What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-15 compared with 2023-02-14 · 145 added, 67 removed, 65 unchanged (77% of the section changed)

4 unchanged sentences

We specialize in the placement of information technology, accounting, finance, office, and engineering professionals for direct hire and contract staffing for our clients, data entry assistants (medical scribes) who specialize in electronic medical records (EMR) services for emergency departments, specialty physician practices and clinics, and provide temporary staffing services for our industrial clients.

The acquisitions of Agile Resources, Inc., a Georgia corporation (“Agile”), Access Data Consulting Corporation, a Colorado corporation (“Access”), Paladin Consulting Inc.

(“Paladin”) and SNI Companies, Inc., a Delaware corporation (“SNI”) expanded our geographical footprint within the placement and contract staffing verticals or end markets of information technology, accounting, finance, office and engineering professionals.

The acquisitions of Scribe Solutions, Inc., a Florida corporation (“Scribe”) in April 2015, Agile Resources, Inc., a Georgia corporation (“Agile”) in July 2015, Access Data Consulting Corporation, a Colorado corporation (“Access”) in October 2015, Paladin Consulting Inc.

(“Paladin”) in January 2016, and SNI Companies, Inc., a Delaware corporation (“SNI”) in April 2017, expanded our geographical footprint within the professional placement and contract staffing verticals or end markets of information technology, accounting, finance, office, engineering professionals, and medical scribes.

The Company markets its services using the trade names General Employment Enterprises, Omni One, Ashley Ellis, Agile Resources, Scribe Solutions Inc., Access Data Consulting Corporation, Paladin Consulting Inc., SNI Companies, Accounting Now, Staffing Now®, SNI Banking, SNI Certes®, SNI Energy®, SNI Financial®, SNI Technology®, Triad Personnel Services and Triad Staffing.

As of December 31, 2022, we operated from locations in eleven (11) states, including twenty-seven (27) branch offices in downtown or suburban areas of major U.S.

As of March 31, 2023, we operated from locations in eleven (11) states, including twenty-six (26) branch offices in downtown or suburban areas of major U.S.

cities and four (4) additional U.S.

4 unchanged sentences

(iii) three offices in Colorado;

(iv) three offices and two additional local market presences in Texas;

(iv) two offices and two additional local market presences in Texas;

(v) six offices and one additional local market presence in Florida;

2 unchanged sentences

Management’s organic growth strategy includes seeking out and winning new client business, as well as expansion of existing client business and on-going cost reduction and productivity improvement efforts in operations.

Management’s acquisition growth strategy includes identifying strategic acquisitions, financed primarily through a combination of cash and the issuance of equity and debt to improve the overall profitability and cash flows of the Company.

Management’s acquisition growth strategy includes identifying strategic, accretive acquisitions, financed primarily through a combination of cash and debt, including seller financing, the issuance of equity in appropriate circumstances, and the use of earn-outs where efficient to improve the overall profitability and cash flows of the Company.

The Company’s contract and placement services are principally provided under two operating divisions or segments:

3 unchanged sentences

Results of Operations

Three Months Ended December 31, 2022 Compared to the Three Months Ended December 31, 2021

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Consolidated net revenues are comprised of the following:

Ended December 31,

Ended March 31,

Professional contract services

3 unchanged sentences

Consolidated net revenues

Contract staffing services contributed $35,401 or approximately 86% of consolidated revenue and direct hire placement services contributed $5,747, or approximately 14%, of consolidated revenue for the three months ended December 31, 2022.

This compares to contract staffing services revenue of $36,684, or approximately 86%, of consolidated revenue and direct hire placement revenue of $6,163, or approximately 14%, of consolidated revenue for the three months ended December 31, 2021.

The net decrease in professional contract services revenues of $812, or 2%, for the three months ended December 31, 2022 compared to the three months ended December 31, 2021, was attributable to completion of certain significant discreet projects as the three-month period ended December 31, 2021 included revenue for staffing support provided to vaccination and testing facilities related to COVID-19 and its variants which have since downsized or closed.

These discreet projects generated $2,325 in revenue during the three-month period ended December 31, 2021.

Excluding the effects of these discreet projects, professional contract services revenues would have increased $1,513, or 5%, during the three months ended December 31, 2022 compared to the three months ended December 31, 2021.

Contract staffing services contributed $33,976, or approximately 87%, of consolidated revenues and direct hire placement services contributed $4,883, or approximately 13%, of consolidated revenues for the three-month period ended March 31, 2023.

This compares to contract staffing services revenues of $33,745, or approximately 85%, of consolidated revenues and direct hire placement revenues of $5,884, or approximately 15%, of consolidated revenues for the three-month period ended March 31, 2022.

The overall increase in contract staffing services revenues was $231, or 1%, for the three-month period ended March 31, 2023 compared to the three-month period ended March 31, 2022, led by professional contract services revenue, which increased $742.

Excluding the effects of certain discreet (non-recurring) projects for professional staffing support provided to former COVID-19 response vaccination and testing facilities, which generated $835 in revenue in the three-month period ended March 31, 2022, professional contract services revenues would have increased $1,577, or 5%, during the three-month period ended March 31, 2023 compared to the three-month period ended March 31, 2022.

Industrial staffing services for the quarter decreased by $511, or 14%, mainly due to a decrease in orders from clients.

The industrial staffing markets in Ohio continue to be affected by workforce volatility following COVID-19, resulting in more competition for orders and temporary labor to fill orders.

Direct hire placement revenue for the three-month period ended March 31, 2023 decreased by $1,001, or approximately 17% as compared to the three-month period ended March 31, 2022.

Direct hire opportunities tend to be highly cyclical and demand dependent.

Demand for the Company’s direct hire services was lower during the three-month period ended March 31, 2023, following record high cyclical direct hire production in fiscal 2022.

It is noteworthy that the three-month period ended March 31, 2022 was one of our highest quarters ever in terms of direct hire revenues.

Management believes that the Company’s direct hire performance during the three-month period ended March 31, 2023 was on par with larger employment and industry trends.

Cost of Contract Services

Cost of contract services includes wages and related payroll taxes and employee benefits of the Company's contract services employees, and certain other contract employee-related costs, while working on contract assignments.

Cost of contract services for the three-month period ended March 31, 2023 totaled $25,643, as compared to $25,115 for the three-month period ended March 31, 2022.

The $528 overall increase in cost of contract services is proportionally greater than the increase in revenues due mainly to inflationary effects on contractor pay and related costs of services.

(Amounts in thousands except per share data, unless otherwise stated)

Gross profit percentage by service:

Ended March 31,

Professional contract services

Industrial contract services

Professional and industrial services combined

Direct hire placement services

Combined gross profit margin (a)

Includes gross profit from direct hire placements, for which all associated costs are recorded as selling, general and administrative expenses.

The Company’s combined gross profit margin, including direct hire placement services (recorded at 100% gross margin) for the three-month periods ended March 31, 2023 and 2022 were approximately 34.0% and 36.6%, respectively.

In the professional contract services segment, the gross margin (excluding direct hire placement services) was approximately 25.4% for three-month period ended March 31, 2023 compared to approximately 26.9% for the three-month period ended March 31, 2022.

This decrease is due in part to increases in contractor pay associated with the recent rise in inflation resulting in some margin compression.

The Company has stepped-up counter-inflationary measures, including seeking increases in bill rates and spreads, where possible, to address margin compression.

The Company’s industrial contract services gross margin for the three-month period ended March 31, 2023 was approximately 16.5% versus approximately 14.7% for the three-month period ended March 31, 2022.

Gross profit for the Company’s Industrial Segment includes annual premium refunds from the Ohio Bureau of Workers Compensation insurance programs totaling $2 and $19 for the three-month periods ended March 31, 2023 and 2022, respectively.

The Industrial Services gross margin excluding the effect of these refunds and distributions were approximately 16.4% and 14.2% for the three-month periods ended March 31, 2023 and 2022, respectively.

The increase, excluding the effects of the workers compensation premium refunds and distributions, is mainly attributable to price increases enacted to offset increases in contractor payroll, leading to higher spreads in the Industrial Segment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) include the following categories:

Compensation and benefits in the operating divisions, which include salaries, wages and commissions earned by the Company’s employment consultants, recruiters and branch managers on permanent and temporary placements;

Administrative compensation, which includes salaries, wages, share-based compensation, payroll taxes, and employee benefits associated with general management and the operation of corporate functions, including principally, finance, human resources, information technology and administrative functions;

Occupancy costs, which includes office rent, and other office operating expenses;

Recruitment advertising, which includes the cost of identifying and tracking job applicants;

Other selling, general and administrative expenses, which includes travel, bad debt expense, fees for outside professional services and other corporate-level expenses such as business insurance and taxes.

(Amounts in thousands except per share data, unless otherwise stated)

The Company’s SG&A for the three-month period ended March 31, 2023 decreased by $523 as compared to the three-month period ended March 31, 2022.

SG&A for the three-month period ended March 31, 2023, as a percentage of revenues, were approximately 30% compared to approximately 31% for the three-month period ended March 31, 2022.

SG&A for the three-month period ended March 31, 2022 included the settlement of a legal matter totaling $975.

The small net increase in SG&A relative to revenue excluding the impact of this non-recurring item is largely a result of the effects of inflation on compensation and other operating costs.

In February and March 2023, the Company implemented certain cost reductions with estimated annual savings of approximately $4.0 million.

The Company monitors operating costs including the impacts of inflation with a view towards identifying and taking advantage of potential cost reductions on a routine basis.

SG&A also includes certain non-cash costs and expenses incurred related to acquisition, integration, restructuring and other non-recurring activities, such as certain corporate legal and general expenses associated with capital markets activities, that either are not directly associated with core business operations or have been eliminated on a going forward basis.

These costs were estimated to be $65 and $1,005 for the three-month periods ended March 31, 2023 and 2022, respectively, and include mainly expenses associated with former closed and consolidated locations, and personnel costs associated with eliminated positions.

The legal settlement described above contributed $975 to these costs for the three-month period ended March 31, 2022.

Depreciation Expense

Depreciation expense was $98 and $94 for the three-month periods ended March 31, 2023, and 2022, respectively.

The increase in depreciation expense is due to recent net additions to fixed assets.

Amortization Expense

Amortization expense was $719 and $1,015 for the three-month periods ended March 31, 2023 and 2022, respectively.

The decrease is due to intangible assets related to certain non-compete agreements and trade names becoming fully amortized.

Income from Operations

Income from operations was $694 and $1,177 for the three-month periods ended March 31, 2023 and 2022, respectively.

This decrease of $483 is mainly attributable to the decrease in direct hire placement revenues as discussed above.

Interest Expense

Interest expense was $73 for the three-month period ended March 31, 2023, which decreased by $25 compared to the three-month period ended March 31, 2022.

Interest Income

The Company began holding excess cash in a money market account in August 2022 on which interest has since been earned on a monthly basis.

Interest income earned from this account was $95 for the three-month period ended March 31, 2023.

Provision for Income Taxes

The Company recognized income tax expense (benefit) of $58 and $(8) for the three-month periods ended March 31, 2023 and 2022, respectively.

Our effective tax rates for the three-month periods ended March 31, 2023 and 2022 are lower than the statutory rate primarily due to the effect of the change in valuation allowance on the net DTA position.

The Company’s net income was $658 and $1,087 for the three-month periods ended March 31, 2023 and 2022, respectively.

The decrease of $429 is consistent with the decrease in gross profit and gross margin for the three months ended March 31, 2023, as explained in the preceding applicable portions of this Management’s Discussion and Analysis (“MD&A”).

(Amounts in thousands except per share data, unless otherwise stated)

Six Months Ended March 31, 2023 Compared to the Six Months Ended March 31, 2022

Consolidated net revenues are comprised of the following:

Ended March 31,

Professional contract services

Industrial contract services

Total professional and industrial contract services

Direct hire placement services

Consolidated net revenues

Contract staffing services contributed $69,377, or approximately 87%, of consolidated revenues and direct hire placement services contributed $10,630, or approximately 13%, for the six-month period ended March 31, 2023.

This compares to contract staffing services revenues of $70,429, or approximately 85%, of consolidated revenues and direct hire placement revenues of $12,047, or approximately 15%, of consolidated revenues for the six-month period ended March 31, 2022.

The overall decrease in contract staffing services revenues of $1,052, or 1%, for the six-month period ended March 31, 2023 compared to the six-month period ended March 31, 2022 was primarily attributable to completion of certain discreet (non-recurring) projects as the six-month period ended March 31, 2022 included revenue for professional staffing support provided to former COVID-19 response vaccination and testing facilities.

These discreet projects generated $3,159 in revenue during the six-month period ended March 31, 2022.

Excluding the effects of these discreet projects, professional contract services revenues would have increased $3,087, or 5%, during the six-month period ended March 31, 2023 compared to the six-month period ended March 31, 2022.

Industrial staffing services for the quarter decreased by $980, or 13%, mainly due to a decrease in orders from clients.

The industrial staffing markets continue to stabilize after the effects of COVID-19;

however, competition for orders and temporary labor to fill orders also has increased.

Direct hire placement revenue for the three months ended December 31, 2022 decreased by $416, or approximately 7%, over the three months ended December 31, 2021.

Demand for the Company’s direct hire services decreased during the three months ended December 31, 2022, in part, due to a slowing in permanent placement orders from clients as economic uncertainties linger, including some predictions of a potential recession.

It also is noteworthy that our 2022 fiscal year, which included the three months ended December 31, 2021, set a record of being one of our highest ever in terms of direct hire revenues.

Direct hire placement revenue for the six-month period ended March 31, 2023 decreased by $1,417, or approximately 12%, from the six-month period ended March 31, 2022.

Direct hire opportunities tend to be highly cyclical and demand dependent.

Demand for the Company’s direct hire services was lower during the six-month period ended March 31, 2023 following record high cyclical direct hire production in fiscal 2022, including the six-month period ended March 31, 2022.

Cost of Contract Services

Cost of contract services for the three months ended December 31, 2022 decreased by approximately 2% to $26,757 compared to $27,265 for the three months ended December 31, 2021.

The $508 overall decrease in cost of contract services is consistent with the decrease in revenues as discussed above.

Cost of contract services for the six-month period ended March 31, 2023 totaled $52,400, which was slightly higher as compared to $52,380 for the six-month period ended March 31, 2022, while total contract services revenues for the six-month period ended March 31, 2023 was down $1,005 compared with the six-month period ended March 31, 2022.

On the basis of relativity to revenue, the increase in cost of contract services was approximately $800, or 1.5%, which is attributable to increases in contractor pay as a result of recent wage inflation.

(Amounts in thousands except per share data, unless otherwise stated)

Gross profit percentage by service:

Ended December 31,

Ended March 31,

Professional contract services

2 unchanged sentences

Direct hire placement services

Combined gross profit margin (1)

Combined gross profit margin (a)

Includes gross profit from direct hire placements, for which all associated costs are recorded as selling, general and administrative expenses.

The Company’s combined gross profit margin, including direct hire placement services (recorded at 100% gross margin) for the three-month period ended December 31, 2022 was approximately 35.0% as compared with approximately 36.4% for the three-month period ended December 31, 2021.

In the professional contract staffing services segment, the gross margin (excluding direct placement services) was approximately 25.4% for three-month period ended December 31, 2022 as compared with approximately 27.0% for the three-month period ended December 31, 2021.

This is due in part to increases in contractor pay associated with the recent rise in inflation resulting in some spread compression.

The Company has stepped-up counter-inflationary increases in bill rates and spreads where possible in response to this margin compression.

The Company’s industrial staffing services gross margin for the three-month period ended December 31, 2022 was approximately 15.5% versus approximately 15.3% for the three-month period ended December 31, 2021.

Gross profit for the Company’s industrial staffing services segment for the three months ended December 31, 2021 includes $18 of annual premium refunds from the Ohio Bureau of Workers Compensation insurance programs, while the three months ended December 31, 2022 did not include any refunds.

The Industrial Services gross margin excluding the effect of these refunds and distributions was approximately 14.8% for the three months ended December 31, 2021.

The increase, excluding the effects of the workers compensation premium refunds and distributions, is mainly attributable to an increase in rates enacted to offset increases in contractor payroll, leading to a higher spread in the Industrial Segment.

The Company’s combined gross profit margins, including direct hire placement services (recorded at 100% gross margin) for the six-month periods ended March 31, 2023 and 2022 were approximately 34.5% and 36.5%, respectively.

In the professional contract services segment, the gross margin (excluding direct hire placement services) was approximately 25.4% for the six-month period ended March 31, 2023 compared to approximately 27.0% for the six-month period ended March 31, 2022.

This decrease is due in part to increases in contractor pay associated with the recent rise in inflation resulting in some margin compression.

The Company has stepped-up counter-inflationary measures, including seeking increases in bill rates and spreads, where possible, to address margin compression.

The Company’s industrial contract services gross margin for the six-month period ended March 31, 2023 was approximately 15.9% versus approximately 15.0% for the six-month period ended March 31, 2022.

Gross profit for the Company’s Industrial Segment includes annual premium refunds from the Ohio Bureau of Workers Compensation insurance programs totaling $2 and $37 for the six-month periods ended March 31, 2023 and 2022, respectively.

The Industrial Services gross margin excluding the effect of these refunds and distributions were approximately 15.9% and 14.5% for the six-month periods ended March 31, 2023 and 2022, respectively.

Selling, General and Administrative Expenses

6 unchanged sentences

(Amounts in thousands except per share data, unless otherwise stated)

The Company’s SG&A for the three months ended December 31, 2022 increased by $449 as compared to the three months ended December 31, 2021.

SG&A for the three months ended December 31, 2022, as a percentage of revenues, was approximately 31% compared to approximately 29% for the three months ended December 31, 2021.

The increase in SG&A expenses as a percentage of revenues is primarily attributable to additional incentive compensation and awards for producers related to recent performance.

These costs were estimated to be $44 and $526 for the three months ended December 31, 2022 and 2021, respectively, and include mainly expenses associated with former closed and consolidated locations, and personnel costs associated with eliminated positions.

The Company’s SG&A for the six-month period ended March 31, 2023 decreased by $74 as compared to the six-month period ended March 31, 2022.

SG&A for the six-month period ended March 31, 2023, as a percentage of revenues, were approximately 31% compared to approximately 30% for the six-month period ended March 31, 2022.

SG&A for the three-month period ended March 31, 2022 included expenses for the settlement of a legal matter and a severance agreement totaling $975 and $510, respectively.

The net increase in SG&A relative to revenue excluding the impact of these non-recurring items is largely a result of the effects of inflation on compensation and other operating costs.

In February and March 2023, the Company implemented certain cost reductions with estimated annual savings of approximately $4.0 million.

The Company monitors operating costs including the impacts of inflation with a view towards identifying and taking advantage of potential cost reductions on a routine basis.

SG&A includes certain non-cash costs and expenses incurred related to acquisition, integration and restructuring and other non-recurring activities, such as certain corporate legal and general expenses associated with capital markets activities that either are not directly associated with core business operations or have been eliminated on a going forward basis.

These costs were estimated to be $110 and $1,531 for the six-month periods ended March 31, 2023 and 2022, respectively, and include mainly expenses associated with former closed and consolidated locations, and personnel costs associated with eliminated positions.

The six-month period ended March 31, 2022 included expenses for a legal settlement and severance agreement totaling $975 and $510, respectively.

Depreciation Expense

Depreciation expense was $101 and $86 for the three months ended December 31, 2022, and 2021, respectively.

Depreciation expense was $199 and $180 for the six-month periods ended March 31, 2023 and 2022, respectively.

The increase in depreciation expense is due to recent net additions to fixed assets.

Amortization Expense

Amortization expense was $720 and $1,014 for the three months ended December 31, 2022 and 2021, respectively.

Amortization expense was $1,439 and $2,029 for the six-month periods ended March 31, 2023 and 2022, respectively.

The decrease is due to intangible assets related to certain non-compete agreements and trade names becoming fully amortized.

Goodwill Impairment

The Company recently completed its annual goodwill impairment assessment, as of September 30, 2022, and determined that its goodwill was not impaired.

As of December 31, 2021, the Company performed an interim assessment of its goodwill for impairment and recognized a non-cash impairment charge of $2,150 during the three months ended December 31, 2021.

Income (Loss) from Operations

The income (loss) from operations was $762 and $(27) for the three months ended December 31, 2022 and 2021, respectively.

This increase of $789 is mainly attributable to the non-cash goodwill impairment charge of $2,150 impacting results for the three months ended December 31, 2021, offset as a result of the combination of matters in regards to the Company’s revenues, costs and expenses as discussed above.

Gain on Extinguishment of Debt

The Company recorded a gain of $16,773 for the three months ended December 31, 2021 related to forgiveness and extinguishment of its remaining PPP loans and accrued interest.

Income from Operations

Income from operations was $1,456 and $1,150 for the six-month periods ended March 31, 2023 and 2022, respectively.

The increase is mainly due to the six-month period ended March 31, 2022 including expenses for a legal settlement and severance agreement totaling $975 and $510, respectively.

Excluding these items, the net decrease of $1,179 is consistent with the decrease in revenues as discussed above.

Interest Expense

Interest expense was $73 for the three months ended December 31, 2022, which decreased by $34 compared to the three months ended December 31, 2021.

The decrease in interest expense is mainly attributable to the three months ending December 31, 2021 including interest of $32 on the Company’s remaining PPP loans which were forgiven during that quarter.

(Amounts in thousands except per share data, unless otherwise stated)

Interest expense was $146 for the six-month period ended March 31, 2023, which decreased by $59 compared to the six-month period ended March 31, 2022.

Interest Income

The Company began holding cash in a money market account in August 2022 on which interest has since been earned on a monthly basis.

Interest income earned from this account was $38 for the three months ended December 31, 2022.

The Company began holding excess cash in a money market account in August 2022 on which interest has since been earned on a monthly basis.

Interest income earned from this account was $133 for the six-month period ended March 31, 2023.

Provision for Income Taxes

The Company recognized income tax expense (benefits) of $73 and $(29) for the three months ended December 31, 2022 and 2021, respectively.

Our effective tax rates for the three months ended December 31, 2022 and 2021 are lower than the statutory rate primarily due to the effect of the change in valuation allowance on the net DTA position.

The Company’s net income was $654 and $16,668 for the three months ended December 31, 2022 and 2021, respectively.

The decrease in net income is mainly attributable to gains of $16,773 from extinguishment of the Company’s remaining PPP loans, offset by a $2,150 non-cash goodwill impairment charge during the three months ended December 31, 2021.

The remaining net decrease of $1,391 is consistent with the decrease in gross profit and gross margin for the three months ended December 31, 2022 compared with the three months ended December 31, 2021, as explained in the preceding paragraphs.

The Company recognized income tax expense (benefits) of $131 and $(37) for the six-month periods ended March 31, 2023 and 2022, respectively.

Our effective tax rates for the six-month periods ended March 31, 2023 and 2022 are lower than the statutory rate primarily due to the effect of the change in valuation allowance on the net DTA position.

The Company’s net income was $1,312 and $17,755 for the six-month periods ended March 31, 2023 and 2022, respectively.

The remaining net decrease of $1,820 is consistent with the decrease in gross profit and gross margin for the six months ended March 31, 2023, as explained in the preceding applicable portions of this MD&A.

(Amounts in thousands except per share data, unless otherwise stated)

Liquidity and Capital Resources

The primary sources of liquidity for the Company are revenues earned and collected from its clients for the placement of contract employees and independent contractors on a temporary basis and permanent employment candidates and borrowings available under its asset-based senior secured revolving credit facility.

The primary sources of liquidity for the Company are revenues earned and collected from its clients and borrowings available under its asset-based senior secured revolving credit facility.

Uses of liquidity include primarily the costs and expenses necessary to fund operations, including payment of compensation to the Company’s contract and permanent employees, and employment-related expenses, operating costs and expenses, taxes and capital expenditures.

The following table sets forth certain consolidated statements of cash flows data:

Ended December 31,

Cash flows (used in) provided by operating activities

Ended March 31,

Cash flows provided by operating activities

Cash flows used in investing activities

Cash flows used in financing activities

As of December 31, 2022, the Company had $18,472 of cash, which was a decrease of $376 from $18,848 as of September 30, 2022.

As of December 31, 2022, the Company had working capital of $28,536 compared to $26,643 of working capital as of September 30, 2022.

The increase in working capital is mainly attributable to the final installment of deferred payroll taxes under the CARES Act being paid and annual incentive compensation payments during the three months ended December 31, 2022, which were reflected in current liabilities in the aggregate amount of $3,027 as of September 30, 2022.

These payments also account for corresponding reductions in cash flows provided by operating activities and ending cash as of December 31, 2022.

The primary uses of cash for investing activities were for the acquisition of property and equipment in the three-month periods ended December 31, 2022 and 2021.

There were no cash flows used in financing activities for the three-month periods ended December 31, 2022 and 2021.

The Company had approximately $13,029 in availability for borrowings under its CIT Facility as of December 31, 2022.

There were no outstanding borrowings on the CIT Facility as of December 31, 2022, or September 30, 2022, except for certain accrued carrying fees and costs, which are included in other current liabilities in the accompanying consolidated balance sheets.

As of March 31, 2023, the Company had $20,099 of cash, which was an increase of $1,251 from $18,848 as of September 30, 2022.

As of March 31, 2023, the Company had working capital of $29,928 compared to $26,643 of working capital as of September 30, 2022.

The increase in working capital is mainly attributable to the final installment of deferred payroll taxes under the CARES Act being paid and annual incentive compensation payments during the six months ended March 31, 2023, which were reflected in current liabilities in the aggregate amount of $3,027 as of September 30, 2022.

These payments also account for corresponding reductions in cash flows provided by operating activities as of March 31, 2023.

The primary uses of cash for investing activities were for the acquisition of property and equipment in the six-month periods ended March 31, 2023 and 2022.

The cash flows used in financing activities were for payments made on finance leases during the six-month periods ended March 31, 2023 and 2022.

All the Company’s office facilities are leased.

Minimum lease payments under all the Company’s lease agreements for the twelve-month period commencing after the close of business on December 31, 2022, are approximately $1,449.

There are no minimum debt service principal payments due during the twelve-month period commencing after the close of business on December 31, 2022.

Minimum lease payments under all the Company’s lease agreements for the twelve-month period commencing after the close of business on March 31, 2023, are approximately $1,682.

There are no minimum debt service principal payments due during the twelve-month period commencing after the close of business on March 31, 2023.

The Company had approximately $13,347 in availability for borrowings under its CIT Facility as of March 31, 2023.

There were no outstanding borrowings on the CIT Facility as of March 31, 2023, or September 30, 2022, except for certain accrued carrying fees and costs, which are included in other current liabilities in the accompanying consolidated balance sheets.

On April 27, 2023, the Company’s Board of Directors approved a share repurchase program authorizing the Company to purchase up to an aggregate of $20,000 of the Company’s currently outstanding shares of common stock.

The share repurchase program will continue through December 31, 2023, may be suspended or discontinued at any time and does not obligate the Company to repurchase any number of shares of common stock.

The share repurchase program is to be conducted in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

Subject to applicable rules and regulations, the shares of common stock may be purchased from time to time in the open market transactions and in amounts as the Company deems appropriate, based on factors such as market conditions, legal requirements and other business considerations.

Management believes that the Company can generate adequate liquidity to meet its obligations for the foreseeable future and at least for the next twelve months.

Off-Balance Sheet Arrangements

As of December 31, 2022, there were no transactions, agreements or other contractual arrangements to which an unconsolidated entity was a party, under which the Company (a) had any direct or contingent obligation under a guarantee contract, derivative instrument or variable interest in the unconsolidated entity, or (b) had a retained or contingent interest in assets transferred to the unconsolidated entity.

(Amounts in thousands except per share data, unless otherwise stated)

As of March 31, 2023, there were no transactions, agreements or other contractual arrangements to which an unconsolidated entity was a party, under which the Company (a) had any direct or contingent obligation under a guarantee contract, derivative instrument or variable interest in the unconsolidated entity, or (b) had a retained or contingent interest in assets transferred to the unconsolidated entity.

Quantitative and Qualitative Disclosures About Market Risk .

1 unchanged sentence

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-Q

Item 2. Management’s Discussion and Analysis