General Employment Enterprises, Inc. Announces Results for Fiscal 2014 Fourth Quarter and Year End

General Employment Enterprises, Inc. Announces Results for Fiscal 2014 Fourth Quarter and Year End

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NAPERVILLE, Ill., Dec. 8, 2014 /PRNewswire/ -- General Employment Enterprises, Inc. (NYSE MKT: JOB) ("the Company" or "General Employment") announced results for the fourth quarter and year ended September 30, 2014. 

The Company reported revenues of $9.4 million for the fiscal fourth quarter ended September 30, 2014 as compared to revenues of $11.3 million in the same period of fiscal 2013.  Contract staffing services contributed $7.6 million or 81% of consolidated revenues and direct placement services contributed $1.8 million or 19% of consolidated revenue.  The decline in revenue was primarily a result of planning reduction in certain lower margin, less profitable light industrial business.  General Employment recorded a net profit from operations of approximately $625,000 in the fourth quarter compared to a net loss from operations of approximately $855,000 in the fourth quarter of fiscal 2013.  Net income from continuing operations for the fourth quarter of 2014 was approximately $463,000 compared to a net loss from continuing operations of approximately $916,000.

For the year ended September 30, 2014, General Employment reported revenues of $39.8 million, a decrease of 14% as compared to fiscal 2013 revenues.  Contract Staffing services contributed approximately $32.7 million or 82% of consolidated revenues and Direct Placement services contributed approximately $7.1 million or 18% of consolidated revenue.  The decline in revenue was primarily a result of planning reduction in certain lower margin, less profitable light industrial business.  The Company recorded a net loss of $1.4 million or a loss of ($0.06) per basic and diluted share, compared to a net loss of $1.9 million or a loss of ($0.09) per basic and diluted share in fiscal 2013. 

In both fiscal year 2014 and 2013 the Company received a significant rebate from the Ohio Bureau of Workers Compensation.  The rebate in fiscal year 2014 was approximately $1,080,000 resulting in the overall workers compensation expense for the year ended September 30, 2014 being approximately $450,000 less than the year ended September 30, 2013.       

Andrew Norstrud, Chief Executive Officer of General Employment, commented, "Fiscal 2014 was a successful year for the Company as we enhanced our financial reporting structure and started to reduce our non-core expenses.  We made excellent progress implementing these operational changes and believe we are now well positioned to capitalize on these improvements to drive performance going forward."

Mr. Norstrud added, "We further strengthened our financial position following the close of the fourth quarter, with the completion of a strategic capital raise in which the Company issued 200,000 shares of Preferred Stock for a total purchase price of $2 million and an 8% annual dividend rate.  We have executed securities purchase agreements with approximately 20 accredited investors for the sale of Series A Preferred Stock, that the proceeds are in escrow pending a closing.  We anticipate a closing will occur in January 2015 upon receipt of necessary approval from NYSE MKT of the Company's additional listing application and necessary clearance from the SEC of the Company's Information Statement.  This financing provides funding for working capital, and for both internal and acquisition growth.  Once we are able to complete this financing, coupled with the operational improvements the Company has initiated, we believe General Employment is positioned favorably as we enter Calendar Year 2015.  Increasing our breadth and depth of services offering and expansion of our geographical footprint into new markets are the primary areas of focus to fuel our organic growth.  Additionally, we will augment internal growth by making select strategic acquisitions into higher margin businesses," Mr. Norstrud concluded.  

 

GENERAL EMPLOYMENT ENTERPRISES, INC.



CONSOLIDATED BALANCE SHEETS 



(In Thousands)








September 30,

September 30,





2014

2013








ASSETS




CURRENT ASSETS:





Cash and cash equivalents

$

168

$

361


Accounts receivable, less allowances (2014 - $395; 2013 - $272)

4,907

6,697


Other current assets

1,650

416


Assets of discontinued operations, less allowances (2014 - $265; 2013 - $35)

-

238



Total current assets

6,725

7,712


Property and equipment, net 

453

530


Goodwill

1,106

1,106


Intangible assets, net

1,560

1,884

TOTAL ASSETS

$

9,844

$

11,232

LIABILITIES AND SHAREHOLDERS' EQUITY




CURRENT LIABILITIES:





Short-term debt

$

2,711

$

3,734


Accounts payable

910

1,015


Accrued compensation

2,633

2,733


Convertible note payable - current portion, net of discount

35

-


Derivative liability

131



Other current liabilities

1,214

981


Liabilities from discontinued operations

-

30



Total current liabilities

7,634

8,493


Convertible note payable, net of discount

132



Other long-term liabilities

13

126



Total long-term liabilities

145

126


Commitments and contingencies




SHAREHOLDERS' EQUITY




Preferred stock; no par value; authorized - 20,000 shares; issued and outstanding - none

-

-

Common stock, no-par value; authorized - 200,000 shares; issued and outstanding - 25,899 shares at September 30, 2014 and 22,799 shares at September 30, 2013





-

-

Additional paid in capital

11,658

10,851

Accumulated deficit

(9,593)

(8,238)


Total shareholders' equity

2,065

2,613

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

9,844

$

11,232

 

 

GENERAL EMPLOYMENT ENTERPRISES, INC.






CONSOLIDATED STATEMENTS OF OPERATIONS 





(In Thousands, Except Per Share Data)




























Years Ended September 30,









2014

2013












NET REVENUES:





Contract staffing services



$

32,723

$

39,187

Direct hire placement services




7,088

7,317


NET REVENUES

39,811

46,504

Cost of contract services




26,417

32,318

Selling, general and administrative expenses



13,733

15,173

Amortization of intangible assets




326

320

LOSS FROM OPERATIONS

(665)

(1,307)

(Gain) on change in derivative liability



(47)


Interest expense





507

251

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION

(1,125)

(1,558)

Provision for income tax




-

(8)

LOSS FROM CONTINUING OPERATIONS

$

(1,125)

$

(1,566)

Loss from discontinued operations



$

(230)

$

(324)

NET LOSS

$

(1,355)

$

(1,890)

BASIC AND DILUTED LOSS PER SHARE





From continuing operations



$

(0.05)

$

(0.07)

From discontinued operations



$

(0.01)

$

(0.01)

Total net loss per share



$

(0.06)

$

(0.09)

WEIGHTED AVERAGE NUMBER OF SHARES - BASIC AND DILUTED 

24,360

21,969

 

 

GENERAL EMPLOYMENT ENTERPRISES, INC.




CONSOLIDATED STATEMENTS OF OPERATIONS 




(In Thousands)

















Three Months Ended September 30,





2014

2013





(UNAUDITED)

(UNAUDITED)

NET REVENUES:






Contract staffing services

$

7,612

$

9,835

Direct hire placement services

1,835

1,510


NET REVENUES

9,447

11,345

Cost of contract services

5,122

8,512

Selling, general and administrative expenses

3,618

3,608

Amortization of intangible assets

82

80

PROFIT (LOSS) FROM OPERATIONS

625

(855)

(Gain) on change in derivative liability

(47)


Interest expense

209

61

PROFIT (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION

463

(916)

Provision for income tax

-

-

LOSS FROM CONTINUING OPERATIONS

$

463

$

(916)

Loss from discontinued operations

$

(230)

$

(105)

NET PROFIT (LOSS)

$

233

$

(1,021)

 

GENERAL EMPLOYMENT ENTERPRISES, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

The following unaudited pro forma combined financial information is based on the historical financial statements of the Company after giving effect to the proposed issuance of preferred equity.  The notes to the unaudited pro forma financial information describe adjustments to the financial information presented.

The unaudited pro forma combined balance sheet is presented as if the issuance had occurred on September 30, 2014.

The unaudited pro forma balance sheet should be read in conjunction with the historical consolidated financial statements and accompanying notes of the Company included in the annual report on form 10-K for the year ended September 30, 2013.

 

GENERAL EMPLOYMENT ENTERPRISES, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2014

(UNAUDITED)








GENERAL EMPLOYMENT ENTERPRISES, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET

(In Thousands)






September 30,

Pro-forma

September 30,






2014

Adjustments

2014












ASSETS










CURRENT ASSETS:







Cash and cash equivalents

$

168

$

2,000

(1)

$

2,168


Accounts receivable, less allowances (2014 - $320; 2013 - $272)

4,907



4,907


Other current assets

1,650



1,650


Assets of discontinued operations, less allowances (2014 - $265; 2013 - $35)

-



-


      Total current assets

6,725



8,725


Property and equipment, net 

453



453


Goodwill


1,106



1,106


Intangible assets, net

1,560



1,560

TOTAL ASSETS

$

9,844


$

11,844

LIABILITIES AND SHAREHOLDERS' EQUITY







CURRENT LIABILITIES:








Short-term debt

$

2,711


$

2,711


Accounts payable

910



910


Accrued compensation

2,633



2,633


Convertible note payable - current portion, net of discount

35



35


Derivative liability

131



131


Other current liabilities

1,214



1,214


Liabilities from discontinued operations

-



-


      Total current liabilities

7,634



7,634


Convertible note payable, net of discount

132



132


Other long-term liabilities

13



13


      Total long-term liabilities

145



145


Commitments and contingencies







SHAREHOLDERS' EQUITY







Preferred stock; no par value; authorized - 20,000 shares; issued and outstanding - none

-

$

2,000

(1)

2,000

Common stock, no-par value; authorized - 200,000 shares; issued and outstanding - 25,899 shares at September 30, 2014 and 22,799 shares at September 30, 2013






-



-

Additional paid in capital

11,658



11,658

Accumulated deficit

(9,593)



(9,593)


Total shareholders' equity

2,065



4,065

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

9,844


$

11,844









(1)

The Company has entered into a transaction to issue 200,000 shares of Preferred Stock that are initially convertible into 10,000,000 shares of Common Stock.

    

About General Employment Enterprises, Inc.

General Employment Enterprises, Inc. (the "Company") was incorporated in the State of Illinois in 1962 and is the successor to employment offices doing business since 1893.  The Company operates in two industry segments, providing professional staffing services and light industrial staffing services through the names of General Employment, Ashley Ellis, Triad and Omni-One.

Forward-Looking Statements

The statements made in this press release that are not historical facts are forward-looking statements.  Such forward-looking statements often contain or are prefaced by words such as "will" and "expect".  As a result of a number of factors, the Company's actual results could differ materially from those set forth in the forward-looking statements.  Certain factors that might cause the Company's actual results to differ materially from those in the forward-looking statements include, without limitation, those factors set forth under the heading "Forward-Looking Statements" in the Company's annual report on Form 10-K for the fiscal year ended September 30, 2013, and in the Company's other filings with the Securities and Exchange Commission.  The Company is under no obligation to (and expressly disclaims any such obligation to) and does not intend to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/general-employment-enterprises-inc-announces-results-for-fiscal-2014-fourth-quarter-and-year-end-300006661.html

SOURCE General Employment Enterprises, Inc.

Released December 8, 2014