Cover
Cover - shares | 3 Months Ended | |
Dec. 31, 2022 | Feb. 13, 2023 | |
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, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
Entity Common Stock Shares Outstanding | 114,450,455 | |
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, 2022 | Sep. 30, 2022 |
CURRENT ASSETS | ||
Cash | $ 18,472 | $ 18,848 |
Accounts receivable, less allowances ($731 and $738, respectively) | 20,339 | 22,770 |
Prepaid expenses and other current assets | 718 | 604 |
Total current assets | 39,529 | 42,222 |
Property and equipment, net | 1,089 | 1,140 |
Goodwill | 61,293 | 61,293 |
Intangible assets, net | 10,565 | 11,285 |
Right-of-use assets | 2,997 | 2,830 |
Other long-term assets | 683 | 784 |
TOTAL ASSETS | 116,156 | 119,554 |
CURRENT LIABILITIES | ||
Accounts payable | 2,869 | 2,958 |
Accrued compensation | 4,835 | 5,750 |
Current operating lease liabilities | 1,303 | 1,333 |
Other current liabilities | 1,986 | 5,538 |
Total current liabilities | 10,993 | 15,579 |
Deferred taxes | 580 | 528 |
Noncurrent operating lease liabilities | 2,046 | 1,889 |
Other long-term liabilities | 506 | 555 |
Total liabilities | 14,125 | 18,551 |
SHAREHOLDERS' EQUITY | ||
Common stock, no-par value; authorized - 200,000 shares; issued and outstanding - 114,450 shares at December 31, 2022 and September 30, 2022 | 112,425 | 112,051 |
Accumulated deficit | (10,394) | (11,048) |
Total shareholders' equity | 102,031 | 101,003 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 116,156 | $ 119,554 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts Receivable, Allowances | $ 731 | $ 738 |
Common Stock, Shares Authorized | 200,000 | 200,000 |
Common Stock, Shares Issued | 114,450 | 114,450 |
Common Stock, Shares Outstanding | 114,450 | 114,450 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
NET REVENUES: | ||
Contract staffing services | $ 35,401 | $ 36,684 |
Direct hire placement services | 5,747 | 6,163 |
NET REVENUES | 41,148 | 42,847 |
Cost of contract services | 26,757 | 27,265 |
GROSS PROFIT | 14,391 | 15,582 |
Selling, general and administrative expenses | 12,808 | 12,359 |
Depreciation expense | 101 | 86 |
Amortization of intangible assets | 720 | 1,014 |
Goodwill impairment charge | 0 | 2,150 |
INCOME (LOSS) FROM OPERATIONS | 762 | (27) |
Gain on extinguishment of debt | 0 | 16,773 |
Interest expense | (73) | (107) |
Interest income | 38 | 0 |
INCOME BEFORE INCOME TAX PROVISION | 727 | 16,639 |
Provision for income tax expense (benefit) | 73 | (29) |
NET INCOME | $ 654 | $ 16,668 |
BASIC EARNINGS PER SHARE | $ 0.01 | $ 0.15 |
DILUTED EARNINGS PER SHARE | $ 0.01 | $ 0.14 |
WEIGHTED AVERAGE SHARES OUTSTANDING: | ||
BASIC | 114,450 | 114,100 |
DILUTED | 114,885 | 115,542 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Accumulated Deficit |
Balance, shares at Sep. 30, 2021 | 114,100 | ||
Balance, amount at Sep. 30, 2021 | $ 80,769 | $ 111,416 | $ (30,647) |
Share-based compensation | 147 | 147 | 0 |
Net income | 16,668 | $ 0 | 16,668 |
Balance, shares at Dec. 31, 2021 | 114,100 | ||
Balance, amount at Dec. 31, 2021 | 97,584 | $ 111,563 | (13,979) |
Balance, shares at Sep. 30, 2022 | 114,450 | ||
Balance, amount at Sep. 30, 2022 | 101,003 | $ 112,051 | (11,048) |
Share-based compensation | 374 | $ 374 | 0 |
Net income | 654 | 654 | |
Balance, shares at Dec. 31, 2022 | 114,450 | ||
Balance, amount at Dec. 31, 2022 | $ 102,031 | $ 112,425 | $ (10,394) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 654 | $ 16,668 |
Adjustments to reconcile net income to cash (used in) provided by operating activities: | ||
Gain on extinguishment of debt | 0 | (16,773) |
Depreciation and amortization | 821 | 1,100 |
Non-cash lease expense | 351 | 322 |
Goodwill impairment charge | 0 | 2,150 |
Stock compensation expense | 374 | 147 |
Increase (decrease) in allowance for doubtful accounts | (7) | 77 |
Deferred income taxes | 52 | (105) |
Amortization of debt discount | 38 | 38 |
Paid in kind interest on term loan | 0 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,438 | 1,762 |
Accounts payable | (89) | 118 |
Accrued compensation | (915) | (1,509) |
Other assets | (114) | (192) |
Other liabilities | (3,929) | (1,539) |
Net cash (used in) provided by operating activities | (326) | 2,264 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisition of property and equipment | (50) | (84) |
Net cash used in investing activities | (50) | (84) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net cash used in financing activities | 0 | 0 |
Net change in cash | (376) | 2,180 |
Cash at beginning of period | 18,848 | 9,947 |
Cash at end of period | 18,472 | 12,127 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | $ 35 | $ 36 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Dec. 31, 2022 | |
Basis of Presentation | |
Basis of Presentation | 1. B asis 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, 2022 are not necessarily indicative of the results that may be expected for the year ending September 30, 2023. 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, 2022 as filed on December 20, 2022. Certain reclassifications have been made to the prior year’s condensed consolidated financial statements and/or related disclosures to conform to the current year’s presentation. |
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts and Falloffs | 3 Months Ended |
Dec. 31, 2022 | |
Allowance for Doubtful Accounts and Falloffs | |
Allowance for Doubtful Accounts and Falloffs | 2. Allowance for Doubtful Accounts and Falloffs 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. 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 $165 and $694 for the three months ended December 31, 2022 and 2021, respectively. Expected future falloffs and refunds are estimated and reflected in the consolidated balance sheet as a reduction of accounts receivable as described below. 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. The Company charges off uncollectible accounts against the allowance once the invoices are deemed unlikely to be collectible. An allowance for placement falloffs also is recorded as a reduction of revenues for estimated losses due to applicants not remaining employed for the Company’s guarantee period. As of December 31, 2022 and September 30, 2022 the allowance for doubtful accounts and falloffs was $731 and $738, respectively. The allowance includes $575 and $548 for doubtful accounts and $156 and $190 for falloffs as of December 31, 2022 and September 30, 2022, respectively. |
Advertising Expenses
Advertising Expenses | 3 Months Ended |
Dec. 31, 2022 | |
Advertising Expenses | |
Advertising Expenses | 3. 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 months ended December 31, 2022 and 2021, advertising expense totaled $581 and $518, respectively. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Dec. 31, 2022 | |
Earnings per Share | |
Earnings per Share | 4. Earnings per Share Basic earnings per share are computed by dividing net income 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, exercise of stock options and warrants. The dilutive effect of the common stock equivalents is reflected in earnings per share by use of the treasury stock method. For the three-month periods ended December 31, 2022 and 2021, the weighted average dilutive incremental shares, or common stock equivalents, included in the calculations of dilutive shares were 816 and 1,442, respectively. Common stock equivalents, which are excluded because their effect is anti-dilutive, were approximately 3,373 and 1,748 for the three months ended December 31, 2022 and 2021, respectively. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Property and Equipment | 5. Property and Equipment Property and equipment, net consisted of the following: December 31, 2022 September 30, 2022 Computer software $ 481 $ 481 Office equipment, furniture, fixtures and leasehold improvements 3,789 3,739 Total property and equipment, at cost 4,270 4,220 Accumulated depreciation and amortization (3,181) (3,080) Property and equipment, net $ 1,089 $ 1,140 |
Leases
Leases | 3 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | 6. Leases The Company occasionally acquires equipment under finance leases including hardware and software used by our IT department to improve security and capacity, vehicles used by our Industrial Segment, and certain furniture for our offices. Terms for these leases generally range from two to six years. Supplemental cash flow information related to finance leases consisted of the following: Three Months Ended December 31, 2022 2021 Cash paid for finance lease liabilities $ 79 $ 36 Acquisition of equipment with finance lease - 320 Supplemental balance sheet information related to finance leases consisted of the following: December 31, 2022 September 30, 2022 Weighted average remaining lease term for finance leases 3.2 years 3.3 years Weighted average discount rate for finance leases 7.1% 7.3% The table below reconciles the undiscounted future minimum lease payments under non-cancelable finance lease agreements to the total finance lease liabilities recognized on the unaudited condensed consolidated balance sheets, included in other current liabilities and other long-term liabilities, as of December 31, 2022: Remainder of Fiscal 2023 $ 171 Fiscal 2024 167 Fiscal 2025 108 Fiscal 2026 105 Fiscal 2027 21 Less: Imputed interest (59) Present value of finance lease liabilities (a) $ 513 (a) Includes current portion of $189 for finance 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 $588 and $534 for the three-month periods ended December 31, 2022 and 2021, respectively. Supplemental cash flow information related to operating leases consisted of the following: Three Months Ended December 31, 2022 2021 Cash paid for operating lease liabilities $ 473 $ 484 Right-of-use assets obtained in exchange for new operating lease liabilities 518 19 Supplemental balance sheet information related to operating leases consisted of the following: December 31, 2022 September 30, 2022 Weighted average remaining lease term for operating leases 2.0 years 1.8 years Weighted average discount rate for operating leases 5.8% 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, 2022, including certain closed offices are as follows: Remainder of Fiscal 2023 $ 1,100 Fiscal 2024 1,294 Fiscal 2025 727 Fiscal 2026 306 Fiscal 2027 66 Less: Imputed interest (144) Present value of operating lease liabilities (a) $ 3,349 (a) Includes current portion of $1,303 for operating leases. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets Goodwill The Company completed its most recent annual goodwill impairment assessment, as of September 30, 2022, and determined that its goodwill was not impaired. Prior to this, as of December 31, 2021, an assessment showed the amount of discount inherent in the Company’s market capitalization as reported on the NYSE American exchange when compared with consolidated stockholders’ equity, or net book value, had increased since the annual goodwill impairment assessment as of September 30, 2021; therefore, the Company performed an interim assessment of its goodwill for impairment. The estimated fair values of its Professional Services and Industrial Services reporting units were adjusted based on qualitative and quantitative analysis so that they reconcile more precisely with the Company’s market capitalization as of December 31, 2021, plus an assumed control premium. As a result, the Company recognized a non-cash impairment charge of $2,150 during the three months ended December 31, 2021. No impairment was recorded during the three months ended December 31, 2022. 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, 2022 and September 30, 2022 and estimated future amortization expense. December 31, 2022 September 30, 2022 Cost Accumulated Amortization Net Book Value Cost Accumulated Amortization Net Book Value Customer relationships $ 29,070 $ (19,141) $ 9,929 $ 29,070 $ (18,482) $ 10,588 Trade names 8,329 (7,693) 636 8,329 (7,632) 697 Total $ 37,399 $ (26,834) $ 10,565 $ 37,399 $ (26,114) $ 11,285 Remainder of Fiscal 2023 $ 2,159 Fiscal 2024 2,879 Fiscal 2025 2,741 Fiscal 2026 1,870 Fiscal 2027 916 Thereafter - $ 10,565 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. Trade names are amortized on a straight-line basis over their respective estimated useful lives of between five and ten years. |
Senior Bank Loan, Security and
Senior Bank Loan, Security and Guarantee Agreement | 3 Months Ended |
Dec. 31, 2022 | |
Senior Bank Loan, Security and Guarantee Agreement | |
Senior Bank Loan, Security and Guarantee Agreement | 8 . Senior Bank Loan, Security and Guarantee Agreement On May 14, 2021, the Company and its subsidiaries 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 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). As of December 31, 2022, the Company had no outstanding borrowings and $13,029 available for borrowing under the terms of the CIT Facility. The Company also had $522 in unamortized debt issue cost associated with the CIT Facility. The amortization expense of these debt costs totaled $38 for both the three months ended December 31, 2022 and 2021. Under the CIT Facility, advances will be subject to a borrowing base formula that is computed based on 85% of eligible accounts receivable of the Company 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 Offered 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 future replacement of LIBOR utilized and referenced in the loan agreement, which will be replaced by the Secured Overnight Financing Rate (“SOFR”) in July 2023. SOFR is a secured, risk-free rate based on the cost of borrowing overnight. 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. The unused line fees incurred and included in interest expense totaled $26 for both the three months ended December 31, 2022 and 2021. |
Coronavirus Aid, Relief, and Ec
Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") Payroll Protection Program Loans | 3 Months Ended |
Dec. 31, 2022 | |
Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") Payroll Protection Program Loans | |
Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") Payroll Protection Program Loans | 9. Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Payroll Protection Program Loans During April and May 2020, the Company obtained Payroll Protection Program loans (“PPP loans”) for each of its operating subsidiaries. The PPP loans were used primarily to restore employee pay-cuts, recall furloughed or laid-off employees, support the payroll costs for existing employees, hire new employees, and for other allowable purposes including interest costs on certain business mortgage obligations, rent and utilities. Each of the Company’s subsidiaries executed a separate promissory note evidencing unsecured loans under the PPP. The Company and its operating subsidiaries have been granted forgiveness of their respective PPP loans by the SBA. During fiscal 2021, the PPP loans and interest were forgiven for Access Data Consulting Corporation, Agile Resources, Inc., Scribe Solutions Inc., Triad Logistics, Inc., and Triad Personnel Services, Inc., in the amounts of $1,470, $1,220, $279, $79, and $408, respectively, which were recognized as aggregate gains at that time. The Company’s remaining four PPP loans and interest for GEE Group Inc., BMCH, Inc., Paladin Consulting, Inc., and SNI Companies, Inc. were forgiven in December 2021 in the amounts of $2,024, $2,630, $1,956, and $10,163, respectively. As a result, the Company recognized aggregate gains of $16,773 during the three months ended December 31, 2021. The former PPP loans obtained by GEE Group Inc., and its operating subsidiaries together as an affiliated group, exceeded the $2,000 audit threshold established by the SBA, and therefore, 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. |
Share-based Compensation
Share-based Compensation | 3 Months Ended |
Dec. 31, 2022 | |
Share-based Compensation | |
Share-based Compensation | 10. Share-based Compensation Amended and Restated 2013 Incentive Stock Plan, as amended As of December 31, 2022, there were shares of restricted stock and stock options outstanding under the Company’s Amended and Restated 2013 Incentive Stock Plan, as amended (“Incentive Stock Plan”). During fiscal 2021, the 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, 2022, there were 8,760 shares available to be granted under the Plan (4,098 shares available for restricted stock grants and 4,662 shares available for stock option grants). Restricted Stock The Company granted 760 shares of restricted stock during the three months ended December 31, 2022. On September 27, 2022, the Company adopted a new annual incentive compensation program (“AICP”) for its executives to be administered under the Company’s Incentive Stock Plan. The AICP includes a long term incentive (“LTI”) compensation plan in the form of restricted stock awards comprised of two components: one that vests based on future service only, and a second that vests based on future service and performance. Initial awards under both service-only and service plus performance-based components of the AICP LTI plan are determined based on financial performance measures for the immediately preceding fiscal year. During the three months ended December 31, 2022, 551 of the 760 restricted shares were granted based on actual results for fiscal 2022, as measured against corresponding financial targets for that year, and will cliff vest as of December 2, 2025. The remaining 209 of the 760 restricted shares were also granted based on fiscal 2022 results, and as further adjusted for the probable outcome with regard to the financial targets set by the Company’s board of directors for fiscal 2023. These restricted shares are subject to adjustment over their corresponding fiscal 2023 reporting period, based on probability of achieving the fiscal 2023 performance conditions. The final number of fiscal 2022 service plus performance-based restricted shares granted will be determined once the actual financial performance of the Company is determined for fiscal 2023, and will cliff vest on December 2, 2025, the third anniversary from their date of grant. Under the AICP LTI plan, the service plus performance-based grants of 209 restricted shares during the three-month period ended December 31, 2022, represent the first tranche of a three-year schedule of awards. The next two tranches of up to 262 shares each (up to an additional 524 restricted shares in total) are scheduled to become effective as the Company’s financial plans and targets are set by the board of directors prior to each anniversary date for each of the two subsequent fiscal years, respectively. As the vesting of the two subsequent tranches will be based in part on performance conditions that have not yet been determined, the grant dates and fair values of these scheduled awards will be established in the future. The end of the requisite service periods for the entire 760 restricted shares granted during the three months ended December 30, 2022, plus the additional 524 restricted shares eligible to be granted in the future, once the performance conditions are determined for fiscal 2024 and fiscal 2025, is December 2, 2025. Therefore, the remaining two tranches of the fiscal 2022 service plus performance-based awards may be expected to have grant dates corresponding with the establishment of the fiscal 2024 and fiscal 2025 financial performance targets by the Company’s board of directors. However, all final shares determined for each of the two subsequent annual tranches also will cliff vest on December 2, 2025. Share-based compensation expense attributable to restricted stock was $87 and $72 during the three months ended December 31, 2022 and 2021, respectively. As of December 31, 2022, there was approximately $882 of unrecognized compensation expense related to restricted stock outstanding and the weighted average vesting period for those grants was 3.05 years. Number of Shares Weighted Average Fair Value ($) Non-vested restricted stock outstanding as of September 30, 2022 1,192 0.61 Granted 760 0.79 Vested - - Non-vested restricted stock outstanding as of December 31, 2022 1,952 0.69 Warrants The Company had 77 warrants outstanding as of December 31, 2022 and September 30, 2022 with a weighted average exercise price per share of $2 and a weighted average remaining contractual life of 2.25 and 2.50, respectively. No warrants were granted or expired during the three months ended December 31, 2022. Stock Options All stock options outstanding as of December 31, 2022 and September 30, 2022 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. The Company granted 435 stock options during the three months ended December 31, 2022. The stock options generally vest on annual schedules during periods ranging from two to four years, although some options are fully vested upon grant. Share-based compensation expense attributable to stock options was $287 and $75 for the three months ended December 31, 2022 and 2021, respectively. As of December 31, 2022, there was approximately $574 of unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was 3.70 years. A summary of stock option activity is as follows: Number of Shares Weighted Average Exercise Price per share ($) Weighted Average Remaining Contractual Life (Years) Total Intrinsic Value of Options ($) Options outstanding as of September 30, 2022 2,427 1.54 7.65 - Granted 435 0.78 - - Forfeited (24) 0.72 - - Options outstanding as of December 31, 2022 2,838 1.43 7.77 - Exercisable as of September 30, 2022 1,111 2.58 5.82 - Exercisable as of December 31, 2022 1,483 2.18 6.47 - |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 11. Income Tax The following table presents the provision for income taxes and our effective tax rate for the three-month periods ended December 31, 2022 and 2021: Three Months Ended, December 31, 2022 2021 Provision for income taxes 73 (29) Effective tax rate 10% 0% 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. The effective tax rates for the three months ended December 31, 2022 and 2021 are lower than the statutory rate primarily due to the effect of the change in valuation allowance on the net deferred tax asset (“DTA”) position. Other than the deferred tax liability relating to indefinite lived assets, the Company is maintaining a valuation allowance against the remaining net DTA position. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. 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, 2022 | |
Segment Data | 13. 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 reportable segments: 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, share-based compensation expenses, consulting expenses, audit fees, corporate rent and facility costs, board related fees, acquisition, integration and restructuring expenses, and interest expense. Three Months Ended December 31, 2022 2021 Industrial Staffing Services Contract services revenue $ 3,618 $ 4,089 Contract services gross margin (1) 15.5% 15.3% Income from operations $ 5 $ 112 Depreciation and amortization 15 16 Professional Staffing Services Permanent placement revenue $ 5,747 $ 6,163 Placement services gross margin 100.0% 100.0% Contract services revenue $ 31,783 $ 32,595 Contract services gross margin 25.4% 27.0% Income from operations $ 2,554 $ 1,241 Depreciation and amortization 806 1,084 Unallocated Expenses Corporate administrative expenses $ 1,231 $ 1,105 Corporate facility expenses 110 94 Share-based compensation expense 374 147 Board related expenses 82 34 Total unallocated expenses $ 1,797 $ 1,380 Consolidated Total revenue $ 41,148 $ 42,847 Income (loss) from operations 762 (27) Depreciation and amortization 821 1,100 (1) Annual premium refunds from the Ohio Bureau of Workers Compensations totaling $18 are included in the three months ended December 31, 2021. No such refunds were included in the three months ended December 31, 2022. The Industrial Services gross margin normalized for the effects of these items was approximately 14.8% for the three months ended December 31, 2021. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Schedule of Property and Equipment | December 31, 2022 September 30, 2022 Computer software $ 481 $ 481 Office equipment, furniture, fixtures and leasehold improvements 3,789 3,739 Total property and equipment, at cost 4,270 4,220 Accumulated depreciation and amortization (3,181) (3,080) Property and equipment, net $ 1,089 $ 1,140 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Leases | |
Schedule Of Supplemental Cash Flow Information | Three Months Ended December 31, 2022 2021 Cash paid for finance lease liabilities $ 79 $ 36 Acquisition of equipment with finance lease - 320 Three Months Ended December 31, 2022 2021 Cash paid for operating lease liabilities $ 473 $ 484 Right-of-use assets obtained in exchange for new operating lease liabilities 518 19 |
Schedule Of Supplemental Balance Sheet Information | December 31, 2022 September 30, 2022 Weighted average remaining lease term for finance leases 3.2 years 3.3 years Weighted average discount rate for finance leases 7.1% 7.3% December 31, 2022 September 30, 2022 Weighted average remaining lease term for operating leases 2.0 years 1.8 years Weighted average discount rate for operating leases 5.8% 5.9% |
Schedule Of Undiscounted Future Minimum Lease Payments | Remainder of Fiscal 2023 $ 171 Fiscal 2024 167 Fiscal 2025 108 Fiscal 2026 105 Fiscal 2027 21 Less: Imputed interest (59) Present value of finance lease liabilities (a) $ 513 Remainder of Fiscal 2023 $ 1,100 Fiscal 2024 1,294 Fiscal 2025 727 Fiscal 2026 306 Fiscal 2027 66 Less: Imputed interest (144) Present value of operating lease liabilities (a) $ 3,349 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets | |
Schedule of accumulated amortization | December 31, 2022 September 30, 2022 Cost Accumulated Amortization Net Book Value Cost Accumulated Amortization Net Book Value Customer relationships $ 29,070 $ (19,141) $ 9,929 $ 29,070 $ (18,482) $ 10,588 Trade names 8,329 (7,693) 636 8,329 (7,632) 697 Total $ 37,399 $ (26,834) $ 10,565 $ 37,399 $ (26,114) $ 11,285 |
Schedule of Identifiable Intangible Assets and estimated future amortization expense | Remainder of Fiscal 2023 $ 2,159 Fiscal 2024 2,879 Fiscal 2025 2,741 Fiscal 2026 1,870 Fiscal 2027 916 Thereafter - $ 10,565 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Share-based Compensation | |
Summary of restricted stock activity | Number of Shares Weighted Average Fair Value ($) Non-vested restricted stock outstanding as of September 30, 2022 1,192 0.61 Granted 760 0.79 Vested - - Non-vested restricted stock outstanding as of December 31, 2022 1,952 0.69 |
Summary of stock option activity | A summary of stock option activity is as follows: Number of Shares Weighted Average Exercise Price per share ($) Weighted Average Remaining Contractual Life (Years) Total Intrinsic Value of Options ($) Options outstanding as of September 30, 2022 2,427 1.54 7.65 - Granted 435 0.78 - - Forfeited (24) 0.72 - - Options outstanding as of December 31, 2022 2,838 1.43 7.77 - Exercisable as of September 30, 2022 1,111 2.58 5.82 - Exercisable as of December 31, 2022 1,483 2.18 6.47 - |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of Provision for income taxes | Three Months Ended, December 31, 2022 2021 Provision for income taxes 73 (29) Effective tax rate 10% 0% |
Segment Data (Tables)
Segment Data (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Schedule of Segment Reporting Information | Three Months Ended December 31, 2022 2021 Industrial Staffing Services Contract services revenue $ 3,618 $ 4,089 Contract services gross margin (1) 15.5% 15.3% Income from operations $ 5 $ 112 Depreciation and amortization 15 16 Professional Staffing Services Permanent placement revenue $ 5,747 $ 6,163 Placement services gross margin 100.0% 100.0% Contract services revenue $ 31,783 $ 32,595 Contract services gross margin 25.4% 27.0% Income from operations $ 2,554 $ 1,241 Depreciation and amortization 806 1,084 Unallocated Expenses Corporate administrative expenses $ 1,231 $ 1,105 Corporate facility expenses 110 94 Share-based compensation expense 374 147 Board related expenses 82 34 Total unallocated expenses $ 1,797 $ 1,380 Consolidated Total revenue $ 41,148 $ 42,847 Income (loss) from operations 762 (27) Depreciation and amortization 821 1,100 |
Allowance for Doubtful Accoun_2
Allowance for Doubtful Accounts and Falloffs (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Allowance for Doubtful Accounts and Falloffs | |||
Allowance for falloffs | $ 156 | $ 190 | |
Falloffs and refunds during the period | 165 | $ 694 | |
Allowance For Doubtful Accounts | 575 | 548 | |
Allowance for doubtful accounts and falloffs | $ 731 | $ 738 |
Advertising Expenses (Details N
Advertising Expenses (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Advertising Expenses [Member] | ||
Cost of print and internet media | $ 581 | $ 518 |
Earnings per Share (Details Nar
Earnings per Share (Details Narrative) - shares shares in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Earnings per Share | ||
Weighted average dilutive incremental shares | 816 | 1,442 |
Weighted average dilutive incremental anti dilutive | 3,373 | 1,748 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Total Property And Equipment, At Cost | $ 4,270 | $ 4,220 |
Accumulated Depreciation And Amortization | (3,181) | (3,080) |
Property And Equipment, Net | 1,089 | 1,140 |
Computer software [Member] | ||
Total Property And Equipment, At Cost | 481 | 481 |
Office equipment, furniture, fixtures and Leasehold Improvements [Member] | ||
Total Property And Equipment, At Cost | $ 3,789 | $ 3,739 |
Leases (Details )
Leases (Details ) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating leases consisted [Member] | ||
Cash paid for operating lease liabilities | $ 473 | $ 484 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 518 | 19 |
finance leases consisted [Member] | ||
Cash paid for finance lease liabilities | 79 | 36 |
Acquisition of equipment with finance lease | $ 0 | $ 320 |
Leases (Details 1)
Leases (Details 1) | 3 Months Ended | |
Dec. 31, 2022 | Sep. 30, 2022 | |
Operating leases consisted [Member] | ||
Weighted Average Remaining Lease Term For Operating Leases | 2 years | 1 year 9 months 18 days |
Weighted average discount rate for operating leases | 5.80% | 5.90% |
finance leases consisted [Member] | ||
Weighted average remaining lease term for finance leases | 3 years 2 months 12 days | 3 years 3 months 18 days |
Weighted average remaining lease term for finance lease | 7.10% | 7.30% |
Leases (Details 2)
Leases (Details 2) $ in Thousands | Dec. 31, 2022 USD ($) |
Operating leases consisted [Member] | |
Remainder of Fiscal 2023 | $ 1,100 |
Fiscal 2024 | 1,294 |
Fiscal 2025 | 727 |
Fiscal 2026 | 306 |
Fiscal 2027 | 66 |
Less: Imputed Interest | (144) |
Present Value Of Financing Lease Liabilities (a) | 3,349 |
finance leases consisted [Member] | |
Remainder of Fiscal 2023 | 171 |
Fiscal 2024 | 167 |
Fiscal 2025 | 108 |
Fiscal 2026 | 105 |
Fiscal 2027 | 21 |
Less: Imputed Interest | (59) |
Present Value Of Financing Lease Liabilities (a) | $ 513 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2022 | |
Leases | |||
Operating Lease Expires description | office lease expires in 2026 | ||
Operating Lease Expenses | $ 588 | $ 534 | |
Current Operating Lease Liabilities | 1,303 | $ 1,333 | |
Current financing Leases Liabilities | $ 189 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Cost | $ 37,399 | $ 37,399 |
Accumulated Amortization | (26,834) | (26,114) |
Net Book Value | 10,565 | 11,285 |
Trade Names [Member] | ||
Cost | 8,329 | 8,329 |
Accumulated Amortization | (7,693) | (7,632) |
Net Book Value | 636 | 697 |
Customer Relationship [Member] | ||
Cost | 29,070 | 29,070 |
Accumulated Amortization | (19,141) | (18,482) |
Net Book Value | $ 9,929 | $ 10,588 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Estimated Amortization Expense | ||
Remainder of Fiscal 2023 | $ 2,159 | |
Fiscal 2024 | 2,879 | |
Fiscal 2025 | 2,741 | |
Fiscal 2026 | 1,870 | |
Fiscal 2027 | 916 | |
Thereafter | 0 | |
Total | $ 10,565 | $ 11,285 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details Narrative) $ in Thousands | 3 Months Ended |
Dec. 31, 2021 USD ($) | |
Goodwill and Intangible Assets | |
Non-cash impairment charge | $ 2,150 |
Senior Bank Loan, Security an_2
Senior Bank Loan, Security and Guarantee Agreement (Details Narrative) - USD ($) | 3 Months Ended | ||
May 14, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Amortization Expense For Debt Costs | $ 38,000 | $ 38,000 | |
Security And Guaranty Agreement [Member] | |||
Credit Facility, Maturity Date | May 14, 2026 | ||
Line of Credit under the terms of the CIT Facility | $ 20,000,000 | ||
Revolving Credit Facility Availability | 13,029,000 | ||
Unamortized Debt Costs | 522,000 | ||
Amortization Expense For Debt Costs | 38,000 | 38,000 | |
Interest expense | $ 26,000 | $ 26,000 | |
Minimum [Member] | |||
Unused line fee ranging | 0.375% | ||
Maximum [Member] | |||
Unused line fee ranging | 0.50% |
Coronavirus Aid, Relief, and _2
Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") Payroll Protection Program Loans (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Sep. 30, 2022 | |
Audit Threshold Limit, Amount | $ 2,000 | |
Gain (loss) On Extinguishment Of Debt | 16,773 | |
Triad Logistics, Inc. [Member] | ||
Forgiven Loan Balances | $ 79 | |
GEE Group Inc [Member] | ||
Forgiven Loan Balances | 2,024 | |
Scribe Solutions, Inc [Member] | ||
Forgiven Loan Balances | 279 | |
Agile Resources, Inc [Member] | ||
Forgiven Loan Balances | 1,220 | |
Access Data Consulting Corporation [Member] | ||
Forgiven Loan Balances | 1,470 | |
Paladin Consulting, Inc [Member] | ||
Forgiven Loan Balances | 1,956 | |
SNI Companies, Inc [Member] | ||
Forgiven Loan Balances | 10,163 | |
Triad Personnel Services, Inc [Member] | ||
Forgiven Loan Balances | $ 408 | |
BMCH, Inc [Member] | ||
Forgiven Loan Balances | $ 2,630 |
Share-based Compensation (Detai
Share-based Compensation (Details) - Restricted Stock [Member] shares in Thousands | 3 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Non-vested Restricted Stock Outstanding, Beginning Balance | shares | 1,192 |
Granted | shares | 760 |
Non-vested Restricted Stock Outstanding, Ending Balance | shares | 1,952 |
Weighted Average Fair Value, Beginning Balance | $ 0.61 |
Weighted Average Fair Value, Granted | 0.79 |
Weighted Average Fair Value, Vested | 0 |
Weighted Average Fair Value, Ending Balance | $ 0.69 |
Share-based Compensation (Det_2
Share-based Compensation (Details 1) - Stock Options [Member] - USD ($) $ / shares in Units, shares in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Sep. 30, 2022 | |
Option outstanding, beginning balance | 2,427 | |
Option Granted | 435 | |
Forfeited/Expired | (24) | |
Option outstanding, ending balance | 2,838 | |
Exercisable, ending balance | 1,483 | 1,111 |
Weighted Average Exercise Price Per Share Options outstanding, beginning balance | $ 1.54 | |
Weighted Average Exercise Price Per Shares granted | 0.78 | |
Weighted Average Exercise Price Per Share Forfeited/Expired | 0.72 | |
Weighted Average Exercise Price Per Share Options outstanding, ending balance | 1.43 | |
Weighted Average Exercise Price Per Share, exercisable, ending balance | $ 2.18 | $ 2.58 |
Weighted Average Remaining Contractual Life Options outstanding, beginning balance | 7 years 7 months 24 days | |
Weighted Average Remaining Contractual Life Options outstanding, ending balance | 7 years 9 months 7 days | 5 years 9 months 25 days |
Weighted Average Remaining Contractual Life, exercisable, ending balance | 6 years 5 months 19 days | |
Total Intrinsic Value of Warrants Options outstanding, beginning balance | $ 0 | |
Total Intrinsic Value Of Options, Granted | 0 | |
Total Intrinsic Value of Options,Options outstanding, ending balance | 0 | $ 0 |
Total Intrinsic Value Of Warrants Warrants Exercisable, ending Balance | $ 0 |
Share-based Compensation (Det_3
Share-based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Restricted stock available to be granted under amended plan | 4,662 | ||
Stock options available to be granted under amended plan | 4,098 | ||
Warrant [Member] | |||
Weighted average remaining contractual life | 2 years 3 months | 2 years 6 months | |
Weighted average exercise price per share | $ 2 | ||
Warrants outstanding | 77 | ||
Directors and officers [Member] | |||
Restricted shares granted based on fiscal 2022 performance | 551 | ||
Stock Option [Member] | |||
Stock options granted under amended plan | 435 | ||
Stock Option [Member] | Warrants [Member] | |||
Share-based compensation expense | $ 287 | $ 75 | |
Unrecognized compensation expense | $ 574 | ||
Weighted average vesting period | 3 years 8 months 12 days | ||
2013 Incentive Stock Plan [Member] | |||
Shares authorized to be granted under amended plan | 15,000 | ||
Restricted stock available to be granted under amended Plan | 7,500 | ||
Stock option available to be granted under amended Plan | 7,500 | ||
Restricted common stock shares granted under amendment plan | 760 | ||
Restricted stock and stock options available to be granted under amended plan | 8,760 | ||
Increased restricted stock and stock option grants under amended plan | 10,000 | ||
Restricted Stock [Member] | |||
Share-based compensation expense | $ 87 | $ 72 | |
Unrecognized compensation expense | $ 882 | ||
Weighted average vesting period | 3 years 18 days |
Income Taxes (Details)
Income Taxes (Details) - Income Tax Provision and effective tax rate - USD ($) | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Provision for income taxes | $ 73 | $ (29) |
Effective tax rate | 10% | 0% |
Segment Data (Details)
Segment Data (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income from operations | $ 762 | $ (27) |
Total revenue | 41,148 | 42,847 |
Consolidated [Member] | ||
Income from operations | 762 | (27) |
Depreciation and amortization | 821 | 1,100 |
Total revenue | 41,148 | 42,847 |
Industrial Staffing Services [Member] | ||
Contract services revenue | $ 3,618 | $ 4,089 |
Contract services gross margin | 15.50% | 15.30% |
Income from operations | $ 5 | $ 112 |
Depreciation and amortization | 15 | 16 |
Professional Staffing Services [Member] | ||
Contract services revenue | $ 31,783 | $ 32,595 |
Contract services gross margin | 25.40% | 27% |
Income from operations | $ 2,554 | $ 1,241 |
Depreciation and amortization | 806 | 1,084 |
Permanent placement revenue | $ 5,747 | $ 6,163 |
Placement services gross margin | 100% | 100% |
Unallocated Expenses [Member] | ||
Corporate administrative expenses | $ 1,231 | $ 1,105 |
Corporate facility expenses | 110 | 94 |
Share-based compensation expense | 374 | 147 |
Board related expenses | 82 | 34 |
Total unallocated expenses | $ 1,797 | $ 1,380 |
Segment Data (Details Narrative
Segment Data (Details Narrative) - Professional Staffing Services [Member] - USD ($) | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Annual premium refunds | $ 0 | $ 18,000 |
Adjusted Industrial Services gross margin | 14.80% |