Cover
Cover - shares | 3 Months Ended | |
Dec. 31, 2021 | Feb. 11, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | GEE GROUP INC. | |
Entity Central Index Key | 0000040570 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Dec. 31, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Entity Common Stock Shares Outstanding | 114,100,455 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 1-05707 | |
Entity Incorporation State Country Code | IL | |
Entity Tax Identification Number | 36-6097429 | |
Entity Address Address Line 1 | 7751 Belfort Parkway | |
Entity Address Address Line 2 | Suite 150 | |
Entity Address City Or Town | Jacksonville | |
Entity Address State Or Province | FL | |
Entity Address Postal Zip Code | 32256 | |
City Area Code | 630 | |
Local Phone Number | 954-0400 | |
Security 12b Title | Common Stock, no par value | |
Trading Symbol | JOB | |
Security Exchange Name | NYSE | |
Entity Interactive Data Current | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
CURRENT ASSETS: | ||
Cash | $ 12,127 | $ 9,947 |
Accounts receivable, less allowances ($363 and $286, respectively) | 21,231 | 23,070 |
Prepaid expenses and other current assets | 860 | 668 |
Total current assets | 34,218 | 33,685 |
Property and equipment, net | 1,083 | 765 |
Goodwill | 61,293 | 63,443 |
Intangible assets, net | 13,740 | 14,754 |
Right-of-use assets | 3,598 | 3,920 |
Other long-term assets | 1,001 | 1,022 |
TOTAL ASSETS | 114,933 | 117,589 |
CURRENT LIABILITIES: | ||
Accounts payable | 2,375 | 2,257 |
Accrued compensation | 4,904 | 6,413 |
Current Paycheck Protection Program Loans | 0 | 16,741 |
Current operating lease liabilities | 1,646 | 1,681 |
Other current liabilities | 4,718 | 4,065 |
Total current liabilities | 13,643 | 31,157 |
Deferred taxes | 486 | 591 |
Noncurrent operating lease liabilities | 2,634 | 3,006 |
Other long-term liabilities | 586 | 2,066 |
Total long-term liabilities | 3,706 | 5,663 |
MEZZANINE EQUITY | ||
Preferred stock; no par value; authorized - 20,000 shares, designated 160 shares of Series A, 5,950 shares of Series B, 3,000 shares of Series C, none issued | 0 | 0 |
Total mezzanine equity | 0 | 0 |
SHAREHOLDERS' EQUITY | ||
Common stock, no-par value; authorized - 200,000 shares; issued and outstanding - 114,100 shares at December 31, 2021 and September 30, 2021 | 0 | 0 |
Additional paid in capital | 111,563 | 111,416 |
Accumulated deficit | (13,979) | (30,647) |
Total shareholders' equity | 97,584 | 80,769 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 114,933 | $ 117,589 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
CURRENT ASSETS: | ||
Accounts receivable, allowances | $ 363 | $ 286 |
SHAREHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, share authorized | 20,000,000 | 20,000,000 |
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 114,100,000 | 114,100,000 |
Common stock, shares outstanding | 114,100,000 | 114,100,000 |
Series A Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, share designated | 160,000 | 160,000 |
Preferred stock, share issued | 0 | 0 |
Series B Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, share designated | 5,950,000 | 5,950,000 |
Preferred stock, share issued | 0 | 0 |
Series C Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, share designated | 3,000,000 | 3,000,000 |
Preferred stock, share issued | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) shares in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
NET REVENUES: | ||
Contract staffing services | $ 36,684,000 | $ 31,248,000 |
Direct hire placement services | 6,163,000 | 3,395,000 |
NET REVENUES | 42,847,000 | 34,643,000 |
Cost of contract services | 27,265,000 | 22,063,000 |
GROSS PROFIT | 15,582,000 | 12,580,000 |
Selling, general and administrative expenses (including noncash stock-based compensation expense of $147 and $311, respectively) | 12,359,000 | 9,487,000 |
Depreciation expense | 86,000 | 73,000 |
Amortization of intangible assets | 1,014,000 | 1,044,000 |
Goodwill impairment charge | 2,150,000 | 0 |
(LOSS) INCOME FROM OPERATIONS | (27,000) | 1,976,000 |
Gain on extinguishment of debt | 16,773,000 | 0 |
Interest expense | (107,000) | (2,686,000) |
INCOME (LOSS) BEFORE INCOME TAX BENEFIT | 16,639,000 | (710,000) |
Provision for income tax (benefit) | (29,000) | (395,000) |
NET INCOME (LOSS) | $ 16,668,000 | $ (315,000) |
BASIC EARNINGS (LOSS) PER SHARE | $ 0.15 | $ (0.02) |
DILUTED EARNINGS (LOSS) PER SHARE | $ 0.14 | $ (0.02) |
WEIGHTED AVERAGE SHARES OUTSTANDING: | ||
BASIC | 114,100 | 17,667 |
DILUTED | 115,542 | 17,667 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (unaudited) - USD ($) shares in Thousands | Total | Common Stock | Additional Paid In Capital | Accumulated Deficit |
Balance, shares at Sep. 30, 2020 | 17,667 | |||
Balance, amount at Sep. 30, 2020 | $ 27,378,000 | $ 58,031,000 | $ (30,653,000) | |
Share-based compensation | 311,000 | $ 0 | 311,000 | 0 |
Net loss | (315,000) | $ 0 | 0 | (315,000) |
Balance, shares at Dec. 31, 2020 | 17,667 | |||
Balance, amount at Dec. 31, 2020 | 27,374,000 | 58,342,000 | (30,968,000) | |
Balance, shares at Sep. 30, 2021 | 114,100 | |||
Balance, amount at Sep. 30, 2021 | 80,769,000 | 111,416,000 | (30,647,000) | |
Share-based compensation | 147,000 | $ 0 | 147,000 | 0 |
Net loss | 16,668,000 | |||
Net income | 16,668,000 | $ 0 | 0 | 16,668,000 |
Balance, shares at Dec. 31, 2021 | 114,100 | |||
Balance, amount at Dec. 31, 2021 | $ 97,584,000 | $ 111,563,000 | $ (13,979,000) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 16,668,000 | $ (315,000) |
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||
Gain on extinguishment of debt | (16,773,000) | 0 |
Depreciation and amortization | 1,100,000 | 1,117,000 |
Non-cash lease expense | 322,000 | 338,000 |
Goodwill impairment charge | 2,150,000 | |
Stock compensation expense | 147,000 | 311,000 |
Increase (decrease) in allowance for doubtful accounts | 77,000 | (397,000) |
Deferred income taxes | (105,000) | (215,000) |
Amortization of debt discount | 38,000 | 445,000 |
Paid in kind interest on term loan | 0 | 547,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,762,000 | (2,176,000) |
Accounts payable | 118,000 | (131,000) |
Accrued compensation | (1,509,000) | (598,000) |
Accrued interest | 32,000 | 46,000 |
Change in other assets, net of change in other liabilities | (1,763,000) | 1,075,000 |
Net cash provided by operating activities | 2,264,000 | 47,000 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisition of property and equipment | (84,000) | (2,000) |
Net cash used in investing activities | (84,000) | (2,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net cash used in financing activities | 0 | 0 |
Net change in cash | 2,180,000 | 45,000 |
Cash at beginning of period | 9,947,000 | 14,074,000 |
Cash at end of period | 12,127,000 | 14,119,000 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 36,000 | 1,647,000 |
Cash paid for taxes | 0 | 21,000 |
Non-cash investing and financing activities: | ||
Acquisition of equipment with finance lease | $ 320,000 | $ 14,000 |
Description of Business
Description of Business | 3 Months Ended |
Dec. 31, 2021 | |
Description of Business | |
Note 1 - Description of Business | 1. Description of Business GEE Group Inc. was incorporated in the State of Illinois in 1962 and is the successor to employment offices doing business since 1893. GEE Group Inc. and its wholly material operating subsidiaries, Access Data Consulting Corporation, Agile Resources, Inc., BMCH, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., Triad Logistics, Inc., and Triad Personnel Services, Inc. (collectively referred to as the “Company”, “us”, “our”, or “we”) are providers of permanent and temporary professional and industrial staffing and placement services in and near several major U.S cities. We specialize in the placement of information technology, accounting, finance, office, engineering, and medical professionals for direct hire and contract staffing for our clients and provide temporary staffing services for our industrial clients. Liquidity The primary sources of liquidity for the Company are revenues earned and collected from its clients for the placement of contractors and permanent employment candidates and borrowings available under its current and former asset-based senior secured revolving credit facilities. Uses of liquidity include primarily the costs and expenses necessary to fund operations, including payment of compensation to the Company’s contract and permanent employees, payment of operating costs and expenses, payment of taxes, payment of interest and principal under its debt agreements, and capital expenditures. On April 19, 2021, the Company completed the initial closing of a follow-on public offering of 83,333 shares of common stock at a public offering price of $0.60 per share. Gross proceeds of the offering totaled $50,000, which after deducting the underwriting discount, legal fees, and offering expenses, resulted in net proceeds of $45,478. On April 27, 2021, the underwriters of the Company’s follow-on public offering exercised, in full, their 15% over–allotment option to purchase an additional 12,500 common shares (the “option shares”) of the Company at the public offering price of $0.60 per share. The Company closed the transaction on April 28, 2021 and received net proceeds from the sale of the option shares of approximately $6,937, after deducting the applicable underwriting discount. ThinkEquity, a division of Fordham Financial Management, Inc., acted as sole book-running manager for the offering. On April 20, 2021, as the result of the completion of the public offering, the Company repaid $56,022 in aggregate outstanding indebtedness under its former Revolving Credit, Term Loan and Security Agreement, dated as of March 31, 2017, including accrued interest, using the net proceeds of its recent underwritten public offering and available cash. The repaid debt was originally obtained from investors led by MGG Investment Group LP (“MGG”) on April 21, 2017 and had a maturity date of June 30, 2023. The MGG debt was comprised of a revolving credit facility with a principal balance on the date of repayment of approximately $11,828, which was subject to an annual interest rate comprised of the greater of the London Interbank Offering Rate (“LIBOR”) or 1%, plus a 10% margin (approximately 11% per annum), and a term loan with a principal balance on the date of repayment of approximately $43,735, which was subject to an annual interest rate of the greater of LIBOR or 1% plus a 10% margin. The term loan also had an annual payment-in-kind (“PIK”) interest rate of 5% in addition to its cash interest rate, which was being added to the term loan principal balance (cash and PIK interest rate combined of approximately 16% per annum). Accrued interest of approximately $459 was paid in connection with the principal repayments. On May 14, 2021, the Company entered a Loan, Security and Guaranty Agreement for a $20 million asset-based senior secured revolving credit facility with CIT Bank, N.A. (the “CIT Facility”). Concurrent with the May 14, 2021 closing of the CIT Facility, the Company borrowed $5,326 and utilized these funds to pay all remaining unpaid Exit and Restructuring Fees due to its former senior lenders in the amount of $4,978, with the remainder going to direct fees and costs associated with the CIT Facility. Additional information regarding the CIT Facility is presented in Note 8. Management believes that the Company has adequate cash and working capital and can generate adequate liquidity to meet its obligations for the foreseeable future or at least for the next twelve months. Coronavirus Pandemic (“COVID-19”), Paycheck Protection Program Loans and Deferral of Federal Payroll Taxes under the CARES Act In approximately mid-March 2020, the Company began to experience the severe negative effects of the economic disruptions resulting from COVID-19. These included abrupt reductions in demand for the Company’s primary sources of revenue, its temporary and direct hire placements, lost productivity due to business closings both by clients and at the Company’s own operating locations, and the significant disruptive impacts to many other aspects of normal operations. Some effects of COVID-19 and the subsequent variants of the virus continue to be felt, although to lesser extent, with the most severe impacts being felt in the commercial (Industrial) segment and, to a lesser extent, in the finance, accounting and office clerical (“FAO”) contract staffing services end markets within the professional segment. Between April 29 and May 7, 2020, the Company and eight of its operating subsidiaries obtained loans in the aggregate amount of $19,927 from BBVA USA (now known as PNC Bank), as lender, pursuant to the Payroll Protection Plan (the “PPP”), which was established under the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). These funds were the only source of financing available to our companies and businesses and were critical to our ability to maintain operations, including the employment of our temporary and full-time employees, in order to provide our services and meet our liquidity requirements in the midst of the worldwide Coronavirus Pandemic. The Company accounted for the PPP loans as a debt (See Note 9) in accordance with Accounting Standards Codification (“ASC”) Topic 470 Debt. Accordingly, the PPP loans were recognized as current debt in the Company’s accompanying unaudited condensed consolidated financial statements as of September 30, 2021. The Company and its operating subsidiaries have been granted forgiveness of their respective outstanding PPP loans, including the Company’s last four remaining PPP loans and interest for GEE Group Inc., BMCH, Inc., Paladin Consulting, Inc., and SNI Companies, Inc., in the amounts of $2,024, $2,630, $1,956, and $10,163, respectively, which were forgiven by the SBA in December 2021. The Company recognized net gains of $16,773, in aggregate, during the three months ended December 31, 2021. The PPP loans obtained by GEE Group Inc., and its operating subsidiaries together as an affiliated group, have exceeded the $2,000 audit threshold established by the SBA, and therefore, also will be subject to audit by the SBA in the future. If any of the nine forgiven PPP loans are reinstated in whole or in part as the result of a future audit, a charge or charges would be incurred, accordingly, and they would need to be repaid. If the companies are unable to repay the portions of their PPP loans that ultimately may be reinstated from available liquidity or operating cash flow, we may be required to raise additional equity or debt capital to repay the PPP loans. The Company and its subsidiaries, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, also were eligible to defer paying $3,692, in aggregate, of applicable payroll taxes incurred during fiscal 2020. The deferred deposits of the employer’s share of Social Security tax are required be paid to be considered timely (and avoid a failure to deposit penalty) by December 31, 2021, fifty (50) percent of the eligible deferred amount, and the remaining amount by December 31, 2022. During the three-month period ending December 31, 2021, the first payments on these deferred amounts were made totaling $1,827, in aggregate. The remaining deferred amounts are included in short-term liabilities on the accompanying unaudited condensed consolidated financial statements. |
Significant Accounting Policies
Significant Accounting Policies and Estimates | 3 Months Ended |
Dec. 31, 2021 | |
Significant Accounting Policies and Estimates | |
Note 2 - Significant Accounting Policies and Estimates | 2. Significant Accounting Policies and Estimates Basis of Presentation 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 notes 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-month period ended December 31, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2022. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2021 as filed on December 23, 2021. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts and transactions of the Company and its wholly owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity 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 requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Revenues from contracts with customers are generated from direct hire placement services, temporary professional services staffing, and temporary industrial staffing. Revenues are recognized when promised services are performed for customers, and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Our revenues are recorded net of variable consideration such as sales adjustments or allowances. Direct hire placement service revenues from contracts with customers are recognized when employment candidates accept offers of employment, less a provision for estimated credits or refunds to customers as the result of applicants not remaining employed for the entirety of the Company's guarantee period (referred to as “falloffs”). The Company’s guarantee periods for permanently placed employees generally range from 60 to 90 days from the date of hire. Fees associated with candidate placement are generally calculated as a percentage of the new employee’s annual compensation. No fees for permanent placement services are charged to employment candidates. Temporary staffing service revenues from contracts with customers are recognized in amounts the Company has a right to invoice as the services are rendered by the Company’s temporary employees. The Company records temporary staffing revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company controls the specified service before that service is performed for a customer. The Company has the risk of identifying and hiring qualified employees (as opposed to client employees), has the discretion to select the employees and establish their price, and bears the risk for services that are not fully paid for by customers. Falloffs and refunds during the period are reflected in the unaudited condensed consolidated statements of operations as a reduction of placement service revenues and were approximately $694 and $303 for the three-month periods ended December 31, 2021 and 2020, respectively. Expected future falloffs and refunds are reflected in the unaudited condensed consolidated balance sheet as a reduction of accounts receivable as described under Accounts Receivable, below. See Note 14 for disaggregated revenues by segment. Payment terms in our contracts vary by the type and location of our customer and the services offered. The terms between invoicing and when payments are due are not significant. Cost of Contract Staffing Services The cost of contract services includes the wages and the related payroll taxes, employee benefits and certain other employee-related costs of the Company’s contract service 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. As of December 31, 2021 and September 30, 2021, there were no cash equivalents. The Company maintains deposits in 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 falloffs is recorded as a reduction of revenues for estimated losses due to applicants not remaining employed during 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 taken together reflect management’s estimate of the potential losses inherent in the accounts receivable balances based on historical loss statistics and known factors impacting our clients. Management believes that the nature of the contract services business, wherein client companies are generally dependent on our contract employees in the same manner as permanent employees for their production cycles and the conduct of their respective businesses contributes to a relatively small accounts receivable allowance. As of December 31, 2021, and September 30, 2021, the allowance for doubtful accounts was $363 and $286, respectively. The Company charges off uncollectible accounts once the invoices are deemed unlikely to be collectible. The allowance also includes permanent placement falloffs of $239 and $115 as of December 31, 2021 and September 30, 2021, 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 three-month periods ended December 31, 2021 and 2020. Leases The Company determines if a contractual arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the Company’s unaudited condensed consolidated balance sheet. The Company evaluates and classifies leases as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All the Company’s real estate leases are classified as operating leases. Also, the Company elected the practical expedient which allows aggregation of non-lease components with the related lease components when evaluating accounting treatment. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The lease payments included in the present value are fixed lease payments. As most of the Company’s leases do not provide an implicit rate, the Company estimates its collateralized incremental borrowing rate, based on information available at the commencement date, in determining the present value of lease payments. The Company applies the portfolio approach in applying discount rates to its classes of leases. The operating lease ROU assets include any payments made before the commencement date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not currently have subleases. The Company also does not currently have residual value guarantees or restrictive covenants in its leases. Goodwill The Company evaluates its goodwill for possible impairment as prescribed by ASU 2017-04, Intangibles — Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment at least annually, and more frequently when one or more triggering events or circumstances indicate that the goodwill might be impaired. Under this guidance, annual or interim goodwill impairment testing is performed by comparing the estimated fair value of a reporting unit with its carrying amount. The Company allocates its goodwill among two reporting units: its Professional Services reporting unit and its Light Industrial Services reporting unit for purposes of evaluation for impairments. An impairment charge is recognized for the amount by which the carrying amount exceeds a reporting unit’s estimated fair value, not to exceed the carrying value of goodwill. In testing for impairments, management applies one or more valuation techniques to estimate the fair values of the reporting units, individual assets or groups of individual assets, as required under the circumstances. These valuation techniques rely on assumptions and other factors, such as industry multiples applied to earnings, estimated future cash flows, the discount rates used to determine the present value of associated cash flows, and market comparable assumptions. The Company recently completed its annual goodwill impairment assessment, as of September 30, 2021, and determined that its goodwill was not impaired. The amount of discount inherent in the Company’s market capitalization as recently reported on the NYSE American exchange when compared with consolidated stockholders’ equity, or net book value, has increased since September 30, 2021; therefore, the Company has performed an interim assessment of its goodwill for impairment as of December 31, 2021. As a result, the Company has recognized a non-cash impairment charge of $2,150 during the quarter ended December 31, 2021. In reaching its most recent conclusion, management performed interim quantitative and qualitative analysis interim quantitative and qualitative analysis and adjusted the estimated fair values the estimated fair values of its Professional Services and Industrial Services reporting units so that they reconcile more precisely with the Company’s market capitalization as of December 31, 2021, plus an assumed control premium. Additional information regarding the Company’s goodwill and impairment assessments is presented in Note 6. Intangible Assets Separately identifiable intangible assets held in the form of customer lists, non-compete agreements, customer relationships, management agreements and trade names were recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives ranging from two to ten years using both accelerated and straight-line methods. Impairment of Long-lived Assets (other than Goodwill) The Company recognizes 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 recognize and record any impairments of long-lived assets used in operations during the three-month periods ended December 31, 2021 and 2020. Fair Value Measurement The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement”, which defines fair value, establishes a framework for measuring fair value and enhances fair value measurement disclosure. Under these provisions, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) 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 of 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 when observable inputs are not available. The hierarchy is described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. The fair value of the Company’s current assets and current liabilities approximate their carrying values due to their short-term nature. The fair value disclosures of the Company’s long-term liabilities approximate their respective fair values based on current yield for debt instruments with similar terms. Fair value measurements utilized in evaluating the Company’s goodwill and other intangible assets for impairments are measured at fair value on a non-recurring basis using a combination of level 2 and level 3 inputs. Earnings and Loss per Share Basic earnings and loss per share are computed by dividing net income or loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the vesting of restricted shares granted but unissued, and exercise of stock options and warrants. The dilutive effect of outstanding warrants and options is reflected in earnings per share by use of the treasury stock method. For the three-month period ended December 31, 2021, the weighted average dilutive incremental shares, or common stock equivalents, included in the calculations of dilutive shares were 1,442. Common stock equivalents, which are excluded because their effect is anti-dilutive, were approximately 1,748 and 2,791 for the three months ended December 31, 2021 and 2020, respectively. For the three-month period ended December 31, 2020, in which a net loss was incurred, all potentially dilutive common shares are considered antidilutive and thus are excluded from the calculation. Advertising Expenses The Company expenses the costs of print and internet media advertising and promotions as incurred and reports these costs in selling, general and administrative expenses. For the three-month periods ended December 31, 2021 and 2020, advertising expense totaled $518 and $421, respectively. Stock-Based Compensation The Company accounts for stock-based awards to employees in accordance with FASB ASC 718, “Compensation-Stock Compensation”, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For all employee stock options, we recognize expense 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 our 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 FASB ASC 718, “Compensation-Stock Compensation”. Such options are valued using the Black-Scholes option pricing model. See Note 11 for the assumptions used to calculate the fair value of stock-based employee and non-employee compensation. Upon the exercise of options, it is the Company’s policy to issue new shares rather than utilizing treasury shares. Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. As of December 31, 2021 and September 30, 2021, no material accrued interest or penalties are included on the related tax liability line in the consolidated balance sheet. Segment Data The Company provides the following distinctive services: (a) direct hire placement services, and (b) temporary professional contract services staffing in the fields of information technology, financial, accounting and office; engineering and medical, and (c) temporary contract industrial staffing. The Company’s services can be divided into two reporting units: Professional Staffing Services and Industrial Staffing Services. Selling, general and administrative expenses are not entirely allocated among the Light Industrial and Professional Staffing Services reporting units. Operating results are regularly reviewed by the chief operating decision makers to make determinations about resources to be allocated to the segments and to assess their performance. Other factors, including type of business, type of employees, type of markets and clients, and revenue sources are considered in determining the Company’s operating segments. |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Dec. 31, 2021 | |
New Accounting Pronouncements | |
Note 3 - New Accounting Pronouncements | 3. New Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted Current Expected Credit Losses Model. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Reference Rate Reform (Topic 848): Scope 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 | 3 Months Ended |
Dec. 31, 2021 | |
Property and Equipment | |
Note 4 - Property and Equipment | 4. Property and Equipment Property and equipment, net consisted of the following: December 31, 2021 September 30, 2021 Computer software $ 462 $ 462 Office equipment, furniture, fixtures and leasehold improvements 3,446 3,042 Total property and equipment, at cost 3,908 3,504 Accumulated depreciation and amortization (2,825 ) (2,739 ) Property and equipment, net $ 1,083 $ 765 Depreciation expense for three-month periods ended December 31, 2021 and 2020 was $86 and $73, respectively. |
Leases
Leases | 3 Months Ended |
Dec. 31, 2021 | |
Leases | |
Note 5 - Leases | 5. Leases The Company leases space for all its branch offices, which are generally located either in downtown or suburban business centers, and for its corporate headquarters. Branch offices are generally leased over periods ranging from three to five years. The corporate office lease expires in 2026. The Company’s leases generally provide for payment of basic rent plus a share of building real estate taxes, maintenance costs and utilities. Operating lease expenses were $534 and $561 for the three-month periods ended December 31, 2021 and 2020, respectively. Supplemental cash flow information related to leases consisted of the following: Three Months Ended December 31, 2021 2020 Cash paid for operating lease liabilities $ 484 $ 493 Supplemental balance sheet information related to leases consisted of the following: December 31, 2021 September 30, 2021 Weighted average remaining lease term for operating leases 2.4 years 2.7 years Weighted average discount rate for operating leases 5.9 % 5.9 % The table below reconciles the undiscounted future minimum lease payments under non-cancelable lease agreements having initial terms in excess of one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of December 31, 2021, including certain closed offices are as follows: Remainder of Fiscal 2022 $ 1,403 Fiscal 2023 1,365 Fiscal 2024 1,079 Fiscal 2025 572 Fiscal 2026 194 Thereafter 29 Less: Imputed interest (362 ) Present value of operating lease liabilities (a) $ 4,280 (a) Includes current portion of $1,646 for operating leases. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets | |
Note 6 - Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets Goodwill Goodwill assets as of December 31, 2021 and September 30, 2021 consisted of the following: December 31, 2021 September 30, 2021 Goodwill beginning balance $ 63,443 $ 63,443 Impairment charges (2,150 ) - Goodwill ending balance $ 61,293 $ 63,443 The Company recently completed its annual goodwill impairment assessment, as of September 30, 2021, and determined that its goodwill was not impaired. The amount of discount inherent in the Company’s market capitalization as recently reported on the NYSE American exchange when compared with consolidated stockholders’ equity, or net book value, has increased since September 30, 2021; therefore, the Company has performed an interim assessment of its goodwill for impairment as of December 31, 2021. As a result, the Company has recognized an impairment charge of $2,150 during the quarter ended December 31, 2021. In reaching its most recent conclusion, management performed interim quantitative and qualitative analysis and adjusted the estimated fair values of its Professional Services and Industrial Services reporting units so that they reconcile more precisely with the Company’s market capitalization as of December 31, 2021, plus an assumed control premium. Intangible Assets The following tables set forth the costs, accumulated amortization and net book value of the Company’s separately identifiable intangible assets as of December 31, 2021 and September 30, 2021 and estimated future amortization expense. December 31, 2021 September 30, 2021 Cost Accumulated Amortization Net Book Value Cost Accumulated Amortization Net Book Value Customer relationships $ 29,070 $ 16,503 $ 12,567 $ 29,070 $ 15,844 $ 13,226 Trade names 8,329 7,156 1,173 8,329 6,801 1,528 Total $ 37,399 $ 23,659 $ 13,740 $ 37,399 $ 22,645 $ 14,754 Estimated Amortization Expense Remaining Fiscal 2022 $ 2,454 Fiscal 2023 2,879 Fiscal 2024 2,879 Fiscal 2025 2,741 Fiscal 2026 1,870 Thereafter 917 $ 13,740 The trade names are amortized on a straight-line basis over their respective estimated useful lives of between five and ten years. Intangible assets that represent customer relationships are amortized on the basis of estimated future undiscounted cash flows or using the straight-line basis over estimated remaining useful lives of five to ten years. The amortization expense for intangible assets was $1,014 and $1,044 for three-month periods ended December 31, 2021 and 2020, respectively. |
Former Revolving Credit Facilit
Former Revolving Credit Facility and Term Loan | 3 Months Ended |
Dec. 31, 2021 | |
Former Revolving Credit Facility and Term Loan | |
Note 7 - Former Revolving Credit Facility and Term Loan | 7. Former Revolving Credit Facility and Term Loan The Company and its subsidiaries, as borrowers, were parties to a Revolving Credit, Term Loan and Security Agreement (the “Former Credit Agreement”) with certain investment funds managed by MGG Investment Group LP ("MGG"). The principal and remaining unpaid accrued interest and fee balances under the Revolving Credit Facility and Term Loan balances outstanding under the Former Credit Agreement, as amended, were fully repaid and the Former Credit Agreement was retired on April 20, 2021. Additional information regarding the repayment of the Former Credit Agreement is presented in Note 1. |
Senior Bank Loan, Security and
Senior Bank Loan, Security and Guarantee Agreement | 3 Months Ended |
Dec. 31, 2021 | |
Senior Bank Loan, Security and Guarantee Agreement | |
Note 8 - Senior Bank Loan, Security and Guarantee Agreement | 8. Senior Bank Loan, Security and Guarantee Agreement On May 14, 2021, GEE Group, Inc. and its subsidiaries, Agile Resources, Inc., Access Data Consulting Corporation, BMCH, Inc., GEE Group Portfolio, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., Triad Personnel Services, Inc., and Triad Logistics, Inc. entered a Loan, Security and Guaranty Agreement for a $20 million asset-based senior secured revolving credit facility with CIT Bank, N.A. (the “CIT Facility”). The CIT Facility is collateralized by 100% of the assets of the Company and its subsidiaries who are co-borrowers and/or guarantors. The CIT Facility matures on the fifth anniversary of the closing date (May 14, 2026). Concurrent with the May 14, 2021 closing of the CIT Facility, the Company borrowed $5,326 and utilized these funds to pay all remaining unpaid Exit and Restructuring Fees due to its former senior lenders in the amount of $4,978, with the remainder going to direct fees and costs associated with the CIT Facility. As of December 31, 2021, the Company had $26 in outstanding borrowings and $13,319 available for borrowing under the terms of the CIT Facility. The Company also had $675 in unamortized debt issue cost associated with the CIT Facility. Under the CIT Facility, advances will be subject to a borrowing base formula that will be computed based on 85% of eligible accounts receivable of the Company and subsidiaries as defined in the CIT Facility, and subject to certain other criteria, conditions, and applicable reserves, including any additional eligibility requirements as determined by the administrative agent. The CIT Facility is subject to usual and customary covenants and events of default for credit facilities of this type. The interest rate, at the Company’s election, will be based on either the Base Rate, as defined, plus the applicable margin; or the London Interbank Offering Rate (“LIBOR” or any successor thereto) for the applicable interest period, subject to a 1% floor, plus the applicable margin. The CIT Facility also contains provisions addressing the potential future replacement of LIBOR utilized and referenced in the loan agreement, in the event LIBOR becomes no longer available. In addition to interest costs on advances outstanding, the CIT Facility will provide for an unused line fee ranging from 0.375% to 0.50% depending on the amount of undrawn credit, original issue discount and certain fees for diligence, implementation, and administration. |
CARES Act Payroll Protection Pr
CARES Act Payroll Protection Program Loans | 3 Months Ended |
Dec. 31, 2021 | |
CARES Act Payroll Protection Program Loans | |
Note 9 - CARES Act Payroll Protection Program Loans | 9. CARES Act Payroll Protection Program Loans Between April 29 and May 7, 2020, the Company obtained for each of its operating subsidiaries a loan from BBVA USA (now known as PNC Bank) pursuant to the Payroll Protection Plan (the “PPP”) which was established under the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). The PPP loans were necessary to support ongoing operations due to current economic hardship, uncertainty, and the significant negative effects on the business operations and activity levels of the applicants attributable to COVID-19 including the impact of lockdowns, quarantines and shut-downs. The PPP loans were used primarily to restore employee pay-cuts, recall furloughed or laid-off employees, support the payroll costs for existing employees, hire new employees, and for other allowable purposes including interest costs on certain business mortgage obligations, rent and utilities. Each of the Company’s subsidiary executed a separate promissory note evidencing unsecured loans under the PPP. The following promissory notes were executed by the Company and its subsidiaries: GEE Group, Inc., for $1,992 (the “GEE Group Note”), Scribe Solutions, Inc. for $277 (the “Scribe Note”), Agile Resources, Inc. for $1,206 (the “Agile Note”), Access Data Consulting Corporation for $1,456 (the “Access Note”), Paladin Consulting, Inc. for $1,925 (the “Paladin Note”), SNI Companies, Inc. for $10,000 (the “SNI Note”), Triad Personnel Services, Inc. for $404 (the “Triad Personnel Note”), Triad Logistics, Inc. for $78 (the “Triad Logistics Note”), and BMCH, Inc. for $2,589 (the “BMCH Note”). The GEE Group Note, the Scribe Note, the Agile Note, the Access Note, the Paladin Note, the SNI Note, the Triad Personnel Note, the Triad Logistics Note, and the BMCH Note are referred to together as the “PPP Notes” and each individually as a “PPP Note”. The loans evidenced by the PPP Notes (the “PPP Loans”) are being made through BBVA as the lender. The Company and its operating subsidiaries have been granted forgiveness of their respective outstanding PPP loans, including the Company’s last four remaining PPP loans and interest for GEE Group Inc., BMCH, Inc., Paladin Consulting, Inc., and SNI Companies, Inc., in the amounts of $2,024, $2,630, $1,956, and $10,163, respectively, which were forgiven by the SBA in December 2021. The Company recognized net gains of $16,773, in aggregate, during the three months ended December 31, 2021 as a result of the forgiveness of its last four PPP loans. The PPP loans obtained by GEE Group Inc., as a public company, and some of its operating subsidiaries, together as an affiliated group, have exceeded the $2,000 audit threshold established by the SBA, and therefore, also will be subject to audit by the SBA in the future. If any of the nine forgiven PPP loans are reinstated in whole or in part as the result of a future audit, a charge or charges would be incurred, accordingly, and they would need to be repaid. If the companies are unable to repay the portions of their PPP loans that ultimately may be reinstated from available liquidity or operating cash flow, we may be required to raise additional equity or debt capital to repay the PPP loans. |
Accrued Compensation
Accrued Compensation | 3 Months Ended |
Dec. 31, 2021 | |
Accrued Compensation | |
Note 10 - Accrued Compensation | 10. Accrued Compensation Accrued Compensation is comprised of accrued wages, the related payroll taxes, employee benefits of the Company's employees, including those working on contract assignments, commissions earned and not yet paid and estimated commissions and bonuses payable. |
Equity
Equity | 3 Months Ended |
Dec. 31, 2021 | |
Equity | |
Note 11 - Equity | 11. Equity On April 19, 2021, the Company concluded its public offering of 83,333 shares of common stock at a public offering price of $0.60 per share. Gross proceeds of the offering totaled $50,000, which after deducting the underwriting discount, legal fees, and offering expenses, resulted in net proceeds of $45,478. GEE granted the underwriters a 45-day option to purchase up to an additional 12,500 shares of the Company's common stock to cover over-allotments, if any, at the public offering price, less the underwriting discount. ThinkEquity, a division of Fordham Financial Management, Inc., acted as sole book-running manager for the offering. On or about April 19, 2021, six (6) directors and officers of the Company individually acquired shares of the Company’s common stock either by directly participating in the Company’s 2021 follow-on public offering of its common shares, as subscribers, or by purchasing Company common shares in the open market. These six officers and directors collectively acquired a total of 679 shares of the Company’s common stock at that time. On April 27, 2021, the underwriters of the Company’s April 19, 2021, public offering exercised in full their 15% over–allotment option to purchase an additional 12,500 common shares (the “option shares”) of the Company at the public offering price of $0.60 per share. The Company closed the transaction on April 28, 2021 and received net proceeds from the sale of the option shares of approximately $6,937, after deducting the applicable underwriting discount. Amended and Restated 2013 Incentive Stock Plan As of December 31, 2021, there were stock options outstanding under the Company’s Amended and Restated 2013 Incentive Stock Plan. During fiscal 2021, the 2013 Incentive Stock Plan was amended to increase the total shares available for restricted stock and stock options grants by 10,000 to a total of 15,000 (7,500 restricted stock shares and 7,500 stock option shares). The Incentive Stock Plan authorizes the Compensation Committee of the Board of Directors to grant either incentive or non-statutory stock options to employees. Vesting periods are established by the Compensation Committee at the time of grant. As of December 31, 2021, there were 10,786 shares available to be granted under the Plan (5,828 shares available for stock option grants and 4,958 shares available for restricted stock grants). Restricted Stock The Company did not grant restricted stock during the three-month periods ended December 31, 2021 and 2020. Stock-based compensation expense attributable to restricted stock was $72 and $176 during the three-month periods ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there was approximately $490 of unrecognized compensation expense related to restricted stock outstanding. A summary of restricted stock activity is presented as follows: Number of Shares Weighted Average Fair Value ($) Non-vested restricted stock outstanding as of September 30, 2021 1,442 0.60 Granted - - Issued - - Non-vested restricted stock outstanding as of December 31, 2021 1,442 0.60 Warrants No warrants were granted or exercised during the three-month periods ended December 31, 2021 and 2020. Number of Shares Weighted Average Exercise Price Per Share ($) Weighted Average Remaining Contractual Life Total Intrinsic Value of Warrants ($) Warrants outstanding as of September 30, 2021 77 2.00 3.50 - Granted - - - - Expired - - - - Warrants outstanding as of December 31, 2021 77 2.00 3.25 - Warrants exercisable as of September 30, 2021 77 2.00 3.50 - Warrants exercisable as of December 31, 2021 77 2.00 3.25 - Stock Options All stock options outstanding as of December 31, 2021 and September 30, 2021 were non-statutory stock options, had exercise prices equal to the market price on the date of grant, and had expiration dates ten years from the date of grant. Stock-based compensation expense attributable to stock options and warrants was $75 and $135 for the three-month periods ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there was approximately $382 of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was 3.56 years. A summary of stock option activity is as follows: Number of Shares Weighted Average Exercise Price per share ($) Weighted Average Remaining Contractual Life (Years) Total Intrinsic Value of Options ($) Options outstanding as of September 30, 2021 1,672 2.14 7.35 - Granted - - - - Forfeited/Expired (1 ) 2.99 - - Options outstanding as of December 31, 2021 1,671 2.14 7.10 - Exercisable as of September 30, 2021 890 3.14 6.08 - Exercisable as of December 31, 2021 994 3.02 5.93 - |
Income Tax
Income Tax | 3 Months Ended |
Dec. 31, 2021 | |
Income Tax | |
Note 12 - Income Tax | 12. Income Tax The following table presents the provision for income taxes and our effective tax rate for the three-month periods ended December 31, 2021 and 2020: Three Months Ended, 2021 2020 Provision for Income Taxes (29 ) (395 ) Effective Tax Rate 0 % 58 % The effective income tax rate on operations is based upon the estimated income for the year, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies. Our effective tax rate for the three months ended December 31, 2021 is lower than the statutory rate primarily due to the effect of the valuation allowance on the net DTA position. Our effective tax rate for the three months ended December 31, 2020 is higher than the statutory tax rate primarily due to statutory changes regarding the Payroll Protection Program (PPP). Other than the deferred tax liability relating to indefinite lived asset, the Company is maintaining a valuation allowance against the remaining net DTA position. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2021 | |
Commitments and contingencies | |
Note 13 - Commitments and Contingencies | 13. Commitments and Contingencies Litigation and Claims The Company and its subsidiaries are involved in various litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position. |
Segment Data
Segment Data | 3 Months Ended |
Dec. 31, 2021 | |
Note 14 - Segment Data | 14. 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, accounting, finance and office, engineering, and medical, and (c) temporary industrial staffing. These services can be divided into two reporting units: Professional Staffing Services and Industrial Staffing Services. Some selling, general and administrative expenses are not fully allocated among Industrial Services and Professional Staffing Services. Unallocated corporate expenses primarily include certain executive compensation expenses and salaries, certain administrative salaries, corporate legal expenses, stock compensation expenses, consulting expenses, audit fees, corporate rent and facility costs, board fees, acquisition, integration and restructuring expenses, and interest expense. Three Months Ended December 31, 2021 2020 Industrial Staffing Services Industrial services revenue $ 4,089 $ 5,111 Industrial services gross margin (1) 15.3 % 45.5 % Operating income $ 112 $ 2,207 Depreciation and amortization $ 16 $ 29 Professional Staffing Services Permanent placement revenue $ 6,163 $ 3,395 Placement services gross margin 100 % 100 % Professional services revenue $ 32,595 $ 26,137 Professional services gross margin 27.0 % 26.2 % Operating income $ 2,245 $ 1,380 Depreciation and amortization $ 1,084 $ 1,088 Unallocated Expenses Corporate administrative expenses $ 2,109 $ 1,184 Corporate facility expenses 94 82 Stock compensation expense 147 311 Board related expenses 34 34 Total unallocated expenses $ 2,384 $ 1,611 Consolidated Total revenue $ 42,847 $ 34,643 Operating (loss) income $ (27 ) $ 1,976 Depreciation and amortization $ 1,100 $ 1,117 (1) Annual premium refunds from the Ohio Bureau of Workers Compensations totaling $18 and $1,537 are included in the three months ended December 31, 2021 and December 31, 2020, respectively. The Industrial Services gross margin normalized for the effects of these items were approximately 14.8% and 15.4% for the three months ended December 31, 2021 and December 31, 2020, respectively. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2021 | |
Subsequent Events | |
Note 15 - Subsequent Events | 15. Subsequent Events On January 18, 2022, the Company’s Compensation Committee and Board of Directors unanimously consented to grant 100 restricted shares of common stock and non-qualified stock options for an additional 50 shares. On February 1, 2022, the Company detected and stopped a network security incident. An unauthorized third party gained access into our network, encrypted various systems, and has demanded money to decrypt the affected systems and to delete and not publicly release stolen information. The Company’s IT professionals immediately disconnected and isolated the affected systems to prevent any further compromise. The senior executive management team was immediately notified who in turn reported the network security incident to the Company’s audit committee chairman who has board oversight authority for these types of matters. The Company’s audit committee and board of directors have been fully briefed and a special committee of the board of directors has been appointed to participate with management in the on-going investigations, response and full remediation of the incident. The Company has engaged third party cyber security experts to assist its internal IT professionals and conduct a comprehensive investigation to determine the extent of the unauthorized activity. The Company has also notified law enforcement and its cyber liability insurance carrier about the incident. To date, the Company’s investigation has determined the unauthorized third party acquired data maintained on the encrypted servers, to include some individual personal information such as name, social security number, passport and driver license information. Our forensic investigation will continue until we have determined, to the maximum extent practically possible, the full scope of the incident. Individuals affected by this incident will be notified in accordance with applicable state and federal laws. The Company’s investigation and analysis are on-going, therefore, management does not yet have a complete estimate of the likely total cost or damages stemming from this incident. Based on what management now knows, the Company does not currently foresee this incident having a material detrimental effect on our business or financial position. The Company had in place cyber liability insurance coverage, subject to certain policy limitations and deductibles. The Company immediately notified the carrier of the network security incident and is working with them on this matter. However, management does not know the full effects at this time, so there can be no assurance that the incident ultimately will not have material adverse effects on our business or financial position. Currently, the Company’s network environment is being monitored around the clock by its IT professionals and third-party cyber security experts to mitigate a future compromise. The Company has not observed any additional malicious activity on the network to date. The Company’s operations have been minimally impacted to date, and it continues to serve our clients without issue. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2021 | |
Significant Accounting Policies and Estimates | |
Basis of Presentation | 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 notes 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-month period ended December 31, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2022. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2021 as filed on December 23, 2021. |
Liquidity | |
Paycheck Protection Program Loan | |
Financial Restructuring | |
Principles of Consolidation | The unaudited condensed consolidated financial statements include the accounts and transactions of the Company and its wholly owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation. |
Use of Estimates | The preparation of financial statements in conformity 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 requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Revenue Recognition | Revenues from contracts with customers are generated from direct hire placement services, temporary professional services staffing, and temporary industrial staffing. Revenues are recognized when promised services are performed for customers, and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Our revenues are recorded net of variable consideration such as sales adjustments or allowances. Direct hire placement service revenues from contracts with customers are recognized when employment candidates accept offers of employment, less a provision for estimated credits or refunds to customers as the result of applicants not remaining employed for the entirety of the Company's guarantee period (referred to as “falloffs”). The Company’s guarantee periods for permanently placed employees generally range from 60 to 90 days from the date of hire. Fees associated with candidate placement are generally calculated as a percentage of the new employee’s annual compensation. No fees for permanent placement services are charged to employment candidates. Temporary staffing service revenues from contracts with customers are recognized in amounts the Company has a right to invoice as the services are rendered by the Company’s temporary employees. The Company records temporary staffing revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company controls the specified service before that service is performed for a customer. The Company has the risk of identifying and hiring qualified employees (as opposed to client employees), has the discretion to select the employees and establish their price, and bears the risk for services that are not fully paid for by customers. Falloffs and refunds during the period are reflected in the unaudited condensed consolidated statements of operations as a reduction of placement service revenues and were approximately $694 and $303 for the three-month periods ended December 31, 2021 and 2020, respectively. Expected future falloffs and refunds are reflected in the unaudited condensed consolidated balance sheet as a reduction of accounts receivable as described under Accounts Receivable, below. See Note 14 for disaggregated revenues by segment. Payment terms in our contracts vary by the type and location of our customer and the services offered. The terms between invoicing and when payments are due are not significant. |
Cost of Contract Staffing Services | The cost of contract services includes the wages and the related payroll taxes, employee benefits and certain other employee-related costs of the Company’s contract service 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. As of December 31, 2021 and September 30, 2021, there were no cash equivalents. The Company maintains deposits in 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 falloffs is recorded as a reduction of revenues for estimated losses due to applicants not remaining employed during 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 taken together reflect management’s estimate of the potential losses inherent in the accounts receivable balances based on historical loss statistics and known factors impacting our clients. Management believes that the nature of the contract services business, wherein client companies are generally dependent on our contract employees in the same manner as permanent employees for their production cycles and the conduct of their respective businesses contributes to a relatively small accounts receivable allowance. As of December 31, 2021, and September 30, 2021, the allowance for doubtful accounts was $363 and $286, respectively. The Company charges off uncollectible accounts once the invoices are deemed unlikely to be collectible. The allowance also includes permanent placement falloffs of $239 and $115 as of December 31, 2021 and September 30, 2021, 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 three-month periods ended December 31, 2021 and 2020. |
Leases | The Company determines if a contractual arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the Company’s unaudited condensed consolidated balance sheet. The Company evaluates and classifies leases as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All the Company’s real estate leases are classified as operating leases. Also, the Company elected the practical expedient which allows aggregation of non-lease components with the related lease components when evaluating accounting treatment. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The lease payments included in the present value are fixed lease payments. As most of the Company’s leases do not provide an implicit rate, the Company estimates its collateralized incremental borrowing rate, based on information available at the commencement date, in determining the present value of lease payments. The Company applies the portfolio approach in applying discount rates to its classes of leases. The operating lease ROU assets include any payments made before the commencement date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company does not currently have subleases. The Company also does not currently have residual value guarantees or restrictive covenants in its leases. |
Fair Value Measurement | The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement”, which defines fair value, establishes a framework for measuring fair value and enhances fair value measurement disclosure. Under these provisions, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) 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 of 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 when observable inputs are not available. The hierarchy is described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. The fair value of the Company’s current assets and current liabilities approximate their carrying values due to their short-term nature. The fair value disclosures of the Company’s long-term liabilities approximate their respective fair values based on current yield for debt instruments with similar terms. Fair value measurements utilized in evaluating the Company’s goodwill and other intangible assets for impairments are measured at fair value on a non-recurring basis using a combination of level 2 and level 3 inputs. |
Earnings and Loss per Share | Basic earnings and loss per share are computed by dividing net income or loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the vesting of restricted shares granted but unissued, and exercise of stock options and warrants. The dilutive effect of outstanding warrants and options is reflected in earnings per share by use of the treasury stock method. For the three-month period ended December 31, 2021, the weighted average dilutive incremental shares, or common stock equivalents, included in the calculations of dilutive shares were 1,442. Common stock equivalents, which are excluded because their effect is anti-dilutive, were approximately 1,748 and 2,791 for the three months ended December 31, 2021 and 2020, respectively. For the three-month period ended December 31, 2020, in which a net loss was incurred, all potentially dilutive common shares are considered antidilutive and thus are excluded from the calculation. |
Advertising Expenses | The Company expenses the costs of print and internet media advertising and promotions as incurred and reports these costs in selling, general and administrative expenses. For the three-month periods ended December 31, 2021 and 2020, advertising expense totaled $518 and $421, respectively. |
Goodwill | The Company evaluates its goodwill for possible impairment as prescribed by ASU 2017-04, Intangibles — Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment at least annually, and more frequently when one or more triggering events or circumstances indicate that the goodwill might be impaired. Under this guidance, annual or interim goodwill impairment testing is performed by comparing the estimated fair value of a reporting unit with its carrying amount. The Company allocates its goodwill among two reporting units: its Professional Services reporting unit and its Light Industrial Services reporting unit for purposes of evaluation for impairments. An impairment charge is recognized for the amount by which the carrying amount exceeds a reporting unit’s estimated fair value, not to exceed the carrying value of goodwill. In testing for impairments, management applies one or more valuation techniques to estimate the fair values of the reporting units, individual assets or groups of individual assets, as required under the circumstances. These valuation techniques rely on assumptions and other factors, such as industry multiples applied to earnings, estimated future cash flows, the discount rates used to determine the present value of associated cash flows, and market comparable assumptions. The Company recently completed its annual goodwill impairment assessment, as of September 30, 2021, and determined that its goodwill was not impaired. The amount of discount inherent in the Company’s market capitalization as recently reported on the NYSE American exchange when compared with consolidated stockholders’ equity, or net book value, has increased since September 30, 2021; therefore, the Company has performed an interim assessment of its goodwill for impairment as of December 31, 2021. As a result, the Company has recognized a non-cash impairment charge of $2,150 during the quarter ended December 31, 2021. In reaching its most recent conclusion, management performed interim quantitative and qualitative analysis interim quantitative and qualitative analysis and adjusted the estimated fair values the estimated fair values of its Professional Services and Industrial Services reporting units so that they reconcile more precisely with the Company’s market capitalization as of December 31, 2021, plus an assumed control premium. Additional information regarding the Company’s goodwill and impairment assessments is presented in Note 6. |
Intangible Assets | Separately identifiable intangible assets held in the form of customer lists, non-compete agreements, customer relationships, management agreements and trade names were recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives ranging from two to ten years using both accelerated and straight-line methods. |
Impairment of Long-lived Assets (other than Goodwill) | The Company recognizes 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 recognize and record any impairments of long-lived assets used in operations during the three-month periods ended December 31, 2021 and 2020. |
Stock-Based Compensation | The Company accounts for stock-based awards to employees in accordance with FASB ASC 718, “Compensation-Stock Compensation”, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For all employee stock options, we recognize expense 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 our 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 FASB ASC 718, “Compensation-Stock Compensation”. Such options are valued using the Black-Scholes option pricing model. See Note 11 for the assumptions used to calculate the fair value of stock-based employee and non-employee compensation. Upon the exercise of options, it is the Company’s policy to issue new shares rather than utilizing treasury shares. |
Income Taxes | We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. As of December 31, 2021 and September 30, 2021, no material accrued interest or penalties are included on the related tax liability line in the consolidated balance sheet. |
Segment Data | The Company provides the following distinctive services: (a) direct hire placement services, and (b) temporary professional contract services staffing in the fields of information technology, financial, accounting and office; engineering and medical, and (c) temporary contract industrial staffing. The Company’s services can be divided into two reporting units: Professional Staffing Services and Industrial Staffing Services. Selling, general and administrative expenses are not entirely allocated among the Light Industrial and Professional Staffing Services reporting units. Operating results are regularly reviewed by the chief operating decision makers to make determinations about resources to be allocated to the segments and to assess their performance. Other factors, including type of business, type of employees, type of markets and clients, and revenue sources are considered in determining the Company’s operating segments. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Property and Equipment | |
Schedule of Property and Equipment | December 31, 2021 September 30, 2021 Computer software $ 462 $ 462 Office equipment, furniture, fixtures and leasehold improvements 3,446 3,042 Total property and equipment, at cost 3,908 3,504 Accumulated depreciation and amortization (2,825 ) (2,739 ) Property and equipment, net $ 1,083 $ 765 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Leases | |
Schedule of Supplemental cash flow information | Three Months Ended December 31, 2021 2020 Cash paid for operating lease liabilities $ 484 $ 493 |
Schedule of Supplemental balance sheer information | December 31, 2021 September 30, 2021 Weighted average remaining lease term for operating leases 2.4 years 2.7 years Weighted average discount rate for operating leases 5.9 % 5.9 % |
Schedule of undiscounted future minimum lease payments | Remainder of Fiscal 2022 $ 1,403 Fiscal 2023 1,365 Fiscal 2024 1,079 Fiscal 2025 572 Fiscal 2026 194 Thereafter 29 Less: Imputed interest (362 ) Present value of operating lease liabilities (a) $ 4,280 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets | |
Schedule of Goodwill | December 31, 2021 September 30, 2021 Goodwill beginning balance $ 63,443 $ 63,443 Impairment charges (2,150 ) - Goodwill ending balance $ 61,293 $ 63,443 |
Schedule of Identifiable Intangible Assets | December 31, 2021 September 30, 2021 Cost Accumulated Amortization Net Book Value Cost Accumulated Amortization Net Book Value Customer relationships $ 29,070 $ 16,503 $ 12,567 $ 29,070 $ 15,844 $ 13,226 Trade names 8,329 7,156 1,173 8,329 6,801 1,528 Total $ 37,399 $ 23,659 $ 13,740 $ 37,399 $ 22,645 $ 14,754 |
Schedule of Estimated Amortization Expense | Estimated Amortization Expense Remaining Fiscal 2022 $ 2,454 Fiscal 2023 2,879 Fiscal 2024 2,879 Fiscal 2025 2,741 Fiscal 2026 1,870 Thereafter 917 $ 13,740 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Equity | |
Summary of restricted stock activity | A summary of restricted stock activity is presented as follows: Number of Shares Weighted Average Fair Value ($) Non-vested restricted stock outstanding as of September 30, 2021 1,442 0.60 Granted - - Issued - - Non-vested restricted stock outstanding as of December 31, 2021 1,442 0.60 |
Summary of Warrants, granted or exercised | Number of Shares Weighted Average Exercise Price Per Share ($) Weighted Average Remaining Contractual Life Total Intrinsic Value of Warrants ($) Warrants outstanding as of September 30, 2021 77 2.00 3.50 - Granted - - - - Expired - - - - Warrants outstanding as of December 31, 2021 77 2.00 3.25 - Warrants exercisable as of September 30, 2021 77 2.00 3.50 - Warrants exercisable as of December 31, 2021 77 2.00 3.25 - |
Summary of stock option activity | A summary of stock option activity is as follows: Number of Shares Weighted Average Exercise Price per share ($) Weighted Average Remaining Contractual Life (Years) Total Intrinsic Value of Options ($) Options outstanding as of September 30, 2021 1,672 2.14 7.35 - Granted - - - - Forfeited/Expired (1 ) 2.99 - - Options outstanding as of December 31, 2021 1,671 2.14 7.10 - Exercisable as of September 30, 2021 890 3.14 6.08 - Exercisable as of December 31, 2021 994 3.02 5.93 - |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Income Tax | |
Schedule of Provision for income taxes | Three Months Ended, 2021 2020 Provision for Income Taxes (29 ) (395 ) Effective Tax Rate 0 % 58 % |
Segment Data (Tables)
Segment Data (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Schedule of Segment Reporting Information | Three Months Ended December 31, 2021 2020 Industrial Staffing Services Industrial services revenue $ 4,089 $ 5,111 Industrial services gross margin (1) 15.3 % 45.5 % Operating income $ 112 $ 2,207 Depreciation and amortization $ 16 $ 29 Professional Staffing Services Permanent placement revenue $ 6,163 $ 3,395 Placement services gross margin 100 % 100 % Professional services revenue $ 32,595 $ 26,137 Professional services gross margin 27.0 % 26.2 % Operating income $ 2,245 $ 1,380 Depreciation and amortization $ 1,084 $ 1,088 Unallocated Expenses Corporate administrative expenses $ 2,109 $ 1,184 Corporate facility expenses 94 82 Stock compensation expense 147 311 Board related expenses 34 34 Total unallocated expenses $ 2,384 $ 1,611 Consolidated Total revenue $ 42,847 $ 34,643 Operating (loss) income $ (27 ) $ 1,976 Depreciation and amortization $ 1,100 $ 1,117 |
Description of Business (Detail
Description of Business (Details Narrative) - USD ($) $ / shares in Units, shares in Thousands | May 14, 2021 | May 07, 2020 | Apr. 27, 2021 | Apr. 20, 2021 | Apr. 19, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 |
Deferred payment | $ 1,827,000 | $ 3,692,000 | ||||||
Exit and Restructuring Fees | $ 4,978 | |||||||
Accrued interest | 32,000 | $ 46,000 | ||||||
Fordham Financial Management [Member] | ||||||||
Common stock shares issued | 83,333 | |||||||
Public offering price per share | $ 0.60 | $ 0.60 | ||||||
Gross proceeds | $ 50,000,000 | |||||||
Net proceeds | $ 45,478,000 | |||||||
Additional shares of common stock | 12,500 | |||||||
Repayment of loan | $ 56,022,000 | |||||||
Repaid debt | 11,828,000 | |||||||
Principal balance | 43,735,000 | |||||||
Accrued interest | $ 459,000 | |||||||
Proceeds from sale of option shares | $ 6,937,000 | |||||||
PIK Interest Rate | 5.00% | |||||||
Description of interbank offering rate | which was subject to an annual interest rate comprised of the greater of the London Interbank Offering Rate (“LIBOR”) or 1%, plus a 10% margin (approximately 11% per annum) | |||||||
Description of annual interest rate | which was subject to an annual interest rate of the greater of LIBOR or 1% plus a 10% margin | |||||||
PPP loans One [Member] | ||||||||
PPP loans and accrued interest | 2,024,000 | |||||||
PPP loans Two [Member] | ||||||||
PPP loans and accrued interest | 2,630,000 | |||||||
PPP loans Three [Member] | ||||||||
PPP loans and accrued interest | 1,956,000 | |||||||
PPP loans Four [Member] | ||||||||
PPP loans and accrued interest | $ 10,163,000 | |||||||
CIT Facility [Member] | ||||||||
Loan amount | 5,326,000,000 | |||||||
Security And Guaranty Agreement [Member] | ||||||||
Loan amount | $ 20,000,000 | |||||||
Repayment of loan | $ 20,000,000 | |||||||
Payroll Protection Program [Member] | Unsecured Promissory Notes [Member] | ||||||||
Funds received | $ 19,927,000 |
Significant Accounting Polici_2
Significant Accounting Policies and Estimates (Details Narrative) - USD ($) shares in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | |
Significant Accounting Policies and Estimates | |||
Falloffs and refunds | $ 694,000 | $ 303,000 | |
Impairment of goodwill | 2,150,000 | $ 0 | |
Allowance for doubtful accounts | 363,000 | 286,000 | |
Reserve for permanent placement falloffs | 239,000 | $ 115,000 | |
Advertising expense | $ 518,000 | $ 421,000 | |
Dilutive securities included in the computation of earning per share | 1,442 | ||
Anti-dilutive securities excluded from computation of earning per share | 1,748 | 2,791 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2021 | Sep. 30, 2021 |
Total property and equipment, at cost | $ 3,908,000 | $ 3,504,000 |
Accumulated depreciation and amortization | (2,825,000) | (2,739,000) |
Property and equipment, net | 1,083,000 | 765,000 |
Computer software [Member] | ||
Total property and equipment, at cost | 462,000 | 462,000 |
Office equipment, furniture, fixtures [Member] | ||
Total property and equipment, at cost | $ 3,446,000 | $ 3,042,000 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment | ||
Depreciation expense | $ 86 | $ 73 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases | ||
Cash paid for operating lease liabilities | $ 484 | $ 493 |
Leases (Details 1)
Leases (Details 1) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Sep. 30, 2021 | |
Leases | ||
Weighted average remaining lease term for operating leases | 2 years 4 months 24 days | 2 years 8 months 12 days |
Weighted average discount rate for operating leases | 5.90% | 5.90% |
Leases (Details 2)
Leases (Details 2) $ in Thousands | Dec. 31, 2021USD ($) |
Leases | |
Fiscal 2022 | $ 1,403 |
Fiscal 2023 | 1,365 |
Fiscal 2024 | 1,079 |
Fiscal 2025 | 572 |
Fiscal 2026 | 194 |
Thereafter | 29 |
Less: Imputed interest | (362) |
Present value of operating lease liabilities (a) | $ 4,280 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | |
Leases | |||
Current operating lease liabilities | $ 1,646 | $ 1,681 | |
Operating lease expenses | $ 534 | $ 561 | |
Operating lease expires | office lease expires in 2026 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Sep. 30, 2021 | |
Goodwill and Intangible Assets | ||
Goodwill, beginning of fiscal year | $ 63,443,000 | $ 63,443,000 |
Impairment of goodwill | 2,150,000 | 0 |
Goodwill, end of fiscal year | $ 61,293,000 | $ 63,443,000 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Cost | $ 37,399 | $ 37,399 |
Accumulated Amortization | 23,659 | 22,645 |
Net Book Value | 13,740 | 14,754 |
Trade Names [Member] | ||
Cost | 8,329 | 8,329 |
Accumulated Amortization | 7,156 | 6,801 |
Net Book Value | 1,173 | 1,528 |
Customer Relationships [Member] | ||
Cost | 29,070 | 29,070 |
Accumulated Amortization | 16,503 | 15,844 |
Net Book Value | $ 12,567 | $ 13,226 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Estimated Amortization Expense | ||
Fiscal 2022 | $ 2,454 | |
Fiscal 2023 | 2,879 | |
Fiscal 2024 | 2,879 | |
Fiscal 2025 | 2,741 | |
Fiscal 2026 | 1,870 | |
Thereafter | 917 | |
Total | $ 13,740 | $ 14,754 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | |
Goodwill and Intangible Assets | |||
Amortization expense | $ 1,014,000 | $ 1,044,000 | |
Impairment of goodwill | $ 2,150,000 | $ 0 | |
Description of net gains, percentage | 20%, as the result of net gains from the forgiveness of its last four remaining outstanding |
Senior Bank Loan Security and G
Senior Bank Loan Security and Guarantee Agreement (Details Narrative) $ in Thousands | 3 Months Ended |
Dec. 31, 2021USD ($) | |
Security And Guaranty Agreement [Member] | |
Credit facility mature | May 14, 2026 |
Exit and Restructuring Fees paid on Former Credit Facility | $ 4,978 |
Outstanding borrowing amount | 26 |
Senior secured revolving credit facility with the bank | 20,000 |
Availability for borrowing under the terms of the CIT Facility | 13,319 |
Unamortized Debt Costs | $ 675 |
Maximum [Member] | |
Unused line fee diligence, implementation, and administration | 0.375% |
Minimum [Member] | |
Unused line fee diligence, implementation, and administration | 0.50% |
CARES Act Payroll Protection _2
CARES Act Payroll Protection Program Loans (Details Narrative) $ in Thousands | 3 Months Ended |
Dec. 31, 2021USD ($) | |
Audit threshould | $ 2,000 |
Triad Logistics Note [Member] | PPP Loans [Member] | |
Promissory notes | 78 |
Net gains recorded on PPP loan forgiveness | 16,773 |
GEE Group, Inc [Member] | |
Promissory notes | 1,992 |
Scribe Solutions, Inc [Member] | |
Promissory notes | 277 |
Agile Resources, Inc [Member] | |
Promissory notes | 1,206 |
Access Data Consulting Corporation [Member] | |
Promissory notes | 1,456 |
Paladin Consulting, Inc [Member] | |
Promissory notes | 1,925 |
Forgiven loan balances | 1,956 |
SNI Companies, Inc [Member] | |
Promissory notes | 10,000 |
Forgiven loan balances | 10,163 |
Triad Personnel Services, Inc [Member] | |
Promissory notes | 404 |
BMCH, Inc [Member] | |
Promissory notes | 2,589 |
Forgiven loan balances | 2,630 |
Gee Group [Member] | |
Forgiven loan balances | $ 2,024 |
Equity (Details)
Equity (Details) | 3 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Equity | |
Non-vested Restricted stock outstanding, beginning balance | shares | 1,442,000 |
Granted | shares | 0 |
Issued | shares | 0 |
Non- vested Restricted stock outstanding, ending balance | shares | 1,442,000 |
Weighted average fair value | |
Weighted average fair value Non- vested Restricted stock outstanding, beginning balance | $ / shares | $ 0.60 |
Weighted average fair value Non- vested Restricted stock outstanding, granted | $ / shares | 0 |
Weighted average fair value Non- vested Restricted stock outstanding, issued | $ / shares | 0 |
Weighted average fair value Non- vested Restricted stock outstanding, ending balance | $ / shares | $ 0.60 |
Equity (Details 1)
Equity (Details 1) $ / shares in Units, $ in Thousands | 3 Months Ended |
Dec. 31, 2021USD ($)$ / sharesshares | |
Granted | 0 |
Exercised | 0 |
Warrants [Member] | |
Warrants outstanding, beginning balance | 77,000 |
Granted | 0 |
Exercised | 0 |
Warrants outstanding, ending balance | 77,000 |
Warrants exercisable, beginning balance | 77,000 |
Warrants exercisable, ending balance | 77,000 |
Weighted Average Exercise Price Per Share warrants outstanding, beginning balance | $ / shares | $ 2 |
Weighted Average Exercise Price Per Share Warrants outstanding, ending balance | $ / shares | 2 |
Weighted Average Exercise Price Per Share Warrants exercisable, beginning balance | $ / shares | 2 |
Weighted Average Exercise Price Per Share Warrants exercisable, ending balance | $ / shares | $ 2 |
Weighted Average Remaining Contractual Life Warrants outstanding, beginning balance | 3 years 6 months |
Weighted Average Remaining Contractual Life Warrants outstanding, ending balance | 3 years 3 months |
Weighted Average Remaining Contractual Life Warrants exercisable, beginning balance | 3 years 6 months |
Weighted Average Remaining Contractual Life Warrants exercisable, ending balance | 3 years 3 months |
Total Intrinsic Value of Warrants Warrants outstanding, beginning balance | $ | $ 0 |
Total Intrinsic Value of Warrants,Warrants outstanding, ending balance | $ | 0 |
Total Intrinsic Value of Warrants Warrants exercisable, beginning balance | $ | 0 |
Total Intrinsic Value of Warrants Warrants exercisable, ending balance | $ | $ 0 |
Equity (Details 2)
Equity (Details 2) | 3 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Granted | shares | 0 |
Weighted Average Exercise Price Per Share granted | $ / shares | $ 0.60 |
Stock Option [Member] | |
Option outstanding, beginning balance | shares | 1,672,000 |
Granted | shares | 0 |
Forfeited | shares | (1,000) |
Option outstanding, ending balance | shares | 1,671,000 |
Exercisable, beginning balance | shares | 890,000 |
Exercisable, ending balance | shares | 994,000 |
Weighted Average Exercise Price Per Share Options outstanding, beginning balance | $ / shares | $ 2.14 |
Weighted Average Exercise Price Per Share granted | $ / shares | 0 |
Weighted Average Exercise Price Per Share Forfeited | $ / shares | 2.99 |
Weighted Average Exercise Price Per Share Optionss outstanding, ending balance | $ / shares | 2.14 |
Weighted Average Exercise Price Per Share, exercisable, beginning balance | $ / shares | 3.14 |
Weighted Average Exercise Price Per Share, exercisable, ending balance | $ / shares | $ 3.02 |
Weighted Average Remaining Contractual Life Options outstanding, beginning balance | 7 years 4 months 6 days |
Weighted Average Remaining Contractual Life Options outstanding, ending balance | 7 years 1 month 6 days |
Weighted Average Remaining Contractual Life, exercisable, beginning balance | 6 years 29 days |
Weighted Average Remaining Contractual Life, exercisable, ending balance | 5 years 11 months 4 days |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Apr. 19, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Apr. 27, 2021 | |
Common stock shares acquired by directors and officers of the Company | 679 | |||
Restricted stock shares available to be granted under amended plan | 4,958 | |||
Stock option shares available to be granted under amended plan | 5,828 | |||
Warrants [Member] | Stock Option [Member] | ||||
Stock granted value share-based compensation | $ 75 | $ 135 | ||
Unrecognized compensation expense | $ 382 | |||
Weighted average vesting period | 3 years 6 months 21 days | |||
Restricted Stock [Member] | ||||
Stock granted value share-based compensation | $ 72 | $ 176 | ||
Unrecognized compensation expense | $ 490 | |||
2013 Incentive Stock Plan [Member] | ||||
Restricted stock shares available to be granted under amended plan | 10,000 | |||
Stock options outstanding under amended plan | 15,000 | |||
Authorizes compensation aggregate, shares | 10,786 | |||
Security Agreement [Member] | ||||
Public offering of shares of common stock | 83,333 | |||
Public offering price per share | $ 0.60 | $ 0.60 | ||
Proceeds from sale of option shares | $ 6,937 | |||
Additional shares of common stock | 12,500 | |||
Net proceeds of public offering | $ 45,478 | |||
Underwriting discount legal fees | $ 50,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax | ||
Provision for Income Taxes | $ (29) | $ (395) |
Effective Tax Rate | 0.00% | 58.00% |
Segment Data (Details)
Segment Data (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating (loss) income | $ (27,000) | $ 1,976,000 |
Total revenue | 42,847,000 | 34,643,000 |
Consolidated [Member] | ||
Operating (loss) income | (27,000) | 1,976,000 |
Depreciation and amortization | 1,100,000 | 1,117,000 |
Total revenue | 42,847,000 | 34,643,000 |
Industrial Staffing Services [Member] | ||
Industrial services revenue | $ 4,089,000 | $ 5,111,000 |
Industrial services gross margin | 15.30% | 45.50% |
Operating (loss) income | $ 112,000 | $ 2,207,000 |
Depreciation and amortization | 16,000 | 29,000 |
Professional Staffing Services [Member] | ||
Operating (loss) income | 2,245,000 | 1,380,000 |
Depreciation and amortization | 1,084,000 | 1,088,000 |
Permanent placement revenue | $ 6,163,000 | $ 3,395,000 |
Placement services gross margin | 100.00% | 100.00% |
Professional services revenue | $ 32,595,000 | $ 26,137,000 |
Professional services gross margin | 27.00% | 26.20% |
Unallocated Expenses [Member] | ||
Corporate administrative expenses | $ 2,109,000 | $ 1,184,000 |
Corporate facility expenses | 94,000 | 82,000 |
Stock compensation expense | 147,000 | 311,000 |
Board related expenses | 34,000 | 34,000 |
Total unallocated expenses | $ 2,384,000 | $ 1,611,000 |
Segment Data (Details Narrative
Segment Data (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Data (Details Narrative) | ||
Annual premium refunds | $ 18 | $ 1,537 |
Adjusted Industrial Services gross margin | 14.80% | 15.40% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Professional Staffing Services [Member] - Subsequent Event [Member] | Jan. 18, 2022shares |
Restricted shares | 100 |
Non-qualified stock options | 50 |