GEE Group Inc. - Annual Report: 2009 (Form 10-K)
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-K
|
x
|
Annual
Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For the
fiscal year ended September 30, 2009
|
¨
|
Transition
Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
|
|
Commission
File Number 1-05707
|
|
GENERAL
EMPLOYMENT ENTERPRISES, INC
|
|
(Exact
name of registrant as specified in its
charter)
|
|
Illinois
|
36-6097429
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification Number)
|
|
One
Tower Lane, Suite 2200, Oakbrook Terrace, IL
|
60181
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
Registrant’s
telephone number, including area code: (630) 954-0400
|
|
Securities
registered pursuant to Section 12(b) of the
Act:
|
|
Title
of each class
|
Name
of each exchange on which registered
|
|
Common
Stock, no par value
|
NYSE
Amex
|
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes ¨ No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. ¨
Indicate
by checkmark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act (check one):
|
Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
|
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
x
|
Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes ¨ No x
The
aggregate market value of the common stock held by non-affiliates computed by
reference to the price at which the common stock was last sold as of March 31,
2009 was $1,698,000.
The
number of shares outstanding of the registrant’s common stock as of December 31,
2009 was 13,380,265.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the General Employment Enterprises, Inc. Proxy Statement for the annual
meeting of shareholders to be held on February 22, 2010 are incorporated by
reference into Part III of this Form 10-K.
2
|
Page
|
|||
|
PART
I
|
|
||
|
|
|||
|
Item
1,
|
4
|
||
|
|
|||
|
Item
1A,
|
5
|
||
|
Item
1B,
|
5
|
||
|
Item
2,
|
5
|
||
|
|
|||
|
Item
3,
|
5
|
||
|
|
|||
|
Item
4,
|
5
|
||
|
|
|||
|
PART
II
|
|
||
|
|
|||
|
Item
5,
|
6
|
||
|
Item
6,
|
7
|
||
|
Item
7,
|
7
|
||
|
Item
8,
|
12
|
||
|
|
|||
|
Item
9,
|
25
|
||
|
|
|||
|
Item
9A(T),
|
25
|
||
|
|
|||
|
Item
9B,
|
26
|
||
|
|
|||
|
PART
III
|
|||
|
Item
10,
|
27
|
||
|
|
|||
|
Item
11,
|
27
|
||
|
|
|||
|
Item
12,
|
27
|
||
|
|
|||
|
Item
13,
|
27
|
||
|
|
|||
|
Item
14,
|
28
|
||
|
PART
IV
|
|||
|
Item
15,
|
28
|
||
PART
I
Item 1, Business.
General
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. In 1987 the Company established Triad Personnel Services, Inc., a
wholly-owned subsidiary, incorporated in the State of Illinois. The principal
executive office of the Company is located at One Tower Lane, Suite 2200,
Oakbrook Terrace, Illinois.
Services
Provided
The
Company operates in one industry segment, providing professional staffing
services. The Company offers its customers placement and contract staffing
services, specializing in the placement of information technology, engineering
and accounting professionals.
The
Company’s placement services include placing candidates into regular, full-time
jobs with client-employers. The Company’s contract services include placing its
professional employees on temporary assignments, under contracts with client
companies. Contract workers are employees of the Company, typically working at
the client location and at the direction of client personnel for periods of
three months to one year. Management believes that the combination of these two
services provides a strong marketing opportunity, because it offers customers a
variety of staffing alternatives that includes direct hire, temporary staffing
and a contract-to-hire approach to hiring. The percentage of revenues derived
from these services is as follows:
|
Year
Ended September 30
|
||||||||
|
2009
|
2008
|
|||||||
|
Contract
services
|
60 | % | 49 | % | ||||
|
Placement
services
|
40 | % | 51 | % | ||||
Marketing
The
Company markets its services using the trade names General Employment
Enterprises, Omni One, Business Management Personnel, Triad Personnel Services
and Generation Technologies. As of September 30, 2009 it operated ten branch
offices located in downtown or suburban areas of major U.S. cities in eight
states. The offices were located in Arizona, California (2), Florida, Illinois,
Indiana, Massachusetts, North Carolina and Ohio (2).
The
Company markets its services to prospective clients primarily through telephone
marketing by its recruiting and sales consultants, and through mailing of
employment bulletins listing candidates available for placement and contract
employees available for assignment.
The
portion of consolidated net revenues derived from the Company’s two largest
customers together was approximately 21% in fiscal 2009 and 11% in fiscal 2008,
and no other customer accounted for more than 4% of net revenues during either
year.
Competition
The
staffing industry is highly competitive. There are relatively few barriers to
entry by firms offering placement services, while significant amounts of working
capital typically are required for firms offering contract services. The
Company’s competitors include a large number of sole-proprietorship operations,
as well as regional and national organizations. Many of them are large
corporations with substantially greater resources than the
Company.
Because
the Company focuses its attention on professional staffing positions, it
competes by providing highly qualified candidates who are well matched for the
position, by responding quickly to client requests, and by establishing offices
in convenient locations. As part of its service, the Company provides reference
checking, scrutiny of candidates’ work experience and optional background
checks. In general, pricing is considered to be secondary to quality of service
as a competitive factor. During slow hiring periods, however, competition can
put pressure on the Company’s pricing.
Recruiting
The
success of the Company is highly dependent on its ability to obtain qualified
candidates. Prospective employment candidates are generally recruited through
telephone contact by the Company’s employment consultants or through postings on
the Internet. For Internet postings, the Company maintains its own web page at
www.generalemployment.com and uses other Internet job posting bulletin board
services. The Company maintains database records of applicants’ skills to assist
in matching them with job openings. The Company screens and interviews
applicants who are presented to its clients.
Employees
As of
September 30, 2009, the Company had approximately 60 regular employees and 110
contract service employees.
Item 1A, Risk Factors.
Not
applicable.
Item 1B, Unresolved Staff Comments.
Not
applicable.
Item 2, Properties.
The
Company’s policy is to lease commercial office space for all of its offices. The
Company’s headquarters are located in a modern 31-story building near Chicago,
Illinois. The Company leases 8,200 square feet of space at that location, under
a lease that will expire in 2015. The lease may be cancelled by the Company in
2012 under certain conditions.
The
Company’s staffing offices are located in downtown and suburban business centers
in eight states. Established offices are operated from leased space ranging from
800 to 2,000 square feet, generally for initial lease periods of three to five
years, with cancellation clauses after certain periods of occupancy in some
cases. Management believes that existing facilities are adequate for the
Company’s current needs and that its leasing strategies provide the Company with
sufficient flexibility to open or close offices to accommodate business
needs.
Item 3, Legal Proceedings.
From time
to time, the Company is subject to various legal proceedings and claims arising
in the ordinary course of business. As of September 30, 2009, there were no
material legal proceedings pending against the Company.
Item 4, Submission of Matters to a Vote of Security
Holders.
Not
applicable.
PART
II
Item 5, Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.
The
Company’s common stock is listed on the NYSE Amex stock exchange and is traded
under the symbol JOB. The following table sets forth the quarterly high and low
sales prices per share of the Company’s common stock on the consolidated market
for each quarter within the last two fiscal years.
|
Fourth
Quarter
|
Third
Quarter
|
Second
Quarter
|
First
Quarter
|
|||||||||||||
|
Fiscal
2009:
|
||||||||||||||||
|
High
|
$ | 1.47 | $ | .58 | $ | .52 | $ | .54 | ||||||||
|
Low
|
.46 | .36 | .19 | .30 | ||||||||||||
|
Fiscal
2008:
|
||||||||||||||||
|
High
|
$ | .88 | $ | 1.39 | $ | 1.70 | $ | 1.79 | ||||||||
|
Low
|
.38 | .76 | 1.31 | 1.50 | ||||||||||||
There
were 665 holders of record on December 31, 2009.
On
November 19, 2007, the Company declared a $.10 per share cash dividend on its
common stock, payable on January 11, 2008 to shareholders of record as of
December 14, 2007. In the past, cash dividends have been declared at
the discretion of the Board of Directors. There is no assurance that
dividends will be paid in the future, since they are dependent on the Company’s
earnings, financial condition and other factors.
Information
concerning securities authorized for issuance under equity compensation plans is
presented in Item 12 of this annual report.
During
the three months ended September 30, 2009, no equity securities of the Company
were purchased by the Company.
Recent
Sales of Unregistered Securities
On June
30, 2009, the Company recorded the sale of 7,700,000 unregistered shares of
common stock to PSQ, LLC (“PSQ”) for $1,925,000 in cash, pursuant to a
Securities Purchase and Tender Offer Agreement that had been entered into by the
Company on March 30, 2009. The sale of unregistered securities was
made in reliance on section 4(2) of the Securities Act of 1933 as amended (the
“Securities Act”). PSQ and its managing member were known to the
Company and its management through the process undertaken by PSQ in conducting a
tender offer for the Company’s shares of common stock. PSQ was
provided access to all material information that it requested and all
information necessary to verify such information, and was afforded access to
Company management in connection with PSQ’s purchase. PSQ and its managing
member acquired such securities for investment and not with a view toward
distribution, acknowledging such intent to the Company in the agreements that
were entered into with PSQ at the time of sale of the securities.
On June
22, 2009, the Company and Herbert F. Imhoff, Jr. entered into Amendment No. 1 to
a Consulting Agreement originally dated March 30, 2009. The
Consulting Agreement as amended provides that Mr. Imhoff is to provide
consulting services to the Company following his resignation as the chief
executive officer, in accordance with the terms of the Securities Purchase and
Tender Offer Agreement with PSQ. A portion of Mr. Imhoff’s
compensation in exchange for his consulting services is the issuance of 500,000
shares of the Company’s common stock for no additional consideration. The share
issuance to Mr. Imhoff was duly approved by the written consent of PSQ on July
24, 2009. The common stock was offered and issued, or will be issued,
to Mr. Imhoff in an offering exempt from the registration requirements, under
section 4(2) of the Securities Act, as Mr. Imhoff has been an affiliate of the
Company prior to and after the consummation of the transactions contemplated by
the Securities Purchase and Tender Offer Agreement with PSQ.
Item 6, Selected Financial Data.
Not
Applicable.
Item 7, Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Overview
The
Company provides contract and placement staffing services for business and
industry, specializing in the placement of information technology, engineering
and accounting professionals. As of September 30, 2009, the Company
operated ten offices located in eight states.
The
Company’s business is highly dependent on national employment trends in general
and on the demand for professional staff in particular. As an
indicator of employment conditions, the national unemployment rate was 9.8% in
September 2009 and 6.2% in September 2008. The change indicates a
trend toward a lower level of employment in the United States during the last
twelve months.
During
the year ended September 30, 2009, the U.S. economy experienced a period of
uncertainty stemming from problems in the housing and credit
markets. According to the U.S. Department of Labor, the national
employment level declined by approximately 6.0 million jobs during the
period. Management believes that employers became extremely cautious
about hiring during the period. As a result, the Company experienced
sharp declines in both the number of billable contract hours and the number of
placements.
Consolidated
net revenues for the year ended September 30, 2009 decreased 32% compared with
the prior year. Contract service revenues were down 16%, and
placement service revenues were down 47%. The effects of lower
consolidated net revenues resulted in a $4,178,000 loss from operations this
year, compared with a $1,843,000 loss from operations last year.
During
the year ended September 30, 2009, the Company recorded the sale of 7,700,000
newly-issued shares of common stock to PSQ for $1,925,000 in cash, pursuant to a
Securities Purchase and Tender Offer Agreement that had been entered into by the
Company on March 30, 2009. The net proceeds to the Company from the
share issuance, after deducting related costs, were $1,384,000, and the Company
ended the year with a balance of cash and cash equivalents of
$2,810,000. In connection with the completion of the sale of shares,
the Company’s Chairman, Chief Executive Officer and President (the “former CEO”)
resigned from those positions and his employment agreement with the Company was
replaced by a new consulting agreement. Under the consulting
agreement, the Company became obligated to pay an annual consulting fee of
$180,000 over a five-year period and to issue 500,000 shares of common stock to
the former CEO for no additional consideration. During fiscal 2009,
the Company determined that the fee payments represent compensation for past
services rendered by the former CEO, and accordingly the Company recorded a
provision for additional compensation expense under the consulting agreement in
the amount of $1,070,000. The fiscal 2009 results also include a
provision for the cost of closing branch offices of $330,000. During
the period, the Company consolidated ten branch offices in four metropolitan
areas.
The
Securities Purchase and Tender Offer Agreement also provided that PSQ would
commence a cash tender offer to purchase from the Company’s shareholders up to
2,500,000 shares of common stock at a price of $0.60 per share. PSQ
informed the Company that the tender offer was concluded as of June 30, 2009 and
that 2,035,287 shares of the Company’s common stock were
tendered.
Results of
Operations
Net
Revenues
Consolidated
net revenues for the year ended September 30, 2009 were down $4,841,000 (32%)
from the prior year. Contract service revenues decreased $1,196,000
(16%) and placement service revenues decreased $3,645,000 (47%). As a
result of the weaker economic conditions that prevailed during the year ended
September 30, 2009, the Company experienced less demand for its
services. The decline in consolidated net revenues was the result of
a 15% decrease in the number of billable contract hours and 51% fewer
placements.
Cost
of Contract Services
The cost
of contract services includes wages and the related payroll taxes and employee
benefits of the Company’s employees while they work on contract
assignments. There are no direct costs associated with placement
service revenues. The cost of contract services for the year ended
September 30, 2009 was down $663,000 (13%) as a result of the lower volume of
contract business. The gross profit margin on contract business was
30.4%, which was 2.2 percentage points less than 32.6% for the prior year due to
competitive pricing pressures during the period.
Selling,
General and Administrative Expenses
Selling,
general and administrative expenses include the following
categories:
|
|
·
|
Compensation
in the operating divisions, which includes commissions earned by the
Company’s employment consultants and branch managers on permanent and
temporary placements. It also includes salaries, wages,
unrecovered advances against commissions, payroll taxes and employee
benefits associated with the management and operation of the Company’s
staffing offices.
|
|
|
·
|
Administrative
compensation, which includes salaries, wages, payroll taxes and employee
benefits associated with general management and the operation of the
finance, legal, human resources and information technology
functions.
|
|
|
·
|
Occupancy
costs, which includes office rent, depreciation and amortization, and
other office operating expenses.
|
|
|
·
|
Recruitment
advertising, which includes the cost of identifying job
applicants.
|
|
|
·
|
Other
selling, general and administrative expenses, which includes travel, bad
debt expense, fees for outside professional services and other
corporate-level expenses such as business insurance and
taxes.
|
The
Company’s largest selling, general and administrative expense is for
compensation in the operating divisions. Most of the Company’s
employment consultants are paid on a commission basis and receive advances
against future commissions. Advances are expensed when
paid. When commissions are earned, prior advances are applied against
them and the consultant is paid the net amount. At that time, the
Company recognizes the full amount as commission expense, and advance expense is
reduced by the amount recovered. Thus, the Company’s advance expense
represents the net amount of advances paid, less amounts applied against
commissions.
Selling,
general and administrative expenses for the year ended September 30, 2009
decreased $1,843,000 (15%). Compensation in the operating divisions
was down 33%, reflecting lower commission expense on the lower volume of
business. Administrative compensation was up 32%, reflecting the
$1,070,000 of additional compensation recorded under the consulting agreement of
the former CEO. All other administrative compensation was down 31%
for the period, reflecting executive pay reductions, staff reductions and lower
deferred compensation expense. Occupancy costs were down 22% for the
period because of operating fewer branch offices than last
year. Recruitment advertising decreased 11% due to lower utilization
of job board posting services. The fiscal 2009 results also include a
provision for the cost of closing branch offices of $330,000.
Other
Investment
income for the year ended September 30, 2009 was down $87,000 from last year due
to a combination of lower funds available for investment and a lower average
rate of return on investments. Returns in both periods were adversely
affected by losses on trading securities.
There
were no credits for income taxes as a result of the pretax losses during the
periods because there was not sufficient assurance that future tax benefits
would be realized.
Liquidity
and Capital Resources
As of
September 30, 2009, the Company had cash and cash equivalents of $2,810,000,
which was a decrease of $1,355,000 from September 30, 2008. Net
working capital at September 30, 2009 was $2,609,000, which was a decrease of
$1,676,000 from September 30, 2008, and the current ratio was 2.8 to
1. Shareholders’
equity as of September 30, 2009 was $2,604,000 which represented 56% of total
assets.
During
the year ended September 30, 2009, the net cash used by operating activities was
$2,695,000. The net loss for the period, adjusted for depreciation
and other non-cash charges, used $3,016,000, while working capital items
provided $321,000.
Expenditures
for the acquisition of property and equipment were $48,000 during the year ended
September 30, 2009.
During
the year ended September 30, 2009, the Company recorded the sale of 7,700,000
newly-issued shares of common stock to PSQ for $1,925,000 in
cash. The net proceeds to the Company from the share issuance, after
deducting related costs, were $1,384,000.
All of
the Company’s office facilities are leased. As of September 30, 2009,
future minimum lease payments under noncancelable lease commitments having
initial terms in excess of one year, including closed offices, totaled
$1,351,000. At that date, the Company also had contractual
obligations to purchase approximately $680,000 of recruitment advertising
through December 2011.
In
connection with the completion of the sale of shares of common stock to PSQ, the
Company’s Chairman, Chief Executive Officer and President (the “former CEO”)
resigned from those positions and his employment agreement with the Company was
replaced by a new consulting agreement. Under the consulting
agreement, the Company became obligated to pay an annual consulting fee of
$180,000 over a five-year period and to issue 500,000 shares of common stock to
the former CEO for no additional consideration, and the Company recorded a
liability for the net present value of the future fee payments in the amount of
$790,000.
As of
September 30, 2009, there were approximately $7,400,000 of losses available to
reduce federal taxable income in future years through 2029, and there were
approximately $6,800,000 of losses available to reduce state taxable income in
future years, expiring from 2010 through 2029. Due to the sale of
shares of common stock to PSQ during fiscal 2009, it is likely that the Company
will be limited by Section 382 of the Internal Revenue Code as to the amount of
net operating losses that may be used in future years. The Company is
currently evaluating the effects of any such limitation. Future
realization of the tax benefits of net operating loss carryforwards ultimately
depends on the existence of sufficient taxable income within the carryforward
period. Based on the weight of available evidence, the Company
determined that it is more likely than not that all of the deferred tax assets
will not be realized. Accordingly, the Company maintained a full valuation
allowance as of September 30, 2009. See “Income Taxes” in the Notes
to Consolidated Financial Statements for additional information.
Due to
the effects of the U.S. economic downturn, the Company incurred losses during
fiscal 2009 and the negative cash flow from operating activities was
$2,695,000. To improve liquidity, the Company took certain
actions. First, the Company completed the sale of 7,700,000 shares of
common stock to PSQ and raised net cash proceeds of $1,384,000 during the
period. With the stock proceeds, the Company’s net cash outflow for
the year was $1,355,000, and the Company’s cash position was reduced to
$2,810,000 as of September 30, 2009.
Second,
the Company implemented a restructuring of its corporate and field operations
during the third quarter. Sales, recruiting and administrative
positions were eliminated, five branch offices were closed and the payroll for
executive officers was reduced. As a result of this restructuring,
together with actions taken earlier in the year, the sales, recruiting and
administrative staff as of September 30, 2009 was 58% below the staff level at
the beginning of the fiscal year, and the salaries and benefits of its three
executive officers in the aggregate had been reduced by $637,000 on an annual
basis. During the fourth quarter of fiscal 2009, the Company took
further actions to reduce selling, general and administrative
expenses. As a result, the net loss for the fourth quarter of fiscal
2009 was $69,000, and the net cash outflow for the quarter was
$271,000. Based on these actions, management believes that existing
cash balances will be adequate to finance current operations for at least the
next twelve months.
In
November 2009, the Company discovered that it did not receive the proceeds from
a bank for a $2,300,000 certificate of deposit that was scheduled to mature in
October 2009. Although the Company made a formal inquiry of the bank,
it did not receive an adequate explanation for the bank’s non-performance
related to the deposit. In December 2009, the Company entered
into an agreement to assign its interests in the certificate of deposit, without
recourse, to an unrelated party that has other business interests with the bank,
and the Company was reimbursed for the face value of the deposit.
On
November 20, 2009, the Company completed the execution of a loan and security
agreement with Crestmark Bank. Under the agreement, the bank will
make advances to the Company upon the request of the Company, subject to certain
limitations. The aggregate loan amount outstanding at any one time
may not exceed the lesser of $3,500,000 or 85% of eligible accounts receivable,
as defined in the agreement, and the Company granted the bank a security
interest in all of its accounts receivable and other property. In
addition, the agreement requires the Company to comply with certain financial
covenants. Advances will be charged interest at the rate of 1.00
percentage point above the prime rate and are payable on
demand. The loan agreement will continue in effect until
demand, but if not sooner demanded then for three years from the date of the
agreement, and it will be automatically renewed for consecutive two year terms
unless terminated by either party. Certain officers of the Company
have provided the bank with a guaranty of validity for certain representations
and covenants made by the Company. Borrowings available under the
line of credit could be used for working capital purposes.
The
Company is in negotiations to purchase On-Site Services, Inc., a temporary
staffing and payroll services company with annual revenues of approximately $10
million. It is anticipated that the purchase would be financed
through a combination of cash and debt convertible into the Company’s common
stock.
On
December 21, 2009, the Company entered into a memorandum agreement to purchase
the core business and business assets of GT Systems, Inc. Among other
things, the agreement requires the Company to obtain an accounts receivable
financing line of credit of $9,000,000. The purchase price is to be
paid by the issuance of no more than 2,000,000 shares of the Company’s common
stock. The closing of the transaction is subject to the approval and
execution by both parties of definitive transaction documents.
Off-Balance
Sheet Arrangements
As of
September 30, 2009, and during the year then ended, there were no transactions,
agreements or other contractual arrangements to which an unconsolidated entity
was a party, under which the Company (a) had any direct or contingent obligation
under a guarantee contract, derivative instrument or variable interest in the
unconsolidated entity, or (b) had a retained or contingent interest in assets
transferred to the unconsolidated entity.
Critical
Accounting Policies
The
consolidated financial statements are prepared in conformity with accounting
principles generally accepted in the United States of America and the rules of
the United States Securities and Exchange Commission.
Management
makes estimates and assumptions that can affect the amounts of assets and
liabilities reported as of the date of the financial statements, as well as the
amounts of reported revenues and expenses during the periods presented. Those
estimates and assumptions typically involve expectations about events to occur
subsequent to the balance sheet date, and it is possible that actual results
could ultimately differ from the estimates. If differences were to occur in a
subsequent period, the Company would recognize those differences when they
became known. Significant matters requiring the use of estimates and assumptions
include deferred income tax valuation allowances and accounts receivable
allowances. Management believes that its estimates and assumptions are
reasonable, based on information that is available at the time they are
made.
The
following accounting policies are considered by management to be “critical”
because of the judgments and uncertainties involved, and because different
amounts would be reported under different conditions or using different
assumptions.
Income
Taxes
Deferred
tax assets and liabilities are determined based on differences between the
financial reporting and tax bases of assets and liabilities, and are measured
using the enacted tax rates and laws that are expected to be in effect when the
differences reverse. A valuation allowance is recorded to reduce deferred tax
assets to the amount that is more likely than not to be realized as a tax
benefit in the future. If the Company were to change its determination about the
future realization of tax benefits, the valuation allowance would be adjusted as
a provision or credit to income taxes in the period in which the determination
is made. Judgment is required in assessing the likelihood that tax assets will
be realized. These judgments are based on estimates about future taxable income,
which is inherently uncertain.
Accounts
Receivable Allowances
An
allowance for placement falloffs is recorded, as a reduction of revenues, for
estimated losses due to applicants not remaining employed for the Company’s
guarantee period. An allowance for doubtful accounts is recorded, as a charge to
bad debt expense, where collection is considered to be doubtful due to credit
issues. These allowances reflect management’s estimate of potential losses
inherent in the accounts receivable balances, based on historical loss
statistics.
Recent
Accounting Pronouncements
The
Company adopted the requirements of the Financial Accounting Standards Board
(the “FASB”) regarding the accounting for uncertainty in income taxes as of
October 1, 2007. The guidance specifies how tax benefits for
uncertain tax positions are to be measured, recognized and disclosed in
financial statements. The adoption of it did not have a material
effect on the Company’s financial statements.
The
Company adopted the requirements of the FASB regarding fair value measurements,
as of October 1, 2008. The FASB guidance defines fair value,
establishes a framework and gives guidance regarding the methods used for
measuring fair value, and expands disclosures about fair value
measurements. The adoption of it did not have a material effect on
the Company’s financial statements.
In May
2009, the FASB issued guidance regarding subsequent events. The FASB
guidance modifies the definition of what qualifies as a subsequent event – those
events or transactions that occur following the balance sheet date, but before
the financial statements are issued, or are available to be issued – and
requires companies to disclose the date through which it has evaluated
subsequent events and the basis for determining that date. The
Company adopted the provisions of this guidance for the third quarter of fiscal
2009, in accordance with the effective date. The adoption of it did
not have a material effect on the Company’s financial statements.
In
December 2007, the FASB issued guidance on business combinations. Under the FASB
guidance, an entity is required to recognize the assets acquired, liabilities
assumed, contractual contingencies, and contingent consideration at their fair
value on the acquisition date. It further requires that acquisition-related
costs be recognized separately from the acquisition and expensed as incurred,
restructuring costs generally be expensed in periods subsequent to the
acquisition date, and changes in accounting for deferred tax asset valuation
allowances and acquired income tax uncertainties after the measurement period
impact income tax expense. The Company will adopt the FASB guidance for business
combinations on a prospective basis beginning in the first quarter of fiscal
2010.
Forward-Looking
Statements
As a
matter of policy, the Company does not provide forecasts of future financial
performance. The statements made in this Form 10-K Annual Report
which 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, our actual results could
differ materially from those set forth in the forward-looking statements.
Certain factors that might cause our actual results to differ materially from
those in the forward-looking statements include, without limitation, general
business conditions, the demand for the Company’s services, competitive market
pressures, the ability of the Company to attract and retain qualified personnel
for regular full-time placement and contract assignments, the possibility of
incurring liability for the Company’s business activities, including the
activities of its contract employees and events affecting its contract employees
on client premises, and the ability to attract and retain qualified corporate
and branch management. 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.
Item 8, Financial Statements and Supplementary Data.
|
GENERAL
EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED
BALANCE SHEET
|
||||||||
|
|
As
of September 30
|
|||||||
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|
||||||
|
ASSETS
|
|
|
||||||
|
Current
assets:
|
|
|
||||||
|
Cash
and cash equivalents
|
$ | 2,810 | $ | 4,165 | ||||
|
Accounts
receivable, less allowances (2009 - $76; 2008 - $151)
|
1,038 | 1,314 | ||||||
|
Other
current assets
|
249 | 313 | ||||||
|
|
||||||||
|
Total
current assets
|
4,097 | 5,792 | ||||||
|
Property
and equipment, net
|
570 | 791 | ||||||
|
Deferred
compensation plan assets
|
— | 419 | ||||||
|
|
||||||||
|
Total
assets
|
$ | 4,667 | $ | 7,002 | ||||
|
|
||||||||
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 348 | $ | 84 | ||||
|
Accrued
compensation
|
666 | 1,001 | ||||||
|
Other
current liabilities
|
474 | 422 | ||||||
|
|
||||||||
|
Total
current liabilities
|
1,488 | 1,507 | ||||||
|
|
||||||||
|
Long-term
obligations
|
575 | 419 | ||||||
|
|
||||||||
|
Shareholders’
equity:
|
||||||||
|
Preferred
stock; authorized - 100 shares; issued and outstanding -
none
|
— | — | ||||||
|
Common
stock, no-par value; authorized - 20,000 shares; issued and outstanding –
13,380 shares in 2009 and 5,165 shares in 2008
|
6,743 | 4,987 | ||||||
|
Retained
earnings (accumulated deficit)
|
(4,139 | ) | 89 | |||||
|
|
||||||||
|
Total
shareholders’ equity
|
2,604 | 5,076 | ||||||
|
|
||||||||
|
Total
liabilities and shareholders’ equity
|
$ | 4,667 | $ | 7,002 | ||||
See notes
to consolidated financial statements.
|
GENERAL
EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED
STATEMENT OF OPERATIONS
|
||||||||
|
Year
Ended September 30
|
||||||||
|
(In
Thousands, Except Per Share)
|
2009
|
2008
|
||||||
|
|
|
|||||||
|
Net
revenues:
|
|
|
||||||
|
Contract
services
|
$ | 6,280 | $ | 7,476 | ||||
|
Placement
services
|
4,114 | 7,759 | ||||||
|
Net
revenues
|
10,394 | 15,235 | ||||||
|
Cost
of contract services
|
4,374 | 5,037 | ||||||
|
Selling,
general and administrative expenses
|
10,198 | 12,041 | ||||||
|
Loss
from operations
|
(4,178 | ) | (1,843 | ) | ||||
|
Investment
income (loss)
|
(50 | ) | 37 | |||||
|
Net
loss
|
$ | (4,228 | ) | $ | (1,806 | ) | ||
|
Average
number of shares -basic and diluted
|
7,232 | 5,163 | ||||||
|
Net
loss per share -basic and diluted
|
$ | (.58 | ) | $ | (.35 | ) | ||
|
Cash
dividends declared per share
|
$ | — | $ | .10 | ||||
See notes
to consolidated financial statements.
|
GENERAL
EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
||||||||
|
Year
Ended September 30
|
||||||||
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|||||||
|
Operating
activities:
|
|
|||||||
|
Net
loss
|
$ | (4,228 | ) | $ | (1,806 | ) | ||
|
Depreciation
and amortization
|
260 | 255 | ||||||
|
Deferred
compensation and stock compensation expense
|
978 | 65 | ||||||
|
Other
noncurrent items
|
(26 | ) | 5 | |||||
|
Changes
in current assets and current liabilities -
|
||||||||
|
Accounts
receivable
|
276 | 601 | ||||||
|
Accounts
payable
|
264 | (9 | ) | |||||
|
Accrued
compensation
|
(335 | ) | (601 | ) | ||||
|
Other
current items, net
|
116 | (60 | ) | |||||
|
Net
cash used by operating activities
|
(2,695 | ) | (1,550 | ) | ||||
|
Investing
activities:
|
||||||||
|
Acquisition
of property and equipment
|
(48 | ) | (122 | ) | ||||
|
Financing
activities:
|
||||||||
|
Exercises
of stock options
|
4 | 10 | ||||||
|
Issuance
of common stock
|
1,925 | — | ||||||
|
Stock
issuance costs
|
(541 | ) | — | |||||
|
Cash
dividends paid
|
— | (517 | ) | |||||
|
Net
cash provided (used) by financing activities
|
1,388 | (507 | ) | |||||
|
Decrease
in cash and cash equivalents
|
(1,355 | ) | (2,179 | ) | ||||
|
Cash
and cash equivalents at beginning of year
|
4,165 | 6,344 | ||||||
|
Cash
and cash equivalents at end of year
|
$ | 2,810 | $ | 4,165 | ||||
See notes
to consolidated financial statements.
|
GENERAL
EMPLOYMENT ENTERPRISES, INC.
CONSOLIDATED
STATEMENT OF SHAREHOLDERS’ EQUITY
|
|
|||||||
|
Year
Ended September 30
|
||||||||
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|||||||
|
Common
shares outstanding:
|
|
|
||||||
|
Number
at beginning of year
|
5,165 | 5,153 | ||||||
|
Issuance
of common stock
|
8,200 | — | ||||||
|
Exercises
of stock options
|
15 | 12 | ||||||
|
Number
at end of year
|
13,380 | 5,165 | ||||||
|
Common
stock:
|
||||||||
|
Balance
at beginning of year
|
$ | 4,987 | $ | 4,912 | ||||
|
Issuance
of common stock, net of issuance costs of $541
|
1,384 | — | ||||||
|
Stock
compensation expense
|
368 | 65 | ||||||
|
Exercises
of stock options
|
4 | 10 | ||||||
|
Balance
at end of year
|
$ | 6,743 | $ | 4,987 | ||||
|
Retained
earnings (accumulated deficit):
|
||||||||
|
Balance
at beginning of year
|
$ | 89 | $ | 2,412 | ||||
|
Net
loss
|
(4,228 | ) | (1,806 | ) | ||||
|
Cash
dividends declared
|
— | (517 | ) | |||||
|
Balance
at end of year
|
$ | (4,139 | ) | $ | 89 | |||
See notes
to consolidated financial statements.
GENERAL
EMPLOYMENT ENTERPRISES, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
Company
General
Employment Enterprises, Inc. (the “Company”) operates in one industry segment,
providing staffing services through a network of branch offices located in major
metropolitan areas throughout the United States. The Company specializes in
providing information technology, engineering and accounting professionals to
clients on either a regular placement basis or a temporary contract basis. The
portion of consolidated net revenues derived from the Company’s two largest
customers together was approximately 21% in fiscal 2009 and 11% in fiscal 2008,
and no other customer accounted for more than 4% of net revenues during either
year.
Significant
Accounting Policies and Estimates
The
consolidated financial statements are prepared in conformity with accounting
principles generally accepted in the United States of America and the rules of
the United States Securities and Exchange Commission.
Principles
of Consolidation
The
consolidated financial statements include the accounts and transactions of the
Company and its wholly-owned subsidiary. All significant intercompany accounts
and transactions are eliminated in consolidation.
Estimates
and Assumptions
Management
makes estimates and assumptions that can affect the amounts of assets and
liabilities reported as of the date of the financial statements, as well as the
amounts of reported revenues and expenses during the periods presented. Those
estimates and assumptions typically involve expectations about events to occur
subsequent to the balance sheet date, and it is possible that actual results
could ultimately differ from the estimates. If differences were to occur in a
subsequent period, the Company would recognize those differences when they
became known. Significant matters requiring the use of estimates and assumptions
include deferred income tax valuation allowances and accounts receivable
allowances. Management believes that its estimates and assumptions are
reasonable, based on information that is available at the time they are
made.
Revenue
Recognition
Placement
service revenues are recognized when applicants accept offers of employment,
less a provision for estimated losses due to applicants not remaining employed
for the Company’s guarantee period. Contract service revenues are recognized
when services are rendered.
Cost
of Contract Services
The cost
of contract services includes the wages and the related payroll taxes and
employee benefits of the Company’s employees while they work on contract
assignments.
Income
Taxes
Deferred
tax assets and liabilities are determined based on differences between the
financial reporting and tax bases of assets and liabilities, and are measured
using the enacted tax rates and laws that are expected to be in effect when the
differences reverse. A valuation allowance is recorded to reduce deferred tax
assets to the amount that is more likely than not to be realized as a tax
benefit in the future.
Income
or Loss Per Share
Basic
income or loss per share is based on the average number of common shares
outstanding. Diluted income per share is based on the average number of common
shares and the dilutive effect of stock options. Stock options are not
considered to be dilutive during loss periods. The diluted net loss
per share does not include the effect of 630,000 stock options in fiscal 2009
and 603,000 stock options in fiscal 2008, because including them would have had
an anti-dilutive effect.
Cash
Equivalents
Highly
liquid investments with a maturity of three months or less when purchased are
considered to be cash equivalents.
Accounts
Receivable Allowances
An
allowance for placement falloffs is recorded, as a reduction of revenues, for
estimated losses due to applicants not remaining employed for the Company’s
guarantee period. An allowance for doubtful accounts is recorded, as a charge to
bad debt expense, where collection is considered to be doubtful due to credit
issues. These allowances together reflect management’s estimate of the potential
losses inherent in the accounts receivable balances, based on historical loss
statistics.
Property
and Equipment
Property
and equipment are recorded at cost. Depreciation expense is calculated on a
straight-line basis over estimated useful lives of five years for computer
equipment and two to ten years for office equipment, furniture and fixtures. The
Company capitalizes computer software purchased or developed for internal use,
and amortizes it over an estimated useful life of five years. The carrying value
of property and equipment is reviewed for impairment whenever events or changes
in circumstances indicate that it may not be recoverable. If the carrying amount
of an asset group is greater than its estimated future undiscounted cash flows,
the carrying value is written down to the estimated fair value.
Deferred
Compensation Plan
The
Company had a rabbi trust agreement to protect the assets of its nonqualified
deferred compensation plan, which was terminated during fiscal 2009. The
accounts of the rabbi trust were included in the consolidated financial
statements. Investments held by the trust were included in other assets, and an
offsetting liability was included in long-term obligations. The investments were
considered to be trading securities and were reported at fair value, with the
realized and unrealized holding gains and losses being recorded in investment
income, and an offsetting amount was recorded as compensation in selling,
general and administrative expenses.
Stock-Based
Compensation
Compensation
expense is recorded for the fair value of stock options issued to directors and
employees. The expense is measured as the estimated fair value of the stock
options on the date of grant and is amortized over the vesting
periods.
Subsequent
Events
We have
evaluated events occurring between the end of our most recent fiscal year and
January 8, 2010, which is the date that these financial statements were
issued.
Recent
Accounting Pronouncements
The
Company adopted the requirements of the Financial Accounting Standards Board
(the “FASB”) regarding the accounting for uncertainty in income taxes as of
October 1, 2007. The guidance specifies how tax benefits for
uncertain tax positions are to be measured, recognized and disclosed in
financial statements. The adoption of it did not have a material
effect on the Company’s financial statements.
The
Company adopted the requirements of the FASB regarding fair value measurements,
as of October 1, 2008. The FASB guidance defines fair value,
establishes a framework and gives guidance regarding the methods used for
measuring fair value, and expands disclosures about fair value
measurements. The adoption of it did not have a material effect on
the Company’s financial statements.
In May
2009, the FASB issued guidance regarding subsequent events. The FASB
guidance modifies the definition of what qualifies as a subsequent event – those
events or transactions that occur following the balance sheet date, but before
the financial statements are issued, or are available to be issued – and
requires companies to disclose the date through which it has evaluated
subsequent events and the basis for determining that date. The
Company adopted the provisions of this guidance for the third quarter of fiscal
2009, in accordance with the effective date. The adoption of it did
not have a material effect on the Company’s financial statements.
In
December 2007, the FASB issued guidance on business combinations. Under the FASB
guidance, an entity is required to recognize the assets acquired, liabilities
assumed, contractual contingencies, and contingent consideration at their fair
value on the acquisition date. It further requires that acquisition-related
costs be recognized separately from the acquisition and expensed as incurred,
restructuring costs generally be expensed in periods subsequent to the
acquisition date, and changes in accounting for deferred tax asset valuation
allowances and acquired income tax uncertainties after the measurement period
impact income tax expense. The Company will adopt the FASB guidance for business
combinations on a prospective basis beginning in the first quarter of fiscal
2010.
Placement
Service Revenues
The
provision for falloffs and refunds, reflected in the consolidated statement of
operations as a reduction of placement service revenues, was $412,000 in fiscal
2009 and $1,116,000 in fiscal 2008.
Investment
Income (Loss)
The
components of investment income (loss) are as follows:
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|
||||||
|
Interest
income
|
$ | 40 | $ | 163 | ||||
|
Loss
on investments
|
(90 | ) | (126 | ) | ||||
|
|
||||||||
|
Investment
income (loss)
|
$ | (50 | ) | $ | 37 | |||
The
losses on investments include unrealized holding gains and losses on trading
securities.
Cash
and Cash Equivalents
The
Company’s primary objective for its investment portfolio is to provide maximum
protection of principal and high liquidity. By investing in
high-quality securities having relatively short maturity periods, or in money
market funds having similar objectives, the Company reduces its exposure to the
risks associated with interest rate fluctuations. A summary of cash and cash
equivalents as of September 30 is as follows:
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|
||||||
|
Cash
|
$ | 510 | $ | 854 | ||||
|
Certificate
of deposit
|
2,300 | — | ||||||
|
Money
market funds
|
— | 3,311 | ||||||
|
|
||||||||
|
Total
cash and cash equivalents
|
$ | 2,810 | $ | 4,165 | ||||
The
Company maintains deposits in financial institutions in excess of amounts
guaranteed by the Federal Deposit Insurance Corporation. As of
September 30, 2009, the balance of cash and cash equivalents in excess of the
insured limits was $2,225,000.
In
November 2009, the Company discovered that it did not receive the proceeds from
a bank for a $2,300,000 certificate of deposit that was scheduled to mature in
October 2009. Although the Company made a formal inquiry of the bank,
it did not receive an adequate explanation for the bank’s non-performance
related to the deposit. In December 2009, the Company entered
into an agreement to assign its interests in the certificate of deposit, without
recourse, to an unrelated party that has other business interests with the bank,
and the Company was reimbursed for the face value of the
deposit.
Income
Taxes
The
components of the provision for income taxes are as follows:
|
|
||||||||
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|
||||||
|
Current
tax provision
|
$ | — | $ | — | ||||
|
Deferred
tax provision (credit) related to:
|
||||||||
|
Temporary
differences
|
(170 | ) | (39 | ) | ||||
|
Loss
carryforwards
|
(1,381 | ) | (607 | ) | ||||
|
Valuation
allowances
|
1,551 | 646 | ||||||
|
|
||||||||
|
Provision
for income taxes
|
$ | — | $ | — | ||||
The
differences between income taxes calculated at the 34% statutory U.S. federal
income tax rate and the Company’s provision for income taxes are as
follows:
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|||||||
|
Income
tax provision (credit) at statutory federal tax rate
|
$ | (1,438 | ) | $ | (614 | ) | ||
|
Federal
valuation allowance
|
1,437 | 604 | ||||||
|
Other
|
1 | 10 | ||||||
|
|
||||||||
|
Provision
for income taxes
|
$ | — | $ | — | ||||
The net
deferred income tax asset balance as of September 30 related to the
following:
|
|
|
|
||||||
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|
||||||
|
Temporary
differences
|
$ | 513 | $ | 343 | ||||
|
Net
operating loss carryforwards
|
2,880 | 1,499 | ||||||
|
Valuation
allowances
|
(3,393 | ) | (1,842 | ) | ||||
|
|
||||||||
|
Net
deferred income tax asset
|
$ | — | $ | — | ||||
As of
September 30, 2009, there were approximately $7,400,000 of losses available to
reduce federal taxable income in future years through 2029, and there were
approximately $6,800,000 of losses available to reduce state taxable income in
future years, expiring from 2010 through 2029. Due to the sale of shares of
common stock to PSQ, LLC (“PSQ”) during fiscal 2009, it is likely that the
Company will be limited by Section 382 of the Internal Revenue Code as to the
amount of net operating losses that may be used in future years. The
Company is currently evaluating the effects of any such limitation.
Future
realization of the tax benefits of existing temporary differences and net
operating loss carryforwards ultimately depends on the existence of sufficient
taxable income within the carryforward period. As of September 30, 2009, the
Company performed an evaluation to determine whether a valuation allowance was
needed. The Company considered all available evidence, both positive
and negative, which included the results of operations for the current and
preceding years. The Company also considered whether there was any currently
available information about future years. Because long-term contracts are not a
significant part of the Company’s business, future results cannot be reliably
predicted by considering past trends or by extrapolating past results. Moreover,
the Company’s earnings are strongly influenced by national economic conditions
and have been volatile in the past. Considering these factors, the Company
determined that it was not possible to reasonably quantify future taxable
income. Based on the weight of available evidence, the Company determined that
it is more likely than not that all of the deferred tax assets will not be
realized. Accordingly, the Company maintained a full valuation allowance as of
September 30, 2009.
As of
September 30, 2009, the Company’s federal income tax returns for fiscal 2006 and
subsequent years were subject to examination.
Property
and Equipment
Property
and equipment consisted of the following as of September 30:
|
|
|
|
||||||
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|
||||||
|
Computer
equipment and software
|
$ | 2,311 | $ | 2,276 | ||||
|
Office
equipment, furniture and fixtures
|
1,155 | 1,332 | ||||||
|
|
||||||||
|
Total
property and equipment, at cost
|
3,466 | 3,608 | ||||||
|
Accumulated
depreciation and amortization
|
(2,896 | ) | (2,817 | ) | ||||
|
|
||||||||
|
Property
and equipment, net
|
$ | 570 | $ | 791 | ||||
Disposals
of property and equipment during fiscal 2009, consisting primarily of
fully-depreciated office furniture and equipment, had an original cost of
$190,000, and disposals during fiscal 2008 had an original cost of
$351,000.
Other
Current Liabilities
Other
current liabilities consisted of the following as of September 30:
|
|
|
|
||||||
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|
||||||
|
Accrued
expenses
|
$ | 113 | $ | 200 | ||||
|
Accrued
rent
|
213 | 47 | ||||||
|
Deferred
rent
|
148 | 175 | ||||||
|
|
||||||||
|
Total
other current liabilities
|
$ | 474 | $ | 422 | ||||
Office
Closings
During
fiscal 2009, the Company consolidated ten branch offices in four metropolitan
areas and closed six of them. As a result, the Company recorded a
$281,000 provision covering the remaining lease obligations of the closed
offices and a $49,000 adjustment of the book value of the related office
furniture and equipment. The total provision for the cost of closing
branch offices, included in selling, general and administrative expenses, was
$330,000 in 2009 and $65,000 in 2008. The rent liability, included in
other current liabilities, was as follows as of September 30:
|
(In
Thousands)
|
2009
|
2008
|
||||||
|
|
|
|
||||||
|
Balance
at beginning of year
|
$ | 47 | $ | — | ||||
|
Provision
for office closings
|
281 | 65 | ||||||
|
Payments
|
(115 | ) | (18 | ) | ||||
|
|
||||||||
|
Balance
at end of year
|
$ | 213 | $ | 47 | ||||
Lease
Obligations
The
Company leases space for all of its branch offices, which are located either in
downtown or suburban business centers, and space for its corporate headquarters.
Branch offices are generally leased over periods from three to five years. The
corporate office lease expires in 2015, but it may be cancelled by the Company
in 2012 under certain conditions. The leases generally provide for payment of
basic rent plus a share of building real estate taxes, maintenance costs and
utilities.
Rent
expense was $802,000 in fiscal 2009 and $1,018,000 in fiscal 2008. As of
September 30, 2009, future minimum lease payments under noncancelable lease
agreements having initial terms in excess of one year , including the closed
offices, totaled $1,351,000, as follows: fiscal 2010 - $683,000, fiscal 2011 -
$398,000 and fiscal 2012 - $270,000.
Commitments
As of
September 30, 2009, the Company had contractual obligations to purchase
approximately $680,000 of recruitment advertising through December
2011.
Long-Term
Obligations
In
connection with the completion of the sale of shares of common stock to PSQ, the
Company’s Chairman, Chief Executive Officer and President (the “former CEO”)
resigned from those positions and his employment agreement with the Company was
replaced by a new consulting agreement. Under the consulting
agreement, the Company became obligated to pay an annual consulting fee of
$180,000 over a five-year period and to issue 500,000 shares of common stock to
the former CEO for no additional consideration. During fiscal 2009,
the Company recorded a provision for additional compensation expense under the
consulting agreement in the amount of $1,070,000, which is included in selling,
general and administrative expenses on the consolidated statement of
operations. Of that amount, the Company recorded a liability for the
net present value of the future payments in the amount of $790,000 and recorded
additional common stock in the amount of $280,000 based on a quoted market price
of $.56 per share on the date of the award. As of September 30, 2009,
the liability for future payments was reflected on the consolidated balance
sheet as accrued compensation of $180,000 and long-term obligations of
$575,000.
The
Company had a nonqualified deferred compensation plan for certain officers,
which was terminated during fiscal 2009. Under the plan, the Company contributed
a percentage of each participant’s earnings to a rabbi trust under a defined
contribution arrangement. The participants directed the investments of the
trust, and the Company did not guarantee investment performance. The
investments in the trust as of September 30, 2008 were valued at $419,000, using
quoted market prices, and were reflected on the consolidated balance sheet as
deferred compensation plan assets, with an offsetting amount reflected as
long-term obligations. All account balances were paid to participants
during fiscal 2009 in connection with the termination of the plan, and therefore
the balances on the consolidated balance sheet as of September 30, 2009 were
zero.
Common
Stock
As of
June 30, 2009, the Company recorded the sale of 7,700,000 newly-issued shares of
common stock to PSQ for $1,925,000 in cash, pursuant to a Securities Purchase
and Tender Offer Agreement that had been entered into by the Company on March
30, 2009. The net proceeds to the Company from the share issuance,
after deducting related costs, were $1,384,000. As further described in
“Long-Term Obligations,” under a consulting agreement with the former CEO, the
Company became obligated during fiscal 2009 to issue 500,000 shares of common
stock to the former CEO for no additional consideration.
Stock
Option Plans
As of
September 30, 2009, there were stock options outstanding under the Company’s
1995 Stock Option Plan, Second Amended and Restated 1997 Stock Option Plan and
1999 Stock Option Plan. All three plans were approved by the shareholders. The
1995 Stock Option Plan and the 1999 Stock Option Plan have expired, and no
further options may be granted under those plans. During fiscal 2009,
the Second Amended and Restated 1997 Stock Option Plan was amended to make an
additional 592,000 options available for granting. The plans granted specified
numbers of options to non-employee directors, and they authorized the
Compensation Committee of the Board of Directors to grant either incentive or
non-statutory stock options to employees. Vesting periods are
established by the Compensation Committee at the time of grant. All
stock options outstanding as of September 30, 2009 were non-statutory stock
options, had exercise prices equal to the market price on the date of grant, and
had expiration dates ten years from the date of grant.
A summary
of stock option activity is as follows:
|
|
|
|
||||||
|
(Number
of Options in Thousands)
|
2009
|
2008 | ||||||
|
|
|
|||||||
|
Number
of options outstanding:
|
|
|
||||||
|
Beginning
of year
|
603 | 615 | ||||||
|
Granted
|
318 | — | ||||||
|
Exercised
|
(15 | ) | (12 | ) | ||||
|
Terminated
|
(276 | ) | — | |||||
|
End
of year
|
630 | 603 | ||||||
|
Number
of options exercisable at end of year
|
530 | 513 | ||||||
|
Number
of options available for grant at end of year
|
493 | 98 | ||||||
|
Weighted
average option prices per share:
|
||||||||
|
Granted
during the year
|
$ | .57 | $ | — | ||||
|
Exercised
during the year
|
.30 | .86 | ||||||
|
Terminated
during the year
|
1.43 | — | ||||||
|
Outstanding
at end of year
|
.94 | 1.34 | ||||||
|
Exercisable
at end of year
|
.99 | 1.21 | ||||||
Stock
options outstanding as of September 30, 2009 were as follows (number of options
in thousands):
|
Range
of Exercise Prices
|
Number
Outstanding
|
|
Weighted
Average Price
|
Number
Exercisable
|
|
Weighted
Average Price
|
Average
Remaining Life (Years)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Under
$1.00
|
488
|
|
$
|
.69
|
|
388
|
|
$
|
.69
|
7.2
|
|||
|
$1.25
to $2.39
|
142
|
|
|
1.80
|
|
142
|
|
|
1.80
|
6.4
|
|||
As of
September 30, 2009, the aggregate intrinsic value of outstanding stock options
and exercisable stock options was $45,000.
No stock
options were granted during fiscal 2008. The average fair value of
stock options granted was estimated to be $0.30 per share in fiscal 2009. This
estimate was made using the Black-Scholes option pricing model and the following
weighted average assumptions:
|
|
||||
|
2009
|
||||
|
|
||||
|
Expected
option life (years)
|
5.0 | |||
|
Expected
stock price volatility
|
59 | % | ||
|
Expected
dividend yield
|
— | % | ||
|
Risk-free
interest rate
|
2.4 | % | ||
Stock-based
compensation expense attribututable to stock options was $86,000 in fiscal 2009
and $65,000 in fiscal 2008. As of September 30, 2009, there was $36,000 of
unrecognized compensation expense related to unvested stock options outstanding,
and the weighted average vesting period for those options was 2.9
years.
Shareholder
Rights Plan
On
February 4, 2000, the Company adopted a shareholder rights plan, and the Board
of Directors declared a dividend of one share purchase right for each share of
outstanding common stock. The rights will become exercisable if any
person or affiliated group acquires, or offers to acquire, 10% or more of the
Company’s outstanding common shares. Each exercisable right entitles the holder
(other than the acquiring person or group) to purchase, at a price of $21.50,
common stock of the Company having a market value equal to two times the
purchase price. The purchase price and the number of common shares issuable on
exercise of the rights are subject to adjustment in accordance with customary
anti-dilution provisions.
The plan
was amended on March 30, 2009 to allow PSQ to hold an unlimited amount of
outstanding capital stock of the Company without being treated as an acquiring
person under the plan.
The Board
of Directors may authorize the Company to redeem the rights at a price of $.01
per right at any time before they become exercisable. After the rights become
exercisable, the Board of Directors may authorize the Company to exchange any
unexercised rights at the rate of one share of common stock for each right. The
rights are nonvoting and will expire on February 22, 2010.
Subsequent
Events
On
November 20, 2009, the Company completed the execution of a loan and security
agreement with Crestmark Bank. Under the agreement, the bank will
make advances to the Company upon the request of the Company, subject to certain
limitations. The aggregate loan amount outstanding at any one time
may not exceed the lesser of $3,500,000 or 85% of eligible accounts receivable,
as defined in the agreement, and the Company granted the bank a security
interest in all of its accounts receivable and other property. In
addition, the agreement requires the Company to comply with certain financial
covenants. Advances will be charged interest at the rate of 1.00
percentage point above the prime rate and are payable on
demand. The loan agreement will continue in effect until
demand, but if not sooner demanded then for three years from the date of the
agreement, and it will be automatically renewed for consecutive two year terms
unless terminated by either party. Certain officers of the Company
have provided the bank with a guaranty of validity for certain representations
and covenants made by the Company.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of
Directors and Shareholders
General
Employment Enterprises, Inc.
Oakbrook
Terrace, Illinois
We have
audited the accompanying consolidated balance sheets of General Employment
Enterprises, Inc. as of September 30, 2009 and 2008 and the related consolidated
statements of operations, shareholders’ equity, and cash flows for the years
then ended. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of General
Employment Enterprises, Inc. at September 30, 2009 and 2008, and the
consolidated results of its operations and its cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.
/s/ BDO
Seidman, LLP
Chicago,
Illinois
January
8, 2010
Item 9, Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Not
applicable.
Item 9A(T), Controls and Procedures.
Disclosure
Controls and Procedures
As of
September 30, 2009, the Company’s management evaluated, with the participation
of its principal executive officer and its principal financial officer, the
effectiveness of the Company’s disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the
Exchange Act”). Based on that evaluation, the Company’s principal executive
officer and its principal financial officer concluded that the Company’s
disclosure controls and procedures were effective as of September 30, 2009 to
ensure that information required to be disclosed in reports filed or submitted
by the Company under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission’s rules and forms. Despite the control weaknesses described below,
management has taken subsequent actions to ensure that the consolidated
financial statements included in this Form 10-K fairly present in all material
respects the consolidated financial condition and results of operations for the
years presented.
Internal
Control Over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act rule
13a-15(f).
Internal
control over financial reporting is a process to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in accordance with
generally accepted accounting principles. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements.
Under the
supervision and with the participation of the chief executive officer and the
chief financial officer, management conducted an evaluation of the effectiveness
of the Company’s internal control over financial reporting based on the
framework in Internal Control - Integrated Framework,” issued by the Committee
of Sponsoring Organizations of the Treadway Commission. As discussed
below, the Company’s Chief Executive Officer and Chief Financial Officer have
concluded that the material weaknesses discussed below existed as of September
30, 2009. A material weakness is a deficiency or combination of deficiencies in
internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the Company’s annual or interim
financial statements will not be prevented or detected on a timely basis. Based
on the Company’s evaluation, the Company has concluded that its internal control
over financial reporting as of September 30, 2009 was not
effective.
In July
2009, the Company purchased a $2,300,000 certificate of deposit (“CD”) at a New
York bank. When the CD matured in October 2009, the bank did not
timely credit the proceeds of the CD to the Company’s account. Although the
Company has made a formal inquiry of the bank, to date the Company has not
received an adequate explanation for the bank’s non-performance relating to the
CD. In December 2009, the Company was reimbursed in full through a
non-recourse assignment of the CD for face value to an unrelated party, who has
other business interests with the bank. The purchaser of the CD is neither an
employee nor a director of the Company. Management has determined that the
certificate of deposit was purchased without adequate documentation and that the
investment was not in accordance with the Company’s investment
policy. Accordingly, management has determined that there was a
material weakness in the Company’s internal control over financial reporting as
of September 30, 2009. In addition, during fiscal 2009, the Company authorized
an individual that was neither an employee nor a director as an authorized
signor on one of the Company’s bank accounts, which was also identified as a
material weakness in internal control. In September 2009, we removed this
individual as an authorized signor on our bank accounts. Management has also
taken the following steps in regards to the CD investment: (i) the CD proceeds
have been transferred to a financial institution that meets the criteria of the
established investment policy adopted by the Company; (ii) the Chief Executive
Officer, Ron Heineman, who authorized the purchase of the CD voluntarily
resigned effective December 23, 2009; and (iii) Salvatore Zizza was appointed by
the Board of Directors as the Chief Executive Officer of the Company
effective December 23, 2009.
This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.
There
were no changes in the Company’s internal control over financial reporting that
occurred during the Company’s most recent fiscal quarter that materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Item 9B, Other Information.
Not
applicable.
PART
III
Item 10, Directors, Executive Officers and Corporate
Governance.
Information
set forth in the Company’s Proxy Statement for the 2010 annual meeting of
shareholders under the headings “Election of Directors,” “Directors and
Executive Officers” and “Corporate Governance” are incorporated herein by
reference.
The
Company has a code of ethics that applies to all of its directors and employees,
including its principal executive officer, principal financial officer and
principal accounting officer. The code of ethics is filed as an exhibit to this
annual report.
Item 11, Executive Compensation.
Information
set forth in the Company’s Proxy Statement for the 2010 annual meeting of
shareholders under the heading “Executive Compensation” is incorporated herein
by reference.
Item 12, Security Ownership of Certain Beneficial Owners and
Management.
Information
set forth in the Company’s Proxy Statement for the 2010 annual meeting of
shareholders under the heading “Security Ownership of Certain Beneficial Owners
and Management” is incorporated herein by reference.
Securities
authorized for issuance under equity compensation plans were as follows as of
September 30, 2009
(number
of shares in thousands):
|
Plan
category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in first
column)
|
|||||||||
|
Equity
compensation plans approved by security holders
|
630 | $ | .94 | 493 | ||||||||
|
|
- | |||||||||||
|
Equity
compensation plans not approved by security holders
|
— | — | — | |||||||||
|
|
||||||||||||
|
Total
|
630 | $ | .94 | 493 | ||||||||
Item 13, Certain Relationships and Related Transactions, and
Director Independence.
Information
set forth in the Company’s Proxy Statement for the 2010 annual meeting of
shareholders under the heading “Director Independence” is incorporated herein by
reference.
Item 14, Principal Accountant Fees and Services.
Information
set forth in the Company’s Proxy Statement for the 2010 annual meeting of
shareholders under the heading “Principal Accountant Fees” is incorporated
herein by reference.
PART
IV
Item 15, Exhibits and Financial Statement
Schedules.
Documents
Filed
The
following documents are filed as part of this report:
|
Page
|
||
|
Report
of Independent Registered Public Accounting Firm
|
24
|
|
|
Consolidated
Balance Sheet as of September 30, 2009 and September 30,
2008
|
12
|
|
|
Consolidated
Statement of Operations for the years ended September 30, 2009 and
September 30, 2008
|
13
|
|
|
Consolidated
Statement of Cash Flows for the years ended September 30, 2009 and
September 30, 2008
|
14
|
|
|
Consolidated
Statement of Shareholders’ Equity for the years ended September 30, 2009
and September 30, 2008
|
15
|
|
|
Notes
to Consolidated Financial Statements
|
16
|
All other
financial statements schedules are omitted because they are not
applicable.
Exhibits
The
following exhibits are filed as part of this report:
|
No.
|
Description
of Exhibit
|
|
|
2.01
|
Securities
Purchase and Tender Offer Agreement, dated March 30, 2009, by and among
General Employment Enterprises, Inc. and PSQ, LLC. Incorporated
by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K
dated March 30, 2009, Commission File No. 1-05707.
|
|
|
3.01
|
Articles
of Incorporation and amendments thereto. Incorporated by reference to
Exhibit 3 to the Company’s Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1996, Commission File No. 1-05707.
|
|
|
3.02
|
By-Laws
of General Employment Enterprises, Inc., as amended June 30,
2009. Incorporated by reference to Exhibit 3.1 to the Company’s
Current Report on Form 8-K dated March 30, 2009, Commission File No.
1-05707
|
|
4.01
|
Rights
Agreement dated as of February 4, 2000, between General Employment
Enterprises, Inc. and Continental Stock Transfer and Trust Company, as
Rights Agent. Incorporated by reference to Exhibit 1 to the Company’s
Registration Statement on Form 8-A filed with the Securities and Exchange
Commission on February 7, 2000, Commission File No.
1-05707.
|
|
|
4.02
|
Amendment
No. 1 to Rights Agreement, dated as of March 30, 2009, by and between
General Employment Enterprises, Inc. and Continental Stock Transfer and
Trust Company, as Rights Agent. Incorporated by reference to Exhibit 4.1
to the Company’s Registration Statement on Form 8-A/A filed with the
Securities and Exchange Commission on March 31, 2009, Commission File No.
1-05707.
|
|
|
10.01*
|
Key
Manager Plan, adopted May 22, 1990. Incorporated by reference to Exhibit
10(h) to the Company’s Annual Report on Form 10-K for the fiscal year
ended September 30, 1990, Commission File No. 1-05707.
|
|
|
10.02*
|
General
Employment Enterprises, Inc. 1995 Stock Option Plan. Incorporated by
reference to Exhibit 4.1 to the Company’s Form S-8 Registration Statement
dated April 25, 1995, Registration No. 33-91550.
|
|
|
Second
Amended and Restated General Employment Enterprises, Inc. 1997 Stock
Option Plan.
|
||
|
10.04*
|
General
Employment Enterprises, Inc. 1999 Stock Option Plan. Incorporated by
reference to Exhibit 10 of the Company’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999, Commission File No.
1-05707.
|
|
|
10.05*
|
Chief
Executive Officer Bonus Plan, adopted September 24, 2001. Incorporated by
reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K for
the fiscal year ended September 30, 2001, Commission File No.
1-05707.
|
|
|
10.06*
|
Operational
Vice President Bonus Plan effective for fiscal years beginning on or after
October 1, 2004. Incorporated by reference to Exhibit 10.01 to the
Company’s Quarterly Report of Form 10-QSB for the quarterly period ended
December 31, 2004, Commission File No. 1-05707.
|
|
|
10.07*
|
Form
of stock option agreement under the General Employment Enterprises, Inc.
1997 Stock Option Plan. Incorporated by reference to Exhibit 99.01 to the
Company’s current report on Form 8-K dated September 25, 2006, Commission
File No. 1-05707.
|
|
|
10.08*
|
Chief
Executive Officer Bonus Plan Amendment 1, effective for fiscal years
beginning on or after October 1, 2006. Incorporated by reference to
Exhibit 10.01 to the Company’s quarterly report on Form 10-QSB for the
quarterly period ended December 31, 2006, Commission File No.
1-05707.
|
|
|
10.09*
|
Form
of director stock option agreement under the Amended and Restated General
Employment Enterprises, Inc. 1997 Stock Option Plan. Incorporated by
reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-KSB
for the fiscal year ended September 30, 2007, Commission File No.
1-05707.
|
|
|
10.10*
|
Form
of stock option agreement under the General Employment Enterprises, Inc.
1999 Stock Option Plan. Incorporated by reference to Exhibit 10.16 to the
Company’s Annual Report on Form 10-KSB for the fiscal year ended September
30, 2007, Commission File No. 1-05707.
|
|
|
10.11*
|
Form
of indemnity agreement with directors and officers, adopted November 19,
2007. Incorporated by reference to Exhibit 10.20 to the Company’s Annual
Report on Form 10-KSB for the fiscal year ended September 30, 2007,
Commission File No. 1-05707.
|
|
|
10.12*
|
Escrow
Agreement, dated as of March 30, 2009, by and among General Employment
Enterprises, Inc., PSQ, LLC and Park Avenue Bank, as escrow
agent. Incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K dated March 30, 2009, Commission File
No. 1-05707.
|
|
|
10.13*
|
Consulting
Agreement, dated as of March 30, 2009, by and among Herbert F. Imhoff,
Jr., General Employment Enterprises, Inc. and PSQ
LLC. Incorporated by reference to Exhibit 10.2 to the Company’s
Current Report on Form 8-K dated March 30, 2009, Commission File No.
1-05707.
|
|
10.14*
|
Registration
Rights Agreement, dated as of March 30, 2009, by and between General
Employment Enterprises, Inc., PSQ, LLC and Herbert F. Imhoff,
Jr. Incorporated by reference to Exhibit 10.3 to the Company’s
Current Report on Form 8-K dated March 30, 2009, Commission File No.
1-05707.
|
|
|
10.15*
|
Amendment
No. 1, dated as of June 22, 2009, to Consulting Agreement, dated as of
March 30, 2009, by and among Herbert F. Imhoff, Jr., General Employment
Enterprises, Inc. and PSQ LLC. Incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 22,
2009, Commission File No. 1-05707.
|
|
|
10.16*
|
Employment
Agreement between General Employment Enterprises, Inc. and Kent M. Yauch,
dated June 26, 2009. Incorporated by reference to Exhibit 10.4
to the Company’s Current Report on Form 8-K dated June 22, 2009,
Commission File No. 1-05707.
|
|
|
10.17*
|
Employment
Agreement between General Employment Enterprises, Inc. and Marilyn L.
White, dated June 26, 2009. Incorporated by reference to
Exhibit 10.5 to the Company’s Current Report on Form 8-K dated June 22,
2009, Commission File No. 1-05707.
|
|
|
Form
of director stock option under the Second Amended and Restated General
Employment Enterprises, Inc. 1997 Stock Option Plan.
|
||
|
Form
of employee stock option under the Second Amended and Restated General
Employment Enterprises, Inc. 1997 Stock Option Plan.
|
||
|
14.01
|
General
Employment Enterprises, Inc. Code of Ethics for Directors, Officers and
Employees, adopted as of August 16, 2004. Incorporated by reference to
Exhibit 14.01 to the Company’s Form 8-K Current Report dated August 16,
2004, Commission File No. 1-05707.
|
|
|
Consent
of Independent Registered Public Accounting Firm.
|
||
|
Certification
of the principal executive officer required by Rule 13a-14(a) or Rule
15d-14(a) of the Exchange Act.
|
||
|
Certification
of the principal financial officer required by Rule 13a-14(a) or Rule
15d-14(a) of the Exchange Act.
|
||
|
Certifications
of the principal executive officer required by Rule 13a-14(a) or Rule
15d-14(a) of the Exchange Act and Section 1350 of Chapter 63 of Title 18
of the United States Code.
|
||
|
Certifications
for the principal financial officer required by Rule 13a-14(a) or Rule
15d-14(a) of the Exchange Act and Section 1350 of Chapter 63 of Title 18
of the United States Code.
|
*
Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
GENERAL EMPLOYMENT
ENTERPRISES, INC.
(Registrant)
|
Date:
January 8, 2010
|
By:
/s/ Salvatore J. Zizza
|
|
Salvatore
J. Zizza
Chief
Executive Officer
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
Date:
January 8, 2010
|
By:
/s/ Salvatore J. Zizza
|
|
Salvatore
J. Zizza
Chief
Executive Officer
(Principal
executive officer)
|
|
|
Date:
January 8, 2010
|
By:
/s/ Kent M. Yauch
|
|
Kent
M. Yauch
Vice
President, Chief Financial
Officer
and Treasurer
(Principal
financial and accounting officer)
|
|
|
Date:
January 8, 2010
|
By:
/s/ Dennis W. Baker
|
|
Dennis
W. Baker, Director
|
|
|
Date:
January 8, 2010
|
By:/s/
Herbert F. Imhoff, Jr.
|
|
Herbert
F. Imhoff, Jr., Director
|
|
|
Date:
January 8, 2010
|
By:
/s/ Stephen B. Pence
|
|
Stephen
B. Pence, Director and Chairman of the Board
|
|
|
Date:
January 8, 2010
|
By:
/s/Charles W. B. Wardell III
|
|
Charles
W. B. Wardell III, Director
|
|
|
Date:
January 8, 2010
|
By:
/s/ Thomas C. Williams
|
|
Thomas
C. Williams, Director
|
32