Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

COMMISSION FILE NUMBER: 001-37575

STAFFING 360 SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Delaware

68-0680859

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

757 3^rd Avenue

27th Floor

New York, New York 10017

(Address of principal executive offices) (Zip code)

(646) 507-5710

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered under Section 12(b) of the Exchange Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.0001 per share		STAF		NASDAQ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of the chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of August 9, 2024, 907,921 shares of common stock, $0.0001 par value, were outstanding.

Form 10-Q Quarterly Report

INDEX

PART I FINANCIAL INFORMATION

Item 1	Financial Statements
	Condensed Consolidated Balance Sheets as of June 29, 2024 (Unaudited) and December 30, 2023	3
	Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 29, 2024 and July 1, 2023	4
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the three and six months ended June 29, 2024 and July 1, 2023	5
	Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited) for the three and six months ended June 29, 2024 and July 1, 2023	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 29, 2024 and July 1, 2023	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4	Controls and Procedures	45

PART II OTHER INFORMATION

Item 1	Legal Proceedings	46
Item 1A	Risk Factors	46
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3	Defaults Upon Senior Securities	48
Item 4	Mine Safety Disclosures	48
Item 5	Other Information	48
Item 6	Exhibits	48

Signatures		49

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except share, per share and par values)

	As of			As of
	June 29, 2024			December 30, 2023
	(Unaudited)
ASSETS
Current Assets:
Cash	$	1,264		$	721
Accounts receivable, net		20,067			17,783
Prepaid expenses and other current assets		1,832			1,080
Current assets held for sale		-			9,116
Total Current Assets		23,163			28,700

Property and equipment, net		445			536
Goodwill		19,891			19,891
Intangible assets, net		10,366			11,193
Other assets		4,851			5,592
Right of use asset		4,728			4,813
Total Assets	$	63,444		$	70,725
LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities:
Accounts payable and accrued expenses	$	15,515		$	13,976
Accrued payroll taxes		11,310			6,193
Accrued expenses - related party		400			257
Current debt - related party		10,005			9,826
Current portion of debt		9,027			8,627
Earnout liabilities		8,854			9,054
Accounts receivable financing		14,822			14,698
Leases - current liabilities		1,115			1,035
Other current liabilities		5			376
Current liabilities held for sale		-			10,077
Total Current Liabilities		71,053			74,119

Leases - non current		4,034			4,213
Other long-term liabilities		331			203
Total Liabilities		75,418			78,535

Commitments and contingencies		—			—

Stockholders’ Deficit:
Preferred stock, $0.00001 par value, 20,000,000 shares authorized;		-			-
Common stock, $0.0001 par value, 250,000,000 shares authorized; 798,219 and 560,102 shares issued and outstanding, as of June 29, 2024 and December 30, 2023, respectively		1			1
Additional paid in capital		119,576			119,214
Accumulated other comprehensive loss		31			31
Accumulated deficit		(131,582	)		(127,056	)
Total Stockholders’ Deficit		(11,974	)		(7,810	)
Total Liabilities and Stockholders’ Deficit	$	63,444		$	70,725

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except share, per share and per share values)

(UNAUDITED)

	June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
	THREE MONTHS ENDED						SIX MONTHS ENDED
	June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
Revenue	$	44,177		$	48,615		$	85,621		$	96,239

Cost of Revenue, excluding depreciation and amortization stated below		38,362			41,588			74,496			81,726

Gross Profit		5,815			7,027			11,125			14,513

Operating Expenses:
Selling, general and administrative expenses		5,933			7,678			13,027			15,469
Depreciation and amortization		472			383			953			873
Total Operating Expenses		6,405			8,061			13,980			16,342

Net Loss From Continuing Operations		(590	)		(1,034	)		(2,855	)		(1,829	)

Other (Expenses)/Income:
Interest expense		(1,371	)		(1,086	)		(2,467	)		(2,141	)
Amortization of debt discount and deferred financing costs		(109	)		(102	)		(260	)		(202	)
Other income, net		150			187			255			174
Total Other (Expenses)/Income, net		(1,330	)		(1,001	)		(2,472	)		(2,169	)

Net Operating Loss		(1,920	)		(2,035	)		(5,327	)		(3,998	)

Discontinued Operations		—			(837	)		901			(1,689	)

Loss Before Benefit from Income Tax		(1,920	)		(2,872	)		(4,426	)		(5,687	)

Provision from Income taxes		(50	)		(7	)		(100	)		(47	)

Net Loss		(1,970	)		(2,879	)		(4,526	)		(5,734	)

Net Loss Attributable to Common Stockholders	$	(1,970	)	$	(2,879	)	$	(4,526	)	$	(5,734	)

Net Operating Loss Attributable to Common Stockholders - Basic	$	(3.55	)	$	(11.61	)	$	(8.70	)	$	(22.99	)

Net Income (Loss) from Discontinued Operations Attributable to Common Stockholders - Basic	$	—		$	(4.76	)	$	1.44		$	(9.60	)

Weighted Average Shares Outstanding – Basic		555,000			175,926			623,875			175,926

Net Loss Attributable to Common Stockholders - Diluted	$	(1,970	)	$	(2,042	)	$	(5,427	)	$	(4,045	)

Net Operating Loss Attributable to Common Stockholders - Diluted	$	(3.55	)	$	(11.61	)	$	(8.70	)	$	(22.99	)

Net Income (Loss) from Discontinued Operations Attributable to Common Stockholders - Diluted	$	—		$	(4.76	)	$	1.44		$	(9.60	)

Weighted Average Shares Outstanding – Diluted		555,000			175,926			623,875			175,926

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(All amounts in thousands)

(UNAUDITED)

	June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
	THREE MONTHS ENDED						SIX MONTHS ENDED
	June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
Net Loss	$	(1,970	)	$	(2,879	)	$	(4,526	)	$	(5,734	)

Other Comprehensive Income (Loss)
Foreign exchange translation adjustment		-			116			-			139
Comprehensive Loss Attributable to the Company	$	(1,970	)	$	(2,763	)	$	(4,526	)	$	(5,595	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(All amounts in thousands, except share and par values)

(UNAUDITED)

	Shares		Par Value		Additional paid in capital		Accumulated other comprehensive income (loss)			Accumulated Deficit			Total Equity
	Common Stock
Balance, January 1, 2023		262,920	$	1	$	111,586	$	(2,219	)	$	(101,015	)	$	8,353
Shares issued to/for:
Employees, directors and consultants		29,730		—		940		—			—			940
Sale of common stock and warrants		188,452		—		4,113		—			—			4,113
Foreign currency translation gain		—		—		—		139			—			139
Net loss		—		—		—		—			(5,734	)		(5,734	)
Balance July 1, 2023		481,102	$	1	$	116,639	$	(2,080	)	$	(106,749	)	$	7,811

	Shares		Par Value		Additional paid in capital			Accumulated other comprehensive income			Accumulated Deficit			Total Equity
	Common Stock
Balance, April 1, 2023		385,602	$	1	$	116,419		$	(2,196	)	$	(103,870	)	$	10,354
Shares issued to/for:
Employees, directors and consultants		6,000		—		221			—			—			221
Sale of common stock and warrants		89,500		—		(1	)		—			—			(1	)
Foreign currency translation gain		—		—		—			116			—			116
Net loss		—		—		—			—			(2,879	)		(2,879	)
Balance, July 1, 2023		481,102	$	1	$	116,639		$	(2,080	)	$	(106,749	)	$	7,811

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(All amounts in thousands, except share and par values)

(UNAUDITED)

	Shares		Par Value		Additional paid in capital		Accumulated other comprehensive loss		Accumulated Deficit			Total Deficit
	Common Stock
Balance, December 30, 2023		560,102	$	1	$	119,214	$	31	$	(127,056	)	$	(7,810	)
Shares issued to/for:
Employees, directors and consultants		17,000		—		362		—		—			362
Warrants Exercised		221,117		—		—		—		—			—
Foreign currency translation loss		—		—		—		—		—			—
Net loss		—		—		—		—		(4,526	)		(4,526	)
Balance, June 29, 2024		798,219	$	1	$	119,576	$	31	$	(131,582	)	$	(11,974	)

	Shares		Par Value		Additional paid in capital		Accumulated other comprehensive income		Accumulated Deficit			Total (Deficit)
	Common Stock
Balance, March 30, 2024		634,219	$	1	$	119,400	$	31	$	(129,612	)	$	(10,180	)
Balance		634,219		1		119,400		31		(129,612	)		(10,180	)
Shares issued to/for:
Employees, directors and consultants		5,000		—		176		—		—			176
Warrants Exercised		159,000		—		—		—		—			—
Foreign currency translation loss		—		—		—		—		—			—
Net loss		—		—		—		—		(1,970	)		(1,970	)
Balance, June 29, 2024		798,219	$	1	$	119,576	$	31	$	(131,582	)	$	(11,974	)
Balance		798,219	$	1	$	119,576	$	31	$	(131,582	)		(11,974	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(All amounts in thousands)

(UNAUDITED)

	June 29, 2024			July 1, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(4,526	)	$	(5,734	)
Adjustments to reconcile net loss income to net cash provided by (used in) operating activities:
Depreciation and amortization		953			873
Amortization of debt discount and deferred financing costs		260			202
Bad debt expense		—			21
Right of use assets depreciation		547			599
Stock based compensation		362			940
Changes in operating assets and liabilities:
Accounts receivable		(2,284	)		(478	)
Prepaid expenses and other current assets		(752	)		(259	)
Other assets		741			4,263
Accounts payable and accrued expenses		1,544			(500	)
Accrued Payroll Taxes		5,118			—
Accounts payable, related party		143			—
Other current liabilities		(373	)		(220	)
Other long-term liabilities and other		(389	)		(380	)
NET CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES		1,344			(673	)
Net cash used in discontinued operating activities:		(3,010	)		(7,611	)
NET CASH USED IN OPERATING ACTIVITIES		(1,666	)		(8,284	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(29	)		(62	)
NET CASH USED IN CONTINUING INVESTING ACTIVITIES		(29	)		(62	)
Net cash provided by discontinued investing activities		2,045			3,196
NET CASH PROVIDED BY INVESTING ACTIVITIES		2,016			3,134

CASH FLOWS FROM FINANCING ACTIVITIES:
Third party financing costs, related party		—			(320	)
Dividend payment in kind		269			—
Financing (repayments) on accounts receivable financing, net		124			(661	)
Proceeds from sale of common stock		—			4,433
Payments made on earnouts		(200	)		—
NET CASH PROVIDED BY CONTINUING FINANCING ACTIVITIES		193			3,452
Net cash used in discontinued financing activities		—			(252	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		193			3,200

NET INCREASE (DECREASE) IN CASH		543			(1,950	)

Effect of exchange rates on cash		—			34

Cash - Beginning of period		721			1,992

Cash - End of period	$	1,264		$	76

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share, par values and stated value per share)

(UNAUDITED)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Staffing 360 Solutions, Inc. (“we,” “us,” “our,” “Staffing 360,” or the “Company”) was incorporated in the State of Nevada on December 22, 2009, as Golden Fork Corporation, which changed its name to Staffing 360 Solutions, Inc., ticker symbol “STAF,” on March 16, 2012. On June 15, 2017, the Company reincorporated in the State of Delaware.

We are a public company in the domestic staffing sector. Our business model is based on finding and acquiring suitable, mature, profitable, operating, U.S.-based staffing companies. Our targeted consolidation model is focused specifically on the accounting and finance, information technology (“IT”), engineering, administration (“Professional”) and light industrial (“Commercial”) disciplines. Our typical acquisition model is based on paying consideration in the form of cash, stock, earn-outs and/or promissory notes. In furthering our business model, we are regularly in discussions and negotiations with various suitable, mature acquisition targets. To date, we have completed ten acquisitions since November 2013. In February 2024, the Company disposed of its UK operations. Accordingly, all of the figures, including share and per share information, except where specifically referenced, have been revised to reflect only the results of continuing operations.

The Company focuses on five strategic verticals that represent sub-segments of the staffing industry. These five strategic pillars, accounting & finance, information technology, engineering, administration, and commercial are the basis for the Company’s sales and revenue generation and its growth acquisition targets.

The Headway business includes EOR (“Employer of Record”) service contracts. EOR projects are typically large volume, long-term providing HR outsourcing of payroll and benefits for a contingent workforce. EOR projects, while priced with lower gross margin percentages than traditional temporary staffing assignments, yield a comparable contribution as a result of lower costs to deliver these services. Typical contribution for EOR projects would be 80-85% of the gross profit earned, compared to 40-50% for traditional staffing which negates the impact of lower gross margins. This EOR service offering could be easily added to the Company’s other Brands (as defined below), providing for a growth element within the existing client base. The Headway business also brought an active workforce in all 50 states in the US, as well as Puerto Rico and Washington DC. This will provide for potential expansion of accounts for all brands in the group’s portfolio (“Brands”).

The Company has developed a centralized, sales and recruitment hub. The addition of Headway, with its single office, and nationwide coverage for operations, supports and accelerates the Company’s objective of driving efficiencies through the use of technology, deemphasizing bricks and mortar, supporting more efficient and cost-effective service delivery for all Brands.

The Company has a management team with significant operational and M&A experience. The combination of this management experience and the increased opportunity for expansion of its core Brands with EOR services and nationwide expansion, provide for the opportunity of significant organic growth, while plans to continue its business model, finding and acquiring suitable, mature, profitable, operating, U.S. based staffing companies continues.

We effected a one-for-ten reverse stock split on June 25, 2024 (the “Reverse Stock Split”). All share and per share information in this Quarterly Report on Form 10-Q, including the condensed consolidated financial statements and related notes thereto, has, where applicable, been retroactively adjusted to reflect the Reverse Stock Split.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

These condensed consolidated financial statements and related notes are presented in accordance with generally accepted accounting principles in the United States (“GAAP”), expressed in U.S. dollars. All amounts are in thousands, except share, per share and par values, unless otherwise indicated.

The accompanying condensed consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the GAAP. All significant intercompany balances and transactions have been eliminated in consolidation.

Liquidity

The accompanying condensed consolidated financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared on a basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity, capital requirements and that our credit facilities with our lenders will remain available to us. As shown in the accompanying condensed consolidated financial statements as of the quarter ended June 29, 2024, the Company has an accumulated deficit of $131,582 and a working capital deficit of $47,890. At June 29, 2024, we had total gross debt of $19,385 and $1,264 of cash on hand. We have historically met our cash needs through a combination of cash flows from operating activities, term loans, promissory notes, convertible notes, private placement offerings and sales of equity. Our cash requirements are generally for operating activities and debt repayments.

Due to the timing of select liabilities coming due, we are in discussion with our lenders to determine the best manner to settle these liabilities.

The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared assuming that we will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity, capital requirements and that our credit facilities with our lenders will remain available to us.

Further, the notes issued to Jackson Investment Group LLC (“Jackson”) includes certain financial customary covenants and the Company is currently not in compliance. We are working with the lenders to bring the Company into compliance with these covenants.

The entire outstanding principal balance of the Jackson Notes (as defined herein), which was $10,116 as of June 29, 2024, shall be due and payable on October 14, 2024. The debt represented by the Jackson Note continues to be secured by substantially all of the Company’s domestic subsidiaries’ assets pursuant to the Amended and Restated Security Agreement with Jackson, dated September 15, 2017, as amended. The Company also has a $32,500 revolving loan facility with MidCap Funding X Trust (“MidCap”). The MidCap facility has a maturity date of September 6, 2024.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Going Concern

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. Historically, the Company has funded such payments either through cash flow from operations or the raising of capital through additional debt or equity. If the Company is unable to obtain additional capital, such payments may not be made on time.

The Board of the Company is reviewing all of the strategic options open to it in determining how to resolve the Going Concern qualification and will update Stockholders as and when any material solution has been determined and ready to be acted upon. These solutions may include, but are not limited to, the restructuring of debt and raising of additional debt, management of expenditures, raising of additional equity, potential dispositions of assets, in addition to what has already happened in disposing of the UK operation to protect cashflows.

Use of Estimates

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from its estimates. To the extent there are material differences between estimates and the actual results, future results of operations will be affected. Significant estimates for the quarters ended June 29, 2024 and July 1, 2023 include the measurement of credit losses, valuation of intangible assets, including goodwill, borrowing rate consideration for right-of-use (“ROU”), liabilities associated with earn-out obligations, testing long-lived assets for impairment, valuation reserves against deferred tax assets and penalties in connection with outstanding payroll tax liabilities, stock based compensation and fair value of warrants and options.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Goodwill

Goodwill relates to amounts that arose in connection with various acquisitions and represents the difference between the purchase price and the fair value of the identifiable intangible and tangible net assets when accounted for using the purchase method of accounting. Goodwill is not amortized, but it is subject to periodic review for impairment. Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to, current economic and market conditions, a decline in the equity value of the business, a significant adverse change in certain agreements that would materially affect reported operating results, business climate or operational performance of the business and an adverse action or assessment by a regulator.

The carrying value of each reporting unit is based on the assignment of the appropriate assets and liabilities to each reporting unit. Assets and liabilities were assigned to each reporting unit if the assets or liabilities are employed in the operations of the reporting unit and the asset and liability is considered in the determination of the reporting unit fair value.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.

The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

The Company has primarily two main forms of revenue – temporary contractor revenue and permanent placement revenue. Temporary contractor revenue is accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of the Company’s performance on an hourly or daily basis. The contracts stipulate weekly or monthly billing, and the Company has elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as we have the right to payment in an amount that corresponds directly with the value of performance completed to date. Permanent placement revenue is recognized on the date the candidate’s full-time employment with the customer has commenced. The customer is invoiced on the start date, and the contract stipulates payment due under varying terms, typically 30 days. The contract with the customer stipulates a guarantee period whereby the customer may be refunded if the employee is terminated within a short period of time, however this has historically been infrequent, and immaterial upon occurrence. As such, the Company’s performance obligations are satisfied upon commencement of the employment, at which point control has transferred to the customer. Revenue for the three and six months ended June 29, 2024 was comprised of $44,077 and $85,246 of temporary contractor revenue and $100 and $375 of permanent placement revenue, respectively compared with $48,389 and $95,512 of temporary contractor revenue and $226 and $727 permanent placement revenue for the three and six months ended July 1, 2023, respectively. Refer to Note 11 – Segment Information for further details on breakdown by segments.

Income Taxes

The Company utilizes Accounting Standards Codification (“ASC”) Topic 740, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company applies the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of the date of this filing, the Company is current on all corporate, federal and state tax returns. The Company’s policy is to record interest and penalties related to unrecognized tax benefits as income tax expense.

The effective income tax rate was (2.61%), (2.27%), (0.77%) and (0.78%) for the three and six months ending June 29, 2024 and July 1, 2023, respectively. The Company’s effective tax rate differs from the U.S. federal statutory rate of 21%, primarily due to changes in valuation allowances in the U.S., which eliminates the effective tax rate on current year losses, offset by current state taxes and changes to goodwill naked credit. The Company may have experienced an IRC Section 382 limitation during 2021, for which it is in process of conducting an analysis to determine the tax consequences of such a limitation.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. Refer to Note 9 – Stockholders’ Deficit for further details.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid. This change is effective for annual periods beginning after December 15, 2024. This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted. The Company does not expect the adoption of this ASU to have a material impact on its financial statements.

NOTE 3 – EARNINGS (LOSS) PER COMMON SHARE

The Company utilizes the guidance per ASC 260, “Earnings per Share”. Basic earnings per share are calculated by dividing income/loss available to stockholders by the weighted average number of common stock shares outstanding during each period.

Diluted earnings per share are computed using the weighted average number of common stock shares and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares of common stock issuable upon the conversion of preferred stock, convertible notes, unvested equity awards and the exercise of stock options and warrants (calculated using the modified treasury stock method). Such securities, shown below, presented on a common stock equivalent basis and outstanding as of June 29, 2024 and July 1, 2023 have not been included in the diluted earnings per share computations, as their inclusion would be anti-dilutive due to the Company’s net loss as of June 29, 2024 and July 1, 2023:

	June 29, 2024		July 1, 2023
Warrants		448,703		372,955
Restricted shares – unvested		22,559		18,850
Options		5,118		5,131
Total		476,380		396,936

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

NOTE 4 – ACCOUNTS RECEIVABLE FINANCING

Midcap Funding X Trust

Prior to September 15, 2017, certain U.S. subsidiaries of the Company were party to a $25,000 revolving loan facility with MidCap, with the option to increase the amount by an additional $25,000, with a maturity date of April 8, 2019.

On October 26, 2020, the Company entered into Amendment No. 17 to that certain Credit and Security Agreement, dated April 8, 2017, by and among, the Company, as the parent, Monroe Staffing Services, LLC, a Delaware limited liability company, Faro Recruitment America, Inc., a New York corporation, Lighthouse Placement Services, Inc., a Massachusetts corporation, Staffing 360 Georgia, LLC, a Georgia limited liability company, and Key Resources, Inc., a North Carolina corporation, as borrowers (the “Credit Facility Borrowers”), MidCap Funding IV Trust as successor by assignment to MidCap (as agent for lenders), and other financial institutions or other entities from time to time parties thereto as lenders (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit and Security Agreement”) pursuant to which, among other things, the parties agreed to extend the maturity date of our outstanding asset based revolving loan until September 1, 2022. In addition, the Company also agreed to certain amendments to the financial covenants.

On October 27, 2022, the Company and the Credit Facility Borrowers entered into Amendment No. 27 and Joinder Agreement to the Credit and Security Agreement (“Amendment No. 27”) with MidCap Funding IV Trust as successor by assignment to MidCap and the lenders party thereto. Amendment No. 27, among other things, (i) increases the revolving loan commitment amount from $25,000 to $32,500 (the “Loan”), (ii) extends the commitment expiry date from October 27, 2022 to September 6, 2024, and (iii) modifies certain of the financial covenants. Pursuant to Amendment No. 27, as long as no default or event of default under the Credit and Security Agreement as amended by Amendment No. 27 exists, upon written request by the Company and with the prior written consent of the agent and lenders, the Loan may be increased by up to $10,000 in minimum amounts of $5,000 tranches each, for an aggregate loan commitment amount of $42,500.

In addition, Amendment No. 27 increases the applicable margin from 4.0% to 4.25%, with respect to the Loan (other than Letter of Credit Liabilities (as defined in the Credit and Security Agreement)), and from 3.5% to 3.75% with respect to the Letter of Credit Liabilities. Amendment No. 27 also replaces the interest rate benchmark from LIBOR to SOFR and provides that the Loan shall bear interest at the sum of a term-based SOFR rate (plus a SOFR adjustment of 0.11448%) plus the Applicable Margin, subject to certain provisions for the replacement of SOFR with an alternate benchmark in connection with SOFR no longer being provided by its administrator. Notwithstanding the foregoing, the SOFR interest rate shall not be at any time less than 1.00%.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

The facility provides events of default including: (i) failure to make payment of principal or interest on any Loans when required, (ii) failure to perform obligations under the facility and related documents, (iii) not paying its debts as such debts become due and similar insolvency matters, and (iv) material adverse changes in the financial condition of business prospectus of any Borrower (subject to a 10-day notice and cure period). Upon an event of default, the Company’s obligations under the credit facility may, or in the event of insolvency or bankruptcy will automatically, be accelerated. At the election of agent or required lenders (or automatically in case of bankruptcy or insolvency events of default), upon the occurrence of any event of default and for so long as it continues, the facility will bear interest at a rate equal to the lesser of: (i) 3.0% above the rate of interest applicable to such obligations immediately prior to the occurrence of the event of default; and (ii) the maximum rate allowable under law.

Under the terms of this agreement, the Company is subject to affirmative covenants which are customary for financings of this type, including covenants to: (i) maintain good standing and governmental authorizations, (ii) provide certain information and notices to MidCap, (iii) deliver monthly reports and quarterly financial statements to MidCap, (iv) maintain insurance, (v) discharge all taxes, (vi) protect its intellectual property, and (vii) generally protect the collateral granted to MidCap. The Company is also subject to negative covenants customary for financings of this type, including that it may not: (i) enter into a merger or consolidation or certain change of control events, (ii) incur liens on the collateral, (iii) except for certain permitted acquisitions, acquire any significant assets other than in the ordinary course of business, (iv) assume certain additional senior debt, or (v) amend any of its organizational documents. The Company is currently not in compliance with certain affirmative covenants contained in its’ debt agreements. We are working with the lenders to bring the Company into compliance with these covenants.

On August 30, 2023, the Company and the Credit Facility Borrowers entered into Amendment No. 28 to Credit and Security Agreement with MidCap and the lenders party thereto (the “Lenders”). Amendment No. 28, among other things: (i) increases the applicable margin (a) from 4.25% to 4.50% with respect to revolving loans and other obligations (other than letter of credit liabilities) and (b) from 3.75% to 4.50% with respect to letter of credit liabilities, (ii) revises the definition of borrowing base to include the amount of any reserves and/or adjustments provided for in the Credit and Security Agreement, including, but not limited to, the Additional Reserve Amount (as defined in the in Amendment No. 28), (iii) requires that the Company complies with a fixed charge coverage ratio of at least 1:00 to 1:00, and (iv) waives the existing event of default that occurred under the Credit and Security Agreement due to the Credit Parties’ failure to maintain the Minimum Liquidity amount (as defined in the Credit and Security Agreement) for the fiscal month ending June 30, 2023 (each as defined in the Credit and Security Agreement).

In addition, pursuant Amendment No. 28, no later than five (5) business days following the receipt of any cash proceeds from any equity issuance or other cash contribution from the Company’s equity holders, the Company shall prepay the revolving loans by an amount equal to (i) the sum of $1,300, less the current funded Additional Reserve Amount, multiplied by (ii) 50%.

In connection with Amendment No. 28, the Company paid to MidCap (i) a modification fee of $68 and (ii) $32 in overdue interest amount, which were paid prior to October 31, 2023.

On August 30, 2023, in connection with that certain First Omnibus Amendment and Reaffirmation Agreement, by and among the Company, the guarantor parties thereto and Jackson (the “First Omnibus Amendment Agreement”) the 2023 Jackson Note (as defined herein) and Amendment No. 28, the Company, Jackson, the Lenders and MidCap entered into the Sixth Amendment to Intercreditor Agreement (the “Sixth Amendment”), which amended the Intercreditor Agreement, dated as of September 15, 2017 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the “Intercreditor Agreement”), by and between the Company, Jackson and MidCap. The Sixth Amendment, among other things, provides for (i) consent by the Lenders to the First Omnibus Amendment Agreement and (ii) consent by Jackson to Amendment No. 28.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

The balance of the MidCap facility as of June 29, 2024 and December 30, 2023 was $14,822 and $14,698, respectively, and is included in Accounts receivable financing on the Consolidated Balance Sheets.

NOTE 5 – INTANGIBLE ASSETS

The following provides a breakdown of intangible assets as of:

	Tradenames			Non-Compete			Customer Relationship			Total
	June 29, 2024
	Tradenames			Non-Compete			Customer Relationship			Total
Intangible assets, gross	$	8,282		$	2,215		$	18,953		$	29,450
Accumulated amortization		(5,215	)		(2,215	)		(11,654	)		(19,084	)
Intangible assets, net	$	3,067		$	-		$	7,299		$	10,366

	Tradenames			Non-Compete			Customer Relationship			Total
	December 30, 2023
	Tradenames			Non-Compete			Customer Relationship			Total
Intangible assets, gross	$	8,282		$	2,215		$	18,953		$	29,450
Accumulated amortization		(4,928	)		(2,215	)		(11,114	)		(18,257	)
Intangible assets, net	$	3,354		$	-		$	7,839		$	11,193

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

As of June 29, 2024, estimated annual amortization expense for each of the next five fiscal years is as follows:

Fiscal quarter ended June	Amount
2023	$	833
2024		1,617
2025		1,567
2026		1,567
2027		1,321
Thereafter		3,461
Total	$	10,366

Amortization of intangible assets for the three and six months ended June 29, 2024 and July 1, 2023 was $433, $843, $453 and $907, respectively. The weighted average useful life of intangible assets remaining is 5.5 years.

NOTE 6 – GOODWILL

The following table provides a roll forward of goodwill:

SCHEDULE OF GOODWILL

	June 29, 2024		December 30, 2023
Beginning balance, gross	$	19,891	$	19,891
Acquisition		—		—
Currency translation adjustment		—		—
Ending balance, net	$	19,891	$	19,891

Goodwill by reportable segment is as follows:

	June 29, 2024		December 30, 2023
Professional Staffing - US	$	14,031	$	14,031
Commercial Staffing - US		5,860		5,860
Ending balance, net	$	19,891	$	19,891
Goodwill	$	19,891	$	19,891

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. ASC 350, requires that goodwill be tested for impairment at the operating segment level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. ASC 280-10-50-11 states that operating segments often exhibit similar long-term financial performance if they have similar economic characteristics. During the quarter ended June 29, 2024, management concluded the Company has two operating segments for goodwill impairment analysis under ASC 350 such as commercial and professional. Accordingly, goodwill will no longer be tested at the unit level for the five reporting units and will be tested for impairment at the operating segment level.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

NOTE 7– DEBT

SCHEDULE OF DEBT

	June 29, 2024			December 30, 2023
Jackson Investment Group - related party	$	10,116		$	10,116
Redeemable Series H Preferred Stock		9,269			9,000
Total Debt, Gross		19,385			19,116
Less: Debt Discount and Deferred Financing Costs, Net		(353	)		(663	)
Total Debt, Net		19,032			18,453
Less: Non-Current Portion - Related Party		—			—
Less: Non-Current Portion		—			—
Total Current Debt, Net	$	19,032		$	18,453

Jackson Notes

On August 30, 2023, the Company and the guarantor parties thereto (together with the Company, the “Obligors”) entered into that certain First Omnibus Amendment and Reaffirmation Agreement to the Note Documents (the “First Omnibus Amendment Agreement”) with Jackson, which First Omnibus Amendment Agreement, among other things: (i) amends the Third A&R Agreement, (ii) provided for the issuance of a new 12% Senior Secured Promissory Note due October 14, 2024 (the “2023 Jackson Note” and together with the 2022 Jackson Note, the “Jackson Notes”) to Jackson, and (iii) joins certain subsidiaries of the Company to (a) that certain Amended and Restated Pledge Agreement, dated as of September 15, 2017 (as amended by the First Omnibus Amendment Agreement, the “Pledge Agreement”) and (b) that certain Amended and Restated Security Agreement, dated as of September 15, 2017 (as amended by the Amendment Agreement, the “Security Agreement”), as either subsidiary guarantors or pledgors (as applicable) and amends certain terms and conditions of each of the Pledge Agreement and the Security Agreement.

Pursuant to the First Omnibus Amendment Agreement, interest on the 2022 Jackson Note, evidencing the obligations of the Obligors under the Third A&R Agreement and executed by the Company in favor of Jackson, shall be paid in cash and continue to accrue at a rate per annum equal to 12% until the principal amount of the 2022 Jackson Note has been paid in full. In the event that Company has not repaid in cash at least 50% of the outstanding principal balance of the 2022 Jackson Note as of the date of the First Omnibus Amendment Agreement or on or before October 27, 2023, then interest on the outstanding principal balance of the 2022 Jackson Note will accrue at 16% per annum until the 2022 Jackson Note is repaid in full. All accrued and unpaid interest on the outstanding principal of the 2022 Jackson Note shall be due and payable in arrears in cash on a monthly basis; provided that (i) the interest payment that would be due on September 1, 2023 shall instead be due December 1, 2023 and (ii) the amount of each such deferred interest payment shall be added to the principal amount of the 2022 Jackson Note. Notwithstanding the foregoing, the amount necessary to satisfy such accrued but unpaid interest on the 2022 Jackson Note as of the date of the First Omnibus Amendment was retained by Jackson from the aggregate purchase price of the 2023 Jackson Note, along with certain out-of-pocket fees and expenses, including reasonable attorney’s fees, incurred by Jackson in connection with the First Omnibus Amendment Agreement, the 2023 Jackson Note and related documents thereto.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

In addition, pursuant to the terms of the Third A&R Agreement, as amended by the First Omnibus Amendment Agreement, until all principal interest and fees due pursuant to the Third A&R Agreement and the Jackson Note are paid in full by the Company and are no longer outstanding, Jackson shall have a first call over 50% of the net proceeds from all common stock equity raises the Company conducts, which shall be used to pay down any outstanding obligations due pursuant to the Note Documents. The 2022 Jackson Note continues to be secured by substantially all of the Company and its subsidiaries’ assets as a second lien holder to MidCap in the United States, pursuant to the Security Agreement.

Redeemable Series H Preferred Stock

On May 18, 2022, the Company entered into a Headway purchase agreement with Headway (the “Headway Purchase Agreement”). Consideration for the purchase of 100% of Headway was the issuance of an aggregate of 9,000,000 shares of Series H Convertible Preferred Stock (the “Series H Preferred Stock”). Each share of Series H Preferred Stock shall have a par value of $0.00001 per share and a stated value equal to $1.00 and is convertible at any time into an aggregate of 350,000 shares of common stock. This is determined by dividing the stated value of such share of Preferred Stock by the conversion price. The conversion price equals $25.714. Holders of Series H Preferred Stock are entitled to quarterly cash dividends at a per annum rate of 12%. The shares of the Series H Preferred Stock may be redeemed by the Company through a cash payment at a per share equal to the stated value, plus all accrued but unpaid dividends, at any time. On May 18, 2025, the Company shall redeem all of the shares of the Series H Preferred Stock. The redemption price represents the number of shares of the Preferred Stock (9,000,000), plus all accrued but unpaid dividends, multiplied by the Stated Value ($1). On May 18, 2022, the Company paid $14 towards the Series H Preferred Stock balance. As of June 29, 2024 the redemption price was $9,269.

In accordance with ASC 480-10-15-3, the agreement includes certain rights and options including: redemption, dividend, voting, and conversion which have characteristics akin to liability and equity. The Series H Preferred Stock is redeemable and has a defined maturity date upon the third anniversary of the original issue date. As such and based on the authoritative guidance, the Series H Preferred Stock meets the definition of a debt instrument. The Company obtained a third-party valuation report to calculate the fair value of Series H Preferred Stock. As of May 18, 2022, the fair value of the Redemption Price was calculated as $8,265 utilizing the CRR Binomial Lattice model. The difference in fair value was $735 is accounted as a deferred financing charge and will be amortized over the life of the term. The quarterly dividends will be reflected as interest expense.

On July 31, 2023, the Company, Chapel Hill Partners, L.P. (“Chapel Hill”) and Jean-Pierre Sakey (“Sakey”) entered into an agreement in connection with the Headway Purchase Agreement.

Pursuant to the agreement, if on or prior to September 30, 2023, the Company does not redeem the Series H Preferred Stock and remit the Contingent Payment (as defined in the Headway Purchase Agreement), then the Company shall make the Contingent Payment in the amount of $5,000, as set forth in the Purchase Agreement, in five equal installments of $1,000 each, less $134 per installment to be paid to third-parties to satisfy existing incentives and fees due, with such fees and incentive payments to be allocated at the discretion of Chapel Hill and Sakey (the “Contingent Payment Installments”), with such Contingent Payment Installments to be made on or before December 31, 2023, March 31, 2024, June 30, 2024, September 30, 2024 and December 31, 2024 (each such date, a “Contingent Installment Payment Date”). On each Contingent Installment Payment Date, the Company shall additionally redeem 100,000 shares of Series H Preferred Stock at a price per share equal to $0.0000001 per share. The contingent payments due on December 31, 2023, March 31, 2024 and June 30, 2024 were not paid.

Pursuant to the Letter Agreement, the Company also had no obligation to pay the Preferred Dividend (as defined in the Certificate of Designation of Preferences, Rights and Limitations of Series H Convertible Preferred Stock, as amended) on June 30, 2023, September 30, 2023 and December 31, 2023.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

NOTE 8 – LEASES

As of June 29, 2024 we recorded a right of use (“ROU”) lease asset of approximately $4,728 with a corresponding lease liability of approximately $5,149, based on the present value of the minimum rental payments of such leases. The Company’s finance leases are immaterial both individually and in the aggregate.

In January 2024, the Company entered into a new lease agreement for an office lease in Worcester, MA for a term of 3 years. This resulted in increases to right of use assets and lease liabilities of $54. In February 2024, the Company entered into a new lease agreement for an office lease in East Hartford for a term of 3 years. This resulted in increases to right of use assets and lease liabilities of $72.

Quantitative information regarding the Company’s leases for period ended June 29, 2024 is as follows:

Lease Cost	Classification	June 29, 2024
Operating lease cost	SG&A Expenses		492
Other information
Weighted average remaining lease term (years)			3.4
Weighted average discount rate			7.00	%

Future minimum lease payments under non-cancelable leases as of June 29, 2024, were as follows:

Future Lease Payments
2024	$	750
2025		1,318
2026		1,130
2027		1,076
2028		1,103
Thereafter		676
	$	6,053
Less: Imputed Interest		904
Operating lease, liability	$	5,149

Leases - Current	$	1,115
Leases - Non current	$	4,034

As most of the Company’s leases do not provide an implicit rate, we use the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. This methodology was deemed to yield a measurement of the ROU lease asset and associated lease liability that was appropriately stated in all material respects.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

NOTE 9– STOCKHOLDERS’ DEFICIT

The Company issued the following shares of common stock during the six-months ended June 29, 2024:

SCHEDULE OF STOCKHOLDERS DEFICIT

	Number of		Fair Value		Fair Value at Issuance
	Common Shares		of Shares		(minimum and maximum
Shares issued to/for:	Issued		Issued		per share)
Warrants Exercised		221,117	$	1,835	$	8.30	$	8.30
Board and committee members		17,000		2,142	$	2.80	$	4.10
		238,117	$	3,977

The Company issued the following shares of common stock during the six-months ended July 1, 2023:

	Number of		Fair Value		Fair Value at Issuance
	Common Shares		of Shares		(minimum and maximum
Shares issued to/for:	Issued		Issued		per share)
Equity raise		188,452	$	4,999	$	26.50	$	26.50
Employees		17,730		531	$	28.20	$	28.20
Board and committee members		12,000		243	$	10.50	$	31.30
		218,182	$	5,773

Reverse Stock Split

On June 25, 2024, the Company effected the Reverse Stock Split. All share and per share information in this Quarterly Report on Form 10-Q, including the condensed consolidated financial statements and the notes thereto, has, where applicable, been retroactively adjusted to reflect the Reverse Stock Split.

Increase of Authorized Common Stock

On December 27, 2023, stockholders approved an amendment to our Charter to increase the number of authorized shares of common stock, par value $0.00001 (“Common Stock”), from 200,000,000 to 250,000,000 and to make a corresponding change to the number of authorized shares of capital stock (the “the Common Stock Increase Amendment”).

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

We previously had a total of 220,000,000 shares of capital stock authorized under our Charter, consisting of 200,000,000 shares of Common Stock and 20,000,000 shares of preferred stock, par value $0.00001 per share (the “Preferred Stock”). This approval allowed our Board to file the Common Stock Increase Amendment with the office of the Delaware Secretary of State, which had the effect of increasing the number of authorized shares of Common Stock from 200,000,000 to 250,000,000 and increasing the number of authorized shares of all classes of stock from 220,000,000 to 270,000,000. The number of shares of authorized Preferred Stock remained unchanged.

February 2023 Public Offering

On February 7, 2023, the Company entered into a securities purchase agreement (“February 2023 Purchase Agreement”) with an institutional, accredited investor (the “Investor”) for the issuance and sale, in a best efforts public offering (the “February 2023 Offering”), of (i) 31,500 units (the “Units”), each Unit consisting of one share of the Company’s common stock, par value $0.0001 per share, and one warrant (the “February 2023 Warrants”) to purchase one share of common stock, and (ii) 156,952 pre-funded units (the “Pre-Funded Units”), each Pre-Funded Unit consisting of one pre-funded warrant (the “February 2023 Pre-Funded Warrants”) to purchase one share of common stock and one February 2023 Warrant. The public offering price was $26.532 per Unit and $26.522 per Pre-Funded Unit. The February 2023 Offering closed on February 10, 2023.

Subject to certain limitations described in the February 2023 Pre-Funded Warrants, the February 2023 Pre-Funded Warrants are immediately exercisable and may be exercised at a nominal consideration of $0.01 per share any time until all of the February 2023 Pre-Funded Warrants are exercised in full. A holder will not have the right to exercise any portion of the February 2023 Warrants or the February 2023 Pre-Funded Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% or 9.99%, respectively (or at the election of the holder of such warrants, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the February 2023 Warrants or the February 2023 Pre-Funded Warrants, respectively. However, upon notice from the holder to the Company, the holder may increase the beneficial ownership limitation pursuant to the February 2023 Warrants, which may not exceed 9.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the February 2023 Warrants, provided that any increase in the beneficial ownership limitation will not take effect until 61 days following notice to the Company.

In connection with the February 2023 Offering, the Investor entered into a warrant amendment agreement (the “February 2023 Warrant Amendment Agreement”) with the Company to amend the exercise price of certain existing warrants to purchase up to an aggregate of 87,666 shares of Common Stock that were previously issued to the Investor, with an exercise price of $58.50 per share and an expiration date of January 7, 2028. Pursuant to the Warrant Amendment Agreement, the amended warrants have a reduced exercise price of $24.70 per share following the closing of the February 2023 Offering.

The Company utilized the net proceeds from the February 2023 Offering for general working capital purposes.

H.C. Wainwright & Co., LLC (“Wainwright”) acted as the Company’s exclusive placement agent in connection with the February 2023 Offering, pursuant to that certain engagement letter, dated as of January 4, 2023, as amended (the “Wainwright Engagement Letter”), between the Company and Wainwright. Pursuant to the Wainwright Engagement Letter, the Company paid Wainwright (i) a cash fee equal to 7.5% of the aggregate gross proceeds of the February 2023 Offering, (ii) a management fee of 1.0% of the aggregate gross proceeds of the February 2023 Offering, and reimbursed certain expenses and legal fees. In addition, the Company issued to Wainwright or its designees, warrants (the “February 2023 Placement Agent Warrants”) to purchase 14,134 shares of Common Stock at an exercise price equal to $33.165 per share. The February 2023 Placement Agent Warrants are exercisable immediately upon issuance and have a term of exercise equal to five years from the date of the February 2023 Purchase Agreement.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

The Units, the Pre-Funded Units, the shares of common stock included as part of the Units and Pre-Funded Units, the February 2023 Pre-Funded Warrants, the February 2023 Warrants, the shares of common stock issuable upon the exercise of the February 2023 Pre-Funded Warrants and the February 2023 Warrants, the February 2023 Placement Agent Warrants and the shares of common stock issuable upon the exercise thereof were offered by the Company pursuant to a Registration Statement on Form S-1, as amended (File No. 333-269308), initially filed on January 20, 2023 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and declared effective on February 7, 2023.

Series A Preferred Stock – Related Party

As of June 29, 2024 and July 1, 2023, the Company had $125 of dividends payable to the Series A Preferred Stockholder, respectively.

Restricted Shares

The Company has issued shares of restricted stock to employees and members of the Board under its 2015 Omnibus Incentive Plan, 2016 Omnibus Incentive Plan, 2020 Omnibus Plan and 2021 Omnibus Inventive Plan. Under these plans, the shares are restricted for a period of three years from issuance. As of June 29, 2024, the Company has issued a total of 22,559 restricted shares of common stock to employees and Board members that remain restricted. In accordance with ASC 718, Compensation – Stock Compensation, the Company recognizes stock-based compensation from restricted stock based upon the fair value of the award at issuance over the vesting term on a straight-line basis. The fair value of the award is calculated by multiplying the number of restricted shares by the Company’s stock price on the date of issuance. The impact of forfeitures has historically been immaterial to the financial statements. In the six months ended June 29, 2024 and July 1, 2023, the Company recorded compensation expense associated with these restricted shares of $362 and $940, respectively. The table below is a rollforward of unvested restricted shares issued to employees and board of directors.

				Weighted
	Restricted Shares			Average Price Per Share
Outstanding at December 31, 2022		6,859		$	67.20
Granted		33,731			23.00
Vested/adjustments		(17,769	)		28.80
Outstanding at December 30, 2023		22,821			31.80
Granted		—			—
Vested/adjustments		(262	)		11.84
Outstanding at June 29, 2024		22,559		$	28.28

Warrants

In connection with the private placement consummated in July 2022 (the “July 2022 Private Placement”), on July 7, 2022, the Company entered into warrant amendment agreements (the “Warrant Amendment Agreements”) with each of the nine existing participating investors, which amended warrants to purchase up to 65,786 shares of common stock (prior to amendment, the “Original Warrants”). The Original Warrants had an exercise price that ranged from $185.00 to $380.00 per share and expiration dates that ranged from July 22, 2026 to November 1, 2026. The Warrant Amendment Agreements reduced the exercise price of the Original Warrants to $58.50 per share and extended the expiration date to January 7, 2028, the date that is five and one-half years following the closing of the July 2022 Private Placement. The Company calculated an incremental fair value of $837 by calculating the excess, of the fair value of the modified over the fair value of that instrument immediately before it is modified. This increase in fair value was recorded in additional paid in capital.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

In connection with the Third A&R Agreement, the Company (i) issued to Jackson five year warrants to purchase up to an aggregate of 2,434 shares of common stock at an exercise price of $30.60 per share, which expire on October 27, 2027, and (ii) amended certain warrants held by Jackson to purchase up to an aggregate of 1,510 shares of common stock such that the exercise price was reduced from $600.00 per share to $30.60 per share, and the expiration date of the warrant was extended from January 26, 2026 to October 27, 2027, which resulted in a fair value adjustment of $29. These warrants were recorded as additional debt discount which will be amortized over the term of the Jackson Notes using the effective interest method.

In connection with the February 2023 Offering, the Company entered into the February 2023 Purchase Agreement with the Investor for the issuance and sale, in a best efforts public offering, of (i) 31,500 Units, each consisting of one share of the Company’s common stock, and one February 2023 Warrant, and (ii) 156,952 Pre-Funded Units, each consisting of one February 2023 Pre-Funded Warrant to and one February 2023 Warrant. The public offering price was $26.532 per Unit and $26.522 per Pre-Funded Unit. The February 2023 Offering closed on February 10, 2023. In connection with the February 2023 Offering, the investor entered into the February 2023 Warrant Amendment Agreement with the Company to amend the exercise price of certain existing warrants to purchase up to an aggregate of 87,666 shares of common stock that were previously issued to the Investor, with an exercise price of $58.50 per share and an expiration date of January 7, 2028. Pursuant to the Warrant Amendment Agreement, the amended warrants have a reduced exercise price of $24.70 per share following the closing of the February 2023 Offering. The Company calculated an incremental fair value of $176 by calculating the excess of the fair value of the modified over the fair value of that instrument immediately before it is modified. This increase in fair value was recorded in additional paid in capital.

On September 1, 2023, the Company entered into an inducement offer letter agreement (the “Inducement Letter”) with a certain holder (the “Holder”) of certain of its existing warrants to purchase up to an aggregate of 276,117 shares of common stock issued to the Holder on July 7, 2022 (as amended on February 10, 2023), and (ii) February 10, 2023 (collectively, the “Existing Warrants”).

Pursuant to the Inducement Letter, the Holder agreed to exercise for cash its Existing Warrants to purchase an aggregate of 276,117 shares of common stock at a reduced exercise price of $8.30 per share in consideration of the Company’s agreement to issue new unregistered common stock purchase warrants (the “September 2023 Warrants”), as described below, to purchase up to an aggregate of 552,234 shares of the Company’s common stock.

The closing of the transactions contemplated pursuant to the Inducement Letter occurred on September 6, 2023 (the “Closing Date”). The Company received aggregate gross proceeds of approximately $2,292 from the exercise of the Existing Warrants by the Holder (the “Exercise”), before deducting placement agent fees and other offering expenses payable by the Company. The Company used 50% of the net proceeds from the Exercise to repay a portion of its outstanding obligations under the Jackson Notes and 50% of the net proceeds from the Exercise to repay a portion of its outstanding obligations pursuant to the Credit and Security Agreement with MidCap.

The Company issued to Wainwright or its designees warrants (the “September 2023 Placement Agent Warrants”) to purchase up to 20,709 shares of common stock. The September 2023 Placement Agent Warrants have substantially the same terms as the September 2023 Warrants, except that the September 2023 Placement Agent Warrants have an exercise price equal to $10.375 per share and are immediately exercisable on or after the Stockholder Approval Date (as defined in the September 2023 Warrants) until the five year anniversary of the Stockholder Approval Date.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Transactions involving the Company’s warrant issuances are summarized as follows:

SCHEDULE OF WARRANTS ACTIVITY

				Weighted
	Number of			Average
	Shares			Exercise Price
Outstanding at December 31, 2022		170,369		$	96.10
Issued		863,193			20.59
Exercised		(276,117	)		5.90
Expired or cancelled		(87,665	)		58.50
Outstanding at December 30, 2023		669,780			34.80
Exercised		(221,117	)		8.30
Adjustment		40			—
Outstanding at June 29, 2024		448,703		$	54.92

The following table summarizes warrants outstanding as of June 29, 2024:

SCHEDULE OF WARRANTS OUTSTANDING

Weighted Average

Number

Remaining

Weighted

Outstanding

Contractual

Average

Exercise Price

and Exercisable

Life (years)

Exercise price

24.70 - $3,000.00

448,703

4.01

54.92

Stock Options

A summary of option activity during the quarter ended June 29, 2024, is presented below:

				Weighted
				Average
	Options			Exercise Price
Outstanding at December 31, 2022		5,151		$	500.60
Granted		—			—
Exercised		—			—
Expired or cancelled		—			—
Outstanding at December 30, 2023		5,151			500.06
Granted		—			—
Exercised		—			—
Expired or cancelled		(33	)		5,303.57
Outstanding at June 29, 2024		5,118		$	498.53

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

The Company recorded share-based payment expense of $176, $362, $221 and $940 for the three and six month periods ended June 29, 2024 and July 1, 2023, respectively.

Limited Duration Stockholder Rights Agreement

On September 27, 2023, the board of directors (the “Board”) of the Company declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock and. 03889 Rights for each outstanding share of Series H Preferred Stock (collectively with the common stock, the “Voting Stock”). The dividend was paid on October 21, 2023 to the stockholders of record at the close of business on October 21, 2023 (the “Record Date”). Each Right initially entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.0001 per share, of the Company (the “Preferred Stock”) at a price of $20.75 per one one-thousandth of a share of Preferred Stock (the “Purchase Price”), subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement, dated as of October 1, 2023, as the same may be amended from time to time (the “Rights Agreement”), between the Company and Securities Transfer Corporation, as Rights Agent.

Until the close of business on the earlier of (i) 10 business days following the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) by the Company or an Acquiring Person (as defined below) that an Acquiring Person has become such, or such other date, as determined by the Board, on which a Person has become an Acquiring Person, or (ii) 10 business days (or such later date as may be determined by action of the Board prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) after the date of the commencement of, or the first public announcement of an intention to commence, a tender or exchange offer the consummation of which would result in any person or group of affiliated or associated persons becoming an Acquiring Person (the earlier of such dates being called the “Distribution Date”), (x) the Rights will be evidenced by the certificates representing the Voting Stock registered in the names of the holders thereof (or by book entry shares in respect of such Voting Stock) and not by separate Right Certificates (as defined below), and (y) the Rights will be transferable only in connection with the transfer of Voting Stock.

Until the Distribution Date (or earlier expiration of the Rights), (i) new Voting Stock certificates issued after the Record Date upon transfer or new issuances of Voting Stock will contain a legend incorporating the terms of the Rights Agreement by reference, and (ii) the surrender for transfer of any certificates representing Voting Stock (or book entry shares of Voting Stock) outstanding as of the Record Date will also constitute the transfer of the Rights associated with the shares of Voting Stock represented thereby. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights (“Right Certificates”) will be mailed to holders of record of the Voting Stock as of the close of business on the Distribution Date and such separate Right Certificates alone will evidence the Rights.

Except as otherwise provided in the Rights Agreement, the Rights are not exercisable until the Distribution Date. The Rights will expire on the earliest of (i) October 2, 2026 or such later date as may be established by the Board prior to the expiration of the Rights, (ii) the time at which the Rights are redeemed pursuant to the terms of the Rights Agreement, (iii) the closing of any merger or other acquisition transaction involving the Company pursuant to an agreement of the type described in the Rights Agreement at which time the Rights are terminated, or (iv) the time at which such Rights are exchanged pursuant to the terms of the Rights Agreement.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

The Purchase Price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights is subject to adjustment from time to time, among others, (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for or purchase Preferred Stock at a price, or securities convertible into Preferred Stock with a conversion price, less than the then-current market price of the Preferred Stock, or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividends payable in Preferred Stock) or of subscription rights or warrants (other than those referred to above).

The number of outstanding Rights is subject to adjustment in the event of a stock dividend on any class or series of Voting Stock payable in shares of a class or series of Voting Stock or subdivisions, consolidations or combinations of any class or series of Voting Stock occurring, in any such case, prior to the Distribution Date.

Shares of Preferred Stock purchasable upon exercise of the Rights will not be redeemable. Each share of Preferred Stock will be entitled, when, as and if declared, to a minimum preferential quarterly dividend payment of the greater of (a) $100.00 and (b) the sum of (1) 10,000 (subject to adjustments for stock dividends, stock splits, or stock combinations) times the aggregate per share amount of all cash dividends, plus (2) 10,000 (subject to adjustments for stock dividends, stock splits, or stock combinations) times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of common stock, or a subdivision of the outstanding shares of common stock (by reclassification or otherwise), in each case declared on the common stock. In the event of liquidation, dissolution or winding up of the Company, the holders of the Preferred Stock will be entitled to a minimum preferential payment of the greater of (a) $100.00 per share (plus any accrued but unpaid dividends and distributions), and (b) an amount equal to 10,000 times (subject to adjustments for stock dividends, stock splits, or stock combinations) made per share amount of all cash and other property to be distributed in respect of common stock. Each share of Preferred Stock will be initially entitled to 10,000 votes (subject to adjustment for stock dividends, stock splits, or stock combinations). In addition to voting together with the holders of common stock for the election of other directors of the Company, the holders of Preferred Stock, voting separately as a class to the exclusion of the holders of common stock, shall be entitled at the meeting of stockholders (and at each subsequent annual meeting of stockholders), unless all dividends in arrears on the Preferred Stock have been paid or declared and set apart for payment prior thereto, to vote for the election of two directors of the Company. Holders of Preferred Stock shall otherwise have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of common stock as set forth herein) for taking any corporate action, other than as required by law.

In the event of any merger, consolidation, combination or other transaction in which outstanding shares of common stock are converted or exchanged, each share of Preferred Stock will be entitled to receive 10,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of common stock is changed or exchanged.

In the event that any person or group of affiliated or associated persons becomes an Acquiring Person (the first occurrence of such event, a “Flip-In Event”), each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereupon become void), will thereafter have the right to receive upon exercise of a Right that number of shares of common stock equal to the number of shares of common stock obtained by dividing the Purchase Price (subject to adjustments) by 50% of the current per share market price of the common stock on the date of the Flip-In Event. Except in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring beneficial ownership of 10% (20% in the case of a Passive Investor (as defined in the Rights Agreement)) or more in voting power of the shares of Voting Stock then outstanding, subject to certain exclusions. Under the Rights Agreement, a “Passive Investor” is generally a person who or which has reported or is required to report beneficial ownership of shares of Voting Stock on Schedule 13G under the Exchange Act. Certain synthetic interests in securities created by derivative positions are treated under the Rights Agreement as beneficial ownership of the number of shares of Voting Stock equivalent to the economic exposure created by the derivative security, to the extent actual shares of Voting Stock are directly or indirectly beneficially owned by a counterparty to such derivative security.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

In the event that, after a Flip-In Event, the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earning power are sold, proper provisions will be made so that each holder of a Right (other than Rights beneficially owned by an Acquiring Person which will have become void) will thereafter have the right to receive upon the exercise of a Right that number of shares of common stock equal to the result obtained by dividing the Purchase Price (subject to adjustments) by 50% of the current per share market price of the common stock of such person(s) (or its parent) with whom the Company has engaged in the foregoing transaction.

At any time after a Flip-In Event and prior to the acquisition by an Acquiring Person of 50% or more in voting power of the shares of Voting Stock then outstanding, the Board may, at its option, exchange the Rights (other than Rights owned by such Acquiring Person which will have become void), in whole or in part, for shares of common stock, at an exchange ratio of one share of common stock per Right.

With certain exceptions, no adjustment in the Purchase Price will be required unless such adjustment would require an increase or decrease of at least 1% in such Purchase Price. No fractional shares of Preferred Stock or common stock will be issued (other than fractions of Preferred Stock which are integral multiples of one one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts), and in lieu thereof an adjustment in cash will be made based on the current market price of the Preferred Stock or the common stock.

At any time prior to a Flip-In Event, the Board may redeem all but not less than the then outstanding Rights at a price of $0.1 per Right, subject to adjustment (the “Redemption Price”) payable, at the option of the Company, in cash, shares of common stock or such other form of consideration as the Board shall determine. The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.

For so long as the Rights are then redeemable, the Company may, in its sole discretion, except with respect to the Redemption Price, supplement or amend any provision in the Rights Agreement without the approval of any holders of the Rights. After the Rights are no longer redeemable, the Company may, except with respect to the Redemption Price, supplement or amend the Rights Agreement without the approval of any holders of Rights, provided that no such supplement or amendment may adversely affect the interests of holders of the Rights, cause the Rights Agreement to become amendable contrary to the provisions of the Rights Agreement, or cause the Rights to again to become redeemable.

Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Earn-out Liabilities

Pursuant to the acquisition of KRI on August 27, 2018, the purchase price includes earnout consideration payable to the seller of $2,027 each on August 27, 2019, and August 27, 2020. The payment of the earnout consideration was contingent on KRI’s achievement of certain trailing gross profit amounts. On September 11, 2019, the Company entered into an amended agreement with the seller to delay the payment of the first year earnout of $2,027 until no later than February 27, 2020. For each full calendar month beyond August 27, 2019, that such payment is delayed, the Company is required pay the seller interest in the amount of $10 with the first such payment of interest due on September 30, 2019. In addition, the amended agreement was further amended to change the due date for the second year earnout payment of $2,027 from August 27, 2020, to February 27, 2020.

On March 9, 2024, a Settlement and Release Agreement was entered into by both parties. Under this agreement, which was entered into to avoid costly court fees, the Company agreed to make a payment, in full and final settlement, of $2 million plus interest across the following dates and amounts: $115 on May 1, 2024, $114 on June 1, 2024, $114 on July 1, 2024, $113 on August 1, 2024, $112 on September 1, 2024, and a final payment of $1,511 on October 1, 2024. There is a five-day cure period for each payment and there is a Confession of Judgement in favor of the defendant for the full amount of the original Earnout plus interest, in the event of non-compliance.

Pursuant to the Headway Acquisition that closed on May 18, 2022, the purchase price includes an earnout payment totaling up to $5,000 of earn out provision. Upon the attainment of certain trailing twelve-month (“TTM”) EBITDA achievements the Company will pay to the Headway seller a contingent payment in accordance with the following:

Adjusted EBITDA of $0 or less than $0= no Contingent Payment

Adjusted EBITDA of $500 x 2.5 multiple= $1,250 Contingent Payment

Adjusted EBITDA of $1,000 x 2.5 multiple= $2,500 Contingent Payment

Adjusted EBITDA of $1,800 x 2.5 multiple= $4,500 Contingent Payment

Adjusted EBITDA of $2,000 or more x 2.5 multiple= $5,000 Contingent Payment

The Company performed an analysis over the contingent payment and prepared a forecast to determine the likelihood of the Adjusted EBITDA payout. The adjusted EBITDA TTM forecast, as of June 2024, is above the $2,000 threshold amount, such that $5,000 was recorded as consideration. The balance at June 29, 2024 is $5,000.

Legal Proceedings

Whitaker v. Monroe Staffing Services, LLC & Staffing 360 Solutions, Inc.

On March 9, 2024, a Settlement and Release Agreement was entered into by both parties. Under this agreement, which was entered into to avoid costly court fees, the Company agreed to make a payment, in full and final settlement, of $2 million plus interest across the following dates and amounts: $115 on May 1, 2024, $114, on June 1, 2024, $114 on July 1, 2024, $113 on August 1, 2024, $112 on September 1, 2024, and a final payment of $1,511 on October 1, 2024. There is a five-day cure period for each payment and there is a Confession of Judgement in favor of the defendant for the full amount of the original Earnout plus interest, in the event of non-compliance.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

As of the date of this filing, we are not aware of any other material legal proceedings to which we or any of our subsidiaries is a party or to which any of our property is subject, other than as disclosed above.

NOTE 11 – SEGMENT INFORMATION

The Company generated revenue and gross profit by segment as follows:


	Three Months Ended						Six Months Ended
	June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
Commercial Staffing - US	$	20,162		$	24,145		$	39,798		$	47,392
Professional Staffing - US		24,015			24,470			45,823			48,847
Total Revenue	$	44,177		$	48,615		$	85,621		$	96,239

Commercial Staffing - US	$	3,240		$	4,293		$	6,290		$	8,096
Professional Staffing - US		2,575			2,734			4,835			6,417
Total Gross Profit	$	5,815		$	7,027		$	11,125		$	14,513

Selling, general and administrative expenses	$	(5,933	)	$	(7,678	)	$	(13,027	)	$	(15,469	)
Depreciation and amortization		(472	)		(383	)		(953	)		(873	)
Interest expense and amortization of debt discount and deferred financing costs		(1,480	)		(1,189	)		(2,727	)		(2,343	)
Discontinued Operations		-			(837	)		901			(1,689	)
Other loss income, net		150			188			255			174
Loss Before Provision for Income Tax	$	(1,920	)	$	(2,872	)	$	(4,426	)	$	(5,687	)

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

The following table disaggregates revenues by segments:

	Commercial Staffing - US		Professional Staffing - US		Total
	Quarter Ended June 29, 2024
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	52	$	48	$	100
Temporary Revenue		20,110		23,967		44,077
Total Revenue	$	20,162	$	24,015	$	44,177

	Commercial Staffing - US		Professional Staffing - US		Total
	Quarter Ended July 1, 2023
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	39	$	187	$	226
Temporary Revenue		24,106		24,283		48,389
Total Revenue	$	24,145	$	24,470	$	48,615

	Commercial Staffing - US		Professional Staffing - US		Total
	Six Months Ended June 29, 2024
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	106	$	269	$	375
Temporary Revenue		39,692		45,554		85,246
Total	$	39,798	$	45,823	$	85,621

	Commercial Staffing - US		Professional Staffing - US		Total
	Six Months Ended July 1, 2023
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	170	$	557	$	727
Temporary Revenue		47,222		48,290		95,512
Total	$	47,392	$	48,847	$	96,239

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

NOTE 12 – RELATED PARTY TRANSACTIONS

In addition to the shares of Series A Preferred Stock and notes and warrants issued to Jackson, the following are other related party transactions:

Board and Committee Members

SCHEDULE OF RELATED PARTY TRANSACTIONS

	Three Months Ended June 29, 2024
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	25		1,000	$	3	$	28
Nick Florio		25		1,000		3		28
Vincent Cebula		25		1,000		3		28
Alicia Barker		-		1,000		3		3
Brendan Flood		-		1,000		2		2
	$	75		5,000	$	14	$	89

	Three Months Ended July 1, 2023
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	25		1,000	$	29	$	54
Jeff Grout		25		1,000		29		54
Nick Florio		25		1,000		29		54
Vincent Cebula		25		1,000		29		54
Alicia Barker		-		1,000		31		31
Brendan Flood		-		1,000		31		31
	$	100	$	6,000	$	178	$	278

	Six Months Ended June 29, 2024
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	50		3,000	$	15	$	65
Nick Florio		50		4,000		15		65
Vincent Cebula		50		3,000		15		65
Alicia Barker		-		3,000		11		11
Brendan Flood		-		3,000		11		11
	$	150		16,000	$	67	$	217

	Six Months Ended July 1, 2023
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	50		2,000	$	40	$	90
Jeff Grout		50		2,000		40		90
Nick Florio		50		2,000		40		90
Vincent Cebula		50		2,000		40		90
Alicia Barker		-		2,000		42		42
Brendan Flood		-		2,000		41		41
	$	200		12,000	$	243	$	443

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

NOTE 13 – SUPPLEMENTAL CASH FLOW INFORMATION


	Six Months Ended
	June 29, 2024		July 1, 2023
Cash paid for:
Interest	$	1,834	$	2,815
Income taxes		—		—

Non-Cash Investing and Financing Activities:
Redeemable Series H preferred stock payment in kind		269		—
Debt discount – Series H		131		111
Debt Discount – Related party note		179		91

NOTE 14 - DISCONTINUED OPERATIONS

In December 2023, given the recurring losses of Professional Staffing UK, management committed to a plan to sell the assets of Professional Staffing UK. On January 6, 2024 Staffing 360 Solutions Limited, a UK Subsidiary, filed a Notice of Intent with the High Court of Justice in the UK, stating the Company’s intention to appoint administrators to save the business from liquidation. Administrators were appointed on January 18, 2024, and the business was transferred to new owners on February 12, 2024. A gain on the transfer of the UK entity of $901 was recognized in the Statement of Operations for the period ended June 29, 2024.

NOTE 15 – SUBSEQUENT EVENTS

Nasdaq Compliance

Minimum Bid Price Requirement

On July 17, 2023, the Company received a letter from the Listing Qualifications Staff (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock for the 30 consecutive business day period between June 1, 2023, through July 14, 2023, the Company did not meet the minimum bid price of $1.00 per share required for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2). The letter also indicated that the Company will be provided with a compliance period of 180 calendar days, or until January 15, 2024 (the “Compliance Period”), in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A). On July 25, 2024, the Company received notification from Nasdaq that the Company has regained compliance with Listing Rule 5550(a)(2).

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Quarterly Reports on Form 10-Q

On May 22, 2024, the Company was advised that it was no longer in compliance with Listing Rule 5250(c)(1) due to the delayed filing of its Form 10-Q, for the period ended March 30, 2024, and was advised that it had to file a plan no later than June 17, 2024, as to how it will regain compliance.

On July 15, 2024 the Company filed its 10Q for the period ending March 30, 2024. On July 25, 2024, the Company was advised that this area of non-compliance is now deemed resolved.

Equity Standard

On June 20, 2024, the Company received a letter from the Staff pertaining to its non-compliance with Listing Rule 5550(b)(1), the requirement to maintain Stockholders’ Equity of a minimum of $2.5 million. With the filing of its Form 10-K for the period ended December 30, 2023 on June 11, 2024, the Company fell out of compliance with this standard. On August 5, 2024, the Company has submitted a plan to regain compliance with the minimum stockholders’ equity requirement. If the Company’s plan to regain compliance is accepted, Nasdaq can grant an extension of up to 180 calendar days from the date of the letter to evidence compliance.

The aforementioned notices have no immediate effect on the listing of the Company’s common stock. There can be no assurance that the Company will regain compliance with Nasdaq’s rules or maintain compliance with any of the other Nasdaq continued listing requirements.

The Board of Directors of the Company has been reviewing the strategic options open to the Company in order to advance the business but also to avoid the continuing issues of non-compliance with the Listing Rules. On February 15, 2024, the Board appointed Transact Capital Securities LLC, to develop and introduce a strategic event that may include the sale of the Company. Additionally, in February, the Company disposed of its UK operations and that event is covered herein.

Series H Preferred Stock

On July 26, 2024, the Company notified the Series H holders that is exercising its right per the Headway Purchase Agreement to make quarterly dividend payments in preferred stock in lieu of cash effective as of April 1, 2024.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our consolidated financial statements and related notes thereto appearing elsewhere in this Quarterly Report. This section includes a number of forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect our current views with respect to future events and financial performance. All statements that address expectations or projections about the future, including, but not limited to, statements about our plans, strategies, adequacy of resources and future financial results (such as revenue, gross profit, operating profit, cash flow), are forward-looking statements. Some of the forward-looking statements can be identified by words like “anticipates,” “believes,” “expects,” “may,” “will,” “can,” “could,” “should,” “intends,” “project,” “predict,” “plans,” “estimates,” “goal,” “target,” “possible,” “potential,” “would,” “seek,” and similar references to future periods. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions that are difficult to predict. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Important factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to: our ability to regain and maintain compliance with the Nasdaq Capital Market’s (“Nasdaq”) listing standards; our ability to continue as a going concern; negative outcome of pending and future claims and litigation; our ability to access the capital markets by pursuing additional debt and equity financing to fund our business plan and expenses on terms acceptable to us or at all; our ability to comply with our contractual covenants, including in respect of our debt; potential cost overruns and possible rejection of our business model and/or sales methods; weakness in general economic conditions and levels of capital spending by customers in the industries we serve; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of our customers’ capital projects or the inability of our customers to pay our fees; delays or reductions in U.S. government spending; credit risks associated with our customers; competitive market pressures; the availability and cost of qualified labor; our level of success in attracting, training and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations, including the impact of health care reform laws and regulations; the possibility of incurring liability for our business activities, including, but not limited to, the activities of our temporary employees; our performance on customer contracts; and government policies, legislation or judicial decisions adverse to our businesses. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We assume no obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by law. We recommend readers to carefully review the entirety of this Quarterly Report on Form 10-Q, including the risk factors set forth under the heading “Risk Factors” in Item 1A of this Quarterly Report on Form 10-Q and under the same or similar headings in the other reports and documents we file from time to time with the Securities and Exchange Commission (“SEC”), particularly our Annual Reports on Form 10-K. Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Overview

We are incorporated in the state of Delaware. We are a rapidly growing public company in the domestic staffing sector. Our high-growth business model is based on finding and acquiring suitable, mature, profitable, operating, U.S. based staffing companies. Our targeted consolidation model is focused specifically on the accounting and finance, information technology (“IT”), engineering, administration (“Professional”) and light industrial (“Commercial”) disciplines.

Business Model, Operating History and Acquisitions

We are a high-growth domestic staffing company engaged in the acquisition of staffing companies. As part of our consolidation model, we pursue a broad spectrum of staffing companies supporting primarily the Professional and Commercial Business Streams. Our typical acquisition model is based on paying consideration in the form of cash, stock, earn-outs and/or promissory notes. In furthering our business model, we are regularly in discussions and negotiations with various suitable, mature acquisition targets. To date we have completed 10 acquisitions, since November 2013.

Recent Developments

We held our 2023 annual meeting of stockholders on December 27, 2023 (the “Annual Meeting”), at which meeting our stockholders approved an amendment (the “Reverse Stock Split Amendment”) to our Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to effect the Reverse Stock Split of all of our issued and outstanding shares of common stock, par value $0.00001 per share (the “Common Stock”), at a ratio in the range of 1-for-2 to 1-for-20, with the exact exchange ratio and timing to be determined by our board of directors (the “Board”) in its discretion and included in a public announcement. Following the Annual Meeting, on May 28, 2024, the Board determined to effect the Reverse Stock Split at a ratio of 1-for-10 and approved the corresponding final form of the Reverse Stock Split Amendment. On June 24, 2024, we filed the Reverse Stock Split Amendment with the Secretary of State of the State of Delaware to effect the Reverse Stock Split, effective as of 4:05 p.m. (New York time) on June 25, 2024.

As a result of the Reverse Stock Split, every ten (10) shares of issued and outstanding Common Stock were automatically combined into one (1) issued and outstanding share of Common Stock, without any change in the par value per share or the number of authorized shares of common stock. No fractional shares were issued as a result of the Reverse Stock Split. Any fractional shares that would otherwise have resulted from the Reverse Stock Split were rounded up to the next whole number. The Reverse Stock Split reduced the number of shares of Common Stock outstanding from 6,397,388 shares to approximately 639,739 shares, subject to adjustment for the rounding up of fractional shares. The number of authorized shares of Common Stock under the Certificate of Incorporation did not change as a result of the Reverse Stock Split.

Proportionate adjustments were made to the per share exercise price and the number of shares of Common Stock that may be purchased upon exercise of outstanding stock options, restricted stock units, and warrants granted by us, the per share conversion price and the number of shares of Common Stock that may be issued upon conversion of outstanding shares of convertible preferred stock issued by us and the number of shares of Common Stock reserved for future issuance under our 2016 Omnibus Incentive Plan.

The Common Stock began trading on a Reverse Stock Split-adjusted basis on the Nasdaq Capital Market on June 26, 2024. The trading symbol for the Common Stock remained “STAF.” The new CUSIP number for the Common Stock following the Reverse Stock Split is 852387604.

For the three months ended June 29, 2024 and July 1, 2023

	Three Months Ended						Three Months Ended
	June 29, 2024			% of Revenue			July 1, 2023			% of Revenue			Growth
Revenue	$	44,177			100.0	%	$	48,615			100.0	%		-9.1	%
Cost of revenue		38,362			86.8	%		41,588			85.5	%		-7.8	%
Gross profit		5,815			13.2	%		7,027			14.5	%		-17.2	%
Operating expenses		6,405			14.5	%		8,061			16.6	%		-20.5	%
Loss from operations		(590	)		-1.3	%		(1,034	)		-2.1	%		-42.9	%
Interest Expense		(1,371	)		-3.1	%		(1,086	)		-2.2	%		26.2	%
Discontinued Operations		-			0.0	%		(837	)		-1.7	%		-100.0	%
Other (expenses) income		41			0.1	%		85			0.2	%		-52.2	%
Provision for income taxes		(50	)		-0.1	%		(7	)		0.0	%		614.3	%
Net (loss) income	$	(1,970	)		-4.5	%	$	(2,879	)		-5.9	%		-31.6	%

For the six months ended June 29, 2024 and July 1, 2023

	Six Months Ended						Six Months Ended
	June 29, 2024			% of Revenue			July 1, 2023			% of Revenue			Growth
Revenue	$	85,621			100.0	%	$	96,239			100.0	%		-11.0	%
Cost of revenue		74,496			87.0	%		81,726			84.9	%		-8.8	%
Gross profit		11,125			13.0	%		14,513			15.1	%		-23.3	%
Operating expenses		13,980			16.3	%		16,342			17.0	%		-14.5	%
Loss from operations		(2,855	)		-3.3	%		(1,829	)		-1.9	%		56.0	%
Interest Expense		(2,467	)		-2.9	%		(2,141	)		-2.2	%		15.2	%
Discontinued Operations		901			1.1	%		(1,689	)		-1.8	%		-153.3	%
Other (expenses) income		(5	)		0.0	%		(28	)		0.0	%		-82.1	%
Provision for income taxes		(100	)		-0.1	%		(47	)		0.0	%		124.8	%
Net loss	$	(4,526	)		-5.3	%	$	(5,734	)		-6.0	%		-21.1	%

Revenue

For the six months ended June 29, 2024, revenue decreased by 11.0% to $85,621 as compared with $96,239 in revenue for the six months ended July 1, 2023. The decline in revenue was more prevalent in Commercial Staffing as a result of a challenging U.S. operating environment. Commercial Staffing declined by 16% and Professional Staffing Business was down by 6.1%. In the Quarter-ended June 29, 2024, the Commercial Staffing business was down by 16.5% year-on-year with Professional Staffing down by 1.7%.

Revenue for the six months ended June 29, 2024, was comprised of $85,246 of temporary contractor revenue and $375 of permanent placement revenue, compared with $95,512 and $727 of temporary contractor revenue and permanent placement revenue, respectively, for the six months ended July 1, 2023.

Cost of revenue, Gross profit and Gross margin

Cost of revenue includes the variable cost of labor and various non-variable costs (e.g., workers’ compensation insurance) relating to employees (temporary and permanent) as well as sub-contractors and consultants. For the six months ended June 29, 2024, cost of revenue was $74,496, a decrease of 9.8% from $81,726 for the six months ended July 1, 2023, compared with a decline in revenue of 11.0%. Overall. gross profit margin declined from 15.1% to 13.0% mainly driven by the proportion of the revenue driven by lower margin Employer of Record (EOR) being 38.6% in the six months ended June 29, 2024 versus 32.1% in the six months ended July 1, 2023.

Operating expenses

Total operating expenses for the six months ended June 29, 2024, were $13,980, a decrease of 14.4% from $16,342 for the six months ended July 1, 2023. The decrease in operating expenses was driven primarily by reductions in force put into effect in May 2023 and again in February 2024.

Other expenses, net

Total other income (expenses), net for the six months ended June 29, 2024 were $896, an increase of 153.3% from ($1,717) for the six months ended July 1, 2023. The increase was driven by an income recognized for discontinued operations of $901 as of July 29, 2024 versus an expense of $1,689 as of July 1, 2023.

Amortization of debt discount and deferred financing costs for the six months ended June 29, 2024 were $260, an increase of $58, compared with amortization of debt discount and deferred financing costs for the six months ended July 1, 2023, which were $202. In addition, for the six months ended June 29, 2024, we had other income of $255 compared with other income of $174 for the six months ended July 1, 2023..

Non-GAAP Measures

To supplement our condensed consolidated financial statements presented in accordance with GAAP, we also use non-GAAP financial measures and key performance indicators (“KPIs”) in addition to our GAAP results. We believe non-GAAP financial measures and KPIs may provide useful information for evaluating our cash operating performance, ability to service debt, compliance with debt covenants and measurement against competitors. This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be comparable to similarly entitled measures reported by other companies.

We present the following non-GAAP financial measure and KPIs in this report:

Revenue and Gross Profit by Business Streams We use this KPI to measure our mix of Revenue and respective profitability between our two main lines of business due to their differing margins. For clarity, these lines of business are not our operating segments, as this information is not currently regularly reviewed by the chief operating decision maker to allocate capital and resources. Rather, we use this KPI to benchmark our business against the industry.

The following table details Revenue and Gross Profit by sector:

	Three Months Ended
	June 29, 2024			Mix			July 1, 2023			Mix

Revenue
Commercial Staffing - US	$	20,162			46	%	$	24,145			50	%
Professional Staffing - US		24,015			54	%		24,470			50	%
Total Service Revenue	$	44,177					$	48,615

Gross Profit
Commercial Staffing - US	$	3,240			56	%	$	4,293			61	%
Professional Staffing - US		2,575			44	%		2,734			39	%
Total Gross Profit	$	5,815					$	7,027

Gross Margin
Commercial Staffing - US		16.1	%					17.8	%
Professional Staffing - US		10.7	%					11.2	%
Total Gross Margin		13.2	%					14.5	%

	Six Months Ended
	June 29, 2024			Mix			July 1, 2023			Mix

Revenue
Commercial Staffing - US	$	39,798			46	%	$	47,392			49	%
Professional Staffing - US		45,823			54	%		48,847			51	%
Total Service Revenue	$	85,621					$	96,239

Gross Profit
Commercial Staffing - US	$	6,290			57	%	$	8,096			56	%
Professional Staffing - US		4,835			43	%		6,417			44	%
Total Gross Profit	$	11,125					$	14,513

Gross Margin
Commercial Staffing - US		15.8	%					17.1	%
Professional Staffing - US		10.6	%					13.1	%
Total Gross Margin		13.0	%					15.1	%

Adjusted EBITDA. This measure is defined as net income (loss) attributable to common stock before: interest expense, benefit from income taxes; depreciation and amortization; acquisition, capital raising and other non-recurring expenses; other non-cash charges; impairment of goodwill; re-measurement gain on intercompany note; restructuring charges; other income (loss); and charges the Company considers to be non-recurring in nature such, as legal expenses associated with litigation, professional fees associated with potential and completed acquisitions. We use this measure because we believe it provides a more meaningful understanding of our profit and cash flow generation.

	Three Months Ended						Six Months Ended						Trailing Twelve Months
	June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
Net (loss) income	$	(1,970	)	$	(2,879	)	$	(4,526	)	$	(5,734	)	$	(18,408	)	$	(18,140	)

Interest expense		1,371			1,086			2,467			2,141			5,335			4,207
Expense (benefit) from income taxes		50			7			100			47			332			(178	)
Depreciation and amortization		581			485			1,213			1,075			2,490			3,732
EBITDA	$	32		$	(1,301	)	$	(746	)	$	(2,471	)	$	(10,251	)	$	(10,379	)

Acquisition, capital raising and other non-recurring expenses (1)		507			1,216			1,565			3,128			5,589			7,782
Other non-cash charges (2)		322			39			362			74			442			922
Discontinued Operations		-			837			(901	)		1,690			7,393			9,340
Other loss (income)		(150	)		(188	)		(255	)		(174	)		(271	)		(613	)
Adjusted EBITDA	$	711		$	603		$	25		$	2,247		$	2,902		$	7,052

Adjusted Gross Profit													$	25,143		$	33,526

Adjusted EBITDA as percentage of Adjusted Gross Profit														11.5	%		21.0	%

	(1)	Acquisition, capital raising, and other non-recurring expenses primarily relate to capital raising expenses, acquisition and integration expenses, and legal expenses incurred in relation to matters outside the ordinary course of business.

	(2)	Other non-cash charges primarily relate to staff option and share compensation expense, expense for shares issued to directors for board services, and consideration paid for consulting services.

Operating Leverage. This measure is calculated by dividing the growth in Adjusted EBITDA by the growth in adjusted gross profit, on a trailing 12-month basis. We use this KPI because we believe it provides a measure of our efficiency for converting incremental gross profit into Adjusted EBITDA.

	June 29, 2024			July 1, 2023

Gross Profit - TTM (Current Period)	$	25,143		$	33,526
Gross Profit - TTM (Prior Period)		33,526			35,866
Gross Profit – Growth (Decline)	$	(8,383	)	$	(2,340	)

Adjusted EBITDA - TTM (Current Period)	$	2,902		$	7,052
Adjusted EBITDA - TTM (Prior Period)		7,052			2,180
Adjusted EBITDA – Growth (Decline)	$	(4,150	)	$	4,872

Operating Leverage		49.5	%		-208.2	%

Leverage Ratio. Calculated as total debt, net, gross of any original issue discount, divided by pro forma adjusted EBITDA for the trailing 12-months. We use this KPI as an indicator of our ability to service debt prospectively.

	June 29, 2024			December 30, 2023

Total Term Debt, Net	$	19,032		$	18,453
Addback: Total Debt Discount and Deferred Financing Costs		353			663
Total Debt	$	19,385		$	19,116

TTM Adjusted EBITDA	$	2,902		$	2,180

Pro Forma TTM Adjusted EBITDA	$	2,902		$	2,180

Pro Forma Leverage Ratio		6.68	x		8.77	x

Operating Cash Flow Including Proceeds from Accounts Receivable Financing. Calculated as net cash (used in) provided by operating activities plus net proceeds from accounts receivable financing. Because much of our temporary payroll expense is paid weekly and in advance of clients remitting payment for invoices, operating cash flow is often weaker in staffing companies where revenue and accounts receivable are growing. Accounts receivable financing is essentially an advance on client remittances and is primarily used to fund temporary payroll. As such, we believe this measure is helpful to investors as an indicator of our underlying operating cash flow.

	Six months Ended
	June 29, 2024		July 1, 2023

Net cash flow provided by (used in) operating activities	$	1,344	$	(673	)

Financing (repayments) on accounts receivable financing		124		(661	)

Net cash used in operating activities including proceeds from accounts receivable financing	$	1,468	$	(1,334	)

The leverage ratio and operating cash flow including proceeds from accounts receivable financing should be considered together with the information in the “Liquidity and Capital Resources” section, immediately below.

Liquidity, Going Concern and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Historically, we have funded our operations through term loans, promissory notes, bonds, convertible notes, private placement offerings and sales of equity.

Our primary uses of cash have been for debt repayments, repayment of deferred consideration from acquisitions, professional fees related to our operations and financial reporting requirements and for the payment of compensation, benefits and consulting fees. The following trends may occur as we continue to execute on our strategy:

	●	An increase in working capital requirements to finance organic growth;

	●	Addition of administrative and sales personnel as the business grows;

	●	Increases in advertising, public relations and sales promotions for existing and new brands as we expand within existing markets or enter new markets;

	●	A continuation of the costs associated with being a public company; and

	●	Capital expenditures to add technologies.

Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 as amended, and other rules implemented by the SEC. We expect all of these applicable rules and regulations could significantly increase our legal and financial compliance costs and increase the use of resources.

As of and for the quarter ended June 29, 2024, we had a working capital deficiency of $47,890, accumulated deficit of $131,582, and a net loss of $4,526.

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation as a going concern. We have an unsecured payment due in the next 12 months associated with a historical acquisition and secured current debt arrangements representing approximately $19,385 which are in excess of cash and cash equivalents on hand, in addition to funding operational growth requirements. Historically, we have funded such payments either through cash flow from operations or the raising of capital through additional debt or equity. If we are unable to obtain additional capital, such payments may not be made on time. These factors raise substantial doubt as to our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments or classifications that may result from our possible inability to continue as a going concern.

In addition, as of June 29, 2024, we have numerous contractual lease obligations representing an aggregate of approximately $5,149 related to current lease agreements. We intend to fund the majority of these obligations through a combination of cash flow from operations, as well as capital raised through additional debt or equity.

The condensed consolidated financial statements and related notes hereto included in this Quarterly Report on Form 10-Q have been prepared assuming that we will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity, capital requirements and that our credit facilities with our lenders will remain available to us.

Operating activities

For the six months ended January 29, 2024, net cash used in continuing operating activities of $1,344 was primarily attributable to net loss of $4,526 an increase in accounts receivable of $2,284, increases in accounts payable and accrued payroll costs of $1,544 and $5,118 respectively. The net cash used in all operating activities was impacted by $3,010 from discontinued operations to give a total cash used in operating activities of $1,666.

For the six months ended July 1, 2023, net cash used in continuing operating activities of $673 was primarily attributable to net loss of $5,734, increases in Other Assets of $4,263 and the impact of non-cash items of $2,635. A negative impact of $7,611 for discontinued operations brought the total cash used in operating activities to $8,284.

Investing activities

For the six months ended June 29, 2024, net cash provided by investing activities totaled $2,016, primarily due to $2,045 related discontinued operations offset by $29 purchase of property and equipment.

For the six months ended July 1, 2023, net cash provided by investing activities totaled $3,134, primarily due to $62 purchase of property and equipment and $3,196 related to discontinued operations.

Financing activities

For the six months ended June 29, 2024, net cash provided by financing activities totaled $193, due to additional cash received of $124 on accounts receivable financing, net.

For the six months ended July 1, 2023, net cash provided by financing activities totaled $3,200 primarily due to repayments of $661 on accounts receivable financing, net proceeds from the sale of common stock of $4,433, third party financing costs of $320 and discontinued operations of $252.

Critical Accounting Policies and Estimates

Refer to the Annual Report on Form 10-K filed with the SEC on June 11, 2024 for the fiscal year ended December 30, 2023. There have been no changes to our critical accounting policies during the six months ended June 30, 2024.

Recent Accounting Pronouncements

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 of the Exchange Act, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” (each as defined in Rules) as of the end of the period covered by this Quarterly Report on Form 10-Q.

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officer as appropriate, to allow timely decisions regarding required disclosures. Based on that evaluation, we identified a material weakness related to the lack of a sufficient complement of competent finance personnel to appropriately account for, review and disclose the completeness and accuracy of transactions we entered into. Our management has also identified a material weakness in our internal control over our goodwill assessment relating to the lack of a sufficient process for determining the valuation of goodwill assets.

Our principal executive officer and principal financial officer evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q (“Evaluation Date”), pursuant to Rule 13a-15(b) under the Exchange Act. Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective, due to the material weakness in our control environment and financial reporting process discussed above.

Management believes that the condensed consolidated financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition as of the Evaluation Date, and results of our operations and cash flows for the Evaluation Date, in conformity with GAAP.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during the quarter ended June 29, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Whitaker v. Monroe Staffing Services, LLC & Staffing 360 Solutions, Inc.

Item 1A. Risk Factors.

The following description of risk factors includes any material changes to risk factors associated with our business, financial condition and results of operations previously disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K filed with the SEC on June 11, 2024. Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results, and stock price.

The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Quarterly Report on Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes thereto included in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

Risks Relating to our Common Stock

We may not meet the continued listing requirements of Nasdaq, which could result in a delisting of our common stock.

As previously reported, on May 22, 2024, we received a letter from the Listing Qualifications Staff (the “Staff”) of Nasdaq notifying us that as we had not yet filed its Form 10-Q for the period ended March 30, 2024 pursuant to Nasdaq Listing Rule 5250(c)(1) (the “Rule”), such matter serves as a basis for delisting our securities from Nasdaq.

On July 17, 2023, the Company received a letter from the Listing Qualifications Staff (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock for the 30 consecutive business day period between June 1, 2023, through July 14, 2023, the Company did not meet the minimum bid price of $1.00 per share required for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2). The letter also indicated that the Company will be provided with a compliance period of 180 calendar days, or until January 15, 2024 (the “Compliance Period”), in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A). On January 16, 2024, we were advised that we qualified for an additional 180 calendar days within which to regain compliance, under Listing Rule 5810(c)(3)(A) which brought the compliance deadline to July 15, 2024. On July 25, 2024, the Company received notification from Nasdaq that the Company has regained compliance with Listing Rule 5550(a)(2).

On December 27, 2023, the Company held its annual meeting of stockholders (the “Annual Meeting”). At the Annual Meeting a proposal was made, and approved, to effect a reverse stock split of all of the outstanding shares of the Company’s Common Stock, in a ratio in the range of 1-for-2 to 1-for-20, with such ratio to be determined by the Board of Directors of the Company in its discretion and included in a public announcement, within twelve months of the vote taking effect. At a meeting of the Board of Directors, held on May 28, 2024, the reverse split ratio was approved at 1-for-10. On June 12, 2024, the Company notified the Nasdaq Listing Center of its intention to move forward with the reverse stock split. Subject to the approval of Nasdaq, the effective date of the reverse and the commencement of trading under a new CUSIP was June 26, 2024.

Although we expect to take actions intended to restore our compliance with the listing requirements, we can provide no assurance that any action taken by us would be successful. If Nasdaq delists our common stock from trading on its exchange for failure to meet Nasdaq’s listing standards for continued listing, an investor would likely find it significantly more difficult to dispose of or obtain our shares, and our ability to raise future capital through the sale of our shares or issue our shares as consideration in acquisitions could be severely limited. Additionally, we may not be able to list our common stock on another national securities exchange, which could result in our securities being quoted on an over-the-counter market. If this were to occur, our stockholders could face significant material adverse consequences, including limited availability of market quotations for our common stock and reduced liquidity for the trading of our securities. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There have been no unregistered sales of securities during the period covered by this Quarterly Report on Form 10-Q that have not been previously reported in a Current Report on Form 8-K. We have not made any purchases of our own securities during the time period covered by this Quarterly Report on Form 10-Q.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No.		Description
3.1		Certificate of Amendment to Amended and Restated Certificate of Incorporation of Staffing 360 Solutions, Inc., dated June 24, 2024 (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2024).
10.1		Employment Agreement, dated October 26, 2023, by and between the Company and Melanie Grossman (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 12, 2024).
31.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of Sarbanes Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of Sarbanes Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002.

101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Schema
101.CAL*		Inline XBRL Taxonomy Calculation Linkbase
101.DEF*		Inline XBRL Taxonomy Definition Linkbase
101.LAB*		Inline XBRL Taxonomy Label Linkbase
101.PRE*		Inline XBRL Taxonomy Presentation Linkbase
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Filed herewith
**	Furnished herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STAFFING 360 SOLUTIONS, INC.

Date: August __, 2024	By:	/s/ Brendan Flood
		Brendan Flood
		Chairman and Chief Executive Officer
		(Principal Executive Officer)

Date: August __, 2024	By:	/s/ Melanie Grossman
		Melanie Grossman Senior Vice President, Corporate Controller
		(Principal Accounting and Financial Officer)

Exhibit 31.1

CERTIFICATION

OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Brendan Flood, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Staffing 360 Solutions, Inc. (“Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures; and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 12, 2024

/s/ Brendan Flood

Brendan Flood

Chairman and Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Melanie Grossman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Staffing 360 Solutions, Inc. (“Registrant”);

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 12, 2024	/s/ Melanie Grossman
	Melanie Grossman
	Senior Vice President, Corporate Controller
	(Principal Accounting and Financial Officer)

Exhibit 32.1

CERTIFICATION

OF PRINCIPAL EXECUTIVE OFFICER AND

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U. S. C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Staffing 360 Solutions, Inc. (“Company”) for the period ended June 29, 2024 (“Report”), I, Brendan Flood, Chairman and Chief Executive Officer of the Company, and I, Melanie Grossman, Senior Vice President, Corporate Controller of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 12, 2024	/s/ Brendan Flood
	Brendan Flood
	Chairman and Chief Executive Officer (Principal Executive Officer)

Date: August 12, 2024	/s/ Melanie Grossman
	Melanie Grossman
	Senior Vice President, Corporate Controller
	(Principal Accounting and Financial Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed from within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Cover - $ / shares	6 Months Ended
Cover - $ / shares	Jun. 29, 2024	Aug. 09, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 29, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-30
Entity File Number	001-37575
Entity Registrant Name	STAFFING 360 SOLUTIONS, INC.
Entity Central Index Key	0001499717
Entity Tax Identification Number	68-0680859
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	757 3rd Avenue
Entity Address, Address Line Two	27th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10017
City Area Code	(646)
Local Phone Number	507-5710
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	STAF
Security Exchange Name	NASDAQ
Entity Current Reporting Status	No
Entity Interactive Data Current	No
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		907,921
Entity Listing, Par Value Per Share	$ 0.0001

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 29, 2024	Dec. 30, 2023
Current Assets:
Cash	$ 1,264	$ 721
Accounts receivable, net	20,067	17,783
Prepaid expenses and other current assets	1,832	1,080
Current assets held for sale		9,116
Total Current Assets	23,163	28,700
Property and equipment, net	445	536
Goodwill	19,891	19,891
Intangible assets, net	10,366	11,193
Other assets	4,851	5,592
Right of use asset	4,728	4,813
Total Assets	63,444	70,725
Current Liabilities:
Accounts payable and accrued expenses	15,515	13,976
Accrued payroll taxes	11,310	6,193
Accrued expenses - related party	400	257
Earnout liabilities	8,854	9,054
Accounts receivable financing	14,822	14,698
Leases - current liabilities	1,115	1,035
Other current liabilities	5	376
Current liabilities held for sale		10,077
Total Current Liabilities	71,053	74,119
Leases - non current	4,034	4,213
Other long-term liabilities	331	203
Total Liabilities	75,418	78,535
Commitments and contingencies
Stockholders’ Deficit:
Preferred stock, $0.00001 par value, 20,000,000 shares authorized;
Common stock, $0.0001 par value, 250,000,000 shares authorized; 798,219 and 560,102 shares issued and outstanding, as of June 29, 2024 and December 30, 2023, respectively	1	1
Additional paid in capital	119,576	119,214
Accumulated other comprehensive loss	31	31
Accumulated deficit	(131,582)	(127,056)
Total Stockholders’ Deficit	(11,974)	(7,810)
Total Liabilities and Stockholders’ Deficit	63,444	70,725
Related Party [Member]
Current Liabilities:
Current portion of debt	10,005	9,826
Nonrelated Party [Member]
Current Liabilities:
Current portion of debt	$ 9,027	$ 8,627

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 29, 2024	Dec. 30, 2023
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.00001	$ 0.00001
Preferred stock, shares authorized	20,000,000	20,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	798,219	560,102
Common stock, shares outstanding	798,219	560,102

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Income Statement [Abstract]
Revenue	$ 44,177	$ 48,615	$ 85,621	$ 96,239
Cost of Revenue, excluding depreciation and amortization stated below	38,362	41,588	74,496	81,726
Gross Profit	5,815	7,027	11,125	14,513
Operating Expenses:
Selling, general and administrative expenses	5,933	7,678	13,027	15,469
Depreciation and amortization	472	383	953	873
Total Operating Expenses	6,405	8,061	13,980	16,342
Net Loss From Continuing Operations	(590)	(1,034)	(2,855)	(1,829)
Other (Expenses)/Income:
Interest expense	(1,371)	(1,086)	(2,467)	(2,141)
Amortization of debt discount and deferred financing costs	(109)	(102)	(260)	(202)
Other income, net	150	187	255	174
Total Other (Expenses)/Income, net	(1,330)	(1,001)	(2,472)	(2,169)
Net Operating Loss	(1,920)	(2,035)	(5,327)	(3,998)
Discontinued Operations		(837)	901	(1,689)
Loss Before Benefit from Income Tax	(1,920)	(2,872)	(4,426)	(5,687)
Provision from Income taxes	(50)	(7)	(100)	(47)
Net Loss	(1,970)	(2,879)	(4,526)	(5,734)
Net Loss Attributable to Common Stockholders	$ (1,970)	$ (2,879)	$ (4,526)	$ (5,734)
Net Operating Loss Attributable to Common Stockholders - Basic	$ (3.55)	$ (11.61)	$ (8.70)	$ (22.99)
Net Income (Loss) from Discontinued Operations Attributable to Common Stockholders - Basic		$ (4.76)	$ 1.44	$ (9.60)
Weighted Average Shares Outstanding – Basic	555,000	175,926	623,875	175,926
Net Income (Loss) Available to Common Stockholders, Diluted [Abstract]
Net Loss Attributable to Common Stockholders - Diluted	$ (1,970)	$ (2,042)	$ (5,427)	$ (4,045)
Net Operating Loss Attributable to Common Stockholders - Diluted	$ (3.55)	$ (11.61)	$ (8.70)	$ (22.99)
Net Income (Loss) from Discontinued Operations Attributable to Common Stockholders - Diluted		$ (4.76)	$ 1.44	$ (9.60)
Weighted Average Shares Outstanding – Diluted	555,000	175,926	623,875	175,926

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Income Statement [Abstract]
Net Loss	$ (1,970)	$ (2,879)	$ (4,526)	$ (5,734)
Other Comprehensive Income (Loss)
Foreign exchange translation adjustment		116		139
Comprehensive Loss Attributable to the Company	$ (1,970)	$ (2,763)	$ (4,526)	$ (5,595)

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2022	$ 1	$ 111,586	$ (2,219)	$ (101,015)	$ 8,353
Balance, shares at Dec. 31, 2022	262,920
Employees, directors and consultants		940			940
Employees, directors and consultants, shares	29,730
Sale of common stock and warrants		4,113			$ 4,113
Sale of common stock and warrants, shares	188,452				218,182
Foreign currency translation loss			139		$ 139
Net loss				(5,734)	(5,734)
Balance at Jul. 01, 2023	$ 1	116,639	(2,080)	(106,749)	7,811
Balance, shares at Jul. 01, 2023	481,102
Balance at Apr. 01, 2023	$ 1	116,419	(2,196)	(103,870)	10,354
Balance, shares at Apr. 01, 2023	385,602
Employees, directors and consultants		221			221
Employees, directors and consultants, shares	6,000
Sale of common stock and warrants		(1)			(1)
Sale of common stock and warrants, shares	89,500
Foreign currency translation loss			116		116
Net loss				(2,879)	(2,879)
Balance at Jul. 01, 2023	$ 1	116,639	(2,080)	(106,749)	7,811
Balance, shares at Jul. 01, 2023	481,102
Balance at Dec. 30, 2023	$ 1	119,214	31	(127,056)	(7,810)
Balance, shares at Dec. 30, 2023	560,102
Employees, directors and consultants		362			$ 362
Employees, directors and consultants, shares	17,000
Sale of common stock and warrants, shares					238,117
Foreign currency translation loss
Net loss				(4,526)	(4,526)
Warrants Exercised
Warrants Exercised, shares	221,117
Balance at Jun. 29, 2024	$ 1	119,576	31	(131,582)	(11,974)
Balance, shares at Jun. 29, 2024	798,219
Balance at Mar. 30, 2024	$ 1	119,400	31	(129,612)	(10,180)
Balance, shares at Mar. 30, 2024	634,219
Employees, directors and consultants		176			176
Employees, directors and consultants, shares	5,000
Foreign currency translation loss
Net loss				(1,970)	(1,970)
Warrants Exercised
Warrants Exercised, shares	159,000
Balance at Jun. 29, 2024	$ 1	$ 119,576	$ 31	$ (131,582)	$ (11,974)
Balance, shares at Jun. 29, 2024	798,219

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (4,526)	$ (5,734)
Adjustments to reconcile net loss income to net cash provided by (used in) operating activities:
Depreciation and amortization	953	873
Amortization of debt discount and deferred financing costs	260	202
Bad debt expense		21
Right of use assets depreciation	547	599
Stock based compensation	362	940
Changes in operating assets and liabilities:
Accounts receivable	(2,284)	(478)
Prepaid expenses and other current assets	(752)	(259)
Other assets	741	4,263
Accounts payable and accrued expenses	1,544	(500)
Accrued Payroll Taxes	5,118
Accounts payable, related party	143
Other current liabilities	(373)	(220)
Other long-term liabilities and other	(389)	(380)
NET CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES	1,344	(673)
Net cash used in discontinued operating activities:	(3,010)	(7,611)
NET CASH USED IN OPERATING ACTIVITIES	(1,666)	(8,284)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(29)	(62)
NET CASH USED IN CONTINUING INVESTING ACTIVITIES	(29)	(62)
Net cash provided by discontinued investing activities	2,045	3,196
NET CASH PROVIDED BY INVESTING ACTIVITIES	2,016	3,134
CASH FLOWS FROM FINANCING ACTIVITIES:
Third party financing costs, related party		(320)
Dividend payment in kind	269
Financing (repayments) on accounts receivable financing, net	124	(661)
Proceeds from sale of common stock		4,433
Payments made on earnouts	(200)
NET CASH PROVIDED BY CONTINUING FINANCING ACTIVITIES	193	3,452
Net cash used in discontinued financing activities		(252)
NET CASH PROVIDED BY FINANCING ACTIVITIES	193	3,200
NET INCREASE (DECREASE) IN CASH	543	(1,950)
Effect of exchange rates on cash		34
Cash - Beginning of period	721	1,992
Cash - End of period	$ 1,264	$ 76

ORGANIZATION AND DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 29, 2024

Accounting Policies [Abstract]

ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 29, 2024

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

Liquidity

Due to the timing of select liabilities coming due, we are in discussion with our lenders to determine the best manner to settle these liabilities.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Going Concern

Use of Estimates

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Goodwill

Revenue Recognition

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Income Taxes

Warrants

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Recent Accounting Pronouncements

EARNINGS (LOSS) PER COMMON SHARE

6 Months Ended

Jun. 29, 2024

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER COMMON SHARE

NOTE 3 – EARNINGS (LOSS) PER COMMON SHARE

	June 29, 2024		July 1, 2023
Warrants		448,703		372,955
Restricted shares – unvested		22,559		18,850
Options		5,118		5,131
Total		476,380		396,936

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

ACCOUNTS RECEIVABLE FINANCING

6 Months Ended

Jun. 29, 2024

Receivables [Abstract]

ACCOUNTS RECEIVABLE FINANCING

NOTE 4 – ACCOUNTS RECEIVABLE FINANCING

Midcap Funding X Trust

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

In connection with Amendment No. 28, the Company paid to MidCap (i) a modification fee of $68 and (ii) $32 in overdue interest amount, which were paid prior to October 31, 2023.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

INTANGIBLE ASSETS

6 Months Ended

Jun. 29, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

NOTE 5 – INTANGIBLE ASSETS

The following provides a breakdown of intangible assets as of:

	Tradenames			Non-Compete			Customer Relationship			Total
	June 29, 2024
	Tradenames			Non-Compete			Customer Relationship			Total
Intangible assets, gross	$	8,282		$	2,215		$	18,953		$	29,450
Accumulated amortization		(5,215	)		(2,215	)		(11,654	)		(19,084	)
Intangible assets, net	$	3,067		$	-		$	7,299		$	10,366

	Tradenames			Non-Compete			Customer Relationship			Total
	December 30, 2023
	Tradenames			Non-Compete			Customer Relationship			Total
Intangible assets, gross	$	8,282		$	2,215		$	18,953		$	29,450
Accumulated amortization		(4,928	)		(2,215	)		(11,114	)		(18,257	)
Intangible assets, net	$	3,354		$	-		$	7,839		$	11,193

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

As of June 29, 2024, estimated annual amortization expense for each of the next five fiscal years is as follows:

Fiscal quarter ended June	Amount
2023	$	833
2024		1,617
2025		1,567
2026		1,567
2027		1,321
Thereafter		3,461
Total	$	10,366

GOODWILL

6 Months Ended

Jun. 29, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL

NOTE 6 – GOODWILL

The following table provides a roll forward of goodwill:

SCHEDULE OF GOODWILL

	June 29, 2024		December 30, 2023
Beginning balance, gross	$	19,891	$	19,891
Acquisition		—		—
Currency translation adjustment		—		—
Ending balance, net	$	19,891	$	19,891

Goodwill by reportable segment is as follows:

	June 29, 2024		December 30, 2023
Professional Staffing - US	$	14,031	$	14,031
Commercial Staffing - US		5,860		5,860
Ending balance, net	$	19,891	$	19,891
Goodwill	$	19,891	$	19,891

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

DEBT

6 Months Ended

Jun. 29, 2024

Debt Disclosure [Abstract]

DEBT

NOTE 7– DEBT

SCHEDULE OF DEBT

	June 29, 2024			December 30, 2023
Jackson Investment Group - related party	$	10,116		$	10,116
Redeemable Series H Preferred Stock		9,269			9,000
Total Debt, Gross		19,385			19,116
Less: Debt Discount and Deferred Financing Costs, Net		(353	)		(663	)
Total Debt, Net		19,032			18,453
Less: Non-Current Portion - Related Party		—			—
Less: Non-Current Portion		—			—
Total Current Debt, Net	$	19,032		$	18,453

Jackson Notes

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Redeemable Series H Preferred Stock

On July 31, 2023, the Company, Chapel Hill Partners, L.P. (“Chapel Hill”) and Jean-Pierre Sakey (“Sakey”) entered into an agreement in connection with the Headway Purchase Agreement.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

LEASES

6 Months Ended

Jun. 29, 2024

Leases

LEASES

NOTE 8 – LEASES

Quantitative information regarding the Company’s leases for period ended June 29, 2024 is as follows:

Lease Cost	Classification	June 29, 2024
Operating lease cost	SG&A Expenses		492
Other information
Weighted average remaining lease term (years)			3.4
Weighted average discount rate			7.00	%

Future minimum lease payments under non-cancelable leases as of June 29, 2024, were as follows:

Future Lease Payments
2024	$	750
2025		1,318
2026		1,130
2027		1,076
2028		1,103
Thereafter		676
	$	6,053
Less: Imputed Interest		904
Operating lease, liability	$	5,149

Leases - Current	$	1,115
Leases - Non current	$	4,034

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

STOCKHOLDERS’ DEFICIT

6 Months Ended

Jun. 29, 2024

Equity [Abstract]

STOCKHOLDERS’ DEFICIT

NOTE 9– STOCKHOLDERS’ DEFICIT

The Company issued the following shares of common stock during the six-months ended June 29, 2024:

SCHEDULE OF STOCKHOLDERS DEFICIT

	Number of		Fair Value		Fair Value at Issuance
	Common Shares		of Shares		(minimum and maximum
Shares issued to/for:	Issued		Issued		per share)
Warrants Exercised		221,117	$	1,835	$	8.30	$	8.30
Board and committee members		17,000		2,142	$	2.80	$	4.10
		238,117	$	3,977

The Company issued the following shares of common stock during the six-months ended July 1, 2023:

	Number of		Fair Value		Fair Value at Issuance
	Common Shares		of Shares		(minimum and maximum
Shares issued to/for:	Issued		Issued		per share)
Equity raise		188,452	$	4,999	$	26.50	$	26.50
Employees		17,730		531	$	28.20	$	28.20
Board and committee members		12,000		243	$	10.50	$	31.30
		218,182	$	5,773

Reverse Stock Split

Increase of Authorized Common Stock

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

February 2023 Public Offering

The Company utilized the net proceeds from the February 2023 Offering for general working capital purposes.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Series A Preferred Stock – Related Party

As of June 29, 2024 and July 1, 2023, the Company had $125 of dividends payable to the Series A Preferred Stockholder, respectively.

Restricted Shares

				Weighted
	Restricted Shares			Average Price Per Share
Outstanding at December 31, 2022		6,859		$	67.20
Granted		33,731			23.00
Vested/adjustments		(17,769	)		28.80
Outstanding at December 30, 2023		22,821			31.80
Granted		—			—
Vested/adjustments		(262	)		11.84
Outstanding at June 29, 2024		22,559		$	28.28

Warrants

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Transactions involving the Company’s warrant issuances are summarized as follows:

SCHEDULE OF WARRANTS ACTIVITY

				Weighted
	Number of			Average
	Shares			Exercise Price
Outstanding at December 31, 2022		170,369		$	96.10
Issued		863,193			20.59
Exercised		(276,117	)		5.90
Expired or cancelled		(87,665	)		58.50
Outstanding at December 30, 2023		669,780			34.80
Exercised		(221,117	)		8.30
Adjustment		40			—
Outstanding at June 29, 2024		448,703		$	54.92

The following table summarizes warrants outstanding as of June 29, 2024:

SCHEDULE OF WARRANTS OUTSTANDING

Weighted Average

Number

Remaining

Weighted

Outstanding

Contractual

Average

Exercise Price

and Exercisable

Life (years)

Exercise price

24.70 - $3,000.00

448,703

4.01

54.92

Stock Options

A summary of option activity during the quarter ended June 29, 2024, is presented below:

				Weighted
				Average
	Options			Exercise Price
Outstanding at December 31, 2022		5,151		$	500.60
Granted		—			—
Exercised		—			—
Expired or cancelled		—			—
Outstanding at December 30, 2023		5,151			500.06
Granted		—			—
Exercised		—			—
Expired or cancelled		(33	)		5,303.57
Outstanding at June 29, 2024		5,118		$	498.53

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

The Company recorded share-based payment expense of $176, $362, $221 and $940 for the three and six month periods ended June 29, 2024 and July 1, 2023, respectively.

Limited Duration Stockholder Rights Agreement

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 29, 2024

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Earn-out Liabilities

Adjusted EBITDA of $0 or less than $0= no Contingent Payment

Adjusted EBITDA of $500 x 2.5 multiple= $1,250 Contingent Payment

Adjusted EBITDA of $1,000 x 2.5 multiple= $2,500 Contingent Payment

Adjusted EBITDA of $1,800 x 2.5 multiple= $4,500 Contingent Payment

Adjusted EBITDA of $2,000 or more x 2.5 multiple= $5,000 Contingent Payment

Legal Proceedings

Whitaker v. Monroe Staffing Services, LLC & Staffing 360 Solutions, Inc.

On March 9, 2024, a Settlement and Release Agreement was entered into by both parties. Under this agreement, which was entered into to avoid costly court fees, the Company agreed to make a payment, in full and final settlement, of $2 million plus interest across the following dates and amounts: $115 on May 1, 2024, $114, on June 1, 2024, $114 on July 1, 2024, $113 on August 1, 2024, $112 on September 1, 2024, and a final payment of $1,511 on October 1, 2024. There is a five-day cure period for each payment and there is a Confession of Judgement in favor of the defendant for the full amount of the original Earnout plus interest, in the event of non-compliance.

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

SEGMENT INFORMATION

6 Months Ended

Jun. 29, 2024

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE 11 – SEGMENT INFORMATION

The Company generated revenue and gross profit by segment as follows:


	Three Months Ended						Six Months Ended
	June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
Commercial Staffing - US	$	20,162		$	24,145		$	39,798		$	47,392
Professional Staffing - US		24,015			24,470			45,823			48,847
Total Revenue	$	44,177		$	48,615		$	85,621		$	96,239

Commercial Staffing - US	$	3,240		$	4,293		$	6,290		$	8,096
Professional Staffing - US		2,575			2,734			4,835			6,417
Total Gross Profit	$	5,815		$	7,027		$	11,125		$	14,513

Selling, general and administrative expenses	$	(5,933	)	$	(7,678	)	$	(13,027	)	$	(15,469	)
Depreciation and amortization		(472	)		(383	)		(953	)		(873	)
Interest expense and amortization of debt discount and deferred financing costs		(1,480	)		(1,189	)		(2,727	)		(2,343	)
Discontinued Operations		-			(837	)		901			(1,689	)
Other loss income, net		150			188			255			174
Loss Before Provision for Income Tax	$	(1,920	)	$	(2,872	)	$	(4,426	)	$	(5,687	)

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

The following table disaggregates revenues by segments:

	Commercial Staffing - US		Professional Staffing - US		Total
	Quarter Ended June 29, 2024
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	52	$	48	$	100
Temporary Revenue		20,110		23,967		44,077
Total Revenue	$	20,162	$	24,015	$	44,177

	Commercial Staffing - US		Professional Staffing - US		Total
	Quarter Ended July 1, 2023
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	39	$	187	$	226
Temporary Revenue		24,106		24,283		48,389
Total Revenue	$	24,145	$	24,470	$	48,615

	Commercial Staffing - US		Professional Staffing - US		Total
	Six Months Ended June 29, 2024
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	106	$	269	$	375
Temporary Revenue		39,692		45,554		85,246
Total	$	39,798	$	45,823	$	85,621

	Commercial Staffing - US		Professional Staffing - US		Total
	Six Months Ended July 1, 2023
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	170	$	557	$	727
Temporary Revenue		47,222		48,290		95,512
Total	$	47,392	$	48,847	$	96,239

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 29, 2024

RELATED PARTY TRANSACTIONS

NOTE 12 – RELATED PARTY TRANSACTIONS

In addition to the shares of Series A Preferred Stock and notes and warrants issued to Jackson, the following are other related party transactions:

Board and Committee Members

SCHEDULE OF RELATED PARTY TRANSACTIONS

	Three Months Ended June 29, 2024
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	25		1,000	$	3	$	28
Nick Florio		25		1,000		3		28
Vincent Cebula		25		1,000		3		28
Alicia Barker		-		1,000		3		3
Brendan Flood		-		1,000		2		2
	$	75		5,000	$	14	$	89

	Three Months Ended July 1, 2023
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	25		1,000	$	29	$	54
Jeff Grout		25		1,000		29		54
Nick Florio		25		1,000		29		54
Vincent Cebula		25		1,000		29		54
Alicia Barker		-		1,000		31		31
Brendan Flood		-		1,000		31		31
	$	100	$	6,000	$	178	$	278

	Six Months Ended June 29, 2024
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	50		3,000	$	15	$	65
Nick Florio		50		4,000		15		65
Vincent Cebula		50		3,000		15		65
Alicia Barker		-		3,000		11		11
Brendan Flood		-		3,000		11		11
	$	150		16,000	$	67	$	217

	Six Months Ended July 1, 2023
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	50		2,000	$	40	$	90
Jeff Grout		50		2,000		40		90
Nick Florio		50		2,000		40		90
Vincent Cebula		50		2,000		40		90
Alicia Barker		-		2,000		42		42
Brendan Flood		-		2,000		41		41
	$	200		12,000	$	243	$	443

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

SUPPLEMENTAL CASH FLOW INFORMATION

6 Months Ended

Jun. 29, 2024

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

NOTE 13 – SUPPLEMENTAL CASH FLOW INFORMATION


	Six Months Ended
	June 29, 2024		July 1, 2023
Cash paid for:
Interest	$	1,834	$	2,815
Income taxes		—		—

Non-Cash Investing and Financing Activities:
Redeemable Series H preferred stock payment in kind		269		—
Debt discount – Series H		131		111
Debt Discount – Related party note		179		91

DISCONTINUED OPERATIONS

6 Months Ended

Jun. 29, 2024

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NOTE 14 - DISCONTINUED OPERATIONS

SUBSEQUENT EVENTS

6 Months Ended

Jun. 29, 2024

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 15 – SUBSEQUENT EVENTS

Nasdaq Compliance

Minimum Bid Price Requirement

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands, except share, per share and stated value per share)

(UNAUDITED)

Quarterly Reports on Form 10-Q

On July 15, 2024 the Company filed its 10Q for the period ending March 30, 2024. On July 25, 2024, the Company was advised that this area of non-compliance is now deemed resolved.

Equity Standard

Series H Preferred Stock

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Jun. 29, 2024
Accounting Policies [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation These condensed consolidated financial statements and related notes are presented in accordance with generally accepted accounting principles in the United States (“GAAP”), expressed in U.S. dollars. All amounts are in thousands, except share, per share and par values, unless otherwise indicated. The accompanying condensed consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the GAAP. All significant intercompany balances and transactions have been eliminated in consolidation.
Liquidity	Liquidity The accompanying condensed consolidated financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared on a basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity, capital requirements and that our credit facilities with our lenders will remain available to us. As shown in the accompanying condensed consolidated financial statements as of the quarter ended June 29, 2024, the Company has an accumulated deficit of $131,582 and a working capital deficit of $47,890. At June 29, 2024, we had total gross debt of $19,385 and $1,264 of cash on hand. We have historically met our cash needs through a combination of cash flows from operating activities, term loans, promissory notes, convertible notes, private placement offerings and sales of equity. Our cash requirements are generally for operating activities and debt repayments. Due to the timing of select liabilities coming due, we are in discussion with our lenders to determine the best manner to settle these liabilities. The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared assuming that we will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity, capital requirements and that our credit facilities with our lenders will remain available to us. Further, the notes issued to Jackson Investment Group LLC (“Jackson”) includes certain financial customary covenants and the Company is currently not in compliance. We are working with the lenders to bring the Company into compliance with these covenants. The entire outstanding principal balance of the Jackson Notes (as defined herein), which was $10,116 as of June 29, 2024, shall be due and payable on October 14, 2024. The debt represented by the Jackson Note continues to be secured by substantially all of the Company’s domestic subsidiaries’ assets pursuant to the Amended and Restated Security Agreement with Jackson, dated September 15, 2017, as amended. The Company also has a $32,500 revolving loan facility with MidCap Funding X Trust (“MidCap”). The MidCap facility has a maturity date of September 6, 2024. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED)
Going Concern	Going Concern The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. Historically, the Company has funded such payments either through cash flow from operations or the raising of capital through additional debt or equity. If the Company is unable to obtain additional capital, such payments may not be made on time. The Board of the Company is reviewing all of the strategic options open to it in determining how to resolve the Going Concern qualification and will update Stockholders as and when any material solution has been determined and ready to be acted upon. These solutions may include, but are not limited to, the restructuring of debt and raising of additional debt, management of expenditures, raising of additional equity, potential dispositions of assets, in addition to what has already happened in disposing of the UK operation to protect cashflows.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from its estimates. To the extent there are material differences between estimates and the actual results, future results of operations will be affected. Significant estimates for the quarters ended June 29, 2024 and July 1, 2023 include the measurement of credit losses, valuation of intangible assets, including goodwill, borrowing rate consideration for right-of-use (“ROU”), liabilities associated with earn-out obligations, testing long-lived assets for impairment, valuation reserves against deferred tax assets and penalties in connection with outstanding payroll tax liabilities, stock based compensation and fair value of warrants and options. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED)
Goodwill	Goodwill Goodwill relates to amounts that arose in connection with various acquisitions and represents the difference between the purchase price and the fair value of the identifiable intangible and tangible net assets when accounted for using the purchase method of accounting. Goodwill is not amortized, but it is subject to periodic review for impairment. Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to, current economic and market conditions, a decline in the equity value of the business, a significant adverse change in certain agreements that would materially affect reported operating results, business climate or operational performance of the business and an adverse action or assessment by a regulator. The carrying value of each reporting unit is based on the assignment of the appropriate assets and liabilities to each reporting unit. Assets and liabilities were assigned to each reporting unit if the assets or liabilities are employed in the operations of the reporting unit and the asset and liability is considered in the determination of the reporting unit fair value.
Revenue Recognition	Revenue Recognition The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) The Company has primarily two main forms of revenue – temporary contractor revenue and permanent placement revenue. Temporary contractor revenue is accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of the Company’s performance on an hourly or daily basis. The contracts stipulate weekly or monthly billing, and the Company has elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as we have the right to payment in an amount that corresponds directly with the value of performance completed to date. Permanent placement revenue is recognized on the date the candidate’s full-time employment with the customer has commenced. The customer is invoiced on the start date, and the contract stipulates payment due under varying terms, typically 30 days. The contract with the customer stipulates a guarantee period whereby the customer may be refunded if the employee is terminated within a short period of time, however this has historically been infrequent, and immaterial upon occurrence. As such, the Company’s performance obligations are satisfied upon commencement of the employment, at which point control has transferred to the customer. Revenue for the three and six months ended June 29, 2024 was comprised of $44,077 and $85,246 of temporary contractor revenue and $100 and $375 of permanent placement revenue, respectively compared with $48,389 and $95,512 of temporary contractor revenue and $226 and $727 permanent placement revenue for the three and six months ended July 1, 2023, respectively. Refer to Note 11 – Segment Information for further details on breakdown by segments.
Income Taxes	Income Taxes The Company utilizes Accounting Standards Codification (“ASC”) Topic 740, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company applies the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of the date of this filing, the Company is current on all corporate, federal and state tax returns. The Company’s policy is to record interest and penalties related to unrecognized tax benefits as income tax expense. The effective income tax rate was (2.61%), (2.27%), (0.77%) and (0.78%) for the three and six months ending June 29, 2024 and July 1, 2023, respectively. The Company’s effective tax rate differs from the U.S. federal statutory rate of 21%, primarily due to changes in valuation allowances in the U.S., which eliminates the effective tax rate on current year losses, offset by current state taxes and changes to goodwill naked credit. The Company may have experienced an IRC Section 382 limitation during 2021, for which it is in process of conducting an analysis to determine the tax consequences of such a limitation.
Warrants	Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands, except share, per share and stated value per share) (UNAUDITED) For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. Refer to Note 9 – Stockholders’ Deficit for further details.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid. This change is effective for annual periods beginning after December 15, 2024. This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted. The Company does not expect the adoption of this ASU to have a material impact on its financial statements.

EARNINGS (LOSS) PER COMMON SHARE (Tables)

6 Months Ended

Jun. 29, 2024

Earnings Per Share [Abstract]

SCHEDULE OF COMMON SHARE EQUIVALENT BASIS AND OUTSTANDING EXCLUDED FROM PER SHARE COMPUTATIONS OF ANTI-DILUTIVE

	June 29, 2024		July 1, 2023
Warrants		448,703		372,955
Restricted shares – unvested		22,559		18,850
Options		5,118		5,131
Total		476,380		396,936

INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 29, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF BREAKDOWN OF INTANGIBLE ASSETS

The following provides a breakdown of intangible assets as of:

	Tradenames			Non-Compete			Customer Relationship			Total
	June 29, 2024
	Tradenames			Non-Compete			Customer Relationship			Total
Intangible assets, gross	$	8,282		$	2,215		$	18,953		$	29,450
Accumulated amortization		(5,215	)		(2,215	)		(11,654	)		(19,084	)
Intangible assets, net	$	3,067		$	-		$	7,299		$	10,366

	Tradenames			Non-Compete			Customer Relationship			Total
	December 30, 2023
	Tradenames			Non-Compete			Customer Relationship			Total
Intangible assets, gross	$	8,282		$	2,215		$	18,953		$	29,450
Accumulated amortization		(4,928	)		(2,215	)		(11,114	)		(18,257	)
Intangible assets, net	$	3,354		$	-		$	7,839		$	11,193

SCHEDULE OF ESTIMATED ANNUAL AMORTIZATION EXPENSE FOR EACH OF THE NEXT FIVE FISCAL YEARS

As of June 29, 2024, estimated annual amortization expense for each of the next five fiscal years is as follows:

Fiscal quarter ended June	Amount
2023	$	833
2024		1,617
2025		1,567
2026		1,567
2027		1,321
Thereafter		3,461
Total	$	10,366

GOODWILL (Tables)

6 Months Ended

Jun. 29, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF GOODWILL

The following table provides a roll forward of goodwill:

SCHEDULE OF GOODWILL

	June 29, 2024		December 30, 2023
Beginning balance, gross	$	19,891	$	19,891
Acquisition		—		—
Currency translation adjustment		—		—
Ending balance, net	$	19,891	$	19,891

SCHEDULE OF GOODWILL REPORTABLE BY SEGMENT

Goodwill by reportable segment is as follows:

	June 29, 2024		December 30, 2023
Professional Staffing - US	$	14,031	$	14,031
Commercial Staffing - US		5,860		5,860
Ending balance, net	$	19,891	$	19,891
Goodwill	$	19,891	$	19,891

DEBT (Tables)

6 Months Ended

Jun. 29, 2024

Debt Disclosure [Abstract]

SCHEDULE OF DEBT

	June 29, 2024			December 30, 2023
Jackson Investment Group - related party	$	10,116		$	10,116
Redeemable Series H Preferred Stock		9,269			9,000
Total Debt, Gross		19,385			19,116
Less: Debt Discount and Deferred Financing Costs, Net		(353	)		(663	)
Total Debt, Net		19,032			18,453
Less: Non-Current Portion - Related Party		—			—
Less: Non-Current Portion		—			—
Total Current Debt, Net	$	19,032		$	18,453

LEASES (Tables)

6 Months Ended

Jun. 29, 2024

Leases

SCHEDULE OF LEASE, COST AND OPERATING LEASE LIABILITY MATURITY

Quantitative information regarding the Company’s leases for period ended June 29, 2024 is as follows:

Lease Cost	Classification	June 29, 2024
Operating lease cost	SG&A Expenses		492
Other information
Weighted average remaining lease term (years)			3.4
Weighted average discount rate			7.00	%

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER NON-CANCELABLE LEASES

Future minimum lease payments under non-cancelable leases as of June 29, 2024, were as follows:

Future Lease Payments
2024	$	750
2025		1,318
2026		1,130
2027		1,076
2028		1,103
Thereafter		676
	$	6,053
Less: Imputed Interest		904
Operating lease, liability	$	5,149

Leases - Current	$	1,115
Leases - Non current	$	4,034

STOCKHOLDERS’ DEFICIT (Tables)

6 Months Ended

Jun. 29, 2024

Accumulated Other Comprehensive Income (Loss) [Line Items]

SCHEDULE OF STOCKHOLDERS DEFICIT

The Company issued the following shares of common stock during the six-months ended June 29, 2024:

SCHEDULE OF STOCKHOLDERS DEFICIT

	Number of		Fair Value		Fair Value at Issuance
	Common Shares		of Shares		(minimum and maximum
Shares issued to/for:	Issued		Issued		per share)
Warrants Exercised		221,117	$	1,835	$	8.30	$	8.30
Board and committee members		17,000		2,142	$	2.80	$	4.10
		238,117	$	3,977

The Company issued the following shares of common stock during the six-months ended July 1, 2023:

	Number of		Fair Value		Fair Value at Issuance
	Common Shares		of Shares		(minimum and maximum
Shares issued to/for:	Issued		Issued		per share)
Equity raise		188,452	$	4,999	$	26.50	$	26.50
Employees		17,730		531	$	28.20	$	28.20
Board and committee members		12,000		243	$	10.50	$	31.30
		218,182	$	5,773

SCHEDULE OF UNVESTED RESTRICTED SHARES ACTIVITY

				Weighted
	Restricted Shares			Average Price Per Share
Outstanding at December 31, 2022		6,859		$	67.20
Granted		33,731			23.00
Vested/adjustments		(17,769	)		28.80
Outstanding at December 30, 2023		22,821			31.80
Granted		—			—
Vested/adjustments		(262	)		11.84
Outstanding at June 29, 2024		22,559		$	28.28

SCHEDULE OF WARRANTS ACTIVITY

Transactions involving the Company’s warrant issuances are summarized as follows:

SCHEDULE OF WARRANTS ACTIVITY

				Weighted
	Number of			Average
	Shares			Exercise Price
Outstanding at December 31, 2022		170,369		$	96.10
Issued		863,193			20.59
Exercised		(276,117	)		5.90
Expired or cancelled		(87,665	)		58.50
Outstanding at December 30, 2023		669,780			34.80
Exercised		(221,117	)		8.30
Adjustment		40			—
Outstanding at June 29, 2024		448,703		$	54.92

SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS ACTIVITY

A summary of option activity during the quarter ended June 29, 2024, is presented below:

				Weighted
				Average
	Options			Exercise Price
Outstanding at December 31, 2022		5,151		$	500.60
Granted		—			—
Exercised		—			—
Expired or cancelled		—			—
Outstanding at December 30, 2023		5,151			500.06
Granted		—			—
Exercised		—			—
Expired or cancelled		(33	)		5,303.57
Outstanding at June 29, 2024		5,118		$	498.53

Warrant [Member]

Accumulated Other Comprehensive Income (Loss) [Line Items]

SCHEDULE OF WARRANTS OUTSTANDING

The following table summarizes warrants outstanding as of June 29, 2024:

SCHEDULE OF WARRANTS OUTSTANDING

Weighted Average

Number

Remaining

Weighted

Outstanding

Contractual

Average

Exercise Price

and Exercisable

Life (years)

Exercise price

24.70 - $3,000.00

448,703

4.01

54.92

SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 29, 2024

Segment Reporting [Abstract]

SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT

The Company generated revenue and gross profit by segment as follows:


	Three Months Ended						Six Months Ended
	June 29, 2024			July 1, 2023			June 29, 2024			July 1, 2023
Commercial Staffing - US	$	20,162		$	24,145		$	39,798		$	47,392
Professional Staffing - US		24,015			24,470			45,823			48,847
Total Revenue	$	44,177		$	48,615		$	85,621		$	96,239

Commercial Staffing - US	$	3,240		$	4,293		$	6,290		$	8,096
Professional Staffing - US		2,575			2,734			4,835			6,417
Total Gross Profit	$	5,815		$	7,027		$	11,125		$	14,513

Selling, general and administrative expenses	$	(5,933	)	$	(7,678	)	$	(13,027	)	$	(15,469	)
Depreciation and amortization		(472	)		(383	)		(953	)		(873	)
Interest expense and amortization of debt discount and deferred financing costs		(1,480	)		(1,189	)		(2,727	)		(2,343	)
Discontinued Operations		-			(837	)		901			(1,689	)
Other loss income, net		150			188			255			174
Loss Before Provision for Income Tax	$	(1,920	)	$	(2,872	)	$	(4,426	)	$	(5,687	)

SCHEDULE OF DISAGGREGATES REVENUES BY SEGMENTS

The following table disaggregates revenues by segments:

	Commercial Staffing - US		Professional Staffing - US		Total
	Quarter Ended June 29, 2024
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	52	$	48	$	100
Temporary Revenue		20,110		23,967		44,077
Total Revenue	$	20,162	$	24,015	$	44,177

	Commercial Staffing - US		Professional Staffing - US		Total
	Quarter Ended July 1, 2023
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	39	$	187	$	226
Temporary Revenue		24,106		24,283		48,389
Total Revenue	$	24,145	$	24,470	$	48,615

	Commercial Staffing - US		Professional Staffing - US		Total
	Six Months Ended June 29, 2024
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	106	$	269	$	375
Temporary Revenue		39,692		45,554		85,246
Total	$	39,798	$	45,823	$	85,621

	Commercial Staffing - US		Professional Staffing - US		Total
	Six Months Ended July 1, 2023
	Commercial Staffing - US		Professional Staffing - US		Total
Permanent Revenue	$	170	$	557	$	727
Temporary Revenue		47,222		48,290		95,512
Total	$	47,392	$	48,847	$	96,239

RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 29, 2024

SCHEDULE OF RELATED PARTY TRANSACTIONS

	Three Months Ended June 29, 2024
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	25		1,000	$	3	$	28
Nick Florio		25		1,000		3		28
Vincent Cebula		25		1,000		3		28
Alicia Barker		-		1,000		3		3
Brendan Flood		-		1,000		2		2
	$	75		5,000	$	14	$	89

	Three Months Ended July 1, 2023
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	25		1,000	$	29	$	54
Jeff Grout		25		1,000		29		54
Nick Florio		25		1,000		29		54
Vincent Cebula		25		1,000		29		54
Alicia Barker		-		1,000		31		31
Brendan Flood		-		1,000		31		31
	$	100	$	6,000	$	178	$	278

	Six Months Ended June 29, 2024
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	50		3,000	$	15	$	65
Nick Florio		50		4,000		15		65
Vincent Cebula		50		3,000		15		65
Alicia Barker		-		3,000		11		11
Brendan Flood		-		3,000		11		11
	$	150		16,000	$	67	$	217

	Six Months Ended July 1, 2023
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	50		2,000	$	40	$	90
Jeff Grout		50		2,000		40		90
Nick Florio		50		2,000		40		90
Vincent Cebula		50		2,000		40		90
Alicia Barker		-		2,000		42		42
Brendan Flood		-		2,000		41		41
	$	200		12,000	$	243	$	443

SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

6 Months Ended

Jun. 29, 2024

Supplemental Cash Flow Elements [Abstract]

SCHEDULE OF CASH FLOW, SUPPLEMENTAL DISCLOSURES


	Six Months Ended
	June 29, 2024		July 1, 2023
Cash paid for:
Interest	$	1,834	$	2,815
Income taxes		—		—

Non-Cash Investing and Financing Activities:
Redeemable Series H preferred stock payment in kind		269		—
Debt discount – Series H		131		111
Debt Discount – Related party note		179		91

ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative)	6 Months Ended
	Jun. 29, 2024
Accounting Policies [Abstract]
Business combination, acquired receivables, description	Typical contribution for EOR projects would be 80-85% of the gross profit earned, compared to 40-50% for traditional staffing which negates the impact of lower gross margins.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023	Dec. 30, 2023
Accumulated deficit	$ 131,582		$ 131,582		$ 127,056
Working capital deficit	47,890		47,890
Gross debt	19,385		19,385
Cash	1,264		1,264		721
Outstanding principal balance	19,385		19,385		$ 19,116
Revenue	$ 44,177	$ 48,615	$ 85,621	$ 96,239
Effective income tax rate	(2.61%)	(0.77%)	(2.27%)	(0.78%)
Effective income tax rate federal			21.00%
Temporary Contractor Revenue [Member]
Revenue	$ 44,077	$ 48,389	$ 85,246	$ 95,512
Permanent Placement Revenue [Member]
Revenue	100	$ 226	375	$ 727
2020 Jackson Note [Member]
Outstanding principal balance	10,116		10,116
2020 Jackson Note [Member] \| Midcap Funding X Trust [Member]
Long-term line of credit	$ 32,500		$ 32,500

SCHEDULE OF COMMON SHARE EQUIVALENT BASIS AND OUTSTANDING EXCLUDED FROM PER SHARE COMPUTATIONS OF ANTI-DILUTIVE (Details) - shares	6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	476,380	396,936
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	448,703	372,955
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	22,559	18,850
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	5,118	5,131

ACCOUNTS RECEIVABLE FINANCING (Details Narrative) - USD ($) $ in Thousands	Aug. 30, 2023	Oct. 27, 2022	Sep. 15, 2017	Jun. 29, 2024	Dec. 30, 2023	Oct. 26, 2022
Financing Receivable, Modified [Line Items]
Line of credit facility, description	Pursuant to the First Omnibus Amendment Agreement, interest on the 2022 Jackson Note, evidencing the obligations of the Obligors under the Third A&R Agreement and executed by the Company in favor of Jackson, shall be paid in cash and continue to accrue at a rate per annum equal to 12% until the principal amount of the 2022 Jackson Note has been paid in full. In the event that Company has not repaid in cash at least 50% of the outstanding principal balance of the 2022 Jackson Note as of the date of the First Omnibus Amendment Agreement or on or before October 27, 2023, then interest on the outstanding principal balance of the 2022 Jackson Note will accrue at 16% per annum until the 2022 Jackson Note is repaid in full.
Credit and Security Agreement [Member]
Financing Receivable, Modified [Line Items]
Interest rate		3.00%
Credit and Security Agreement [Member] \| Revolving Credit Facility [Member]
Financing Receivable, Modified [Line Items]
Line of credit facility, description	(i) increases the applicable margin (a) from 4.25% to 4.50% with respect to revolving loans and other obligations (other than letter of credit liabilities) and (b) from 3.75% to 4.50% with respect to letter of credit liabilities, (ii) revises the definition of borrowing base to include the amount of any reserves and/or adjustments provided for in the Credit and Security Agreement, including, but not limited to, the Additional Reserve Amount (as defined in the in Amendment No. 28), (iii) requires that the Company complies with a fixed charge coverage ratio of at least 1:00 to 1:00, and (iv) waives the existing event of default that occurred under the Credit and Security Agreement due to the Credit Parties’ failure to maintain the Minimum Liquidity amount (as defined in the Credit and Security Agreement) for the fiscal month ending June 30, 2023 (each as defined in the Credit and Security Agreement).
Revolving loans amount	$ 1,300
Line of credit facility, percentage	50.00%
Modification fee	$ 68
Line of credit facility, periodic payment interest	$ 32
Midcap Financial Trust [Member]
Financing Receivable, Modified [Line Items]
Long-term line of credit			$ 25,000	$ 14,822	$ 14,698
Line of credit facility additional borrowing capacity			$ 25,000
Line of credit facility, maturity date			Apr. 08, 2019
MidCap Funding IV Trust [Member] \| Credit and Security Agreement [Member]
Financing Receivable, Modified [Line Items]
Loans payable		$ 32,500				$ 25,000
Debt instrument maturity date		extends the commitment expiry date from October 27, 2022 to September 6, 2024
Line of credit facility, description		Amendment No. 27 increases the applicable margin from 4.0% to 4.25%, with respect to the Loan (other than Letter of Credit Liabilities (as defined in the Credit and Security Agreement)), and from 3.5% to 3.75% with respect to the Letter of Credit Liabilities. Amendment No. 27 also replaces the interest rate benchmark from LIBOR to SOFR and provides that the Loan shall bear interest at the sum of a term-based SOFR rate (plus a SOFR adjustment of 0.11448%) plus the Applicable Margin, subject to certain provisions for the replacement of SOFR with an alternate benchmark in connection with SOFR no longer being provided by its administrator. Notwithstanding the foregoing, the SOFR interest rate shall not be at any time less than 1.00%.
MidCap Funding IV Trust [Member] \| Credit and Security Agreement [Member] \| Tranches [Member]
Financing Receivable, Modified [Line Items]
Loan commitment amount		$ 42,500
MidCap Funding IV Trust [Member] \| Credit and Security Agreement [Member] \| Tranches [Member] \| Maximum [Member]
Financing Receivable, Modified [Line Items]
Loans payable		10,000
MidCap Funding IV Trust [Member] \| Credit and Security Agreement [Member] \| Tranches [Member] \| Minimum [Member]
Financing Receivable, Modified [Line Items]
Loans payable		$ 5,000

SCHEDULE OF BREAKDOWN OF INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	Jun. 29, 2024	Dec. 30, 2023
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 29,450	$ 29,450
Accumulated amortization	(19,084)	(18,257)
Intangible assets, net	10,366	11,193
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	8,282	8,282
Accumulated amortization	(5,215)	(4,928)
Intangible assets, net	3,067	3,354
Non Compete [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	2,215	2,215
Accumulated amortization	(2,215)	(2,215)
Intangible assets, net
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	18,953	18,953
Accumulated amortization	(11,654)	(11,114)
Intangible assets, net	$ 7,299	$ 7,839

SCHEDULE OF ESTIMATED ANNUAL AMORTIZATION EXPENSE FOR EACH OF THE NEXT FIVE FISCAL YEARS (Details) - USD ($) $ in Thousands	Jun. 29, 2024	Dec. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
2023	$ 833
2024	1,617
2025	1,567
2026	1,567
2027	1,321
Thereafter	3,461
Intangible assets, net	$ 10,366	$ 11,193

SCHEDULE OF GOODWILL (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
SCHEDULE OF GOODWILL (Details) - USD ($) $ in Thousands	Jun. 29, 2024	Dec. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Beginning balance, gross	$ 19,891	$ 19,891
Acquisition
Currency translation adjustment
Ending balance, net	$ 19,891	$ 19,891

SCHEDULE OF GOODWILL REPORTABLE BY SEGMENT (Details) - USD ($) $ in Thousands	Jun. 29, 2024	Dec. 30, 2023
Goodwill	$ 19,891	$ 19,891
Professional Staffing [Member] \| UNITED STATES
Goodwill	14,031	14,031
Commercial Staffing [Member] \| UNITED STATES
Goodwill	$ 5,860	$ 5,860

INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 433	$ 453	$ 843	$ 907
Intangible asset, useful life	5 years 6 months		5 years 6 months

SCHEDULE OF DEBT (Details) - USD ($) $ in Thousands	Jun. 29, 2024	Dec. 30, 2023
Short-Term Debt [Line Items]
Total Debt, Gross	$ 19,385	$ 19,116
Less: Debt Discount and Deferred Financing Costs, Net	(353)	(663)
Total Debt, Net	19,032	18,453
Total Current Debt, Net	19,032	18,453
Related Party [Member]
Short-Term Debt [Line Items]
Less: Non-Current Portion - Related Party
Nonrelated Party [Member]
Short-Term Debt [Line Items]
Less: Non-Current Portion
Jackson Investment Group Related Party [Member]
Short-Term Debt [Line Items]
Total Debt, Gross	10,116	10,116
Redeemable Series H Preferred Stock [Member]
Short-Term Debt [Line Items]
Total Debt, Gross	$ 9,269	$ 9,000

DEBT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands				1 Months Ended	3 Months Ended	6 Months Ended
	Sep. 30, 2023	Sep. 01, 2023	Aug. 30, 2023	May 18, 2022	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023	Dec. 30, 2023	Dec. 27, 2023	Oct. 27, 2022
Expiration term			Pursuant to the First Omnibus Amendment Agreement, interest on the 2022 Jackson Note, evidencing the obligations of the Obligors under the Third A&R Agreement and executed by the Company in favor of Jackson, shall be paid in cash and continue to accrue at a rate per annum equal to 12% until the principal amount of the 2022 Jackson Note has been paid in full. In the event that Company has not repaid in cash at least 50% of the outstanding principal balance of the 2022 Jackson Note as of the date of the First Omnibus Amendment Agreement or on or before October 27, 2023, then interest on the outstanding principal balance of the 2022 Jackson Note will accrue at 16% per annum until the 2022 Jackson Note is repaid in full.
Number of shares issued						238,117	218,182
Preferred stock stated value						$ 0.00001		$ 0.00001	$ 0.00001
Common Stock [Member]
Number of shares issued		552,234			89,500		188,452
Series H Preferred Stock [Member]
Number of shares issued				9,000,000
Preferred stock stated value				$ 0.00001
Debt instrument conversion price				1.00
Preferred stock conversion price				$ 25.714
Cash dividends per annum rate				12.00%
Preferred stock redemption description				The redemption price represents the number of shares of the Preferred Stock (9,000,000), plus all accrued but unpaid dividends, multiplied by the Stated Value ($1). On May 18, 2022, the Company paid $14 towards the Series H Preferred Stock balance.
Debt instrument redemption amount				$ 8,265		$ 9,269
Fair value of deferred financing				$ 735
Number of additional shares redeem	100,000
Redemption price per share	$ 0.0000001
Series H Preferred Stock [Member] \| Common Stock [Member]
Debt instrument issuance of aggregate shares				350,000
Series H Preferred Stock [Member] \| Headway [Member]
Ownership percentage				100.00%
Third Amended and Restated Note Purchase Agreement [Member] \| Jackson Investment Group, LLC [Member]
Percentage of first call over of net proceeds from increase of common stock										50.00%
Purchase Agreement Amended [Member]
Contingent payment amount as per agreement	$ 5,000
Contingent payment installment amount	1,000
Installment amount to be paid to third parties to satisfy existing incentives and fees	$ 134
Senior Secured Tweleve Promissory Note [Member]
Expiration term			amends the Third A&R Agreement, (ii) provided for the issuance of a new 12% Senior Secured Promissory Note due October 14, 2024 (the “2023 Jackson Note” and together with the 2022 Jackson Note, the “Jackson Notes”) to Jackson, and (iii) joins certain subsidiaries of the Company to (a) that certain Amended and Restated Pledge Agreement, dated as of September 15, 2017 (as amended by the First Omnibus Amendment Agreement, the “Pledge Agreement”) and (b) that certain Amended and Restated Security Agreement, dated as of September 15, 2017 (as amended by the Amendment Agreement, the “Security Agreement”), as either subsidiary guarantors or pledgors (as applicable) and amends certain terms and conditions of each of the Pledge Agreement and the Security Agreement.

SCHEDULE OF LEASE, COST AND OPERATING LEASE LIABILITY MATURITY (Details) $ in Thousands	6 Months Ended
	Jun. 29, 2024 USD ($)
Leases
Operating lease cost	$ 492
Weighted average remaining lease term (years)	3 years 4 months 24 days
Weighted average discount rate	7.00%

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER NON-CANCELABLE LEASES (Details) - USD ($) $ in Thousands	Jun. 29, 2024	Dec. 30, 2023
Leases
2024	$ 750
2025	1,318
2026	1,130
2027	1,076
2028	1,103
Thereafter	676
Lessee operating lease liability payments due	6,053
Less: Imputed Interest	904
Operating lease, liability	5,149
Leases - Current	1,115	$ 1,035
Leases - Non current	$ 4,034	$ 4,213

LEASES (Details Narrative) - USD ($) $ in Thousands	1 Months Ended
LEASES (Details Narrative) - USD ($) $ in Thousands	Feb. 29, 2024	Jan. 31, 2024	Jun. 29, 2024	Dec. 30, 2023
Operating Lease, Right-of-Use Asset			$ 4,728	$ 4,813
Operating Lease, Liability			5,149
New Lease Agreement [Member] \| MOROCCO
Lessee, operating lease, renewal term	3 years	3 years
Increase in operating right of use assets	$ 72	$ 54
Accounting Standards Update 2018-11 [Member]
Operating Lease, Right-of-Use Asset			4,728
Operating Lease, Liability			$ 5,149

SCHEDULE OF STOCKHOLDERS DEFICIT (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023
Subsidiary, Sale of Stock [Line Items]
Number of common shares issued	238,117	218,182
Fair Value of Shares Issued	$ 3,977	$ 5,773
Board and Committee Members [Member]
Subsidiary, Sale of Stock [Line Items]
Number of common shares issued	17,000	12,000
Fair Value of Shares Issued	$ 2,142	$ 243
Employees [Member]
Subsidiary, Sale of Stock [Line Items]
Number of common shares issued		17,730
Fair Value of Shares Issued		$ 531
Minimum [Member] \| Board and Committee Members [Member]
Subsidiary, Sale of Stock [Line Items]
Fair Value at Issuance (per Share)	$ 2.80	$ 10.50
Minimum [Member] \| Employees [Member]
Subsidiary, Sale of Stock [Line Items]
Fair Value at Issuance (per Share)		28.20
Maximum [Member] \| Board and Committee Members [Member]
Subsidiary, Sale of Stock [Line Items]
Fair Value at Issuance (per Share)	$ 4.10	31.30
Maximum [Member] \| Employees [Member]
Subsidiary, Sale of Stock [Line Items]
Fair Value at Issuance (per Share)		$ 28.20
Warrants Exercised [Member]
Subsidiary, Sale of Stock [Line Items]
Number of common shares issued	221,117
Fair Value of Shares Issued	$ 1,835
Warrants Exercised [Member] \| Minimum [Member]
Subsidiary, Sale of Stock [Line Items]
Fair Value at Issuance (per Share)	$ 8.30
Warrants Exercised [Member] \| Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Fair Value at Issuance (per Share)	$ 8.30
Equity Raise [Member]
Subsidiary, Sale of Stock [Line Items]
Number of common shares issued		188,452
Fair Value of Shares Issued		$ 4,999
Equity Raise [Member] \| Minimum [Member]
Subsidiary, Sale of Stock [Line Items]
Fair Value at Issuance (per Share)		$ 26.50
Equity Raise [Member] \| Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Fair Value at Issuance (per Share)		$ 26.50

SCHEDULE OF UNVESTED RESTRICTED SHARES ACTIVITY (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 29, 2024	Dec. 30, 2023
Equity [Abstract]
Restricted shares, beginning balance	22,821	6,859
Weighted average price per share, beginning balance	$ 31.80	$ 67.20
Restricted shares, granted		33,731
Weighted average price per share, granted		$ 23.00
Restricted shares, vested/adjustments	(262)	(17,769)
Weighted average price per share, vested/adjustments	$ 11.84	$ 28.80
Restricted shares, ending balance	22,559	22,821
Weighted average price per share, ending balance	$ 28.28	$ 31.80

SCHEDULE OF WARRANTS ACTIVITY (Details) - $ / shares	6 Months Ended	12 Months Ended
SCHEDULE OF WARRANTS ACTIVITY (Details) - $ / shares	Jun. 29, 2024	Dec. 30, 2023
Equity [Abstract]
Number of shares, outstanding ending balance	669,780	170,369
Weighted average exercise price, outstanding beginning balance	$ 34.80	$ 96.10
Number of shares, issued		863,193
Weighted average exercise price, issued		$ 20.59
Number of shares, exercised	(221,117)	(276,117)
Weighted average exercise price, exercised	$ 8.30	$ 5.90
Number of shares, expired or cancelled		(87,665)
Weighted average exercise price, expired or cancelled		$ 58.50
Number of shares, adjustment	40
Weighted average exercise price, adjustment
Number of shares, outstanding ending balance	448,703	669,780
Weighted average exercise price, outstanding ending balance	$ 54.92	$ 34.80

SCHEDULE OF WARRANTS OUTSTANDING (Details) - $ / shares	6 Months Ended
SCHEDULE OF WARRANTS OUTSTANDING (Details) - $ / shares	Jun. 29, 2024	Sep. 30, 2023
Exercise price		$ 10.375
Number of warrants outstanding and exercisable	448,703
Weighted average remaining contractual life (years)	4 years 3 days
Weighted average exercise price	$ 54.92
Minimum [Member]
Exercise price	24.70
Maximum [Member]
Exercise price	$ 3,000.00

SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS ACTIVITY (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 29, 2024	Dec. 30, 2023
Equity [Abstract]
Options outstanding, beginning balance	5,151	5,151
Weighted average exercise price, beginning balance	$ 500.06	$ 500.60
Options granted
Weighted average exercise price, granted
Options exercised
Weighted average exercise price, exercised
Options expired or cancelled	(33)
Weighted average exercise price, expired or cancelled	$ 5,303.57
Options outstanding, ending balance	5,118	5,151
Weighted average exercise price, ending balance	$ 498.53	$ 500.06

STOCKHOLDERS’ DEFICIT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands							1 Months Ended	3 Months Ended		6 Months Ended
	Sep. 27, 2023	Sep. 06, 2023	Sep. 01, 2023	Feb. 07, 2023	Jan. 04, 2023	Jul. 07, 2022	Sep. 30, 2023	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023	Dec. 30, 2023	Dec. 27, 2023	Dec. 26, 2023
Subsidiary, Sale of Stock [Line Items]
Common stock, par value								$ 0.0001		$ 0.0001		$ 0.0001	$ 0.00001
Common stock, shares authorized								250,000,000		250,000,000		250,000,000	250,000,000	200,000,000
Capital stock, shares authorized													270,000,000	220,000,000
Preferred stock, shares authorized								20,000,000		20,000,000		20,000,000		20,000,000
Preferred stock, par value								$ 0.00001		$ 0.00001		$ 0.00001	$ 0.00001
Exercise price, per share							$ 10.375
Sale of common stock and warrants, shares										238,117	218,182
Sharebased payment expense								$ 176	$ 221	$ 362	$ 940
Dividend description	(a) $100.00 and (b) the sum of (1) 10,000 (subject to adjustments for stock dividends, stock splits, or stock combinations) times the aggregate per share amount of all cash dividends, plus (2) 10,000 (subject to adjustments for stock dividends, stock splits, or stock combinations) times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of common stock, or a subdivision of the outstanding shares of common stock (by reclassification or otherwise), in each case declared on the common stock. In the event of liquidation, dissolution or winding up of the Company, the holders of the Preferred Stock will be entitled to a minimum preferential payment of the greater of (a) $100.00 per share (plus any accrued but unpaid dividends and distributions), and (b) an amount equal to 10,000 times (subject to adjustments for stock dividends, stock splits, or stock combinations) made per share amount of all cash and other property to be distributed in respect of common stock. Each share of Preferred Stock will be initially entitled to 10,000 votes (subject to adjustment for stock dividends, stock splits, or stock combinations). In addition to voting together with the holders of common stock for the election of other directors of the Company, the holders of Preferred Stock, voting separately as a class to the exclusion of the holders of common stock, shall be entitled at the meeting of stockholders (and at each subsequent annual meeting of stockholders), unless all dividends in arrears on the Preferred Stock have been paid or declared and set apart for payment prior thereto, to vote for the election of two directors of the Company. Holders of Preferred Stock shall otherwise have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of common stock as set forth herein) for taking any corporate action, other than as required by law.
Description of purchase price	no adjustment in the Purchase Price will be required unless such adjustment would require an increase or decrease of at least 1% in such Purchase Price.
Sale of stock, price per share	$ 0.1
Acquiring Person [Member]
Subsidiary, Sale of Stock [Line Items]
Business acquisition, description of acquired entity	In the event that any person or group of affiliated or associated persons becomes an Acquiring Person (the first occurrence of such event, a “Flip-In Event”), each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereupon become void), will thereafter have the right to receive upon exercise of a Right that number of shares of common stock equal to the number of shares of common stock obtained by dividing the Purchase Price (subject to adjustments) by 50% of the current per share market price of the common stock on the date of the Flip-In Event. Except in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring beneficial ownership of 10% (20% in the case of a Passive Investor (as defined in the Rights Agreement)) or more in voting power of the shares of Voting Stock then outstanding, subject to certain exclusions.
Business combination acquired, percentage	50.00%
Business acquisition, percentage of voting	50.00%
Restricted Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Shares issued								22,559		22,559
Share-Based Payment Arrangement, Expense										$ 362	940
Series A Preferred Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Dividends payable								$ 125	$ 125	$ 125	$ 125
Minimum [Member]
Subsidiary, Sale of Stock [Line Items]
Exercise price, per share								$ 24.70		$ 24.70
Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Exercise price, per share								$ 3,000.00		$ 3,000.00
Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Sale of common stock and warrants, shares			552,234						89,500		188,452
Warrant [Member]
Subsidiary, Sale of Stock [Line Items]
Proceeds from warrant exercises		$ 2,292
Exercise of warrants percentage			50.00%
Securities Purchase Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock issued ammended								1,510		1,510
Exercise price, per share								$ 30.60		$ 30.60
Sale of common stock and warrants, shares										2,434
Expiration date										Oct. 27, 2027
Securities Purchase Agreement [Member] \| Minimum [Member]
Subsidiary, Sale of Stock [Line Items]
Exercise price, per share								600.00		$ 600.00
Securities Purchase Agreement [Member] \| Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Exercise price, per share								$ 30.60		$ 30.60
Warrant Amendment Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock issued ammended						65,786
Exercise price, per share						$ 58.50
Maturity date						Jan. 07, 2028
Fair value option changes in fair value gain loss						$ 837
Warrant Amendment Agreement [Member] \| Minimum [Member]
Subsidiary, Sale of Stock [Line Items]
Exercise price, per share						$ 185.00
Warrant Amendment Agreement [Member] \| Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Exercise price, per share						$ 380.00
Amended Note Purchase Agreement [Member] \| Jackson Investment Group, LLC [Member]
Subsidiary, Sale of Stock [Line Items]
Fair value adjustment of warrants										$ 29
Inducement Offer Letter Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Exercise price, per share			$ 8.30
Class of warrant or right, outstanding			276,117
September 2023 Placement Agent Warrants [Member]
Subsidiary, Sale of Stock [Line Items]
Purchase shares of common stock							20,709
Limited Duration Stockholder Rights Agreement [Member] \| Director [Member]
Subsidiary, Sale of Stock [Line Items]
Preferred stock, par value	$ 0.0001
Limited Duration Stockholder Rights Agreement [Member] \| Preferred Stock [Member] \| Director [Member]
Subsidiary, Sale of Stock [Line Items]
Share price	$ 20.75
February 2023 IPO [Member] \| H.C. Wainwright & Co., LLC [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock issued ammended					14,134
Exercise price, per share					$ 33.165
Cash fee percentage					7.50%
Management fee percentage					1.00%
February 2023 IPO [Member] \| Securities Purchase Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock, par value				$ 0.0001
Common stock issued ammended				31,500
Public offering price				$ 26.532
Fair value at issuance (per Share)				$ 26.522
Pre-funded description				Subject to certain limitations described in the February 2023 Pre-Funded Warrants, the February 2023 Pre-Funded Warrants are immediately exercisable and may be exercised at a nominal consideration of $0.01 per share any time until all of the February 2023 Pre-Funded Warrants are exercised in full. A holder will not have the right to exercise any portion of the February 2023 Warrants or the February 2023 Pre-Funded Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% or 9.99%, respectively (or at the election of the holder of such warrants, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the February 2023 Warrants or the February 2023 Pre-Funded Warrants, respectively. However, upon notice from the holder to the Company, the holder may increase the beneficial ownership limitation pursuant to the February 2023 Warrants, which may not exceed 9.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the February 2023 Warrants, provided that any increase in the beneficial ownership limitation will not take effect until 61 days following notice to the Company.
February 2023 IPO [Member] \| Securities Purchase Agreement [Member] \| Prefunded Warrant [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock issued ammended				156,952
February 2023 IPO [Member] \| Warrant Amendment Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock issued ammended				87,666
Exercise price, per share				$ 58.50
Maturity date				Jan. 07, 2028
Fair value option changes in fair value gain loss				$ 176
February 2023 IPO [Member] \| Warrant Amendment Agreement [Member] \| Minimum [Member]
Subsidiary, Sale of Stock [Line Items]
Exercise price, per share				$ 24.70
February 2023 Purchase Agreement [Member] \| Warrant Amendment Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Maturity date				Jan. 07, 2028

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands										6 Months Ended
	Oct. 01, 2024	Sep. 01, 2024	Aug. 01, 2024	Jul. 01, 2024	Jun. 01, 2024	May 01, 2024	Mar. 09, 2024	May 18, 2022	Sep. 30, 2019	Jun. 29, 2024	Aug. 27, 2020	Sep. 11, 2019	Aug. 27, 2019
Key Resources Inc [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Business combination earnout consideration interest payment									$ 10
Headway Workforce Solutions [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payment totaling								$ 5,000
Contingent payment										$ 2,000
Consideration transferred amount										5,000
Transferred remaining										$ 5,000
Headway Workforce Solutions [Member] \| Contingent Payment One [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Contingent payment description								Adjusted EBITDA of $0 or less than $0= no Contingent Payment
Headway Workforce Solutions [Member] \| Contingent Payment Two [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Contingent payment description								Adjusted EBITDA of $500 x 2.5 multiple= $1,250 Contingent Payment
Headway Workforce Solutions [Member] \| Contingent Payment Three [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Contingent payment description								Adjusted EBITDA of $1,000 x 2.5 multiple= $2,500 Contingent Payment
Headway Workforce Solutions [Member] \| Contingent Payment Four [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Contingent payment description								Adjusted EBITDA of $1,800 x 2.5 multiple= $4,500 Contingent Payment
Headway Workforce Solutions [Member] \| Contingent Payment Five [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Contingent payment description								Adjusted EBITDA of $2,000 or more x 2.5 multiple= $5,000 Contingent Payment
Business Combination Earnout Consideration Prepone Date [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Payment totaling											$ 2,027	$ 2,027	$ 2,027
Settlement and Release Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Litigation settlement							$ 2,000
Litigation settlement expense					$ 114	$ 115
Settlement and Release Agreement [Member] \| Forecast [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Litigation settlement expense	$ 1,511	$ 112	$ 113	$ 114

SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Segment Reporting Information [Line Items]
Total Revenue	$ 44,177	$ 48,615	$ 85,621	$ 96,239
Total Gross Profit	5,815	7,027	11,125	14,513
Selling, general and administrative expenses	(5,933)	(7,678)	(13,027)	(15,469)
Depreciation and amortization	(472)	(383)	(953)	(873)
Interest expense and amortization of debt discount and deferred financing costs	(1,480)	(1,189)	(2,727)	(2,343)
Discontinued Operations		(837)	901	(1,689)
Other loss income, net	150	188	255	174
Loss Before Benefit from Income Tax	(1,920)	(2,872)	(4,426)	(5,687)
Commercial Staffing US [Member] \| UNITED STATES
Segment Reporting Information [Line Items]
Total Revenue	20,162	24,145	39,798	47,392
Total Gross Profit	3,240	4,293	6,290	8,096
Professional Staffing US [Member] \| UNITED STATES
Segment Reporting Information [Line Items]
Total Revenue	24,015	24,470	45,823	48,847
Total Gross Profit	$ 2,575	$ 2,734	$ 4,835	$ 6,417

SCHEDULE OF DISAGGREGATES REVENUES BY SEGMENTS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Segment Reporting Information [Line Items]
Total	$ 44,177	$ 48,615	$ 85,621	$ 96,239
Operating Segments [Member]
Segment Reporting Information [Line Items]
Total	44,177	48,615	85,621	96,239
Permanent Placement Revenue [Member] \| Operating Segments [Member]
Segment Reporting Information [Line Items]
Total	100	226	375	727
Temporary Contractor Revenue [Member] \| Operating Segments [Member]
Segment Reporting Information [Line Items]
Total	44,077	48,389	85,246	95,512
Commercial Staffing US [Member] \| Operating Segments [Member]
Segment Reporting Information [Line Items]
Total	20,162	24,145	39,798	47,392
Commercial Staffing US [Member] \| Permanent Placement Revenue [Member] \| Operating Segments [Member]
Segment Reporting Information [Line Items]
Total	52	39	106	170
Commercial Staffing US [Member] \| Temporary Contractor Revenue [Member] \| Operating Segments [Member]
Segment Reporting Information [Line Items]
Total	20,110	24,106	39,692	47,222
Professional Staffing US [Member] \| Operating Segments [Member]
Segment Reporting Information [Line Items]
Total	24,015	24,470	45,823	48,847
Professional Staffing US [Member] \| Permanent Placement Revenue [Member] \| Operating Segments [Member]
Segment Reporting Information [Line Items]
Total	48	187	269	557
Professional Staffing US [Member] \| Temporary Contractor Revenue [Member] \| Operating Segments [Member]
Segment Reporting Information [Line Items]
Total	$ 23,967	$ 24,283	$ 45,554	$ 48,290

SCHEDULE OF RELATED PARTY TRANSACTIONS (Details) - Board and Committee [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Related Party Transaction [Line Items]
Cash Compensation	$ 75,000	$ 100,000	$ 150,000	$ 200,000
Shares Issued	5,000	6,000	16,000	12,000
Value of Shares Issued	$ 14,000	$ 178,000	$ 67,000	$ 243,000
Compensation Expense Recognized	89,000	278,000	217,000	443,000
Dimitri Villard [Member]
Related Party Transaction [Line Items]
Cash Compensation	$ 25,000	$ 25,000	$ 50,000	$ 50,000
Shares Issued	1,000	1,000	3,000	2,000
Value of Shares Issued	$ 3,000	$ 29,000	$ 15,000	$ 40,000
Compensation Expense Recognized	28,000	54,000	65,000	90,000
Nick Florio [Member]
Related Party Transaction [Line Items]
Cash Compensation	$ 25,000	$ 25,000	$ 50,000	$ 50,000
Shares Issued	1,000	1,000	4,000	2,000
Value of Shares Issued	$ 3,000	$ 29,000	$ 15,000	$ 40,000
Compensation Expense Recognized	28,000	54,000	65,000	90,000
Vincent Cebula [Member]
Related Party Transaction [Line Items]
Cash Compensation	$ 25,000	$ 25,000	$ 50,000	$ 50,000
Shares Issued	1,000	1,000	3,000	2,000
Value of Shares Issued	$ 3,000	$ 29,000	$ 15,000	$ 40,000
Compensation Expense Recognized	28,000	54,000	65,000	90,000
Alicia Barker [Member]
Related Party Transaction [Line Items]
Cash Compensation
Shares Issued	1,000	1,000	3,000	2,000
Value of Shares Issued	$ 3,000	$ 31,000	$ 11,000	$ 42,000
Compensation Expense Recognized	3,000	31,000	11,000	42,000
Brendan Flood [Member]
Related Party Transaction [Line Items]
Cash Compensation
Shares Issued	1,000	1,000	3,000	2,000
Value of Shares Issued	$ 2,000	$ 31,000	$ 11,000	$ 41,000
Compensation Expense Recognized	$ 2,000	31,000	$ 11,000	41,000
Jeff Grout [Member]
Related Party Transaction [Line Items]
Cash Compensation		$ 25,000		$ 50,000
Shares Issued		1,000		2,000
Value of Shares Issued		$ 29,000		$ 40,000
Compensation Expense Recognized		$ 54,000		$ 90,000

SCHEDULE OF CASH FLOW, SUPPLEMENTAL DISCLOSURES (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023
Supplemental Cash Flow Elements [Abstract]
Interest	$ 1,834	$ 2,815
Income taxes
Redeemable Series H preferred stock payment in kind	269
Debt discount – Series H	131	111
Debt Discount – Related party note	$ 179	$ 91

DISCONTINUED OPERATIONS (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 29, 2024	Jul. 01, 2023	Jun. 29, 2024	Jul. 01, 2023
Discontinued Operations and Disposal Groups [Abstract]
Gain on discontinued operation		$ (837)	$ 901	$ (1,689)

SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ / shares in Units, $ in Millions	Jun. 20, 2024	Jul. 17, 2023
Subsequent Events [Abstract]
Minimum bid price per share		$ 1.00
Stockholders equity minimum	$ 2.5

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