GEE Group Inc. 10-K

Item 1. Business General GEE Group Inc. (the “Company,” “us,” “our” or “we”) was incorporated in the State of Illinois in 1962 and is the successor to employment offices doing business since 1893. We are a provider of human resources solutions which primarily include the provision of temporary and permanent personnel in the professional services sector to customers located in the United Sates. We, through our operating subsidiaries, deliver our services from a network of four virtual locations and 19 branch office locations located in or near several major U.S. cities, including, but not limited to: Atlanta, Dallas, Denver, and Miami. We have several subsidiary corporations, all of which are wholly owned and consolidated under GEE Group Inc. Our material operating subsidiaries include Access Data Consulting Corporation, Agile Resources, Inc., Hornet Staffing, Inc., Paladin Consulting, Inc., Scribe Solutions, Inc., SNI Companies, Inc., and Triad Personnel Services, Inc. In addition, we and our operating subsidiaries own and operate under other trade names, including Accounting Now, Ashley Ellis, Staffing Now®, SNI Banking, SNI Certes®, SNI Energy®, SNI Financial®, SNI Technology®, GEE Group (Columbus), General Employment and Omni One. Business Acquisition We acquired Hornet Staffing, Inc., a Georgia corporation, (“Hornet”) on January 3, 2025, broadening our footprint in the professional contract staffing market with a specialty in working with managed service providers (“MSP”) and vendor management systems (“VMS”) that streamline outsourced labor for large clients. We entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Hornet and its shareholders and purchased 100 thousand shares of its capital stock which represents 100% of the ownership interest in Hornet. Hornet is an Atlanta-based provider of staff augmentation services with national service capability. Hornet provides staffing solutions to many markets serving large scale, "blue chip" companies in the information technology ("IT"), professional and customer service staffing verticals. The total consideration paid for the purchased shares was $1.5 million, consisting of (i) a $1.1 million cash payment, and (ii) the issuance to its former shareholders of subordinated and unsecured promissory notes (the "Promissory Notes") totaling an aggregate initial principal amount of $400 thousand. Interest on the outstanding principal balances of the Promissory Notes is payable at a fixed rate of 5% per annum. Payments on the Promissory Notes shall be made annually with the first payment due on the first anniversary of the issuance dates and the second and final payment due on the second anniversary of the issuance date. We also paid legal and professional fees of $111 thousand related to the purchase during fiscal 2025, which are included in selling, general and administrative expenses in the consolidated statements of operations. The Purchase Agreement also provides that for the initial two-year period after closing, Hornet is required to achieve an agreed upon minimum average gross profit measure equal to $720 thousand for each of the two subsequent twelve-month periods (each twelve-month period being separately measured). If the average gross profit measure during either of the subsequent two years is less than the minimum required average gross profit, then we will reduce the remaining balance under the Promissory Notes proportionally by an amount equal to the amount of the shortfall; provided we may not deduct more than the amount due under the then current payment for the Promissory Notes and may not seek to claw back any previous payments made under the Notes. The Purchase Agreement contains certain representations and warranties customary and standard for this type of transaction. 3 Table of Contents Discontinued Operations Our former wholly owned subsidiaries, BMCH, Inc. and Triad Logistics, Inc., provided industrial contract staffing services until their operations were discontinued and assets were sold on June 2, 2025. On April 18, 2024, our Mergers and Acquisitions (“M&A”) committee of the Board of Directors completed its review of strategic alternatives recommended by an outside investment banking firm. This included recommendation of divesture of our Industrial Segment which was subsequently approved by our full Board of Directors on May 13, 2024. Management thereafter began the process of identifying and contacting potential buyers. As of March 31, 2025, our plan to sell the Industrial Segment met all the criteria for the first time to be reported as discontinued operations under accounting principles generally accepted in the United States of America (“U.S. GAAP”), the final one being making the determination that the sale or other disposition would be completed within twelve months. On June 2, 2025, we entered into an agreement for the sale of certain operating assets of its Industrial Segment, including those of BMCH, Inc., Triad Logistics, Inc., and its Triad Staffing brand. We received total cash consideration of $250 thousand from the buyer at closing and an additional $788 thousand during the first 90 days following closing. A pre-tax net gain of $133 thousand, including transaction costs of $97 thousand, is included in discontinued operations for fiscal 2025. The remaining assets of the Industrial Segment not sold were distributed to the Company. Services Provided We provide our services to a broad range of customers from small and medium-sized businesses to the Fortune 1000. Our services include the provision of highly specialized contract or permanently placed professionals in several verticals, including information technology (“IT”), engineering, accounting and finance, office support, and specialized contract healthcare professionals, including scribes who specialize in electronic medical record (“EMR”) services for emergency departments, specialty physician practices and clinics. Our contract and placement services are currently provided under our Professional Staffing Services operating division or segment. Our former Industrial Staffing Services segment was deemed a discontinued operation in fiscal 2025 and is excluded from results of continuing operations reported in this filing, unless otherwise stated. 4 Table of Contents Our Professional Staffing Services segment operating subsidiaries and divisions, and their respective end markets served are as follows: · Access Data Consulting provides hard-to-find IT talent to customers on a direct hire or contract basis and human resources consulting services and solutions in the higher-end IT vertical including project management support to businesses regionally (Western and Southwestern U.S.) and, to a lesser extent, throughout the rest of the U.S. · Agile Resources specializes in providing technical staffing services for AI-focused consulting, IT project support, and talent solutions across the Southeastern U.S. and, to a lesser extent, throughout out the rest of the U.S. Services include talent delivery for cutting-edge AI-driven application architecture and delivery, enterprise operations optimization, digital transformation, information lifecycle management, and project management. With flexible engagement options, Agile Resources offer both contract staffing and direct hire to meet the diverse needs of our clients in deploying advanced AI and technology solutions. · Ashley Ellis works with C-suite and senior executives to offer full cycle engineering and IT contract staffing services, with a focus on business intelligence, application development and network infrastructure, to clients in the Southeastern U.S. region and, to a lesser extent, throughout the rest of the U.S. · GEE Group (Columbus) primarily provides direct hire placement and contract staffing services in the accounting and engineering verticals, with an emphasis on placing personnel with specialized skills in the mechanical, manufacturing and equipment maintenance areas to clients throughout the Midwestern U.S. · Hornet Staffing provides professional contract staffing solutions with a specialty in working with MSP and VMS arrangements that streamline outsourced labor for large clients. · Omni One specializes in technical and professional direct-hire and contract staffing solutions in the manufacturing and engineering verticals for clients primarily located in the Midwestern U.S. · Paladin Consulting primarily provides highly skilled IT professionals on a contract or direct hire basis directly to customers or through RPO, MSP and VMS arrangements and other non-IT staffing solutions to customers nationwide including government contractors who require that the provider of staffing services have required security clearance; such security certification is maintained by Paladin Consulting. · Scribe Solutions provides hospital and free-standing emergency rooms and physician practices in the Southeastern U.S. with highly trained medical scribes for personal assistant work in connection with EMR. · SNI Companies provides human resource solutions, including direct hire and contract staffing, project support and retained search services specializing primarily in the accounting, finance, banking, IT and office support verticals to customers located in major U.S. metropolitan markets, such as Dallas/Fort Worth, Austin, Houston, Chicago, Denver, Miami, Princeton, Tampa, Jacksonville, Hartford, Andover and surrounding areas. SNI Companies’ brands include Accounting Now, Staffing Now®, SNI Banking, SNI Certes®, SNI Energy®, SNI Financial®, and SNI Technology®. The percentage of revenues derived from each of the Company’s direct hire and contract services lines are as follows: Fiscal 2025 2024 Direct hire placement services 12.2% 11.4% Contract staffing services 87.8% 88.6% 5 Table of Contents Business Strategy Our business strategy is multi-dimensional and encompasses both organic growth and growth through strategic acquisitions. Since 2015, the Company has completed five acquisitions, the most recent of which was Hornet in fiscal 2025. The main tenants of our strategy are to grow organically by: · Providing innovative solutions for clients delivered through an enhanced and expanded menu of professional services offerings while increasing the penetration of clients in our existing markets for our IT, finance and accounting, healthcare, engineering and office support verticals; · Entering other fast-growing markets following existing customers who are expanding their operations and cross-selling services by leveraging strategic customer relationships capitalizing on the Company’s national managed services agreements MSA, MSP and VMS relationships; · Expanding our geographic footprint of professional services offerings into new markets believed to possess high growth potential, particularly with regard to our IT brands; · Adding recruiting and sales talent to our existing delivery network to obtain new customers and increase the number of placements made to increase revenue; · Increasing scalability and expanding operating margins through the on-going process of streamlining back- office operations, establishing and leveraging regional centers of excellence, improving upon per desk production averages, elimination of duplicative costs among our businesses, and continued realization of economies of scale; and · Capitalizing on hiring opportunities created by volatility in the economic and labor markets by providing on-demand labor to fill the personnel voids of businesses following corporate America’s reactions and resulting on-going realignments since the on-set of the COVID-19 pandemic. As the economy recovers and companies have returned to sustained operations and growth, demand for our services has accelerated, with a particular focus on IT, E-Commerce and Logistics. We expect to continue to capitalize on these opportunities and to explore and innovate others, particularly in IT, including frontier areas such as digital content and information management disciplines. Growth Through Strategic Acquisitions: Since 2015, a significant portion of our growth has been achieved as a result of acquisitions of complementary businesses. We intend to continue to expand our business through strategic acquisitions, subject to our business plans and management’s ability to identify, acquire and develop suitable acquisition or investment targets in both new and existing service categories. Along with our significant business growth to date, we have built a robust platform with the appropriate infrastructure and scalability, which we believe is necessary to assimilate acquisitions. We continue to explore opportunities for potential acquisitions in the fragmented staffing industry. Our acquisition strategy includes, but is not limited to, targeting companies or transactions that we believe may have one or more of the following characteristics: · A focus on IT specialties and other verticals, including Artificial Intelligence (“AI”), cyber security, government, healthcare, and other targets in the professional services sectors; · A well-managed business with experienced operators and with high gross profit and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins, as well as consistent revenue growth; · Limited enterprise risk and successful due diligence; and · Pricing commensurate with profitability and growth, must be accretive to earnings and consideration generally consisting of a combination of cash, seller and/or bank financing and stock. 6 Table of Contents Marketing We market our staffing services using our corporate and trade names in our respective vertical markets. As of September 30, 2025, we operated from locations in ten (10) states, including nineteen (19) branch offices in downtown or suburban areas of major U.S. cities and four (4) additional U.S. locations utilizing local staff members working remotely. We have offices or serve markets remotely, as follows; (i) one office in each of Connecticut, Georgia, Illinois, and New Jersey, and one remote local market presence in each of Georgia and Virginia; (ii) two offices each in Massachusetts and Colorado; (iv) three offices and one additional local market presence in Texas; (v) six offices and one additional local market presence in Florida; and (vi) two offices in Ohio. We market our staffing services to prospective clients primarily through the use of the internet, specialty brands and corporate websites, digital direct mail campaigns, publishing annual electronic and widely distributed salary guides, advertising in tech, HR and accounting publications, attendance and booth displays at specialty trade shows, participation and membership in chambers of commerce and other business organizations, and support for our employees’ philanthropic activities. Our sales consultants and business development managers also engage in telephone marketing using our CRM tools to identify prospects, and through the mailing of tailored employment bulletins which list highly-skilled candidates available for placement and contract employees available for assignment. There was no customer that represented 10% or more of the Company’s consolidated revenue in fiscal 2025 or 2024. There was one customer that made up approximately 21% of the consolidated accounts receivable balance as of September 30, 2025, and two customers that, in aggregate, made up approximately 27% of the consolidated accounts receivable balance as of September 30, 2024. These customers are offered extended payment terms due to the frequency and volume of our services they utilize. Each has demonstrated consistent creditworthiness since doing business with us and the Company has not experienced any losses related to these two customers historically. Competition The staffing industry is highly fragmented with a multitude of competitors. There are relatively few barriers to entry by firms offering direct hire placement and staff augmentation services although significant amounts of working capital typically are required to fund the payroll of temporary workers for businesses providing contract staffing services. New entrants to the staffing industry are constantly introduced to the marketplace. Our competitors include sole-proprietorship operations, local and regional firms as well as national organizations. In the U.S., large national firms with annual revenue of at least $100 million or more, represent a relatively small portion of all U.S. staffing firms. Local and regional firms’ yearly revenue can range from one to several million dollars or more. The largest portion of the marketplace consists of small, individual-sized or family-run operations. With low barriers to entry, sole proprietorships and smaller entities routinely enter the staffing industry. Many of our competitors are larger corporations with substantially greater resources than ours; however, as described below, we believe we are able to compete successfully in the verticals and end markets in which we operate. Our professional staffing services compete effectively by providing highly qualified candidates who are well matched for the position, by developing and maintaining outstanding client relationships on a local level, by responding quickly to client requests, and by establishing offices and presences in convenient locations. As part of our services, we provide professional reference checking, scrutiny of candidates’ work experiences and optional custom background checks. In general, we believe that a positive client experience is most important, and pricing often is secondary to quality of service as a competitive factor. During slow hiring periods, competition can put pressure on our pricing; however, we believe we are able to effectively compete on price in such situations. 7 Table of Contents Our Competitive Strengths We believe that we are able to compete effectively in the staffing industry because we have: · Deep experience and vertical specialization and expertise in niche markets; · Invested in robust sales programs and marketing tools and technology and CRM software to successfully identify, target and reach out to potential new customers; · Long-tenured division leaders, business development managers and vertical specialists (e.g., certified public accountants for accounting, tax and financial placements) with deep and relevant staffing industry experience; · Strong and proven capability to deliver outstanding results for our clients under significant time constraints on large-scale projects leveraging our wide office network and experienced project team leaders, including experience with MSP and VMS programs; · Well established strategies and procedures for both temporary and permanent virtual working environments supported by technology to facilitate communication, recruiting, onboarding and management of the business virtually; · Specialized state-of-the-art databases, applicant tracking systems (“ATS”) and other technology tools that facilitate swift, expert matching of candidates to job requirements providing highly qualified multiple choices to clients; · Localized decision-making and a lack of a multi-layered bureaucracy which provides for more rapid responses to customized client requests and a streamlined approval process in place for speedy recruitment of personnel; and · Hands-on training with specialized modules for newly hired recruiters and account management personnel. Our business is mainly that of a temporary staffing company within the broader staffing industry, however, we also offer and provide permanent placement services. We employ the substantial portion of our staff members we place on temporary assignments with our clients. In addition to assisting our clients in managing peaks and valleys in their staffing needs, the temporary workers we place come in the form of a broader human resources management solution. That is, our clients do not bear the usual employment risks and compliance costs and burdens associated with our temporary workers; instead, we retain these costs and risks as the employer of record. We believe this is a significant value add for many of our temporary staffing clients. Recruiting The success of our services is highly dependent on our ability to recruit and retain qualified candidates. Prospective employment candidates are generally recruited through job postings and contact made electronically using various internet tools as well as telephone contact by our employment consultants. For internet postings, we maintain our corporate web page at www.geegroup.com and our specialty brand web pages in addition to extensive use of internet job posting bulletin board services. We also maintain database records of applicants’ skills through our ATS to assist in matching applicant skills with job openings and contract assignments. We generally screen, interview and, in many cases, background check applicants who are presented to our clients. Industry Overview The staffing industry is divided into three major segments: temporary staffing services, professional employer organizations (“PEOs”) and placement agencies. Temporary staffing services provide workers for limited periods, often to substitute for absent permanent workers or to staff discreet projects, or to help during periods of peak demand. These workers, who are often employees of the temporary staffing agency, will generally fill administrative, clerical, accounting, and other professional technical positions, or industrial positions. In some cases, temporary staffing services may be provided to clients over prolonged periods in longer-term HR outsourcing type scenarios. PEOs, sometimes referred to as employee leasing agencies, contract to provide workers to customers for specific functions, often related to human resource management. In many cases, a customer’s employees are hired by a PEO and then contracted back to the customer. Placement agencies, sometimes referred to as executive recruiters or headhunters, find workers to fill permanent positions at customer companies. These agencies may specialize in placing senior managers, mid-level managers, technical workers, or clerical and other support workers. 8 Table of Contents Staffing companies identify potential candidates through online advertising and referrals, and interview, test and/or counsel workers before sending them to the customer for approval. Pre-employment screening can include skills assessment and reference checking, as well as drug tests and criminal background checks. The personnel staffing industry has been radically changed by the internet. Many employers list available positions with one or several internet personnel sites, such as those offered by firms like Indeed or LinkedIn, and on their own websites. Personnel agencies operate their own sites and often still work as intermediaries by helping employers accurately describe job openings and by screening candidates who submit applications. Major end-use customers include businesses from virtually all industries. Marketing involves direct sales presentations, referrals from existing clients and advertising. Agencies compete both for customers and workers. Depending on market supply and demand at any given time, agencies may allocate more resources either to finding potential employers or potential workers. Permanent placement agencies work either on a retained or on a contingency basis. Clients may retain an agency for a specific job search or on contract for a specific period. Temporary staffing services charge customers a fixed price per hour or a standard markup on prevailing hourly rates. For many staffing companies, including ours, demand is lower late in the fourth calendar quarter and early in the first calendar quarter, partly because of holidays, and is higher during the rest of the year. Staffing companies may have high receivables from customers. Temporary staffing agencies and PEOs must manage a high cash flow because they make payroll payments to their employees on behalf of client employers. Cash flow imbalances also occur because agencies must pay workers even if they have not been paid by clients. The revenue of staffing companies depends on the number of jobs they fill, which in turn can depend upon the economic environment. During economic slowdowns, many client companies may typically also be expected to slow down or stop hiring altogether. Internet employment sites expand a Company’s ability to find and source potential workers without the help of traditional agencies. Staffing companies often work as intermediaries, helping employers accurately describe job openings and screen candidates. Increasing the use of sophisticated, automated job description and candidate screening tools could make many traditional functions of personnel agencies obsolete. Free social networking sites such as LinkedIn and Facebook are also becoming a common way for recruiters and employees to connect without the assistance of a staffing agency. Staffing companies are subject to regulations promulgated by the U.S. Department of Labor and the Equal Employment Opportunity Commission, and often by state authorities. Many federal anti-discrimination rules regulate the type of information that employment firms can request from candidates or provide to customers about candidates. In addition, the relationship between the agency and its temporary employees, or its employee candidates may not always be clear, resulting in legal and regulatory uncertainty. Trends in the Staffing Business Market Size & Growth Outlook Staffing Industry Analysts (“SIA”), a leading industry trade organization, recently published in its September 2025 U.S. Staffing Industry Forecast update, that the U.S. Staffing Industry as a whole is expected to decline by 3% in 2025. This follows a 12% decline already experienced in 2024. The SIA report cites that the forecasted 2025 decline is expected due to widespread client caution, a slow labor market, reduced employee churn and flat bill rates. The U.S. staffing industry is expected to grow in the future, but not uniformly. The SIA report forecasts that the staffing industry will grow 2% in 2026 to reach a market size of $183.3 billion. In terms of segments, SIA forecasts 1% growth in IT, 3% growth in engineering, 5% growth in finance and accounting, and 2% growth in healthcare. To maximize growth going forward, we intend to identify and focus our resources and efforts on high-growth verticals and sub-markets. 9 Table of Contents Technology, AI Technology continues to be a dominant driver in staffing and HR solutions, led most recently and broadly by AI. Fiscal 2025 saw significant increases in the use of AI by staffing firms to perform fundamental tasks such as screening resumes, ranking candidates, scheduling interviews, and suggesting matches. Automation of routine HR tasks including payroll, benefits administration, compliance tracking also are increasing in use across staffing firms. Predictive analytics for workforce-planning: using data to forecast hiring needs, attrition, and talent gaps is another example of technological advancement in staffing. HR software is evolving to support remote work, virtual onboarding, and other continuous performance/collaboration tools. The implications of accelerating advancements in technology occurring now, and particularly the AI explosion, already are believed to be disrupting traditional staffing platforms, protocols and even underlying business models. Clients expect faster time-to-hire, better quality matches, and seamless experiences. But there’s also a risk: over-reliance on automation can reduce personalization and candidate experience. We are actively seeking to partner with and/or invest in tech partners and vendors, with a particular focus on AI and cybersecurity, in order to assist us in innovating and developing next level tools that allow us to provide outstanding services to our clients. Skills-Based Hiring and Non-Traditional Talent Pools Key elements of the traditional staffing model such as “degree first” hiring are being challenged. Increasingly, employers are shifting to questions such as “what can you do” rather than “what degree do you have.” That opens opportunities for people from varied backgrounds, often with micro-credentials, certificates, bootcamps, or self-studied skills. Staffing & HR solutions firms are adjusting job descriptions, assessment tools, and sourcing strategies, accordingly, and will need to build new assessment capabilities, such as skills testing and project-based evaluations, and rethink candidate sourcing beyond traditional credential-based pipelines. Flexible Workforce Models – Contingent, Gig, Hybrid Workforce models are demanding that staffing and HR solutions firms become more agile. Growth in traditional temporary, contingent, project-based staffing has been tepid overall (low single digit) and negative in the case of some verticals, including information technology, which traditionally has been one of the leading growth verticals in staffing. The hybrid and remote work models have become relatively standardized in many industries, creating challenges for staffing and HR solution firms and their clients. A staffing firm’s ability to offer scalable workforce solutions that allow clients to expand and contract usage depending on demand will continue to be an important value add. Staffing firms, therefore, must build flexibility into their delivery models, maintain on-demand talent pools, and adapt to remote/virtual work settings (including cross-geography compliance). For HR solutions vendors, tools must support remote onboarding, dispersed teams, collaboration and engagement. Employee Experience, Candidate Experience and Branding Talent attraction and retention are increasingly shaped by experience as opposed to credentials-based. Candidate experience is a key differentiator, including transparency, communication, speed of responses to candidates. The whole of employee experience, including engagement, wellness, development opportunities and responsiveness are central and not just recruitment. Employer branding and talent-market reputation matter more than ever. In order to succeed today, staffing firms and HR service providers must focus not only on filling roles but on delivering quality experience to candidates and clients. HR platforms will need to include or accommodate employee engagement analytics modules. Regulatory Compliance With changing work models, talent requirements, and hybrid and remote work environments now on the rise, the regulatory landscape is becoming more complex. Data-privacy, employment laws across jurisdictions, AI ethics, and remote employment security and compliance requirements are all challenges. Staffing firms must be ever-vigilant about the needs for placing more emphasis on managing compliance risk for clients (e.g., contingent workforce laws, employer-of-record services, I-9 compliance, and others). HR solutions providers must ensure their systems support compliance (audit trails, data security, policy enforcement and others). Staffing firms also may find they are uniquely positioned to offer advisory services around compliance and risk mitigation. 10 Table of Contents Employees As of September 30, 2025, the Company had approximately 173 regular employees and the number of contract service employees varied week to week during fiscal 2025, from a minimum of approximately 815 to a maximum of 1,275. Our Corporate Information We were incorporated in the State of Illinois in 1962 and are the successor to employment offices doing business since 1893. Our principal executive offices are located at 7751 Belfort Parkway, Suite 150, Jacksonville, Florida 32256, and our telephone number at that location is (904) 512-7501. Available Public Information We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements and amendments to reports filed or furnished pursuant to Sections 13(a), 14 and 15(d) of the Exchange Act. The public may obtain these filings at the Securities and Exchange Commission (the “SEC”) Public Reference Room at 100 F Street, NE, Washington DC 20549 or by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding the Company and other companies that file material with the SEC electronically. Copies of the Company’s reports can be obtained, free of charge, electronically through our internet website, www.geegroup.com. Information on the Company’s website is not incorporated in this report by the foregoing reference.