GEE Group Inc 10-Q for FY2023 Q2

GEE Group Inc. (JOB)

10-Q 2023-05-15 For: 2023-03-31

Added on April 08, 2026

About this 10-Q

GEE Group Inc filed this 10-Q on May 15, 2023, covering the quarter ended March 31, 2023 (FY2023 Q2).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $38.86M; down 1.9% from $39.63M a year earlier
Net income: $658K; down 39.5% from net income of $1.09M a year earlier
Diluted EPS: $0.01; unchanged from $0.01 a year earlier

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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. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Shareholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
	Signatures	27

ASSETS	March 31, 2023			September 30, 2022
CURRENT ASSETS
Cash	$	20,099		$	18,848
Accounts receivable, less allowances ($702 and $738, respectively)		20,431			22,770
Prepaid expenses and other current assets		757			604
Total current assets		41,287			42,222
Property and equipment, net		1,025			1,140
Goodwill		61,293			61,293
Intangible assets, net		9,846			11,285
Right-of-use assets		3,979			2,830
Other long-term assets		679			784
TOTAL ASSETS	$	118,109		$	119,554

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	3,373		$	2,958
Accrued compensation		5,580			5,750
Current operating lease liabilities		1,461			1,333
Other current liabilities		945			5,538
Total current liabilities		11,359			15,579
Deferred taxes		617			528
Noncurrent operating lease liabilities		2,867			1,889
Other long-term liabilities		451			555
Total liabilities		15,294			18,551

Commitments and contingencies (Note 12)

SHAREHOLDERS' EQUITY
Common stock, no-par value; authorized - 200,000 shares; issued and outstanding - 114,450 shares at March 31, 2023 and September 30, 2022		112,551			112,051
Accumulated deficit		(9,736	)		(11,048	)
Total shareholders' equity		102,815			101,003
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	118,109		$	119,554

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2023			2022			2023			2022
NET REVENUES:
Contract staffing services	$	33,976		$	33,745		$	69,377		$	70,429
Direct hire placement services		4,883			5,884			10,630			12,047
NET REVENUES		38,859			39,629			80,007			82,476

Cost of contract services		25,643			25,115			52,400			52,380
GROSS PROFIT		13,216			14,514			27,607			30,096

Selling, general and administrative expenses		11,705			12,228			24,513			24,587
Depreciation expense		98			94			199			180
Amortization of intangible assets		719			1,015			1,439			2,029
Goodwill impairment charge		-			-			-			2,150
INCOME FROM OPERATIONS		694			1,177			1,456			1,150
Gain on extinguishment of debt		-			-			-			16,773
Interest expense		(73	)		(98	)		(146	)		(205	)
Interest income		95			-			133			-
INCOME BEFORE INCOME TAX PROVISION		716			1,079			1,443			17,718
Provision for income tax expense (benefit)		58			(8	)		131			(37	)
NET INCOME	$	658		$	1,087		$	1,312		$	17,755

BASIC EARNINGS PER SHARE	$	0.01		$	0.01		$	0.01		$	0.16
DILUTED EARNINGS PER SHARE	$	0.01		$	0.01		$	0.01		$	0.15

WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC		114,450			114,100			114,450			114,100
DILUTED		115,185			115,642			115,226			115,592

	Common							Total
	Stock		Common		Accumulated			Shareholders'
	Shares		Stock		Deficit			Equity
Balance, September 30, 2022		114,450	$	112,051	$	(11,048	)	$	101,003
Share-based compensation		-		374		-			374
Net income		-		-		654			654

Balance, December 31, 2022		114,450	$	112,425	$	(10,394	)	$	102,031
Share-based compensation		-		126		-			126
Net income		-		-		658			658

Balance, March 31, 2023		114,450	$	112,551	$	(9,736	)	$	102,815

	March 31, 2023			September 30, 2022

Computer software	$	481		$	481
Office equipment, furniture, fixtures and leasehold improvements		3,823			3,739
Total property and equipment, at cost		4,304			4,220
Accumulated depreciation and amortization		(3,279	)		(3,080	)
Property and equipment, net	$	1,025		$	1,140

	Six Months Ended March 31,
	2023		2022
Cash paid for finance lease liabilities	$	104	$	73
Acquisition of equipment with finance lease		-		320

Remainder of Fiscal 2023	$	110
Fiscal 2024		167
Fiscal 2025		108
Fiscal 2026		105
Fiscal 2027		21
Less: Imputed interest		(50	)
Present value of finance lease liabilities (a)	$	461

Remainder of Fiscal 2023	$	842
Fiscal 2024		1,588
Fiscal 2025		1,028
Fiscal 2026		615
Fiscal 2027		457
Thereafter		242
Less: Imputed interest		(444	)
Present value of operating lease liabilities (a)	$	4,328

	March 31, 2023							September 30, 2022
	Cost		Accumulated Amortization			Net Book Value		Cost		Accumulated Amortization			Net Book Value
Customer relationships	$	29,070	$	(19,801	)	$	9,269	$	29,070	$	(18,482	)	$	10,588
Trade names		8,329		(7,752	)		577		8,329		(7,632	)		697
Total	$	37,399	$	(27,553	)	$	9,846	$	37,399	$	(26,114	)	$	11,285

Remainder of Fiscal 2023	$	1,440
Fiscal 2024		2,879
Fiscal 2025		2,741
Fiscal 2026		1,870
Fiscal 2027		916
	$	9,846

	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
Granted		-		-
Vested		-		-
Non-vested restricted stock outstanding as of March 31, 2023		1,952		0.69

	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		-
Granted		-			-		-		-
Forfeited		(55	)		1.06		-		-
Options outstanding as of March 31, 2023		2,783			1.44		7.52		-

Exercisable as of September 30, 2022		1,111			2.58		5.82		-
Exercisable as of March 31, 2023		1,815			1.88		6.70		-

	Six Months Ended
	March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,312		$	17,755
Adjustments to reconcile net income to cash provided by operating activities:
Gain on extinguishment of debt		-			(16,773	)
Depreciation and amortization		1,638			2,209
Non-cash lease expense		690			692
Goodwill impairment charge		-			2,150
Share-based compensation		500			299
Increase (decrease) in allowance for doubtful accounts		(36	)		477
Deferred income taxes		89			(109	)
Amortization of debt discount		76			76
Changes in operating assets and liabilities:
Accounts receivable		2,375			1,394
Accounts payable		415			(560	)
Accrued compensation		(170	)		(590	)
Other assets		(153	)		(149	)
Other liabilities		(5,297	)		(2,415	)
Net cash provided by operating activities		1,439			4,456

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment		(84	)		(155	)
Net cash used in investing activities		(84	)		(155	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on finance leases		(104	)		(73	)
Net cash used in financing activities		(104	)		(73	)

Net change in cash		1,251			4,228

Cash at beginning of period		18,848			9,947

Cash at end of period	$	20,099		$	14,175

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest	$	70		$	60
Cash paid for taxes		219			248

	Three Months Ended, March 31,					Six Months Ended, March 31,
	2023		2022			2023		2022
Provision (benefit) for income taxes	$	58	$	(8	)	$	131	$	(37	)
Effective tax rate		8%		0%			9%		0%

	Three Months
	Ended March 31,
	2023		2022		Change			Change
Professional contract services	$	30,751	$	30,009	$	742			2%
Industrial contract services		3,225		3,736		(511	)		-14%
Total professional and industrial contract services		33,976		33,745		231			1%

Direct hire placement services		4,883		5,884		(1,001	)		-17%
Consolidated net revenues	$	38,859	$	39,629	$	(770	)		-2%

	·	Compensation and benefits in the operating divisions, which include 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.

	Six Months
	Ended March 31,
	2023		2022		Change			Change
Professional contract services	$	62,533	$	62,605	$	(72	)		0%
Industrial contract services		6,844		7,824		(980	)		-13%
Total professional and industrial contract services		69,377		70,429		(1,052	)		-1%

Direct hire placement services		10,630		12,047		(1,417	)		-12%
Consolidated net revenues	$	80,007	$	82,476	$	(2,469	)		-3%

No.		Description of Exhibit

3.01*		Amended and Restated By-Laws
10.01*		Employment Agreement, dated April 27, 2023, between the Company and Derek Dewan
10.02*		Employment Agreement, dated April 27, 2023, between the Company and Kim Thorpe
10.03*		Employment Agreement, dated April 27, 2023, between the Company and Alex Stuckey
10.04*		Form of Indemnity Agreement with directors and officers, adopted April 27, 2023
31.01*		Certifications of the principal executive officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
31.02*		Certifications of the principal financial officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
32.01**		Certifications of the principal executive officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act and Section 1350 of Title 18 of the United States Code.
32.02**		Certifications of the principal financial officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act and Section 1350 of Title 18 of the United States Code.
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

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

	GEE GROUP INC.
	(Registrant)

Date: May 15, 2023	By:	/s/ Derek Dewan
		Derek Dewan
		Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Kim Thorpe
		Kim Thorpe
		Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

	(a)	A shareholder may sign a proxy appointment form. The shareholder’s signature may be affixed by any reasonable means, including, but not limited to, by facsimile signature.

	(b)	A shareholder may transmit or authorize the transmission of a telegram, cablegram, or other means of electronic transmission; provided that any such transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram, or other electronic transmission was authorized by the shareholder. If it is determined that the telegram, cablegram, or other electronic transmission is valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information upon which they relied.

EXECUTIVE


Derek E. Dewan, individually		Witness


EMPLOYER


		Witness

EXECUTIVE


Kim Thorpe, individually		Witness


EMPLOYER


		Witness

EXECUTIVE


Alex P. Stuckey, individually		Witness


EMPLOYER


		Witness

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and