Staffing 360 Solutions Announces Financial Results for Fiscal Q2 2015

NEW YORK, NY--(Marketwired - Jan 20, 2015) - Staffing 360 Solutions, Inc. (OTCQB: STAF), a public company executing a global buy-and-build strategy through the acquisition of staffing organizations with operations in the US and Europe, today released its financial results for its fiscal quarter ended November 30, 2014.

"We have achieved some significant milestones this quarter," stated Brendan Flood, Executive Chairman of Staffing 360 Solutions. "First and foremost, our acquisition strategy has fueled our expansion from around $2 million in revenue in fiscal Q2 2014 to over $33.9 million in Q2 2015. In addition, we have achieved the major threshold event of positive Adjusted EBITDA ahead of schedule. This has been a strategic objective within our Pathway to Profitability and we will continue to strive toward our longer term goal of reaching positive net income as we grow both organically and through additional M&A activity."

Summary of Fiscal Q2 2015 (Three Months Ended November 30, 2014)

• Net revenues increased to $33.9 million, compared to $2.0 million in the quarter ended November 30, 2013.
• Gross profit increased to $6.1 million, compared to approximately $631,000 in the quarter ended November 30, 2013.
• Net loss increased to $8.8 million*, compared to a net loss of approximately $1.4 million in the quarter ended November 30, 2013.
• Adjusted EBITDA was approximately $572,000* in the quarter ended November 30, 2014.

* A table has been included in this press release with Non-GAAP adjustments to the Company's net loss by approximately $9.4 million (including: acquisition expenses, capital raising expenses, non-cash expenses and non-recurring expenses of $859,000, depreciation and amortization of $1.7 million, non-cash restructuring expenses of $5.2 million, cash restructuring expenses of $442,000, impairment of goodwill of $703,000 and approximately $490,000 of other expenses), resulting in Adjusted EBITDA of $572,000.

"In addition to our significant year-over-year growth, our most recent quarter ended November 30, 2014 has shown strong improvements on a sequential basis from our quarter ended August 31, 2014," stated Mr. Flood. "Although we still have a net loss, we improved our Adjusted EBITDA from a loss of approximately $356,000** in the previous quarter to positive Adjusted EBITDA of $572,000 for the quarter ended November 30, 2014. This is a major achievement and a testament to our Pathway to Profitability."

** The Adjusted EBITDA loss for the three months ended August 31, 2014 was previously reported as $409,096 in the Company's last earnings announcement. This loss was unintentionally overstated. The corrected Adjusted EBITDA loss is $356,454 and is presented in the table at the end of this press release.

Analysis of Financial Results

As part of its targeted acquisition strategy, Staffing 360 Solutions has completed five acquisitions to-date, including The Revolution Group (renamed Cyber 360), Control Solutions International, Initio International Holdings Limited (renamed Staffing 360 Solutions Limited), certain business assets of Poolia UK, and PeopleSERVE (acquired as two separate entities: PeopleSERVE, Inc. and PeopleSERVE PRS, Inc.). Three of these acquisitions took place after November 30, 2013.

As a result of these acquisitions, net revenues increased to $33.9 million in the quarter ended November 30, 2014, compared to approximately $2.0 million for the same period in 2013. Gross profit increased to over $6.1 million, compared to approximately $631,000 for the same period in 2013. Again, this significant increase in revenue and gross profit was principally a result of the Company's recent acquisitions, as compared to the revenue and gross profit of its two subsidiaries in 2013.

The Company's net loss for the quarter ended November 30, 2014 increased to $8.8 million (or positive Adjusted EBITDA of approximately $572,000 on a Non-GAAP basis*), compared to a net loss of approximately $1.4 million for the same period in 2013. The increase in net loss was primarily attributable to increased operating expenses including an increased workforce due to the acquisitions made throughout the year as well as office expenses related to the Company's subsidiaries, three of which had not been acquired prior to November 30, 2013. The Company incurred approximately $7.9 million of total non-cash charges in the fiscal second quarter ended November 30, 2014.

"Our highly selective acquisition strategy has fueled our growth over the past year," stated Jeff Mitchell, Chief Financial Officer. "From a revenue perspective, the $33.9 million we generated in our most recent quarter is consistent with what is expected on a quarterly basis going forward, prior to additional acquisitions that we may close. Although we reported a net loss of approximately $8.8 million, approximately $7.9 million is attributable to non-cash charges, including $5.2 million of non-cash restructuring expenses as part of our Pathway to Profitability. Our mission is to continue to raise capital and acquire additional staffing companies, in order to contribute to our bottom line. Going forward, our fiscal Q3 results will likely see a sequential dip in revenue due to the seasonality of the winter weather and its effect on our business, especially in the Northeast, but this is always the case and we expect to report improvements on a year-over-year basis."

Highlights of Fiscal Q2 2015 and Subsequent Events

• Announced the Company's application for uplisting its common stock on the NASDAQ Capital Market.
• Projected that positive Adjusted EBITDA would be realized two quarters ahead of schedule. Successfully achieved this objective through the issuance of the Company's financial results for the fiscal quarter ending November 30, 2014.
• Maintained focus on the Company's Pathway to Profitability through the successful deleveraging of various balance sheet items and effective conversion and/or deferral of various debt obligations, including the Company's Series A Bonds.
• Reduced corporate overheads through the cancelation of various on-going employment and consulting agreements. Management believes overall costs of corporate are now in line with industry levels.
• Completed an offering of approximately $1 million in Series B Convertible Bonds to continue to fund the Company's organic growth and acquisition strategy.
• Demonstrated management's deep faith in the Company with the above-market conversion of $3.3 million of principal and interest relating to the promissory notes of the Initio acquisition. Both Executive Chairman Brendan Flood, and CEO Matt Briand, were among the note holders that converted into equity at $1.00 per share.
• Engaged a New York-based investment bank with a particular expertise in emerging small-cap companies. Currently, the Company would like to undertake a "best efforts" round of financing up to $4 million to fund its next acquisition, followed by additional financings to support its high-growth M&A strategy.

Matt Briand, Chief Executive Officer, added, "Each of us at Staffing 360 Solutions is fully committed to reaching our stated goal of $300 million in annualized revenues. We encourage the public to join us during our earnings conference call tomorrow morning for more details on how we plan to achieve these goals over the next year. With many exciting developments on the horizon, including raising capital to fund our next several acquisitions as well as our potential uplisting to NASDAQ, we will remain committed to growth in revenues, growth in earnings and growth in long term shareholder value."

Earnings Conference Call

Staffing 360 Solutions will host a conference call on Wednesday, January 21, 2015 at 8:00 am Eastern Time to discuss its financial results for the fiscal second quarter ended November 30, 2014. The conference call will include a Q&A session where investors will have the opportunity to ask questions of management.

The teleconference can be accessed by dialing 877.407.0778 within the United States, 800.756.3429 within the UK, or 201.689.8565 internationally. Please dial in 10 minutes prior to the beginning of the call. There will be a playback of the teleconference available until January 27, 2015. To listen to the playback dial 877.660.6853 within the United States or 201.612.7415 internationally and use replay ID number: 13598847.

The conference call will be simultaneously webcast and available at:
http://www.investorcalendar.com/event/173535

About Staffing 360 Solutions, Inc.

Staffing 360 Solutions, Inc. (OTCQB: STAF) is a public company in the staffing sector engaged in the execution of a global buy-and-build strategy through the acquisition of domestic and international staffing organizations with operations in the US and Europe. The Company believes the staffing industry offers opportunities for accretive acquisitions that will drive its annual revenues to $300 million. As part of its targeted consolidation model, the Company is pursuing acquisition targets in the finance and accounting, administrative, engineering, IT and cybersecurity industries. For more information, please visit: www.staffing360solutions.com

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Non-GAAP Financial Measures

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

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

Forward-Looking Statements

Certain matters discussed within this press release are forward-looking statements including, but not limited to the timing and ability to enter into any additional acquisitions, as well as the size of future revenue. Although Staffing 360 Solutions, Inc. believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Specifically, in order for the Company to achieve annualized revenues of $300 million, the Company will need to successfully raise sufficient capital, to consummate additional target acquisitions, successfully integrate any newly acquired companies, organically grow its business, successfully defend current and any potential future litigation, as well as various additional contingencies, many of which are unknown at this time and generally out of the Company's control. The Company can give no assurance that the Company will be able to achieve these objectives. Staffing 360 Solutions does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law. Factors that could cause actual results to differ materially from expectations include general industry considerations, regulatory changes, changes in local or national economic conditions and other risks detailed from time to time in Staffing 360 Solutions' reports filed with the SEC, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.

Staffing 360 Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
			November 30,			May 31,
			2014			2014
			(Unaudited)
ASSETS
Assets
	Current Assets		$	20,923,588		$	19,585,049
	Other Assets			22,278,716			24,100,133
Total Assets			$	43,202,304		$	43,685,182
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
	Current Liabilities		$	30,780,213		$	26,743,511
	Other Liabilities			3,013,835			6,322,261
Total Liabilities				33,794,048			33,065,772
Stockholders' Equity
	Stockholders' Equity			8,609,164			10,036,873
	Non-Controlling Interest			799,092			582,537
Total Stockholders' Equity				9,408,256			10,619,410
Total Liabilities and Stockholders' Equity			$	43,202,304		$	43,685,182

Staffing 360 Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
			For the Three Months Ended November 30,
			2014				2013
Sales			$	33,937,982			$	1,963,607
Cost of Sales				27,841,756				1,332,148
Gross Profit				6,096,226				631,459
Operating Expenses				8,652,392				1,861,752
Loss from Operations				(2,556,166	)			(1,230,293	)
Other Income (Expenses)				(6,217,411	)			(193,618	)
Loss Before Provision for Income Tax				(8,773,577	)			(1,423,911	)
Income Tax benefit				36,381				-
Net Loss			$	(8,737,196	)		$	(1,423,911	)
	Net Income Attributable to Non-Controlling Interest			111,892				-
Net Loss Attributable to STAF			$	(8,849,088	)		$	(1,423,911	)

Staffing 360 Solutions, Inc. and Subsidiaries
Condensed Consolidated Non-GAAP Adjusted EBITDA Calculations
Comparing the Three Months Ended August 31, 2014 to November 30, 2014
(Unaudited)
			Fiscal Q2 2015				Fiscal Q1 2015
			For the Three Months Ended November 30, 2014				For the Three Months Ended August 31, 2014
Sales			$	33,937,982			$	33,439,373
Gross Profit			$	6,096,225			$	5,909,814
Loss from Operations			$	(2,556,167	)		$	(1,429,641	)
Net Loss Attributable to STAF			$	(8,849,088	)		$	(4,768,061	)
Adjustments:
	Interest		$	523,065			$	458,211
	Restructuring Expenses - Cash			441,868				-
	Restructuring Expenses - Non-Cash			5,236,727				-
	Other Income			(108,672	)			(52,021)
	Depreciation and Amortization			1,689,695				3,585,368
	Tax			(36,381	)			(62,614	)
	Impairment of Goodwill			703,222				-
	Non-Controlling Interest			111,892				104,663
	Acquisition, Capital Raising, Non-Cash and Other Expenses			859,314				378,000
Total Adjustments				9,420,730				4,411,607
Adjusted EBITDA			$	571,642			$	(356,454	)