General Employment Enterprises Inc (JOB) filed Quarterly Report for the period ended 2009-06-30.
General Employment Enterprises Inc. provides professional staffing services. They offer customers both full time placement and temporary contract staffing services specializing in the placement of information technology engineering and accounting professionals. General Employment Enterprises Inc has a market cap of $3.9 million; its shares were traded at around $0.75 with and P/S ratio of 0.3.
Highlight of Business Operations:
As of June 30, 2009, the Company recorded the sale of 7,700,000 newly-issued shares of common stock to PSQ, LLC for $1,925,000 in cash, pursuant to a Securities Purchase and Tender Offer Agreement that had been entered into by the Company on March 30, 2009. The net proceeds to the Company from the share issuance, after deducting related costs, were $1,432,000. In connection with the completion of the sale of shares, the Company s Chairman, Chief Executive Officer and President (the “former CEO”) resigned from those positions and his employment agreement with the Company was replaced by a new consulting agreement. Under the consulting agreement, the Company is obligated to pay an annual consulting fee of $180,000 over a five-year period and to issue 500,000 shares of common stock to the former CEO for no additional consideration. As of June 30, 2009, the Company recorded a provision for additional compensation expense under the consulting agreement in the amount of $1,125,000. The nine-month results also include a provision for the cost of closing branch offices of $376,000. During the period, the Company consolidated ten branch offices in four metropolitan areas.
Consolidated net revenues for the nine months ended June 30, 2009 were down $3,596,000 (31%) from the prior year. Contract service revenues decreased $1,232,000 (22%) and placement service revenues decreased $2,364,000 (41%). As a result of the weaker economic conditions that prevailed during the nine months ended June 30, 2009, the Company experienced less demand for its services. The decline in consolidated net revenues was the result of a 16% decrease in the number of billable contract hours and 48% fewer placements.
Consolidated net revenues for the three months ended June 30, 2009 were down $1,102,000 (30%) from the prior year. Contract service revenues decreased $315,000 (17%) and placement service revenues decreased $787,000 (43%). As a result of the weaker economic conditions that prevailed during the three months ended June 30, 2009, the Company experienced less demand for its services. The decline in consolidated net revenues was the result of a 23% decrease in the number of billable contract hours and 46% fewer placements.
As of June 30, 2009, the Company had cash and cash equivalents of $3,081,000, which was a decrease of $1,084,000 from September 30, 2008. Net working capital at June 30, 2009 was $2,747,000, which was a decrease of $1,538,000 from September 30, 2008, and the current ratio was 2.4 to 1. Shareholders equity as of June 30, 2009 was $2,711,000 which represented 51% of total assets.
During the nine months ended June 30, 2009, the net cash used by operating activities was $2,468,000. The net loss for the period, adjusted for depreciation and other non-cash charges, used $2,922,000. A reduction of accounts receivable provided $210,000, and all other working capital items provided an additional $244,000.
Due to the effects of the U.S. economic downturn, the Company incurred losses during the first nine months of fiscal 2009, and the negative cash flow from operating activities was $2,468,000. To improve liquidity, the Company took certain actions. First, the Company completed the sale of 7,700,000 shares of common stock to PSQ and raised net cash proceeds of $1,432,000 during the period. With the stock proceeds, the Company s net cash outflow for the year to date was $1,084,000, and the Company s cash position was reduced to $3,081,000 as of June 30, 2009.
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