GEE Group Inc 10-Q for FY2023 Q1

GEE Group Inc. (JOB)

10-Q 2023-02-14 For: 2022-12-31

Added on April 08, 2026

About this 10-Q

GEE Group Inc filed this 10-Q on February 14, 2023, covering the quarter ended December 31, 2022 (FY2023 Q1).

Headline figures

Quarter ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $41.15M; down 4.0% from $42.85M a year earlier
Net income: $654K; down 96.1% from net income of $16.67M a year earlier
Diluted EPS: $0.01; down 92.9% from $0.14 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	☐

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	22
Item 4.	Controls and Procedures	22

Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
	Signatures	25

ASSETS	December 31, 2022		September 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

LIABILITIES AND SHAREHOLDERS' EQUITY
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

Commitments and contingencies (Note 12)

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

	Three Months Ended
	December 31,
	2022		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		-		2,150
INCOME (LOSS) FROM OPERATIONS		762		(27)
Gain on extinguishment of debt		-		16,773
Interest expense		(73)		(107)
Interest income		38		-
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

	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

	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

	Three Months Ended December 31,
	2022		2021
Cash paid for finance lease liabilities	$	79	$	36
Acquisition of equipment with finance lease		-		320

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

	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

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

	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

	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

	Three Months Ended
	December 31,
	2022		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		-		(16,773)
Depreciation and amortization		821		1,100
Non-cash lease expense		351		322
Goodwill impairment charge		-		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		-		-
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		-		-

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

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		-

	Three Months Ended, December 31,
	2022		2021
Provision for income taxes		73		(29)
Effective tax rate		10%		0%

	Three Months
	Ended December 31,
	2022		2021		Change		Change
Professional contract services	$	31,783	$	32,595	$	(812)		-2%
Industrial contract services		3,618		4,089		(471)		-12%
Total professional and industrial contract services		35,401		36,684		(1,283)		-3%

Direct hire placement services		5,747		6,163		(416)		-7%
Consolidated net revenues	$	41,148	$	42,847	$	(1,699)		-4%

Gross Profit percentage by service:

	Three Months
	Ended December 31,
	2022		2021
Professional contract services		25.4%		27.0%
Industrial contract services		15.5%		15.3%
Professional and industrial services combined		24.4%		25.7%

Direct hire placement services		100.0%		100.0%
Combined gross profit margin (1)		35.0%		36.4%

	•	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.

No.		Description of Exhibit

10.01*		Form of non-qualified stock option agreement under the GEE Group Inc. Amended and Restated 2013 Incentive Stock Plan
10.02*		Form of executive restricted stock agreement under the GEE Group Inc. Amended and Restated 2013 Incentive Stock Plan
10.03*		Form of performance-based restricted stock agreement for Executive Officers under the GEE Group Inc. Amended and Restated 2013 Incentive Stock Plan
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: February 14, 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)

	(i)	twenty-five percent (25%) of the Option shall become vested and exercisable on the twelve (12) month anniversary of the Grant Date; and

	(ii)	twenty-five percent (25%) of the Option shall become vested and exercisable on the twenty-four (24) month anniversary of the Grant Date;

	(iii)	twenty-five percent (25%) of the Option shall become vested and exercisable on the thirty-six (36) month anniversary of the Grant Date; and

	(iv)	the remaining twenty-five percent (25%) of the Option shall become vested and exercisable on the forty-eight (48) month anniversary of the Grant Date.
The unvested portion of the Option will not be exercisable on or after the Participant’s Termination of Employment. Notwithstanding the foregoing, the Committee may, at any time, in its sole discretion, waive or modify the vesting requirements with respect to this Option, in whole or in part, and accelerate the exercisability of all or a portion of this Option.

	(a)	If a Participant incurs a Termination of Employment, for any reason, prior to the Expiration Date, the Option, if not vested and exercisable on the date of Termination of Employment, or any portion of the Option that is not vested and exercisable on the date of Termination of Employment, shall expire and be forfeited, and shall ne void for all purposes, immediately on the date of Termination of Employment.

	(b)	If a Participant incurs a Termination of Employment, for any reason, prior to the Expiration Date, the Option, if vested and exercisable on the date of Termination of Employment, or any portion of the Option that is vested and exercisable on the date of Termination of Employment, shall continue to be exercisable only for the applicable extended time period following such Termination of Employment set forth hereinafter and shall otherwise cease to be exercisable as of the close of business on the date of Termination of Employment.

	(i)	In the event of Termination of Employment constituting Retirement, such Option or such portion thereof may be exercised by the Participant until the end of the ninety (90) day period commencing with the date of Retirement or, if earlier, the Expiration Date.

	(ii)	In the event of Termination of Employment due to death, such Option or such portion thereof may be exercised by the Participant’s Representative until the end of the twelve (12) month period commencing with the date of the Participant’s death or, if earlier, the Expiration Date.

	(iii)	In the event of Termination of Employment due to Disability, such Option or such portion thereof may be exercised by the Participant or, in the event the Participant is legally incompetent, the Participant’s Representative until the end of the six (6) month period commencing with the date of Disability or, if earlier, the Expiration Date.

	(iv)	In the event of Termination of Employment at the election of the Participant with “Good Reason” (as defined by such Participant’s Employment Agreement, if applicable), such Option or such portion thereof may be exercised by the Participant until the end of the ninety (90) day period commencing with the date of Retirement or, if earlier, the Expiration Date.

	(v)	In the event of Termination of Employment by the Company or an Affiliate, as the case may be, without Cause, such Option or such portion thereof may be exercised by the Participant until the end of the ninety (90) day period commencing with the date of Retirement or, if earlier, the Expiration Date.

	(vi)	Notwithstanding anything in the preceding subparagraphs (i) through (v) to the contrary, in the event of Termination of Employment by the Company or an Affiliate, as the case may be, for Cause, such Option or such portion thereof shall cease to be exercisable automatically upon first notification to the Participant by the Company or the Affiliate of such termination, with no extended time period for any exercise of the Option or any portion thereof. If a Participant’s employment or services are suspended pending an investigation of whether the Participant’s employment or services should be terminated for Cause, all of the Participant’s rights under the Option shall likewise be suspended during the period of such investigation.

	(a)	in cash or by certified or bank check at the time the Option is exercised;

	(b)	by tendering other shares of Common Stock which have either been owned by the Participant for more than six (6) months on the date of surrender or were acquired upon exercise of the Option for which payment is being made and which, in either case, have a Fair Market Value on the date of surrender equal to the aggregate Option Price of the shares for which the Option is being exercised;

	(c)	consideration received by the Company under a broker-assisted cashless exercise program;

	(d)	by reduction in the number of Option Shares otherwise deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate Option Price at the time of exercise;

	(e)	by any combination of the foregoing methods; or

	(f)	in any other form of legal consideration that may be acceptable to the Committee.

	(a)	tendering a cash payment;

	(b)	authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise of the Option; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or

	(c)	delivering to the Company previously owned and unencumbered shares of Common Stock.

	If to the Company	GEE Group, Inc.
		c/o The Committee for the 2013 Incentive Stock Plan
		Attn: Kim Thorpe, Senior Vice President, CFO
		7751 Belfort Parkway
		Suite 150
		Jacksonville, Florida 32256

	If to the Participant	To the current address of the Participant’s primary residence, as reflected on Company’s official payroll and records, unless the Participant provides an alternative address to the Committee, in writing.

	Executed Agreement Acknowledged by the PLAN COMMITTEE

	By:
	Name:
	Date:

	3.1	“Board” means the Board of Directors of the Corporation.

	3.2	“Change in Control” for the purposes of this Agreement only shall mean at any time or from time to time:

	3.3	“Restriction Period” means a period of time beginning on the date of the grant of Shares and ending on the Vesting Date with respect to the grant.

	3.4	“Executive” means an executive of the Company named in the preamble of the Agreement.

	3.5	‘Vesting Date” with respect to any Shares awarded hereunder means the date when such Shares shall become unconditionally vested as provided herein.

	5.1	The Executive may not sell, assign, transfer, exchange or dispose of the Shares during the Restriction Period without the written consent of the Corporation.

	5.2	A breach of any restrictions, terms or conditions provided in the Agreement with respect to any Shares shall cause a forfeiture of such Shares.

	6.1	Vesting Date. Subject to the appropriate adjustments in accordance with Section 8 of this Agreement, upon the third anniversary of the Effective Date of this Agreement, the Shares shall become vested (the “Vesting Date”), and such Shares shall be released, and all restrictions related to such Shares shall lapse and shall no longer be further subject to the Agreement. Such vesting shall be subject to earlier vesting in whole or in part upon the occurrence of an event to accelerate vesting as provided in Section 7 herein below.

	6.2	Completion of Restriction Period. On the Vesting Date the Shares shall vest and such Shares shall be released, and all restrictions related to such Shares shall lapse and such Shares shall no longer be further subject to the Agreement as provided in Section 6.1. Any such Shares that shall not have become vested shall be forfeited to the Corporation and the Executive shall not thereafter have any rights (including dividend and voting rights) with respect to such Shares that shall have been so forfeited.

	7.1	Executive: (i) is not appointed as an Executive for any reason (other than at Executive’s written request to not be nominated or appointed); (ii) does not continue as an Executive other than through the Executive’s voluntary written termination as an Executive; or (iii) is terminated as an Executive without “cause.” For purposes of this Agreement the term “cause” means a termination of the Executive arising out of conviction of the Executive of a capital felony crime by a court of competent jurisdiction.

	7.2	Executive’s position, authorities or duties as [TITLE OF EXECUTIVE] are changed in nature or scope, or diminished or reduced, Executive’s compensation or benefits are reduced, whether vested or not, Executive is relocated to a place that Executive deems unreasonable in light of Executive’s personal circumstances or any other action by or upon request of the Corporation in respect of Executive’s position, authority or responsibility occurs that Executive deems to be contrary to his employment with the Corporation or which he deems to be unacceptable. Determination of whether an event under 7.2 has occurred is within the sole discretion of the Executive unless such discretion is patently erroneous, except in the determination of relocation or other action that Executive deems to be contrary to his employment with the Corporation. In such cases, Executive’s discretion may not be deemed patently erroneous.

	7.3	There is a “Change in Control” of the Corporation.

	7.4	The death of the Executive, the disability of the Executive (as defined herein below), or the termination of Executive by the Corporation without cause. For purposes of this Agreement, the disability of Executive shall mean the inability of Executive to perform his customary and usual duties as [TITLE OF EXECUTIVE] of the Corporation.

	7.5	Any event or action which gives rise to the inability of Executive to vote the Shares granted under this Agreement at any duly called meeting of the shareholder or other applicable corporate forum which requires a vote of the shareholders of the Corporation.

	7.6	Any failure by the Corporation or its successors or assigns to pay duly declared and authorized dividends (cash or property) to the Executive with regard to the Shares.

	GEE GROUP INC.


	By:
	[COMMITTEE CHAIR NAME]
	Compensation Committee


	By:
	[SENIOR OFFICER NAME AND TITLE]


	EXECUTIVE


	By:
	[SENIOR OFFICER NAME AND TITLE]