Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 31, 2017 | May 15, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | GEE Group Inc. | |
Entity Central Index Key | 40,570 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Is Entity a Well-known Seasoned Issuer | No | |
Is Entity a Voluntary Filer | No | |
Is Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 9,878,892 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Sep. 30, 2016 |
CURRENT ASSETS: | ||
Cash | $ 1,562 | $ 2,528 |
Accounts receivable, less allowances (March and September - $191) | 13,099 | 11,569 |
Other current assets | 1,492 | 1,500 |
Total current assets | 16,153 | 15,597 |
Other long-term assets | 34 | 34 |
Goodwill | 18,590 | 18,590 |
Intangible assets, net | 10,356 | 11,094 |
TOTAL ASSETS | 45,660 | 45,926 |
CURRENT LIABILITIES: | ||
Short-term debt | 7,142 | 7,127 |
Accounts payable | 1,263 | 2,224 |
Accrued compensation | 3,281 | 3,116 |
Other current liabilities | 1,240 | 692 |
Short-term portion of subordinated debt | 1,357 | 1,285 |
Contingent consideration | 480 | 1,750 |
Total current liabilities | 14,763 | 16,194 |
Deferred rent | 149 | 162 |
Subordinated debt | 4,863 | 4,981 |
Other long-term liabilities | 45 | 56 |
Total long-term liabilities | 5,057 | 5,199 |
Commitments and contingencies | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock | ||
Common stock, no-par value; authorized - 200,000 shares; issued and outstanding - 9,879 shares at March 31, 2017 and 9,379 shares at September 30, 2016, respectiv | ||
Additional paid in capital | 39,000 | 37,615 |
Accumulated deficit | (13,160) | (13,082) |
Total shareholders' equity | 25,840 | 24,533 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 45,660 | 45,926 |
Series B Convertible Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock | ||
Series A Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Sep. 30, 2016 |
CURRENT ASSETS: | ||
Accounts receivable, allowances | $ 191 | $ 191 |
SHAREHOLDERS' EQUITY | ||
Preferred stock, par value | ||
Preferred stock, share authorized | 20,000,000 | 20,000,000 |
Preferred stock, share issued | ||
Preferred stock, outstanding | ||
Common stock, par value | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 9,879,000 | 9,379,000 |
Common stock, shares outstanding | 9,879,000 | 9,379,000 |
Series A Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, share authorized | 160,000 | 160,000 |
Preferred stock, share issued | ||
Preferred stock, outstanding | ||
Series B Convertible Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, share authorized | 5,950,000 | 5,950,000 |
Preferred stock, share issued | ||
Preferred stock, outstanding |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
NET REVENUES: | ||||
Contract staffing services | $ 20,090 | $ 19,607 | $ 39,946 | $ 35,606 |
Direct hire placement services | 1,459 | 2,059 | 2,609 | 3,685 |
NET REVENUES | 21,549 | 21,666 | 42,555 | 39,291 |
Cost of contract services | 15,894 | 15,630 | 31,457 | 27,967 |
GROSS PROFIT | 5,655 | 6,036 | 11,098 | 11,324 |
Selling, general and administrative expenses | 4,811 | 5,143 | 9,306 | 9,651 |
Acquisition, integration and restructuring expense | 77 | 122 | 100 | 568 |
Depreciation expense | 71 | 76 | 150 | 142 |
Amortization of intangible assets | 369 | 435 | 738 | 772 |
INCOME FROM OPERATIONS | 327 | 260 | 804 | 191 |
Change in contingent consideration | 156 | 156 | ||
Interest expense | (392) | (409) | (752) | (734) |
INCOME (LOSS) BEFORE INCOME TAX PROVISION | (65) | 7 | 52 | (387) |
Provision for income tax | (64) | (130) | ||
NET INCOME (LOSS) | (129) | 7 | (78) | (387) |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (129) | $ 7 | $ (78) | $ (387) |
BASIC INCOME (LOSS) PER SHARE | $ (0.01) | $ 0 | $ (0.01) | $ (0.04) |
WEIGHTED AVERAGE NUMBER OF SHARES - BASIC | 9,384,000 | 9,256,000 | 9,382,000 | 9,252,000 |
DILUTED INCOME (LOSS) PER SHARE | $ (0.01) | $ 0 | $ (0.01) | $ (0.04) |
WEIGHTED AVERAGE NUMBER OF SHARES - DILUTED | 9,384,000 | 9,779,000 | 9,382,000 | 9,252,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited) - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Preferred Stock | Accumulated Deficit | Total |
Beginning Balance, Amount at Sep. 30, 2015 | $ 33,492 | $ (14,255) | $ 19,237 | ||
Beginning Balance, Shares at Sep. 30, 2015 | 8,833,000 | ||||
Shares issued for JAX Legacy debt, Amount | 589 | 589 | |||
Shares issued for JAX Legacy debt, Shares | 95,000 | ||||
Issuance of common stock for contingent consideration related to the acquisition of Access Data Consulting Corporation, Amount | 544 | 544 | |||
Issuance of common stock for contingent consideration related to the acquisition of Access Data Consulting Corporation, Shares | 123,000 | ||||
Amortization of stock option expense | 793 | 793 | |||
Issuance of common stock for acquisition of Access Data Consulting Corporation, Amount | 2,197 | 2,197 | |||
Issuance of common stock for acquisition of Access Data Consulting Corporation, Shares | 328,000 | ||||
Net income | 1,173 | 1,173 | |||
Ending Balance, Amount at Sep. 30, 2016 | 37,615 | (13,082) | 24,533 | ||
Ending Balance, Shares at Sep. 30, 2016 | 9,379,000 | ||||
Amortization of stock option expense | 385 | 385 | |||
Exercise of stock warrants, Amount | 1,000 | ||||
Exercise of stock warrants, Shares | 500,000 | ||||
Net income | (78) | (78) | |||
Ending Balance, Amount at Mar. 31, 2017 | $ 39,000 | $ (13,160) | $ 25,840 | ||
Ending Balance, Shares at Mar. 31, 2017 | 9,879,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (78) | $ (387) |
Adjustments to reconcile net loss to cash (used in) provided by operating activities: | ||
Depreciation and amortization | 888 | 914 |
Stock option expense | 385 | 392 |
Provision for doubtful accounts | 46 | |
Amortization of debt discount | 107 | 107 |
Change in contingent consideration | (156) | |
Changes in operating assets and liabilities - | ||
Accounts receivable | (1,530) | 242 |
Accounts payable | (961) | 522 |
Accrued compensation | 165 | (450) |
Other current items, net | 756 | (522) |
Long-term liabilities | (13) | (25) |
Net cash (used in) provided by operating activities | (281) | 683 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisition of property and equipment | (66) | (14) |
Acquisition payments | (470) | (9,217) |
Net cash used in investing activities | (536) | (9,231) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from subordinated debt | 4,107 | |
Payments on the debt related to acquisitions | (1,153) | (220) |
Proceeds from exercise of stock warrants | 1,000 | |
Payments on capital lease | (11) | (56) |
Net proceeds from short-term debt | 15 | 1,701 |
Net cash (used in) provided by financing activities | (149) | 5,532 |
Net change in cash | (966) | (3,016) |
Cash at beginning of period | 2,528 | 5,932 |
Cash at end of year | 1,562 | 2,916 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 656 | 468 |
Cash paid for taxes | 130 | |
Non-cash financing activities | ||
Stock paid for prepaid interest on subordinated note | 566 | |
Stock paid for fees in conection with subordinated note | 23 | |
Issuance of common stock for acquisition | 2,197 | |
Note issued in connection with acquisition | 3,000 | |
Earn-out liability, contingent consideration, and other liabilities incurred in connection with acquisition | $ 4,246 |
Description of Business
Description of Business | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
1. Description of Business | 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. We are a provider of permanent and temporary professional, industrial and physician assistant staffing and placement services in and near several major U.S cities. We specialize in the placement of information technology, engineering, medical and accounting professionals for direct hire and contract staffing for our clients, and provide temporary staffing services for our commercial clients. Through our acquisition of Scribe Solutions in April 2015, we also offer data entry assistants (medical scribes) who specialize in electronic medical records (EMR) services for emergency departments, specialty physician practices and clinics. |
Significant Accounting Policies
Significant Accounting Policies and Estimates | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
2. Significant Accounting Policies and Estimates | 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 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 required by accounting principles generally accepted in the United States of America 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 and six-month period ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending September 30, 2017. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2016 as filed on December 22, 2016. Principles of Consolidation The condensed unaudited consolidated financial statements include the accounts and transactions of the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. Estimates and Assumptions Management makes estimates and assumptions that can affect the amounts of assets and liabilities reported as of the date of the consolidated financial statements, as well as the amounts of reported revenues and expenses during the periods presented. Those estimates and assumptions typically involve expectations about events to occur subsequent to the balance sheet date, and it is possible that actual results could ultimately differ from the estimates. If differences were to occur in a subsequent period, the Company would recognize those differences when they became known. Significant matters requiring the use of estimates and assumptions include, but may not be limited to, deferred income tax valuation allowances, accounts receivable allowances, accounting for acquisitions, 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. Revenue Recognition Direct hire placement service revenues are recognized when applicants accept offers of employment, less a provision for estimated losses due to applicants not remaining employed for the Company's guarantee period. Contract staffing service revenues are recognized when services are rendered. Falloffs and refunds during the period are reflected in the unaudited condensed consolidated statements of operations as a reduction of placement service revenues and were approximately $125,000 and $218,000 for the six-month period ended March 31, 2017 and 2016 respectively. Expected future falloffs and refunds are reflected in the consolidated balance sheet as a reduction of accounts receivable and were approximately $60,000 as of March 31, 2017 and September 30, 2016, respectively. Cost of Contract Staffing Services The cost of contract services includes the wages and the related payroll taxes and employee benefits of the Company's employees while they work on contract assignments. Cash and Cash Equivalents Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. At March 31, 2017 and September 30, 2016, 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. Accounts Receivable The Company extends credit to its various customers based on evaluation of the customer's financial condition and ability to pay the Company in accordance with the payment terms. An allowance for placement fall-offs is recorded, as a reduction of revenues, for estimated losses due to applicants not remaining employed for the Company's guarantee period. An allowance for doubtful accounts is recorded, as a charge to bad debt expense, where collection is considered to be doubtful due to credit issues. These allowances together reflect 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 nature of the contract service business, where companies are dependent on employees for the production cycle allows for a small accounts receivable allowance. Based on management's review of accounts receivable, an allowance for doubtful accounts of approximately $191,000 is considered necessary as of March 31, 2017 and September 30, 2016, respectively. The Company charges uncollectible accounts against the allowance once the invoices are deemed unlikely to be collectible. The reserve includes the $60,000 reserve for permanent placement falloffs considered necessary as of March 31, 2017 and September 30, 2016, respectively. Property and Equipment 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 six-months ended March 31, 2017 and 2016. Goodwill Goodwill represents the excess of cost over the fair value of the net assets acquired in the various acquisitions. The Company assesses goodwill for impairment at least annually. Testing goodwill for impairment allows the Company to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the entity determines that this threshold is not met, then performing the two-step impairment test is unnecessary. An impairment loss would be recognized to the extent the carrying value of goodwill exceeds its implied fair value. Fair Value Measurement The Company follows the provisions of the accounting standard 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") 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 on 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 assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. 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 value of the Company's long-term liabilities represents their fair value based on level 3 inputs, as further discussed in note 8. The Company's goodwill and other intangible assets are measured at fair value on a non-recurring basis using level 3 inputs. Earnings and Loss per Share Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. There were approximately 1,038,602 and 619,700 of common stock equivalents excluded for the six months ended March 31, 2017 and 2016, respectively, because their effect is anti-dilutive. Common share equivalents of approximately 523,000 were included in the computation of diluted earnings per share for the three months ended March 31, 2016. There were approximately 1,053,421 of common stock equivalents excluded for the three months ended March 31, 2017, because their effect is anti-dilutive. Advertising Expenses Most of the Company's advertising expense budget is used to support the Company's business. Most of the advertisements are in print or internet media, with expenses recorded as they are incurred. For the three and six months ended March 31, 2017 and 2016, included in selling, general and administrative expenses was advertising expense totaling approximately $216,000 and $504,000, and approximately $251,000 and $549,000, respectively. Intangible Assets 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. Impairment of Long-lived Assets 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 six months ended March 31, 2017 and 2016. Stock-Based Compensation The Company accounts for stock-based awards to employees in accordance with applicable accounting principles, 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. The grant date fair value is determined using the Black-Scholes-Merton ("Black-Scholes") pricing model. For all employee stock options, we recognize 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 compensation expense. Options awarded to purchase shares 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. Upon the exercise of options, it is the Company's policy to issue new shares rather than utilizing treasury shares. Income Taxes We record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. Due to the private sale of shares of common stock to LEED HR during fiscal 2012 and the resulting change in control, the Company may be limited by Section 382 of the Internal Revenue Code as to the amount of net operating losses that may be used in future years. Due to the issuance of convertible preferred shares related to the Scribe acquisition, the Company may be limited by Section 382 of the Internal Revenue Code as to the amount of net operating losses that may be used in future years. We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results. Reclassification Certain reclassifications have been made to the financial statements as of and for the three and six months ended March 31, 2016 to conform to the current year presentation. There is no effect on assets, liabilities, equity or net income. Segment Data 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. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
3. Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (FASB) issued authoritative guidance that provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The new guidance requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. The amended guidance also requires additional quantitative and qualitative disclosures. In March 2016, amended guidance was issued to clarify implementation guidance on principal versus agent consideration. In April 2016, an amendment provided clarifications on determining whether a promised license provides a customer with a right to use or a right to access an entitys intellectual property. In May 2016, an amendment provided narrow scope improvements and practical expedients to reduce the potential diversity, cost and complexity of applying new revenue standard. These amendments, as well as the original guidance, are all effective for annual and interim periods beginning after December 15, 2017. The new standard will be effective for the Company beginning January 1, 2018 and the Company intends to implement the standard with the modified retrospective approach, which recognizes the cumulative effect of application recognized on that date. The Company is in the process of evaluating the impact of adoption of this guidance on its financial statements. In March 2016, the FASB issued Accounting Standards Update ("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 Company is currently assessing the potential impact of adopting ASU 2016-09 on its financial statements and related disclosures. 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 August 2016, the FASB issued authoritative guidance designed to address diversity in how certain cash receipts and cash payments are presented and classified in the statement 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. The new guidance is effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted in any interim or annual period. The Company believes the adoption of this guidance will not have a material impact on its financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard will be effective for the Company in the first quarter of 2019. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update simplifies how an entity is required 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 units goodwill with the carrying amount. The new rules will be effective for the Company in the first quarter of 2021. Early adoption is permitted The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. No other recent accounting pronouncements were issued by FASB and the SEC that are believed by management to have a material impact on the Company's present or future financial statements. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
4. Property and Equipment | Property and equipment, net consisted of the following: (In thousands) Useful Lives March 31, 2017 September 30, 2016 Computer software 5 years $ 1,447 $ 1,447 Office equipment, furniture and fixtures and leasehold improvements 2 to 10 years 2,580 2,514 Total property and equipment, at cost 4,027 3,961 Accumulated depreciation and amortization (3,500 ) (3,350 ) Property and equipment, net $ 527 $ 611 Leasehold improvements are amortized over the term of the lease. Depreciation expense for the three and six month periods ended March 31, 2017 and 2016 was approximately $71,000 and $150,000, and approximately $76,000 and $142,000, respectively. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
5. Intangible Assets | As of March 31, 2017 (In Thousands) Cost Accumulated Amortization Net Book Value Customer Relationships $ 10,758 $ 3,173 $ 7,585 Trade Name 2,429 405 2,024 Non-Compete Agreements 1,061 314 747 $ 14,248 $ 3,892 $ 10,356 As of September 30, 2016 (In Thousands) Cost Accumulated Amortization Net Book Value Customer Relationships $ 10,758 $ 2,662 $ 8,096 Trade Name 2,429 285 2,144 Non-Compete Agreements 1,061 207 854 $ 14,248 $ 3,154 $ 11,094 The amortization expense attributable to the amortization of identifiable intangible assets was approximately $369,000 and $738,000 and $407,000 and $744,000 for the three and six months ended March 31, 2017 and 2016, respectively. In addition to amortization expense for intangible assets, the Company incurred amortization of deferred financing fees of $28,000 for the three and six months ended March 31, 2016. The trade names are amortized on a straight line basis over the estimated useful life of ten years. Customer relationships are amortized based on the future undiscounted cash flows or 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 amortization expense for these finite life intangible assets will total approximately $10,356,000, as follows: fiscal 2017 - $738,000, fiscal 2018 - $1,481,000, fiscal 2019 - $1,485,000, fiscal 2020 - $1,482,000, fiscal 2021 - $1,077,000 and thereafter - $4,093,000. 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 events 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. |
Short-term Debt
Short-term Debt | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
6. Short-term Debt | On September 27, 2013, the Company ("Borrower") entered into agreements with ACF FINCO I LP (successor-in-interest to Keltic Financial Partners II, LP) ("ACF") ("Lender"), that provides the Company with long term financing through a six million dollar ($6,000,000) secured revolving note (the "Note"). The Note has a term of three years and has no amortization prior to maturity. The interest rate for the Note is a fluctuating rate that, when annualized, is equal to the greatest of (A) the Prime Rate plus three and one quarter percent (3.25%), (B) the LIBOR Rate plus six and one quarter percent (6.25%), and (C) six and one half percent (6.50%), with the interest paid on a monthly basis. Loan advances pursuant to the Note are based on the accounts receivable balance and other assets. The Company incurred certain cash expense and commitment fees related to obtaining the agreement of approximately $170,000, which has been paid. The Note 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. On January 1, 2016, the Company entered into an eighth Amendment and Waiver to the Loan and Security Agreement with ACF to increase the maximum amount of revolving credit under the Amended Loan Agreement from $6,000,000 to $10,000,000. On September 27, 2016, the Company entered into a ninth Amendment and Waiver to the Loan and Security Agreement with ACF. Pursuant to the Amendment, the Lender agreed (i) to decrease the annual Facility Fee (as defined in the Credit Agreement) payable by Borrower on the total Revolving Credit Limit (as defined in the Loan Agreement) to 0.75% , (ii) to allow the Borrower to make certain prepayments of amounts owed under the Amended Loan Agreement and the other loan documents on or prior to September 27, 2018, (iii) to amend the provision regarding liquidated damages payable by Borrower in the event of any early termination of the revolving credit line under the Amended Credit Agreement such that Borrower shall pay liquidated damages to Lender in an amount equal to the Revolving Credit Limit multiplied by (X) two percent (2.00%) if such prepayment, repayment, demand or acceleration occurs prior to September 28, 2017, and (Y) one percent (1.00%) if such prepayment, repayment, demand or acceleration occurs on or after September 28, 2017, (iv) to change the minimum EBITDA (as defined in the Amended Credit Agreement) thresholds required to be maintained by the Company as outlined below (v) to extend the Revolving Credit Termination Date to the earliest to occur of (a) September 27, 2018, (b) the date Lender terminates the Revolving Credit pursuant to the terms of the Amended Credit Agreement, and (c) the date on which repayment of the Revolving Credit, or any portion thereof, becomes immediately due and payable pursuant to the terms of the Amended Loan Agreement, (vi) to amend the definition of EBITDA and (vii) to change the Revolving Credit Rate to a fluctuating rate that, when annualized, is equal to the greatest of (A) the Prime Rate plus one and one half percent (1.50%), (B) the LIBOR Rate plus four and one half percent (4.50%), and (C) four and three quarters percent (4.75%). On January 20, 2017, the Company entered into a Tenth Amendment, Consent and Waiver to the Loan and Security Agreement. Pursuant to the Amendment, the Lender agreed (i) to consent to the Companys execution and delivery of the Addendum and the consummation of the transactions contemplated by the Addendum, (ii) to allow the Company to pay the Earnout (as defined in the Paladin Agreement) Cash Payment to the Sellers, (iii) to allow the Company to issue the Subordinated Note to the Sellers and (iv) to amend the terms of the Loan Agreement to reflect the amended and restructured terms of the Earnouts. In connection with the execution and delivery of the Amendment, the Sellers and the Lender executed and delivered Amendment No. 1 dated January 20, 2017 to the Subordination Agreement between the Sellers and the Lender dated as of January 1, 2016. Also in connection with the execution of the Amendment, the Borrowers, the Validity Party, the Guarantor, the Subordinated Creditors and the Lender executed and delivered a Reaffirmation Agreement effective as of January 20, 2017 (the Reaffirmation Agreement) pursuant to which, among other things, (i) the Borrowers reaffirmed their obligations to Lender under each of the Loan Documents (as defined in the Reaffirmation Agreement), (ii) the Validity Party (as defined in the Reaffirmation Agreement) reaffirmed his obligations under the Validity Agreement (as defined in the Reaffirmation Agreement) and each of the Loan Documents, (iii) the Guarantor (as defined in the Reaffirmation Agreement) reaffirmed his obligations under the Amended and Restated Guaranty Agreement dated on or about September 27, 2013 and each of the Loan Documents and (iv) each of the Subordinated Creditors (as defined in the Reaffirmation Agreement) reaffirmed its obligations under its respective Subordination Agreement (as defined in the Reaffirmation Agreement). At March 31, 2017 and September 30, 2016, the interest rate was 4.75%, respectively. At March 31, 2017, there was no availability on the line of credit as the Company was in the process of refinancing this loan. The interest expense related to the lines of credit for the three and six months ended March 31, 2017 and 2016 approximated $172,000 and $337,000, and $182,000 and $291,000, respectively. 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), with an effective date of April 3, 2017. 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 pursuant to a borrowing base that is calculated based on the outstanding amount of the Companys eligible accounts receivable, as described in the Credit Agreement. The loans under the Credit Agreement mature on March 31, 2021. The Company used approximately $7,631,000 of the proceeds to payoff the ACF FINCO I LP note. See subsequent event footnote for additional information. |
Accrued Compensation
Accrued Compensation | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
7. Accrued Compensation | Accrued Compensation includes accrued wages, the related payroll taxes, employee benefits of the Company's employees while they work on contract assignments, commissions earned and not yet paid and estimated commission payable. |
Subordinated Debt
Subordinated Debt | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
8. Subordinated Debt | On October 2, 2015, the Company issued and sold the Subordinated Note to JAX Legacy Investment 1, LLC (the "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 is due on October 2, 2018 (the "Maturity Date"). Interest on the Subordinated Note is payable as follows: (i) 10% interest per annum on the outstanding principal balance of the Subordinated Note shall be payable quarterly in arrears, in cash, on each December 30 th th th th 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 Companys 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). On October 4, 2015, the Company issued to the sellers of Access Data Consulting Corporation (see note 10) 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 Promissory Note is subordinated in payment to the obligations of the Company to ACF FINCO I LLP pursuant to the terms and provisions of a Subordination and Intercreditor Agreement dated October 5, 2015 between ACF FINCO I LLP and the Sellers of Access Data Consulting Corporation. 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. 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). Balance as of March 31, 2017: JAX Legacy debt $ 4,185 Access Data debt 1,357 Paladin debt 1,000 JAX Legacy debt discount (322 ) Total subordinated debt 6,220 Short-term portion of subordinated debt (1,357 ) Long-term portion of subordinated debt $ 4,863 Over the next four years, the payments of subordinated debt will total approximately $6,542,000 as follows: fiscal 2017 - $113,000 fiscal 2018 - $1,244,000, fiscal 2020 - $1,000,000 and fiscal 2021 - $4,185,000. |
Equity
Equity | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
9. Equity | On October 2, 2015, the Company issued approximately 95,000 shares of common stock to JAX Legacy related to the subordinated note. The stock was valued at approximately $589,000. On October 4, 2015, the Company issued approximately 328,000 shares of common stock to the sellers of Access Data Consulting Corporation. The Company also agreed if the closing price of the Company's common stock on the trading day immediately preceding the day on which the Issued Shares are first freely salable under Rule 144 (the "Rule 144 Date") is less than 90% of the Issue Price, then the Company shall make a one-time adjustment and shall promptly pay to the Sellers, in stock in the form of additional shares of common stock of the Company at the market value on the Rule 144 Date, the difference between the aggregate value of the Issued Shares at the Issue Price and the aggregate value of the Issued Shares at the closing price on the Rule 144 Date. The Company had recorded a liability of approximately $500,000 in contingent consideration. On April 4, 2016, the Company issued approximately 123,000 shares of common stock to the sellers of Access Data Consulting Corporation related to the guarantee, discussed above. This was based on market value of the stock on April 4, 2016 being approximately $544,000 less than the $2,000,000 six month guarantee provided in the Access Data Agreement and based on the closing stock price of $4.44 per common share. On March 31, 2017, the Company issued approximately 500,000 shares of common stock to two related party warrant holders and received cash of $1,000,000. Stock Options The Company has recognized compensation expense in the amount of approximately $385,000 and $392,000 during the six months ended March 31, 2017 and 2016, respectively, related to the issuance of stock options. The Company has recognized compensation expense in the amount of approximately $191,000 and $230,000 during the three months ended March 31, 2017 and 2016, respectively, related to the issuance of stock options. During the six month period ended March 31, 2017, there were options granted to purchase 40,000 shares of common stock with a weighted average price of $4.72 per common share. This estimated value was made using the Black-Scholes option pricing model. The average expected life (years) of the options were 7, the estimated stock price volatility was 104% and the risk-free interest rate was 2.2%. The calculated compensation value of these grants was approximately $172,000. At March 31, 2017 there was approximately $1,092,000 of unrecognized compensation expense for all options. |
Acquisitions
Acquisitions | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
10. Acquisitions | On October 4, 2015, the Company entered into a Stock Purchase Agreement (the "Access Data Agreement") with William Daniel Dampier and Carol Lee Dampier (collectively, the "Sellers"). Pursuant to the terms of the Access Data Agreement the Company acquired on October 4, 2015, 100% of the outstanding stock of Access Data Consulting Corporation., a Colorado corporation ("Access Data"), for a purchase price (the "Purchase Price") equal to approximately $16,168,000, which includes $600,000 related to a mutual tax election of which $200,000 was paid during the six months ended March 31, 2017 and the remaining $400,000 is included in current liabilities. Paladin The Company entered into a Stock Purchase Agreement dated as of January 1, 2016 (the "Paladin Agreement") with Enoch S. Timothy and Dorothy Timothy (collectively, the "Sellers"). Pursuant to the terms of the Paladin Agreement the Company acquired on January 1, 2016, 100% of the outstanding stock of Paladin Consulting Inc., a Texas corporation ("Paladin"), for a purchase price (the "Purchase Price") equal to approximately $2,625,000. Consolidated pro-forma unaudited financial statements The following unaudited pro forma combined financial information is based on the historical financial statements of the Company and Paladin Consulting, Inc., after giving effect to the Company's acquisition as if the acquisitions occurred on October 1, 2015. 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, 2015, 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 six months ended March 31, 2016 as if the acquisition occurred on October 1, 2015. The pro forma results of operations for the six months ended March 31, 2016 only include Paladin, as all other acquisitions either occurred prior to October 1, 2015 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 $51,000 for the six months ended March 31, 2016 for the Paladin acquisition. (in Thousands, except per share data) Six Months Ended March 31, 2016 Net sales $ 44,076 Cost of sales 31,863 Operating expenses 12,131 Net loss $ (470 ) Basic and dilutive loss per common share $ (0.05 ) The Company's consolidated financial statements for the three and six months ended March 31, 2017 include the actual results of all acquisitions. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
11. Commitments and Contingencies | Lease The Company leases space 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 plus a share of building real estate taxes, maintenance costs and utilities. Rent expense was approximately $307,000 and $579,000 and $260,000 and $502,000 for the three and six month periods ended March 31, 2017 and 2016, respectively. As of March 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 $2,357,000 as follows: fiscal 2017 - $475,000, fiscal 2018 - $844,000, fiscal 2019 - $641,000, fiscal 2020 - $238,000 fiscal 2021 - $74,000 and thereafter - $85,000. |
Segment Data
Segment Data | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
12. Segment Data | 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. Unallocated corporate expenses primarily include, corporate legal expenses, consulting expenses, corporate payroll, audit fees, corporate rent and facility costs, board fees and interest expense. Three Months Ended Six Months Ended March 31, March 31, (In Thousands) 2017 2016 2017 2016 Industrial Staffing Services Industrial services revenue $ 6,125 $ 4,874 $ 12,106 $ 10,874 Industrial services gross margin 13.7 % 10.8 % 15.0 % 11.3 % Operating income (loss) $ 249 $ (27 ) $ 589 $ 40 Depreciation & amortization 68 87 141 138 Accounts receivable net 3,644 2,116 3,644 2,116 Intangible assets 800 1,014 800 1,014 Goodwill 1,084 1,084 1,084 1,084 Total assets $ 8,269 $ 6,629 $ 8,269 $ 6,629 Professional Staffing Services Permanent placement revenue $ 1,459 $ 2,059 $ 2,609 $ 3,685 Placement services gross margin 100 % 100 % 100 % 100 % Professional services revenue $ 13,965 $ 14,733 $ 27,840 $ 24,732 Professional services gross margin 24.1 % 19.9 % 24.0 % 23.9 % Operating income $ 1,068 $ 1,118 $ 2,116 $ 2,254 Depreciation and amortization 372 424 747 776 Accounts receivable net 9,455 8,839 9,455 8,838 Intangible assets 9,556 10,653 9,556 10,653 Goodwill 17,506 17,108 17,506 17,109 Total assets $ 37,391 $ 38,659 $ 37,391 $ 38,659 Unallocated Expenses Corporate administrative expenses $ 634 $ 429 $ 1,235 $ 1,041 Corporate facility expenses 69 50 143 102 Stock option amortization expense 191 230 385 392 Board related expenses 19 0 38 0 Acquisition, integration and restructuring expenses 77 122 100 568 Total unallocated expenses $ 990 $ 831 $ 1,901 $ 2,103 Consolidated Total revenue $ 21,549 $ 21,666 $ 42,555 $ 39,291 Operating income 327 260 804 191 Depreciation and amortization 440 511 888 914 Total accounts receivables net 13,099 10,954 13,099 10,954 Intangible assets 10,356 11,667 10,356 11,667 Goodwill 18,590 18,193 18,590 18,193 Total assets $ 45,660 $ 45,288 $ 45,660 $ 45,288 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
13. Subsequent Events | 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). 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 (Term Loan) and revolving loans (Revolver) 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 Companys eligible accounts receivable, as described in the Credit Agreement. The loans under the Credit Agreement mature on March 31, 2021. 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 (the Merger Agreement) noted below, 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 $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. The loans under the Credit Agreement will bear interest at rates at the Companys option of LIBOR rate plus 10% or PNCs floating base rate plus 9%. The Term Loans may consist of Domestic Rate Loans or LIBOR Rate Loans, or a combination thereof. The Credit Agreement is secured by all of the Companys 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 2017 - $609,000, Fiscal year 2018 $5,789,000, Fiscal year 2019 $6,094,000, Fiscal year 2020 $6,398,000 and Fiscal year 2021 - $29,860,000. The Credit Agreement contains certain covenants including the following: Fixed Charge Coverage Ratio Minimum EBITDA Senior Leverage Ratio 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. At close, the Company used approximately $7,476,000 of the revolver in relations to the transaction and refinancing of the ACF FINCO I, LP loan. In connection with this Credit Agreement, the Company agreed to pay an original discount fee of approximately $901,300, a closing fee for the term loan of approximately $75,000 and a closing fee for the revolving credit facility of approximately $500,000. In addition, the Company paid early termination fees of approximately $240,000 to ACF FINCO I, LP in connection with the refinancing of its indebtedness to ACF FINCO I, LP. 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 Companys 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). 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 Companys 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 entered into an Agreement and Plan of Merger dated as of March 31, 2017 (the Merger Agreement) by and among the Company, GEE Group Portfolio, Inc., a Delaware corporation and a wholly owned subsidiary of the Company, (the GEE Portfolio), SNI Holdco Inc., a Delaware corporation (SNI Holdco), Smith Holdings, LLC a Delaware limited liability company, Thrivent Financial for Lutherans, a Wisconsin corporation, organized as a fraternal benefits society (Thrivent), Madison Capital Funding, LLC, a Delaware limited liability company (Madison) and Ronald R. Smith, 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). The Merger Agreement provided for the merger subject to the terms and conditions set forth in the Merger Agreement of SNI Holdco with and into GEE Portfolio pursuant to which GEE Portfolio would be the surviving corporation (the Merger). The Merger was consummated on April 3, 2017. 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 $66.4 million. Consideration was comprised of the following: · The Company paid an aggregate of $25,100,000 in cash to the SNIH Stockholders and others as they directed (the Closing Cash Payment). · Issuance of 9.5% Convertible Subordinated Notes. · Issuance of Series B Convertible Preferred Stock. Cash Payment to Former Senior Lender of the Company. Cash Payment to Senior Lender of Acquired Companies. The SNIH Stockholders have agreed to indemnify the Company with respect to the breach of the representations and warranties set forth in the Merger Agreement. The relative responsibility and Indemnification Ceiling of each SNIH Stockholder is determined as set forth in the Merger Agreement. In addition, the indemnification obligations of the SNIH Stockholders are subject to certain overall baskets, deductibles and ceilings as set forth in the Merger Agreement. The Company is entitled to seek set off or recoupment for indemnification with respect to a respective SNIH Stockholders 9.5% Notes or stock or other property, as may be owned by that SNIH Stockholder and held in escrow. $8.6 million in aggregate principal amount of the 9.5% Notes will be held in escrow by the Escrow Agent against which the Company may seek set-off in the event of certain indemnification obligations of the SNIH Stockholders. These 9.5% Notes will be released from escrow after a period of eighteen months if there are no outstanding claims for indemnification, but not if there are outstanding claims for indemnification. The Company has agreed to prepare and file with the Securities and Exchange Commission a proxy statement for the purpose of convening a meeting of its stockholders to obtain Requisite Shareholder Approval (as defined below) to approve the conversion of shares of Series B Convertible Preferred Stock and 9.5% Notes into shares of Common Stock and the payment of interest on the 9.5% Notes in shares of Common Stock in excess of the Conversion Limit (as defined below). The Company has agreed to provide the SNIH Stockholders with certain piggyback and demand registration rights with respect to the shares of Common Stock that are issuable upon the conversion of the Series B Convertible Preferred Stock and the 9.5% Notes. The transactions contemplated by the Merger Agreement were unanimously approved by the board of directors of the Company and GEE Portfolio, by the Company as sole stockholder of GEE Portfolio and by each of the Acquired Companies. The Company utilized $52,336,000 of the proceeds from its Credit Agreement to finance the Closing Cash Payment to the SNIH Stockholders as well as the other cash payments described above and made at the Closing. SNI Companies, led by co-founder and current Chairman and CEO Ron Smith, is a premier provider of recruitment and staffing services specializing in administrative, finance, accounting, banking, technology, and legal professions. Through its Staffing Now®, Accounting Now®, SNI Technology®, SNI Financial®, Legal Now®, SNI Energy® and SNI Certes® divisions, SNI Companies delivers staffing solutions on a temporary/contract, temp/contract-to hire, full time and direct hire basis, across a wide range of disciplines and industries including finance, accounting, banking, technical, software, tax, human resources, legal, engineering, construction, manufacturing, natural resources, energy and administrative professional. SNI Companies has offices in Colorado, Connecticut, Washington DC, Georgia, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, New Jersey, Pennsylvania, Texas and Virginia. The assets acquired primarily consist of accounts receivable, unbilled revenue, deposit, leases, customer contracts, fixed assets and other current assets. In addition, the purchase price for the Acquired Companies includes value derived from goodwill and the talented sales and recruiting personnel employed by the Acquired Companies. On April 3, 2017, the Company and Thrivent entered into an Agreement which restricts Thrivent from converting all or any portion of its shares of Series B Convertible Preferred Stock to the extent that after giving effect to such conversion as set forth in a written election to GEE to convert the Preferred Stock, Thrivent (together with Thrivents Affiliates, and any other person or entity acting as a group together with Thrivent or any of Thrivents Affiliates), would beneficially own Common Stock in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Thrivents Series B Convertible Preferred Stock (the Beneficial Ownership Limitation). The Beneficial Ownership Limitation may be waived by Thrivent, upon not less than 61 days prior notice to the Company that Thrivent would like to waive the Beneficial Ownership Limitation with regard to any or all shares of Common Stock issuable upon conversion of the Series B Convertible Preferred Stock. On April 3, 2017, the Company issued and paid to certain SNIH Stockholders as part of the Merger Consideration 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 Companys Common Stock at a conversion price equal to $5.83 per share (subject to adjustment as provided in the 9.5% Note upon any stock dividend, stock combination or stock split or upon the consummation of certain fundamental transactions) (the Conversion Price) ; provided, however provided, however 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. 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 to certain of the SNIH Stockholders 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 Companys 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. Except as set forth in the Resolution Establishing Series (as defined below) as may be required by Illinois law, 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 shall be 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: provided, however 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 filed a Statement of Resolution Establishing its Series B Convertible Preferred Stock with the State of Illinois. (the Resolution Establishing Series). Pursuant to the Resolution Establishing Series, the Company designated 5,950,000 of its authorized preferred stock as Series B Convertible Preferred Stock, without par value. |
Significant Accounting Polici20
Significant Accounting Policies and Estimates (Policies) | 6 Months Ended |
Mar. 31, 2017 | |
Significant Accounting Policies And Estimates Policies | |
Principles of Consolidation | The condensed unaudited consolidated financial statements include the accounts and transactions of the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. |
Estimates and Assumptions | Management makes estimates and assumptions that can affect the amounts of assets and liabilities reported as of the date of the consolidated financial statements, as well as the amounts of reported revenues and expenses during the periods presented. Those estimates and assumptions typically involve expectations about events to occur subsequent to the balance sheet date, and it is possible that actual results could ultimately differ from the estimates. If differences were to occur in a subsequent period, the Company would recognize those differences when they became known. Significant matters requiring the use of estimates and assumptions include, but may not be limited to, deferred income tax valuation allowances, accounts receivable allowances, accounting for acquisitions, 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. |
Revenue Recognition | Direct hire placement service revenues are recognized when applicants accept offers of employment, less a provision for estimated losses due to applicants not remaining employed for the Company's guarantee period. Contract staffing service revenues are recognized when services are rendered. Falloffs and refunds during the period are reflected in the unaudited condensed consolidated statements of operations as a reduction of placement service revenues and were approximately $125,000 and $218,000 for the six-month period ended March 31, 2017 and 2016 respectively. Expected future falloffs and refunds are reflected in the consolidated balance sheet as a reduction of accounts receivable and were approximately $60,000 as of March 31, 2017 and September 30, 2016, respectively. |
Cost of Contract Staffing Services | The cost of contract services includes the wages and the related payroll taxes and employee benefits of the Company's employees while they work on contract assignments. |
Cash and Cash Equivalents | Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. At March 31, 2017 and September 30, 2016, 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. |
Accounts Receivable | The Company extends credit to its various customers based on evaluation of the customer's financial condition and ability to pay the Company in accordance with the payment terms. An allowance for placement fall-offs is recorded, as a reduction of revenues, for estimated losses due to applicants not remaining employed for the Company's guarantee period. An allowance for doubtful accounts is recorded, as a charge to bad debt expense, where collection is considered to be doubtful due to credit issues. These allowances together reflect 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 nature of the contract service business, where companies are dependent on employees for the production cycle allows for a small accounts receivable allowance. Based on management's review of accounts receivable, an allowance for doubtful accounts of approximately $191,000 is considered necessary as of March 31, 2017 and September 30, 2016, respectively. The Company charges uncollectible accounts against the allowance once the invoices are deemed unlikely to be collectible. The reserve includes the $60,000 reserve for permanent placement falloffs considered necessary as of March 31, 2017 and September 30, 2016, respectively. |
Property and Equipment | 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 six-months ended March 31, 2017 and 2016. |
Goodwill | Goodwill represents the excess of cost over the fair value of the net assets acquired in the various acquisitions. The Company assesses goodwill for impairment at least annually. Testing goodwill for impairment allows the Company to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the entity determines that this threshold is not met, then performing the two-step impairment test is unnecessary. An impairment loss would be recognized to the extent the carrying value of goodwill exceeds its implied fair value. |
Fair Value Measurement | The Company follows the provisions of the accounting standard 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") 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 on 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 assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. 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 value of the Company's long-term liabilities represents their fair value based on level 3 inputs, as further discussed in note 8. The Company's goodwill and other intangible assets are measured at fair value on a non-recurring basis using level 3 inputs. |
Earnings and Loss per Share | Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. There were approximately 1,038,602 and 619,700 of common stock equivalents excluded for the six months ended March 31, 2017 and 2016, respectively, because their effect is anti-dilutive. Common share equivalents of approximately 523,000 were included in the computation of diluted earnings per share for the three months ended March 31, 2016. There were approximately 1,053,421 of common stock equivalents excluded for the three months ended March 31, 2017, because their effect is anti-dilutive. |
Advertising Expenses | Most of the Company's advertising expense budget is used to support the Company's business. Most of the advertisements are in print or internet media, with expenses recorded as they are incurred. For the three and six months ended March 31, 2017 and 2016, included in selling, general and administrative expenses was advertising expense totaling approximately $216,000 and $504,000, and approximately $251,000 and $549,000, respectively. |
Intangible Assets | 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. |
Impairment of Long-lived Assets | 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 six months ended March 31, 2017 and 2016. |
Stock-Based Compensation | The Company accounts for stock-based awards to employees in accordance with applicable accounting principles, 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. The grant date fair value is determined using the Black-Scholes-Merton ("Black-Scholes") pricing model. For all employee stock options, we recognize 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 compensation expense. Options awarded to purchase shares 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. Upon the exercise of options, it is the Company's policy to issue new shares rather than utilizing treasury shares. |
Income Taxes | We record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. Due to the private sale of shares of common stock to LEED HR during fiscal 2012 and the resulting change in control, the Company may be limited by Section 382 of the Internal Revenue Code as to the amount of net operating losses that may be used in future years. Due to the issuance of convertible preferred shares related to the Scribe acquisition, the Company may be limited by Section 382 of the Internal Revenue Code as to the amount of net operating losses that may be used in future years. We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results. |
Reclassification | Certain reclassifications have been made to the financial statements as of and for the three and six months ended March 31, 2016 to conform to the current year presentation. There is no effect on assets, liabilities, equity or net income. |
Segment Data | 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. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Mar. 31, 2017 | |
Property And Equipment Tables | |
Schedule of Property and Equipment | (In thousands) Useful Lives March 31, 2017 September 30, 2016 Computer software 5 years $ 1,447 $ 1,447 Office equipment, furniture and fixtures and leasehold improvements 2 to 10 years 2,580 2,514 Total property and equipment, at cost 4,027 3,961 Accumulated depreciation and amortization (3,500 ) (3,350 ) Property and equipment, net $ 527 $ 611 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Mar. 31, 2017 | |
Intangible Assets Tables | |
Schedule of Finite-Lived Intangible Assets | As of March 31, 2017 (In Thousands) Cost Accumulated Amortization Net Book Value Customer Relationships $ 10,758 $ 3,173 $ 7,585 Trade Name 2,429 405 2,024 Non-Compete Agreements 1,061 314 747 $ 14,248 $ 3,892 $ 10,356 As of September 30, 2016 (In Thousands) Cost Accumulated Amortization Net Book Value Customer Relationships $ 10,758 $ 2,662 $ 8,096 Trade Name 2,429 285 2,144 Non-Compete Agreements 1,061 207 854 $ 14,248 $ 3,154 $ 11,094 |
Subordinated Debt (Tables)
Subordinated Debt (Tables) | 6 Months Ended |
Mar. 31, 2017 | |
Subordinated Debt Tables | |
Schedule of subordindated debt | Balance as of March 31, 2017: JAX Legacy debt $ 4,185 Access Data debt 1,357 Paladin debt 1,000 JAX Legacy debt discount (322 ) Total subordinated debt 6,220 Short-term portion of subordinated debt (1,357 ) Long-term portion of subordinated debt $ 4,863 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Mar. 31, 2017 | |
Acquisitions Tables | |
Schedule of consolidated pro-forma unaudited financial statements | (in Thousands, except per share data) Six Months Ended March 31, 2016 Net sales $ 44,076 Cost of sales 31,863 Operating expenses 12,131 Net loss $ (470 ) Basic and dilutive loss per common share $ (0.05 ) |
Segment Data (Tables)
Segment Data (Tables) | 6 Months Ended |
Mar. 31, 2017 | |
Segment Data Tables | |
Schedule of Segment Reporting Information | Three Months Ended Six Months Ended March 31, March 31, (In Thousands) 2017 2016 2017 2016 Industrial Staffing Services Industrial services revenue $ 6,125 $ 4,874 $ 12,106 $ 10,874 Industrial services gross margin 13.7 % 10.8 % 15.0 % 11.3 % Operating income (loss) $ 249 $ (27 ) $ 589 $ 40 Depreciation & amortization 68 87 141 138 Accounts receivable net 3,644 2,116 3,644 2,116 Intangible assets 800 1,014 800 1,014 Goodwill 1,084 1,084 1,084 1,084 Total assets $ 8,269 $ 6,629 $ 8,269 $ 6,629 Professional Staffing Services Permanent placement revenue $ 1,459 $ 2,059 $ 2,609 $ 3,685 Placement services gross margin 100 % 100 % 100 % 100 % Professional services revenue $ 13,965 $ 14,733 $ 27,840 $ 24,732 Professional services gross margin 24.1 % 19.9 % 24.0 % 23.9 % Operating income $ 1,068 $ 1,118 $ 2,116 $ 2,254 Depreciation and amortization 372 424 747 776 Accounts receivable net 9,455 8,839 9,455 8,838 Intangible assets 9,556 10,653 9,556 10,653 Goodwill 17,506 17,108 17,506 17,109 Total assets $ 37,391 $ 38,659 $ 37,391 $ 38,659 Unallocated Expenses Corporate administrative expenses $ 634 $ 429 $ 1,235 $ 1,041 Corporate facility expenses 69 50 143 102 Stock option amortization expense 191 230 385 392 Board related expenses 19 0 38 0 Acquisition, integration and restructuring expenses 77 122 100 568 Total unallocated expenses $ 990 $ 831 $ 1,901 $ 2,103 Consolidated Total revenue $ 21,549 $ 21,666 $ 42,555 $ 39,291 Operating income 327 260 804 191 Depreciation and amortization 440 511 888 914 Total accounts receivables net 13,099 10,954 13,099 10,954 Intangible assets 10,356 11,667 10,356 11,667 Goodwill 18,590 18,193 18,590 18,193 Total assets $ 45,660 $ 45,288 $ 45,660 $ 45,288 |
Description of Business (Detail
Description of Business (Details Narrative) | 6 Months Ended |
Mar. 31, 2017 | |
Description Of Business Details Narrative | |
Period of incorporation | Incorporated in the State of Illinois in 1962 and is the successor to employment offices doing business since 1893. |
Significant Accounting Polici27
Significant Accounting Policies and Estimates (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Sep. 30, 2016 | |
Significant Accounting Policies And Estimates Details Narrative | |||||
Reduction of placement service revenues | $ 125 | $ 218 | |||
Reduction of accounts receivable | $ (60) | (60) | $ (60) | ||
Allowance for doubtful accounts | 191 | 191 | 191 | ||
Reserve for permanent placement falloffs | $ 60 | $ 60 | $ 60 | ||
Common stock equivalents excluded from the computation of diluted earnings per share | 1,038,602 | 619,700 | |||
Common stock equivalents | 1,053,421 | 523,000 | |||
Advertising expense | $ 216 | $ 504 | $ 251 | $ 549 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2017 | Sep. 30, 2016 | |
Total property and equipment, at cost | $ 4,027 | $ 3,961 |
Accumulated depreciation and amortization | $ (3,500) | (3,350) |
Computer software [Member] | ||
Useful life of property and equipment | 5 years | |
Total property and equipment, at cost | $ 1,447 | 1,447 |
Office equipment, furniture and fixtures and leasehold improvements [Member] | ||
Total property and equipment, at cost | $ 2,580 | $ 2,514 |
Office equipment, furniture and fixtures and leasehold improvements [Member] | Minimum [Member] | ||
Useful life of property and equipment | 2 years | |
Office equipment, furniture and fixtures and leasehold improvements [Member] | Maximum [Member] | ||
Useful life of property and equipment | 10 years |
Property and Equipment (Detai29
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Property And Equipment Details Narrative | ||||
Depreciation expense | $ 71 | $ 150 | $ 76 | $ 142 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Sep. 30, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 14,248 | $ 14,248 |
Accumulated Amortization | 3,892 | 3,154 |
Net Book Value | 10,356 | 11,094 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 10,758 | 10,758 |
Accumulated Amortization | 3,173 | 2,662 |
Net Book Value | 7,585 | 8,096 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 2,429 | 2,429 |
Accumulated Amortization | 405 | 285 |
Net Book Value | 2,024 | 2,144 |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,061 | 1,061 |
Accumulated Amortization | 314 | 207 |
Net Book Value | $ 747 | $ 854 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Sep. 30, 2016 | |
Goodwill And Intangible Assets Details Narrative | |||||
Amortization expense | $ 369 | $ 738 | $ 407 | $ 744 | |
Amortization of deferred financing fees | 28,000 | ||||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity | |||||
2,017 | 738 | 738 | |||
2,018 | 1,481 | 1,481 | |||
2,019 | 1,485 | 1,485 | |||
2,020 | 1,482 | 1,482 | |||
2,021 | 1,077 | 1,077 | |||
Thereafter | 4,093 | 4,093 | |||
Total | $ 10,356 | $ 10,356 | $ 11,094 |
Short-term Debt (Details Narrat
Short-term Debt (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Sep. 27, 2016 | Sep. 27, 2013 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Sep. 30, 2016 | Jan. 02, 2016 | |
Interest rate | 4.75% | 4.75% | 4.75% | |||||
Interest expense related to the lines of credit | $ 172 | $ 337 | $ 182 | $ 291 | ||||
Credit agreement [Member] | Short-term Debt [Member] | ||||||||
Borrowing amount | $ 73,750 | 73,750 | ||||||
Principal amount | $ 48,750 | |||||||
Revolving loans, Description | 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. | |||||||
Proceeds from line of credit | $ 7,631 | |||||||
ACF FINCO I LP [Member] | ||||||||
Borrower agreement | ACF FINCO I LP | |||||||
Secured revolving note | $ 6,000 | |||||||
Secured revolving note validity term | 3 years | |||||||
Secured revolving note interest rate description | The interest rate for the Note is a fluctuating rate that, when annualized, is equal to the greatest of (A) the Prime Rate plus three and one quarter percent (3.25%), (B) the LIBOR Rate plus six and one quarter percent (6.25%), and (C) six and one half percent (6.50%), with the interest paid on a monthly basis. | |||||||
Agreement related fees and expenses | $ 170 | |||||||
ACF FINCO I LP [Member] | Short-term Debt [Member] | ||||||||
Secured revolving note interest rate description | Pursuant to the Amendment, the Lender agreed (i) to decrease the annual Facility Fee (as defined in the Credit Agreement) payable by Borrower on the total Revolving Credit Limit (as defined in the Loan Agreement) to 0.75% , (ii) to allow the Borrower to make certain prepayments of amounts owed under the Amended Loan Agreement and the other loan documents on or prior to September 27, 2018, (iii) to amend the provision regarding liquidated damages payable by Borrower in the event of any early termination of the revolving credit line under the Amended Credit Agreement such that Borrower shall pay liquidated damages to Lender in an amount equal to the Revolving Credit Limit multiplied by (X) two percent (2.00%) if such prepayment, repayment, demand or acceleration occurs prior to September 28, 2017, and (Y) one percent (1.00%) if such prepayment, repayment, demand or acceleration occurs on or after September 28, 2017, (iv) to change the minimum EBITDA (as defined in the Amended Credit Agreement) thresholds required to be maintained by the Company as outlined below (v) to extend the Revolving Credit Termination Date to the earliest to occur of (a) September 27, 2018, (b) the date Lender terminates the Revolving Credit pursuant to the terms of the Amended Credit Agreement, and (c) the date on which repayment of the Revolving Credit, or any portion thereof, becomes immediately due and payable pursuant to the terms of the Amended Loan Agreement, (vi) to amend the definition of EBITDA and (vii) to change the Revolving Credit Rate to a fluctuating rate that, when annualized, is equal to the greatest of (A) the Prime Rate plus one and one half percent (1.50%), (B) the LIBOR Rate plus four and one half percent (4.50%), and (C) four and three quarters percent (4.75%). | |||||||
ACF FINCO I LP [Member] | Short-term Debt [Member] | Minimum [Member] | ||||||||
Amended credit agreement range | $ 6,000 | |||||||
ACF FINCO I LP [Member] | Short-term Debt [Member] | Maximum [Member] | ||||||||
Amended credit agreement range | $ 10,000 |
Subordinated Debt (Details)
Subordinated Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Sep. 30, 2016 |
Total debt | $ 6,220 | |
Short-term portion of debt | (1,357) | $ (1,285) |
Long-term portion of debt | 4,863 | $ 4,981 |
JAX Legacy debt [Member] | ||
Total debt | 4,185 | |
Access Data debt [Member] | ||
Total debt | 1,357 | |
Paladin debt [Member] | ||
Total debt | 1,000 | |
JAX Legacy debt discount [Member] | ||
Total debt | $ (322) |
Subordinated Debt (Details Narr
Subordinated Debt (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Apr. 03, 2017 | Oct. 02, 2015 | Jan. 20, 2017 | Mar. 31, 2017 | Mar. 31, 2016 | Oct. 04, 2017 | Oct. 04, 2016 | Oct. 04, 2015 |
Amortization of debt discount | $ 107 | $ 107 | ||||||
Repayments of debt | ||||||||
2,017 | 113 | |||||||
2,018 | 1,244 | |||||||
2,020 | 1,000 | |||||||
2,021 | 4,185 | |||||||
Total | $ 6,542 | |||||||
Addendum [Member] | ||||||||
Cash paid to Sellers | $ 250 | |||||||
Stock Purchase Agreement [Member] | ||||||||
Note issued | $ 1,000 | |||||||
Note payable interest rate | 5.50% | |||||||
Data Consulting Corporation [Member] | ||||||||
Note payable interest rate | 5.50% | |||||||
Monthly payment principal and interest | $ 28 | $ 57 | ||||||
Payment of principal | $ 1,202 | $ 1,000 | ||||||
Subscription Agreement [Member] | ||||||||
Note issued | $ 4,185 | |||||||
Maturity date of note | Oct. 2, 2018 | |||||||
Note interest description | (i) 10% interest per annum on the outstanding principal balance of the Subordinated Note shall be payable quarterly in arrears, in cash, on each December 30th, March 30th, June 30th, and September 30th, until the Maturity Date and (ii) 4% interest per annum until the Maturity Date on the original principal balance of the Subordinated Note, was paid in advance on the issuance date of the Subordinated Note through the issuance to the Investor of approximately 91,000 shares of the Company's common stock (the "Interest Shares") valued at approximately $566,000. | |||||||
Fees paid in shares | 3,000,000 | |||||||
Fees paid in cash | $ 25 | |||||||
Value of fees paid shares | 23 | |||||||
Legal fees | 33 | |||||||
Balloon payment of principal | $ 647 | |||||||
10% Convertible Subordinated Note [Member] | ||||||||
Note issued | $ 4,185 | |||||||
Maturity date of note | Oct. 3, 2021 | |||||||
Repayments of debt | ||||||||
Common stock conversion price | $ 5.83 |
Equity (Details Narrative)
Equity (Details Narrative) $ / shares in Units, $ in Thousands | Apr. 04, 2016USD ($)$ / sharesshares | Oct. 04, 2015USD ($)shares | Oct. 02, 2015USD ($)shares | Mar. 31, 2017USD ($)Integer$ / sharesshares | Mar. 31, 2016USD ($) | Mar. 31, 2017USD ($)$ / sharesshares | Mar. 31, 2016USD ($) | Sep. 30, 2016USD ($)shares |
Share based compensation expense | $ 191 | $ 230 | $ 385 | $ 392 | ||||
Issuance of common stock for contingent consideration, Amount | $ 544 | |||||||
Option granted to purchase | shares | 40,000 | |||||||
Stock option weighted average price | $ / shares | $ 4.72 | $ 4.72 | ||||||
Stock option average expected life | 7 years | |||||||
Stock granted value share-based compensation | $ 172 | |||||||
Unrecognized compensation expense | $ 1,092 | |||||||
Stock price volatility | 104.00% | |||||||
Risk-free interest rate | 2.20% | |||||||
JAX Legacy [Member] | ||||||||
Shares issued for debt, Shares | shares | 95,000 | |||||||
Shares issued for debt, Amount | $ 589 | |||||||
Access Data Consulting Corporation [Member] | ||||||||
Issuance of common stock for acquisition, Shares | shares | 328,000 | |||||||
Liability contingent consideration | $ 500 | |||||||
Issuance of common stock for contingent consideration, Amount | $ 544 | |||||||
Closing stock price per share | $ / shares | $ 4.44 | |||||||
Guarantee price | $ 2,000 | |||||||
Common Stock | ||||||||
Issuance of common stock for acquisition, Shares | shares | 328,000 | |||||||
Issuance of common stock for contingent consideration related to the acquisition of Access Data Consulting Corporation, Shares | shares | 123,000 | 123,000 | ||||||
Exercise of stock warrants, Shares | shares | 500,000 | |||||||
Related Party [Member] | ||||||||
Exercise of stock warrants, Amount | $ 1,000 | |||||||
Exercise of stock warrants, Shares | shares | 480,000 | |||||||
Number of related party | Integer | 2 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Net sales | $ 21,549 | $ 21,666 | $ 42,555 | $ 39,291 |
Net loss | $ (129) | $ 7 | $ (78) | (387) |
Pro Forma [Member] | ||||
Net sales | 44,076 | |||
Cost of sales | 31,863 | |||
Operating expenses | 12,131 | |||
Net loss | $ (470) | |||
Basic and dilutive loss per common share | $ (0.05) |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2015 | |
Fair value adjustment of definite lived intangible assets | $ 51 | |||
Current liabilities remaining amount | $ (13) | $ (25) | ||
Access [Member] | ||||
Outstanding stock percent | 100.00% | |||
Purchase price | $ 16,168 | |||
Stock Purchase agreement date | Oct. 4, 2015 | |||
Mutual tax election expenses | $ 600 | |||
Mutual tax election paid | 200 | |||
Current liabilities remaining amount | $ 400 | |||
Paladin [Member] | ||||
Outstanding stock percent | 100.00% | |||
Purchase price | $ 2,625 | |||
Stock Purchase agreement date | Jan. 1, 2016 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Commitments And Contingencies Details Narrative | ||||
Rent expense | $ 307 | $ 579 | $ 260 | $ 502 |
2,017 | 475 | 475 | ||
2,018 | 844 | 844 | ||
2,019 | 641 | 641 | ||
2,020 | 238 | 238 | ||
2,021 | 74 | 74 | ||
thereafter | 85 | 85 | ||
Total | $ 2,357 | $ 2,357 |
Segment Data (Details)
Segment Data (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Sep. 30, 2016 | |
Operating income | $ 327 | $ 260 | $ 804 | $ 191 | |
Depreciation and amortization | 888 | 914 | |||
Accounts receivable - net | 1,530 | (242) | |||
Intangible asset | 10,356 | 10,356 | $ 11,094 | ||
Total assets | 45,660 | 45,660 | $ 45,926 | ||
Industrial Staffing Services [Member] | |||||
Industrial services revenue | $ 6,125 | $ 4,874 | $ 12,106 | $ 10,874 | |
Industrial services gross margin | 13.70% | 10.80% | 15.00% | 11.30% | |
Operating income | $ 249 | $ (27) | $ 589 | $ 40 | |
Depreciation and amortization | 68 | 87 | 141 | 138 | |
Accounts receivable - net | 3,644 | 2,116 | 3,644 | 2,116 | |
Intangible asset | 800 | 1,014 | 800 | 1,014 | |
Goodwill | 1,084 | 1,084 | 1,084 | 1,084 | |
Total assets | 8,269 | 6,629 | 8,269 | 6,629 | |
Professional Staffing Services [Member] | |||||
Operating income | 1,068 | 1,118 | 2,116 | 2,254 | |
Depreciation and amortization | 372 | 424 | 747 | 776 | |
Accounts receivable - net | 9,455 | 8,839 | 9,455 | 8,838 | |
Intangible asset | 9,556 | 10,653 | 9,556 | 10,653 | |
Goodwill | 17,506 | 17,108 | 17,506 | 17,109 | |
Total assets | 37,391 | 38,659 | 37,391 | 38,659 | |
Permanent placement revenue | $ 1,459 | $ 2,059 | $ 2,609 | $ 3,685 | |
Placement services gross margin | 100.00% | 100.00% | 100.00% | 100.00% | |
Professional services revenue | $ 13,965 | $ 14,733 | $ 27,840 | $ 24,732 | |
Professional services gross margin | 24.10% | 19.90% | 24.00% | 23.90% | |
Unallocated Expenses [Member] | |||||
Corporate administrative expenses | $ 634 | $ 429 | $ 1,235 | $ 1,041 | |
Corporate facility expenses | 69 | 50 | 143 | 102 | |
Stock option amortization expense | 191 | 230 | 385 | 392 | |
Board related expenses | 19 | 0 | 38 | 0 | |
Acquisition, integration and restructuring expenses | 77 | 122 | 100 | 568 | |
Total unallocated expenses | 990 | 831 | 1,901 | 2,103 | |
Consolidated [Member] | |||||
Operating income | 327 | 260 | 804 | 191 | |
Depreciation and amortization | 440 | 511 | 888 | 914 | |
Accounts receivable - net | 13,099 | 10,954 | 13,099 | 10,954 | |
Intangible asset | 10,356 | 11,667 | 10,356 | 11,667 | |
Goodwill | 18,590 | 18,193 | 18,590 | 18,193 | |
Total assets | 45,660 | 45,288 | 45,660 | 45,288 | |
Total revenue | $ 21,549 | $ 21,666 | $ 42,555 | $ 39,291 |
Segment Data (Details Narrative
Segment Data (Details Narrative) | 3 Months Ended |
Mar. 31, 2017Integer | |
Segment Data Details Narrative | |
Number of reportable segments | 2 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Apr. 03, 2017 | Mar. 31, 2017 | Sep. 30, 2016 |
Principal payment, Fiscal year 2018 | $ 113 | ||
Principal payment, Fiscal year 2019 | 1,244 | ||
Principal payment, Fiscal year 2020 | 1,000 | ||
Principal payment, Fiscal year 2021 | 4,185 | ||
Subordinated note, principal amount | $ 1,357 | $ 1,285 | |
Subsequent Event [Member] | Convertible subordinated note [Member] | |||
Maturity date | Oct. 3, 2021 | ||
Interest rate | 10.00% | ||
Subordinated note, principal amount | $ 4,185 | ||
Conversion price | $ 5.83 | ||
Convertible note redemption description | 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 Companys 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 | ||
Redemption price percentage | 100.00% | ||
Subsequent Event [Member] | Merger agreement [Member] | SNI Holdco [Member] | |||
Convertible note redemption description | The redemption price shall be an amount equal to 100% of the then outstanding principal amount of the 9.5% Notes being redeemed, plus accrued and unpaid interest thereon | ||
Business acquisition, consideration transferred | $ 66,400 | ||
Escrow deposit | $ 8,600 | ||
Description of escrow deposit restriction | These 9.5% Notes will be released from escrow after a period of eighteen months if there are no outstanding claims for indemnification | ||
Conversion to common stock limit percentage | 19.99% | ||
Description for change in control | For purposes of the 9.5% Notes, a Change of Control of the Company shall mean any of the following: (A) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions or (B) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any person or entity together with their affiliates, becomes the beneficial owner, directly or indirectly, of more than 50% of the Common Stock of the Company | ||
Subsequent Event [Member] | Merger agreement [Member] | SNI Holdco [Member] | Cash [Member] | |||
Business acquisition, consideration transferred | $ 25,100 | ||
Subsequent Event [Member] | Merger agreement [Member] | SNI Holdco [Member] | Convertible subordinated note [Member] | |||
Interest rate | 9.50% | ||
Business acquisition, consideration transferred | $ 12,500 | ||
Subsequent Event [Member] | Merger agreement [Member] | SNI Companies, Inc. [Member] | |||
Ownership percentage | 100.00% | ||
Subsequent Event [Member] | Credit agreement [Member] | |||
Maximum borrowing capacity | $ 73,750 | ||
Maturity date | Mar. 31, 2021 | ||
Line of credit outstanding amount | $ 56,226 | ||
Description for interest rate | LIBOR rate plus 10% or PNC's floating base rate plus 9% | ||
Senior Leverage Ratio, description | 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 4.50 to 1.0 to 1.5 to 1.0 over the term of the Credit Agreement | ||
Original discount fee payable | $ 901 | ||
Subsequent Event [Member] | Credit agreement [Member] | Minimum [Member] | |||
EBITDA | 13,000 | ||
Subsequent Event [Member] | Credit agreement [Member] | Maximum [Member] | |||
EBITDA | 24,000 | ||
Subsequent Event [Member] | Credit agreement [Member] | Term loan [Member] | |||
Maximum borrowing capacity | $ 48,750 | ||
Maturity period | 4 years | ||
Principal payment, Fiscal year 2017 | $ 609 | ||
Principal payment, Fiscal year 2018 | 5,789 | ||
Principal payment, Fiscal year 2019 | 6,094 | ||
Principal payment, Fiscal year 2020 | 6,398 | ||
Principal payment, Fiscal year 2021 | $ 29,860 | ||
Fixed Charge Coverage Ratio, description | 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, which ranges from 1.10 to 1.0 to 1.40 to 1.0 | ||
Closing fee payable | $ 75 | ||
Subsequent Event [Member] | Credit agreement [Member] | Revolving Credit Facility [Member] | |||
Maximum borrowing capacity | 25,000 | ||
Line of credit outstanding amount | 7,476 | ||
Closing fee payable | 500 | ||
Subsequent Event [Member] | Credit agreement [Member] | SNI Holdco [Member] | |||
Line of credit outstanding amount | 52,336 | ||
Subsequent Event [Member] | Monroe Capital [Member] | |||
Repayment of debt | 20,221 | ||
Subsequent Event [Member] | ACF FINCO I, LP [Member] | |||
Repayment of debt | 7,631 | ||
Subsequent Event [Member] | ACF FINCO I, LP [Member] | Credit agreement [Member] | |||
Termination fees | $ 240 | ||
Subsequent Event [Member] | Series B Convertible Preferred Stock [Member] | |||
Preferred stock shares designated | 5,950,000 | ||
Subsequent Event [Member] | Series B Convertible Preferred Stock [Member] | Merger agreement [Member] | SNI Holdco [Member] | |||
Interest rate | 9.50% | ||
Conversion price | $ 4.86 | ||
Business acquisition, consideration transferred | $ 28,800 | ||
Business acquisition, consideration shares issuable | 5,926,000 | ||
Share price description | Average daily VWAP of the Common Stock for the 20 trading days immediately prior to the closing date of the Merger | ||
Liquidation preference | $ 4.86 | ||
Subsequent Event [Member] | Series B Convertible Preferred Stock [Member] | Thrivent [Member] | |||
Description for beneficial ownership limitation | Beneficially own Common Stock in excess o f 4.99% of |