Cover
Cover - shares | 3 Months Ended | |
Apr. 01, 2023 | Oct. 16, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Apr. 01, 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-30 | |
Entity File Number | 001-37575 | |
Entity Registrant Name | STAFFING 360 SOLUTIONS, INC. | |
Entity Central Index Key | 0001499717 | |
Entity Tax Identification Number | 68-0680859 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 757 3rd Avenue | |
Entity Address, Address Line Two | 27th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10017 | |
City Area Code | (646) | |
Local Phone Number | 507-5710 | |
Title of 12(b) Security | Common stock, par value $0.00001 per share | |
Trading Symbol | STAF | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 5,601,020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash | $ 1,402 | $ 1,992 |
Accounts receivable, net | 24,427 | 23,628 |
Prepaid expenses and other current assets | 2,195 | 1,762 |
Total Current Assets | 28,024 | 27,382 |
Property and equipment, net | 1,172 | 1,230 |
Goodwill | 19,891 | 19,891 |
Intangible assets, net | 16,639 | 17,385 |
Other assets | 7,404 | 6,701 |
Right of use asset | 8,728 | 9,070 |
Total Assets | 81,858 | 81,659 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 17,177 | 16,526 |
Accrued expenses – related party | 218 | 218 |
Current portion of debt | 125 | 249 |
Accounts receivable financing | 16,525 | 18,268 |
Leases – current liabilities | 1,245 | 1,188 |
Earnout liabilities | 8,344 | 8,344 |
Other current liabilities | 2,219 | 2,639 |
Total Current Liabilities | 45,853 | 47,432 |
Long-term debt – related party | 8,705 | 8,661 |
Redeemable Series H preferred stock, net | 8,448 | 8,393 |
Leases – noncurrent | 8,298 | 8,640 |
Other long-term liabilities | 200 | 180 |
Total Liabilities | 71,504 | 73,306 |
Commitments and contingencies | ||
Stockholders’ Equity: | ||
Preferred Stock | ||
Common stock, $0.00001 par value, 200,000,000 shares authorized; 3,856,020 and 2,629,199 shares issued and outstanding, as of April 1, 2023 and December 31, 2022, respectively | 1 | 1 |
Additional paid in capital | 116,419 | 111,586 |
Accumulated other comprehensive loss | (2,196) | (2,219) |
Accumulated deficit | (103,870) | (101,015) |
Total Stockholders’ Equity | 10,354 | 8,353 |
Total Liabilities and Stockholders’ Equity | 81,858 | 81,659 |
Series J Preferred Stock [Member] | ||
Stockholders’ Equity: | ||
Preferred Stock |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Apr. 01, 2023 | Dec. 31, 2022 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 3,856,020 | 2,629,199 |
Common stock, shares outstanding | 3,856,020 | 2,629,199 |
Series J Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 40,000 | 40,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 63,105 | $ 49,893 |
Cost of Revenue, excluding depreciation and amortization stated below | 53,517 | 41,380 |
Gross Profit | 9,588 | 8,513 |
Operating Expenses: | ||
Selling, general and administrative expenses | 10,167 | 8,909 |
Depreciation and amortization | 775 | 655 |
Total Operating Expenses | 10,942 | 9,564 |
Loss From Operations | (1,354) | (1,051) |
Other Expenses: | ||
Interest expense | (1,349) | (670) |
Amortization of debt discount and deferred financing costs | (98) | (96) |
Re-measurement loss on intercompany note | (443) | |
Other loss, net | (14) | (58) |
Total Other Expenses, net | (1,461) | (1,267) |
Loss Before Benefit from Income Tax | (2,815) | (2,318) |
Provision from Income taxes | (40) | (6) |
Net Loss | $ (2,855) | $ (2,324) |
Net Loss Basic | $ (0.90) | $ (1.33) |
Net Loss Diluted | $ (0.90) | $ (1.33) |
Weighted Average Shares Outstanding Basic | 3,177,517 | 1,752,949 |
Weighted Average Shares Outstanding Diluted | 3,177,517 | 1,752,949 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Income Statement [Abstract] | ||
Net Loss | $ (2,855) | $ (2,324) |
Other Comprehensive Income (Loss) | ||
Foreign exchange translation adjustment | 23 | (200) |
Comprehensive Loss | $ (2,832) | $ (2,524) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($) $ in Thousands | Preferred Stock [Member] Series J Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Total |
Balance at Jan. 01, 2022 | $ 1 | $ 107,183 | $ 162 | $ (84,021) | $ 23,325 | |
Balance, shares at Jan. 01, 2022 | 1,758,835 | |||||
Employees, directors and consultants | 42 | 42 | ||||
Balance, shares | 1,000 | |||||
Foreign currency translation Income (loss) | (200) | (200) | ||||
Net income (loss) | (2,324) | $ (2,324) | ||||
Balance, shares | 1,000 | |||||
Balance at Apr. 02, 2022 | $ 1 | 107,225 | (38) | (86,345) | $ 20,843 | |
Balance, shares at Apr. 02, 2022 | 1,759,835 | |||||
Balance at Dec. 31, 2022 | $ 1 | 111,586 | (2,219) | (101,015) | 8,353 | |
Balance, shares at Dec. 31, 2022 | 2,629,199 | |||||
Employees, directors and consultants | 720 | 720 | ||||
Balance, shares | 237,305 | |||||
Foreign currency translation Income (loss) | 23 | 23 | ||||
Net income (loss) | (2,855) | (2,855) | ||||
Sale of common stock and warrants | 4,113 | $ 4,113 | ||||
Balance, shares | 989,516 | 1,226,821 | ||||
Warrants modification | 176 | $ 176 | ||||
Equity issuance cost | (176) | (176) | ||||
Balance at Apr. 01, 2023 | $ 1 | $ 116,419 | $ (2,196) | $ (103,870) | $ 10,354 | |
Balance, shares at Apr. 01, 2023 | 3,856,020 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Loss | $ (2,855) | $ (2,324) |
Adjustments to reconcile net loss income to net cash used in operating activities: | ||
Depreciation and amortization | 775 | 655 |
Amortization of debt discount and deferred financing costs | 98 | 96 |
Accounts receivable allowance | 18 | (1) |
Right of use assets depreciation | 355 | 324 |
Stock based compensation | 720 | 42 |
Re-measurement loss on intercompany note | 443 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,519) | (5,621) |
Prepaid expenses and other current assets | (437) | (526) |
Other assets | (1,015) | 812 |
Accounts payable and accrued expenses | 717 | 3,999 |
Accounts payable, related party | 122 | |
Other current liabilities | (363) | (128) |
Other long-term liabilities and other | 77 | (749) |
NET CASH USED IN OPERATING ACTIVITIES | (4,429) | (2,856) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (28) | (42) |
Collection of UK factoring facility deferred purchase price | 1,626 | 1,877 |
NET CASH PROVIDED BY INVESTING ACTIVITIES | 1,598 | 1,835 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Third party financing costs | (319) | |
Repayment of term loan | (124) | |
Proceeds from term loan | (117) | |
Repayments on accounts receivable financing, net | (1,743) | |
Dividends paid to related parties | (2,036) | |
Proceeds from sale of common stock and warrants, net of third-party financing costs | 4,433 | |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 2,247 | (2,153) |
NET DECREASE IN CASH | (584) | (3,174) |
Effect of exchange rates on cash | (6) | (29) |
Cash – Beginning of period | 1,992 | 4,558 |
Cash – End of period | $ 1,402 | $ 1,355 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 3 Months Ended |
Apr. 01, 2023 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Staffing 360 Solutions, Inc. (“we,” “us,” “our,” “Staffing 360,” or the “Company”) was incorporated in the State of Nevada on December 22, 2009, as Golden Fork Corporation, which changed its name to Staffing 360 Solutions, Inc., ticker symbol “STAF,” on March 16, 2012. On June 15, 2017, the Company reincorporated in the State of Delaware. We are a high-growth international staffing company engaged in the acquisition of U.S. and U.K. based staffing companies. As part of our consolidation model, we pursue a broad spectrum of staffing companies supporting primarily the Professional and Commercial Business Streams. The model is based on finding and acquiring suitable, mature, profitable, operating, domestic and international staffing companies focused specifically on the accounting and finance, information technology (“IT”), engineering, administration (“Professional”) and light industrial (“Commercial”) disciplines. Our typical acquisition model is based on paying consideration in the form of cash, stock, earn-outs and/or promissory notes. In furthering our business model, we are regularly in discussions and negotiations with various suitable, mature acquisition targets. To date, we have completed 11 acquisitions since November 2013. The Company focuses on five strategic verticals that represent sub-segments of the staffing industry. These five strategic pillars, accounting & finance, information technology, engineering, administration, and commercial are the basis for the Company’s sales and revenue generation and its growth acquisition targets. The Headway Acquisition in May 2022 added 33 60,700 184,100 60,000 Typical contribution for EOR projects is 80-85% of the gross profit earned, compared to 40-50% for traditional staffing which negates the impact of lower gross margins. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) The Company has developed a centralized, sales and recruitment hub in both the U.S. and U.K. markets. The addition of Headway, with its single office in Raleigh, North Carolina, and nationwide coverage for operations, supports and accelerates the Company’s objective of driving efficiencies through the use of technology, deemphasizing bricks and mortar, supporting more efficient and cost-effective service delivery for all Brands. The Company has a management team with significant operational and M&A experience. The combination of this management experience and the increased opportunity for expansion of its core Brands with EOR services and nationwide expansion, provide for the opportunity of significant organic growth, while plans to continue its business model, finding and acquiring suitable, mature, profitable, operating, U.S. and U.K. based staffing companies continues. We effected a one-for-ten reverse stock split |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Apr. 01, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation These condensed consolidated financial statements and related notes are presented in accordance with generally accepted accounting principles in the United States (“GAAP”), expressed in U.S. dollars. All amounts are in thousands, except share, per share and par values, unless otherwise indicated. The accompanying condensed consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the GAAP. All significant intercompany balances and transactions have been eliminated in consolidation. Liquidity The accompanying condensed consolidated financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. The accompanying financial statements have been prepared on a basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements as of the quarter ended April 1, 2023, the Company has an accumulated deficit of $ 103,870 17,829 18,141 1,402 The financial statements included in this Quarterly Report on Form 10-Q have been prepared assuming that we will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity, capital requirements and that our credit facilities with our lenders will remain available to us. Further, the notes issued to Jackson Investment Group LLC (“Jackson”) includes certain financial customary covenants and the Company has had instances of non-compliance. Management has historically been able to obtain from Jackson waivers of any non-compliance and management expects to continue to be able to obtain necessary waivers in the event of future non-compliance; however, there can be no assurance that the Company will be able to obtain such waivers, and should Jackson refuse to provide a waiver in the future, the outstanding debt under the agreement could become due immediately, which exceeds our current cash balance. As of the date of the filing of this Quarterly Report on Form 10-Q, the entire outstanding principal balance of the Jackson Notes, which was $ 10,116 October 14, 2024 32,500 September 6, 2024 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) Going Concern The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. Historically, the Company has funded such payments either through cash flow from operations or the raising of capital through additional debt or equity. If the Company is unable to obtain additional capital, such payments may not be made on time. The Company’s negative working capital and liquidity position combined with the uncertainty generated by the economic reaction to the COVID-19 pandemic raise substantial doubt about the Company’s ability to continue as a going concern. COVID-19 In May 2023, the World Health Organization determined that COVID-19 no longer fit the definition of a public health emergency and the U.S. government announced its plan to let the declaration of a public health emergency associated with COVID-19 expire on May 11, 2023. COVID-19 is expected to remain a serious endemic threat for an indefinite future period and may continue to adversely affect the global economy, and we are unable to predict the full extent of potential delays or impacts on our business, our clinical studies, our research programs, the recoverability of our assets, and our manufacturing. The effects of the COVID-19 endemic may continue to disrupt or delay our business operations, including but not limited to with respect to efforts relating to potential business development transactions and our ability to deploy staffing workforce effectively during social distancing and shelter-in-place directives, and it could continue to disrupt the marketplace which could have an adverse effect on our operations. As such, it is uncertain as to the full magnitude that the COVID-19 and its ongoing effects will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on its financial condition, liquidity, operations, industry, and workforce. The Company is not able to estimate the effects of the COVID-19 endemic on its results of operations, financial condition, or liquidity for fiscal year 2023. The Company’s negative working capital and liquidity position combined with the uncertainty generated by the economic reaction to COVID-19 and its ongoing effects contribute to the substantial doubt about the Company’s ability to continue as a going concern. Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from its estimates. To the extent there are material differences between estimates and the actual results, future results of operations will be affected. Significant estimates for the quarters ended April 1, 2023 and April 2, 2022 include the valuation of intangible assets, including goodwill, liabilities associated with testing long-lived assets for impairment and valuation reserves against deferred tax assets. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) Goodwill Goodwill relates to amounts that arose in connection with various acquisitions and represents the difference between the purchase price and the fair value of the identifiable intangible and tangible net assets when accounted for using the purchase method of accounting. Goodwill is not amortized, but it is subject to periodic review for impairment. Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to, current economic and market conditions, a decline in the equity value of the business, a significant adverse change in certain agreements that would materially affect reported operating results, business climate or operational performance of the business and an adverse action or assessment by a regulator. In accordance with ASU No. 2011-08, Intangibles-Goodwill and Other (Topic 350) Testing Goodwill for Impairment, the Company is required to review goodwill by reporting unit for impairment at least annually or more often if there are indicators of impairment present. During the year ended December 31, 2022, the Company changed its annual measurement date from the last day of the fiscal year end to the first day of the fiscal fourth quarter. A reporting unit is either the equivalent of, or one level below, an operating segment. The Company early-adopted the provisions in ASU 2017-04, which eliminates the second step of the goodwill impairment test. As a result, the Company’s goodwill impairment tests include only one step, which is a comparison of the carrying value of each reporting unit to its fair value, and any excess carrying value, up to the amount of goodwill allocated to that reporting unit, is impaired. The carrying value of each reporting unit is based on the assignment of the appropriate assets and liabilities to each reporting unit. Assets and liabilities were assigned to each reporting unit if the assets or liabilities are employed in the operations of the reporting unit and the asset and liability is considered in the determination of the reporting unit fair value. The Company recognized an impairment with respect to its Staffing UK 10,000 Revenue Recognition The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) The Company has primarily two main forms of revenue – temporary contractor revenue and permanent placement revenue. Temporary contractor revenue is accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of the Company’s performance on an hourly or daily basis. The contracts stipulate weekly or monthly billing, and the Company has elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as we have the right to payment in an amount that corresponds directly with the value of performance completed to date. Permanent placement revenue is recognized on the date the candidate’s full-time employment with the customer has commenced. The customer is invoiced on the start date, and the contract stipulates payment due under varying terms, typically 30 days. The contract with the customer stipulates a guarantee period whereby the customer may be refunded if the employee is terminated within a short period of time, however this has historically been infrequent, and immaterial upon occurrence. As such, the Company’s performance obligations are satisfied upon commencement of the employment, at which point control has transferred to the customer. Revenue for the quarter ended April 1, 2023 was comprised of $ 61,795 1,310 48,329 1,564 Income Taxes The Company utilizes Accounting Standards Codification (“ASC”) Topic 740, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company applies the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of the date of this filing, the Company is current on all corporate, federal and state tax returns. The Company’s policy is to record interest and penalties related to unrecognized tax benefits as income tax expense. The effective income tax rate was ( 0.79% 0.25 Foreign Currency The Company recorded a non-cash foreign currency remeasurement loss of $ 443 Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the warrants placed were estimated using a Black Scholes model. Refer to Note 10 – Stockholders’ Equity for further details. Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) No. 2020-06 August 2020 Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and treasury stock method will be no longer available. ASU 2020-06 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company adopted this ASU on January 2, 2022. This standard does not have an impact on our consolidated financial statements. On June 16, 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss model for the impairment of financial assets measured at amortized cost basis. This ASU replaces the probable, incurred loss model for those assets. On November 15, 2019, the FASB delayed the effective date of FASB ASC Topic 326 for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022, for SEC filers that are smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities. The Company has adopted this ASU on January 1, 2023. This standard does not have a material impact on the consolidated financial statements. |
EARNINGS (LOSS) PER COMMON SHAR
EARNINGS (LOSS) PER COMMON SHARE | 3 Months Ended |
Apr. 01, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS (LOSS) PER COMMON SHARE | NOTE 3 – EARNINGS (LOSS) PER COMMON SHARE The Company utilizes the guidance per ASC 260, “Earnings per Share”. Basic earnings per share are calculated by dividing income/loss available to stockholders by the weighted average number of common stock shares outstanding during each period. Our Series A, Series E and Series E-1 Preferred Stockholders (related parties) receive certain dividends or dividend equivalents that are considered participating securities and our loss per share is computed using the two-class method. For the quarters ended April 1, 2023 and April 2, 2022, pursuant to the two-class method, as a result of the net loss attributable to common stockholders, losses were not allocated to the participating securities. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) Diluted earnings per share are computed using the weighted average number of common stock shares and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares of common stock issuable upon the conversion of preferred stock, convertible notes, unvested equity awards and the exercise of stock options and warrants (calculated using the modified treasury stock method). Such securities, shown below, presented on a common stock equivalent basis and outstanding as of April 1, 2023 and April 2, 2022 have not been included in the diluted earnings per share computations, as their inclusion would be anti-dilutive due to the Company’s net loss as of April 1, 2023 and April 2, 2022: SCHEDULE OF COMMON SHARE EQUIVALENT BASIS AND OUTSTANDING EXCLUDED FROM PER SHARE COMPUTATIONS OF ANTI-DILUTIVE April 1, 2023 April 2, 2022 Warrants 4,624,543 127,300 Restricted shares – unvested 128,496 972,495 Options 51,302 6,880 Total 4,804,341 1,106,675 |
ACCOUNTS RECEIVABLE FINANCING
ACCOUNTS RECEIVABLE FINANCING | 3 Months Ended |
Apr. 01, 2023 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE FINANCING | NOTE 4 – ACCOUNTS RECEIVABLE FINANCING Midcap Funding X Trust Prior to September 15, 2017, certain U.S. subsidiaries of the Company were party to a $ 25,000 25,000 April 8, 2019 On October 26, 2020, the Company entered into Amendment No. 17 to that certain Credit and Security Agreement, dated April 8, 2017, by and among, the Company, as the parent, Monroe Staffing Services, LLC, a Delaware limited liability company, Faro Recruitment America, Inc., a New York corporation, Lighthouse Placement Services, Inc., a Massachusetts corporation, Staffing 360 Georgia, LLC, a Georgia limited liability company, and Key Resources, Inc., a North Carolina corporation, as borrowers (the “Credit Facility Borrowers”), MidCap Funding IV Trust as successor by assignment to MidCap (as agent for lenders), and other financial institutions or other entities from time to time parties thereto as lenders (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit and Security Agreement”) pursuant to which, among other things, the parties agreed to extend the maturity date of our outstanding asset based revolving loan until September 1, 2022. In addition, the Company also agreed to certain amendments to the financial covenants. On October 27, 2022, the Company and the Credit Facility Borrowers entered into Amendment No. 27 and Joinder Agreement to the Credit and Security Agreement (“Amendment No. 27”) with MidCap Funding IV Trust as successor by assignment to MidCap and the lenders party thereto. Amendment No. 27, among other things, (i) increases the revolving loan commitment amount from $ 25,000 32,500 10,000 5,000 42,500 In addition, Amendment No. 27 increases the applicable margin from 4.0% to 4.25%, with respect to the Loan (other than Letter of Credit Liabilities (as defined in the Credit and Security Agreement)), and from 3.5% to 3.75% with respect to the Letter of Credit Liabilities. Amendment No. 27 also replaces the interest rate benchmark from LIBOR to SOFR and provides that the Loan shall bear interest at the sum of a term-based SOFR rate (plus a SOFR adjustment of 0.11448%) plus the Applicable Margin, subject to certain provisions for the replacement of SOFR with an alternate benchmark in connection with SOFR no longer being provided by its administrator. Notwithstanding the foregoing, the SOFR interest rate shall not be at any time less than 1.00%. On August 30, 2023, the Company entered into Amendment No. 28 (“Amendment No. 28”) to the Credit and Security Agreement with MidCap, which among other things further increases the applicable margin (a) from 4.25% to 4.50% with respect to the Loan (other than the Letter of Credit Liabilities) and (b) from 3.75% to 4.50% with respect to the Letter of Credit Liabilities. See Note 15 – Subsequent Events. The facility provides events of default including: (i) failure to make payment of principal or interest on any Loans when required, (ii) failure to perform obligations under the facility and related documents, (iii) not paying its debts as such debts become due and similar insolvency matters, and (iv) material adverse changes in the financial condition of business prospectus of any Borrower (subject to a 10-day notice and cure period.) Upon an event of default, the Company’s obligations under the credit facility may, or in the event of insolvency or bankruptcy will automatically, be accelerated. At the election of agent or required lenders (or automatically in case of bankruptcy or insolvency events of default), upon the occurrence of any event of default and for so long as it continues, the facility will bear interest at a rate equal to the lesser of: (i) 3.0% above the rate of interest applicable to such obligations immediately prior to the occurrence of the event of default; and (ii) the maximum rate allowable under law. Under the terms of this agreement, the Company is subject to affirmative covenants which are customary for financings of this type, including covenants to: (i) maintain good standing and governmental authorizations, (ii) provide certain information and notices to MidCap, (iii) deliver monthly reports and quarterly financial statements to MidCap, (iv) maintain insurance, (v) discharge all taxes, (vi) protect its intellectual property, and (vii) generally protect the collateral granted to MidCap. The Company is also subject to negative covenants customary for financings of this type, including that it may not: (i) enter into a merger or consolidation or certain change of control events, (ii) incur liens on the collateral, (iii) except for certain permitted acquisitions, acquire any significant assets other than in the ordinary course of business, (iv) assume certain additional senior debt, or (v) amend any of its organizational documents. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) The balance of the MidCap facility as of April 1, 2023 and December 31, 2022 was $ 16,434 18,176 HSBC Invoice Finance (UK) Ltd On February 8, 2018, CBSbutler, Staffing 360 Solutions Limited and The JM Group, entered into a new arrangement with HSBC Invoice Finance (UK) Ltd (“HSBC”) which provides for HSBC to purchase the subsidiaries’ accounts receivable up to an aggregate amount of £ 11,500 The terms of the arrangement provide for HSBC to fund 90% of the purchased accounts receivable upfront and a secured borrowing line of 70% of unbilled receivables capped at £1,000 (within the overall aggregate total facility of £11,500.) 1.80 three-year term 1,000 125 On June 28, 2018, the Company’s new subsidiary, Clement May Limited (“CML”), entered into a new agreement with a minimum term of 12 months for purchase of debt (“APD”) with HSBC, joining CBS Butler, Staffing 360 Solutions Limited and The JM Group (collectively, with CML, the “Borrowers”) as “Connected Clients” as defined in the APD. In 2021, the subsidiaries were reorganized and are now Staffing 360 Solutions Limited and Clement May. The new Connected Client APDs carry an aggregate Facility Limit of £ 20,000 1,500 22,500 Under ASU 2016-16, “Statement of Cash Flows (Topic 230, Classification of Certain Cash Receipts and Cash Payments, a consensus of the FASB Emerging Issues Task Force 1,626 1,877 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Apr. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5 – INTANGIBLE ASSETS The following provides a breakdown of intangible assets as of: SCHEDULE OF BREAKDOWN OF INTANGIBLE ASSETS April 1, 2023 Tradenames Non-Compete Customer Relationship Total Intangible assets, gross $ 10,728 $ 2,464 $ 26,080 $ 39,272 Accumulated amortization (5,796 ) (2,464 ) (14,373 ) (22,633 ) Intangible assets, net $ 4,932 $ — $ 11,707 $ 16,639 December 31, 2022 Tradenames Non-Compete Customer Relationship Total Intangible assets, gross $ 10,759 $ 2,467 $ 26,170 $ 39,396 Accumulated amortization (5,608 ) (2,467 ) (13,936 ) (22,011 ) Intangible assets, net $ 5,151 $ — $ 12,234 $ 17,385 On April 18, 2022, the Company entered into a Stock Purchase Agreement (the “Headway Purchase Agreement”) with Headway Workforce Solutions (“Headway”), pursuant to which, among other things, the Company agreed to purchase all of the issued and outstanding securities of Headway in exchange for (i) a cash payment of $ 14 9,000,000 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) As of April 1, 2023, estimated annual amortization expense for each of the next five fiscal years is as follows: SCHEDULE OF ESTIMATED ANNUAL AMORTIZATION EXPENSE FOR EACH OF THE NEXT FIVE FISCAL YEARS Fiscal quarter ended April Amount 2023 $ 1,965 2024 2,620 2025 2,552 2026 2,410 2027 2,410 Thereafter 4,682 Total $ 16,639 Amortization of intangible assets for the period ended April 1, 2023 and April 2, 2022 was $ 699 584 8 years |
GOODWILL
GOODWILL | 3 Months Ended |
Apr. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | NOTE 6 – GOODWILL The following table provides a roll forward of goodwill: SCHEDULE OF GOODWILL April 1, 2023 December 31, 2022 Beginning balance, gross $ 37,541 $ 31,478 Acquisition — 7,808 Accumulated disposition (1,577 ) (1,577 ) Accumulated impairment losses (16,073 ) (16,073 ) Currency translation adjustment — (1,745 ) Ending balance, net $ 19,891 $ 19,891 Goodwill by reportable segment is as follows: SCHEDULE OF GOODWILL REPORTABLE BY SEGMENT April 1, 2023 December 31, 2022 Professional Staffing - US $ 14,031 $ 14,031 Commercial Staffing - US 5,860 5,860 Professional Staffing - UK — — Ending balance, net $ 19,891 $ 19,891 Goodwill $ 19,891 $ 19,891 Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. ASC 350, requires that goodwill be tested for impairment at the operating segment level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. ASC 280-10-50-11 states that operating segments often exhibit similar long-term financial performance if they have similar economic characteristics. During the quarter ended April 1, 2023, management concluded the Company has three operating segments for goodwill impairment analysis under ASC 350 such as commercial, professional US and professional UK. Accordingly, goodwill will no longer be tested at the unit level for the five reporting units and will be tested for impairment at the three operating segment level. During the fourth quarter of 2021 the Company identified a triggering event in response the COVID-19 pandemic. In accordance with ASC 350 the Company tested its goodwill for impairment and the Company recognized an impairment with respect to its Staffing UK 10,000 10,000 7,808 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) During the year ended December 31, 2022, the Company changed its measurement date from the last day of the fiscal year end to the first day of the fiscal fourth quarter. The Company performed its annual goodwill impairment test and no impairment was recognized other than the charge recognized by the Staffing UK reporting unit. To estimate the fair value of the reporting units the Company employed a combination of market approach (valuations using comparable company multiples) and income approach (discounted cash flow analysis) to derive the fair value of the reporting unit when performing its annual impairment testing. Volatility in the Company’s stock price can result in the net book value of our reporting unit approximating, or even temporarily exceeding market capitalization, however, the fair value of our reporting unit is not driven solely by the market price of our stock. As described above, fair value of our reporting unit is derived using a combination of an asset approach, an income approach and a market approach. These valuation techniques consider several other factors beyond our market capitalization, such as the estimated future cash flows of our reporting units, the discount rate used to present value such cash flows and the market multiples of comparable companies. Changes to input assumptions used in the analysis could result in materially different evaluations of goodwill impairment. |
ACQUISITION
ACQUISITION | 3 Months Ended |
Apr. 01, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITION | NOTE 7 – ACQUISITION In accordance with ASC 805, the Company accounts for acquisitions using the purchase method under which the acquisition purchase price is allocated to the assets acquired and liabilities assumed based upon their respective fair values. The Company utilizes management estimates and, in some instances, may retain the services of an independent third-party valuation firm to assist in determining the fair values of assets acquired, liabilities assumed and contingent consideration granted. Such estimates and valuations require the Company to make significant assumptions, including projections of future events and operating performance. On April 18, 2022, the Company entered into the Headway Purchase Agreement with Headway, pursuant to which, among other things, the Company agreed to purchase all of the issued and outstanding securities of Headway in exchange for (i) a cash payment of $ 14 9,000,000 The purchase price in connection with the Headway Acquisition was $ 9,000 4,450 to integrate the business of Headway into the Company’s existing temporary professional staffing business in the US within the expected timeframe which would enable the Company to operate more effectively and efficiently and to create synergy hence lower costs of operations. The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on our preliminary estimates of their fair values on the acquisition date. The fair values assigned in the preliminary allocation of purchase price included in the table below are based on information that was available as of the date of the acquisition and such amounts are considered preliminary and are based on the information that was available as of the date of the acquisition. We were not able to complete our final purchase price allocation based on the timing of the acquisition and our need to engage third party valuation specialists to assist with the valuation of the contingent consideration as well as requiring additional time to further analyze the initial amounts recorded. The Company is in the process of finalizing its allocation and this may result in potential adjustments to the carrying value of the respective recorded assets and liabilities, establishment of certain additional intangible assets, revisions of useful lives of intangible assets, establishment of potential acquisition contingencies, and the determination of any residual amount that will be allocated to goodwill. As additional information becomes available, the preliminary purchase price allocation may be revised during the remainder of the measurement period, which will not exceed 12 months from the acquisition date. Any such revisions or changes may be material. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) The following table summarizes the allocation of the purchase price of the fair value of the assets acquired and liabilities assumed at the date of the acquisition: SCHEDULE OF BUSINESS ACQUISITION PURCHASE PRICE FAIR VALUE Current assets $ 10,833 Fixed assets 150 Other non-current assets 4,914 Intangible assets 6,800 Goodwill 6,809 Current liabilities (14,965 ) Other non-current liabilities (1,812 ) Consideration $ 12,729 In connection with the acquisition of Headway, the Company recorded $ 6,800 |
DEBT
DEBT | 3 Months Ended |
Apr. 01, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 8 – DEBT SCHEDULE OF DEBT April 1, 2023 December 31, 2022 Jackson Investment Group - related party $ 9,016 $ 9,016 Redeemable Series H Preferred Stock 9,000 9,000 HSBC Term Loan 125 249 Total Debt, Gross 18,141 18,265 Less: Debt Discount and Deferred Financing Costs, Net (863 ) (962 ) Total Debt, Net 17,278 17,303 Less: Non-Current Portion - Related Party (8,705 ) (8,661 ) Less: Non-Current Portion (8,448 ) (8,393 ) Total Current Debt, Net $ 125 $ 249 Jackson Notes The entire outstanding principal balance of the Second Amended and Restated Note Purchase Agreement between the Company, Jackson and the guarantor parties thereto was due and payable on September 30, 2022. On October 27, 2022, the Company entered into the Third Amended and Restated Note and Warrant Purchase Agreement (the “Third A&R Agreement”) with Jackson, which amended and restated the Second Amended Note Purchase Agreement, dated October 26, 2020, as amended, and issued to Jackson the Third Amended and Restated Senior Secured 12 9,000 In connection with the amendment and restatement, the Company paid Jackson an amendment fee of $ 39 39 100,000 257 24,332 3.06 October 27, 2027 15,093 60.00 3.06 January 26, 2026 October 27, 2027 29 On August 30, 2023, the Company and the guarantor parties thereto (together with the Company, the “Obligors”) entered into that certain First Omnibus Amendment and Reaffirmation Agreement to the Note Documents (the “First Omnibus Amendment Agreement”) with Jackson, which First Omnibus Amendment Agreement, among other things: (i) amends the Third A&R Agreement, (ii) provided for the issuance of a new 12% Senior Secured Promissory Note due October 14, 2024 (the “2023 Jackson Note” and together with the 2022 Jackson Note, the “Jackson Notes”) to Jackson, and (iii) joins certain subsidiaries of the Company to (a) that certain Amended and Restated Pledge Agreement, dated as of September 15, 2017 (as amended by the First Omnibus Amendment Agreement, the “Pledge Agreement”) and (b) that certain Amended and Restated Security Agreement, dated as of September 15, 2017 (as amended by the Amendment Agreement, the “Security Agreement”), as either subsidiary guarantors or pledgors (as applicable) and amends certain terms and conditions of each of the Pledge Agreement and the Security Agreement Pursuant to the First Omnibus Amendment Agreement, interest on the 2022 Jackson Note, evidencing the obligations of the Obligors under the Third A&R Agreement and executed by the Company in favor of Jackson, shall be paid in cash and continue to accrue at a rate per annum equal to 12% until the principal amount of the 2022 Jackson Note has been paid in full. In the event that Company has not repaid in cash at least 50% of the outstanding principal balance of the 2022 Jackson Note as of the date of the First Omnibus Amendment Agreement or on or before October 27, 2023, then interest on the outstanding principal balance of the 2022 Jackson Note will accrue at 16% per annum until the 2022 Jackson Note is repaid in full STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) In addition, pursuant to the terms of the Third AR Agreement, as amended by the First Omnibus Amendment Agreement, until all principal interest and fees due pursuant to the Third AR Agreement and the Jackson Note are paid in full by the Company and are no longer outstanding, Jackson shall have a first call over 50% HSBC Loan On February 8, 2018, CBS Butler, Staffing 360 Solutions Limited and The JM Group, entered into a new arrangement with HSBC which provides for HSBC to purchase the subsidiaries’ accounts receivable up to an aggregate amount of £ 11,500 1,000 11,500 12 1.80% , three-year term 1,000 125 Redeemable Series H Preferred Stock On May 18, 2022, the Company entered into a Headway purchase agreement with Headway. Consideration for the Purchase of 100% 9,000,000 0.00001 1.00 350,000 25.714 12% The redemption price represents the number of shares of the Preferred Stock (9,000,000), plus all accrued but unpaid dividends, multiplied by the Stated Value ($1). On May 18, 2022, the Company paid $14 towards the Series H Preferred Stock balance. 9,000 In accordance with ASC 480-10-15-3, the agreement includes certain rights and options including: redemption, dividend, voting, and conversion which have characteristics akin to liability and equity. The Series H Preferred Stock is redeemable and has a defined maturity date upon the third anniversary of the original issue date. As such and based on the authoritative guidance, the Series H Preferred Stock meets the definition of a debt instrument. The Company obtained a third-party valuation report to calculate the fair value of Series H Preferred Stock. As of May 18, 2022, the fair value of the Redemption Price was calculated as $ 8,265 735 |
LEASES
LEASES | 3 Months Ended |
Apr. 01, 2023 | |
Leases | |
LEASES | NOTE 9 – LEASES As of April 1, 2023 and December 31, 2022, we recorded a right of use (“ROU”) lease asset of approximately $ 8,728 9,543 9,070 9,828 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) On May 18, 2022, the Company acquired Headway and assumed an office lease in North Carolina for a remaining term of six years and eight months. This resulted in increases to right of use assets of $ 1,715 1,731 10 years 2,048 10 years 1,555 Quantitative information regarding the Company’s leases for period ended April 1, 2023 is as follows: SCHEDULE OF LEASE, COST AND OPERATING LEASE LIABILITY MATURITY Lease Cost Classification April 1, 2023 Operating lease cost SG&A Expenses 417 Other information Weighted average remaining lease term (years) 5.80 Weighted average discount rate 6.30 % Future Lease Payments 2023 $ 1,406 2024 1,766 2025 1,642 2026 2,387 2027 1,243 Thereafter 3,685 Lessee operating lease liability payments due $ 12,129 Less: Imputed Interest 2,586 Operating lease, liability $ 9,543 Leases - Current $ 1,245 Leases – Non-current $ 8,298 As most of the Company’s leases do not provide an implicit rate, we use the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This methodology was deemed to yield a measurement of the ROU lease asset and associated lease liability that was appropriately stated in all material respects. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended |
Apr. 01, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 10 – STOCKHOLDERS’ EQUITY The Company issued the following shares of common stock during the quarter ended April 1, 2023: SCHEDULE OF STOCKHOLDERS EQUITY Number of Shares of Common Stock Fair Value of Shares Fair Value at Issuance (minimum and maximum Shares issued to/for: Issued Issued per share) Equity raise 989,516 $ 4,999 $ 2.65 $ 2.65 Employees 177,305 515 $ 2.82 $ 2.82 Board and committee members 60,000 201 $ 2.93 $ 3.13 1,226,821 $ 5,715 The Company issued the following shares of common stock during the quarter ended April 2, 2022: Number of Shares of Common Stock Fair Value of Shares Fair Value at Issuance (minimum and maximum Shares issued to/for: Issued Issued per share) Board and committee members 1,000 $ 6 $ 9.65 $ 9.65 1,000 $ 6 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) Reverse Stock Split On June 24, 2022, the Company effected the Reverse Stock Split. All share and per share information in this Quarterly Report on Form 10-Q, including the condensed consolidated financial statements and the notes thereto, has, where applicable, been retroactively adjusted to reflect the Reverse Stock Split. February 2023 Public Offering On February 7, 2023, the Company entered into a securities purchase agreement (“February 2023 Purchase Agreement”) with an institutional, accredited investor (the “Investor”) for the issuance and sale, in a best efforts public offering (the “February 2023 Offering”), of (i) 315,000 0.00001 1,569,516 2.6532 2.6522 Subject to certain limitations described in the February 2023 Pre-Funded Warrants, the February 2023 Pre-Funded Warrants are immediately exercisable and may be exercised at a nominal consideration of $0.001 per share any time until all of the February 2023 Pre-Funded Warrants are exercised in full. A holder will not have the right to exercise any portion of the February 2023 Warrants or the February 2023 Pre-Funded Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% or 9.99%, respectively (or at the election of the holder of such warrants, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the February 2023 Warrants or the February 2023 Pre-Funded Warrants, respectively. However, upon notice from the holder to the Company, the holder may increase the beneficial ownership limitation pursuant to the February 2023 Warrants, which may not exceed 9.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the February 2023 Warrants, provided that any increase in the beneficial ownership limitation will not take effect until 61 days following notice to the Company. In connection with the February 2023 Offering, the Investor entered into a warrant amendment agreement (the “February 2023 Warrant Amendment Agreement”) with the Company to amend the exercise price of certain existing warrants to purchase up to an aggregate of 876,654 5.85 2.47 The Company utilized the net proceeds from the February 2023 Offering for general working capital purposes. H.C. Wainwright & Co., LLC (“Wainwright”) acted as the Company’s exclusive placement agent in connection with the February 2023 Offering, pursuant to that certain engagement letter, dated as of January 4, 2023, as amended (the “Wainwright Engagement Letter”), between the Company and Wainwright. Pursuant to the Wainwright Engagement Letter, the Company paid Wainwright (i) a cash fee equal to 7.5% 1.0% 141,339 3.3165 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) The Units, the Pre-Funded Units, the shares of common stock included as part of the Units and Pre-Funded Units, the February 2023 Pre-Funded Warrants, the February 2023 Warrants, the shares of common stock issuable upon the exercise of the February 2023 Pre-Funded Warrants and the February 2023 Warrants, the February 2023 Placement Agent Warrants and the shares of common stock issuable upon the exercise thereof were offered by the Company pursuant to a Registration Statement on Form S-1, as amended (File No. 333-269308), initially filed on January 20, 2023 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and declared effective on February 7, 2023. Series A Preferred Stock – Related Party As of April 1, 2023 and April 2, 2022, the Company had $ 125 125 Restricted Shares The Company has issued shares of restricted stock to employees and members of the Board under its 2015 Omnibus Incentive Plan, 2016 Omnibus Incentive Plan, 2020 Omnibus Plan and 2021 Omnibus Inventive Plan. Under these plans, the shares are restricted for a period of three years from issuance. As of the year ended December 31, 2022, the Company has issued a total of 68,592 720 374 SCHEDULE OF UNVESTED RESTRICTED SHARES ACTIVITY Weighted Average Restricted Shares Price Per Share Balance at January 1, 2022 5,976 $ 75.00 Granted 63,000 29.20 Vested/adjustments (384 ) 29.00 Balance at December 31, 2022 68,592 $ 50.00 Granted 237,305 2.87 Vested/adjustments (177,401 ) 2.85 Balance at April 1, 2023 128,496 $ 4.96 Warrants In connection with the private placement consummated in July 2022 (the “July 2022 Private Placement”), on July 7, 2022, the Company entered into warrant amendment agreements (the “Warrant Amendment Agreements”) with each of the nine existing participating investors, which amended warrants to purchase up to 657,858 18.50 38.00 5.85 837 In connection with the Third AR Agreement, the Company (i) issued to Jackson five year warrants to purchase up to an aggregate of 24,332 3.06 October 27, 2027 15,093 60.00 3.06 29 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) In connection with the February 2023 Offering, the Company entered into the February 2023 Purchase Agreement with the Investor for the issuance and sale, in a best efforts public offering, of (i) 315,000 Units, each consisting of one share of the Company’s common stock, and one February 2023 Warrant, and (ii) 1,569,516 Pre-Funded Units, each consisting of one February 2023 Pre-Funded Warrant to and one February 2023 Warrant. The public offering price was $ 2.6532 per Unit and $ 2.6522 per Pre-Funded Unit. The February 2023 Offering closed on February 10, 2023. In connection with the February 2023 876,654 shares of common stock that were previously issued to the Investor, with an exercise price of $ 5.85 per share and an expiration date of January 7, 2028. Pursuant to the Warrant Amendment Agreement, the amended warrants have a reduced exercise price of $ 2.47 per share following the closing of the February 2023 Offering. The Company calculated an incremental fair value of $ 176 by calculating the excess of the fair value of the modified over the fair value of that instrument immediately before it is modified. This increase in fair value was recorded in additional paid in capital. Transactions involving the Company’s warrant issuances are summarized as follows: SCHEDULE OF WARRANTS ACTIVITY Weighted Number of Average Shares Exercise Price Outstanding at January 1, 2022 972,495 $ 26.88 Issued 1,404,478 5.83 Exercised — — Expired or cancelled (673,285 ) 26.84 Outstanding at December 31, 2022 1,703,688 $ 10.21 Issued 2,902,509 2.51 Issued – Pre-funded warrants 1,569,516 0.001 Exercised (674,516 ) 0.001 Expired or cancelled (876,654 ) (5.85 ) Outstanding at April 1, 2023 4,624,543 $ 4.97 The following table summarizes warrants outstanding as of April 1, 2023: SCHEDULE OF WARRANTS OUTSTANDING Weighted Average Number Remaining Weighted Outstanding Contractual Average Exercise Price and Exercisable Life (years) Exercise Price $ 0.001 3,750.00 4,624,543 4.72 4.97 Stock Options A summary of option activity during the quarter ended April 1, 2023 is presented below: SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY Weighted Average Options Exercise Price Outstanding at January 1, 2022 1,302 $ 1,665.60 Granted 50,000 7.80 Exercised — — Expired or cancelled — — Outstanding at December 31, 2022 51,302 $ 50.06 Granted — — Exercised — — Expired or cancelled — — Outstanding at April 1, 2023 51,302 $ 50.06 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) The Company recorded share-based payment expense of $ 16 21 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Apr. 01, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11 – COMMITMENTS AND CONTINGENCIES Earn-out Liabilities Pursuant to the acquisition of Key Resources, Inc. (“KRI”) on August 27, 2018, the purchase price includes earnout consideration payable to the seller of $ 2,027 2,027 10 2,027 4,054 4,054 40 Pursuant to the Headway Acquisition that closed on May 18, 2022, the purchase price includes an earnout payment totaling up to $ 4,450 Adjusted EBITDA of $0 or less than $0= no Contingent Payment Adjusted EBITDA of $500 x 2.5 multiple= $1,250 Contingent Payment Adjusted EBITDA of $1,000 x 2.5 multiple= $2,500 Contingent Payment Adjusted EBITDA of $1,800 x 2.5 multiple= $4,500 Contingent Payment Adjusted EBITDA of $2,000 or more x 2.5 multiple= $5,000 Contingent Payment The Company performed an analysis over the contingent payment and prepared a forecast to determine the likelihood of the Adjusted EBITDA payout. The adjusted EBITDA TTM forecast, as of April 2023, is above the $ 2,000 5,000 160 550 4,290 Legal Proceedings Whitaker v. Monroe Staffing Services, LLC & Staffing 360 Solutions, Inc. On December 5, 2019, former owner of KRI, Pamela D. Whitaker (“Whitaker” or “Plaintiff”), filed a complaint in Guilford County, North Carolina (the “North Carolina Action”) asserting claims for breach of contract and declaratory judgment against Monroe Staffing Services LLC (“Monroe”) and the Company (collectively, the “Defendants”) arising out of the alleged non-payment of certain earn-out payments and interest purportedly due under a Share Purchase Agreement pursuant to which Whitaker sold all issued and outstanding shares in her staffing agency, KRI, to Monroe in August 2018. Whitaker sought $ 4,054 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) Defendants removed the action to the Middle District of North Carolina on January 7, 2020, and Plaintiff moved to remand on February 4, 2020. Briefing on the motion to remand concluded on February 24, 2020. Separately, Defendants moved to dismiss the action on January 14, 2020, based on Plaintiff’s failure to state a claim, improper venue, and lack of personal jurisdiction as to defendant Staffing 360 Solutions, Inc. Alternatively, Defendants sought a transfer of the action to the Southern District of New York, based on the plain language of the Share Purchase Agreement’s forum selection clause. Briefing on Defendants’ motion to dismiss concluded on February 18, 2020. On February 28, 2020, Plaintiff moved for leave to file an amended complaint. Defendants filed their opposition to the motion for leave on March 19, 2020. Plaintiff has filed a reply. On June 29, 2020, Magistrate Judge Webster issued a Report and Recommendation on the pending motions, recommending that Defendants’ motion to dismiss be granted with regard to Defendants’ request to transfer the matter to the Southern District of New York, and denied in all other regards without prejudice to Defendants raising those arguments again in the new forum. Magistrate Judge Webster also recommended that Plaintiff’s motion to remand be denied and motion to amend be left to the discretion of the Southern District of New York. Plaintiff filed an objection to the Report and Recommendation on July 9, 2020. Defendants responded on July 23, 2020. On February 19, 2021, the District Court issued a decision that reversed the Magistrate Judge’s Order. The District Court granted Plaintiff’s motion to remand and denied Defendants’ motion to dismiss as moot. Defendants filed a Notice of Appeal to the Fourth Circuit on February 25, 2021, and filed their opening brief on April 21, 2021. Plaintiff filed her response brief on May 21, 2021, and Defendants replied on June 11, 2021. Oral argument was held on March 9, 2022. As of the date of this filing, a decision is pending. Separately, on February 26, 2020, the Company and Monroe filed an action against Whitaker in the United States District Court for the Southern District of New York (Case No. 1:20-cv-01716) (the “New York Action”.) The New York Action concerns claims for breach of contract and fraudulent inducement arising from various misrepresentations made by Whitaker to the Company and Monroe in advance of, and included in, the share purchase agreement. The Company and Monroe are seeking damages in an amount to be determined at trial but in no event less than $ 6,000 On October 13, 2020, the Court denied Whitaker’s motion to dismiss, in part, and granted the motion, in part. The Court rejected Whitaker’s procedural arguments but granted the motion on substantive grounds. However, the Court ordered that Monroe and the Company may seek leave to amend the complaint by letter application by December 1, 2020. Monroe and the Company filed a letter of motion for leave to amend and a proposed Amended Complaint on December 1, 2020. On January 5, 2021, Whitaker filed an opposition to the letter motion. On January 25, 2021, Monroe and the Company filed a reply in further support of the letter motion. On March 9, 2021, the Court granted Monroe and the Company’s motion for leave to amend, in part, and denied the motion, in part. The Court rejected Monroe and the Company’s claim for fraudulent inducement but granted the motion for leave to amend their breach of contract claim. Monroe and the Company filed their amended complaint on March 12, 2021. On April 9, 2021, Whitaker renewed her motion to dismiss on procedural grounds, requesting dismissal of the action or, in the alternative, a stay of the proceeding pending adjudication on the merits of the North Carolina Action. On May 14, 2021, Monroe and the Company filed an opposition to the motion to dismiss. On June 21, 2021, Whitaker filed a reply in further support of the motion. The Court referred the case to Magistrate Judge Moses, who held oral argument on the motion on November 9, 2021. On April 9, 2021, Whitaker renewed her motion to dismiss on procedural grounds, requesting dismissal of the action or, in the alternative, a stay of the proceeding pending adjudication on the merits of the North Carolina Action. On May 14, 2021, Monroe and the Company filed an opposition to the motion to dismiss. On June 21, 2021, Whitaker filed a reply in further support of the motion. The Court referred the case to Magistrate Judge Barbara Moses, who held oral argument on the motion on November 9, 2021. On March 8, 2022, Magistrate Judge Moses stayed the action pending a decision by the Fourth Circuit on the appeal filed by Monroe and the Company in the North Carolina Action. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) In light of the Fourth Circuit’s issuance of its July 22, 2022, decision and order transferring the North Carolina Action to the Southern District of New York, on August 1, 2022, the parties to the New York Action wrote to the Magistrate overseeing the matter to request a conference to address, inter alia, the resumption of discovery in light of the Fourth Circuit’s Order issued on July 22, 2022. On August 3, 2022, Magistrate Judge Moses lifted the stay previously imposed in the matter and ordered the parties to appear at a teleconference held on August 16, 2022. At the teleconference, the parties agreed that the North Carolina Action would be dismissed following its transfer to the Southern District of New York without prejudice to Whitaker’s right to assert the same causes of action, based on substantially similar allegations, as counterclaims in the New York Action and that Whitaker would have until September 30, 2022, to do so. The Court ordered the parties to submit a stipulation to this effect by August 23, 2022. Per the Court’s Order, on August 22, 2022, the parties filed a stipulation and proposed order whereby the parties agreed that Whitaker would voluntarily dismiss the North Carolina Action, and would reassert the causes of action set forth in the Proposed Amended Complaint filed in the North Carolina Action as counterclaims in the New York Action; and set forth deadlines for the filing of Whitaker’s answer and counterclaims Plaintiffs’ response to such counterclaims. The Court so-ordered that stipulation on August 23, 2022. On September 30, 2022, Whitaker filed an answer and counterclaims, including (1) a cause of action for breach of contract, which was substantially similar to Whitaker’s breach of contract in the North Carolina Action (the “Breach of Contract Counterclaim”), and (2) a cause of action under New York and North Carolina consumer protection statutes, asserting that that Plaintiffs exhibited a pattern and practice in the purchase of businesses similar to KRI by which they allegedly, “endeavor[ ] to acquire the purchased company at a discount of the agreed-upon purchase price by making an initial down payment, then reneging on payment of deferred compensation or earnouts and fabricating a pretextual reason for nonpayment at the time the deferred compensation or earnouts become due” (the Consumer Protection Counterclaim”). For the Consumer Protection Counterclaim, Defendant seeks to recover the full amount of the Earnout Payments ($ 4,054 On November 11, 2022, Plaintiffs moved to dismiss the Consumer Protection Counterclaim. Briefing on Plaintiffs’ motion was completed on December 22, 2022. On June 9, 2023, Plaintiff’s motion to dismiss the Consumer Protection Counterclaim was granted. On August 9, 2023, the Court issued a third revised case management order which set forth relevant deadlines, including the close of fact discovery on September 22, 2023, and the close of all discovery (including expert discovery) on December 8, 2023. Monroe and the Company intend to pursue their claims vigorously. As of the date of this filing, we are not aware of any other material legal proceedings to which we or any of our subsidiaries is a party or to which any of our property is subject, other than as disclosed above. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Apr. 01, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE 12 – SEGMENT INFORMATION The Company generated revenue and gross profit by segment as follows: SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT Three Months Ended April 1, 2023 April 2, 2022 Commercial Staffing - US $ 23,247 $ 28,609 Professional Staffing - US 24,376 4,329 Professional Staffing - UK 15,482 16,955 Total Revenue $ 63,105 $ 49,893 Commercial Staffing - US $ 3,815 $ 4,719 Professional Staffing - US 3,695 1,204 Professional Staffing - UK 2,078 2,590 Total Gross Profit $ 9,588 $ 8,513 Selling, general and administrative expenses $ (10,167 ) $ (8,909 ) Depreciation and amortization (873 ) (655 ) Interest expense and amortization of debt discount and deferred financing costs (1,349 ) (766 ) Re-measurement loss on intercompany note — (443 ) Other loss income, net (14 ) (58 ) Loss Before Provision for Income Tax $ (2,815 ) $ (2,318 ) STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) The following table disaggregates revenues by segments: Quarter Ended April 1, 2023 Commercial Staffing - US Professional Staffing - US Professional Staffing - UK Total Permanent Revenue $ 131 $ 369 $ 810 $ 1,310 Temporary Revenue 23,116 24,007 14,672 61,795 Total Revenue $ 23,247 $ 24,376 $ 15,482 $ 63,105 Quarter Ended April 2, 2022 Commercial Staffing - US Professional Staffing - US Professional Staffing - UK Total Permanent Revenue $ 113 $ 380 $ 1,071 $ 1,564 Temporary Revenue 28,496 3,949 15,884 48,329 Total Revenue $ 28,609 $ 4,329 $ 16,955 $ 49,893 As of April 1, 2023 and December 31, 2022, the Company has assets in the U.S. and the U.K. as follows: April 1, 2023 December 31, 2022 United States $ 70,685 $ 70,970 United Kingdom 11,173 10,689 Total Assets $ 81,858 $ 81,659 April 1, 2023 December 31, 2022 United States $ 19,891 $ 19,891 United Kingdom — — Total Goodwill $ 19,891 $ 19,891 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Apr. 01, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 13 – RELATED PARTY TRANSACTIONS In addition to the shares of Series A Preferred Stock and notes and warrants issued to Jackson, the following are other related party transactions: Board and Committee Members SCHEDULE OF RELATED PARTY TRANSACTIONS Three Months Ended April 1, 2023 Cash Compensation Shares Issued Value of Shares Issued Compensation Expense Recognized Dimitri Villard $ 25 10,000 $ 29 $ 54 Jeff Grout 25 10,000 29 54 Nick Florio — 10,000 29 29 Vincent Cebula 8 10,000 29 38 Alicia Barker — 10,000 31 31 Brendan Flood — 10,000 31 31 $ 58 60,000 $ 180 $ 237 Three Months Ended April 2, 2022 Cash Compensation Shares Issued Value of Shares Issued Compensation Expense Recognized Dimitri Villard $ 25 2,000 $ 2 $ 27 Jeff Grout 25 2,000 2 27 Nick Florio 25 2,000 2 27 Vincent Cebula 25 2,000 2 27 Alicia Barker — 2,000 2 2 $ 100 10,000 $ 10 $ 110 |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 3 Months Ended |
Apr. 01, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | NOTE 14 – SUPPLEMENTAL CASH FLOW INFORMATION SCHEDULE OF CASH FLOW, SUPPLEMENTAL DISCLOSURES Three Months Ended April 1, 2023 April 2, 2022 Cash paid for: Interest $ 1,406 $ 766 Income taxes — — Non-Cash Investing and Financing Activities: Deferred purchase price of UK factoring facility $ 1,651 $ 1,835 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Apr. 01, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 15 – SUBSEQUENT EVENTS Nasdaq Compliance Minimum Bid Price Requirement On July 17, 2023, the Company received a letter from the Listing Qualifications Staff (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock for the 30 consecutive business day period between June 1, 2023, through July 14, 2023, the Company did not meet the minimum bid price of $ 1.00 In order to regain compliance with Nasdaq’s minimum bid price requirement, the Company’s common stock must maintain a minimum closing bid price of $ 1.00 The letter has no immediate impact on the listing of the Company’s common stock, which will continue to be listed and traded on Nasdaq, subject to the Company’s compliance with the other listing requirements of Nasdaq. Quarterly Reports on Form 10-Q On May 18, 2023, the Company received a notice from the Staff notifying the Company that as it has not yet filed its Form 10-Q for the period ended April 1, 2023 pursuant to Nasdaq Listing Rule 5250(c)(1) (the “Rule”), such matter serves as a basis for delisting the Company’s securities from Nasdaq. On July 5, 2023, the Company received a notice from the Staff notifying the Company that it has been granted an exception to enable the Company to regain compliance with the Rule pursuant to the following terms: on or before October 16, 2023, the Company must file the Form 10-Q for the period ended April 1, 2023, as required by the Rule. In the event the Company does not satisfy the terms of the exception, the Staff will provide written notification that the Company’s common stock will be delisted. On August 23, 2023, the Company received a notice from the Staff notifying the Company that as it has not yet filed its Quarterly Report on Form 10-Q for the period ended June 30, 2023, the Company no longer complies with the Rule for continued listing on Nasdaq. Pursuant to the July 5, 2023 notice described above, the Staff had granted the Company an exception until October 16, 2023 to file its delinquent Form 10-Q for the period ended April 1, 2023 (the “Initial Delinquent Filing”). As a result, any additional Staff exception to allow the Company to regain compliance with all delinquent filings, will be limited to a maximum of 180 calendar days from the due date of the Initial Delinquent Filing, or October 16, 2023. The aforementioned notices have no immediate effect on the listing of the Company’s common stock. There can be no assurance that the Company will regain compliance with the Nasdaq’s rules or maintain compliance with any of the other Nasdaq continued listing requirements. Series H Preferred Stock Amendment On July 31, 2023, the Company, Chapel Hill Partners, L.P. (“Chapel Hill”) and Jean-Pierre Sakey (“Sakey”) entered into an agreement in connection with the Headway Purchase Agreement. Pursuant to the agreement, if on or prior to September 30, 2023, the Company pays an aggregate of $ 11,340,000 9,000,000 525,000 Pursuant to the agreement, if on or prior to September 30, 2023, the Company does not redeem the Series H Preferred Stock and remit the Contingent Payment (as defined in the Headway Purchase Agreement), then the Company shall make the Contingent Payment in the amount of $ 5,000,000 1,000,000 134,000 100,000 0.0000001 Pursuant to the Letter Agreement, the Company shall also have no obligation to pay the Preferred Dividend (as defined in the Series H COD) on June 30, 2023, September 30, 2023 and December 31, 2023. Agreements with Jackson Amendment No. 1 to 2022 Jackson Note On June 30, 2023, the Company and Jackson entered into an amendment (“Amendment No. 1”) to the 2022 Jackson Note to amend the interest payment dates of July 1, 2023, August 1, 2023, and September 1, 2023 to October 1, 2023, November 1, 2023 and December 1, 2023, respectively. First Omnibus Amendment Agreement and Jackson Notes On August 30, 2023, the Obligors entered into a First Omnibus Amendment Agreement with Jackson, which, among other things: (i) amends that certain Third A&R Agreement, by and between the Company and Jackson, dated as of October 27, 2022, (ii) provides for the issuance of 2023 Jackson Note, and (iii) joins certain subsidiaries of the Company to (a) the Pledge Agreement, and (b) the Security Agreement, dated as of September 15, 2017, as either subsidiary guarantors or pledgors (as applicable) and amends certain terms and conditions of each of the Pledge Agreement and the Security Agreement. Pursuant to the terms of the purchase agreement, simultaneously with the execution of the amendment agreement, the Company issued to Jackson the 2023 Jackson Note due October 14, 2024 in the principal amount of $ 2,000 the Company is required to pay interest at a per annum rate of 12%. In the event the Company has not repaid in cash at 50% of the outstanding principal balance of the 2023 Jackson Note on or before October 27, 2023, then interest on the outstanding principal balance of the 2023 Jackson Note will accrue at 16% per annum until the 2023 Jackson Note is repaid in full Pursuant to the First Omnibus Amendment Agreement, interest on that certain 2022 Jackson Note due October 14, 2024, evidencing the obligations of the Obligors under the Third A&R Agreement and executed by the Company in favor of Jackson, shall be paid in cash and continue to accrue at a rate per annum equal to 12 50 16 Amendment No. 28 to Credit and Security Agreement and Limited Waiver with MidCap On August 30, 2023, the Company and the Credit Facility Borrowers entered into Amendment No. 28 to Credit and Security Agreement with MidCap and the lenders party thereto (the “Lenders”). Amendment No. 28, among other things: (i) increases the applicable margin (a) from 4.25% to 4.50% with respect to revolving loans and other obligations (other than letter of credit liabilities) and (b) from 3.75% to 4.50% with respect to letter of credit liabilities, (ii) revises the definition of borrowing base to include the amount of any reserves and/or adjustments provided for in the Credit and Security Agreement, including, but not limited to, the Additional Reserve Amount (as defined in the in Amendment No. 28), (iii) requires that the Company complies with a fixed charge coverage ratio of at least 1:00 to 1:00, and (iv) waives the existing event of default that occurred under the Credit and Security Agreement due to the Credit Parties’ failure to maintain the Minimum Liquidity amount (as defined in the Credit and Security Agreement) for the fiscal month ending June 30, 2023 (each as defined in the Credit and Security Agreement) In addition, pursuant Amendment No. 28, no later than five (5) business days following the receipt of any cash proceeds from any equity issuance or other cash contribution from the Company’s equity holders, the Company shall prepay the revolving loans by an amount equal to (i) the sum of $ 1,300 50 In connection with Amendment No. 28, the Company shall pay to MidCap (i) a modification fee of $ 68 32 Sixth Amendment to Intercreditor Agreement with Jackson and MidCap On August 30, 2023, in connection with the First Omnibus Amendment Agreement, the 2023 Jackson Note and Amendment No. 28, the Company, Jackson, the Lenders and MidCap entered into the Sixth Amendment to Intercreditor Agreement (the “Sixth Amendment”), which amended the Intercreditor Agreement, dated as of September 15, 2017 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the “Intercreditor Agreement”), by and between the Company, Jackson and MidCap. The Sixth Amendment, among other things, provides for (i) consent by the Lenders to the Amendment Agreement and (ii) consent by Jackson to Amendment No. 28. Inducement Letter and Exercise of Warrants On September 1, 2023, the Company entered into an inducement offer letter agreement (the “Inducement Letter”) with a certain holder (the “Holder”) of certain of its existing warrants to purchase up to an aggregate of 2,761,170 Pursuant to the Inducement Letter, the Holder agreed to exercise for cash its Existing Warrants to purchase an aggregate of 2,761,170 0.83 5,522,340 The closing of the transactions contemplated pursuant to the Inducement Letter occurred on September 6, 2023 (the “Closing Date”). The Company received aggregate gross proceeds of approximately $ 2,300 The Company engaged Wainwright to act as its exclusive placement agent in connection with the transactions summarized above and paid Wainwright a cash fee equal to 7.5 1.0 Pursuant to the Engagement Letter, the Company agreed to reimburse Wainwright for its expenses in connection with the exercise of the Existing Warrants and the issuance of the September 2023 Warrants of up to $ 50 25 16 207,088 1.0375 Limited Duration Stockholder Rights Agreement On September 27, 2023, the board of directors (the “Board”) of the Company declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock and .3889 Rights for each outstanding share of Series H Preferred Stock (collectively with the common stock, the “Voting Stock”). The dividend is payable on October 21, 2023 to the stockholders of record at the close of business on October 21, 2023 (the “Record Date”). Each Right initially entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $ 0.00001 2.75 Until the close of business on the earlier of (i) 10 business days following the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) by the Company or an Acquiring Person (as defined below) that an Acquiring Person has become such, or such other date, as determined by the Board, on which a Person has become an Acquiring Person, or (ii) 10 business days (or such later date as may be determined by action of the Board prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) after the date of the commencement of, or the first public announcement of an intention to commence, a tender or exchange offer the consummation of which would result in any person or group of affiliated or associated persons becoming an Acquiring Person (the earlier of such dates being called the “Distribution Date”), (x) the Rights will be evidenced by the certificates representing the Voting Stock registered in the names of the holders thereof (or by book entry shares in respect of such Voting Stock) and not by separate Right Certificates (as defined below), and (y) the Rights will be transferable only in connection with the transfer of Voting Stock. Until the Distribution Date (or earlier expiration of the Rights), (i) new Voting Stock certificates issued after the Record Date upon transfer or new issuances of Voting Stock will contain a legend incorporating the terms of the Rights Agreement by reference, and (ii) the surrender for transfer of any certificates representing Voting Stock (or book entry shares of Voting Stock) outstanding as of the Record Date will also constitute the transfer of the Rights associated with the shares of Voting Stock represented thereby. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights (“Right Certificates”) will be mailed to holders of record of the Voting Stock as of the close of business on the Distribution Date and such separate Right Certificates alone will evidence the Rights. Except as otherwise provided in the Rights Agreement, the Rights are not exercisable until the Distribution Date. The Rights will expire on the earliest of (i) October 2, 2026 or such later date as may be established by the Board prior to the expiration of the Rights, (ii) the time at which the Rights are redeemed pursuant to the terms of the Rights Agreement, (iii) the closing of any merger or other acquisition transaction involving the Company pursuant to an agreement of the type described in the Rights Agreement at which time the Rights are terminated, or (iv) the time at which such Rights are exchanged pursuant to the terms of the Rights Agreement. The Purchase Price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights is subject to adjustment from time to time, among others, (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for or purchase Preferred Stock at a price, or securities convertible into Preferred Stock with a conversion price, less than the then-current market price of the Preferred Stock, or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividends payable in Preferred Stock) or of subscription rights or warrants (other than those referred to above). The number of outstanding Rights is subject to adjustment in the event of a stock dividend on any class or series of Voting Stock payable in shares of a class or series of Voting Stock or subdivisions, consolidations or combinations of any class or series of Voting Stock occurring, in any such case, prior to the Distribution Date. Shares of Preferred Stock purchasable upon exercise of the Rights will not be redeemable. Each share of Preferred Stock will be entitled, when, as and if declared, to a minimum preferential quarterly dividend payment of the greater of (a) $ 10.00 10.00 In the event of any merger, consolidation, combination or other transaction in which outstanding shares of common stock are converted or exchanged, each share of Preferred Stock will be entitled to receive 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of common stock is changed or exchanged. In the event that any person or group of affiliated or associated persons becomes an Acquiring Person (the first occurrence of such event, a “Flip-In Event”), each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereupon become void), will thereafter have the right to receive upon exercise of a Right that number of shares of common stock equal to the number of shares of common stock obtained by dividing the Purchase Price (subject to adjustments) by 50% of the current per share market price of the common stock on the date of the Flip-In Event. Except in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring beneficial ownership of 10% (20% in the case of a Passive Investor (as defined in the Rights Agreement)) or more in voting power of the shares of Voting Stock then outstanding, subject to certain exclusions In the event that, after a Flip-In Event, the Company is acquired in a merger or other business combination transaction or 50 50 At any time after a Flip-In Event and prior to the acquisition by an Acquiring Person of 50 With certain exceptions, no adjustment in the Purchase Price will be required unless such adjustment would require an increase or decrease of at least 1% in such Purchase Price At any time prior to a Flip-In Event, the Board may redeem all but not less than the then outstanding Rights at a price of $ 0.01 For so long as the Rights are then redeemable, the Company may, in its sole discretion, except with respect to the Redemption Price, supplement or amend any provision in the Rights Agreement without the approval of any holders of the Rights. After the Rights are no longer redeemable, the Company may, except with respect to the Redemption Price, supplement or amend the Rights Agreement without the approval of any holders of Rights, provided that no such supplement or amendment may adversely affect the interests of holders of the Rights, cause the Rights Agreement to become amendable contrary to the provisions of the Rights Agreement, or cause the Rights to again to become redeemable. Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Apr. 01, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation These condensed consolidated financial statements and related notes are presented in accordance with generally accepted accounting principles in the United States (“GAAP”), expressed in U.S. dollars. All amounts are in thousands, except share, per share and par values, unless otherwise indicated. The accompanying condensed consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the GAAP. All significant intercompany balances and transactions have been eliminated in consolidation. |
Liquidity | Liquidity The accompanying condensed consolidated financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. The accompanying financial statements have been prepared on a basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements as of the quarter ended April 1, 2023, the Company has an accumulated deficit of $ 103,870 17,829 18,141 1,402 The financial statements included in this Quarterly Report on Form 10-Q have been prepared assuming that we will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity, capital requirements and that our credit facilities with our lenders will remain available to us. Further, the notes issued to Jackson Investment Group LLC (“Jackson”) includes certain financial customary covenants and the Company has had instances of non-compliance. Management has historically been able to obtain from Jackson waivers of any non-compliance and management expects to continue to be able to obtain necessary waivers in the event of future non-compliance; however, there can be no assurance that the Company will be able to obtain such waivers, and should Jackson refuse to provide a waiver in the future, the outstanding debt under the agreement could become due immediately, which exceeds our current cash balance. As of the date of the filing of this Quarterly Report on Form 10-Q, the entire outstanding principal balance of the Jackson Notes, which was $ 10,116 October 14, 2024 32,500 September 6, 2024 STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) |
Going Concern | Going Concern The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. Historically, the Company has funded such payments either through cash flow from operations or the raising of capital through additional debt or equity. If the Company is unable to obtain additional capital, such payments may not be made on time. The Company’s negative working capital and liquidity position combined with the uncertainty generated by the economic reaction to the COVID-19 pandemic raise substantial doubt about the Company’s ability to continue as a going concern. |
COVID-19 | COVID-19 In May 2023, the World Health Organization determined that COVID-19 no longer fit the definition of a public health emergency and the U.S. government announced its plan to let the declaration of a public health emergency associated with COVID-19 expire on May 11, 2023. COVID-19 is expected to remain a serious endemic threat for an indefinite future period and may continue to adversely affect the global economy, and we are unable to predict the full extent of potential delays or impacts on our business, our clinical studies, our research programs, the recoverability of our assets, and our manufacturing. The effects of the COVID-19 endemic may continue to disrupt or delay our business operations, including but not limited to with respect to efforts relating to potential business development transactions and our ability to deploy staffing workforce effectively during social distancing and shelter-in-place directives, and it could continue to disrupt the marketplace which could have an adverse effect on our operations. As such, it is uncertain as to the full magnitude that the COVID-19 and its ongoing effects will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on its financial condition, liquidity, operations, industry, and workforce. The Company is not able to estimate the effects of the COVID-19 endemic on its results of operations, financial condition, or liquidity for fiscal year 2023. The Company’s negative working capital and liquidity position combined with the uncertainty generated by the economic reaction to COVID-19 and its ongoing effects contribute to the substantial doubt about the Company’s ability to continue as a going concern. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from its estimates. To the extent there are material differences between estimates and the actual results, future results of operations will be affected. Significant estimates for the quarters ended April 1, 2023 and April 2, 2022 include the valuation of intangible assets, including goodwill, liabilities associated with testing long-lived assets for impairment and valuation reserves against deferred tax assets. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) |
Goodwill | Goodwill Goodwill relates to amounts that arose in connection with various acquisitions and represents the difference between the purchase price and the fair value of the identifiable intangible and tangible net assets when accounted for using the purchase method of accounting. Goodwill is not amortized, but it is subject to periodic review for impairment. Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to, current economic and market conditions, a decline in the equity value of the business, a significant adverse change in certain agreements that would materially affect reported operating results, business climate or operational performance of the business and an adverse action or assessment by a regulator. In accordance with ASU No. 2011-08, Intangibles-Goodwill and Other (Topic 350) Testing Goodwill for Impairment, the Company is required to review goodwill by reporting unit for impairment at least annually or more often if there are indicators of impairment present. During the year ended December 31, 2022, the Company changed its annual measurement date from the last day of the fiscal year end to the first day of the fiscal fourth quarter. A reporting unit is either the equivalent of, or one level below, an operating segment. The Company early-adopted the provisions in ASU 2017-04, which eliminates the second step of the goodwill impairment test. As a result, the Company’s goodwill impairment tests include only one step, which is a comparison of the carrying value of each reporting unit to its fair value, and any excess carrying value, up to the amount of goodwill allocated to that reporting unit, is impaired. The carrying value of each reporting unit is based on the assignment of the appropriate assets and liabilities to each reporting unit. Assets and liabilities were assigned to each reporting unit if the assets or liabilities are employed in the operations of the reporting unit and the asset and liability is considered in the determination of the reporting unit fair value. The Company recognized an impairment with respect to its Staffing UK 10,000 |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) The Company has primarily two main forms of revenue – temporary contractor revenue and permanent placement revenue. Temporary contractor revenue is accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of the Company’s performance on an hourly or daily basis. The contracts stipulate weekly or monthly billing, and the Company has elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as we have the right to payment in an amount that corresponds directly with the value of performance completed to date. Permanent placement revenue is recognized on the date the candidate’s full-time employment with the customer has commenced. The customer is invoiced on the start date, and the contract stipulates payment due under varying terms, typically 30 days. The contract with the customer stipulates a guarantee period whereby the customer may be refunded if the employee is terminated within a short period of time, however this has historically been infrequent, and immaterial upon occurrence. As such, the Company’s performance obligations are satisfied upon commencement of the employment, at which point control has transferred to the customer. Revenue for the quarter ended April 1, 2023 was comprised of $ 61,795 1,310 48,329 1,564 |
Income Taxes | Income Taxes The Company utilizes Accounting Standards Codification (“ASC”) Topic 740, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company applies the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of the date of this filing, the Company is current on all corporate, federal and state tax returns. The Company’s policy is to record interest and penalties related to unrecognized tax benefits as income tax expense. The effective income tax rate was ( 0.79% 0.25 |
Foreign Currency | Foreign Currency The Company recorded a non-cash foreign currency remeasurement loss of $ 443 |
Warrants | Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the warrants placed were estimated using a Black Scholes model. Refer to Note 10 – Stockholders’ Equity for further details. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) No. 2020-06 August 2020 Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and treasury stock method will be no longer available. ASU 2020-06 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company adopted this ASU on January 2, 2022. This standard does not have an impact on our consolidated financial statements. On June 16, 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss model for the impairment of financial assets measured at amortized cost basis. This ASU replaces the probable, incurred loss model for those assets. On November 15, 2019, the FASB delayed the effective date of FASB ASC Topic 326 for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022, for SEC filers that are smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities. The Company has adopted this ASU on January 1, 2023. This standard does not have a material impact on the consolidated financial statements. |
EARNINGS (LOSS) PER COMMON SH_2
EARNINGS (LOSS) PER COMMON SHARE (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Earnings Per Share [Abstract] | |
SCHEDULE OF COMMON SHARE EQUIVALENT BASIS AND OUTSTANDING EXCLUDED FROM PER SHARE COMPUTATIONS OF ANTI-DILUTIVE | SCHEDULE OF COMMON SHARE EQUIVALENT BASIS AND OUTSTANDING EXCLUDED FROM PER SHARE COMPUTATIONS OF ANTI-DILUTIVE April 1, 2023 April 2, 2022 Warrants 4,624,543 127,300 Restricted shares – unvested 128,496 972,495 Options 51,302 6,880 Total 4,804,341 1,106,675 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF BREAKDOWN OF INTANGIBLE ASSETS | The following provides a breakdown of intangible assets as of: SCHEDULE OF BREAKDOWN OF INTANGIBLE ASSETS April 1, 2023 Tradenames Non-Compete Customer Relationship Total Intangible assets, gross $ 10,728 $ 2,464 $ 26,080 $ 39,272 Accumulated amortization (5,796 ) (2,464 ) (14,373 ) (22,633 ) Intangible assets, net $ 4,932 $ — $ 11,707 $ 16,639 December 31, 2022 Tradenames Non-Compete Customer Relationship Total Intangible assets, gross $ 10,759 $ 2,467 $ 26,170 $ 39,396 Accumulated amortization (5,608 ) (2,467 ) (13,936 ) (22,011 ) Intangible assets, net $ 5,151 $ — $ 12,234 $ 17,385 |
SCHEDULE OF ESTIMATED ANNUAL AMORTIZATION EXPENSE FOR EACH OF THE NEXT FIVE FISCAL YEARS | As of April 1, 2023, estimated annual amortization expense for each of the next five fiscal years is as follows: SCHEDULE OF ESTIMATED ANNUAL AMORTIZATION EXPENSE FOR EACH OF THE NEXT FIVE FISCAL YEARS Fiscal quarter ended April Amount 2023 $ 1,965 2024 2,620 2025 2,552 2026 2,410 2027 2,410 Thereafter 4,682 Total $ 16,639 |
GOODWILL (Tables)
GOODWILL (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF GOODWILL | The following table provides a roll forward of goodwill: SCHEDULE OF GOODWILL April 1, 2023 December 31, 2022 Beginning balance, gross $ 37,541 $ 31,478 Acquisition — 7,808 Accumulated disposition (1,577 ) (1,577 ) Accumulated impairment losses (16,073 ) (16,073 ) Currency translation adjustment — (1,745 ) Ending balance, net $ 19,891 $ 19,891 |
SCHEDULE OF GOODWILL REPORTABLE BY SEGMENT | Goodwill by reportable segment is as follows: SCHEDULE OF GOODWILL REPORTABLE BY SEGMENT April 1, 2023 December 31, 2022 Professional Staffing - US $ 14,031 $ 14,031 Commercial Staffing - US 5,860 5,860 Professional Staffing - UK — — Ending balance, net $ 19,891 $ 19,891 Goodwill $ 19,891 $ 19,891 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
SCHEDULE OF BUSINESS ACQUISITION PURCHASE PRICE FAIR VALUE | The following table summarizes the allocation of the purchase price of the fair value of the assets acquired and liabilities assumed at the date of the acquisition: SCHEDULE OF BUSINESS ACQUISITION PURCHASE PRICE FAIR VALUE Current assets $ 10,833 Fixed assets 150 Other non-current assets 4,914 Intangible assets 6,800 Goodwill 6,809 Current liabilities (14,965 ) Other non-current liabilities (1,812 ) Consideration $ 12,729 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF DEBT | SCHEDULE OF DEBT April 1, 2023 December 31, 2022 Jackson Investment Group - related party $ 9,016 $ 9,016 Redeemable Series H Preferred Stock 9,000 9,000 HSBC Term Loan 125 249 Total Debt, Gross 18,141 18,265 Less: Debt Discount and Deferred Financing Costs, Net (863 ) (962 ) Total Debt, Net 17,278 17,303 Less: Non-Current Portion - Related Party (8,705 ) (8,661 ) Less: Non-Current Portion (8,448 ) (8,393 ) Total Current Debt, Net $ 125 $ 249 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Leases | |
SCHEDULE OF LEASE, COST AND OPERATING LEASE LIABILITY MATURITY | Quantitative information regarding the Company’s leases for period ended April 1, 2023 is as follows: SCHEDULE OF LEASE, COST AND OPERATING LEASE LIABILITY MATURITY Lease Cost Classification April 1, 2023 Operating lease cost SG&A Expenses 417 Other information Weighted average remaining lease term (years) 5.80 Weighted average discount rate 6.30 % Future Lease Payments 2023 $ 1,406 2024 1,766 2025 1,642 2026 2,387 2027 1,243 Thereafter 3,685 Lessee operating lease liability payments due $ 12,129 Less: Imputed Interest 2,586 Operating lease, liability $ 9,543 Leases - Current $ 1,245 Leases – Non-current $ 8,298 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
SCHEDULE OF STOCKHOLDERS EQUITY | The Company issued the following shares of common stock during the quarter ended April 1, 2023: SCHEDULE OF STOCKHOLDERS EQUITY Number of Shares of Common Stock Fair Value of Shares Fair Value at Issuance (minimum and maximum Shares issued to/for: Issued Issued per share) Equity raise 989,516 $ 4,999 $ 2.65 $ 2.65 Employees 177,305 515 $ 2.82 $ 2.82 Board and committee members 60,000 201 $ 2.93 $ 3.13 1,226,821 $ 5,715 The Company issued the following shares of common stock during the quarter ended April 2, 2022: Number of Shares of Common Stock Fair Value of Shares Fair Value at Issuance (minimum and maximum Shares issued to/for: Issued Issued per share) Board and committee members 1,000 $ 6 $ 9.65 $ 9.65 1,000 $ 6 |
SCHEDULE OF UNVESTED RESTRICTED SHARES ACTIVITY | SCHEDULE OF UNVESTED RESTRICTED SHARES ACTIVITY Weighted Average Restricted Shares Price Per Share Balance at January 1, 2022 5,976 $ 75.00 Granted 63,000 29.20 Vested/adjustments (384 ) 29.00 Balance at December 31, 2022 68,592 $ 50.00 Granted 237,305 2.87 Vested/adjustments (177,401 ) 2.85 Balance at April 1, 2023 128,496 $ 4.96 |
SCHEDULE OF WARRANTS ACTIVITY | Transactions involving the Company’s warrant issuances are summarized as follows: SCHEDULE OF WARRANTS ACTIVITY Weighted Number of Average Shares Exercise Price Outstanding at January 1, 2022 972,495 $ 26.88 Issued 1,404,478 5.83 Exercised — — Expired or cancelled (673,285 ) 26.84 Outstanding at December 31, 2022 1,703,688 $ 10.21 Issued 2,902,509 2.51 Issued – Pre-funded warrants 1,569,516 0.001 Exercised (674,516 ) 0.001 Expired or cancelled (876,654 ) (5.85 ) Outstanding at April 1, 2023 4,624,543 $ 4.97 |
SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY | A summary of option activity during the quarter ended April 1, 2023 is presented below: SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY Weighted Average Options Exercise Price Outstanding at January 1, 2022 1,302 $ 1,665.60 Granted 50,000 7.80 Exercised — — Expired or cancelled — — Outstanding at December 31, 2022 51,302 $ 50.06 Granted — — Exercised — — Expired or cancelled — — Outstanding at April 1, 2023 51,302 $ 50.06 |
Warrant [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
SCHEDULE OF WARRANTS OUTSTANDING | The following table summarizes warrants outstanding as of April 1, 2023: SCHEDULE OF WARRANTS OUTSTANDING Weighted Average Number Remaining Weighted Outstanding Contractual Average Exercise Price and Exercisable Life (years) Exercise Price $ 0.001 3,750.00 4,624,543 4.72 4.97 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Segment Reporting [Abstract] | |
SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT | The Company generated revenue and gross profit by segment as follows: SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT Three Months Ended April 1, 2023 April 2, 2022 Commercial Staffing - US $ 23,247 $ 28,609 Professional Staffing - US 24,376 4,329 Professional Staffing - UK 15,482 16,955 Total Revenue $ 63,105 $ 49,893 Commercial Staffing - US $ 3,815 $ 4,719 Professional Staffing - US 3,695 1,204 Professional Staffing - UK 2,078 2,590 Total Gross Profit $ 9,588 $ 8,513 Selling, general and administrative expenses $ (10,167 ) $ (8,909 ) Depreciation and amortization (873 ) (655 ) Interest expense and amortization of debt discount and deferred financing costs (1,349 ) (766 ) Re-measurement loss on intercompany note — (443 ) Other loss income, net (14 ) (58 ) Loss Before Provision for Income Tax $ (2,815 ) $ (2,318 ) STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) The following table disaggregates revenues by segments: Quarter Ended April 1, 2023 Commercial Staffing - US Professional Staffing - US Professional Staffing - UK Total Permanent Revenue $ 131 $ 369 $ 810 $ 1,310 Temporary Revenue 23,116 24,007 14,672 61,795 Total Revenue $ 23,247 $ 24,376 $ 15,482 $ 63,105 Quarter Ended April 2, 2022 Commercial Staffing - US Professional Staffing - US Professional Staffing - UK Total Permanent Revenue $ 113 $ 380 $ 1,071 $ 1,564 Temporary Revenue 28,496 3,949 15,884 48,329 Total Revenue $ 28,609 $ 4,329 $ 16,955 $ 49,893 As of April 1, 2023 and December 31, 2022, the Company has assets in the U.S. and the U.K. as follows: April 1, 2023 December 31, 2022 United States $ 70,685 $ 70,970 United Kingdom 11,173 10,689 Total Assets $ 81,858 $ 81,659 April 1, 2023 December 31, 2022 United States $ 19,891 $ 19,891 United Kingdom — — Total Goodwill $ 19,891 $ 19,891 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Related Party Transactions [Abstract] | |
SCHEDULE OF RELATED PARTY TRANSACTIONS | SCHEDULE OF RELATED PARTY TRANSACTIONS Three Months Ended April 1, 2023 Cash Compensation Shares Issued Value of Shares Issued Compensation Expense Recognized Dimitri Villard $ 25 10,000 $ 29 $ 54 Jeff Grout 25 10,000 29 54 Nick Florio — 10,000 29 29 Vincent Cebula 8 10,000 29 38 Alicia Barker — 10,000 31 31 Brendan Flood — 10,000 31 31 $ 58 60,000 $ 180 $ 237 Three Months Ended April 2, 2022 Cash Compensation Shares Issued Value of Shares Issued Compensation Expense Recognized Dimitri Villard $ 25 2,000 $ 2 $ 27 Jeff Grout 25 2,000 2 27 Nick Florio 25 2,000 2 27 Vincent Cebula 25 2,000 2 27 Alicia Barker — 2,000 2 2 $ 100 10,000 $ 10 $ 110 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 3 Months Ended |
Apr. 01, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
SCHEDULE OF CASH FLOW, SUPPLEMENTAL DISCLOSURES | SCHEDULE OF CASH FLOW, SUPPLEMENTAL DISCLOSURES Three Months Ended April 1, 2023 April 2, 2022 Cash paid for: Interest $ 1,406 $ 766 Income taxes — — Non-Cash Investing and Financing Activities: Deferred purchase price of UK factoring facility $ 1,651 $ 1,835 |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) - USD ($) $ in Thousands, Pure in Millions | 1 Months Ended | 3 Months Ended | |
Jun. 24, 2022 | May 31, 2022 | Apr. 01, 2023 | |
Property, Plant and Equipment [Line Items] | |||
Service contracts | $ 60,000 | ||
Business contribution description | Typical contribution for EOR projects is 80-85% of the gross profit earned, compared to 40-50% for traditional staffing which negates the impact of lower gross margins. | ||
Reverse stock split, description | one-for-ten reverse stock split | ||
Headway Workforce Solutions [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Percentage of revenue from business acquired | 3,300% | ||
Headway Workforce Solutions [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Revenues | $ 60,700 | ||
Headway Workforce Solutions [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Revenues | $ 184,100 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
Short-Term Debt [Line Items] | |||
Accumulated deficit | $ 103,870 | $ 101,015 | |
Working capital deficit | 17,829 | ||
Gross debt | 18,141 | ||
Cash | 1,402 | 1,992 | |
Revenue | $ 63,105 | $ 49,893 | |
Effective Income Tax Rate Reconciliation, Percent | 0.79% | 0.25% | |
Other comprehensive income (loss), foreign currency transaction and translation adjustment, net of tax | $ 443 | ||
Temporary Contractor Revenue [Member] | |||
Short-Term Debt [Line Items] | |||
Revenue | $ 61,795 | 48,329 | |
Permanent Placement Revenue [Member] | |||
Short-Term Debt [Line Items] | |||
Revenue | 1,310 | $ 1,564 | |
Staffing UK Reporting Unit [Member] | |||
Short-Term Debt [Line Items] | |||
Goodwill impairment loss | 10,000 | $ 10,000 | |
Jackson Note [Member] | |||
Short-Term Debt [Line Items] | |||
Principal amount | $ 10,116 | ||
Debt instrument, maturity date | Oct. 14, 2024 | ||
Jackson Note [Member] | Midcap Funding X Trust [Member] | |||
Short-Term Debt [Line Items] | |||
Debt instrument, maturity date | Sep. 06, 2024 | ||
Long-term line of credit | $ 32,500 |
SCHEDULE OF COMMON SHARE EQUIVA
SCHEDULE OF COMMON SHARE EQUIVALENT BASIS AND OUTSTANDING EXCLUDED FROM PER SHARE COMPUTATIONS OF ANTI-DILUTIVE (Details) - shares | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 4,804,341 | 1,106,675 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 4,624,543 | 127,300 |
Restricted Shares Unvested [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 128,496 | 972,495 |
Share-Based Payment Arrangement, Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 51,302 | 6,880 |
ACCOUNTS RECEIVABLE FINANCING (
ACCOUNTS RECEIVABLE FINANCING (Details Narrative) £ in Thousands | 1 Months Ended | 3 Months Ended | |||||||||
Oct. 27, 2022 USD ($) | May 15, 2020 GBP (£) | May 15, 2020 GBP (£) | Jun. 28, 2018 GBP (£) | Feb. 08, 2018 GBP (£) | Sep. 15, 2017 USD ($) | Jul. 31, 2019 GBP (£) | Apr. 01, 2023 USD ($) | Apr. 02, 2022 USD ($) | Dec. 31, 2022 USD ($) | Oct. 26, 2022 USD ($) | |
Financing Receivable, Modified [Line Items] | |||||||||||
Total debt, gross | $ 18,141,000 | $ 18,265,000 | |||||||||
Collection of UK factoring facility deferred purchase price | 1,626,000 | $ 1,877,000 | |||||||||
HSBC Bank [Member] | |||||||||||
Financing Receivable, Modified [Line Items] | |||||||||||
Debt instrument, description | three-year term | three-year term | |||||||||
Debt instrument, face amount | £ | £ 1,000 | £ 1,000 | |||||||||
Total debt, gross | 125,000 | ||||||||||
Midcap Financial Trust [Member] | |||||||||||
Financing Receivable, Modified [Line Items] | |||||||||||
Long-term line of credit | $ 25,000,000 | $ 16,434 | $ 18,176 | ||||||||
Line of credit facility additional borrowing capacity | $ 25,000,000 | ||||||||||
Line of credit facility, maturity date | Apr. 08, 2019 | ||||||||||
MidCap Funding IV Trust [Member] | Credit and Security Agreement [Member] | |||||||||||
Financing Receivable, Modified [Line Items] | |||||||||||
Loans payable | $ 32,500,000 | $ 25,000,000 | |||||||||
Loan description | Amendment No. 27 increases the applicable margin from 4.0% to 4.25%, with respect to the Loan (other than Letter of Credit Liabilities (as defined in the Credit and Security Agreement)), and from 3.5% to 3.75% with respect to the Letter of Credit Liabilities. Amendment No. 27 also replaces the interest rate benchmark from LIBOR to SOFR and provides that the Loan shall bear interest at the sum of a term-based SOFR rate (plus a SOFR adjustment of 0.11448%) plus the Applicable Margin, subject to certain provisions for the replacement of SOFR with an alternate benchmark in connection with SOFR no longer being provided by its administrator. Notwithstanding the foregoing, the SOFR interest rate shall not be at any time less than 1.00%. On August 30, 2023, the Company entered into Amendment No. 28 (“Amendment No. 28”) to the Credit and Security Agreement with MidCap, which among other things further increases the applicable margin (a) from 4.25% to 4.50% with respect to the Loan (other than the Letter of Credit Liabilities) and (b) from 3.75% to 4.50% with respect to the Letter of Credit Liabilities. See Note 15 – Subsequent Events. | ||||||||||
MidCap Funding IV Trust [Member] | Credit and Security Agreement [Member] | Tranches [Member] | |||||||||||
Financing Receivable, Modified [Line Items] | |||||||||||
Loan commitment amount | $ 42,500,000 | ||||||||||
MidCap Funding IV Trust [Member] | Credit and Security Agreement [Member] | Tranches [Member] | Maximum [Member] | |||||||||||
Financing Receivable, Modified [Line Items] | |||||||||||
Loans payable | 10,000,000 | ||||||||||
MidCap Funding IV Trust [Member] | Credit and Security Agreement [Member] | Tranches [Member] | Minimum [Member] | |||||||||||
Financing Receivable, Modified [Line Items] | |||||||||||
Loans payable | $ 5,000,000 | ||||||||||
HSBC Invoice Finance (UK) Ltd [Member] | New Facility [Member] | |||||||||||
Financing Receivable, Modified [Line Items] | |||||||||||
Line of credit facility aggregate amount | £ | £ 11,500 | ||||||||||
Borrowing fund description | The terms of the arrangement provide for HSBC to fund 90% of the purchased accounts receivable upfront and a secured borrowing line of 70% of unbilled receivables capped at £1,000 (within the overall aggregate total facility of £11,500.) | ||||||||||
Line of credit facility, commitment fee percentage | 1.80% | ||||||||||
Line of credit facility increase decrease for period net | £ | £ 20,000 | £ 11,500 | £ 22,500 | ||||||||
Line of credit facility unbilled receivables | £ | £ 1,500 | £ 1,000 |
SCHEDULE OF BREAKDOWN OF INTANG
SCHEDULE OF BREAKDOWN OF INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 39,272 | $ 39,396 |
Accumulated amortization | (22,633) | (22,011) |
Intangible assets, net | 16,639 | 17,385 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 10,728 | 10,759 |
Accumulated amortization | (5,796) | (5,608) |
Intangible assets, net | 4,932 | 5,151 |
Non Compete [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 2,464 | 2,467 |
Accumulated amortization | (2,464) | (2,467) |
Intangible assets, net | ||
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 26,080 | 26,170 |
Accumulated amortization | (14,373) | (13,936) |
Intangible assets, net | $ 11,707 | $ 12,234 |
SCHEDULE OF ESTIMATED ANNUAL AM
SCHEDULE OF ESTIMATED ANNUAL AMORTIZATION EXPENSE FOR EACH OF THE NEXT FIVE FISCAL YEARS (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 | $ 1,965 | |
2024 | 2,620 | |
2025 | 2,552 | |
2026 | 2,410 | |
2027 | 2,410 | |
Thereafter | 4,682 | |
Intangible assets, net | $ 16,639 | $ 17,385 |
SCHEDULE OF GOODWILL (Details)
SCHEDULE OF GOODWILL (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 01, 2023 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Beginning balance, gross | $ 37,541 | $ 31,478 |
Acquisition | 7,808 | |
Accumulated disposition | (1,577) | (1,577) |
Accumulated impairment losses | (16,073) | (16,073) |
Currency translation adjustment | (1,745) | |
Ending balance, net | $ 19,891 | $ 19,891 |
SCHEDULE OF GOODWILL REPORTABLE
SCHEDULE OF GOODWILL REPORTABLE BY SEGMENT (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Goodwill | $ 19,891 | $ 19,891 |
UNITED STATES | ||
Goodwill | 19,891 | 19,891 |
UNITED KINGDOM | ||
Goodwill | ||
Professional Staffing [Member] | UNITED STATES | ||
Goodwill | 14,031 | 14,031 |
Professional Staffing [Member] | UNITED KINGDOM | ||
Goodwill | ||
Commercial Staffing [Member] | UNITED STATES | ||
Goodwill | $ 5,860 | $ 5,860 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 18, 2022 | Apr. 01, 2023 | Apr. 02, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Amortization of intangible assets | $ 699 | $ 584 | |
Intangible asset, useful life | 8 years | ||
Stock Purchase Agreement [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Payments to acquire receivables | $ 14 | ||
Stock Purchase Agreement [Member] | Series H Convertible Preferred Stock [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Stock issued during period, shares, conversion of convertible securities | 9,000,000 |
GOODWILL (Details Narrative)
GOODWILL (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
May 18, 2022 | Apr. 01, 2023 | Dec. 31, 2022 | |
Goodwill [Line Items] | |||
Estimated value of goodwill | $ 7,808 | $ 10,000 | |
Staffing UK Reporting Unit [Member] | |||
Goodwill [Line Items] | |||
Goodwill impairment loss | $ 10,000 | $ 10,000 |
SCHEDULE OF BUSINESS ACQUISITIO
SCHEDULE OF BUSINESS ACQUISITION PURCHASE PRICE FAIR VALUE (Details) - Headway Workforce Solutions [Member] $ in Thousands | Apr. 18, 2022 USD ($) |
Business Acquisition [Line Items] | |
Current assets | $ 10,833 |
Fixed assets | 150 |
Other non-current assets | 4,914 |
Intangible assets | 6,800 |
Goodwill | 6,809 |
Current liabilities | (14,965) |
Other non-current liabilities | (1,812) |
Consideration | $ 12,729 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) $ in Thousands | May 18, 2022 | Apr. 18, 2022 |
Headway Workforce Solutions [Member] | ||
Business Acquisition [Line Items] | ||
Payments to acquire business | $ 160 | |
Business combination consideration transferred | $ 4,290 | |
Intangible assets | $ 6,800 | |
Stock Purchase Agreement [Member] | ||
Business Acquisition [Line Items] | ||
Payments to acquire receivables | $ 14 | |
Stock Purchase Agreement [Member] | Series H Convertible Preferred Stock [Member] | ||
Business Acquisition [Line Items] | ||
Conversion of convertible securities, shares | 9,000,000 | |
Payments to acquire business | $ 9,000 | |
Stock Purchase Agreement [Member] | Series H Convertible Preferred Stock [Member] | Headway Workforce Solutions [Member] | ||
Business Acquisition [Line Items] | ||
Business combination consideration transferred | $ 4,450 |
SCHEDULE OF DEBT (Details)
SCHEDULE OF DEBT (Details) - USD ($) $ in Thousands | Apr. 01, 2023 | Dec. 31, 2022 |
Short-Term Debt [Line Items] | ||
Total Debt, Gross | $ 18,141 | $ 18,265 |
Less: Debt Discount and Deferred Financing Costs, Net | (863) | (962) |
Total Debt, Net | 17,278 | 17,303 |
Total Current Debt, Net | 125 | 249 |
Related Party [Member] | ||
Short-Term Debt [Line Items] | ||
Less: Non-Current Portion - Related Party | (8,705) | (8,661) |
Nonrelated Party [Member] | ||
Short-Term Debt [Line Items] | ||
Less: Non-Current Portion | (8,448) | (8,393) |
Jackson Investment Group Related Party [Member] | ||
Short-Term Debt [Line Items] | ||
Total Debt, Gross | 9,016 | 9,016 |
Redeemable Series H Preferred Stock [Member] | ||
Short-Term Debt [Line Items] | ||
Total Debt, Gross | 9,000 | 9,000 |
HSBC Term Loan [Member] | ||
Short-Term Debt [Line Items] | ||
Total Debt, Gross | $ 125 | $ 249 |
DEBT (Details Narrative)
DEBT (Details Narrative) $ / shares in Units, £ in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||
Aug. 30, 2023 | Oct. 27, 2022 USD ($) $ / shares shares | Oct. 27, 2022 USD ($) $ / shares shares | May 18, 2022 USD ($) $ / shares shares | May 15, 2020 GBP (£) | May 15, 2020 GBP (£) | Jun. 28, 2018 GBP (£) | Feb. 08, 2018 GBP (£) | May 18, 2022 USD ($) $ / shares shares | Jul. 31, 2019 GBP (£) | Apr. 01, 2023 USD ($) $ / shares shares | Apr. 02, 2022 shares | Oct. 27, 2022 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares | Oct. 26, 2022 USD ($) | |
Number of shares issued | shares | 1,226,821 | 1,000 | |||||||||||||
Aggregate value of number of shares issued | $ 4,113 | ||||||||||||||
Carrying amount | $ 18,141 | $ 18,265 | |||||||||||||
Preferred stock stated value | $ / shares | $ 0.00001 | $ 0.00001 | |||||||||||||
Common Stock [Member] | |||||||||||||||
Number of shares issued | shares | 989,516 | ||||||||||||||
Aggregate value of number of shares issued | |||||||||||||||
Series H Preferred Stock [Member] | |||||||||||||||
Number of shares issued | shares | 9,000,000 | ||||||||||||||
Preferred stock stated value | $ / shares | $ 0.00001 | $ 0.00001 | |||||||||||||
Debt instrument conversion price | $ / shares | 1 | 1 | |||||||||||||
Preferred stock conversion price | $ / shares | $ 25.714 | $ 25.714 | |||||||||||||
Cash dividends per annum rate | 12% | ||||||||||||||
Preferred stock redemption description | The redemption price represents the number of shares of the Preferred Stock (9,000,000), plus all accrued but unpaid dividends, multiplied by the Stated Value ($1). On May 18, 2022, the Company paid $14 towards the Series H Preferred Stock balance. | ||||||||||||||
Debt instrument redemption amount | $ 8,265 | $ 8,265 | 9,000 | ||||||||||||
Fair value financing charge | $ 735 | ||||||||||||||
Series H Preferred Stock [Member] | Common Stock [Member] | |||||||||||||||
Debt instrument issuance of aggregate shares | shares | 350,000 | 350,000 | |||||||||||||
Series H Preferred Stock [Member] | Headway [Member] | |||||||||||||||
Ownership percentage | 100% | 100% | |||||||||||||
HSBC Bank [Member] | |||||||||||||||
Face amount | £ | £ 1,000 | £ 1,000 | |||||||||||||
Debt instrument description | three-year term | three-year term | |||||||||||||
Carrying amount | $ 125 | ||||||||||||||
HSBC Invoice Finance (UK) Ltd [Member] | New Facility [Member] | |||||||||||||||
Line of credit facility increase decrease for period | £ | £ 20,000 | £ 11,500 | £ 22,500 | ||||||||||||
Unbilled receivables | £ | £ 1,500 | £ 1,000 | |||||||||||||
Expiration period | 12 months | ||||||||||||||
Service charge percentage | 1.80% | ||||||||||||||
Third Amended and Restated Note Purchase Agreement [Member] | |||||||||||||||
Number of warrants issued | shares | 24,332 | 24,332 | 24,332 | ||||||||||||
Jackson Note [Member] | Third Amended and Restated Note Purchase Agreement [Member] | |||||||||||||||
Amendment fee | $ 39 | $ 39 | $ 39 | ||||||||||||
Number of shares issued | shares | 100,000 | ||||||||||||||
Aggregate value of number of shares issued | $ 257 | ||||||||||||||
Strike price | $ / shares | $ 3.06 | $ 3.06 | $ 3.06 | ||||||||||||
Warrant expiration date | Oct. 27, 2027 | Oct. 27, 2027 | Oct. 27, 2027 | ||||||||||||
Percentage of first call over of net proceeds from increase of common stock | 50% | 50% | 50% | ||||||||||||
Jackson Note [Member] | Third Amended and Restated Note Purchase Agreement [Member] | Modification of Strike Price [Member] | |||||||||||||||
Number of warrants issued | shares | 15,093 | 15,093 | 15,093 | ||||||||||||
Strike price | $ / shares | $ 60 | $ 60 | $ 60 | ||||||||||||
Warrant expiration date | Jan. 26, 2026 | Jan. 26, 2026 | Jan. 26, 2026 | ||||||||||||
Fair value adjustment of warrant | $ 29 | ||||||||||||||
Twenty Twenty Two Jackson Note [Member] | |||||||||||||||
Debt instrument, payment terms | the Company in favor of Jackson, shall be paid in cash and continue to accrue at a rate per annum equal to 12% until the principal amount of the 2022 Jackson Note has been paid in full. In the event that Company has not repaid in cash at least 50% of the outstanding principal balance of the 2022 Jackson Note as of the date of the First Omnibus Amendment Agreement or on or before October 27, 2023, then interest on the outstanding principal balance of the 2022 Jackson Note will accrue at 16% per annum until the 2022 Jackson Note is repaid in full | ||||||||||||||
Twenty Twenty Two Jackson Notes [Member] | |||||||||||||||
Debt instrument, interest rate | 12% | ||||||||||||||
Face amount | $ 9,000 | ||||||||||||||
Twenty Twenty Two Jackson Notes [Member] | Subsequent Event [Member] | |||||||||||||||
Debt instrument description | (i) amends the Third A&R Agreement, (ii) provided for the issuance of a new 12% Senior Secured Promissory Note due October 14, 2024 (the “2023 Jackson Note” and together with the 2022 Jackson Note, the “Jackson Notes”) to Jackson, and (iii) joins certain subsidiaries of the Company to (a) that certain Amended and Restated Pledge Agreement, dated as of September 15, 2017 (as amended by the First Omnibus Amendment Agreement, the “Pledge Agreement”) and (b) that certain Amended and Restated Security Agreement, dated as of September 15, 2017 (as amended by the Amendment Agreement, the “Security Agreement”), as either subsidiary guarantors or pledgors (as applicable) and amends certain terms and conditions of each of the Pledge Agreement and the Security Agreement |
SCHEDULE OF LEASE, COST AND OPE
SCHEDULE OF LEASE, COST AND OPERATING LEASE LIABILITY MATURITY (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Dec. 31, 2022 | |
Leases | ||
Operating lease cost | $ 417 | |
Weighted average remaining lease term (years) | 5 years 9 months 18 days | |
Weighted average discount rate | 6.30% | |
2023 | $ 1,406 | |
2024 | 1,766 | |
2025 | 1,642 | |
2026 | 2,387 | |
2027 | 1,243 | |
Thereafter | 3,685 | |
Lessee operating lease liability payments due | 12,129 | |
Less: Imputed Interest | 2,586 | |
Operating lease, liability | 9,543 | |
Leases - Current | 1,245 | $ 1,188 |
Leases – Non-current | $ 8,298 | $ 8,640 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | |||||
May 18, 2022 | May 31, 2022 | May 18, 2022 | Apr. 30, 2022 | Apr. 01, 2023 | Dec. 31, 2022 | |
Operating lease right of use asset | $ 8,728 | $ 9,070 | ||||
Operating lease liability | 9,543 | |||||
Increase in operating lease, right-of-use asset | $ 1,715 | $ 1,555 | $ 2,048 | |||
Increase in operating lease liabilities | $ 1,555 | $ 1,731 | $ 2,048 | |||
New Lease Agreement [Member] | London England [Member] | ||||||
Lessee, operating lease, renewal term | 10 years | |||||
New Lease Agreement [Member] | Redhill England [Member] | ||||||
Lessee, operating lease, renewal term | 10 years | |||||
Accounting Standards Update 2018-11 [Member] | ||||||
Operating lease right of use asset | 8,728 | 9,070 | ||||
Operating lease liability | $ 9,543 | $ 9,828 |
SCHEDULE OF STOCKHOLDERS EQUITY
SCHEDULE OF STOCKHOLDERS EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Subsidiary, Sale of Stock [Line Items] | ||
Number of Common Shares Issued | 1,226,821 | 1,000 |
Fair Value of Shares Issued | $ 5,715 | $ 6 |
Employees [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of Common Shares Issued | 177,305 | |
Fair Value of Shares Issued | $ 515 | |
Board and Committee Members [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of Common Shares Issued | 60,000 | 1,000 |
Fair Value of Shares Issued | $ 201 | $ 6 |
Minimum [Member] | Employees [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Fair value at issuance (per Share) | $ 2.82 | |
Minimum [Member] | Board and Committee Members [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Fair value at issuance (per Share) | 2.93 | $ 9.65 |
Maximum [Member] | Employees [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Fair value at issuance (per Share) | 2.82 | |
Maximum [Member] | Board and Committee Members [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Fair value at issuance (per Share) | $ 3.13 | $ 9.65 |
Equity Raise [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of Common Shares Issued | 989,516 | |
Fair Value of Shares Issued | $ 4,999 | |
Equity Raise [Member] | Minimum [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Fair value at issuance (per Share) | $ 2.65 | |
Equity Raise [Member] | Maximum [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Fair value at issuance (per Share) | $ 2.65 |
SCHEDULE OF UNVESTED RESTRICTED
SCHEDULE OF UNVESTED RESTRICTED SHARES ACTIVITY (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Apr. 01, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
Restricted shares, beginning balance | 68,592 | 5,976 |
Weighted average price per share, beginning balance | $ 50 | $ 75 |
Restricted shares, granted | 237,305 | 63,000 |
Weighted average price per share, granted | $ 2.87 | $ 29.20 |
Restricted shares, vested/adjustments | (177,401) | (384) |
Weighted average price per share, vested/adjustments | $ 2.85 | $ 29 |
Restricted shares, ending balance | 128,496 | 68,592 |
Weighted average price per share, ending balance | $ 4.96 | $ 50 |
SCHEDULE OF WARRANTS ACTIVITY (
SCHEDULE OF WARRANTS ACTIVITY (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Apr. 01, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
Number of shares, outstanding ending balance | 1,703,688 | 972,495 |
Weighted average exercise price, outstanding beginning balance | $ 10.21 | $ 26.88 |
Number of shares, issued | 2,902,509 | 1,404,478 |
Weighted average exercise price, issued | $ 2.51 | $ 5.83 |
Number of shares, exercised | (674,516) | |
Weighted average exercise price, exercised | $ 0.001 | |
Number of shares, expired or cancelled | (876,654) | (673,285) |
Weighted average exercise price, expired or cancelled | $ (5.85) | $ 26.84 |
Number of shares, issued | 1,569,516 | |
Weighted average exercise price, issued | $ 0.001 | |
Number of shares, outstanding ending balance | 4,624,543 | 1,703,688 |
Weighted average exercise price, outstanding ending balance | $ 4.97 | $ 10.21 |
SCHEDULE OF WARRANTS OUTSTANDIN
SCHEDULE OF WARRANTS OUTSTANDING (Details) | 3 Months Ended |
Apr. 01, 2023 $ / shares shares | |
Number of warrants outstanding and exercisable | shares | 4,624,543 |
Weighted average remaining contractual life (years) | 4 years 8 months 19 days |
Weighted average exercise price | $ 4.97 |
Minimum [Member] | |
Exercise price | 0.001 |
Maximum [Member] | |
Exercise price | $ 3,750 |
SCHEDULE OF SHARE-BASED COMPENS
SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Apr. 01, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
Options outstanding, beginning balance | 51,302 | 1,302 |
Weighted average exercise price, beginning balance | $ 50.06 | $ 1,665.60 |
Options granted | 50,000 | |
Weighted average exercise price, granted | $ 7.80 | |
Options exercised | ||
Weighted average exercise price, exercised | ||
Options expired or cancelled | ||
Weighted average exercise price, expired or cancelled | ||
Options outstanding, ending balance | 51,302 | 51,302 |
Weighted average exercise price, ending balance | $ 50.06 | $ 50.06 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Feb. 28, 2023 | Feb. 07, 2023 | Jan. 04, 2023 | Jul. 07, 2022 | Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock, par value | $ 0.00001 | $ 0.00001 | |||||
Grants in period shares | 237,305 | 63,000 | |||||
Allocated share based compensation expense | $ 16 | $ 21 | |||||
Number of shares issued | 1,226,821 | 1,000 | |||||
Restricted Stocks [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Grants in period shares | 68,592 | ||||||
Allocated share based compensation expense | $ 720 | $ 374 | |||||
Series A Preferred Stock [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Preferred stock dividends | $ 125 | $ 125 | |||||
Minimum [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | $ 0.001 | ||||||
Maximum [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | $ 3,750 | ||||||
Common Stock [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of shares issued | 989,516 | ||||||
Securities Purchase Agreement [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | 15,093 | ||||||
Common stock issued ammended | $ 3.06 | ||||||
Number of shares issued | 24,332 | ||||||
Expiration date | Oct. 27, 2027 | ||||||
Securities Purchase Agreement [Member] | Minimum [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | $ 60 | ||||||
Securities Purchase Agreement [Member] | Maximum [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | $ 3.06 | ||||||
Warrant Amendment Agreement [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | 657,858 | ||||||
Common stock issued ammended | $ 5.85 | ||||||
Incremental fair value | $ 837 | ||||||
Warrant Amendment Agreement [Member] | Minimum [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | $ 18.50 | ||||||
Warrant Amendment Agreement [Member] | Maximum [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | $ 38 | ||||||
Amended Note Purchase Agreement [Member] | Jackson Investment Group, LLC [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Fair value adjustment of warrants | $ 29 | ||||||
February 2023 IPO [Member] | H.C. Wainwright & Co., LLC [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | 141,339 | ||||||
Common stock issued ammended | $ 3.3165 | ||||||
Cash fee percentage | 7.50% | ||||||
Management fee percentage | 1% | ||||||
February 2023 IPO [Member] | Securities Purchase Agreement [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | 315,000 | ||||||
Common stock, par value | $ 0.00001 | ||||||
Public offering price | 2.6532 | ||||||
Shares issued price per share | $ 2.6522 | ||||||
Pre-funded description | Subject to certain limitations described in the February 2023 Pre-Funded Warrants, the February 2023 Pre-Funded Warrants are immediately exercisable and may be exercised at a nominal consideration of $0.001 per share any time until all of the February 2023 Pre-Funded Warrants are exercised in full. A holder will not have the right to exercise any portion of the February 2023 Warrants or the February 2023 Pre-Funded Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% or 9.99%, respectively (or at the election of the holder of such warrants, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the February 2023 Warrants or the February 2023 Pre-Funded Warrants, respectively. However, upon notice from the holder to the Company, the holder may increase the beneficial ownership limitation pursuant to the February 2023 Warrants, which may not exceed 9.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the February 2023 Warrants, provided that any increase in the beneficial ownership limitation will not take effect until 61 days following notice to the Company. | ||||||
Number of shares issued | 315,000 | ||||||
February 2023 IPO [Member] | Securities Purchase Agreement [Member] | Prefunded Warrant [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | 1,569,516 | ||||||
February 2023 IPO [Member] | Securities Purchase Agreement [Member] | Common Stock [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | 1,569,516 | ||||||
Common stock issued ammended | $ 2.6532 | ||||||
Sale of Stock, Price Per Share | $ 2.6522 | ||||||
February 2023 IPO [Member] | Warrant Amendment Agreement [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | 876,654 | 876,654 | |||||
Common stock issued ammended | $ 5.85 | $ 5.85 | |||||
Incremental fair value | $ 176 | ||||||
February 2023 IPO [Member] | Warrant Amendment Agreement [Member] | Minimum [Member] | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock issued ammended | $ 2.47 | $ 2.47 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||||||||
May 18, 2022 | Sep. 26, 2020 | Feb. 26, 2020 | Feb. 09, 2020 | Sep. 30, 2019 | Apr. 30, 2023 | Sep. 30, 2022 | Apr. 01, 2023 | Dec. 31, 2022 | Aug. 27, 2020 | Sep. 11, 2019 | Aug. 27, 2018 | |
Loss Contingencies [Line Items] | ||||||||||||
Loss contingency damages sought value | $ 6,000,000 | |||||||||||
Earnout payments | $ 4,054 | |||||||||||
Business combination consideration transferred | $ 2,219,000 | $ 2,639,000 | ||||||||||
Retention Bonus [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Business combination consideration transferred | 550,000 | |||||||||||
Key Resources Inc [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Business combination earnout consideration interest payment | $ 10,000 | |||||||||||
Headway Workforce Solutions [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Payment totaling | $ 4,450,000 | |||||||||||
Business combination consideration transferred | 4,290,000 | |||||||||||
Payments to acquire business | $ 160,000 | |||||||||||
Headway Workforce Solutions [Member] | Subsequent Event [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Threshold amount | $ 2,000,000 | |||||||||||
Business combination consideration transferred | $ 5,000,000 | |||||||||||
Headway Workforce Solutions [Member] | Contingent Payment One [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Contingent payment description | Adjusted EBITDA of $0 or less than $0= no Contingent Payment | |||||||||||
Headway Workforce Solutions [Member] | Contingent Payment Two [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Contingent payment description | Adjusted EBITDA of $500 x 2.5 multiple= $1,250 Contingent Payment | |||||||||||
Headway Workforce Solutions [Member] | Contingent Payment Three [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Contingent payment description | Adjusted EBITDA of $1,000 x 2.5 multiple= $2,500 Contingent Payment | |||||||||||
Headway Workforce Solutions [Member] | Contingent Payment Four [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Contingent payment description | Adjusted EBITDA of $1,800 x 2.5 multiple= $4,500 Contingent Payment | |||||||||||
Headway Workforce Solutions [Member] | Contingent Payment Five [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Contingent payment description | Adjusted EBITDA of $2,000 or more x 2.5 multiple= $5,000 Contingent Payment | |||||||||||
Business Combination Earnout Consideration Prepone Date [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Payment totaling | $ 2,027,000 | $ 2,027,000 | $ 2,027,000 | |||||||||
Share Purchase Agreement [Member] | Key Resources Inc [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Business combination earnout consideration interest payment | $ 40,000 | |||||||||||
Loss contingency damages sought value | $ 4,054,000 | |||||||||||
Earnout payments | $ 4,054,000 | |||||||||||
New York Action [Member] | Pamela D. Whitaker [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Loss contingency damages sought value | $ 4,054,000 |
SCHEDULE OF SEGMENT REPORTING I
SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2023 | Apr. 02, 2022 | Dec. 31, 2022 | |
Segment Reporting Information [Line Items] | |||
Total Revenue | $ 63,105 | $ 49,893 | |
Total Gross Profit | 9,588 | 8,513 | |
Selling, general and administrative expenses | (10,167) | (8,909) | |
Depreciation and amortization | (873) | (655) | |
Interest expense and amortization of debt discount and deferred financing costs | (1,349) | (766) | |
Re-measurement loss on intercompany note | (443) | ||
Other loss income, net | (14) | (58) | |
Loss Before Benefit from Income Tax | (2,815) | (2,318) | |
Total Assets | 81,858 | $ 81,659 | |
Total Goodwill | 19,891 | 19,891 | |
Permanent Placement Revenue [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | 1,310 | 1,564 | |
Temporary Contractor Revenue [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | 61,795 | 48,329 | |
UNITED STATES | |||
Segment Reporting Information [Line Items] | |||
Total Assets | 70,685 | 70,970 | |
Total Goodwill | 19,891 | 19,891 | |
UNITED KINGDOM | |||
Segment Reporting Information [Line Items] | |||
Total Assets | 11,173 | 10,689 | |
Total Goodwill | |||
Commercial Staffing U S [Member] | UNITED STATES | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | 23,247 | 28,609 | |
Total Gross Profit | 3,815 | 4,719 | |
Commercial Staffing U S [Member] | UNITED STATES | Permanent Placement Revenue [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | 131 | 113 | |
Commercial Staffing U S [Member] | UNITED STATES | Temporary Contractor Revenue [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | 23,116 | 28,496 | |
Professional Staffing US [Member] | UNITED STATES | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | 24,376 | 4,329 | |
Total Gross Profit | 3,695 | 1,204 | |
Professional Staffing US [Member] | UNITED STATES | Permanent Placement Revenue [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | 369 | 380 | |
Professional Staffing US [Member] | UNITED STATES | Temporary Contractor Revenue [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | 24,007 | 3,949 | |
Professional Staffing UK [Member] | UNITED KINGDOM | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | 15,482 | 16,955 | |
Total Gross Profit | 2,078 | 2,590 | |
Professional Staffing UK [Member] | UNITED KINGDOM | Permanent Placement Revenue [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | 810 | 1,071 | |
Professional Staffing UK [Member] | UNITED KINGDOM | Temporary Contractor Revenue [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenue | $ 14,672 | $ 15,884 |
SCHEDULE OF RELATED PARTY TRANS
SCHEDULE OF RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Related Party Transaction [Line Items] | ||
Value of Shares Issued | $ 60,000,000 | |
Compensation Expense Recognized | 16,000 | $ 21,000 |
Board and Committee [Member] | ||
Related Party Transaction [Line Items] | ||
Cash Compensation | $ 58,000 | $ 100,000 |
Shares Issued | 60,000 | 10,000 |
Value of Shares Issued | $ 180,000 | $ 10,000 |
Compensation Expense Recognized | 237,000 | 110,000 |
Dimitri Villard [Member] | Board and Committee [Member] | ||
Related Party Transaction [Line Items] | ||
Cash Compensation | $ 25,000 | $ 25,000 |
Shares Issued | 10,000 | 2,000 |
Value of Shares Issued | $ 29,000 | $ 2,000 |
Compensation Expense Recognized | 54,000 | 27,000 |
Jeff Grout [Member] | Board and Committee [Member] | ||
Related Party Transaction [Line Items] | ||
Cash Compensation | $ 25,000 | $ 25,000 |
Shares Issued | 10,000 | 2,000 |
Value of Shares Issued | $ 29,000 | $ 2,000 |
Compensation Expense Recognized | 54,000 | 27,000 |
Nick Florio [Member] | Board and Committee [Member] | ||
Related Party Transaction [Line Items] | ||
Cash Compensation | $ 25,000 | |
Shares Issued | 10,000 | 2,000 |
Value of Shares Issued | $ 29,000 | $ 2,000 |
Compensation Expense Recognized | 29,000 | 27,000 |
Vincent Cebula [Member] | Board and Committee [Member] | ||
Related Party Transaction [Line Items] | ||
Cash Compensation | $ 8,000 | $ 25,000 |
Shares Issued | 10,000 | 2,000 |
Value of Shares Issued | $ 29,000 | $ 2,000 |
Compensation Expense Recognized | 38,000 | 27,000 |
Alicia Barker [Member] | Board and Committee [Member] | ||
Related Party Transaction [Line Items] | ||
Cash Compensation | ||
Shares Issued | 10,000 | 2,000 |
Value of Shares Issued | $ 31,000 | $ 2,000 |
Compensation Expense Recognized | 31,000 | $ 2,000 |
Brendan Flood [Member] | Board and Committee [Member] | ||
Related Party Transaction [Line Items] | ||
Cash Compensation | ||
Shares Issued | 10,000 | |
Value of Shares Issued | $ 31,000 | |
Compensation Expense Recognized | $ 31,000 |
SCHEDULE OF CASH FLOW, SUPPLEME
SCHEDULE OF CASH FLOW, SUPPLEMENTAL DISCLOSURES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2023 | Apr. 02, 2022 | |
Supplemental Cash Flow Elements [Abstract] | ||
Interest | $ 1,406 | $ 766 |
Income taxes | ||
Deferred purchase price of UK factoring facility | $ 1,651 | $ 1,835 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||||||||
Sep. 29, 2023 | Sep. 27, 2023 | Sep. 06, 2023 | Sep. 01, 2023 | Aug. 30, 2023 | May 18, 2022 | Apr. 01, 2023 | Apr. 02, 2022 | Jul. 14, 2023 | Dec. 31, 2022 | |
Number of shares issued | 1,226,821 | 1,000 | ||||||||
Preferred stock, par value | $ 0.00001 | $ 0.00001 | ||||||||
Series H Preferred Stock [Member] | ||||||||||
Number of shares issued | 9,000,000 | |||||||||
Preferred stock, par value | $ 0.00001 | |||||||||
Common Stock [Member] | ||||||||||
Number of shares issued | 989,516 | |||||||||
Forecast [Member] | ||||||||||
Description of purchase price | no adjustment in the Purchase Price will be required unless such adjustment would require an increase or decrease of at least 1% in such Purchase Price | |||||||||
Sale of stock, price per share | $ 0.01 | |||||||||
Forecast [Member] | Dividend Paid [Member] | ||||||||||
Dividend payment, per share | $ 10 | |||||||||
Forecast [Member] | Acquiring Person [Member] | ||||||||||
Business combination acquired, percentage | 50% | |||||||||
Business acquisition, description of acquired entity | In the event that any person or group of affiliated or associated persons becomes an Acquiring Person (the first occurrence of such event, a “Flip-In Event”), each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereupon become void), will thereafter have the right to receive upon exercise of a Right that number of shares of common stock equal to the number of shares of common stock obtained by dividing the Purchase Price (subject to adjustments) by 50% of the current per share market price of the common stock on the date of the Flip-In Event. Except in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring beneficial ownership of 10% (20% in the case of a Passive Investor (as defined in the Rights Agreement)) or more in voting power of the shares of Voting Stock then outstanding, subject to certain exclusions | |||||||||
Business acquisition, percentage of voting | 50% | |||||||||
Forecast [Member] | Headway Purchase Agreement [Member] | ||||||||||
Contingent payment | $ 5,000,000 | |||||||||
Contingent payment deduction amount | 134,000 | |||||||||
Forecast [Member] | First Omnibus Amendment Agreement [Member] | ||||||||||
Debt instrument, face amount | $ 2,000 | |||||||||
Debt instrument, description | the Company is required to pay interest at a per annum rate of 12%. In the event the Company has not repaid in cash at 50% of the outstanding principal balance of the 2023 Jackson Note on or before October 27, 2023, then interest on the outstanding principal balance of the 2023 Jackson Note will accrue at 16% per annum until the 2023 Jackson Note is repaid in full | |||||||||
Debt instrument, interest rate | 12% | |||||||||
Percentage of outstanding principal balance | 50% | |||||||||
Forecast [Member] | First Omnibus Amendment Agreement [Member] | Acquiring Person [Member] | ||||||||||
Business combination acquired, percentage | 16% | |||||||||
Forecast [Member] | Credit and Security Agreement [Member] | Revolving Credit Facility [Member] | ||||||||||
Line of credit facility, description | (i) increases the applicable margin (a) from 4.25% to 4.50% with respect to revolving loans and other obligations (other than letter of credit liabilities) and (b) from 3.75% to 4.50% with respect to letter of credit liabilities, (ii) revises the definition of borrowing base to include the amount of any reserves and/or adjustments provided for in the Credit and Security Agreement, including, but not limited to, the Additional Reserve Amount (as defined in the in Amendment No. 28), (iii) requires that the Company complies with a fixed charge coverage ratio of at least 1:00 to 1:00, and (iv) waives the existing event of default that occurred under the Credit and Security Agreement due to the Credit Parties’ failure to maintain the Minimum Liquidity amount (as defined in the Credit and Security Agreement) for the fiscal month ending June 30, 2023 (each as defined in the Credit and Security Agreement) | |||||||||
Revolving loans amount | $ 1,300 | |||||||||
Line of credit facility, percentage | 50% | |||||||||
Modification fee | $ 68 | |||||||||
Line of credit facility, periodic payment interest | $ 32 | |||||||||
Forecast [Member] | Offer Letter Agreement [Member] | ||||||||||
Number of shares issued | 2,761,170,000 | |||||||||
Forecast [Member] | Engagement Letter [Member] | H.C. Wainwright & Co., LLC [Member] | ||||||||||
Number of shares issued | 207,088 | |||||||||
Strike price | $ 1.0375 | |||||||||
Percentage of cash fee on gross proceeds | 7.50% | |||||||||
Percentage of management fee on gross proceeds | 1% | |||||||||
Proceeds from issuance of warrants | $ 50 | |||||||||
Non accountable expenses | 25 | |||||||||
Clearing costs | $ 16 | |||||||||
Forecast [Member] | Limited Duration Stockholder Rights Agreement [Member] | Director [Member] | ||||||||||
Preferred stock, par value | $ 0.00001 | |||||||||
Forecast [Member] | Related Party [Member] | ||||||||||
Agreed amount | 525,000 | |||||||||
Forecast [Member] | Series H Preferred Stock [Member] | ||||||||||
Agreed amount | $ 11,340,000 | |||||||||
Preferred stock, shares issued | 9,000,000 | |||||||||
Preferred stock, shares outstanding | 9,000,000 | |||||||||
Forecast [Member] | Series H Preferred Stock [Member] | Headway Purchase Agreement [Member] | ||||||||||
Dividend payment, per share | $ 0.00 | |||||||||
Redemption Shares | 100,000 | |||||||||
Forecast [Member] | Common Stock [Member] | ||||||||||
Dividend payment, per share | $ 1 | |||||||||
Forecast [Member] | Warrant [Member] | ||||||||||
Number of shares issued | 2,761,170 | |||||||||
Strike price | $ 0.83 | |||||||||
Warrants to purchase | 5,522,340 | |||||||||
Proceeds from warrant exercises | $ 2,300 | |||||||||
Forecast [Member] | Preferred Stock [Member] | Limited Duration Stockholder Rights Agreement [Member] | Director [Member] | ||||||||||
Dividend payment, per share | $ 2.75 | |||||||||
Five Equal Installments [Member] | Headway Purchase Agreement [Member] | ||||||||||
Contingent payment | $ 1,000,000 |