GEE Group Inc 10-K for FY2024

GEE Group Inc. (JOB)

10-K 2024-12-19 For: 2024-09-30

Added on April 08, 2026

About this 10-K

GEE Group Inc filed this 10-K on December 19, 2024, covering the fiscal year ended September 30, 2024 (FY2024).

Headline figures

Fiscal year ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $116.48M; down 23.6% from $152.44M a year earlier
Net loss: $24.1M; compared with net income of $9.42M a year earlier
Diluted EPS: -$0.22; compared with $0.08 a year earlier

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7751 Belfort Parkway, Suite 150, Jacksonville, FL		32256
(Address of principal executive offices)		(Zip Code)

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

PART I		Page

Item 1.	Business.	3

Item 1A.	Risk Factors.	11

Item 1B.	Unresolved Staff Comments.	26

Item 1C.	Cybersecurity.	27

Item 2.	Properties.	27

Item 3.	Legal Proceedings.	27

Item 4.	Mine Safety Disclosures.	27

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	28

Item 6.	[Reserved].	29

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	29

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	40

Item 8.	Financial Statements and Supplementary Data.	F-1

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	41

Item 9A.	Controls and Procedures.	41

Item 9B.	Other Information.	41

Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	41

PART III

Item 10.	Directors, Executive Officers and Corporate Governance.	42

Item 11.	Executive Compensation.	57

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	64

Item 13.	Certain Relationships and Related Transactions, and Director Independence.	67

Item 14.	Principal Accountant Fees and Services.	67

PART IV

Item 15.	Exhibits and Financial Statement Schedules.	69

SIGNATURES		72

	·	Access Data Consulting provides hard-to-find IT talent to customers on a direct hire or contract basis and human resources consulting services and solutions in the higher-end IT vertical including project management support to businesses regionally (Western and Southwestern U.S.) and, to a lesser extent, throughout the rest of the U.S.

	·	Agile Resources specializes in providing technical staffing services for AI-focused consulting, IT project support, and talent solutions across the Southeastern U.S. and, to a lesser extent, throughout out the rest of the U.S. Services include talent delivery for cutting-edge AI-driven application architecture and delivery, enterprise operations optimization, digital transformation, information lifecycle management, and project management. With flexible engagement options, Agile Resources offer both contract staffing and direct hire to meet the diverse needs of our clients in deploying advanced AI and technology solutions.

	·	Ashley Ellis works with C-suite and senior executives to offer full cycle engineering and IT contract staffing services, with a focus on business intelligence, application development and network infrastructure, to clients in the Southeastern U.S. region and, to a lesser extent, throughout the rest of the U.S.

	·	GEE Group (Columbus) primarily provides direct hire placement and contract staffing services in the accounting and engineering verticals, with an emphasis on placing personnel with specialized skills in the mechanical, manufacturing and equipment maintenance areas to clients throughout the Midwestern U.S.

	·	Omni One specializes in technical and professional direct-hire and contract staffing solutions in the manufacturing and engineering verticals for clients primarily located in the Midwestern U.S.

	·	Paladin Consulting primarily provides highly skilled IT professionals on a contract or direct hire basis directly to customers or through RPO, MSP and VMS arrangements and other non-IT staffing solutions to customers nationwide including government contractors who require that the provider of staffing services have required security clearance; such security certification is maintained by Paladin Consulting.

	·	Scribe Solutions provides hospital and free-standing emergency rooms and physician practices in the Southeastern U.S. with highly trained medical scribes for personal assistant work in connection with EMR.

	·	SNI Companies provides human resource solutions, including direct hire and contract staffing, project support and retained search services specializing primarily in the accounting, finance, banking, IT and office support verticals to customers located in major U.S. metropolitan markets, such as Dallas/Fort Worth, Austin, Houston, Chicago, Denver, Miami, Princeton, Tampa, Jacksonville, Hartford, Andover and surrounding areas. SNI Companies’ brands include Accounting Now, Staffing Now®, SNI Banking, SNI Certes®, SNI Energy®, SNI Financial®, and SNI Technology®.

	Fiscal
	2024		2023
Professional direct hire placement services		10.5%		12.7%
Professional contract services		81.3%		78.7%
Industrial contract services		8.2%		8.6%

	·	Providing innovative solutions for clients delivered through an enhanced and expanded menu of professional services offerings while increasing the penetration of clients in our existing markets for our IT, finance and accounting, healthcare, engineering and office support verticals;

	·	Entering other fast-growing markets following existing customers who are expanding their operations and cross-selling services by leveraging strategic customer relationships capitalizing on the Company’s national managed services agreements MSA, MSP and VMS relationships;

	·	Expanding our geographic footprint of professional services offerings into new markets believed to possess high growth potential, particularly with regard to our IT brands;

	·	Adding recruiting and sales talent to our existing delivery network to obtain new customers and increase the number of placements made to increase revenue;

	·	Increasing scalability and expanding operating margins through the on-going process of streamlining back- office operations, establishing and leveraging regional centers of excellence, improving upon per desk production averages, elimination of duplicative costs among our businesses, and continued realization of economies of scale; and

	·	Capitalizing on hiring opportunities created by volatility in the economic and labor markets by providing on-demand labor to fill the personnel voids of businesses following corporate America’s reactions and resulting on-going realignments since the on-set of the COVID-19 pandemic. As the economy recovers and companies have returned to sustained operations and growth, demand for our services has accelerated, with a particular focus on IT, E-Commerce and Logistics. We expect to continue to capitalize on these opportunities and to explore and innovate others, particularly in IT, including frontier areas such as digital content and information management disciplines.

	·	A focus on IT specialties and other verticals, including healthcare, cyber security, government and other targets in the professional services sectors;

	·	A well-managed business with experienced operators and with high gross profit and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins, as well as consistent revenue growth;

	·	Limited enterprise risk and successful due diligence; and

	·	Pricing commensurate with profitability and growth, must be accretive to earnings and consideration generally consisting of a combination of cash, seller and/or bank financing and stock.

	·	Deep experience and vertical specialization and expertise in niche markets;

	·	Invested in robust sales programs and marketing tools and technology and CRM software to successfully identify, target and reach out to potential new customers;

	·	Long-tenured division leaders, business development managers and vertical specialists (e.g., certified public accountants for accounting, tax and financial placements) with deep and relevant staffing industry experience;

	·	Strong and proven capability to deliver outstanding results for our clients under significant time constraints on large-scale projects leveraging our wide office network and experienced project team leaders, including experience with MSP and VMS programs;

	·	Well established strategies and procedures for both temporary and permanent virtual working environments supported by technology to facilitate communication, recruiting, onboarding and management of the business virtually;

	·	Specialized state-of-the-art databases, applicant tracking systems (“ATS”) and other technology tools that facilitate swift, expert matching of candidates to job requirements providing highly qualified multiple choices to clients;

	·	Localized decision-making and a lack of a multi-layered bureaucracy which provides for more rapid responses to customized client requests and a streamlined approval process in place for speedy recruitment of personnel; and

	·	Hands-on training with specialized modules for newly hired recruiters and account management personnel.

	·	difficulty in integrating the operations, technologies, products and personnel of an acquired business, including consolidating redundant facilities and infrastructure;

	·	potential disruption of our ongoing business and the distraction of management from our day-to-day operations;

	·	difficulty entering markets in which we have limited or no prior experience and in which competitors have a stronger market position;

	·	difficulty maintaining the quality of services that such acquired companies have historically provided;

	·	impact of liabilities of the acquired businesses undiscovered or underestimated as part of the acquisition due diligence;

	·	failure to realize anticipated growth opportunities from a combined business, because existing and potential clients may be unwilling to consolidate business with a single supplier or to stay with the acquirer post acquisition;

	·	impacts of cash on hand and debt incurred to finance acquisitions, thus increasing debt leverage and reducing liquidity for other significant strategic objectives;

	·	internal controls, disclosure controls, corruption prevention policies, human resources and other key policies and practices of the acquired companies may be inadequate or ineffective;

	·	overpayment for the acquired company or assets or failure to achieve anticipated benefits, such as cost savings (“synergies”) and revenue enhancements;

	·	increased expenses associated with completing an acquisition and amortizing any acquired intangible assets;

	·	challenges in implementing uniform standards, accounting policies, customs, controls, procedures and policies throughout an acquired business;

	·	failure to retain, motivate and integrate key management and other employees of the acquired business; and

	·	loss of customers and a failure to integrate and retain customer bases.

	·	discrimination and harassment;

	·	wrongful termination or denial of employment;

	·	violations of employment rights related to employment screening or privacy issues;

	·	classification of temporary workers;

	·	assignment of illegal aliens;

	·	violations of wage and hour requirements;

	·	retroactive entitlement to temporary worker benefits;

	·	errors and omissions by our temporary workers;

	·	release, misuse or appropriation of client intellectual property, or other confidential or other property or proprietary information;

	·	misappropriation of funds;

	·	cybersecurity breaches affecting our clients and/or us;

	·	damage to customer facilities due to negligence of temporary workers; and

	·	criminal misconduct or illegal activity by our temporary workers.

	·	our quarterly or annual operating results and financial position;

	·	adverse market reaction to changes in our indebtedness, if any;

	·	the perceived impact of the present uncertainties in the economy and labor markets on our industry and our own results;

	·	announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures, or capital commitments;

	·	litigation and government investigations;

	·	pending acquisitions, if any;

	·	investment recommendations by securities analysts following our business or our industry;

	·	additions or departures of key personnel;

	·	changes in the business, earnings estimates or market perceptions of our competitors;

	·	our failure to achieve operating results consistent with securities analysts’ projections;

	·	future changes in industry, general market or economic conditions; and

	·	changes or proposed changes in laws or regulations or differing interpretations or enforcement of laws or regulations affecting our business.

	·	restrictions on the ability of shareholders to call special meetings of shareholders. Special meetings of our shareholders may be called only by the chairman of the board of directors, our president, a majority of the members of the board of directors, or by one or more shareholders holding shares in the aggregate entitled to cast not less than 20% of the votes at the special meeting;

	·	establishing a staggered board of directors. Our board is divided into three classes, each of which shall serve for a term of three years, with only one class of directors being elected in each year. As a result, successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;

	·	requiring advance notice of shareholder proposals for business to be conducted at meetings of our shareholders and for nominations of candidates for election to our board of directors;

	·	the ability of our board of directors to designate the terms of and issue new series of preferred stock without shareholder approval, which could include the right to approve an acquisition or other change in our control or could be used to institute a rights plan, also known as a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors; and

	·	restrictions pursuant to the Illinois Business Corporation Act (the “IBCA”) that prohibit a publicly held Illinois corporation from engaging in a “business combination” with an “interested shareholder” for a period of three years following the time the person became an interested shareholder, unless the business combination or the acquisition of shares that resulted in a shareholder becoming an interested shareholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested shareholder. Generally, an “interested shareholder” is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested shareholder status did own) 15% or more of a corporation’s voting stock. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging attempts that might result in a premium over the market price for our stock.

Gross Profit percentage by service:

	Fiscal
	2024		2023
Professional contract services		25.3%		26.1%

Industrial contract services		15.8%		16.5%

Consolidated contract services		24.4%		25.2%

Direct hire placement services		100.0%		100.0%

Combined gross profit margin (a)		32.3%		34.7%

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

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

	·	Occupancy costs, which includes office rent, and other office operating expenses;

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

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

	Page

Report of Independent Registered Public Accounting Firm for the year ended September 30, 2024	F-2

Report of Independent Registered Public Accounting Firm for the year ended September 30, 2023	F-4

Consolidated Balance Sheets as of September 30, 2024 and 2023	F-5

Consolidated Statements of Operations for the years ended September 30, 2024 and 2023	F-6

Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2024 and 2023	F-7

Consolidated Statements of Cash Flows for the years ended September 30, 2024 and 2023	F-8

Notes to Consolidated Financial Statements	F-9

	September 30,
ASSETS	2024			2023
CURRENT ASSETS:
Cash	$	20,828		$	22,471
Accounts receivable, less allowances ($568 and $562, respectively)		13,747			18,451
Prepaid expenses and other current assets		825			847
Total current assets		35,400			41,769
Property and equipment, net		559			846
Goodwill		46,008			61,293
Intangible assets, net		834			8,406
Deferred tax assets, net		9,495			7,064
Right-of-use assets		3,252			3,637
Other long-term assets		353			596
TOTAL ASSETS	$	95,901		$	123,611

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,987		$	2,762
Accrued compensation		5,223			5,464
Current operating lease liabilities		1,195			1,475
Other current liabilities		916			1,778
Total current liabilities		9,321			11,479
Noncurrent operating lease liabilities		2,287			2,470
Other long-term liabilities		82			361
Total liabilities		11,690			14,310

Commitments and contingencies (Note 11)

SHAREHOLDERS' EQUITY:
Common stock, no-par value; authorized - 200,000 shares; 114,900 shares issued and 109,413 shares outstanding at September 30, 2024 and 114,900 shares issued and 111,488 shares outstanding at September 30, 2023		113,129			112,915
Accumulated deficit		(25,732	)		(1,630	)
Treasury stock; at cost - 5,487 shares at September 30, 2024 and 3,412 shares at September 30, 2023		(3,186	)		(1,984	)
Total shareholders' equity		84,211			109,301
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	95,901		$	123,611

	Year Ended September 30,
	2024			2023
NET REVENUES:
Contract staffing services	$	104,300		$	133,051
Direct hire placement services		12,183			19,392
NET REVENUES		116,483			152,443

Cost of contract services		78,837			99,571
GROSS PROFIT		37,646			52,872

Selling, general and administrative expenses		41,545			47,577
Depreciation expense		301			383
Amortization of intangible assets		2,363			2,879
Intangible asset impairment charges		5,209			-
Goodwill impairment charges		15,285			-
INCOME (LOSS) FROM OPERATIONS		(27,057	)		2,033
Interest expense		(322	)		(336	)
Interest income		722			472
INCOME (LOSS) BEFORE INCOME TAX PROVISION		(26,657	)		2,169
Provision for income tax benefit		2,555			7,249
NET INCOME (LOSS)	$	(24,102	)	$	9,418

BASIC EARNINGS (LOSS) PER SHARE	$	(0.22	)	$	0.08
DILUTED EARNINGS (LOSS) PER SHARE	$	(0.22	)	$	0.08

WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC		109,139			114,021
DILUTED		109,139			114,715

															Total
	Common Stock					Treasury Stock						Accumulated			Shareholders'
	Shares		Amount			Shares			Amount			Deficit			Equity
Balance, September 30, 2022		114,450	$	112,051			-		$	-		$	(11,048	)	$	101,003
Purchase of treasury stock		-		-			3,412			(1,984	)		-			(1,984	)
Share-based compensation		-		864			-			-			-			864
Issuance of shares under incentive stock plan		450		-			-			-			-			-
Net income		-		-			-			-			9,418			9,418

Balance, September 30, 2023		114,900	$	112,915			3,412		$	(1,984	)	$	(1,630	)	$	109,301
Purchase of treasury stock		-		-			2,717			(1,575	)		-			(1,575	)
Share-based compensation		-		587			-			-			-			587
Issuance of shares under incentive stock plan		-		(373	)		(642	)		373			-			-
Net loss		-		-			-			-			(24,102	)		(24,102	)

Balance, September 30, 2024		114,900	$	113,129			5,487		$	(3,186	)	$	(25,732	)	$	84,211

Allowance for credit losses as of September 30, 2023	$	562
Provisions for credit losses		49
Accounts receivable written-off		(43	)
Allowance for credit losses as of September 30, 2024	$	568

	September 30, 2024			September 30, 2023

Computer software	$	472		$	481
Computer equipment		2,165			2,166
Furniture and fixtures		981			1,444
Leasehold improvements		192			218
Total property and equipment, at cost		3,810			4,309
Accumulated depreciation		(3,251	)		(3,463	)
Property and equipment, net	$	559		$	846

	Fiscal 2024		Fiscal 2023
Amortization of finance lease assets	$	132	$	176
Interest on finance lease liabilities		18		31

	September 30, 2024		September 30, 2023
Net book value of finance lease assets	$	242	$	374
Weighted average remaining lease term for finance leases	2.2 years		2.8 years
Weighted average discount rate for finance leases		5.3%		6.6%

Fiscal 2025	$	73
Fiscal 2026		73
Fiscal 2027		12
Less: Imputed interest		(9	)
Present value of finance lease liabilities (a)	$	149

	Fiscal 2024		Fiscal 2023
Cash paid for operating lease liabilities	$	1,711	$	1,764
Right-of-use assets obtained in exchange for new operating lease liabilities		1,058		2,206

Fiscal 2025	$	1,329
Fiscal 2026		942
Fiscal 2027		752
Fiscal 2028		497
Fiscal 2029		197
Thereafter		83
Less: Imputed interest		(318	)
Present value of operating lease liabilities (a)	$	3,482

	September 30, 2024							September 30, 2023
	Goodwill		Accumulated Impairment Charges			Goodwill Carrying Amount		Goodwill		Accumulated Impairment Charges			Goodwill Carrying Amount
Professional Services reporting unit	$	75,510	$	(29,502	)	$	46,008	$	75,510	$	(15,300	)	$	60,210
Industrial Services reporting unit		1,083		(1,083	)		-		1,083		-			1,083
Total	$	76,593	$	(30,585	)	$	46,008	$	76,593	$	(15,300	)	$	61,293

	September 30, 2024										September 30, 2023
	Cost		Impairment Charges			Accumulated Amortization			Net Book Value		Cost		Accumulated Amortization			Net Book Value
Customer relationships	$	29,070	$	(5,153	)	$	(23,260	)	$	657	$	29,070	$	(21,120	)	$	7,950
Trade names		8,329		(56	)		(8,096	)		177		8,329		(7,873	)		456
Total	$	37,399	$	(5,209	)	$	(31,356	)	$	834	$	37,399	$	(28,993	)	$	8,406

	September 30, 2024		September 30, 2023
Accrued audit fees	$	47	$	13
Accrued client rebates		340		442
Accrued legal fees		-		675
Accrued severance		45		55
Current finance leases payable		67		148
Reserve for falloffs		102		118
Other		315		327
Total other current liabilities	$	916	$	1,778

				Shares granted (b)				Maximum future shares eligible to be granted (c)
Tranche		Grant Date (a)	Vesting Date	Fiscal 2023		Fiscal 2024		Fiscal 2025		Fiscal 2026

Awards based on Fiscal 2022 performance:
	1	December 2, 2022	December 2, 2025		41
	2	December 1, 2023	December 2, 2025				-
	3	November 29, 2024	December 2, 2025						262

Awards based on Fiscal 2023 performance:
	1	December 1, 2023	December 1, 2026				-
	2	November 29, 2024	December 1, 2026						55
	3	November 28, 2025	December 1, 2026								55

Total shares granted or eligible to be granted in future					41		-		317		55

	(a)	Future grant dates are estimates subject to change based on approval by the Company’s Board of Directors of the related financial targets for the fiscal year in which the grants are made.
	(b)	Shares granted reflect the portions earned of each award, as adjusted for the performance of each respective fiscal year with regard to the applicable financial targets as set by the Board of Directors.
	(c)	The maximum future shares eligible to be granted under each award will be further adjusted based on the outcome for each respective fiscal year with regard to the financial targets set by the Board of Directors.

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, 2022		1,192			0.61
Granted		742			0.79
Forfeited		(100	)		0.53
Vested		(450	)		0.85
Non-vested restricted stock outstanding as of September 30, 2023		1,384			0.62
Granted		164			0.54
Vested		(642	)		0.46
Non-vested restricted stock outstanding as of September 30, 2024		906			0.71

A summary of stock option activity is as follows:
	Number of Shares			Weighted Average Exercise Price per share ($)		Weighted Average Fair Value per share ($)		Weighted Average Remaining Contractual Life (Years)		Total Intrinsic Value of Options ($)
Options outstanding as of September 30, 2022		2,427			1.54		1.26		7.65		88
Granted		1,720			0.64		0.52		-		-
Forfeited		(214	)		0.94		0.86		-		3
Options outstanding as of September 30, 2023		3,933			1.18		0.96		7.96		27
Granted		-			-		-		-		-
Forfeited		(582	)		1.25		1.10		-		-
Options outstanding as of September 30, 2024		3,351			1.17		0.93		7.08		-

Exercisable as of September 30, 2023		2,190			1.64		1.31		6.80		23
Exercisable as of September 30, 2024		2,293			1.43		1.13		6.38		-

	Fiscal 2024		Fiscal 2023
Weighted average fair value of options	$	-	$	0.52
Weighted average risk-free interest rate		-		4.3%
Weighted average volatility factor		-		106%
Weighted average expected life (years)		-		5.9

The components of the provision for income taxes is as follows:
	Year Ended September 30,
	2024			2023
Current expense (benefit):
Federal	$	-		$	-
State		(124	)		343
Total current expense (benefit):	$	(124	)	$	343

Deferred expense (benefit):
Federal	$	(3,038	)	$	347
State		(313	)		(358	)
Total deferred expense (benefit):	$	(3,351	)	$	(11	)

Change in valuation allowance:
Federal	$	-		$	(6,615	)
State		920			(966	)
Total change in valuation allowance:	$	2,087		$	(7,581	)

Provision for income tax expense (benefit)	$	(2,555	)	$	(7,249	)