issued and outstanding 114,100 shares at March 31, 2022 and September 30, 2021		111,715			111,416
Accumulated deficit		(12,892	)		(30,647	)
Total shareholders' equity		98,823			80,769
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	115,622		$	117,589

	Three Months Ended December 31,
	2017			2016

NET REVENUES:
Contract staffing services	$	39,461		$	19,856
Direct hire placement services		5,771			1,150
NET REVENUES		45,232			21,006

Cost of contract services		29,458			15,563
GROSS PROFIT		15,774			5,443

Selling, general and administrative expenses		12,766			4,495
Acquisition, integration and restructuring expenses		40			23
Depreciation expense		97			79
Amortization of intangible assets		1,396			369
INCOME FROM OPERATIONS		1,475			477
Interest expense		(3,294	)		(360	)
INCOME (LOSS) BEFORE INCOME TAX PROVISION		(1,819	)		117
Provision for income tax		28			(66	)
NET INCOME (LOSS)	$	(1,791	)	$	51
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(1,791	)	$	51

BASIC INCOME (LOSS) PER SHARE	$	(0.18	)	$	0.01
WEIGHTED AVERAGE NUMBER OF SHARES - BASIC		9,905			9,379
DILUTED INCOME (LOSS) PER SHARE	$	(0.18	)	$	0.01
WEIGHTED AVERAGE NUMBER OF SHARES - DILUTED		9,905			9,925

								Total
	Common Stock		Additional Paid		Accumulated			Shareholders'
	Shares		In Capital		Deficit			Equity

Balance, September 30, 2016		9,379	$	37,615	$	(13,082	)	$	24,533

Amortization of stock option expense		-		902		-			902

Exercise of stock warrants		500		1,000		-			1,000

Net loss		-		-		(2,372	)		(2,372	)

Balance, September 30, 2017		9,879		39,517		(15,454	)		24,063

Amortization of stock option expense		-		293		-			293

Issuance of stock for interest		136		595		-			595

Net loss		-		-		(1,791	)		(1,791	)

Balance, December 31, 2017		10,015	$	40,405	$	(17,245	)	$	23,160

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2022			2021			2022			2021
NET REVENUES:
Contract staffing services	$	33,745		$	31,063		$	70,429		$	62,311
Direct hire placement services		5,884			3,655			12,047			7,050
NET REVENUES		39,629			34,718			82,476			69,361

Cost of contract services		25,115			23,810			52,380			45,873
GROSS PROFIT		14,514			10,908			30,096			23,488

Selling, general and administrative expenses		12,228			9,179			24,587			18,665
Depreciation expense		94			77			180			150
Amortization of intangible assets		1,015			1,015			2,029			2,059
Goodwill impairment charge		0			0			2,150			0
INCOME FROM OPERATIONS		1,177			637			1,150			2,614
Gain on extinguishment of debt		0			279			16,773			279
Interest expense		(98	)		(2,534	)		(205	)		(5,220	)
INCOME (LOSS) BEFORE INCOME TAX PROVISION		1,079			(1,618	)		17,718			(2,327	)
Provision for income tax expense (benefit)		(8	)		117			(37	)		(277	)
NET INCOME (LOSS)	$	1,087		$	(1,735	)	$	17,755		$	(2,050	)

BASIC EARNINGS (LOSS) PER SHARE	$	0.01		$	(0.10	)	$	0.16		$	(0.12	)
DILUTED EARNINGS (LOSS) PER SHARE	$	0.01		$	(0.10	)	$	0.15		$	(0.12	)

WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC		114,100			17,667			114,100			17,667
DILUTED		115,642			17,667			115,592			17,667

	Common		Common Stock		Accumulated			Shareholders'
	Shares		No Par Value		Deficit			Equity
Balance, September 30, 2021		114,100	$	111,416	$	(30,647	)	$	80,769
Share-based compensation		-		147		0			147
Net income		-		0		16,668			16,668

Balance, December 31, 2021		114,100	$	111,563	$	(13,979	)	$	97,584
Share-based compensation		-		152		0			152
Net income		-		0		1,087			1,087

Balance, March 31, 2022		114,100	$	111,715	$	(12,892	)	$	98,823

	Common		Common Stock		Accumulated			Shareholders'
	Shares		No Par Value		Deficit			Equity
Balance, September 30, 2020		17,667	$	58,031	$	(30,653	)	$	27,378
Share-based compensation		-		311		0			311
Net loss		-		0		(315	)		(315	)

Balance, December 31, 2020		17,667	$	58,342	$	(30,968	)	$	27,374
Share-based compensation		-		293		0			293
Net loss		-		0		(1,735	)		(1,735	)

Balance, March 31, 2021		17,667	$	58,635	$	(32,703	)	$	25,932

	Useful Lives	December 31, 2017			September 30, 2017
(In thousands)

Computer software	5 years	$	1,447		$	1,447
Office equipment, furniture and fixtures and leasehold improvements	2 to 10 years		3,371			3,243
Total property and equipment, at cost			4,818			4,690
Accumulated depreciation and amortization			(3,873	)		(3,776	)
Property and equipment, net		$	945		$	914

Goodwill as of September 30, 2016	$	18,590
Acquisition of SNI Companies		58,003
Goodwill as of September 30, 2017	$	76,593
Goodwill as of December 31, 2017	$	76,593

(In Thousands)	Cost		Accumulated Amortization		Net Book Value

Customer Relationships	$	29,070	$	5,314	$	23,756
Trade Name		8,329		1,473		6,856
Non-Compete Agreements		4,331		1,290		3,041
	$	41,730	$	8,077	$	33,653

	Six Months Ended March 31,
	2022		2021
Cash paid for operating lease liabilities	$	987		947
Right-of-use assets obtained in exchange for new operating lease liabilities	$	294		135

Remainder of Fiscal 2022	$	985
Fiscal 2023		1,472
Fiscal 2024		1,172
Fiscal 2025		602
Fiscal 2026		194
Thereafter		29
Less: Imputed interest		(344	)
Present value of operating lease liabilities (a)	$	4,110

	March 31, 2022			September 30, 2021

Goodwill beginning balance	$	63,443		$	63,443
Impairment charges		(2,150	)		-
Goodwill ending balance	$	61,293		$	63,443

	March 31, 2022						September 30, 2021
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
Customer relationships	$	29,070	$	17,163	$	11,907	$	29,070	$	15,844	$	13,226
Trade names		8,329		7,511		818		8,329		6,801		1,528
Total	$	37,399	$	24,674	$	12,725	$	37,399	$	22,645	$	14,754

Estimated Amortization Expense
Remaining Fiscal 2022	$	1,440
Fiscal 2023		2,879
Fiscal 2024		2,879
Fiscal 2025		2,741
Fiscal 2026		1,870
Thereafter		916
	$	12,725

Balance of:	December 31, 2017			September 30, 2017
(In thousands)
Term loan	$	47,328		$	48,141
Unamortized debt discount		(2,497	)		(2,690	)
		44,831			45,451
Short term portion of term loan		(3,987	)		(3,433	)
Term loan	$	40,844		$	42,018

A summary of restricted stock activity is presented as follows:
	Number of Shares		Weighted Average Fair Value ($)
Non-vested restricted stock outstanding as of September 30, 2021		1,442		0.60
Granted		-		0
Vested		-		0
Non-vested restricted stock outstanding as of December 31, 2021		1,442		0.60
Granted		100		0.53
Vested		-		0
Non-vested restricted stock outstanding as of March 31, 2022		1,542		0.59

Balance as of:	December 31, 2017			September 30, 2017
(In thousands)
JAX Legacy debt	$	4,185		$	4,185
Access Data debt		1,013			1,225
Paladin debt		1,000			1,000
9.5% convertible debt		12,500			12,500

Total subordinated debt, convertible and non-convertible		18,698			18,910

Short-term portion of subordinated debt, convertible and non-convertible		(1,013	)		(1,225	)

Long-term portion of subordinated debt, convertible and non-convertible	$	17,685		$	17,685

(Number of Warrants in Thousands)	Number of Shares		Exercise Price		Expiration
Outstanding at September 30, 2017		497	$	3.84
Warrants exercised		-		-
Warrants granted		-		-
Outstanding at December 31, 2017		497	$	3.84

	Number of Shares			Weighted Average Exercise Price Per Share ($)		Weighted Average Remaining Contractual Life (Years)		Total Intrinsic Value of Options ($)

Options outstanding as of September 30, 2021		1,672			2.14		7.35		0
Granted		-			0		-		0
Forfeited/Expired		(1	)		2.99		-		0
Options outstanding as of December 31, 2021		1,671			2.14		7.10		0
Granted		50			0.53		-		0
Forfeited/Expired		(80	)		1.12		-		0
Options outstanding as of March 31, 2022		1,641			2.14		6.89		0

Exercisable as of September 30, 2021		890			3.14		6.08		0
Exercisable as of March 31, 2022		965			3.06		5.65		0

Pro Forma, unaudited	Three Months Ended December 31, 2016

Net sales	$	48,601
Cost of sales	$	31,324
Operating expenses	$	15,693
Net loss	$	(364	)
Basic income per common share	$	0.04
Dilutive income per common share	$	0.04

	Three Months Ended
	December 31,
(In Thousands)	2017			2016

Industrial Staffing Services
Industrial services revenue	$	5,872		$	5,981
Industrial services gross margin		15.6	%		16.4	%
Operating income	$	253		$	340
Depreciation & amortization		66			73
Accounts receivable – net		3,521			3,497
Intangible assets		637			854
Goodwill		519			1,084
Total assets	$	4,177		$	7,629

Professional Staffing Services
Permanent placement revenue	$	5,771		$	1,150
Placement services gross margin		100	%		100	%
Professional services revenue	$	33,589		$	13,875
Professional services gross margin		27.0	%		23.9	%
Operating income	$	2,477		$	1,048
Depreciation and amortization		1,427			375
Accounts receivable – net		19,148			9,080
Intangible assets		33,016			9,871
Goodwill		76,074			17,506
Total assets	$	134,844		$	38,631

Unallocated Expenses
Corporate administrative expenses	$	817		$	601
Corporate facility expenses		105			74
Stock option amortization expense		293			194
Board related expenses		-			19
Acquisition, integration and restructuring expenses		40			23
Total unallocated expenses	$	1,255		$	911

Consolidated
Total revenue	$	45,232		$	21,006
Operating income		1,475			477
Depreciation and amortization		1,493			448
Total accounts receivables – net		22,669			12,577
Intangible assets		33,653			10,725
Goodwill		76,593			18,590
Total assets	$	139,021		$	46,260

Gross Profit percentage by service:
	Three Months
	Ended March 31,
	2022			2021
Professional contract services		26.9	%		25.5	%
Industrial contract services		14.7	%		8.8	%
Professional and industrial services combined		25.6	%		23.3	%

Direct hire placement services		100.0	%		100.0	%
Combined gross profit margin % (1)		36.6	%		31.4	%

	Three Months Ended			Three Months Ended
Gross Profit Margin %	December 31, 2017			December 31, 2016
Direct hire placement services		100	%		100	%
Industrial contract services		15.6	%		16.4	%
Professional contract services		27.0	%		23.9	%
Combined Gross Profit Margin % (1)		34.9	%		25.9	%

~~Exhibit~~ No.		Description of Exhibit

~~31.01~~31.01*		Certifications of the principal executive officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

~~31.02~~31.02*		Certifications of the principal financial officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

~~32.01~~32.01**		Certifications of the principal executive officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act and Section 1350 of Title 18 of the United States Code.

~~32.02~~32.02**		Certifications of the principal financial officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act and Section 1350 of Title 18 of the United States Code.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

*		Filed herewith
**		Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filings of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

	GEE GROUP INC.
	(Registrant)

Date: ~~February 14, 2018~~May 16, 2022	By:	/s/ Derek Dewan
		Derek Dewan
		Chief Executive Officer
		(Principal Executive Officer)
		~~(Principal Executive Officer)~~

	By:	/s/ ~~Andrew J. Norstrud~~Kim Thorpe
		~~Andrew J. Norstrud~~Kim Thorpe
		Chief Financial Officer (Principal Financial and Accounting Officer)
		~~Chief Financial Officer~~ ~~(Principal Financial and Accounting Officer)~~