What changed in this filing

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Item 9A. Controls and Procedures

2020-12-29 compared with 2019-12-23 · 220 added, 158 removed, 655 unchanged (37% of the section changed)

31 unchanged sentences

Senior Vice President and Chief Financial Officer

Laffer (1)(2)(3)

Tanous (1)(2)

Moore (1)(2)(3)

William Isaac (1)(3)

Matthew Gormly (1)

Thomas Vetrano (2)

Member of the Audit Committee.

26 unchanged sentences

Kim Thorpe, Senior Vice President and Chief Financial Officer

Thorpe joined the Company as the Vice President-Finance on May 1, 2018 and was appointed as the Company’s Senior Vice President and Chief Financial Officer effective June 15, 2018.

Thorpe joined the Company as the Vice President of Finance on May 1, 2018 and was appointed as the Company’s Senior Vice President and Chief Financial Officer effective June 15, 2018.

Since February 2013, Mr.

39 unchanged sentences

Isaac is involved with several charitable and not for profit organizations including current and past service on the OSU Foundation Board, member of the OSU “Presidents Club”, former Trustee of the Miami University Foundation Board and a member the University’s “Business Advisory Council”, Goodwill Industries and the Community Foundation of Sarasota, Fl.

Laffer – Director

Laffer joined the Company as a director in January 2015.

Arthur Laffer is the founder and chairman of Laffer Associates, an economic research and consulting firm.

A former member of President Reagan’s Economic Policy Advisory Board during the 1980s, Dr.

Laffer’s economic acumen and influence have earned him the distinction in many publications as “The Father of Supply-Side Economics”.

He has served on several boards of directors of public and private companies, including MPS Group, Inc.

Laffer previously served as a consultant to Secretary of the Treasury William Simon, Secretary of Defense Donald Rumsfeld, and Secretary of the Treasury George Shultz.

In the early 1970s, Dr.

Laffer was the first to hold the title of Chief Economist at the Office of Management and Budget (OMB) under Mr.

Additionally, Dr.

Laffer was formerly the Distinguished University Professor at Pepperdine University and a member of the Pepperdine Board of Directors.

He also served as Charles B.

Thornton Professor of Business Economics at the University of Southern California and as Associate Professor of Business Economics at the University of Chicago.

Laffer is credited with advancing the concept of supply-side economics and is best remembered from the time he drew a curve on the back of a napkin at a dinner meeting, showing how government tax receipts can sometimes increase when federal income tax rates are lowered.

The “Laffer Curve,” which it subsequently became known as, and supply–side economics served as the foundation for Reaganomics in the 1980s when Dr.

Laffer served on the President’s Economic Policy Advisory Board from 1981 to 1989.

Laffer has been recognized for his achievements in economics, including having been featured in Time Magazine’s 1999 cover story, “The Century’s Greatest Minds”, for inventing the Laffer Curve, which Time deemed “one of a few of the advances that powered this extraordinary century”.

Bloomberg BusinessWeek recently featured the Laffer Curve as part of “The 85 Most Disruptive Ideas in Our History”.

A video is available on its website which features a re-creation of the famous drawing of the Laffer Curve with Donald Rumsfeld and Dick Cheney.

Laffer has received multiple awards for his economic work, including most recently, the Presidential Medal of Freedom from President Donald Trump.

In addition, Dr.

Laffer has been awarded two Graham and Dodd Awards from the Financial Analyst Federation;

the Distinguished Service Award by the National Association of Investment Clubs;

the Adam Smith Award for his insights and contributions to the Wealth of Nations;

and the Daniel Webster Award for public speaking by the International Platform Association.

Laffer received a B.A.

in economics from Yale University and an MBA and Ph.D.

in economics from Stanford University.

Darla Moore – Director

4 unchanged sentences

Moore is also the founder and chair of the Charleston Parks Conservancy, a foundation focused on enhancing the parks and public spaces of the City of Charleston.

Moore is the first woman to be profiled on the cover of Fortune magazine and named to the list of the Top 50 Most Powerful Women in American Business.

Moore is the first woman to be profiled on the cover of Fortune magazine and has been named to the list of the Top 50 Most Powerful Women in American Business.

Moore has served on numerous corporate and philanthropic boards, including Hospital Corporation of America (HCA), Martha Stewart Living Omnimedia, The South Financial Group, MPS Group, the National Advisory Board of JP Morgan, the National Teach for America Board of Directors, the Board of Trustees of the New York University Medical School and Hospital and the University of South Carolina Board of Trustees.

Moore was formerly a managing director of the predecessor Chemical Bank (now a part of JP Morgan Chase) and currently serves on the Culture Shed Board.

Moore was formerly a managing director of Chemical Bank (now a part of JP Morgan Chase) and currently serves on the Culture Shed Board.

The University of South Carolina’s business school is named in her honor, the first business school in America named for a woman.

Moore received the Business Person of the Year Award from the South Carolina Chamber of Commerce and was inducted into the South Carolina Business Hall of Fame.

Moore is a recipient of the Business Person of the Year Award from the South Carolina Chamber of Commerce and was inducted into the South Carolina Business Hall of Fame.

Currently, she serves as Chairman of the Darla Moore and Richard Rainwater Foundation.

A graduate of the University of South Carolina, Ms.

Moore holds an M.B.A.

Moore is a graduate of the University of South Carolina and holds an M.B.A.

from George Washington University.

13 unchanged sentences

His most recent book, Debt, Deficits and the Demise of the American Economy , co-authored with Jeff Cox, finance editor at CNBC, was published by Wiley in May 2011.

In addition to Georgetown University, Tanous serves on several investment committees including:

In addition to Georgetown University, Tanous serves on several investment committees including St.

Jude Children’s Research Hospital and Lebanese American University.

Tanous’ experience as a director on corporate boards is extensive.

At MPS Group (“MPS”), he served as chairman of the audit committee and on several other committees over many years.

He gained significant staffing industry knowledge and experience as MPS was one of the largest companies in the U.S.

in the field of professional staffing with specialization in accounting, engineering, health care and legal services including a significant concentration on information technology delivered through its “Modis” brand.

Tanous served on the board of Cedars Bank, Los Angeles, a California state commercial bank with branches in Orange County and San Francisco, and as a director at Worldcare Ltd., Cambridge, Mass, a company in the field of health care services and telemedicine diagnostics.

Tanous’ experience as a corporate director also includes having served on the board of directors of MPS Group.

At MPS Group, he served as chairman of the audit committee and on several other committees over many years where he gained significant staffing industry knowledge and experience as MPS was one of the largest staffing organizations in the U.S.

Tanous has also served on the board of Cedars Bank, Los Angeles, a California state commercial bank with branches in Orange County and San Francisco, and as a director at Worldcare Ltd., Cambridge, Mass, a company in the field of health care services and telemedicine diagnostics.

Carl Camden – Director

Camden joined the Company as a director in March 2020.

He is the former President and Chief Executive Officer and a former director of global staffing giant Kelly Services® (NASDAQ:

KELYA, KELYB) (“Kelly”) and served in these roles from February 2006 to May 2017.

Camden is a recognized leader in the use of contingent on-demand labor, talent management, and the concept of how companies can adapt and succeed in the “gig economy”.

He is currently President of IPSE – The Association of Independent Professionals and the Self-Employed.

Camden serves on the Board of Trustees of The Conference Board and is Co-Chair of the Policy and Impact Committee for the Committee for Economic Development.

He also serves on the Board of Directors of TopBuild, a leading installer and distributor of insulation products in the U.S.

construction industry.

Previously, Mr.

Camden has served on the Board of Directors for a regional branch of the Federal Reserve Bank of Chicago, the Labor Advisory Council for the Federal Reserve Bank, the Advisory Committee on Employee Welfare and Pension Benefits (ERISA Advisory Council), and the Board of Visitors of Duke University Fuqua School of Business.

He is also a former member of the Board of Trustees for the University of Detroit Mercy, the Detroit Medical Center Board, and the Detroit Chamber Board.

Camden has served on the American Staffing Association’s Board of Directors and received awards from international workforce agencies for his significant contributions to improving the workforce development system.

He has been featured in Business Week, the New York Times, Bloomberg, CNBC, and numerous other media on topics ranging from labor force dynamics to healthcare reform.

Camden has a bachelor’s degree and a PhD.

Matthew Gormly – Director

Gormly joined the Company as a director in March 2020.

He is a Founder and Managing Partner of Reynolds Gormly & Co., LLC (“Reynolds Gormly”), where he is responsible for origination and capital market opportunities and the firm’s general management.

Prior to Reynolds Gormly, Mr.

Gormly played a leadership role in the growth and evolution of Wicks Capital Partners (“Wicks”), as a Managing Partner for seventeen years before departing the firm in 2016.

At Wicks, Mr.

Gormly focused his energy on originating, acquiring, managing, growing, and divesting its portfolio of control buyout investments.

Gormly has extensive experience in all aspects of the investment process including developing investment theses, origination, acquisitions, strategic planning, and divestitures.

Additionally, Mr.

Gormly was responsible for originating new investments, arranging financing for transactions, and managing those investments through the sale processes.

Gormly has been on the board of directors of over 25 companies, spanning a 30-year period, and has been responsible for over $1.5 billion in financings for acquisitions, leveraged recapitalizations, and re-financings over the course of his career.

Gormly holds a B.A.

and an M.B.A.

Thomas Vetrano – Director

Vetrano joined the Company as a Director in March 2020.

From 2004 through 2014, Mr.

Vetrano served as Principal, Chief Operating Officer, and Secretary of ENVIRON Holdings, Inc.

Under his executive leadership ENVIRON tripled revenues to over $300 million and grew from 300 employees in the US and UK to over 1,600 employees in 25 countries, with consistent top-quartile industry growth and profitability.

After leading the sale of ENVIRON to Ramboll in 2014, Mr.

Vetrano served as President and Managing Director of Ramboll Environment and Health (“REH”), one of the ten largest global environmental and health consultancies.

Vetrano was responsible for all REH global operations, including financial performance;

finance and accounting;

strategic planning;

risk management;

human resources;

information technology;

marketing and communications;

sustainability, equality, diversity, and inclusion;

and employee health, safety and security.

Vetrano has over 35 years of international business experience assisting corporations, private equity, financial institutions, and their legal counsel in identifying and resolving complex environmental, health, safety, and sustainability (“EHSS”) issues.

He has directed EHSS due diligence in support of over 500 global transactions across a wide range of industries and sectors, served as Chairman or speaker at over 50 professional, technical and industry conferences and seminars, and authored/co-authored numerous publications on EHSS issues.

Vetrano served as a Director for ENVIRON and REH from 2000 through 2019 and is currently also a Director for several privately-held companies and charitable organizations.

During his Board tenures, Mr.

Vetrano has chaired or served on Ethics, Equity, Executive Compensation, Finance, Governance and Valuation Committees.

Vetrano holds a bachelor’s degree and a master’s degree.

Bajalia – Former President and Director

6 unchanged sentences

in Accounting from Florida State University, was a licensed CPA and real estate broker, and was a member of several professional associations.

Ronald Smith – Former Director

Smith served as a director from August 16, 2017 until his resignation from the Board effective July 25, 2019.

Smith co-founded SNI and was the Chairman and CEO until March 31, 2017.

Smith is a seasoned staffing executive with over 40 years’ experience in the industry.

Smith previously worked for a large international staffing and recruiting firm where he ultimately owned six franchises.

After selling his franchises to a large international staffing and recruiting firm in 1988, Smith was promoted to Regional Manager and integrated 20 locations for a large international staffing and recruiting firm.

All executive officers are elected annually by the Board of Directors at the first meeting of the Board of Directors held following each Annual Meeting of Shareholders, and they hold office until their successors are elected and qualified.

There are no family relationships among any of the directors or executive officers of the Company.

Laffer – Former Director

Laffer served as a director from January 2015 until his resignation from the Board effective March 30, 2020.

Laffer is well known throughout the U.S.

and abroad as expert economist and for his famous “Laffer Curve” which continues to be included in economic curriculums today.

He has served as an key economic advisor to several U.S.

presidents and received multiple awards for his work and contributions to our society, including most recently, the Presidential Medal of Freedom from President Donald Trump.

In addition, Dr.

Laffer has been awarded two Graham and Dodd Awards from the Financial Analyst Federation;

the Distinguished Service Award by the National Association of Investment Clubs;

the Adam Smith Award for his insights and contributions to the Wealth of Nations;

and the Daniel Webster Award for public speaking by the International Platform Association.

Laffer received a B.A.

in economics from Yale University and an MBA and Ph.D.

in economics from Stanford University.

Section 16(a) Beneficial Ownership Reporting Compliance

1 unchanged sentence

Such entities are also required by SEC regulations to furnish the Company with copies of all such Section 16(a) reports.

To our knowledge, based solely on a review of the copies of such reports furnished to us regarding the filing of required reports, we believe that all Section 16(a) reports applicable to our directors, executive officers and greater-than-ten-percent beneficial owners with respect to fiscal 2019 were timely filed.

To our knowledge, based solely on a review of the copies of such reports furnished to us regarding the filing of required reports, we believe that all Section 16(a) reports applicable to our directors, executive officers, and greater-than-ten-percent beneficial owners with respect to fiscal 2020 were filed.

Board of Directors Leadership Structure and Role in Risk Oversight

10 unchanged sentences

It receives reports from Mr.

Bajalia and other members of senior management on a periodic basis on areas of risk facing the Company.

Thorpe, and other members of senior management on a periodic basis on areas of risk facing the Company.

In addition, Board of Directors committees oversee specific elements of risk or potential risk.

2 unchanged sentences

Dewan, is an independent director under the listing standards of the NYSE American.

In addition, the Board of Directors has determined that each current member of the Audit Committee meets the additional independence criteria required for audit committee membership under the listing standards of the NYSE American and Rule 10A-3 of the Exchange Act and possesses the experience and expertise required to be considered a “financial expert” as defined under the Sarbanes-Oxley Act.

Board of Directors and Committee Meetings

The Board of Directors meets on a regularly scheduled basis to review significant developments affecting the Company and to act on matters requiring Board of Directors approval.

It also holds special meetings when an important matter requires Board of Directors action between scheduled meetings.

The Board of Directors held seven meetings and executed four unanimous consents in lieu of meetings during fiscal 2019.

It also holds special meetings when an important matter requires Board of Directors action or attention between scheduled meetings.

The Board of Directors held eight meetings and executed one unanimous consent in lieu of meetings during fiscal 2020.

No director of the Company attended less than 75% of the total meetings of the Board of Directors and Committees on which such Board of Directors members served during this period.

The members of the Board of Directors are expected to attend the Company’s Annual Meeting of Shareholders.

There are three standing committees of the Board of Directors, which are the Nominating Committee, the Audit Committee and the Compensation Committee.

There are five standing committees of the Board of Directors, which are the Nominating Committee, the Audit Committee, the Corporate Governance Committee, the Mergers and Acquisitions Committee, and the Compensation Committee.

Nominating Committee

4 unchanged sentences

In addition, qualified candidates for director are those who, in the judgment of the Nominating Committee, have significant decision-making responsibility, with business, legal or academic experience.

The Nominating Committee will consider recommendations for Board of Directors candidates that are received from various sources, including directors and officers of the Company, other business associates and shareholders, and all candidates will be considered on an equal basis, regardless of source.

Shareholders may contact the Nominating Committee to make such recommendations by writing in care of the Secretary of the Company, at 7751 Belfort Road, Suite 150, Jacksonville, FL 32256.

Submissions must be in accordance with the Company’s By-Laws and include:

(a) a statement that the writer is a shareholder and is proposing a candidate for consideration by the Nominating Committee;

(b) the name, address and number of shares beneficially owned by the shareholder;

(d) a description of the qualifications and business experience of the candidate;

(e) a statement detailing any relationships between the candidate and the Company and any relationships or understandings between the candidate and the proposing shareholder;

and (f) the written consent of the candidate that the candidate is willing to serve as a director if nominated and elected.

(a) a statement that the writer is a shareholder and is proposing a candidate for consideration by the Nominating Committee, (b) the name, address and number of shares beneficially owned by the shareholder, (c) the name, address and contact information of the candidate being recommended, (d) a description of the qualifications and business experience of the candidate, (e) a statement detailing any relationships between the candidate and the Company and any relationships or understandings between the candidate and the proposing shareholder, and (f) the written consent of the candidate that the candidate is willing to serve as a director if nominated and elected.

The Nominating Committee is presently composed of three non-employee, independent directors:

Darla Moore (Chairwoman), Dr.

Laffer, and William Issac.

Darla Moore (Chairwoman), Peter Tanous, and William Isaac.

Arthur Laffer resigned as a member of the Board of Directors of the Company in March 2020 and, as a result, ceased to be a member of the Nominating Committee.

The Board of Directors has adopted a written charter for the Nominating Committee.

4 unchanged sentences

In addition, the Audit Committee reviews and approves the scope of the annual audit of the Company’s books, reviews the findings and recommendations of the independent registered public accounting firm at the completion of their audit, and approves annual audit fees and the selection of an auditing firm.

The Audit Committee also considers the relationships among the independent auditors.

management and board members to ascertain the audit firm’s independence from management and board members.

The Audit Committee met five times and executed one unanimous consent during fiscal 2020.

The Audit Committee is presently composed of four non-employee, independent directors:

Tanous (Chairman), Dr.

Laffer, Darla Moore and William M.

Tanous (Chairman), Darla Moore, Matthew Gormly, and William M.

Arthur Laffer resigned as a member of the Board of Directors of the Company in March 2020 and, as a result, ceased to be a member of the Audit Committee.

The Board of Directors has determined that Ms.

Tanous and Mr.

Isaac are each considered an “audit committee financial expert” as defined by rules of the SEC.

Isaac are each considered an “financial expert” as defined by the Sarbanes-Oxley Act.

The Board of Directors has determined that each audit committee financial expert meets the additional independence criteria required under the listing standards of the NYSE American and Rule 10A-3 of the Exchange Act.

14 unchanged sentences

The Compensation Committee is presently composed of three non-employee, independent directors:

Laffer (Chairman), Peter Tanous and Darla Moore.

Thomas Vetrano, Peter Tanous and Darla Moore.

Laffer resigned as a member of the Board of Directors of the Company in March 2020 and, as a result, ceased to be a member of the Compensation Committee.

Effective March 2020, Thomas Vetrano was appointed to the Compensation Committee and assumed the role as its in-coming Chairman.

The Board of Directors has adopted a written charter for the Compensation Committee.

1 unchanged sentence

A copy the Compensation Committee Charter was attached as an appendix to the proxy statement prepared in connection with the January 28, 2010, Annual Meeting of Shareholders.

The Compensation Committee met once during fiscal 2020.

Mergers and Acquisition Committee

The Mergers and Acquisition Committee has the responsibility for evaluating acquisitions and the necessary financing to complete the acquisitions that are determined by management to meet the minimum criteria for evaluation.

The Mergers and Acquisitions Committee has the responsibility to keep the entire board informed of managements acquisitions and only after the Committee has determined an acquisition qualifies is the acquisition presented to the entire board for approval.

The Mergers and Acquisitions Committee has the responsibility to keep the entire board informed of the Company’s acquisitions and only after the Committee has determined an acquisition qualifies is the acquisition presented to the entire board for approval.

The Mergers and Acquisition Committee has the authority to retain compensation consultants, but has not done so.

The Mergers and Acquisition Committee did not meet during fiscal 2020.

The Mergers and Acquisition Committee is presently composed of one employee and two non-employee, independent directors:

Dewan (Chairman), Dr.

Laffer, and William M.

The Mergers and Acquisition Committee is presently composed of one employee and one non-employee, independent director:

Dewan (Chairman) and William M.

Arthur Laffer resigned as a member of the Board of Directors of the Company in March 2020 and, as a result, ceased to be a member of the Mergers and Acquisition Committee.

Shareholder Communications

17 unchanged sentences

Summary Compensation Table

Principal Position

Name and Principal Position

Stock Awards ($)

Option Awards ($)

6 unchanged sentences

George Bajalia (2)

Former President

Kim Thorpe (3)

Chief Financial Officer and

Senior Vice President-Finance

Andrew Norstrud (4)

Financial Officer and Treasurer

_____________ (1) Mr.

Chief Financial Officer and Senior Vice President

_____________

Stuckey was appointed as Chief Administrative Officer on April 10, 2017.

2 unchanged sentences

Thorpe was appointed as Chief Financial Officer and Senior Vice President on June 15, 2018.

Norstrud served as Chief Financial Officer and Treasurer from April 1, 2015 until his resignation effective June 15, 2018.

Employment and Change in Control Agreements

6 unchanged sentences

The Dewan Employment Agreement contains standard termination, change of control, non-compete and confidentiality provisions.

On June 15, 2018, the Company granted 600,000 restricted shares of common stock to Mr.

The restricted shares are to be earned over a three-year period and cliff vest at the end of the third year from the date of grant.

George Bajalia, Former President and Director:

25 unchanged sentences

On August 21, 2019, the Company granted 100,000 restricted shares of common stock to Mr.

On August 12, 2020, Mr.

Thorpe employment agreement was amended to increase his base salary to $250,000 per year.

Separately, Mr.

Thorpe also was granted 300,000 restricted shares of common stock.

The restricted shares are to be earned over a three-year period and cliff vest at the end of the third year from the date of grant.

2 unchanged sentences

Stuckey entered into a written employment agreement with respect to Mr.

Stuckey’s service as Chief Administrative Officer of the Company (the “Stuckey Employment Agreement”).The Company and Mr.

Stuckey’s service as Chief Administrative Officer of the Company (the “Stuckey Employment Agreement”).

The Company and Mr.

Stuckey agreed to an initial term of five years and that Mr.

10 unchanged sentences

The methods and assumptions used to determine the fair value of stock options granted are disclosed in Note 11 in the notes to consolidated financial statements contained elsewhere herein.

All stock options awarded to the named executive officers during fiscal 2019 and 2018 were at option prices that were equal to the market price on the date of grant, had vesting dates five years or less after the date of grant, and had expiration dates ten years after the date of grant.

All stock options awarded to the named executive officers or others during fiscal 2020 were at option prices that were equal to the market price on the date of grant, had vesting dates five years or less after the date of grant, and had expiration dates ten years after the date of grant.

Outstanding Equity Awards at Fiscal Year-End

16 unchanged sentences

Market of Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested $

Chief Executive Officer

George Bajalia,

Former President and Director

Alex Stuckey,

Chief Administrative Officer

Chief Financial Officer

and Senior Vice President-Finance

Derek Dewan, Chief Executive Officer

Alex Stuckey, Chief Administrative Officer

Kim Thorpe, Chief Financial Officer and Senior Vice President

Retirement Benefits

3 unchanged sentences

Compensation of Directors

Under the Company’s standard compensation arrangements that were in effect during fiscal 2015, each non-employee director received a monthly retainer of $2,000.

This was discontinued as of April 18, 2015 and the members of the Board of Directors have only received stock options for their services as board members.

Beginning July 2020, members of the Board of Directors are paid cash compensation each quarter in the amount of $5,000 for their attendance/participation.

Also, non-executive Committee Chairpersons receive an additional $1,000 per quarter for their committee meeting.

Employees serving as directors of the Company did not receive any additional compensation for service on the Board of Directors.

1 unchanged sentence

Director Compensation

or Paid in Cash

Fees Earned or

Paid in Cash ($)

Stock Awards ($)

Matthew Gormly

Thomas Vetrano

Option Awards

9 unchanged sentences

Name and Address of Beneficial Owner, Directors and Executive Officers

Amount and Nature

of Beneficial

Derek Dewan 443,266

Smith 5,464,369

Arthur Laffer 394,140

Darla Moore 167,030

Peter Tanous 302,280

Beneficial Ownership

William Isaac

Bajalia 568,571

Alex Stuckey 1,869,320

Kim Thorpe 118,020

Current directors and executive officers as a group (9 individuals) 9,657,776

5% or Greater Holders

Dewan as Trustee of the Derek E.

Dewan Irrevocable Living Trust II dated the 27th of July, 2010 861,082

1,566,624 (6)

Matthew Gormly

Thomas Vetrano

Current directors and executive officers as a group (9 individuals)

Represents less than 1%.

Based on 13,089,703 shares issued and outstanding as of December 20, 2019.

Based on 17,667,123 Common Stock issued and outstanding as of December 28, 2020.

Represents (i) 400,000 shares of Common Stock and (ii) 38,636 shares issuable upon the exercise of warrants that are exercisable within 60 days.

Does not include 600,000 shares of restricted Common Stock that are subject to cliff vesting on June 15, 2021.

Represents (i) 250,000 shares of Common Stock, (ii) 4,184,169 shares of Series B Convertible Preferred Stock, which can be converted into 4,184,169 shares of common stock within 60 days (iii) 30,200 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 30,200 shares of common stock within 60 days, and (iv) $1,000,000 aggregate principal amount of 8% Notes, which can be converted into 1,000,000 shares of Series C 8% Cumulative Convertible Preferred Stock, which can be converted into 1,000,000 shares of common stock within 60 days.

Represents (i) 90,860 shares of Common Stock, (ii) 148,750 shares issuable upon the exercise of options that are exercisable within 60 days, (iii) 4,530 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 4,530 shares of common stock within 60 days, and (iv) $150,000 aggregate principal amount of 8% Notes, which can be converted into 150,000 shares of Series C 8% Cumulative Convertible Preferred Stock, which can be converted into 150,000 shares of common stock within 60 days.

Does not include 31,250 shares of common stock issuable upon the exercise of stock options that are not exercisable within 60 days and 50,000 shares of restricted common stock that cliff vest on August 20, 2022.

Includes (i) 12,500 shares issuable upon the exercise of options that are exercisable within 60 days (ii) 4,530 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 4,530 shares of common stock within 60 days, and (iii) $150,000 aggregate principal amount of 8% Notes which can be converted into 150,000 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 150,000 shares of common stock within 60 days.

Does not include 12,500 shares of common stock issuable upon the exercise of stock options that are not exercisable within 60 days and 50,000 shares of restricted common stock that cliff vest on August 20, 2022.

Represents (i) 4,000 shares of Common Stock, (ii) 143,750 shares issuable upon the exercise of stock options that are exercisable within 60 day (iii) 4,530 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 4,530 shares of common stock within 60 days and (iv) $150,000 aggregate principal amount of 8% Notes which can be converted into 150,000 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 150,000 shares of common stock within 60 days.

Represents (i) 30,000 shares of Common Stock (ii) 146,250 shares issuable upon the exercise of stock options that are exercisable within 60 days (iii) 4,530 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 4,530 shares of common stock within 60 days and (iv) $150,000 aggregate principal amount of 8% Notes which can be converted into 150,000 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 150,000 shares of common stock within 60 days.

Represents (i) 528,571 shares of Common Stock including 500,000 shares of restricted common stock that vested on November 23, 2019 upon Mr.

Bajalia’s passing, and (ii) 40,000 shares issuable upon the exercise of stock options that are exercisable within 60 days.

Represents (i) 1,727,664 shares of common stock, (ii) 38,636 shares issuable upon the exercise of warrants that are exercisable within 60 days, (iii) 3,020 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 3,030 shares of common stock within 60 days, and (iv) $100,000 aggregate principal amount of 8% Notes which can be converted into 100,000 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 100,000 shares of common stock within 60 days.

Represents (i) 15,000 shares issuable upon the exercise of options that are exercisable within 60 days, (ii) 3,020 shares of Series C 8% Cumulative Convertible Preferred Stock beneficially owned through FRUS Capital LLC which can be converted into 3,020 shares of common stock within 60 days, and (iii) $100,000 aggregate principal amount of 8% Notes owned by FRUS Capital LLC which can be converted into 100,000 shares of Series C 8% Cumulative Convertible Preferred Stock which can be converted into 100,000 shares of common stock within 60 days.

Includes (i)163,987 Common Stock owned by the Darla Moore Trust (ii) 16,667 shares issuable upon the exercise of stock options that are exercisable within 60 days.

Does not include 33,333 shares of Common Stock issuable upon the exercise of stock options that are not exercisable within 60 days and 50,000 shares of restricted common stock that cliff vest on August 21, 2022.

Represents (i) 163,987 shares of Common Stock and, (ii) 175,000 shares issuable upon the exercise of stock options that are exercisable within 60 days.

Does not include 50,000 shares of restricted common stock that cliff vest on August 20, 2022, and options to purchase 25,000 shares of Common Stock that cliff vest on June 22, 2022.

Represents (i) 193,987 shares of Common Stock and (ii) 177,500 shares issuable upon the exercise of stock options that are exercisable within 60 days.

Does not include 25,000 shares of Common Stock issuable upon the exercise of stock options that are not exercisable within 60 days, 50,000 shares of restricted common stock that cliff vest on August 20, 2022.

Represents (i) 1,527,988 shares of Common Stock, and (ii) 38,636 shares issuable upon the exercise of warrants that are exercisable within 60 days.

Does not include 100,000 shares of restricted common stock that cliff vest on August 20, 2022.

Represents (i) 109,324 shares of Common Stock, and (ii) 20,000 shares issuable upon the exercise of options that are exercisable within 60 days.

Does not include 30,000 shares of Common Stock issuable upon the exercise of stock options that are not exercisable within 60 days, 100,000 shares of restricted common stock that cliff vest on August 20, 2022 and 300,000 restricted shares of common stock that vest on August 12, 2023.

Camden was appointed to serve as a member of the Board on March 30, 2020.

Does not include 50,000 shares of restricted common stock that cliff vest on June 21, 2023.

Gormly was appointed to serve as a member of the Board on March 30, 2020.

Does not include 50,000 shares of restricted common stock that cliff vest on June 21, 2023.

Vetrano was appointed to serve as a member of the Board on March 30, 2020.

Does not include 50,000 shares of restricted common stock that cliff vest on June 21, 2023.

Dewan is the trustee of the Derek E.

Dewan Irrevocable Living Trust II Dated the 27th of July, 2010.

Dewan has the sole voting power and sole dispositive power over the 855,042 shares of Common Stock which includes (i) 655,042 shares of common stock, (ii) $200,000 aggregate principal amount of 8% Notes which can be converted into 200,000 shares of Series C 8% Cumulative Convertible Preferred Stock, which can be converted into 200,000 shares of common stock within 60 days, and (iii) 6,040 shares of Series C 8% Cumulative Convertible Preferred Stock, which can be converted into 6,040 shares of common stock within 60 days.

Certain Relationships and Related Transactions, and Director Independence.

Dewan has the sole voting power and sole dispositive power over the 885,715 shares of Common Stock.

C ertain Relationships and Related Transactions, and Director Independence.

Director Independence

Our Board of Directors is responsible to make independence determinations annually with the assistance of the Nominating Committee.

Such independence determinations are made by reference to the independence standard under the definition of “independent director” under the NYSE American Listed Company Manual.

Our Board of Directors has affirmatively determined that William Isaac, Dr.

Laffer, Darla Moore, and Peter Tanous satisfy the independence standards under the NYSE American Listed Company Manual.

Such independence determinations are made by reference to the independence standards under the definition of “independent director” included in the NYSE American Listed Company Manual.

Our Board of Directors has affirmatively determined that William Isaac, Darla Moore, Carl Camden, Matthew Gormly, Thomas Vetrano, and Peter Tanous satisfy the independence standards under the NYSE American Listed Company Manual.

In addition to the independence standards provided in the NYSE American Listed Company Manual, our Board of Directors has determined that each director who serves on our Audit Committee satisfies standards established by the SEC providing that, in order to qualify as “independent” for the purposes of membership on that committee, members of audit committees may not (1) accept directly or indirectly any consulting, advisory or other compensatory fee from the Company other than their director compensation or (2) be an affiliated person of the Company or any of its subsidiaries.

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Related Party Transactions

Other than as disclosed below, and except for the Dewan Employment Agreement, the Bajalia Employment Agreement and the Thorpe Employment Agreement described in “Executive Compensation”, there have been no transactions since October 1, 2018, or any currently proposed transaction or series of similar transactions to which the Company was or is to be a party, in which the amount involved exceeds $120,000 and in which any current or former director or officer of the Company, any 5% or greater stockholder of the Company or any member of the immediate family of any such persons had or will have a direct or indirect material interest.

8% Convertible Subordinated Notes to Related Parties

On May 15, 2019, the Company issued and sold to members of its executive management and Board of Directors (the “Investors”) $2.0 million in aggregate principal amount of its 8% Notes.

The 8% Notes mature on October 3, 2021 (the “Maturity Date”).

The 8% Notes are convertible into shares of the Company’s Series C 8% Cumulative Convertible Preferred Stock (“Series C Preferred Stock”) at a conversion price equal to $1.00 per share (subject to adjustment as provided in the 8% Notes upon any stock dividend, stock combination or stock split or upon the consummation of certain fundamental transactions) (the “Conversion Price”).

Interest on the 8% Notes accrues at the rate of 8% per annum and shall be paid quarterly in non-cash payments-in-kind (“PIK”) in arrears on June 30, September 30, December 31 and March 31, beginning on June 30, 2019, on each conversion date with respect to the 8% Notes (as to that principal amount then being converted), and on the Maturity Date (each such date, an “Interest Payment Date”).

Interest shall be paid on an Interest Payment Date in shares of Series C Preferred Stock of the Company, which Series C Preferred Stock shall be valued at its liquidation value.

All or any portion of the 8% Notes may be redeemed by the Company for cash at any time.

The redemption price shall be an amount equal to 100% of the then outstanding principal amount of the 8% Notes being redeemed, plus accrued and unpaid PIK interest thereon.

The Company may, at its option, prepay any portion of the principal amount of the 8% Notes without the prior consent of the holders thereof;

provided, however, that any prepayments of the 8% Notes shall be made on a pro rata basis to all holders of 8% Notes based on the aggregate principal amount of 8% Notes held by such holders.

The Company shall be required to prepay the 8% Notes together with accrued and unpaid PIK interest thereon upon the consummation by the Company of any Change of Control.

For purposes of the 8% Notes, a Change of Control of the Company shall mean any of the following:

(A) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions or (B) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any person or entity together with their affiliates, becomes the beneficial owner, directly or indirectly, of more than 50% of the Common Stock of the Company.

Each of the 8% Notes is subordinated in payment to the obligations of the Company to the lenders parties to that certain Revolving Credit, Term Loan and Security Agreement, dated as of March 31, 2017, as amended, by and among the Company, the Company’s subsidiaries named as borrowers therein (collectively with the Company, the “Borrowers”), the senior lenders named therein and MGG Investment Group LP, as administrative agent and collateral agent (the “Agent”) for the senior lenders (the “Senior Credit Agreement”), pursuant to those certain Subordination and Intercreditor Agreements, each dated as of May 15, 2019 by and among the Company, the Borrowers, the Agent and each of the holders of the 8% Notes.

Other than as disclosed below, and except for the Thorpe Employment Agreement described in “Executive Compensation”, there have been no transactions since October 1, 2019, or any currently proposed transaction or series of similar transactions to which the Company was or is to be a party, in which the amount involved exceeds $120,000 and in which any current or former director or officer of the Company, any 5% or greater stockholder of the Company or any member of the immediate family of any such persons had or will have a direct or indirect material interest.

On May 15, 2019, the Company issued and sold to members of its executive management and Board of Directors (the “Investors”) $2,000 in aggregate principal amount of its 8% Notes.

The maturity date of the 8% Notes was on October 3, 2021 (the “Maturity Date”).

The 8% Notes were converted into shares of the Company’s Series C 8% Cumulative Convertible Preferred Stock (“Series C Preferred Stock”) at a conversion price equal to $1.00 per share (subject to adjustment as provided in the 8% Notes upon any stock dividend, stock combination or stock split or upon the consummation of certain fundamental transactions) (the “Conversion Price”).

Interest on the 8% Notes accrued at the rate of 8% per annum and was payable quarterly in non-cash payments-in-kind (“PIK”) in arrears on June 30, September 30, December 31, and March 31, beginning on June 30, 2019, on each conversion date with respect to the 8% Notes (as to that principal amount then being converted), and on the Maturity Date (each such date, an “Interest Payment Date”).

Interest was payable on an Interest Payment Date in shares of Series C Preferred Stock of the Company, which Series C Preferred Stock was valued at its liquidation value.

During fiscal 2019, the Company issued approximately 60,400 shares of Series C Preferred Stock to Investors related to interest of $60,400 on the 8% Notes.

The Company entered into the Merger Agreement as of March 31, 2017 and consummated the Merger on April 3, 2017.

Smith, a former stockholder of SNIH and a former member of the Company’s Board of Directors received $1,879,127 and 4,424,169 shares of Series B Convertible Preferred Stock as Merger Consideration for his shares of SNIH.

Smith also serves as the Stockholder Representative for the former SNIH Stockholders.

Pursuant to the Merger Agreement, the Company has agreed to reimburse Mr.

Smith for up to $500,000 in expenses he may incur in his role as Stockholder Representative.

The Company did not have reimbursable expenses related to Mr.

Smith role as Stockholder Representative.

During fiscal 2020, the Company has issued approximately 32,846 shares of Series C Preferred Stock to Investors related to interest of $32,846 on the 8% Notes.

On June 30, 2020, each of the holders of the 8% Notes other than Ronald R.

Smith converted the $1,000 aggregate principal amount of 8% Notes held by them to an aggregate of 1,000 shares of Series C Preferred Stock which were immediately and simultaneously converted into 1,000 shares of Common Stock at the $1.00 per share conversion price stated in the 8% Notes and in the Series C Preferred Stock.

These holders also converted an aggregate of 93 additional shares of Series C Preferred Stock issued or issuable to them into a total of 93,246 shares of Common Stock at the $1.00 per share conversion price stated in the Series C Preferred Stock.

On June 30, 2020, he Company entered into a Repurchase Agreement for Preferred Stock and Subordinated Notes (the “Repurchase Agreement”) with Ronald R.

Smith”), Thrivent Financial for Lutherans (“Thrivent”), Madison Capital Funding LLC (“Madison”), Maurice R.

Harrison IV, Peter Langlois, Vincent Lombardo and Shane Parr (collectively with Smith, Thrivent and Madison, the “SNI Group Members” pursuant to which the SNI Group Members agreed to allow the Company to repurchase and settle all of the 9.5% Convertible Subordinated Notes (the “9.5% Notes”), Series B Convertible Preferred Stock, no par value (“Series B Preferred Stock”), “8% Notes and Series C Preferred Stock held by each of them.

Pursuant to the Repurchase Agreement, Mr.

Smith agreed to accept an aggregate amount of $520 in cash in consideration for the purchase by the Company of the $1,000 aggregate principal amount of 8% Notes held by him and an aggregate amount of $37 in cash in consideration for the purchase by the Company of the 71 shares of Series C Preferred Stock held by him.

The Company consummated the repurchase of the 8% Notes and Series C Preferred Stock held by Mr.

Smith on June 30, 2020.

Pursuant to the Repurchase Agreement, the holders of the Series B Preferred Stock agreed to accept an aggregate amount of $2,894 in cash in consideration for the purchase by the Company of all 5,566 currently outstanding shares of Series B Preferred Stock held by them.

This amount included 4,184 shares of Series B Preferred Stock held by Mr.

Smith for which he received an aggregate purchase price of $2,176.

The Company consummated the repurchase of the Series B Preferred Stock on June 30, 2020.

In addition, pursuant to the Repurchase Agreement, the holders of the 9.5% Notes agreed to accept an aggregate amount of $1,115 in cash in consideration for the purchase by the Company of the entire $12,500 aggregate principal amount of the 9.5% Notes held by them.

The Company consummated the repurchase of the 9.5% Notes on June 30, 2020.

In connection with the Repurchase Agreement, the Company and the SNI Group Members entered into a Registration Rights Agreement dated as of June 30, 2020 (the “Registration Rights Agreement”).

Pursuant to the terms of the Registration Rights Agreement, the Company agreed to file an initial registration statement with respect to the resale of shares of Common Stock currently owned by the SNI Group members that are “Registrable Securities” (as defined in the Registration Rights Agreement) on or prior to July 31, 2020.

In addition, the Company has agreed that it shall, on one occasion, on or after September 30, 2020 and upon the written request of the holders of 51% or more of the Registrable Securities, file a registration statement with respect to the Registrable Securities held by such holders.

The demanding holders may require, in connection with the registration, that such demand registration take the form of an underwritten public offering of such Registrable Securities.

The Registration Rights Agreement also provides that for a period of three years after the closing date of the Restructuring, the holders of Registrable Securities shall have piggyback registration rights with respect to all registration statements filed by the Company (other than those on Form S-4 or Form S-8).

Principal Accountant Fees and Services.

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“Audit fees” relate to services for the audit of the Company’s consolidated financial statements for the fiscal year and for reviews of the interim consolidated financial statements included in the Company’s quarterly reports filed with the SEC.

“Audit-related fees” relate to services that are reasonably related to the audit of the Company’s consolidated financial statements and are not included in “audit fees.” These services include audits of the Company’s 401(k) retirement plan and audits related to acquisitions and S-8 filings.

The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the independent registered public accounting firm, and to not engage them to perform the specific non-audit services proscribed by law or regulation.

At the beginning of each fiscal year, the Audit Committee meets with the independent registered public accounting firm and approves the fees and services to be performed for the ensuing year.

On a quarterly basis, the Audit Committee reviews the fees billed for all services provided for the year to date, and it pre-approves additional services if necessary.

At or just prior to the beginning of each fiscal year, the Audit Committee meets with the independent registered public accounting firm and approves the fees and services to be performed for the ensuing year.

The Audit Committee’s pre-approval policies allow management to engage the independent registered public accounting firm for consultations on tax or accounting matters up to an aggregate of $10,000 annually.

All fees listed in the table above were approved in accordance with the Audit Committee’s policies.

Exhibits and Financial Statement Schedules.

E xhibits and Financial Statement Schedules.

The following exhibits are filed as part of this report:

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Incorporated by reference to Exhibit 3(i) to the Company’s Form 8-K filed with the Commission on December 6, 2013.

By-Laws of GEE Group 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.

Amended and Restated By-Laws.

Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated August 3, 2020.

Certificate of designation of series a convertible preferred stock of GEE Group Inc.

261 unchanged sentences

Incorporated by reference to Exhibit 10.10 to the Company’s Form 8-K filed with the Commission on May 21, 2019.

Six Amendment, dated as of February 12, 2020, to the Revolving Credit, Term Loan and Security Agreement, dated as of March 31, 2017, as amended, by and among GEE Group, Inc., the other borrower entities and guarantor entities named therein, and certain investment funds managed by MGG Investment Group LP.

Incorporated by reference to Form 10-Q filed with the Commission on February 13, 2020.

First Amendment to the Subordinated Promissory Note dated as of February 8, 2020 by and among GEE Group, Inc., Enoch S.

Timothy, and Dorothy Timothy.

Incorporated by reference to Form 10-Q filed with the Commission on February 13, 2020.

Seventh Amendment dated as of April 28, 2020 to Revolving Credit, Term Loan and Security Agreement dated as of March 31, 2017 by and among GEE Group, Inc., the other Borrowers and Guarantors named therein, the lenders named therein and MGG Investment Group LP, as administrative agent, term loan agent and collateral agent for the lenders named therein.

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on May 4, 2020.

Registration Rights Agreement dated as of April 28, 2020 by and between GEE Group, Inc.

and MGG Investment Group LP.

Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the Commission on May 4, 2020.

Registration Rights Agreement dated as of April 28, 2020 by and between GEE Group, Inc., and CM Finance SPV., Ltd.

Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed with the Commission on May 4, 2020.

Repurchase Agreement for Preferred Stock and Subordinated Notes dated as of June 30, 2020 with Ronald R.

Smith, Thrivent Financial for Lutherans, Madison Capital Funding LLC, Maurice R.

Harrison IV, Peter Langlois, Vincent Lombardo, and Shane Parr.

Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on July 7, 2020.

Note Conversion Agreement dated as of June 30, 2020 by and between GEE Group, Inc.

and JAX Legacy Investment I, LLC.

Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the Commission on July 7, 2020.

Note Settlement Agreement dated as of June 27, 2020 by and among GEE Group, Inc, Enoch S.

Timothy and Dorothy Timothy.

Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed with the Commission on July 7, 2020.

Registration Rights Agreement dated as of June 30, 2020 by and among GEE Group, Inc., and Ronald R.

Smith, Thrivent Financial for Lutherans Madison Capital Funding LLC, Maurice R.

Harrison IV, Peter Langlois, Vincent Lombardo, and Shane Parr (included as Exhibit B to Exhibit 10.1).

Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K filed with the Commission on July 7, 2020.

Ninth Amendment dated as of June 30, 2020 to Revolving Credit, Term Loan and Security Agreement dated as of March 31, 2017 by and among GEE Group, Inc., the other Borrowers and Guarantors named therein, the lenders named therein and MGG Investment Group LP, as administrative agent, term loan agent and collateral agent for the lenders named therein.

Incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K filed with the Commission on July 7, 2020.

Amendment No.

1 to Executive Employment Agreement dated and effective as of August 12, 2020 between GEE Group Inc.

and Kim Thorpe.

Incorporated by reference to Form 10-Q filed with the Commission on August 14, 2020.

Letter Amendment dated as of December 22, 2020 to Revolving Credit, Term Loan and Security Agreement dated as of March 31, 2017 by and among GEE Group, Inc., the other Borrowers and Guarantors named therein, the lenders named therein and MGG Investment Group LP, as administrative agent, term loan agent and collateral agent for the lenders named therein.

List of Subsidiaries of the Registrant.

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/s/ Kim Thorpe

Senior Vice President-Finance and Chief Financial Officer

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

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December 29, 2020

Laffer, Director

/s/ Thomas Vetrano

Thomas Vetrano, Director

December 29, 2020

2 unchanged sentences

Moore, Director

December 29, 2020

Camden, Director

December 29, 2020

/s/ Matthew E.

Gormly, Director

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