8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

April 30, 2018

Date of Report (Date of earliest event reported)

STAFFING 360 SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-37575	68-0680859
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

641 Lexington Avenue

27th Floor

New York, NY 10022

(Address of principal executive offices)

(646) 507-5710

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§ 240.12b–2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Item 2.02Results of Operations and Financial Condition.

On April 30, 2018, Staffing 360 Solutions, Inc. (the “Company”) issued a press release announcing the Company’s preliminary unaudited financial results for the fiscal first quarter ended March 31, 2018. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Within the press release and the supplemental financial information furnished therein, the Company refers to certain financial measures that are not in accordance with generally accepted accounting principles in the United States of America (“GAAP”), such as adjusted EBITDA. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flows (or equivalent statements) of the company, or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

The Company believes that these non-GAAP measures represent important internal measures of performance as management uses such measures in monitoring and evaluating the Company’s ongoing financial results, as well as to reflect the Company’s acquisitions. Management believes that these measures provide a more complete understanding of the Company’s operational results and a meaningful comparison of the Company’s performance between periods. These non-GAAP measures, however, may not reflect the actual financial results the Company would have achieved absent such acquisitions, and may not be indicative of the results that the Company expects to recognize for future periods. These non-GAAP measures should be considered in addition to, not a substitute for, measures of financial performance prepared in accordance with GAAP.

The information in this Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information contained in this Item 2.02 and Exhibit 99.1 attached hereto shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing.

Forward-Looking Statements

Certain matters discussed within this communication are forward-looking statements. These statements may be identified by words such as “expect,” “look forward to,” “anticipate” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project” or words of similar meaning.  Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained.  Actual results may vary materially from those expressed or implied by the statements herein, including the goal of achieving annualized revenues of $500 million, due to the Company’s ability to successfully raise sufficient capital on reasonable terms or at all, to consummate additional target acquisitions, to successfully integrate any newly acquired companies, to organically grow its business, to successfully defend any potential future litigation, changes in local or national economic conditions, the Company’s ability to comply with its contractual covenants, including in respect of its debt, as well as various additional risks, many of which are unknown at this time and generally out of the Company’s control, and which are detailed from time to time in Staffing 360 Solutions’ reports filed with the SEC, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.  The Company does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law.

Item 9.01Financial Statements and Exhibits.

(d) Exhibits (furnished only).

Exhibit No.	Description
99.1	Press Release of Staffing 360 Solutions, Inc. dated April 30, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  April 30, 2018	STAFFING 360 SOLUTIONS, INC.
	By:	/s/ Brendan Flood
		Brendan Flood
		Chairman, President and CEO

EX-99.1

Staffing 360 Solutions Announces Preliminary Q1 2018 Results

Q1 2018 Revenue Growth of 37%; Gross Profit Growth of 58%

Q1 2018 Highlights:

• Revenue growth of 37% to approximately $55.8 million

• Gross profit growth of 58% to approximately $11.6 million

• Gross margin strengthened to approximately 20.8%

• Net loss decreased to approximately $1.3 million

• Adjusted EBITDA growth of 55% to approximately $1.6 million

• Non-adjusted EBITDA growth by $3.0 million to $1.75 million

New York, NY – April 30, 2018 – Staffing 360 Solutions, Inc. (Nasdaq: STAF), (“STAF 360” or “the Company”), a staffing solutions company executing an international buy-and-build strategy in the U.S. and the U.K., today announced it preliminary results for the three months period ended March 31, 2018 (“Q1 2018”).  

Subject to the completion of the review of STAF 360’s interim financial statements for Q1 2018, and filing of its Form 10-Q with the Securities and Exchange Commission (“SEC”), the results for Q1 2018 are expected to be as follows¹:

• Q1 2018 revenue of approximately $55.8 million, an increase of approximately 37% from the $40.7 million reported for the three months ended April 1, 2017 (“Q1 2017”). Included in the Q1 2018 revenue is $17.9 million from acquisitions completed in September 2017, approximately $0.6 million from favorable foreign currency translation, partially offset by the impact of low margin business that we exited in Fiscal 2017. In addition, in Q1 2018 we were impacted by weather-related stoppages primarily for our Northeast clients.

• Q1 2018 gross profit of approximately $11.6 million, a 58% increase from the $7.3 million reported for Q1 2017.

• Q1 2018 gross margin improved to approximately 20.8% from 18.0% for Q1 2017.  The gross margin improvement, reflects the acquisition of two higher margin businesses, the strengthening of our permanent placement business, and the continued improvements in our workers compensation insurance costs.

• Q1 2018 net loss of approximately $1.3 million, a substantial improvement as compared to a net loss of $3.1 million reported for Q1 2017.

¹ Actual results may differ materially from the estimates described above due to developments or other information that may arise between now and the time the financial results for Q1 2018 are finalized. These preliminary results should not be viewed as a substitute for our interim consolidated financial statements prepared in accordance with GAAP.

• Q1 2018 adjusted EBITDA of approximately $1.6 million, an increase of over 55% as compared to $1.0 million for Q1 2017.

• Pro Forma trailing twelve-month adjusted EBITDA of approximately $10.3 million; this includes adjusted EBITDA of the two acquired companies prior to September 2017.

Brendan Flood, Chairman and Chief Executive Officer stated, “Q1 2018 was another quarter of improved operational and financial performance for STAF 360.  As expected, due to the internal growth initiatives which we put in place at the beginning of the year, in Q1 2018 we grew our revenues, improved our gross profit and substantially decreased our net loss.  We expect all metrics to continue to improve in the upcoming quarters and 2018 to be a year of sustainable, profitable, enterprise-wide growth.”

The Company expects to file its interim results for Q1 2018 on Form 10-Q before the SEC filing deadline of May 15, 2018 and will host an earnings conference call around the same time to discuss the results.

For more information about Staffing 360 Solutions and complete investor materials such as investor presentations, white papers and webcasts of past earnings calls, please visit: www.staffing360solutions.com/res.html.  

About Staffing 360 Solutions, Inc.

Staffing 360 Solutions, Inc. (Nasdaq: STAF) is a public company in the staffing sector engaged in the execution of an international buy-and-build strategy through the acquisition of domestic and international staffing organizations in the United States and United Kingdom.  The Company believes that the staffing industry offers opportunities for accretive acquisitions that will drive its annual revenues to $500 million.  As part of its targeted consolidation model, the Company is pursuing acquisition targets in the finance and accounting, administrative, engineering, IT, and Light Industrial staffing space.  For more information, please visit: www.staffing360solutions.com.

Follow Staffing 360 Solutions on Facebook, LinkedIn and Twitter.

Non-GAAP Financial Measures

The Company uses financial measures which are not calculated and presented in accordance with US generally accepted accounting principles (“GAAP”) in evaluating its financial and operational decision making regarding potential acquisitions, as well as a means to evaluate period-to period comparison. The Company presents these non-GAAP financial measures because it believes them to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We refer you to the reconciliations below.

The Company defines Adjusted EBITDA as earnings (or loss) from continuing operations before interest expense, income taxes, depreciation and amortization, and amortization of non-cash stock-based compensation, non-recurring acquisition and restructuring expenses and goodwill impairment charges.

Forward-Looking Statements

This press release contains forward-looking statements, which may be identified by words such as "expect," "look forward to," "anticipate" "intend," "plan," "believe," "seek," "estimate," "will," "project" or

words of similar meaning.  Although Staffing 360 Solutions, Inc. believes such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained.  Actual results may vary materially from those expressed or implied by the statements herein, including the goal of achieving annualized revenues of $500 million, due to the Company’s audited financial results deviating from its expected financial results,  the Company’s ability to successfully raise sufficient capital on reasonable terms or at all, to consummate additional acquisitions, to successfully integrate newly acquired companies, to organically grow its business, to successfully defend potential future litigation, changes in local or national economic conditions, the ability to comply with contractual covenants, including in respect of its debt, as well as various additional risks, many of which are now unknown and generally out of the Company’s control, and which are detailed from time to time in reports filed by the Company with the SEC, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.  Staffing 360 Solutions does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law.  

Contacts:

Investor Relations:

The Equity Group, Inc.

Lena Cati

lcati@equityny.com / +1 (212) 836-9611

Devin Sullivan

dsullivan@equityny.com / +1 (212) 836-9608

Staffing 360 Solutions, Inc.

Brendan Flood, Chairman and Chief Executive Officer

brendan.flood@staffing360solutions.com / +1 (646) 507-5715

David Faiman, Chief Financial Officer

info@staffing360solutions.com / (646) 507-5711

Staffing 360 Solutions, Inc. and Subsidiaries

Reconciliation of Net Loss to Adjusted EBITDA

(All Amounts in Thousands)

	Q1 2018	Q1 2017
		(Revised)
Net loss	$                   (1,271)	$                   (3,081)
Interest expense	1,955	502
Provision for income taxes	152	5
Depreciation and amortization	920	1,319
EBITDA	$                      1,756	$                   (1,255)
Acquisition, capital raising and other non-recurring expenses	$                        847	$                        531
Loss on extinguishment of debt	-	1,368
Change in fair value of warrant liability	(538)	92
Gain on intercompany note	(575)	-
Other non-cash charges	373	294
Other (income) / expense	(250)	8
Adjusted EBITDA	$                      1,613	$                      1,038
Trailing Twelve Months ("TTM") Adjusted EBITDA	$                      7,966	$                      5,339
Pro Forma TTM Adjusted EBITDA	$                    10,340	N/A