What changed in this filing

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Item 9A. Controls and Procedures

2021-03-11 compared with 2020-03-12 · 234 added, 107 removed, 495 unchanged (41% of the section changed)

8 unchanged sentences

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 27, 2020, using criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and concluded that the Company maintained effective internal control over financial reporting as of December 27, 2020.

As previously disclosed in our Form 10-Q for the quarter ended June 28, 2020, management had identified a deficiency in our internal control over financial reporting, which was related to the quantitative assessment of impairment of goodwill and intangible assets.

Our management had concluded that we did not maintain effective controls related to the technical aspects of GAAP for testing goodwill and other intangible assets for impairment.

Management had determined that the aggregate impact of this deficiency resulted in a material weakness.

The material weakness did not result in any identified misstatements in the current period consolidated financial statements, nor in any restatements of consolidated financial statements previously reported by us, and there were no changes in previously released financial results.

As described below, our management believes this material weakness has since been effectively remediated.

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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

1 unchanged sentence

The effectiveness of our internal control over financial reporting as of December 27, 2020, has been audited by Whitley Penn LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Remediation Steps to Address the Material Weakness

Since identifying the material weakness related to our process of impairment assessment of goodwill and intangible assets, we have taken steps to strengthen the control function related to the financial closing process.

These steps included retaining external expert resources, enhancing the design of certain management review controls and providing training regarding internal control processes.

Management believes that these efforts have effectively remediated the material weaknesses.

We will continue to monitor the effectiveness of these and other processes, procedures, and controls and will make any further changes that management determines to be appropriate.

Management's assessment and conclusion on the effectiveness of internal control over financial reporting did not include an assessment of the internal controls of the Company's fiscal year 2020 acquisition of EdgeRock Technology Holding, Inc.

as further described in Note 3 in the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated by reference.

This entity constituted approximately 6.0% of the Company's total assets as of December 27, 2020 and 12.5% of revenues for the fiscal year then ended.

Management did not assess the effectiveness of internal control over financial reporting for this entity because of the timing of the acquisition during the fiscal year.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) during the fourth quarter of Fiscal 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than as described above, there have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) during the fourth quarter of Fiscal 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of BG Staffing, Inc.

Stockholders of BGSF, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited BG Staffing, Inc.

We have audited BGSF, Inc.

(the “Company”) internal control over financial reporting as of December 27, 2020, based on criteria established in 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 27, 2020, based on criteria established in 2013 Internal Control— Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company, as of December 29, 2019 and December 30, 2018 , and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 29, 2019 , and our report dated March 12, 2020 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company, as of December 27, 2020 and December 29, 2019, and the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 27, 2020, and our report dated March 11, 2021 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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We believe that our audit provides a reasonable basis for our opinion.

Our audit of and opinion on the Company’s internal control over financial reporting does not include the internal control over financial reporting related to the acquired business, EdgeRock Technology Holding, Inc.

As disclosed in Note 3 to the consolidated financial statements, this business was acquired by the Company during the year ended December 27, 2020, and whose total assets and revenues were 6.0 and 12.5 percent, respectively, of the Company’s related consolidated financial statement amounts as of and for the year ended December 27, 2020.

Managements assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of the acquired business.

Definition and Limitations of Internal Control Over Financial Reporting

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Board Composition

Our board of directors consists of five directors.

Our board of directors consists of seven directors.

Our board of directors has determined that the following directors are “independent” as defined under the rules of the NYSE:

Baum, Jr., Paul A.

David Allen, Jr., and Douglas E.

David Allen, Jr., Richard L.

Baum, Jr., Douglas E.

Hailey, Cynthia Marshall, and Paul A.

The authorized number of directors may be changed by resolution of our board of directors.

1 unchanged sentence

Our board of directors is divided into three classes, each serving staggered, three-year terms:

Our Class I director is L.

Allen Baker, Jr., and the term of such director will expire at the 2021 annual meeting of stockholders;

• Our Class I directors are L.

Allen Baker, Jr.

and Beth Garvey, and the term of each director will expire at the 2021 annual meeting of stockholders;

• Our Class II directors are Richard L.

Baum, Jr., Cynthia Marshall, and Paul A.

Seid, and the term of each director will expire at the 2022 annual meeting of stockholders;

2 unchanged sentences

and Douglas E.

Hailey, and the term of each director will expire at the 2020 annual meeting of stockholders.

Hailey the term of each director will expire at the 2023 annual meeting of stockholders.

As a result, only one class of directors will be elected at each annual meeting of stockholders, with the other classes continuing for the remainder of their respective terms.

Board Leadership and Role in Risk Oversight

Meetings of our board of directors are presided over by our chairman of the board, L.

Meetings of our board of directors (including executive sessions other than executive sessions consisting only of independent directors) are presided over by our chairman of the board, L.

Allen Baker, Jr.

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Our board of directors oversees the risk management activities designed and implemented by our management and executes its oversight responsibility for risk management both directly and through its committees.

The full board of directors also considers specific risk topics, including risks associated with our strategic plan, business operations and capital structure.

The full board of directors also considers specific risk topics, including risks associated with our strategic plan, our whistle blower program, business operations and capital structure.

In addition, our board of directors receives detailed regular reports from members of our senior management and other personnel that include assessments and potential mitigation of the risks and exposures involved with their respective areas of responsibility.

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Allen qualify as our “audit committee financial expert,” as such term is defined in Item 407(d)(5)(ii) of Regulation S-K.

Our board of directors has adopted a written charter for the Audit Committee, which is available on our home office website under the investor relations tab at www.bgstaffing.com.

Our board of directors has adopted a written charter for the Audit Committee, which is available on our home office website under the investor relations tab at www.bgsf.com.

The information on our website is not part of this Annual Report on Form 10-K.

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(3) reviewing and approving employment agreements and other similar arrangements between us and our executive officers;

and (4) administering our stock plans and other incentive compensation plans, including our 2013 Long-Term Incentive Plan.

and (4) administering our stock plans and other incentive compensation plans, including our 2013 Long-Term Incentive Plan and our 2020 Employee Stock Purchase Plan.

The Committee shall have the authority to delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees as the committee may deem appropriate in its sole discretion.

5 unchanged sentences

David Allen, Jr., Richard L.

Our board of directors has adopted a written charter for the Compensation Committee, which is available on our home office website under the investor relations tab at www.bgstaffing.com.

Baum, Jr., Cynthia Marshall, and Paul A.

Our board of directors has adopted a written charter for the Compensation Committee, which is available on our home office website under the investor relations tab at www.bgsf.com.

The information on our website is not part of this Annual Report on Form 10-K.

6 unchanged sentences

Baum, Jr., Douglas E.

Hailey, and Paul A.

A copy of the Nominating and Corporate Governance Committee’s charter is posted on our website at www.bgstaffing.com.

Hailey, Cynthia Marshall, and Paul A.

A copy of the Nominating and Corporate Governance Committee’s charter is posted on our website at www.bgsf.com.

The information on our website is not part of this Annual Report on Form 10-K.

13 unchanged sentences

Prior to Graebel, from 2009 to 2015, Mr.

Allen served as an officer of Snelling Services, LLC, a workforce solutions, contract and temporary staffing services provider.

Allen served as an officer of Snelling Services, LLC, a workforce solutions and contract provider.

From 2010 to 2015, Mr.

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Our board of directors benefits from Mr.

Allen's extensive experience in the temporary staffing industry as well as his financial expertise.

Allen's extensive experience in the workforce solutions industry as well as his financial expertise.

Allen Baker, Jr.

1 unchanged sentence

Allen Baker, Jr.

joined the board of managers of LTN Acquisition, LLC (the former parent of the predecessor to BG Staffing, Inc.) in 2008 while serving as the Executive Vice President/Chief Financial Officer of Impact Confections, Inc., a confections manufacturing company in Colorado, a position Mr.

joined the board of managers of LTN Acquisition, LLC (the former parent of the predecessor to BGSF, Inc.) in 2008 while serving as the Executive Vice President/Chief Financial Officer of Impact Confections, Inc., a confections manufacturing company in Colorado, a position Mr.

Baker held from 2002 through 2009 and was appointed to our board of directors in November 2013.

He served as President and Chief Executive Officer of BG Staffing from 2009 through October 2018 when he assumed the role of Chairman.

He served as President and Chief Executive Officer of BGSF from 2009 through October 2018 when he assumed the role of Chairman.

From 1985 to 2002, Mr.

Baker served as Executive Vice President and Chief Financial Officer of Piping Design Services, Inc.

d/b/a PDS Technical Services, a national, privately held staffing company headquartered in the Dallas/Fort Worth area, with operations in 43 states.

d/b/a PDS Technical Services, a national, privately held service company headquartered in the Dallas/Fort Worth area, with operations in 43 states.

Prior to this position, he worked at Core Laboratories, Inc.

3 unchanged sentences

Our board of directors benefits from Mr.

Baker's extensive experience in the temporary staffing industry.

Baker's extensive experience in the workforce solution industry.

Independent Director

2 unchanged sentences

Audit Committee, Compensation Committee (Chair), Nominating and Corporate Governance Committee (Chair)

served on the board of managers of LTN Acquisition, LLC (the former parent of the predecessor to BG Staffing, Inc.) since its inception and was appointed to serve on our board of directors in November 2013.

served on the board of managers of LTN Acquisition, LLC (the former parent of the predecessor to BGSF, Inc.) since its inception and was appointed to serve on our board of directors in November 2013.

Since March 2013, Mr.

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Baum's perspective and experience with our ongoing operations and strategy that he has obtained through his prolonged service to the company and due to his ability to assist with the evaluation of potential acquisitions.

President and Chief Executive Officer

Director Since:

Beth Garvey began serving as director in July 2020 and as President and Chief Executive Officer of the Company in October 2018.

Garvey previously served as Chief Operating Officer of the Company from August 2016 and joined the Company through the Company's acquisition of substantially all of the assets of InStaff Holding Corporation and InStaff Personnel, LLC (“InStaff”) in 2013.

Garvey started at InStaff in 1998 as Director of Human Resources, subsequently serving as Director of Operations, VP of Operations, Senior VP of Operations, COO and ultimately CEO prior to our acquisition.

The Staffing Industry Analysts has recognized her as one of North America Staffing 100 for the previous 2 years and included her in the Global Power 150 – Women in Staffing list for the past 3 years.

In addition, D CEO has named Ms.

Garvey as one of the top Dallas 500 Business Leaders 4 times.

Garvey was a Dallas Business Journal ‘Women in Business’ honoree recognizing outstanding local women business leaders who not only make a difference in their industries, but also in their communities.

Beth currently serves on the Board of Directors of the Dallas Regional Chamber and is co-chair of the Talent Attraction committee.

She is a past chair of the Executive Committee for the Dallas Executive Women’s Roundtable and is on the Board of Directors for The Family Place, a non-profit supporting victims of family violence.

In addition, she is a founding member of Y Texas, as well as a Board Member of the Y Texas Foundation an initiative of Texas CEO’s to help advance workforce development initiatives for students and veterans in the State of Texas.

Recently, Ms.

Garvey was named as a finalist in the EY Entrepreneur of the Year® 2020 Award for the Southwest region.

We believe that Ms.

Garvey should serve as a member of the Board due to her extensive experience in the workforce solutions industry.

Independent Director

2 unchanged sentences

Audit Committee (Chair), Nominating and Corporate Governance Committee

Hailey served on the board of managers of LTN Acquisition, LLC (the former parent of the predecessor to BG Staffing, Inc.) since its inception and was appointed to our board of directors in November 2013.

Hailey served on the board of managers of LTN Acquisition, LLC (the former parent of the predecessor to BGSF, Inc.) since its inception and was appointed to our board of directors in November 2013.

Hailey is the managing director of Taglich Private Equity LLC.

9 unchanged sentences

Hailey's perspective and experience with our ongoing operations and strategy that he has obtained through his prolonged service to the company and due to his ability to assist with the evaluation of potential acquisitions.

Cynthia Marshall

Independent Director

2 unchanged sentences

Compensation Committee, Nominating and Corporate Governance Committee

Marshall began service as director in July 2020.

Marshall is currently the CEO of the Dallas Mavericks, is Founder, President and CEO of the consulting firm Marshalling Resources.

The Marshalling Resources consulting firm specializes in leadership, diversity and inclusion, culture transformation and overall optimization of people resources.

Marshall worked with The Dow Chemical Company in 2017 and 2018 to develop and implement a strategy for institutionalizing an inclusive culture.

Prior to this position, Ms.

Marshall retired from a 36-year career at AT&T, where she had ultimately served as SVP - Human Resources and Chief Diversity Officer.

She was responsible for identifying and developing leaders, aligning employees with the company’s vision and priorities, overseeing major business unit HR support, performance development, employee engagement, skills transformation initiatives, EEO and Affirmative Action.

She led the team that created a world class Diversity and Inclusion culture, earning AT&T a top 3 ranking on Diversity Inc’s 2017 Top 50 list of companies.

Marshall also spearheaded the work that for the first-time placed AT&T on Fortune’s 100 Best Companies to Work For list in 2017 (one of only two Fortune 50 companies).

Before her SVP-Human Resources and Chief Diversity Officer roles, Ms.

Marshall served as President - AT&T North Carolina where she became the first African-American chair of the North Carolina State Chamber of Commerce.

Marshall graduated from the University of California-Berkeley with degrees in Business Administration and Human Resources Management and holds four honorary Doctorate degrees.

Marshall has chaired a variety of non-profit boards and is currently on the board of Dallas CASA, Dallas Regional Chamber, Texas Women’s Foundation, Texas 2036 and a member of the Executive Leadership Council.

We believe that Ms.

Marshall should serve as a member of the Board due to her extensive leadership and business experience and her expertise with respect to human resources and culture.

Independent Director

Director Since:

Committees Served:

Compensation Committee, Nominating and Corporate Governance Committee

Since 2010, Mr.

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Seid's extensive experience growing diverse businesses.

Executive Officers

Information about our Executive Officers

Our board of directors appoints our executive officers and updates the executive officer positions as needed throughout the fiscal year.

1 unchanged sentence

The following table sets forth certain information with respect to our executive officers as of the date of this Annual Report:

President and Chief Executive Officer

Dan Hollenbach

Chief Financial Officer and Secretary

Name Age Position

Beth Garvey 55 President and Chief Executive Officer

Dan Hollenbach 65 Chief Financial Officer and Secretary

Beth Garvey began serving as President and Chief Executive Officer of the Company in October 2018.

5 unchanged sentences

Beth currently serves on the Board of Directors of the Dallas Regional Chamber and is co-chair of the Talent Attraction committee.

She is a past chair of the Executive Committee for the Dallas

Executive Women’s Roundtable and is on the Board of Directors for The Family Place, a non-profit supporting victims of family violence.

She is a past chair of the Executive Committee for the Dallas Executive Women’s Roundtable and is on the Board of Directors for The Family Place, a non-profit supporting victims of family violence.

Recently, Ms.

Garvey was named as a finalist in the EY Entrepreneur of the Year® 2020 Award for the Southwest region.

Dan Hollenbach joined as CFO and Secretary in August 2015.

4 unchanged sentences

From August 2004 to July 2009, Dan was the CFO for Global Employment Holdings (OTC:

GEYH), a national staffing, consulting and professional employer organization company.

GEYH), a national workforce solution, consulting, and professional employer organization company.

Hollenbach began his career in the Audit and Assurance Services practice of EY before entering the corporate world.

5 unchanged sentences

We have adopted a Code of Ethics that applies to all of our team members, including our chief executive officer and our chief financial officer (who is our principal accounting officer).

Our Code of Ethics is available on our website at www.bgstaffing.com.

Our Code of Ethics is available on our website at www.bgsf.com.

If we amend or grant a waiver of one or more of the provisions of our Code of Ethics, we intend to satisfy the requirements under Item 5.05 of Item 8-K regarding the disclosure of amendments to or waivers from provisions of our Code of Ethics that apply to our principal executive, financial and accounting officers by posting the required information on our website at the above address.

Our website is not part of this Annual Report on Form 10-K.

Corporate Governance Guidelines

The board of directors has adopted Corporate Governance Guidelines on a number of significant matters, including director qualifications, director responsibilities, board committees, director access to officers, employees, and advisors, director compensation, related party transactions, annual performance evaluations, and chief executive officer and director succession.

A copy of the Corporate Governance Guidelines is posted on our website at http://www.bgsf.com.

The information on our website is not part of this Annual Report on Form 10-K.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC and further requires us to identify in this Annual Report on Form 10-K those executive officers, directors and persons who failed to timely file such a report.

A Form 4 for Ms.

Beth Garvey and Mr.

Dan Hollenbach were filed late on August 7, 2020 to report an option grant on August 4, 2020 of 6,000 and 4,500 shares of common stock, respectively.

A Form 4 for Mr.

David Allen, Jr., Mr.

Allen Baker, Jr., and Mr.

were filed late on August 8, 2019 to report an option grant on July 31, 2019 of 5,000 shares of common stock each.

Allen Baker, Jr., Mr.

Baum, Jr., Mr.

Hailey, and Mr.

Seid were filed late on August 7, 2020 to report an option grant and restricted stock grant on August 4, 2020 of 2,060 and 1,672, respectively, shares of common stock each.

A Form 3 for Cynthia Marshall was filed late on August 11, 2020 to report ownership on July 29, 2020 and a Form 4 for Ms.

Cynthia Marshall was filed late on August 11, 2020 to report an option grant and restricted stock grant on August 4, 2020 of 2,060 and 1,672, respectively, shares of common stock.

A Form 4 for Mr.

David Allen, Jr., Mr.

Allen Baker, Jr., Mr.

Baum, Jr., Mr.

Cynthia Marshall, and Mr.

Seid were filed late on November 20, 2020 to report a restricted stock grant on November 4, 2020 of 1,932 shares of common stock each.

Excepting the late filing disclosed above, and based solely on our review of these forms or written representations from the executive officers, directors and persons who own more than 10% of our common stock, we believe that all Section 16(a) filing requirements were met during Fiscal 2020.

3 unchanged sentences

• Beth Garvey, our President and Chief Executive Officer;

Dan Hollenbach, our Chief Financial Officer and Secretary.

• Dan Hollenbach, our Chief Financial Officer and Secretary (Principal Financial and Accounting Officer).

Throughout this section, the term “named executive officer” is intended to refer to the individuals identified above.

9 unchanged sentences

Beth Garvey President and Chief Executive Officer

2020 $350,000 $113,475 $35,763 $193,860 $— $— $14,588 (1) $707,686

2019 $350,000 $70,000 $— $252,728 $— $— $13,710 (1) $686,438

Dan Hollenbach Chief Financial Officer and Secretary

2020 $275,000 $94,725 $35,763 $124,214 $— $— $10,400 (1) $540,102

2019 $275,000 $55,000 $— $184,766 $— $— $5,710 (1) $520,476

(*) The amounts reflect the dollar amounts recognized for financial statement reporting purposes in accordance with FASB ASC Topic 718.

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Garvey's annual compensation is evaluated annually, but may not be less than $350,000 per year.

Effective December 27, 2020, Ms.

Garvey's annual salary was raised to $425,000.

Garvey is eligible to receive an annual cash bonus based on achieving certain adjusted EBITDA levels (as defined by the Compensation Committee) and, except as stated in her employment agreement, provided that Ms.

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Garvey will receive a bonus equal to 1% of the acquired company’s adjusted EBITDA, as determined by the board, for the first 12 months after the acquisition’s closing date.

The Compensation Committee may also grant discretionary bonuses.

In the event that Ms.

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Garvey also agrees not to compete with us for a period of twelve months after termination.

Garvey was granted stock options and restricted stock in Fiscal 2018 and granted stock options in Fiscal 2017 as further described under “Outstanding Equity Awards” below.

Garvey was granted stock options in Fiscal 2020 and granted stock options and restricted stock in Fiscal 2018 as further described under “Outstanding Equity Awards” below.

Chief Financial Officer

3 unchanged sentences

Hollenbach's annual compensation is evaluated annually, but may not be less than $275,000 per year.

Effective December 27, 2020, Mr.

Hollenbach's annual salary was raised to $320,000.

Hollenbach is eligible to receive an annual cash bonus based on achieving certain adjusted EBITDA levels (as defined by the Compensation Committee) and, except as stated in his employment agreement, provided that Mr.

2 unchanged sentences

Hollenbach will receive a bonus equal to 1% of the acquired company’s adjusted EBITDA, as determined by the board, for the first 12 months after the acquisition’s closing date.

The Compensation Committee may also grant discretionary bonuses.

In the event that Mr.

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Hollenbach also agrees not to compete with us for a period of twelve months after termination.

Hollenbach was granted stock options and restricted stock in Fiscal 2018 and granted stock options in Fiscal 2017 as further described under “Outstanding Equity Awards” below.

Hollenbach was granted stock options in Fiscal 2020 and granted stock options and restricted stock in Fiscal 2018 as further described under “Outstanding Equity Awards” below.

2013 Long-Term Incentive Plan

1 unchanged sentence

Under the original 2013 Plan team members, directors and consultants of the Company may receive incentive stock options and other awards.

A total of 900,000 shares of common stock of BG Staffing, Inc.

A total of 900,000 shares of common stock of BGSF, Inc.

were initially reserved for issuance pursuant to the original 2013 Plan.

On May 16, 2017, stockholders of the Company approved and made effective an amendment to the 2013 Plan to add an additional 250,000 shares of common stock reserved for issuance.

On November 3, 2020 and May 16, 2017, stockholders of the Company approved and made effective amendments to the 2013 Plan, which each added an additional 250,000 shares of common stock reserved for issuance.

To the extent any option or award expires unexercised or is canceled, terminated or forfeited in any manner without the issuance of common stock thereunder, such shares shall again be available for issuance under the original 2013 Plan, of which 1,088,739 shares remain available for issuance as of December 27, 2020.

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333-193014) filed on December 20, 2013, Form S-8 (File No.

333-218869) filed on June 20, 2017, and Note 14 in the Notes to Consolidated Financial Statements.

333-218869) filed on June 20, 2017, Form S-8 (File No.

333-251192) filed on December 8, 2020, and Note 14 in the Notes to Consolidated Financial Statements.

2020 Employee Stock Purchase Plan (“2020 ESPP”)

In November 2020, the board of directors adopted and the shareholders approved the 2020 ESPP.

Under the 2020 ESPP, eligible team members of the Company may elect for payroll deductions to purchase shares on each purchase date during an offering period.

A total of 250,000 shares of common stock of BGSF, Inc.

were initially reserved for issuance pursuant to the 2020 ESPP.

All shares remain available for issuance as of December 27, 2020 and we plan to begin our initial offering period during second quarter 2021.

For more details on our 2020 Plan, see our registration statement on Form S-8 (File No.

333-251193) filed on December 8, 2020, and Note 14 in the Notes to Consolidated Financial Statements.

Outstanding Equity Awards

The following table presents outstanding equity awards as of December 27, 2020.

Option Awards

Number of securities underlying unexercised options (#) exercisable

Number of securities underlying unexercised options (#) unexercisable

Equity incentive plan awards:

Number of securities underlying unexercised unearned options (#)

Option exercise price ($)

Option expiration date

Number of Shares or Units of Stock that Have Not Vested (#)

Market Value of Shares or Units of Stock that Have Not Vested ($)

Name Option Awards Stock Awards

Grant date Number of securities underlying unexercised options (#) exercisable Number of securities underlying unexercised options (#) unexercisable Equity incentive plan awards:

Number of securities underlying unexercised unearned options (#) Option exercise price ($) Option expiration date Number of Shares or Units of Stock that Have Not Vested (#) Market Value of Shares or Units of Stock that Have Not Vested ($)

(a) (b) (c) (d) (e) (f) (g) (h)

Beth Garvey 08/04/2020 1,200 2,400 (1) — $ 9.72 08/04/2030 — —

08/04/2020 — 2,400 (2) — $ 9.72 08/04/2030 — —

09/24/2018 — 6,150 (3) — $ 25.71 09/24/2028 — —

09/24/2018 60,000 33,850 (4) — $ 25.71 09/24/2028 — —

08/10/2018 — — — $ — — 1,250 (11) $ 15,763

06/07/2017 — 2,500 (5) — $ 16.76 06/07/2027 — —

06/07/2017 10,000 — — $ 16.76 06/07/2027 — —

08/16/2016 13,185 — — $ 17.46 08/16/2026 — —

08/16/2016 36,815 — — $ 17.46 08/16/2026 — —

06/09/2015 20,000 — — $ 11.00 06/09/2025 — —

Dan Hollenbach 08/04/2020 900 1,800 (6) — $ 9.72 08/04/2030 — —

08/04/2020 — 1,800 (7) — $ 9.72 08/04/2030 — —

09/24/2018 2,260 6,150 (8) — $ 25.71 09/24/2028 — —

09/24/2018 42,740 23,850 (9) — $ 25.71 09/24/2028 — —

08/10/2018 — — — $ — — 1,250 (11) $ 15,763

06/07/2017 2,500 2,500 (10) — $ 16.76 06/07/2027 — —

06/07/2017 7,500 — — $ 16.76 06/07/2027 — —

10/27/2015 17,012 — — $ 11.07 10/27/2025 — —

10/27/2015 19,835 — — $ 11.07 10/27/2025 — —

(1) Incentive stock options will vest 1,200 on August 4, 2021 and 1,200 on August 4, 2022.

(2) Nonqualified stock options will vest 1,200 on August 4, 2023 and 1,200 on August 4, 2024.

(3) Incentive stock options will vest 2,260 on September 24, 2021 and 3,890 on September 24, 2022.

Nonqualified stock options vested one-fifth on September 24, 2018 and the remainder of the options vest annually at 20,000, 20,000, 17,740, 16,110 beginning September 24, 2019.

(4) Nonqualified stock options will vest 17,740 on September 24, 2021 and 16,110 on September 24, 2022.

(5) Incentive stock options will vest on June 7, 2021.

Nonqualified stock options vested one-fifth on June 7, 2017 and the remainder of the options vest in four equal annual increments beginning on June 7, 2018.

Incentive stock options vested one-fifth on August 16, 2016 and the remainder of the options vest in four equal annual increments beginning on August 16, 2017.

Nonqualified stock options vested one-fifth on August 16, 2016 and the remainder of the options vest in four equal annual increments beginning on August 16, 2017.

Incentive stock options vested one-fifth on June 9, 2015 and the remainder of the options vest in four equal annual increments beginning on June 9, 2016.

Incentive stock options will vest annually at 2,260, 2,260, and 3,890 beginning September 24, 2020.

Nonqualified stock options vested one-fifth on September 24, 2018 and one-fifth on September 24, 2019.

Incentive stock options will vest one-half on June 7, 2020 and the remainder of the options vest on June 7, 2021.

Incentive stock options vested one-fifth on October 27, 2015 and the remainder of the options vest in four equal annual increments beginning on October 27, 2016.

Nonqualified stock options vested one-fifth on October 27, 2015 and the remainder of the options vest in four equal annual increments beginning on October 27, 2016.

Shares vested one-fourth on August 10, 2018 and the remainder of the shares vest in three equal annual increments beginning on August 10, 2019.

(6) Incentive stock options will vest 900 on August 4, 2021 and 900 on August 4, 2022.

(7) Nonqualified stock options will vest 900 on August 4, 2023 and 900 on August 4, 2024.

(8) Incentive stock options will vest 2,260 on September 24, 2021 and 3,890 on September 24, 2022.

(9) Nonqualified stock options will vest 12,740 on September 24, 2021 and 11,110 on September 24, 2022.

(10) Incentive stock options will 2,500 on June 7, 2021.

(11) Shares will vest on August 10, 2021.

Each option and stock award is subject to the condition that the optionee will have remained employed by the Company, or any one or more of its subsidiaries, through such vesting dates, and each option is further subject to the terms and conditions set forth in the 2013 Plan and in the applicable Stock Option Agreement.

Compensation Committee Interlocks and Insider Participation

No member of our Compensation Committee is a current or former officer or team member of BG Staffing, Inc.

No member of our Compensation Committee is a current or former officer or team member of BGSF, Inc.

or its subsidiaries.

No executive officer of BG Staffing, Inc.

No executive officer of BGSF, Inc.

served as a director or member of the compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or Compensation Committee.

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We reimburse each member of our board of directors for all reasonable out-of-pocket expenses incurred in connection with their attendance at meetings of our board of directors and any committees thereof, including, without limitation, reasonable travel, lodging and meal expenses.

Prior to July 2019, each director who was not also a team member or officer of the Company was also entitled to (i) an annual retainer of $27,500 for their service on our board of directors, (ii) an annual retainer of $5,000 for each committee on which the director served, and (iii) an annual retainer of $30,000 for audit and $15,000 for all other committee chairs on which the director served.

Effective July 2019, each director who is not also a team member or officer of the Company is also entitled to (i) an annual retainer of $45,000 for their service on our board of directors, and (ii) an annual retainer of $5,000 for all committee chairs on which the director serves.

Audit Committee ($)

Compensation Committee

Nominating & Governance Committee ($)

Chairman of the Board

Each director who is not a team member or officer of the Company is entitled to (i) an annual retainer of $45,000 for their service on our board of directors, and (ii) an annual retainer of $5,000 for audit committee service.

Name Board Member

($) Audit Committee ($) Compensation Committee

($) Nominating & Governance Committee ($) Chairman of the Board

David Allen, Jr.

$ 45,000 $ 5,000 $ — $ — $ — $ 50,000

Allen Baker, Jr.

$ 45,000 $ — $ — $ — $ — $ 45,000

$ 45,000 $ 5,000 $ — $ — $ — $ 50,000

Hailey $ 45,000 $ 5,000 $ — $ — $ — $ 50,000

Cynthia Marshall * $ 22,500 $ — $ — $ — $ — $ 22,500

Seid $ 45,000 $ — $ — $ — $ — $ 45,000

Marshall began service as a director in July 2020.

Director Compensation for Fiscal 2020

The table below sets forth the compensation payable to our non-management directors for service during Fiscal 2020.

Fees earned or paid in cash

Name Fees earned or paid in cash

($) Stock awards

Option awards

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David Allen, Jr.

$ 50,000 $ 46,270 $ 4,032 $ — $ — $ — $ 100,302

Allen Baker, Jr.

$ 45,000 $ 10,507 $ 4,032 $ — $ — $ — $ 59,539

$ 50,000 $ 46,270 $ 4,032 $ — $ — $ — $ 100,302

Hailey $ 50,000 $ 46,270 $ 4,032 $ — $ — $ — $ 100,302

Cynthia Marshall $ 22,500 $ 10,507 $ 952 $ — $ — $ — $ 33,959

Seid $ 45,000 $ 46,270 $ 4,032 $ — $ — $ — $ 95,302

* The amounts reflect the dollar amounts recognized for financial statement reporting purposes in accordance with FASB ASC Topic 718.

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth information regarding the beneficial ownership of our common stock as of February 5, 2020 by:

The following table sets forth information regarding the beneficial ownership of our common stock as of January 15, 2021 by:

• each person, or group of affiliated persons, known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

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• all our executive officers and directors as a group.

Each stockholder’s percentage ownership is based on 10,309,236 shares of common stock outstanding as of February 5, 2020 .

Each stockholder’s percentage ownership is based on 10,328,379 shares of common stock outstanding as of January 15, 2021.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities.

Except as otherwise indicated, each person or entity named in the table has sole voting and investment power with respect to all shares of our capital shown as beneficially owned, subject to applicable community property laws.

The number and percentage of shares beneficially owned by a person includes shares that may be acquired by such person within 60 days of February 5, 2020 through the exercise of vested options or warrants, while these shares are not counted as outstanding for computing the percentage ownership of any other person.

Except as otherwise set forth below, the address of the persons below is c/o BG Staffing, Inc., 5850 Granite Parkway, Suite 730, Plano, Texas 75024 .

Name of Beneficial Owner

The number and percentage of shares beneficially owned by a person includes shares that may be acquired by such person within 60 days of January 15, 2021 through the exercise of vested options or warrants, while these shares are not counted as outstanding for computing the percentage ownership of any other person.

Except as otherwise set forth below, the address of the persons below is c/o BGSF, Inc., 5850 Granite Parkway, Suite 730, Plano, Texas 75024.

Name of Beneficial Owner Shares of

Stock Owned Percent of

Dan Hollenbach 97,597 (1)

Allen Baker, Jr.

David Allen, Jr.

Allen Baker, Jr.

Hailey 98,348 (6)

Cynthia Marshall 4,016 (7)

Seid 64,723 (8)

All executive officers and directors as a group (8 total) 584,254 2.8 %

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(2) Includes 1,412 shares of common stock issuable upon exercise of stock options and 4,893 shares of unvested restricted common stock.

Shares of common stock held by a trust.

Includes 23,748 and 1,613 shares of common stock issuable upon exercise of stock options and warrants, respectively, and 2,500 shares of unvested restricted common stock.

(3) Includes 55,785 shares of common stock held by a trust, 1,412 shares of common stock issuable upon exercise of stock options, and 3,643 shares of unvested restricted common stock.

(4) Includes 13,662 shares of common stock issuable upon exercise of stock options, 44,544 shares of common stock held by a private investment company controlled by Mr.

Baum, 5,388 shares of common stock held by a family trust and 4,893 shares of unvested restricted common stock.

Includes 2,500 shares of unvested restricted common stock.

(5) Includes 141,200 shares of common stock issuable upon exercise of stock options and 1,250 shares of unvested restricted common stock.

Includes 21,540 shares of common stock issuable upon exercise of warrants to purchase shares of common stock, and 12,204 shares of common stock held by Mr.

Taglich as custodian for third parties.

Includes 18,020 shares of common stock issuable upon exercise of warrants to purchase shares of common stock.

The address of Michael N.

Taglich and Robert F.

Taglich is c/o Taglich Brothers, Inc., 790 New York Avenue, Suite 209, Huntington, New York 11743.

(6) Includes 25,160 and 1,613 shares of common stock issuable upon exercise of stock options and warrants, respectively, and 4,893 shares of unvested restricted common stock.

(7) Includes 412 shares of common stock issuable upon exercise of stock options and 3,643 shares of unvested restricted common stock.

(8) Includes 13,662 shares of common stock issuable upon exercise of stock options and 4,893 shares of unvested restricted common stock.

(9) The address of BlackRock, Inc.

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The Company used a portion of the net proceeds received from the sale of the common stock to cancel outstanding in-the-money stock options held by L.

Allen Baker, Jr., BG Staffing's President and Chief Executive Officer, as further described below.

Allen Baker, Jr., BGSF's President and Chief Executive Officer, as further described below.

Stock Option Cancellation

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Audit Fees (1)

$ 298,487 $ 266,992

Audit-Related Fees (2)

48,435 71,300

All Other Fees

$ 346,922 $ 338,292

(1) Audit fees consist principally of fees for the audit of our consolidated financial statements and Sarbanes-Oxley audit over internal controls, review of our interim consolidated financial statements, and audit services related to our acquisitions.

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Department of Labor filings.

The Audit Committee appointed Whitley Penn LLP as our independent registered public accounting firm for Fiscal 2020 and Whitley Penn LLP has served in this capacity since 2013.

The Audit Committee appointed Whitley Penn LLP as our independent registered public accounting firm for the 2021 fiscal year and Whitley Penn LLP has served in this capacity since 2013.

Our board of directors has further directed that we submit the selection of our independent registered public accounting firm for ratification by our shareholders at the 2021 annual meeting.

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The following consolidated financial statements of the Company and the report of the Independent Registered Public Accounting Firm are contained in Item 8 of Part II of this Annual Report on Form 10-K as indicated:

Audited Consolidated Financial Statements of BG Staffing, Inc.

Audited Consolidated Financial Statements of BGSF, Inc.

As of and for the Fiscal Years Ended December 27, 2020, December 29, 2019, and December 30, 2018.

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Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Changes in Stockholders' Equity

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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 on March 11, 2021.

BG STAFFING, INC.

/s/ Beth Garvey

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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 indicated on March 11, 2021.

/s/ Beth Garvey

President and Chief Executive Officer

(Principal Executive Officer)

/s/ Dan Hollenbach

Chief Financial Officer and Secretary

Dan Hollenbach

(Principal Financial and Accounting Officer)

/s/ Beth Garvey President and Chief Executive Officer and Director

Beth Garvey (Principal Executive Officer)

/s/ Dan Hollenbach Chief Financial Officer and Secretary

Dan Hollenbach (Principal Financial and Accounting Officer)

David Allen, Jr.

Allen Baker, Jr.

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Allen Baker, Jr.

/s/ Douglas E.

/s/ Richard L.

David Allen, Jr.

/s/ Douglas E.

Hailey Director

/s/ Cynthia Marshall Director

Cynthia Marshall

Seid Director

EXHIBIT INDEX

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2.10 Securities Purchase Agreement, dated as of February 3, 2020, by and between BG Staffing, LLC, EdgeRock Technology Holdings, Inc., and CDI Holding Company LLC (incorporated by reference from the registrant’s Current Report on Form 8-K filed on February 6, 2020)

2.11 Asset Purchase Agreement, dated as of February 8, 2021, between BG Staffing, LLC, Momentum Solutionz LLC, Lorne Kaufman, and Jeff Servidio (incorporated by reference from the registrant’s Current Report on Form 8-K filed on February 11, 2021)

3.1 Certificate of Incorporation of BG Staffing, Inc.

2 unchanged sentences

333-191683) filed on November 4, 2013)

3.2 Certificate of Amendment to Certificate of Incorporation of BGSF, Inc.

(incorporated by reference from the registrant ’ s Current Report on Form 8-K filed on February 12, 2021)

3.3 Bylaws of BG Staffing, Inc.

5 unchanged sentences

333-191683) filed on October 28, 2013)

Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended

4.2 Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference from the registrant ’ s Form 10-K filed on March 12, 2020 )

10.1** BG Staffing, Inc.

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10.16 Credit Agreement, dated as of July 16, 2019, among BG Staffing, Inc., as borrower, the lenders from time to time party there to, and BMO Harris Bank, National Association, as administrative agent, letters of credit issuer, swing line lender, sole lead arranger, and sole book runner (incorporated by reference from the registrant’s Current Report on Form 8-K filed on July 22, 2019)

10.17** BG Staffing, Inc.

2020 Employee Stock Purchase Plan (incorporated by reference from the registrant’s definitive proxy statement on Schedule 14A filed on September 15, 2020)

21.1* List of Subsidiaries of the Registrant

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document.

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

101.INS* XBRL Instance Document

101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

104.0 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101document)

* Filed herewith.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures