Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

October 16, 2023

Date of Report (Date of earliest event reported)

STAFFING 360 SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-37575

68-0680859

(State or other jurisdiction of

incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification Number)

757 3rd Avenue

27th Floor

New York, NY 10017

(Address of principal executive offices)

(646) 507-5710

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

	☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

	☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

	☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock		STAF		NASDAQ

Item 2.02 Results of Operations and Financial Condition.

On October 16, 2023, Staffing 360 Solutions, Inc. issued a press release announcing its first quarter 2023 financial results for the period ended April 1, 2023. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, that is furnished pursuant to this Item 7.01 shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1		Press Release of Staffing 360 Solutions, Inc., dated October 16, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Staffing 360 Solutions, Inc.

	By:	/s/ Brendan Flood
	Name:	Brendan Flood
Date: October 20, 2023	Title:	Chairman and Chief Executive Officer

Exhibit 99.1

Staffing 360 Solutions Reports First Quarter 2023 Financial Results

— Revenue Growth Driven by Gains in U.S. Professional Staffing Business Stream —

— On Track to Resolve Outstanding First Quarter Form 10-Q Filing:

Plans to Provide Update on Filing of Second Quarter Form 10-Q in the Coming Weeks —

NEW YORK, October 16, 2023 - Staffing 360 Solutions, Inc. (Nasdaq: STAF) (“Staffing 360 Solutions” or the “Company”), a company executing an international buy-integrate-build strategy through the acquisition of staffing organizations in the United States and the United Kingdom, today reported its first quarter 2023 financial results for the period ended April 1, 2023. The Company also believes that it is on track to file its outstanding first quarter Form 10-Q with the Securities and Exchange Commission this week and plans to file its second quarter Form 10-Q in the coming weeks.

First Quarter 2023 Overview

	●	Revenue increased by 26.5% (23.5% in constant currency) to $63.1 million, compared with revenue of $49.9 million for the prior year period, driven by an almost five-fold increase in U.S. professional staffing.

	●	Gross profit rose to $9.6 million, compared with $8.5 million for the prior year period, or an increase of 12.6% (6.9% in constant currency).

	●	Operating loss was approximately $1.4 million, compared with an operating loss of approximately $1.1 million for the prior year period.

	●	Net loss was $2.9 million, compared with a net loss of $2.3 million for the prior year period.

	●	Diluted loss per share loss was $0.90 , compared with a diluted loss per share loss of $1.33 in the prior year period.

	●	EBITDA loss narrowed to $600,000, compared with an EBITDA loss of $900,000 for the prior year period.

	●	Adjusted EBITDA, a non-GAAP measure, rose 65% to $1.3 million, compared with Adjusted EBITDA of $800,000 in the prior year period.

Non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial results. The presentation of these non-GAAP financial measures should not be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with the Company’s financial statements prepared in accordance with GAAP. Reconciliations of the Company’s non-GAAP measures are included in the tables below.

Brendan Flood, Chairman, CEO and President, said, “We believe that we are successfully executing on our growth strategy, with nearly 27% year-over-year revenue growth for the first quarter, and positive adjusted EBITDA, led by significant gains in our U.S. professional staffing segment, despite the continuing challenging macroeconomic environment. In addition to the planned filing of our outstanding first quarter Form 10-Q, we are working to file our second quarter Form 10-Q as quickly as possible and expect to provide further information in the coming weeks.

“Our buy-integrate-build strategy is beginning to pay off, and we anticipate continued revenue growth and margin improvements as we move toward our long-term goals. As we expect is the case with other staffing companies, we continue to closely monitor the marketplace and our clients’ needs for any recessionary, or other macro-economic impacts, and are ready to take necessary actions to mitigate any such impact. Our primary focus is on providing meaningful staffing solutions to our clients, while driving future growth and shareholder value,” concluded Flood.

Outlook

Although industry conditions remain uncertain and are subject to change, the Company currently estimates revenues for the 2023 fiscal year in the range of $250 million to $265 million.

About Staffing 360 Solutions, Inc.

Staffing 360 Solutions, Inc. is engaged in the execution of an international buy-integrate-build strategy through the acquisition of domestic and international staffing organizations in the United States and United Kingdom. The Company believes that the staffing industry offers opportunities for accretive acquisitions and as part of its targeted consolidation model, is pursuing acquisition targets in the finance and accounting, administrative, engineering, IT, and light industrial staffing space.

For more information, visit http://www.staffing360solutions.com. Follow Staffing 360 Solutions on Facebook, LinkedIn and Twitter.

Forward-Looking Statements

This press release contains forward-looking statements, which may be identified by words such as “expect,” “look forward to,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project,” or words of similar meaning. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified; consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, our ability to retain our listing on the Nasdaq Capital Market and to regain and maintain compliance with the rules of the Nasdaq Capital Market; market and other conditions; the geographic, social and economic impact of COVID-19 endemic and its ongoing effects on the Company’s ability to conduct its business and raise capital in the future when needed; weakness in general economic conditions and levels of capital spending by customers in the industries the Company serves; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of customer capital projects or the inability of the Company’s customers to pay the Company’s fees; the termination of a major customer contract or project; delays or reductions in U.S. government spending; credit risks associated with the Company’s customers; competitive market pressures; the availability and cost of qualified labor; the Company’s level of success in attracting, training and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations, including the impact of health care reform laws and regulations; the possibility of incurring liability for the Company’s business activities, including, but not limited to, the activities of the Company’s temporary employees; the Company’s performance on customer contracts; negative outcome of pending and future claims and litigation; government policies, legislation or judicial decisions adverse to the Company’s businesses; the Company’s ability to access the capital markets by pursuing additional debt and equity financing to fund its business plan and expenses on terms acceptable to the Company or at all; and the Company’s ability to comply with its contractual covenants, including in respect of its debt agreements, as well as various additional risks, many of which are now unknown and generally out of the Company’s control, and which are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Staffing 360 Solutions does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law.

Investor Relations Contact:

Roger Pondel or Laurie Berman

PondelWilkinson Inc.

310-279-5980

pwinvestor@pondel.com

(financial tables follow)

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except share, per share and par values)

	As of			As of
	April 1, 2023			December 31, 2022
	(Unaudited)
ASSETS
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
LIABILITIES AND STOCKHOLDERS’ EQUITY

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, $0.00001 par value, 20,000,000 shares authorized;
Series J Preferred Stock, 40,000 shares designated, $0.00001 par value, 0 and 0 shares issued and outstanding as of April 1, 2023 and December 31, 2022, respectively		—			—
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

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except share, per share and per share values)

(UNAUDITED)

	Quarter Ended
	April 1, 2023			April 2, 2022
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 and Diluted	$	(0.90	)	$	(1.33	)

Weighted Average Shares Outstanding – Basic and Diluted		3,177,517			1,752,949

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(All amounts in thousands)

(UNAUDITED)

	April 1, 2023			April 2, 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

Use of Non-GAAP Financial Measures

Staffing 360 Solutions provides Adjusted EBITDA, a non-generally accepted accounting principal (“GAAP”) financial measure, because it believes it offers to investors additional information for monitoring its profit and cash flow generation. Adjusted EBITDA is a non-GAAP financial measure and is defined as net income (loss) attributable to common stock before interest expense, benefit from income taxes, depreciation and amortization, acquisition, capital raising and other non-recurring expenses, other non-cash charges, impairment of goodwill, re-measurement gain on intercompany note, restructuring charges, other income, and charges the Company considers to be non-recurring in nature such as legal expenses associated with litigation, professional fees associated potential and completed acquisition. Adjusted EBITDA is not intended to replace EBITDA other measures of financial performance reported in accordance with GAAP.

	Three Months Ended						Trailing Twelve Months
	April 1, 2023			April 2, 2022			April 1, 2023			April 2, 2022
Net (loss) income	$	(2,855	)	$	(2,324	)	$	(17,525	)	$	7,522

Interest expense		1,349			670			4,560			3,370
Expense (benefit) from income taxes		40			6			(188	)		(388	)
Depreciation and amortization		873			751			3,714			3,055
EBITDA	$	(593	)	$	(897	)	$	(9,439	)	$	13,559

Acquisition, capital raising and other non-recurring expenses (1)		1,872			1,188			8,638			3,872
Other non-cash charges (2)		35			16			19			158
Impairment of Goodwill		—			—			10,000			3,104
Re-measurement gain on intercompany note		—			443			(443	)		831
Gain on sale of business		—			—			(726	)		—
Other loss (income)		16			58			(42	)		(19,412	)
Adjusted EBITDA	$	1,330		$	808		$	8,007		$	2,112

Adjusted Gross Profit							$	43,843		$	35,938

Adjusted EBITDA as percentage of Adjusted Gross Profit								18.3	%		5.9	%

	(1)	Acquisition, capital raising, and other non-recurring expenses primarily relate to capital raising expenses, acquisition and integration expenses, and legal expenses incurred in relation to matters outside the ordinary course of business.

	(2)	Other non-cash charges primarily relate to staff option and share compensation expense, expense for shares issued to directors for board services, and consideration paid for consulting services.

Cover	Oct. 16, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 16, 2023
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
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock
Trading Symbol	STAF
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false