10-Q

F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 28, 2019

or

☐ 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.)

641 Lexington Avenue, Suite 2701

New York, New York 10022

(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)

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 Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and 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 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 November 12, 2019, there were 8,680,148 outstanding common stock shares, par value $0.00001 per share, of the issuer.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	STAF	NASDAQ

Form 10-Q Quarterly Report

INDEX

	PART I FINANCIAL INFORMATION
Item 1	Financial Statements		1
	Condensed Consolidated Balance Sheets as of September 28, 2019 (unaudited) and December 29, 2018		1
	Unaudited Condensed Consolidated Statements of Operations for the three and nine month periods ended September 28, 2019 and three and nine month periods ended September 29, 2018		2
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three and nine month periods ended September 28, 2019 and the three and nine month periods ended September 29, 2018		3
		Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine month period ended September 28, 2019 and three and nine months ended September 29, 2018	4
		Unaudited Condensed Consolidated Statements of Cash Flows for the nine month period ended September 28, 2019 and September 29, 2018	6
		Notes to Unaudited Condensed Consolidated Financial Statements	14
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3		Quantitative and Qualitative Disclosures About Market Risk	29
Item 4		Controls and Procedures	29
		PART II OTHER INFORMATION
Item 1		Legal Proceedings	31
Item 1A		Risk Factors	31
Item 2		Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3		Defaults Upon Senior Securities	31
Item 4		Mine Safety Disclosures	31
Item 5		Other Information	31
Item 6		Exhibits	32
Signatures			33

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

	September 28,			December 29,
	2019			2018
	(Unaudited)
ASSETS
Current Assets:
Cash	$	1,797		$	3,181
Accounts receivable, net		31,506			32,746
Prepaid expenses and other current assets		1,384			1,197
Total Current Assets		34,687			37,124
Property and equipment, net		1,570			1,639
Intangible assets, net		20,509			22,657
Goodwill		32,061			32,061
Right of use asset - leases		5,262			—
Other assets		3,351			2,956
Total Assets	$	97,440		$	96,437
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	21,347		$	18,283
Payable - related party		2,140			1,457
Current portion of debt		38,068			657
Accounts receivable financing		18,011			21,979
Lease liabilities, current		1,773			—
Other current liabilities		4,353			9,642
Total Current Liabilities		85,692			52,018
Term loan - related party, net		—			34,568
Term loan		474			997
Lease liabilities, non current		3,571			—
Other long-term liabilities		2,237			4,659
Total Liabilities		91,974			92,242
Commitments and contingencies		—			—
Series E-1 Preferred Stock, 6,500 designated, $0.00001 par value, 567 and 81 shares issued and outstanding as of September 28, 2019 and December 29, 2018, respectively		—			—
Stockholders' Equity:
Staffing 360 Solutions, Inc. Equity:
Preferred stock, $0.00001 par value, 20,000,000 shares authorized;
Series A Preferred Stock - Related Party, 1,663,008 shares designated, $1.00 stated value, 1,663,008 shares issued and outstanding, as of September 28, 2019 and December 29, 2018		—			—
Series E Preferred Stock, 13,000 designated, $0.00001 par value, 13,000 shares issued and outstanding as of September 28, 2019 and December 29, 2018		13			13
Common stock, $0.00001 par value, 40,000,000 and 20,000,000 shares authorized as of      September 28, 2019 and December 29, 2018, respectively; 8,680,148 and 5,326,068 shares      issued and outstanding, as of September 28, 2019 and December 29, 2018, respectively		1			—
Additional paid in capital		76,673			73,772
Accumulated other comprehensive income		2,772			2,053
Accumulated deficit		(73,993	)		(71,643	)
Total Stockholders' Equity		5,466			4,195
Total Liabilities and Stockholders' Equity	$	97,440		$	96,437

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

1

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(UNAUDITED)

	Q3 2019			Q3 2018			Q3 2019 YTD			Q3 2018 YTD
Revenue	$	67,320		$	71,317		$	214,644		$	186,835
Cost of Revenue, excluding depreciation and amortization stated below		54,835			58,821			177,949			150,876
Gross Profit		12,485			12,496			36,695			35,959
Operating Expenses:
Selling, general and administrative expenses		11,361			11,097			32,552			33,315
Depreciation and amortization		867			741			2,621			2,251
Total Operating Expenses		12,228			11,838			35,173			35,566
Income From Operations		257			658			1,522			393
Other (Expenses) Income:
Interest expense and amortization of debt discount and deferred financing costs		(2,059	)		(2,435	)		(5,977	)		(6,578	)
Gain in fair value of warrant liability		—			—			—			879
Re-measurement loss on intercompany note		(467	)		(186	)		(484	)		(332	)
Gain on sale of business		—			—			—			238
Gain on settlement of deferred consideration		1,138			—			1,985			—
Other income (loss), net		51			(14	)		308			227
Total Other Expenses, net		(1,337	)		(2,635	)		(4,168	)		(5,566	)
Loss Before Provision for Income Tax		(1,080	)		(1,977	)		(2,646	)		(5,173	)
(Provision) Benefit from income taxes		(28	)		(3	)		296			78
Net Loss		(1,108	)		(1,980	)		(2,350	)		(5,095	)
Dividends - Series A preferred stock - related party		50			50			150			150
Dividends - Series E preferred stock - related party		390			—			1,170			—
Dividends - Series E-1 preferred stock - related party		182			—			546			—
Net Loss Attributable to Common Stock Holders	$	(1,730	)	$	(2,030	)	$	(4,216	)	$	(5,245	)
Basic and Diluted Loss per Share:
Net Loss Attributable to Common Stock Holders	$	(0.20	)	$	(0.43	)	$	(0.53	)	$	(1.23	)
Weighted Average Shares Outstanding – Basic and Diluted		8,821,607			4,721,364			7,974,186			4,250,500

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

2

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(All amounts in thousands)

(UNAUDITED)

	Q3 2019			Q3 2018			Q3 2019 YTD			Q3 2018 YTD
Net Loss	$	(1,108	)	$	(1,980	)	$	(2,350	)	$	(5,095	)
Other Comprehensive loss
Foreign exchange translation adjustment		717			356			719			694
Comprehensive Loss Attributable to the Company	$	(391	)	$	(1,624	)	$	(1,631	)	$	(4,401	)

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

3

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(All amounts in thousands)

(UNAUDITED)

	Shares		Par Value		Shares		Par Value		Shares		Par Value		Shares		Par Value		Additional paid in capital			Accumulated other comprehensive loss		Accumulated Deficit			Total Equity
	Series E-1				Series A				Series E				Common Stock
Balance June 29, 2019		81	$	—		1,663,008	$	—		13,000	$	13		8,245,948	$	1	$	76,711		$	2,055	$	(72,885	)	$	5,895
Shares issued to/for:
Employees, directors and consultants		—		—		—		—		—		—		5,600		—		198			—		—			198
Sale of common stock, net		—		—		—		—		—		—		428,600		—		471			—		—			471
Dividends - Series A Preferred Stock - Related Party		—		—		—		—		—		—		—		—		(50	)		—		—			(50	)
Dividends - Series E Preferred Stock - Related Party		—		—		—		—		—		—		—		—		(390	)		—		—			(390	)
Dividends - Series E-1 Preferred Stock - Related Party		486		—		—		—		—		—		—		—		(182	)		—		—			(182	)
Dividends - Common Stock holders		—		—		—		—		—		—		—		—		(85	)		—		—			(85	)
Foreign currency translation gain		—		—		—		—		—		—		—		—		—			717		—			717
Net loss		—		—		—		—		—		—		—		—		—			—		(1,108	)		(1,108	)
Balance September 28, 2019		567	$	—		1,663,008	$	—		13,000	$	13		8,680,148	$	1	$	76,673		$	2,772	$	(73,993	)	$	5,466

	Shares		Par Value		Shares		Par Value		Shares		Par Value		Shares		Par Value		Additional paid in capital			Accumulated other comprehensive loss		Accumulated Deficit			Total Equity
	Series E-1				Series A				Series E				Common Stock
Balance December 29, 2018		81	$	—		1,663,008	$	—		13,000	$	13		5,326,068	$	—	$	73,772		$	2,053	$	(71,643	)	$	4,195
Shares issued to/for:
Employees, directors and consultants		—		—		—		—		—		—		22,800		—		621			—		—			621
Sale of common stock, net		—		—		—		—		—		—		3,331,280		1		4,395			—		—			4,396
Dividends - Series A Preferred Stock - Related Party		—		—		—		—		—		—		—		—		(150	)		—		—			(150	)
Dividends - Series E Preferred Stock - Related Party		—		—		—		—		—		—		—		—		(1,170	)		—		—			(1,170	)
Dividends - Series E-1 Preferred Stock - Related Party		486		—		—		—		—		—		—		—		(546	)		—		—			(546	)
Dividends - Common Stock holders		—		—		—		—		—		—		—		—		(249	)		—		—			(249	)
Foreign currency translation gain		—		—		—		—		—		—		—		—		—			719		—			719
Net loss		—		—		—		—		—		—		—		—		—			—		(2,350	)		(2,350	)
Balance September 28, 2019		567	$	—		1,663,008	$	—		13,000	$	13		8,680,148	$	1	$	76,673		$	2,772	$	(73,993	)	$	5,466

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

4

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

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

(All amounts in thousands)

(UNAUDITED)

	Shares		Par Value		Shares		Par Value		Additional paid in capital			Accumulated other comprehensive loss		Accumulated Deficit			Total Equity
	Series A				Common Stock
Balance June 30, 2018		1,663,008	$	—		4,272,094	$	—	$	59,314		$	1,121	$	(68,257	)		(7,822	)
Shares issued to/for:
Employees, directors and consultants		—		—		49,461		—		287			—		—			287
At-Market-Facility, net		—		—		489,589		—		1,616			—		—			1,616
Term loans		—		—		192,000		—		371			—		—			371
Warrant adjustments		—		—		—		—		135			—		—			135
Dividends - Series A Preferred Stock - Related Party		—		—		—		—		(50	)		—		—			(50	)
Foreign currency translation gain		—		—		—		—		—			356		—			356
Net loss		—		—		—		—		—			—		(1,980	)		(1,980	)
Balance September 29, 2018		1,663,008	$	—		5,003,144	$	—	$	61,673		$	1,477	$	(70,237	)	$	(7,087	)

	Shares		Par Value		Shares		Par Value		Additional paid in capital			Accumulated other comprehensive loss		Accumulated Deficit			Total Equity
	Series A				Common Stock
Balance December 30, 2017		1,663,008	$	—		3,909,114	$	—	$	57,574		$	783	$	(65,142	)		(6,785	)
Shares issued to/for:
Employees, directors and consultants		—		—		159,783		—		950			—		—			950
Acquisition of Clement May		—		—		15,000		—		21			—		—			21
At-Market-Facility, net		—		—		726,821		—		2,225			—		—			2,225
Term loans		—		—		192,000		—		371			—		—			371
Additional shares issues on share split		—		—		426		—		—			—		—			—
Warrant adjustments		—		—		—		—		682			—		—			682
Dividends - Series A Preferred Stock - Related Party		—		—		—		—		(150	)		—		—			(150	)
Foreign currency translation gain		—		—		—		—		—			694		—			694
Net loss		—		—		—		—		—			—		(5,095	)		(5,095	)
Balance September 29, 2018		1,663,008	$	—		5,003,144	$	—	$	61,673		$	1,477	$	(70,237	)	$	(7,087	)

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

5

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(All amounts in thousands)

(UNAUDITED)

	Q3 2019 YTD			Q3 2018 YTD
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,350	)	$	(5,095	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		2,621			2,251
Amortization of debt discount and deferred financing costs		529			393
Gain in fair value of warrants		—			(879	)
Stock based compensation		621			951
Gain on sale of business		—			(238	)
Gain on settlement of deferred consideration		(1,985	)		—
Re-measurement loss on intercompany note		484			332
Changes in operating assets and liabilities:
Accounts receivable		(8,994	)		6,282
Prepaid expenses and other current assets		(187	)		71
Other assets		(395	)		165
Accounts payable and accrued expenses		3,240			2,789
Interest payable - related party		(190	)		(64	)
Other current liabilities		(54	)		(94	)
Other long-term liabilities and other		(341	)		285
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(7,001	)		7,149
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business, net of cash acquired		—			(9,760	)
Disposal of business, net of cash		—			1,403
Purchase of property and equipment		(415	)		(330	)
Collection of UK factoring facility deferred purchase price		10,502			7,086
NET CASH PROVIDED BY INVESTING ACTIVITIES		10,087			(1,601	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from term loan - related party		2,538			8,428
Repayment of term loan		(522	)		(422	)
Proceeds from term loan		—			2,047
Repayments on accounts receivable financing, net		(3,702	)		(16,220	)
Dividends paid to related parties		(1,125	)		(150	)
Dividends paid on common stock		(249	)		—
Proceeds from sale of common stock		5,515			2,286
Payments made for earn-outs		(5,613	)		(1,402	)
Financing costs - related party		(188	)		(280	)
Third party financing costs		(1,122	)		(109	)
NET CASH USED IN FINANCING ACTIVITIES		(4,468	)		(5,822	)
NET DECREASE IN CASH		(1,382	)		(274	)
Effect of exchange rates on cash		(2	)		(2	)
Cash - Beginning of period		3,181			3,100
Cash - End of period	$	1,797		$	2,824

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

6

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 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 changed its state of domicile to Delaware.

The Company effected a one-for-ten reverse stock split on September 17, 2015 and a one-for-five reverse stock split on January 3, 2018. All share and per share information in these consolidated financial statements has been retroactively adjusted to reflect these reverse stock splits.

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.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.  

These unaudited 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.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 29, 2018 are included in the Company’s December 29, 2018 Form 10-K (“Fiscal 2018”), filed with the United States Securities and Exchange Commission on March 25, 2019. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the period ended September 28, 2019 are not necessarily indicative of results for the entire year ending December 28, 2019. This report is for the period December 30, 2018 to September 28, 2019 (“Q3 2019 YTD”), June 30, 2019 to September 28, 2019 (“Q3 2019”), December 31, 2017 to September 29, 2018 (“Q3 2018 YTD”) and July 1, 2018 to September 29, 2018 (“Q3 2018”).

Liquidity

The accompanying 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 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. As shown in the accompanying financial statements as of the quarter ended September 28, 2019, the Company has an accumulated deficit of $73,993 and a working capital deficit of $51,005. At September 28, 2019, we had total debt of $39,409 and $1,797 of cash on hand. We have historically met our cash needs through a combination of cash flows from operating activities, term loans, promissory notes, bonds, convertible notes, private placement offerings and sales of equity. Our cash requirements are generally for operating activities and debt repayments

The financial statements included in this quarterly report 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, our note issued to Jackson Investment Group LLC(“Jackson”) includes certain financial customary covenants and the Company has had instances of non-compliance. Management has historically been able to obtain from Jackson waivers of any non-compliance and management expects to continue to be able to obtain necessary waivers in the event of future non-compliance; however, there can be no assurance that the Company will be able to obtain such waivers, and should Jackson refuse to provide a waiver in the future, the outstanding debt under the agreement could become due immediately.

7

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 financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern. The Company debt obligations and certain unsecured payments associated with historical acquisitions are due in the next 12 months and are in excess of cash and cash equivalents on hand. 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. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Goodwill

During Q3 2019, the Company performed an interim goodwill impairment test for three of its reporting units, resulting in each case, the fair value of each reporting unit exceeding their carrying values by a minimal percentage. Goodwill, in the aggregate, for these three reporting units is approximately $26 million. A reduction in the projected long-term operating performance of any of these reporting units, market declines, changes in discount rates or other conditions could result in an impairment in the future. In connection with the interim impairment test, the Company used a combination of the income approach, which incorporates the use of a discounted cash flow method, and the market approach, which incorporates the use of earnings and cash flow multiples based on market data. The income approach and the market approach both require the exercise of significant judgment, including judgment about the amount and timing of expected future cash flows, assumed terminal value and appropriate discount rates.

Revenue Recognition

On December 31, 2017, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers for all open contracts and related amendments as of December 31, 2017 using the modified retrospective method.  The adoption had no impact to the reported results. Results for reporting periods beginning after December 31, 2017 are presented under ASC 606, while the comparative information will not be restated and will continue to be reported under the accounting standards in effect for those periods.

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.

8

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 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.

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 basis. The contracts stipulate weekly 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 in Q3 2019 YTD was comprised of $205,809 of temporary contractor revenue and $8,835 of permanent placement revenue, compared with $178,518 and $8,317 for Q3 2018 YTD, respectively. Revenue in Q3 2019 was comprised of $63,821 of temporary contractor revenue and $3,499 of permanent placement revenue, compared with $68,683 and $2,634 for Q3 2018, respectively. Refer to Note 9 for further details on breakdown by segments.  

Reclassifications

We may make certain reclassifications to prior period amounts to conform with the current year’s presentation. These reclassifications did not have a material effect on our condensed consolidated statement of financial position, results of operations or cash flows.

Income Taxes

The Company's provision for income taxes is based upon an estimated annual tax rate for the year applied to federal, state and foreign income. On a quarterly basis, the annual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter. 

The Company’s effective tax rate may change from period to period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes, and tax audit settlements.  The effective income tax rate was (2.6)%, (0.31)%, 11.2% and 1.59% for the period ending Q3 2019, Q3 2018, Q3 2019 YTD and Q3 2018 YTD, respectively.

Foreign Currency

The Company recorded a non cash foreign currency remeasurement loss of $467, $186, $484 and $332 in Q3 2019, Q3 2018, Q3 2019 YTD and Q3 2018 YTD, respectively, associated with its U.S dollar denominated intercompany note.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842).  The Company adopted this guidance effective December 30, 2018. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less.  All other leases will fall into one of two categories: (i) Financing leases, similar to capital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) Operating leases which will require the recognition of an asset and liability measured at the present value of the lease payments. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, the sale will only be recognized if the criteria in the new revenue recognition standard are met. The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the ‘package of practical expedients’ which allow us to not reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expired leases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company has also elected to apply i) the practical expedient which allows us to not separate lease and non-lease components, and (2) the short-term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new standard. The adoption of the new standard resulted in the recognition of additional lease liabilities of approximately $5,344, and right-of-use assets of approximately $5,262 as of September 28, 2019 related to the Company’s operating leases. The new standard did not have a material impact to the Company’s consolidated statement of operations or consolidated statement of cash flows.

9

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 3 – 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. Our Series A preferred stock holders (related parties) receive certain dividends or dividend equivalents that are considered participating securities and our loss per share is computed using the two-class method. For Q3 2019 and Q3 2018, pursuant to the two-class method, as a result of the net loss attributable to common stock holders, losses were not allocated to the participating securities.

Diluted earnings per share are computed using the weighted average number of common stock shares and dilutive common share equivalents outstanding during the period. Dilutive common stock equivalents consist of common shares 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 share equivalent basis and outstanding as of September 28, 2019 and September 29, 2018 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 September 28, 2019 and September 29, 2018:

	September 28,		September 29,
	2019		2018
Convertible preferred shares		7,688,175		43,239
Warrants		925,935		925,935
Restricted shares - unvested		495,690		595,272
Long term incentive plan (LTIP)		380,000		123,515
Options		79,560		125,400
Total		9,569,360		1,813,361

NOTE 4 – ACCOUNTS RECEIVABLE BASED FINANCING FACILITIES

HSBC Invoice Finance (UK) Ltd – New Facility

On February 8, 2018, CBS Butler Holdings Limited (“CBS Butler”), Staffing 360 Solutions Limited and The JM Group, entered into a new arrangement with HSBC Invoice Finance (UK) Ltd (“HSBC”) which provides for HSBC to purchase the subsidiaries’ accounts receivable up to an aggregate amount of £11,500 across all three subsidiaries. The terms of the arrangement provide for HSBC to fund 90% of the purchased accounts receivable upfront and, a secured borrowing line of 70% of unbilled receivables capped at £1,000 (within the overall aggregate total facility of £11,500). The arrangement has an initial term of 12 months, with an automatic rolling three-month extension and carries a service charge of 1.80%.

On June 28, 2018, Clement May Limited (“CML”), the Company’s new subsidiary entered into a new agreement with a minimum term of 12 months for purchase of debt (“APD”) with HSBC, joining CBS Butler, Staffing 360 Solutions Limited and The JM Group (collectively, with CML, the “Borrowers”) as “Connected Clients” as defined in the APD. The new Connected Client APDs carry an aggregate Facility Limit of £20,000 across all Borrowers. The obligations of the Borrowers are secured by a fixed charge and a floating charge on the Borrowers’ respective accounts receivable and are subject to cross-company guarantees among the Borrowers. In addition, the secured borrowing line against unbilled receivables was increased to £1,500 for a period of 90 days. In July 2019, the aggregate Facility Limit was extended to £22,500 across all Borrowers.

Under ASU 2016-16, “Statement of Cash Flows (Topic 230, Classification of Certain Cash Receipts and Cash Payments, a consensus of the FASB Emerging Issues Task Force), the upfront portion of the sale of accounts receivable is classified within operating activities, while the deferred purchase price portion (or beneficial interest), once collected, is classified within investing activities.

Midcap Funding Trust

On August 2, 2019, the Company amended the facility with Midcap to allow for additional borrowing against the unbilled receivables by $1,000 to a cap of $2,300 and extended the maturity of the facility to August 2020.

ABN AMRO Commercial Finance

In conjunction with the HSBC Invoice Finance (UK) Ltd – New Facility, on February 8, 2018, Staffing 360 Solutions Limited and The JM Group terminated its facility with ABN AMRO Commercial Finance and the remaining balance was paid in full.

10

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 5 –DEBT

	September 28,			December 29,
	2019			2018
Jackson Investment Group - related party	$	38,278		$	35,740
HSBC Term Loan		1,131			1,653
Total Debt, Gross		39,409			37,393
Less: Debt Discount and Deferred Financing Costs		(867	)		(1,171	)
Total Debt, Net		38,542			36,222
Less: Current Portion, Net		(38,068	)		(657	)
Total Long-Term Debt, Net	$	474		$	35,565

On August 29, 2019, the Company, entered into a Fourth Omnibus Amendment and Reaffirmation Agreement with Jackson, as lender, which, among other things, amends the Amended and Restated Note Purchase Agreement, dated as of September 15, 2017. Pursuant to this agreement, the Company agreed to issue and sell to Jackson a 18% Senior Secured Note due December 31, 2019 in the aggregate principal amount of $2,538. All accrued and unpaid interest on the outstanding principal balance of this term note will be due and payable monthly on the first day of each month, beginning on October 1, 2019. Pursuant to the terms of this note, if this term note is not repaid by December 31, 2019, the Company will be required to issue 100,000 shares of its common stock to Jackson on a monthly basis until this term note is fully repaid, subject to certain exceptions to comply with Nasdaq listing standards.

As of September 28, 2019, the Company was not in compliance with all covenants. On November 12, 2019, the Company received a waiver from Jackson curing the non-compliance as of September 28, 2019 and the past due interest payments that were due on October 1, 2019 and November 1, 2019. In return for the waiver, Jackson received 100,000 shares of common stock which is to be registered under Form S-3 as soon as practicable.

NOTE 6 – LEASES

On December 30, 2018, the Company adopted ASC 842 using the modified retrospective transition approach allowed under ASU 2018-11 which releases companies from presenting comparative periods and related disclosures under ASC 842 and requires a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company has elected to apply the short-term lease exception to all leases of one year or less. As of September 28, 2019, as a result of the adoption of ASC 842, we have recorded a right of use (“ROU”) lease asset of approximately $5,262 with a corresponding lease liability of approximately $5,344 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.

Quantitative information regarding the Company’s leases for the period ended September 28, 2019 is as follows:

Lease Cost	Classification	Q3 2019 YTD
Operating lease cost	SG&A Expenses		1,285

Other information
Weighted average remaining lease term (years)		3.7
Weighted average discount rate		6.4	%
Future Lease Payments
2019	$	624
2020		1,734
2021		1,432
2022		583
2023		326
Thereafter		1,464
	$	6,163

11

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 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.

NOTE 7 – EQUITY

Common Stock

The Company issued the following shares of common stock during the nine month period ended September 28, 2019:

Shares issued to/for:	Number of Common Shares Issued		Fair Value of Shares Issued		Fair Value at Issuance (minimum and maximum per share)
Equity raise		3,331,280	$	5,515	$	1.40	$	2.00
Consultants		6,000		10		1.56		1.56
Board and Committee members		16,800		28		1.58		1.79
		3,354,080	$	5,553

The Company issued the following shares of common stock during the nine month period ended September 29, 2018:

Shares issued to/for:	Number of Common Shares Issued		Fair Value of Shares Issued		Fair Value at Issuance (minimum and maximum per share)
At-the-Market Facility		726,821	$	2,286	$	1.61	$	3.59
Jackson Investment Group		192,000		371		1.93		1.93
Employees		125,000		199		1.54		1.61
Consultants		19,383		55		1.40		3.42
Acquisition		15,000		21		1.38		1.38
Board and Committee members		15,400		32		1.40		3.25
Reverse stock split (rounding up shares)		426		-		-		-
		1,094,030	$	2,964

Restricted Shares

The Company has issued shares to employees and board and committee members under its 2015 Omnibus Incentive Plan and 2016 Omnibus Incentive Plan. Under these plans, the shares are restricted for a period of three years from issuance. As of September 28, 2019, the Company has a total of495,690shares issued to employees and Board and committee 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. The Company recorded compensation expense associated with these restricted shares of $132, $407, $248 and $728, for the periods ended Q3 2019, Q3 2019 YTD, Q3 2018 and Q3 2018 YTD, respectively.

Stock Options

The Company recorded share based payment expense of $7, $43, $33 and $168 for the periods ended Q3 2019, Q3 2019 YTD, Q3 2018 and Q3 2018 YTD, respectively.

Convertible Preferred Shares

Series A Preferred Stock – Related Party

In the periods ended Q3 2019, Q3 2019 YTD, Q3 2018 and Q3 2018 YTD, the Company paid $50, $150, $50 and $150, respectively, in dividends to its Series A preferred stock holders. The Company did not have any Series A dividends payable to preferred stock holders at the end of Q3 2019 YTD and Q3 2018 YTD.  

12

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 E Preferred Stock - Related Party

The Series E Preferred Stock ranks senior to common stock and any other series or classes of preferred stock now or after issued or outstanding with respect to dividend rights and rights on liquidation, winding up and dissolution. Each share of Series E Preferred Stock is initially convertible into 561.8 shares of our common stock at any time after October 31, 2020 or the occurrence of a Preferred Default. A holder of Series E Preferred Stock is not required to pay any additional consideration in exchange for conversion of such Series E Preferred Stock into our common stock. Series E Preferred Stock is redeemable by the Company at any time at a price per share equal to the stated value ($1,000 per share) plus all accrued and unpaid dividends thereon. While the Series E Preferred Stock is outstanding, the Company is required to use the proceeds of any sales of equity securities, exclusively to redeem any outstanding shares of Series E Preferred Stock, except that the Company is permitted to use up to an aggregate of $3,000 of the gross proceeds from any equity offering completed on or before November 15, 2019 for working capital purposes.

On January 22, 2019, the Company completed a registered direct offering of 387,500 common stock that generated $775 in gross proceeds that were used for working capital purposes. On February 12, 2019, the Company closed its previously announced firm commitment underwritten public offering in which, pursuant to an underwriting agreement between the Company and the underwriter, dated as of February 8, 2019, the Company issued and sold 2,425,000 shares of its common stock, at a public offering price of $1.65 per share. Notwithstanding the terms of the certificate of designations for Series E Preferred Stock, Jackson, the holder our outstanding shares of Series E Preferred Stock, did not require us to use the proceeds from our recent offerings in excess of $3,000 to redeem outstanding shares of the Series E Preferred Stock.  Instead, we used such excess proceeds to make a terminal payment to the sellers of FirstPro Inc. in final settlement of all deferred consideration due under our asset purchase agreement with such sellers.

As of September 28, 2019, 7,303,371 shares and 341,566 of common stock were issuable upon the potential conversion of Series E Preferred Stock and Series E-1 Preferred Stock, respectively. Due to the contingent nature of the cash redemption feature of the Series E-1 Preferred Stock, the Company classified the shares as mezzanine equity on the consolidated balance sheets.

In the period ended Q3 2019, the Company paid $975 in dividends to its Series E preferred stock holders.

Warrants

The Company had accounted for certain warrants issued to Jackson as a liability under ASC 815-40 due to certain anti-dilution protection provisions. The warrants issued to Jackson are considered to be Level 3 liabilities under ASC 820.  On April 25, 2018, the Company and Jackson amended the warrant to remove the anti-dilution clauses. No economic terms were adjusted. These clauses were the basis for recording the warrants as a liability. Therefore, upon execution of this amendment, the Company recorded a mark-to-market gain and reclass the remaining liability to Additional paid-in capital. The Company recorded a change in fair value of the warrant liability of  $0 and $879 in Q3 2018 and Q3 2018 YTD, respectively, using Black-Scholes valuation model.

2019 Long-Term Incentive Plan

In January 2019, the Company’s Board approved the 2019 Long-Term Incentive Plan (the “2019 LTIP”).

The Board granted 380,000 units to adequately motivate the participants and drive performance for the period.  

Units vest upon the following:

• 50% upon the employee being in good standing on December 31, 2020; and,

• 50% upon the average share price of the Company’s common stock during the 90-day period leading up to December 31, 2020, based upon the following Vesting Rate table:

Average 2019 Price	Vesting Rate
<$8 per share	0
>$8 per share	Pro-rated
>=$12 per share	Full Vesting

13

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 performed a valuation of these units and determined them to be valued at $519 using a combination of Black-Sholes and Monte Carlo valuation models. The Company recorded share based expense of approximately $72 and $161 in Q3 2019 and Q3 2019 YTD in connection with these awards.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Earn-out Liabilities and Stock Value Guarantees

Pursuant to the acquisition of CBS Butler on September 15, 2017, the purchase price includes an earn-out payment of up to £4,214 (payable in December 2018, based upon CBS Butler’s operating performance during the period September 1, 2017 through August 31, 2018) and deferred consideration of £150 less the aggregate amount of any net asset shortfall amount, if any, as determined pursuant to the acquisition agreements for the acquisition of CBS Butler. In September 2018, the Company paid the deferred consideration of £150 ($195).

While the Company had recognized the liability for the contingent earn-out due the sellers of CBS Butler within current liabilities as of December 29, 2018, in March 2019 the Company filed a warranty claim against the sellers asserting certain misrepresentations for an amount which approximates the contingent earn-out. In April 2019, the sellers of CBS Butler responded denying the Company’s warranty claim and asserting that the earn-out amount is due. On July 5, 2019, the Company entered into a settlement agreement with the selling shareholders of CBS Butler for the full and final satisfaction of claims in exchange for a payment of approximately £2,150 by the Company to the CBS Butler shareholders.  The payment was due no later than July 26, 2019. The Company did not make the payment on July 26, 2019, as such the parties agreed to adjust the amount payable to £2,500. The Company paid this in full on August 30, 2019 and recorded a gain of approximately £894 ($1,138) on final settlement. The Company used the proceeds from the term note entered into with Jackson on August 29, 2019 for $2,538, to satisfy this obligation.  

Pursuant to the acquisition of FirstPro Inc., on September 15, 2017, the purchase price includes deferred quarterly installments of $75 beginning on October 1, 2017, and $2,675 is payable annually in three equal installments beginning on September 15, 2018. On March 1, 2019, the Company paid $1,125 in full satisfaction of the remaining liability, recognizing a gain of $847.

Pursuant to the acquisition of CML on June 28, 2018, the purchase price includes an earnout payment of up to £500 to be paid on or around December 28, 2019; and deferred consideration of £350, the amount to be calculated and paid pursuant to the Share Purchase Agreement, on or around June 28, 2019. The Company paid deferred consideration of £350 ($444) on June 26, 2019.

Pursuant to the acquisition of Key Resources Inc. (“KRI”) on August 27, 2018, the purchase price includes earnout consideration payable to the seller of $2,027each on August 27, 2019 and August 27, 2020. The payment of the earnout consideration is 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 shall 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. The Company paid interest of $10 in September 2019.

14

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 – SEGMENTS

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

	Q3 2019			Q3 2018			Q3 2019 YTD			Q3 2018 YTD
Commercial Staffing - US	$	31,644		$	28,496		$	94,280		$	73,441
Professional Staffing - US		9,387			11,301			28,449			40,034
Professional Staffing - UK		26,289			31,520			91,915			73,360
Total Revenue	$	67,320		$	71,317		$	214,644		$	186,835
Commercial Staffing - US	$	5,107		$	4,463		$	14,823		$	12,278
Professional Staffing - US		3,701			4,069			10,904			12,268
Professional Staffing - UK		3,677			3,964			10,968			11,413
Total Gross Profit	$	12,485		$	12,496		$	36,695		$	35,959
Selling, general and administrative expenses	$	(11,361	)	$	(11,097	)	$	(32,552	)	$	(33,315	)
Depreciation and amortization		(867	)		(741	)		(2,621	)		(2,251	)
Interest expense and amortization of debt discount and deferred financing costs		(2,059	)		(2,435	)		(5,977	)		(6,578	)
Gain in fair value of warrant liability		—			—			—			879
Re-measurement loss on intercompany note		(467	)		(186	)		(484	)		(332	)
Gain on sale of business		—			—			—			238
Gain on settlement of deferred consideration		1,138			—			1,985			—
Other income, net		51			(14	)		308			227
Loss Before Provision for Income Tax	$	(1,080	)	$	(1,977	)	$	(2,646	)	$	(5,173	)

15

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:

	Q3 2019
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	104	$	1,953	$	1,442	$	3,499
Temporary Revenue		31,540		7,434		24,847		63,821
Total	$	31,644	$	9,387	$	26,289	$	67,320
	Q3 2018
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	13	$	1,714	$	907	$	2,634
Temporary Revenue		28,483		9,587		30,613		68,683
Total	$	28,496	$	11,301	$	31,520	$	71,317
	Q3 2019 YTD
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	201	$	5,430	$	3,204	$	8,835
Temporary Revenue		94,079		23,019		88,711		205,809
Total	$	94,280	$	28,449	$	91,915	$	214,644
	Q3 2018 YTD
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	128	$	4,887	$	3,302	$	8,317
Temporary Revenue		73,313		35,147		70,058		178,518
Total	$	73,441	$	40,034	$	73,360	$	186,835

As of September 28, 2019 and December 29, 2018, the Company has assets in the U.S., the U.K. and Canada as follows:

	September 28,		December 29,
	2019		2018
United States	$	75,239	$	70,267
United Kingdom		22,201		26,170
Total Assets	$	97,440	$	96,437

NOTE 10 – ACQUISITIONS

The following unaudited pro forma consolidated results of operations have been prepared, as if the acquisition of KRI and CML were acquired on January 1, 2017.

	Q3 2018			Q3 2018 YTD
Revenues	$	76,749		$	234,001
Net loss from continuing operations		(2,269	)		(5,392	)

Included in revenues for Q3 2018 and Q3 2018 YTD, is $0 and $7,653 associated with PeopleServe Inc., which was disposed in June 2018.

16

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 11 – OTHER RELATED PARTY TRANSACTIONS

In addition to the Series E and Series E-1 Preferred Shares and notes issued to Jackson, the following are other related party transactions:

Board and Committee Members

The Company had the following activity with its Board and Committee Members:

	Q3 2019								Q3 2018
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized		Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	19		1,400	$	2	$	8	$	19		1,400	$	2	$	22
Jeff Grout		19		1,400		2		8		19		1,400		2		22
Nick Florio		19		1,400		2		8		19		1,400		2		22
Alicia Barker		—		1,400		2		1		—		1,400		2		—
	$	57		5,600	$	8	$	25	$	57		5,600	$	8	$	66
	Q3 2019 YTD								Q3 2018 YTD
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized		Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	56		4,200	$	7	$	23	$	56		4,200	$	9	$	62
Jeff Grout		56		4,200		7		23		56		4,200		9		62
Nick Florio		56		4,200		7		23		56		4,200		9		62
Alicia Barker		-		4,200		7		3		19		2,800		4		-
	$	168		16,800	$	28	$	72	$	187		15,400	$	31	$	186

The Briand Separation Agreement

Matthew Briand, the Company’s former employee, board member and officer, resigned from his positions with the Company and subsidiaries. The Company entered into an agreement (the “Briand Separation Agreement”) with Mr. Briand dated December 21, 2017, with an effective date (“Separation Date”) of January 31, 2018, pursuant to which Mr. Briand may provide advisory services, if requested by the Company, through the effective date. The Company paid approximately $190 in Q3 2019 YTD to Mr. Briand in full settlement of his separation agreement.

The Faiman Separation Agreement

On September 11, 2019, David Faiman, the Company’s Chief Financial Officer, and the Company entered into an agreement whereby Mr. Faiman agreed to transition his position and responsibilities with the Company (“Faiman Separation Agreement”), and Mr. Faiman’s Employment Agreement, dated February 5, 2016, was terminated.

Under the terms of the Faiman Separation Agreement, Mr. Faiman will continue as the Company’s Chief Financial Officer, including acting as the Company’s principal financial officer, for a period lasting until the earlier of (i) December 31, 2019 and (ii) either (a) such date that is a reasonable time, as determined by the Company, prior to the commencement of a new position by Mr. Faiman, or (b) upon the Company’s termination of Mr. Faiman’s obligation to provide transition services for Cause.

Pursuant to the Faiman Separation Agreement, Mr. Faiman will be entitled to receive, among other things, (i) pay in an amount equal to his base salary through the separation date, payable in equal installments in accordance with the Company’s normal payroll policies, (ii) continuation of Mr. Faiman’s current Company-sponsored employee benefits through the separation date, (iii) accelerated vesting of any outstanding equity awards held by Mr. Faiman and the elimination of any obligations to forfeit such awards upon the termination of Mr. Faiman’s employment (provided that no award shall be extended beyond its original term) and (iv) a positive reference from the management of the Company.

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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 exchange for the consideration described above, Mr. Faiman granted a general release of claims in favor of the Company covering the period leading up to, and including, the date of the Separation Agreement. The Separation Agreement provides that, following the Separation Date and subject to Mr. Faiman executing another general release of claims in favor of the Company covering any claims leading up to, and including, the Separation Date, Mr. Faiman will also be entitled to additional consideration of, among other things, (i) severance in an amount equal to Mr. Faiman’s annual base salary for six (6) months, payable in equal installments in accordance with the Company’s normal payroll policies, and (ii) coverage under COBRA, payable directly by the Company, for all health insurance plan benefits to which Mr. Faiman was entitled prior to the Separation Date for a six (6) month period.

NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

	Q3 2019 YTD		Q3 2018 YTD
Cash paid for:
Interest	$	6,494	$	4,775
Income taxes		146		104
Non-Cash Investing and Financing Activities:
Deferred purchase price of UK factoring facility	$	10,833	$	8,418
Shares issued in connection with acquisition of business		—		21
Shares issued in connection with Jackson term loan		—		371
Warrants issued in connection with Jackson term loan		—		682

18

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 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: 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; and 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 reports and documents we file from time to time with the Securities and Exchange Commission (“SEC”), particularly our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K.

Overview

We are incorporated in the State of Delaware. As a rapidly growing public company in the international staffing sector, our high-growth business model is based on finding and acquiring suitable, mature, profitable, operating, U.S. and U.K. based staffing companies. Our targeted consolidation model is focused specifically on the Professional Sector and Commercial Sector disciplines.

Business Model, Operating History and Acquisitions

We are a high-growth international staffing company engaged in the acquisition of United States (“U.S.”) and United Kingdom (“U.K.”) based staffing companies. Our services principally consist of providing temporary contractors, and, to a much lesser extent, the recruitment of candidates for permanent placement. As part of our consolidation model, we pursue a broad spectrum of staffing companies supporting primarily accounting and finance, IT, engineering, administration (collectively, the “Professional Business Stream”) and commercial (“Commercial Business Stream”) 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, the Company is regularly in discussions and negotiations with various suitable, mature acquisition targets. To date, we have completed ten acquisitions since November 2013.

All share numbers in this section have been adjusted for the one-for-five reverse stock split effective at 5:00 p.m. New York time on January 3, 2018.

PeopleServe Disposition

On June 6, 2018, the Company divested the stock of PeopleServe Inc., and PeopleServe PRS, Inc. for a total consideration of $1,502, net of $567 that was remitted back to the buyer on July 31, 2018 in connection with a net working capital true up. The Company recorded a gain of $238 from sale of business.  

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STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Clement May Acquisition

On June 28, 2018, the Company and Staffing 360 Solutions Limited (formerly known as Longbridge Recruitment 360 Limited), a wholly-owned subsidiary of the Company, entered into share purchase agreements (“Share Purchase Agreements”) to acquire all of the share capital of Clement May Limited (“CML”). Consideration for the acquisition of all the shares was (i) an aggregate cash payment of £1,550 ($2,047), (ii) 15,000 shares of the Company’s common stock, (iii) an earn-out payment of up to £500, the amount to be calculated and paid on or around December 28, 2019 pursuant to the Share Purchase Agreement, and (iv) deferred consideration of £350, to be paid on or around June 28, 2019, depending on the satisfaction of certain conditions set forth in that Share Purchase Agreement. To finance the above acquisition, the Company entered into a term loan with HSBC Bank plc. The Company paid deferred consideration of £350 ($444) on June 26, 2019.

Key Resources Inc. Acquisition

On August 27, 2018, the Company and Monroe Staffing Services, LLC (“Monroe Staffing”), an indirect wholly-owned subsidiary of the Company, entered into a share purchase agreement with Pamela D. Whitaker (“Seller”), pursuant to which the Seller sold 100% of the common shares of Key Resources Inc. (“KRI”) to Monroe Staffing (the “KRI Transaction”).

The KRI Transaction closed simultaneously with the signing of the share purchase agreement. The purchase price in connection with the KRI Transaction was approximately $12,163, of which (a) approximately $8,109 was paid to the Seller at closing, (b) up to approximately $2,027 is payable as earnout consideration to the Seller on August 27, 2019 and (c) up to $2,027 is payable as earnout consideration to the Seller on August 27, 2020.  The payment of the earnout consideration is contingent on KRI’s achievement of certain trailing gross profit amounts.

To finance the KRI Transaction, the Company entered into an agreement with Jackson Investment Group, LLC (“Jackson”) on August 27, 2018, pursuant to which the note purchase agreement dated as of September 15, 2017 was amended to add an additional senior debt investment of approximately $8,428. 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 shall 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. The Company paid interest of $10 in September 2019.

For three-month periods ended September 28, 2019 and September 29, 2018

	Q3 2019			% of Revenue			Q3 2018			% of Revenue			Growth
Revenue	$	67,320			100.0	%	$	71,317			100.0	%		(5.6	)%
Direct cost of revenue		54,835			81.5	%		58,821			82.5	%		(6.8	)%
Gross profit		12,485			18.5	%		12,496			17.5	%		(0.1	)%
Operating expenses		12,228			18.2	%		11,838			16.6	%		3.3	%
Income from operations		257			0.4	%		658			0.9	%		(60.9	)%
Other expenses		(1,337	)		(2.0	)%		(2,635	)		(3.7	)%		(49.3	)%
Provision from income taxes		(28	)		(0.0	)%		(3	)		(0.0	)%		833.3	%
Net Loss	$	(1,108	)		(1.6	)%	$	(1,980	)		(2.8	)%		(44.0	)%

Revenue

For Q3 2019, revenue decreased by 5.6% to $67,320, as compared with $71,317, for Q3 2018. The decline was driven by $1,459 of unfavorable foreign currency translation and $7,970 of organic decline.  Within organic decline, temporary contractor revenue declined $8,594 and permanent placement grew $624.  This was partly offset by $5,432 of growth from the acquisitions of KRI.  

Revenue in Q3 2019 was comprised of $63,821 of temporary contractor revenue and $3,499 of permanent placement revenue, compared with $68,683 and $2,634 for Q3 2018, respectively.

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STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Direct cost of revenue, Gross profit and gross margin

Direct cost of services 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 Q3 2019, direct cost of revenue was $54,835, a decrease of 6.8% from $58,821 in Q3 2018, compared with revenue decline of 5.6%.

Gross profit for Q3 2019 was $12,485, almost flat to Q3 2018, but yielded gross margin improvement with 18.5% in Q3 2019 versus 17.5% in Q3 2018.  Gross profit growth was primarily attributable to the impact of acquisitions and growth in permanent placement revenue. This was partly offset by unfavorable foreign currency translation, and organic contract revenue decline.

Operating expenses

Operating expenses for Q3 2019 were $12,228 an increase of 3.3% as compared with $11,838 for Q3 2018.  The acquisitions of Clement May, and KRI drove an additional increase of 3.6% in operating expense.  Excluding the acquisitions, operating expenses decreased by 0.3% driven by significantly lower people costs driven by lower variable costs, savings attributable to synergies within the subsidiaries, and cost savings initiatives.  This is partly offset by higher non-recurring costs, legal, and other costs associated with acquisitions.    

Other Expenses

Other expenses for Q3 2019 was $1,337 a decrease of 49.3% from $2,635 in Q3 2018. The decrease was mainly driven by Q3 2019 CBS Butler warranty claim settlement gain of $1,138 and $433 in lower interest expense recorded in Q3 2019 versus Q3 2018 due to the $13 million debt conversion in Q3 2018.  This was partly offset by $59 of higher net amortization of debt discount and deferred financing costs and $281 of higher loss from remeasuring the Company’s intercompany note.

For nine-month periods ended September 28, 2019 and September 29, 2018

	Q3 2019 YTD			% of Revenue			Q3 2018 YTD			% of Revenue			Growth
Revenue	$	214,644			100.0	%	$	186,835			100.0	%		14.9	%
Direct cost of revenue		177,949			82.9	%		150,876			80.8	%		17.9	%
Gross profit		36,695			17.1	%		35,959			19.2	%		2.0	%
Operating expenses		35,173			16.4	%		35,566			19.0	%		(1.1	)%
Income from operations		1,522			0.7	%		393			0.2	%		287.3	%
Other expenses		(4,168	)		(1.9	)%		(5,566	)		(3.0	)%		(25.1	)%
Benefit from income taxes		296			0.1	%		78			0.0	%		279.5	%
Net Loss	$	(2,350	)		(1.1	)%	$	(5,095	)		(2.7	)%		(53.9	)%

Revenue

For Q3 YTD 2019, revenue increased by 14.9% to $214,644, as compared with $186,835, for Q3 YTD 2018. Of that growth, $47,167 was from the acquisitions of Clement May and KRI.  This was partially offset by a decline of $7,653 from divesting of PeopleServe, $5,624 from unfavorable foreign currency translation, and $6,081 of organic revenue decline. Within organic revenue, temporary contractor revenue declined $6,386 and permanent placement grew $306.

Revenue in Q3 YTD 2019 was comprised of $205,809 of temporary contractor revenue and $8,835 of permanent placement revenue, compared with $178,518 and $8,317 for Q3 YTD 2018, respectively.

Direct cost of revenue, Gross profit and gross margin

Direct cost of services 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 Q3 YTD 2019, direct cost of revenue was $177,949, an increase of 17.9% from $150,876 in Q3 YTD 2018, compared with revenue growth of 14.9%.

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STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Gross profit for Q3 YTD 2019 was $36,695, an increase of 2% over $35,959 for Q3 YTD 2018, representing gross margin of 17.1% and 19.2% for each period, respectively.  Gross profit growth was primarily attributable to the impact of acquisitions and growth in permanent revenue. This was partly offset by the divestiture of the lower margin PeopleServe business, workers’ compensation insurance savings realized in Q3 YTD 2018 with no corresponding credit in Q3 YTD 2019, unfavorable foreign currency translation, and organic contract revenue decline.

Operating expenses

Operating expenses for Q3 YTD 2019 were $35,173, a decrease of 1.1% over $35,566 for Q3 YTD 2018.  The acquisitions of Clement May, and KRI drove an additional increase of 7.4% in operating expense.  Excluding the acquisitions, operating expenses decreased by 8.5% driven by lower non-recurring costs, legal, and other costs associated with acquisitions, lower variable costs and savings attributable to synergies within the subsidiaries, cost savings initiatives, and PeopleServe divesture.    

Other Expenses

Other expenses for Q3 YTD 2019 was $4,168, a decrease of 25.1% from $5,566 in Q3 YTD 2018. The decrease is driven by the following: $1,138 CBS Butler warranty claim settlement gain in Q3 YTD 2019, $737 lower interest expense recorded in Q3 YTD 2019 versus Q3 YTD 2018 due to the $13 million debt conversion in Q3 2018; $847 gain on settlement of FirstPro Inc., deferred consideration in Q3 YTD 2019; $81 higher other income driven mainly by higher investment income on the Company’s workers’ compensation collateral.  These were partially offset by a gain of $879 from fair valuing warrants in Q3 YTD 2018, with no corresponding gain in Q3 YTD 2019; $238 gain from the sale of Peopleserve in Q3 YTD 2018; $136 of higher net amortization of debt discount and deferred financing costs; $152 of higher loss in Q3 YTD 2019 versus Q3 YTD 2018 from remeasuring the Company’s intercompany note.

Non-GAAP Measures

To supplement our consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America (“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 Sector We use this KPI to measure the Company’s mix of Revenue and respective profitability between its two main lines of business due to their differing margins. For clarity, these lines of business are not the Company’s 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 the Company against the industry.

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STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

The following table details Revenue and Gross Profit by Sector:

	Q3 2019			Mix	Q3 2018			Mix	Q3 2019 YTD			Mix	Q3 2018 YTD			Mix
Commercial Staffing - US	$	31,644		47%	$	28,496		40%	$	94,280		43%	$	73,441		39%
Professional Staffing - US		9,387		14%		11,301		16%		28,449		13%		40,034		22%
Professional Staffing - UK		26,289		39%		31,520		44%		91,915		44%		73,360		39%
Total Revenue	$	67,320			$	71,317			$	214,644			$	186,835
Commercial Staffing - US	$	5,107		41%	$	4,463		36%	$	14,823		40%	$	12,278		34%
Professional Staffing - US		3,701		30%		4,069		33%		10,904		30%		12,268		34%
Professional Staffing - UK		3,677		29%		3,964		31%		10,968		30%		11,413		32%
Total Gross Profit	$	12,485			$	12,496			$	36,695			$	35,959
Commercial Staffing - US		16.1	%			15.7	%			15.7	%			16.7	%
Professional Staffing - US		39.4	%			36.0	%			38.3	%			30.6	%
Professional Staffing - UK		14.0	%			12.6	%			11.9	%			15.6	%
Total Gross Margin		18.5	%			17.5	%			17.1	%			19.2	%

23

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Adjusted EBITDA This measure is defined as net loss attributable to common stock before: interest expense, benefit from (provision for) income taxes; income (loss) from discontinued operations, net of tax; other (income) expense, net, in operating income (loss); amortization and impairment of intangible assets; impairment of goodwill; depreciation; operational restructuring and other charges; other income (expense), net, below operating income (loss); non-cash expenses associated with stock compensation; and charges the Company considers to be non-recurring in nature such as legal expenses associated with litigation, professional fees associated potential and completed acquisitions. We use this measure because we believe it provides a more meaningful understanding of the profit and cash flow generation of the Company.

	Q3 2019			Q3 2018			Q3 2019 YTD			Q3 2018 YTD			Trailing Twelve Months Q3 2019			Trailing Twelve Months Q3 2018
Net loss	$	(1,108	)	$	(1,980	)	$	(2,350	)	$	(5,095	)	$	(3,756	)	$	(12,419	)
Interest expense and amortization of debt discount and deferred financing costs		2,059			2,435			5,977			6,578			8,365			8,615
Benefit (Provision) from income taxes		28			3			(296	)		(78	)		(196	)		641
Depreciation and amortization		867			741			2,621			2,251			3,494			3,507
EBITDA	$	1,846		$	1,199		$	5,952		$	3,656		$	7,907		$	344
Acquisition, capital raising and other non-recurring expenses (1)		1,558			797			2,511			2,642			2,993			3,587
Other non-cash charges (2)		205			288			627			951			834			1,319
Gain in fair value of warrant liability		—			—			—			(879	)		—			(1,755	)
Re-measurement loss on intercompany note		467			186			484			332			838			332
Impairment of goodwill		—			—			—			—			—			4,790
Deferred consideration settlement		(1,138	)		—			(1,985	)		—			(1,985	)		—
Restructuring charges		—			—			—			—			(57	)		780
Gain from sale of business		—			—			—			(238	)		—			(238	)
Operational (income) of divested business		—			—			—			(237	)		—			(357	)
Other loss (income)		(51	)		14			(308	)		(227	)		(479	)		(152	)
Adjusted EBITDA	$	2,887		$	2,484		$	7,281		$	6,000		$	10,051		$	8,650
Pre-Acquisition Adjusted EBITDA (3)														—		$	3,323
Pro Forma TTM Adjusted EBITDA (4)													$	10,051		$	11,973
Adjusted Gross Profit TTM (5)													$	49,040		$	46,649
TTM Adjusted EBITDA as percentage of adjusted gross profit TTM														20.5	%		18.5	%

(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.

(3) Pre-Acquisition Adjusted EBITDA excludes the Adjusted EBITDA of acquisitions for the period prior to the acquisition date.

(4) Pro Forma TTM Adjusted EBITDA includes the Adjusted EBITDA of acquisitions for the period prior to the acquisition date.

(5) Adjusted Gross Profit EBITDA excludes gross profit of business divested in June 2018, for the period prior to divested date.

24

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

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 the Company’s efficiency for converting incremental gross profit into Adjusted EBITDA.

	Twelve Months Ended
	September 28, 2019			September 29, 2018
Adjusted Gross Profit - TTM (Current Period)	$	49,040		$	46,649
Adjusted Gross Profit - TTM (Prior Period)		46,649			30,948
Adjusted Gross Profit - Growth	$	2,391		$	15,701
Adjusted EBITDA - TTM (Current Period)	$	10,051		$	8,650
Adjusted EBITDA - TTM (Prior Period)		8,650			5,321
Adjusted EBITDA - Growth	$	1,402		$	3,328
Operating Leverage		58.6	%		21.2	%

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 the Company’s ability to service its debt prospectively.

	September 28, 2019		December 29, 2018
Total Debt, Net	$	38,542	$	36,222
Addback: Total Debt Discount and Deferred Financing Costs		867		1,171
Total Term Debt	$	39,409	$	37,393
TTM Adjusted EBITDA	$	10,051	$	8,770
Pro Forma TTM Adjusted EBITDA	$	10,051	$	10,592
Pro Forma Leverage Ratio	3.9x		3.5x

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 the Company’s 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 the Company’s underlying operating cash flow.

On February 8, 2018, CBS Butler Holdings Limited (“CBS Butler”), Staffing 360 Solutions Limited and The JM Group, entered into a new arrangement with HSBC Invoice Finance (UK) Ltd (“HSBC”) which provides for HSBC to purchase the subsidiaries’ accounts receivable up to an aggregate amount of £11,500 across all three subsidiaries. The terms of the arrangement provide for HSBC to fund 90% of the purchased accounts receivable upfront and, a secured borrowing line of 70% of unbilled receivables capped at £1,000 (within the overall aggregate total facility of £11,500). Under ASU 2016-16, “Statement of Cash Flows (Topic 230, Classification of Certain Cash Receipts and Cash Payments, a consensus of the FASB Emerging Issues Task Force, the upfront portion of the sale of accounts receivable is classified within operating activities, while the deferred purchase price portion (or beneficial interest), once collected, is classified within investing activities.

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STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

	Q3 2019			Q3 2018
Net cash (used) provided by operating activities	$	(7,001	)	$	7,149
Collection of UK factoring facility deferred purchase price		10,502			7,086
Repayments on accounts receivable financing		(3,702	)		(16,220	)
Net cash used in operating activities including proceeds from accounts receivable financing	$	(201	)	$	(1,985	)

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 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 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 the Company continues to execute on its 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 and other rules implemented by the Securities and Exchange Commission. 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 nine month period ended September 28, 2019, the Company had a working capital deficiency of $51,005 an accumulated deficit of $73,993, and a net loss of $2,350. Management believes the Company is a going concern meaning it will meet its obligations for the next 12 months as of the date these financial statements are issued.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern. The Company has unsecured payments due in the next 12 months associated with historical acquisitions which are in excess of cash and cash equivalents on hand, in addition to funding operational growth and meeting debt service requirements. 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. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying 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.

26

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Operating activities

For Q3 2019 YTD, net cash used in operations of $7,001 was primarily attributable to changes in operating assets and liabilities totaling $6,921, net loss of $2,350; offset by non-cash adjustments of $2,270. Changes in operating assets and liabilities primarily relates to an increase in accounts receivable of $8,994, increase in prepaid expenses and other current assets of $187, increase other assets of $395, decrease in interest payable to related parties of $190, decrease in other non current liabilities of $54 and decrease in other long term liabilities and other of $341; offset by increase in accounts payable and accrued expenses of $3,240. Total non-cash adjustments of $2,270 primarily includes depreciation and amortization of intangible assets of $2,621, stock based compensation of $621, amortization of debt discounts and deferred financing of $529, foreign currency re-measurement on intercompany loan of $484; offset by gain from settlements of the FirstPro Inc. and CBSB deferred consideration totaling $1,985.

For Q3 2018 YTD, net cash provided by operations of $7,149 was primarily attributable changes in operating assets and liabilities totaling $9,434, non-cash adjustments of $2,810, partially offset by net loss of $5,095. Changes in operating assets and liabilities primarily relates to a decrease in accounts receivable of $6,282 (see further discussion below), increase in accounts payable and accrued expenses of $2,789, decrease in other assets of $165, decrease in prepaid expenses and other current assets of $71, and increase in other long term liabilities and other of $285; offset by decrease in interest payable – related party of $64 and decrease in other current liabilities of $94. Total non-cash adjustments of $2,810 primarily includes depreciation and amortization of intangible assets of $2,251, stock based compensation of $951, amortization of debt discounts and deferred financing of $393, foreign currency re-measurement on intercompany loan of $332; offset by gain on fair value of warrants of $879 and gain from sale of business of $238.

On February 8, 2018, CBS Butler, Staffing 360 Solutions Limited and The JM Group, entered into a new arrangement with HSBC Invoice Finance (UK) Ltd (“HSBC”) which provides for HSBC to purchase the subsidiaries’ accounts receivable. Under ASU 2016-16, “Statement of Cash Flows (Topic 230, Classification of Certain Cash Receipts and Cash Payments, a consensus of the FASB Emerging Issues Task Force, the upfront portion of the sale of accounts receivable is classified within operating activities, while the deferred purchase price portion (or beneficial interest), once collected, is classified within investing activities.

Investing activities

For Q3 2019 YTD, net cash flows provided by investing activities was $10,087, $10,502 related to collection of the beneficial interest from HSBC partially offset by purchase of property and equipment of $415.

For Q3 2018 YTD, net cash flows used in investing activities was $1,601, $9,760 related to acquisition of Clement May and KRI and purchase of property and equipment of $330; offset by collection of the beneficial interest from HSBC of $7,086 (see discussion above) and disposal of business of $1,403.

Financing activities

For Q3 2019 YTD, net cash flows used in financing activities totaled $4,468, of which $3,702 relates to repayments on accounts receivable financing, net, payment on deferred consideration for $5,613, third party financing costs of $1,122, dividends paid to related parties of $1,125, dividends paid to shareholders of $249, and repayment on HSBC loan of $522; financing costs – related party of $188; offset by proceeds from equity raise of $5,515 and proceeds from related party term loan of $2,538.

For Q3 2018 YTD, net cash flows used in financing activities totaled $5,822, of which $16,220 relates repayments on accounts receivable financing, net (primarily relates to settlement of the prior U.K. secured borrowing facilities in connection with the new HSBC facility (see discussion above)), payments for deferred payments associated with the Firstpro and CBS Butler acquisition and CSI earnout of $1,402, $422 for repayments of term loans, $389 for third party financing costs and $150 dividends to related parties; offset by proceeds from term loans of $10,475 and proceeds from the At-market facility of $2,286.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Refer to the Form 10-K filed with the SEC on March 25, 2019.

27

STAFFING 360 SOLUTIONS, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Recent Accounting Pronouncements  

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842).  The Company adopted this guidance effective December 30, 2018. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less.  All other leases will fall into one of two categories: (i) Financing leases, similar to capital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) Operating leases which will require the recognition of an asset and liability measured at the present value of the lease payments. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, the sale will only be recognized if the criteria in the new revenue recognition standard are met. The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the ‘package of practical expedients’ which allow us to not reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expired leases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company has also elected to apply i) the practical expedient which allows us to not separate lease and non-lease components, and (2) the short-term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new standard. The adoption of the new standard resulted in the recognition of additional lease liabilities of approximately $5,344, and right-of-use assets of approximately $5,262 as of September 28, 2019 related to the Company’s operating leases. The new standard did not have a material impact to the Company’s consolidated statement of operations or consolidated statement of cash flows.

28

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 Securities Exchange Act of 1934, as amended (“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 the Company’s “disclosure controls and procedures” and “internal control over financial reporting” as of the end of the period covered by this Quarterly Report.

Evaluation of Disclosure Controls and Procedures

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.

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 Annual Report (“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 operating effectively.

Management believes that the condensed consolidated financial statements in this quarterly report on Form 10-Q fairly present, in all material respects, the Company’s financial condition as of the Evaluation Date, and results of its operations and cash flows for the Evaluation Date, in conformity with United States Generally Accepted Accounting Principles (“GAAP”).

Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).  Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting. Internal control over financial reporting is a process designed 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 and includes those policies and procedures that

a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

b) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and

c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. 

Based on our evaluation under the framework described above, our management concluded that our internal controls over financial reporting were effective in accordance with Item 308(a)(3) of Regulation S-K.      

A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Based on our evaluation under the framework described above, our management concluded that our internal controls over financial reporting were effective in accordance with Item 308(a)(3) of Regulation S-K.

Attestation report of the registered public accounting firm

This Quarterly Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the SEC.

29

Changes in Internal Control over Financial Reporting

There has been no change in our system of internal control over financial reporting occurred during the period ended September 28, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

30

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

No material developments.

Item 1A. Risk Factors.

Except as otherwise set forth below, therehave been no material developments to alter the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 29, 2018, and our Quarterly Report for the fiscal quarter ended March 30, 2019.

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

None.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

31

Item 6. Exhibits

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation (previously filed as Exhibit 3.3 to the Company’s Form 8-K, filed with the SEC on June 15, 2017)
3.2	Amendment to Amended and Restated Certificate of Incorporation (previously filed as Exhibit 3.1 to the Company’s Form 8-K, filed with the SEC on January 3, 2018)
3.3	Amended and Restated By-Laws (previously filed as Exhibit 3.1 to the Company’s Form 8-K, filed with the SEC on March 29, 2018)
3.4	Certificate of Amendment to Certificate of Designation of Series E Convertible Preferred Stock, dated February 7, 2019 (previously filed as Exhibit 3.1 to the Company’s current Report on Form 8-K filed with the SEC on February 11, 2019)
10.1	Securities Purchase Agreement, dated July 29, 2019, by and between Staffing 360 Solutions, Inc. and the purchaser signatory thereto (previously filed as Exhibit 10.1 to the Company’s current report on Form 8-K filed with the SEC on July 29, 2019)
10.2	Placement Agency Agreement, dated July 29, 2019, by and between the Company and ThinkEquity(previously filed as Exhibit 10.2 to the Company’s current report on Form 8-K filed with the SEC on July 29, 2019)
10.3	Fourth Omnibus Amendment and Reaffirmation Agreement, dated August 29, 2019, by and among the Company, certain subsidiaries of the Company and Jackson Investment Group, LLC.(previously filed as Exhibit 10.1 to the Company’s current report on Form 8-K filed with the SEC on August 30, 2019)
10.4	18% Senior Secured Note, due December 31, 2019, issued on August 29, 2019, to Jackson Investment Group, LLC(previously filed as Exhibit 10.2 to the Company’s current report on Form 8-K filed with the SEC on August 30, 2019)
10.5	Third Amendment to Intercreditor Agreement, dated August 29, 2019, by and among the Company, certain subsidiaries of the Company, Jackson Investment Group, LLC and MidCap Funding X Trust.(previously filed as Exhibit 10.3 to the Company’s current report on Form 8-K filed with the SEC on August 30, 2019)
10.6	Amendment Agreement, dated as of September 11, 2019, by and among Monroe Staffing Services, LLC, Staffing 360 Solutions, Inc. and Pamela D. Whitaker(previously filed as Exhibit 10.1 to the Company’s current report on Form 8-K filed with the SEC on September 12, 2019)
10.7	General Release and Severance Agreement, dated as of September 11, 2019, by and between Staffing 360 Solutions, Inc. and David Faiman(previously filed as Exhibit 10.1 to the Company’s current report on Form 8-K filed with the SEC on September 17, 2019)
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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002
32.2†	Certification of 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	XBRL Instance Document
101.SCH	XBRL Taxonomy Schema
101.CAL	XBRL Taxonomy Calculation Linkbase
101.DEF	XBRL Taxonomy Definition Linkbase
101.LAB	XBRL Taxonomy Label Linkbase
101.PRE	XBRL Taxonomy Presentation Linkbase

† In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.

32

SIGNATURES

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

Date: November 12, 2019	STAFFING 360 SOLUTIONS, INC.
	By:	/s/ Brendan Flood
		Brendan Flood
		Chairman and Chief Executive Officer
		(Duly Authorized Officer and Principal Executive Officer)

Date: November 12, 2019	STAFFING 360 SOLUTIONS, INC.
	By:	/s/ David Faiman
		David Faiman
		Chief Financial Officer
		(Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer)

33

EX-31.1

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. (the “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. I am 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: November 12, 2019	/s/ Brendan Flood
	Brendan Flood
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

OF PRINCIPAL FINANICAL OFFICER

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

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, David Faiman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Staffing 360 Solutions, Inc. (the “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. I am 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: November 12, 2019	/s/ David Faiman
	David Faiman
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF

PRINCIPAL EXECUTIVE 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. (the “Company”) on Form 10-Q for the period ended September 28, 2019 (the “Report”), I, Brendan Flood, Executive Chairman of the Company, respectively, 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: November 12, 2019	/s/ Brendan Flood
	Brendan Flood
	Chairman and Chief Executive Officer
	(Principal Executive 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.

EX-32.2

Exhibit 32.2

CERTIFICATION OF

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. (the “Company”) on Form 10-Q for the period ended September 28, 2019 (the “Report”), I, David Faiman, Chief Financial Officer 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: November 12, 2019	/s/ David Faiman
	David Faiman
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting 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.

XML

OTHER RELATED PARTY TRANSACTIONS (Details Textual) $ in Thousands	9 Months Ended
	Sep. 28, 2019 USD ($)
Mr. Briand [Member] | Separation Agreement [Member]
Related Party Transaction [Line Items]
Severance pay	$ 190

XML

SEGMENTS (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Disaggregation Of Revenue [Line Items]
Total Revenue	$ 67,320	$ 71,317	$ 214,644	$ 186,835
Temporary Revenue [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	63,821	68,683	205,809	178,518
Permanent Revenue [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	3,499	2,634	8,835	8,317
UNITED STATES [Member] | Commercial Staffing [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	31,644	28,496	94,280	73,441
UNITED STATES [Member] | Commercial Staffing [Member] | Temporary Revenue [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	31,540	28,483	94,079	73,313
UNITED STATES [Member] | Commercial Staffing [Member] | Permanent Revenue [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	104	13	201	128
UNITED STATES [Member] | Professional Staffing [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	9,387	11,301	28,449	40,034
UNITED STATES [Member] | Professional Staffing [Member] | Temporary Revenue [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	7,434	9,587	23,019	35,147
UNITED STATES [Member] | Professional Staffing [Member] | Permanent Revenue [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	1,953	1,714	5,430	4,887
UNITED KINGDOM [Member] | Professional Staffing [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	26,289	31,520	91,915	73,360
UNITED KINGDOM [Member] | Professional Staffing [Member] | Temporary Revenue [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	24,847	30,613	88,711	70,058
UNITED KINGDOM [Member] | Professional Staffing [Member] | Permanent Revenue [Member]
Disaggregation Of Revenue [Line Items]
Total Revenue	$ 1,442	$ 907	$ 3,204	$ 3,302

XML

SEGMENTS

9 Months Ended

Sep. 28, 2019

Segments Geographical Areas [Abstract]

SEGMENTS

NOTE 9 – SEGMENTS

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

	Q3 2019			Q3 2018			Q3 2019 YTD			Q3 2018 YTD
Commercial Staffing - US	$	31,644		$	28,496		$	94,280		$	73,441
Professional Staffing - US		9,387			11,301			28,449			40,034
Professional Staffing - UK		26,289			31,520			91,915			73,360
Total Revenue	$	67,320		$	71,317		$	214,644		$	186,835
Commercial Staffing - US	$	5,107		$	4,463		$	14,823		$	12,278
Professional Staffing - US		3,701			4,069			10,904			12,268
Professional Staffing - UK		3,677			3,964			10,968			11,413
Total Gross Profit	$	12,485		$	12,496		$	36,695		$	35,959
Selling, general and administrative expenses	$	(11,361	)	$	(11,097	)	$	(32,552	)	$	(33,315	)
Depreciation and amortization		(867	)		(741	)		(2,621	)		(2,251	)
Interest expense and amortization of debt discount and deferred financing costs		(2,059	)		(2,435	)		(5,977	)		(6,578	)
Gain in fair value of warrant liability		—			—			—			879
Re-measurement loss on intercompany note		(467	)		(186	)		(484	)		(332	)
Gain on sale of business		—			—			—			238
Gain on settlement of deferred consideration		1,138			—			1,985			—
Other income, net		51			(14	)		308			227
Loss Before Provision for Income Tax	$	(1,080	)	$	(1,977	)	$	(2,646	)	$	(5,173	)

The following table disaggregates revenues by segments:

	Q3 2019
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	104	$	1,953	$	1,442	$	3,499
Temporary Revenue		31,540		7,434		24,847		63,821
Total	$	31,644	$	9,387	$	26,289	$	67,320
	Q3 2018
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	13	$	1,714	$	907	$	2,634
Temporary Revenue		28,483		9,587		30,613		68,683
Total	$	28,496	$	11,301	$	31,520	$	71,317
	Q3 2019 YTD
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	201	$	5,430	$	3,204	$	8,835
Temporary Revenue		94,079		23,019		88,711		205,809
Total	$	94,280	$	28,449	$	91,915	$	214,644
	Q3 2018 YTD
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	128	$	4,887	$	3,302	$	8,317
Temporary Revenue		73,313		35,147		70,058		178,518
Total	$	73,441	$	40,034	$	73,360	$	186,835

As of September 28, 2019 and December 29, 2018, the Company has assets in the U.S., the U.K. and Canada as follows:

	September 28,		December 29,
	2019		2018
United States	$	75,239	$	70,267
United Kingdom		22,201		26,170
Total Assets	$	97,440	$	96,437

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DEBT

9 Months Ended

Sep. 28, 2019

Debt Disclosure [Abstract]

Debt

NOTE 5 – DEBT

	September 28,			December 29,
	2019			2018
Jackson Investment Group - related party	$	38,278		$	35,740
HSBC Term Loan		1,131			1,653
Total Debt, Gross		39,409			37,393
Less: Debt Discount and Deferred Financing Costs		(867	)		(1,171	)
Total Debt, Net		38,542			36,222
Less: Current Portion, Net		(38,068	)		(657	)
Total Long-Term Debt, Net	$	474		$	35,565

On August 29, 2019, the Company, entered into a Fourth Omnibus Amendment and Reaffirmation Agreement with Jackson, as lender, which, among other things, amends the Amended and Restated Note Purchase Agreement, dated as of September 15, 2017. Pursuant to this agreement, the Company agreed to issue and sell to Jackson a 18% Senior Secured Note due December 31, 2019 in the aggregate principal amount of $2,538. All accrued and unpaid interest on the outstanding principal balance of this term note will be due and payable monthly on the first day of each month, beginning on October 1, 2019. Pursuant to the terms of this note, if this term note is not repaid by December 31, 2019, the Company will be required to issue 100,000 shares of its common stock to Jackson on a monthly basis until this term note is fully repaid, subject to certain exceptions to comply with Nasdaq listing standards.

As of September 28, 2019, the Company was not in compliance with all covenants. On November 12, 2019, the Company received a waiver from Jackson curing the non-compliance as of September 28, 2019 and the past due interest payments that were due on October 1, 2019 and November 1, 2019. In return for the waiver, Jackson received 100,000 shares of common stock which is to be registered under Form S-3 as soon as practicable.

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LOSS PER COMMON SHARE (Details) - shares	9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Shares Included In Computation Of Diluted Earnings Per Share [Line Items]
Convertible preferred shares	7,688,175	43,239
Warrants	925,935	925,935
Total	9,569,360	1,813,361
Long term incentive plan (LTIP) [Member]
Shares Included In Computation Of Diluted Earnings Per Share [Line Items]
Share-based compensation	380,000	123,515
Restricted shares - unvested [Member]
Shares Included In Computation Of Diluted Earnings Per Share [Line Items]
Share-based compensation	495,690	595,272
Options [Member]
Shares Included In Computation Of Diluted Earnings Per Share [Line Items]
Share-based compensation	79,560	125,400

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DEBT (Details) - USD ($) $ in Thousands	Sep. 28, 2019	Dec. 29, 2018
Debt Instrument [Line Items]
Debt instrument	$ 39,409	$ 37,393
Less: Debt Discount and Deferred Financing Costs	(867)	(1,171)
Total Debt, Net	38,542	36,222
Less: Current Portion, Net	(38,068)	(657)
Total Long-Term Debt, Net	474	35,565
HSBC Term Loan [Member]
Debt Instrument [Line Items]
Debt instrument	1,131	1,653
Jackson Investment Group - related party [Member]
Debt Instrument [Line Items]
Debt instrument	$ 38,278	$ 35,740

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LEASES (Details1) $ in Thousands	Sep. 28, 2019 USD ($)
Leases [Abstract]
Weighted average remaining lease term (years)	3 years 8 months 12 days
Weighted average discount rate	6.40%
Future Lease Payments
2019	$ 624
2020	1,734
2021	1,432
2022	583
2023	326
Thereafter	1,464
Total	$ 6,163

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

9 Months Ended

Sep. 28, 2019

Supplemental Cash Flow Information [Abstract]

Schedule of Cash Flow Supplemental Information

	Q3 2019 YTD		Q3 2018 YTD
Cash paid for:
Interest	$	6,494	$	4,775
Income taxes		146		104
Non-Cash Investing and Financing Activities:
Deferred purchase price of UK factoring facility	$	10,833	$	8,418
Shares issued in connection with acquisition of business		—		21
Shares issued in connection with Jackson term loan		—		371
Warrants issued in connection with Jackson term loan		—		682

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (2,350)	$ (5,095)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	2,621	2,251
Amortization of debt discount and deferred financing costs	529	393
Gain in fair value of warrants	0	(879)
Stock based compensation	621	951
Gain on sale of business	0	(238)
Gain on settlement of deferred consideration	(1,985)	0
Re-measurement loss on intercompany note	484	332
Changes in operating assets and liabilities:
Accounts receivable	(8,994)	6,282
Prepaid expenses and other current assets	(187)	71
Other assets	(395)	165
Accounts payable and accrued expenses	3,240	2,789
Interest payable - related party	(190)	(64)
Other current liabilities	(54)	(94)
Other long-term liabilities and other	(341)	285
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(7,001)	7,149
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business, net of cash acquired		(9,760)
Disposal of business, net of cash		1,403
Purchase of property and equipment	(415)	(330)
Collection of UK factoring facility deferred purchase price	10,502	7,086
NET CASH PROVIDED BY INVESTING ACTIVITIES	10,087	(1,601)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from term loan - related party	2,538	8,428
Repayment of term loan	(522)	(422)
Proceeds from term loan		2,047
Repayments on accounts receivable financing, net	(3,702)	(16,220)
Dividends paid to related parties	(1,125)	(150)
Dividends paid on common stock	(249)
Proceeds from sale of common stock	5,515	2,286
Payments made for earn-outs	(5,613)	(1,402)
Financing costs - related party	(188)	(280)
Third party financing costs	(1,122)	(109)
NET CASH USED IN FINANCING ACTIVITIES	(4,468)	(5,822)
NET DECREASE IN CASH	(1,382)	(274)
Effect of exchange rates on cash	(2)	(2)
Cash - Beginning of period	3,181	3,100
Cash - End of period	$ 1,797	$ 2,824

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 28, 2019	Dec. 29, 2018
Series E-1 Preferred Stock, Shares Designated	6,500	6,500
Series E-1 Preferred Stock, Par Value Per Share (in dollars per share)	$ 0.00001	$ 0.00001
Series E-1 Preferred Stock, Shares Issued	567	81
Series E-1 Preferred Stock, Shares Outstanding	567	81
Preferred Stock, Par Value Per Share (in dollars per share)	$ 0.00001	$ 0.00001
Preferred Stock, Shares Authorized	20,000,000	20,000,000
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.00001	$ 0.00001
Common Stock, Shares Authorized	40,000,000	20,000,000
Common Stock, Shares, Issued	8,680,148	5,326,068
Common Stock, Shares, Outstanding	8,680,148	5,326,068
Series A Preferred Stock - Related Party [Member]
Preferred Stock, Par Value Per Share (in dollars per share)	$ 0.00001	$ 0.00001
Preferred Stock, Shares Designated	1,663,008	1,663,008
Preferred Stock, Shares Issued	1,663,008	1,663,008
Preferred Stock, Shares Outstanding	1,663,008	1,663,008
Preferred Stock, Stated Value Per Share (in dollars per share)	$ 1.00	$ 1.00
Series E Preferred Stock [Member]
Preferred Stock, Par Value Per Share (in dollars per share)	$ 0.00001	$ 0.00001
Preferred Stock, Shares Designated	13,000	13,000
Preferred Stock, Shares Issued	13,000	13,000
Preferred Stock, Shares Outstanding	13,000	13,000
Preferred Stock, Stated Value Per Share (in dollars per share)	$ 1,000

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EQUITY (Tables)

9 Months Ended

Sep. 28, 2019

Stockholders Equity Note [Abstract]

Schedule of Stockholders Equity

The Company issued the following shares of common stock during the nine month period ended September 28, 2019:

Shares issued to/for:	Number of Common Shares Issued		Fair Value of Shares Issued		Fair Value at Issuance (minimum and maximum per share)
Equity raise		3,331,280	$	5,515	$	1.40	$	2.00
Consultants		6,000		10		1.56		1.56
Board and Committee members		16,800		28		1.58		1.79
		3,354,080	$	5,553

The Company issued the following shares of common stock during the nine month period ended September 29, 2018:

Shares issued to/for:	Number of Common Shares Issued		Fair Value of Shares Issued		Fair Value at Issuance (minimum and maximum per share)
At-the-Market Facility		726,821	$	2,286	$	1.61	$	3.59
Jackson Investment Group		192,000		371		1.93		1.93
Employees		125,000		199		1.54		1.61
Consultants		19,383		55		1.40		3.42
Acquisition		15,000		21		1.38		1.38
Board and Committee members		15,400		32		1.40		3.25
Reverse stock split (rounding up shares)		426		-		-		-
		1,094,030	$	2,964

Summary of Relationship Between Performance and the Vesting Rate

Average 2019 Price	Vesting Rate
<$8 per share	0
>$8 per share	Pro-rated
>=$12 per share	Full Vesting

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 28, 2019

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.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.  

These unaudited 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.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 29, 2018 are included in the Company’s December 29, 2018 Form 10-K (“Fiscal 2018”), filed with the United States Securities and Exchange Commission on March 25, 2019. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the period ended September 28, 2019 are not necessarily indicative of results for the entire year ending December 28, 2019. This report is for the period December 30, 2018 to September 28, 2019 (“Q3 2019 YTD”), June 30, 2019 to September 28, 2019 (“Q3 2019”), December 31, 2017 to September 29, 2018 (“Q3 2018 YTD”) and July 1, 2018 to September 29, 2018 (“Q3 2018”).

Liquidity

Liquidity

The accompanying 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 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. As shown in the accompanying financial statements as of the quarter ended September 28, 2019, the Company has an accumulated deficit of $73,993 and a working capital deficit of $51,005. At September 28, 2019, we had total debt of $39,409 and $1,797 of cash on hand. We have historically met our cash needs through a combination of cash flows from operating activities, term loans, promissory notes, bonds, convertible notes, private placement offerings and sales of equity. Our cash requirements are generally for operating activities and debt repayments

The financial statements included in this quarterly report 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, our note issued to Jackson Investment Group LLC(“Jackson”) includes certain financial customary covenants and the Company has had instances of non-compliance. Management has historically been able to obtain from Jackson waivers of any non-compliance and management expects to continue to be able to obtain necessary waivers in the event of future non-compliance; however, there can be no assurance that the Company will be able to obtain such waivers, and should Jackson refuse to provide a waiver in the future, the outstanding debt under the agreement could become due immediately.

Going concern

Going concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern. The Company debt obligations and certain unsecured payments associated with historical acquisitions are due in the next 12 months and are in excess of cash and cash equivalents on hand. 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. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Goodwill

Goodwill

During Q3 2019, the Company performed an interim goodwill impairment test for three of its reporting units, resulting in each case, the fair value of each reporting unit exceeding their carrying values by a minimal percentage. Goodwill, in the aggregate, for these three reporting units is approximately $26 million. A reduction in the projected long-term operating performance of any of these reporting units, market declines, changes in discount rates or other conditions could result in an impairment in the future. In connection with the interim impairment test, the Company used a combination of the income approach, which incorporates the use of a discounted cash flow method, and the market approach, which incorporates the use of earnings and cash flow multiples based on market data. The income approach and the market approach both require the exercise of significant judgment, including judgment about the amount and timing of expected future cash flows, assumed terminal value and appropriate discount rates.

Revenue Recognition

Revenue Recognition

On December 31, 2017, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers for all open contracts and related amendments as of December 31, 2017 using the modified retrospective method.  The adoption had no impact to the reported results. Results for reporting periods beginning after December 31, 2017 are presented under ASC 606, while the comparative information will not be restated and will continue to be reported under the accounting standards in effect for those periods.

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.

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 basis. The contracts stipulate weekly 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 in Q3 2019 YTD was comprised of $205,809 of temporary contractor revenue and $8,835 of permanent placement revenue, compared with $178,518 and $8,317 for Q3 2018 YTD, respectively. Revenue in Q3 2019 was comprised of $63,821 of temporary contractor revenue and $3,499 of permanent placement revenue, compared with $68,683 and $2,634 for Q3 2018, respectively. Refer to Note 9 for further details on breakdown by segments.  

Reclassifications

Reclassifications

We may make certain reclassifications to prior period amounts to conform with the current year’s presentation. These reclassifications did not have a material effect on our condensed consolidated statement of financial position, results of operations or cash flows.

Income Taxes

Income Taxes

The Company's provision for income taxes is based upon an estimated annual tax rate for the year applied to federal, state and foreign income. On a quarterly basis, the annual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter. 

The Company’s effective tax rate may change from period to period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes, and tax audit settlements.  The effective income tax rate was (2.6)%, (0.31)%, 11.2% and 1.59% for the period ending Q3 2019, Q3 2018, Q3 2019 YTD and Q3 2018 YTD, respectively.

Foreign Currency

Foreign Currency

The Company recorded a non cash foreign currency remeasurement loss of $467, $186, $484 and $332 in Q3 2019, Q3 2018, Q3 2019 YTD and Q3 2018 YTD, respectively, associated with its U.S dollar denominated intercompany note.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842).  The Company adopted this guidance effective December 30, 2018. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less.  All other leases will fall into one of two categories: (i) Financing leases, similar to capital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) Operating leases which will require the recognition of an asset and liability measured at the present value of the lease payments. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, the sale will only be recognized if the criteria in the new revenue recognition standard are met. The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the ‘package of practical expedients’ which allow us to not reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expired leases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company has also elected to apply i) the practical expedient which allows us to not separate lease and non-lease components, and (2) the short-term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new standard. The adoption of the new standard resulted in the recognition of additional lease liabilities of approximately $5,344, and right-of-use assets of approximately $5,262 as of September 28, 2019 related to the Company’s operating leases. The new standard did not have a material impact to the Company’s consolidated statement of operations or consolidated statement of cash flows.

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EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Stockholders Equity [Line Items]
Number of Common Shares Issued	3,354,080	1,094,030
Fair Value of Shares Issued	$ 5,553	$ 2,964
Jackson Investment Group, LLC [Member]
Stockholders Equity [Line Items]
Number of Common Shares Issued		192,000
Fair Value of Shares Issued		$ 371
Acquisition [Member]
Stockholders Equity [Line Items]
Number of Common Shares Issued		15,000
Fair Value of Shares Issued		$ 21
Minimum [Member] | Jackson Investment Group, LLC [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)		$ 1.93
Minimum [Member] | Acquisition [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)		1.38
Maximum [Member] | Jackson Investment Group, LLC [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)		1.93
Maximum [Member] | Acquisition [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)		$ 1.38
Equity Raise [Member]
Stockholders Equity [Line Items]
Number of Common Shares Issued	3,331,280
Fair Value of Shares Issued	$ 5,515
Equity Raise [Member] | Minimum [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)	$ 1.40
Equity Raise [Member] | Maximum [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)	$ 2.00
At-the-Market Facility [Member]
Stockholders Equity [Line Items]
Number of Common Shares Issued		726,821
Fair Value of Shares Issued		$ 2,286
At-the-Market Facility [Member] | Minimum [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)		$ 1.61
At-the-Market Facility [Member] | Maximum [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)		$ 3.59
Reverse Stock Split [Member]
Stockholders Equity [Line Items]
Number of Common Shares Issued		426
Consultants [Member]
Stockholders Equity [Line Items]
Number of Common Shares Issued	6,000	19,383
Fair Value of Shares Issued	$ 10	$ 55
Consultants [Member] | Minimum [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)	$ 1.56	$ 1.40
Consultants [Member] | Maximum [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)	$ 1.56	$ 3.42
Employees [Member]
Stockholders Equity [Line Items]
Number of Common Shares Issued		125,000
Fair Value of Shares Issued		$ 199
Employees [Member] | Minimum [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)		$ 1.54
Employees [Member] | Maximum [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)		$ 1.61
Board and Committee members [Member]
Stockholders Equity [Line Items]
Number of Common Shares Issued	16,800	15,400
Fair Value of Shares Issued	$ 28	$ 32
Board and Committee members [Member] | Minimum [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)	$ 1.58	$ 1.40
Board and Committee members [Member] | Maximum [Member]
Stockholders Equity [Line Items]
Fair Value at Issuance (per share)	$ 1.79	$ 3.25

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EQUITY - Warrants (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Stockholders Equity [Line Items]
Change in fair value of warrant liability	$ 0	$ 0	$ 0	$ 879
Level 3 [Member]
Stockholders Equity [Line Items]
Change in fair value of warrant liability		$ 0		$ 879

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SEGMENTS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018	Dec. 29, 2018
Revenues From External Customers And Long Lived Assets [Line Items]
Total Revenue	$ 67,320	$ 71,317	$ 214,644	$ 186,835
Total Gross Profit	12,485	12,496	36,695	35,959
Selling, general and administrative expenses	(11,361)	(11,097)	(32,552)	(33,315)
Depreciation and amortization	(867)	(741)	(2,621)	(2,251)
Interest expense and amortization of debt discount and deferred financing costs	(2,059)	(2,435)	(5,977)	(6,578)
Gain in fair value of warrant liability	0	0	0	879
Re-measurement loss on intercompany note	(467)	(186)	(484)	(332)
Gain on sale of business	0	0	0	238
Gain on settlement of deferred consideration	1,138	0	1,985	0
Other income, net	51	(14)	308	227
Loss Before Provision for Income Tax	(1,080)	(1,977)	(2,646)	(5,173)
Total Assets	97,440		97,440		$ 96,437
UNITED STATES [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total Assets	75,239		75,239		70,267
UNITED STATES [Member] | Commercial Staffing [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total Revenue	31,644	28,496	94,280	73,441
Total Gross Profit	5,107	4,463	14,823	12,278
UNITED STATES [Member] | Professional Staffing [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total Revenue	9,387	11,301	28,449	40,034
Total Gross Profit	3,701	4,069	10,904	12,268
UNITED KINGDOM [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total Assets	22,201		22,201		$ 26,170
UNITED KINGDOM [Member] | Professional Staffing [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total Revenue	26,289	31,520	91,915	73,360
Total Gross Profit	$ 3,677	$ 3,964	$ 10,968	$ 11,413

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SEGMENTS (Tables)

9 Months Ended

Sep. 28, 2019

Segments Geographical Areas [Abstract]

Schedule of Revenue Assets by Geographical Segment

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

	Q3 2019			Q3 2018			Q3 2019 YTD			Q3 2018 YTD
Commercial Staffing - US	$	31,644		$	28,496		$	94,280		$	73,441
Professional Staffing - US		9,387			11,301			28,449			40,034
Professional Staffing - UK		26,289			31,520			91,915			73,360
Total Revenue	$	67,320		$	71,317		$	214,644		$	186,835
Commercial Staffing - US	$	5,107		$	4,463		$	14,823		$	12,278
Professional Staffing - US		3,701			4,069			10,904			12,268
Professional Staffing - UK		3,677			3,964			10,968			11,413
Total Gross Profit	$	12,485		$	12,496		$	36,695		$	35,959
Selling, general and administrative expenses	$	(11,361	)	$	(11,097	)	$	(32,552	)	$	(33,315	)
Depreciation and amortization		(867	)		(741	)		(2,621	)		(2,251	)
Interest expense and amortization of debt discount and deferred financing costs		(2,059	)		(2,435	)		(5,977	)		(6,578	)
Gain in fair value of warrant liability		—			—			—			879
Re-measurement loss on intercompany note		(467	)		(186	)		(484	)		(332	)
Gain on sale of business		—			—			—			238
Gain on settlement of deferred consideration		1,138			—			1,985			—
Other income, net		51			(14	)		308			227
Loss Before Provision for Income Tax	$	(1,080	)	$	(1,977	)	$	(2,646	)	$	(5,173	)

The following table disaggregates revenues by segments:

	Q3 2019
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	104	$	1,953	$	1,442	$	3,499
Temporary Revenue		31,540		7,434		24,847		63,821
Total	$	31,644	$	9,387	$	26,289	$	67,320
	Q3 2018
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	13	$	1,714	$	907	$	2,634
Temporary Revenue		28,483		9,587		30,613		68,683
Total	$	28,496	$	11,301	$	31,520	$	71,317
	Q3 2019 YTD
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	201	$	5,430	$	3,204	$	8,835
Temporary Revenue		94,079		23,019		88,711		205,809
Total	$	94,280	$	28,449	$	91,915	$	214,644
	Q3 2018 YTD
	Commercial Staffing - US		Professional Staffing - US		Professional Staffing - UK		Total
Permanent Revenue	$	128	$	4,887	$	3,302	$	8,317
Temporary Revenue		73,313		35,147		70,058		178,518
Total	$	73,441	$	40,034	$	73,360	$	186,835

As of September 28, 2019 and December 29, 2018, the Company has assets in the U.S., the U.K. and Canada as follows:

	September 28,		December 29,
	2019		2018
United States	$	75,239	$	70,267
United Kingdom		22,201		26,170
Total Assets	$	97,440	$	96,437

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LOSS PER COMMON SHARE (Tables)

9 Months Ended

Sep. 28, 2019

Earnings Per Share [Abstract]

Schedule of Common Share Equivalent Not Included in Diluted Earnings per Share Computations

Diluted earnings per share are computed using the weighted average number of common stock shares and dilutive common share equivalents outstanding during the period. Dilutive common stock equivalents consist of common shares 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 share equivalent basis and outstanding as of September 28, 2019 and September 29, 2018 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 September 28, 2019 and September 29, 2018:

	September 28,		September 29,
	2019		2018
Convertible preferred shares		7,688,175		43,239
Warrants		925,935		925,935
Restricted shares - unvested		495,690		595,272
Long term incentive plan (LTIP)		380,000		123,515
Options		79,560		125,400
Total		9,569,360		1,813,361

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ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Textual)			9 Months Ended
	Jan. 03, 2018	Sep. 17, 2015	Sep. 28, 2019
Business Combinations [Abstract]
Stockholders' Equity, Reverse Stock Split			one-for-ten reverse stock split on September 17, 2015 and a one-for-five reverse stock split on January 3, 2018
Reverse stock split, ratio	0.2	0.1

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Term Loan [Member]	Employees, Directors and Consultants [Member]	Clement May Limited [Member]	Series E-1 Preferred Stock - Related Party [Member]	Series A Preferred Stock - Related Party [Member]	Series E Preferred Stock [Member]	Preferred Stock [Member] Series E-1 Preferred Stock - Related Party [Member]	Preferred Stock [Member] Series A Preferred Stock - Related Party [Member]	Preferred Stock [Member] Series E Preferred Stock [Member]	Common Stock [Member]	Common Stock [Member] Term Loan [Member]	Common Stock [Member] Employees, Directors and Consultants [Member]	Common Stock [Member] Clement May Limited [Member]	Additional Paid-in Capital [Member]	Additional Paid-in Capital [Member] Term Loan [Member]	Additional Paid-in Capital [Member] Employees, Directors and Consultants [Member]	Additional Paid-in Capital [Member] Clement May Limited [Member]	Additional Paid-in Capital [Member] Series E-1 Preferred Stock - Related Party [Member]	Additional Paid-in Capital [Member] Series A Preferred Stock - Related Party [Member]	Additional Paid-in Capital [Member] Series E Preferred Stock [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]
Balance at Dec. 30, 2017	$ (6,785)														$ 57,574							$ 783	$ (65,142)
Balance (in shares) at Dec. 30, 2017									1,663,008		3,909,114
Shares issued for services			$ 950														$ 950
Shares issued for services, shares													159,783
Shares issued to/for, Acquisition of business				$ 21														$ 21
Shares issued to/for, Acquisition of business, shares														15,000
Sale of common stock, net, shares	1,094,030
At-Market-Facility, net	$ 2,225														2,225
At-Market-Facility, net, shares											726,821
Term loans		$ 371														$ 371
Term loans, shares												192,000
Additional shares issues on share split, shares											426
Warrant adjustments	682														682
Dividends - Preferred Stock - Related Party						$ (150)														$ (150)
Foreign currency translation gain	694																					694
Net Loss	(5,095)																						(5,095)
Balance at Sep. 29, 2018	(7,087)														61,673							1,477	(70,237)
Balance (in shares) at Sep. 29, 2018									1,663,008		5,003,144
Balance at Jun. 30, 2018	(7,822)														59,314							1,121	(68,257)
Balance (in shares) at Jun. 30, 2018									1,663,008		4,272,094
Shares issued for services			287														287
Shares issued for services, shares													49,461
At-Market-Facility, net	1,616														1,616
At-Market-Facility, net, shares											489,589
Term loans		$ 371														$ 371
Term loans, shares												192,000
Warrant adjustments	135														135
Dividends - Preferred Stock - Related Party						(50)														(50)
Foreign currency translation gain	356																					356
Net Loss	(1,980)																						(1,980)
Balance at Sep. 29, 2018	(7,087)														61,673							1,477	(70,237)
Balance (in shares) at Sep. 29, 2018									1,663,008		5,003,144
Balance at Dec. 29, 2018	$ 4,195									$ 13					73,772							2,053	(71,643)
Balance (in shares) at Dec. 29, 2018	81							81
Balance at Dec. 29, 2018	$ 0
Balance (in shares) at Dec. 29, 2018									1,663,008	13,000	5,326,068
Shares issued for services			621														621
Shares issued for services, shares													22,800
Sale of common stock, net	$ 4,396										$ 1				4,395
Sale of common stock, net, shares	3,354,080										3,331,280
Term loans, shares					341,566		7,303,371
Dividends - Preferred Stock - Related Party					$ (546)	(150)	$ (1,170)												$ (546)	(150)	$ (1,170)
Dividends - Preferred Stock - Related Party (in shares)								(486)
Dividends - Common Stock holders	$ (249)														(249)
Foreign currency translation gain	719																					719
Net Loss	(2,350)																						(2,350)
Balance at Sep. 28, 2019	$ 5,466									$ 13	$ 1				76,673							2,772	(73,993)
Balance (in shares) at Sep. 28, 2019	567							567
Balance at Sep. 28, 2019	$ 0
Balance (in shares) at Sep. 28, 2019									1,663,008	13,000	8,680,148
Balance at Jun. 29, 2019	5,895									$ 13	$ 1				76,711							2,055	(72,885)
Balance (in shares) at Jun. 29, 2019								81
Balance (in shares) at Jun. 29, 2019									1,663,008	13,000	8,245,948
Shares issued for services			$ 198														$ 198
Shares issued for services, shares													5,600
Sale of common stock, net	471														471
Sale of common stock, net, shares											428,600
Dividends - Preferred Stock - Related Party					$ (182)	$ (50)	$ (390)												$ (182)	$ (50)	$ (390)
Dividends - Preferred Stock - Related Party (in shares)								(486)
Dividends - Common Stock holders	(85)														(85)
Foreign currency translation gain	717																					717
Net Loss	(1,108)																						(1,108)
Balance at Sep. 28, 2019	$ 5,466									$ 13	$ 1				$ 76,673							$ 2,772	$ (73,993)
Balance (in shares) at Sep. 28, 2019	567							567
Balance at Sep. 28, 2019	$ 0
Balance (in shares) at Sep. 28, 2019									1,663,008	13,000	8,680,148

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 28, 2019	Dec. 29, 2018
Current Assets:
Cash	$ 1,797	$ 3,181
Accounts receivable, net	31,506	32,746
Prepaid expenses and other current assets	1,384	1,197
Total Current Assets	34,687	37,124
Property and equipment, net	1,570	1,639
Intangible assets, net	20,509	22,657
Goodwill	32,061	32,061
Right of use asset - leases	5,262
Other assets	3,351	2,956
Total Assets	97,440	96,437
Current Liabilities:
Accounts payable and accrued expenses	21,347	18,283
Payable - related party	2,140	1,457
Current portion of debt	38,068	657
Accounts receivable financing	18,011	21,979
Lease liabilities, current	1,773
Other current liabilities	4,353	9,642
Total Current Liabilities	85,692	52,018
Term loan - related party, net		34,568
Term loan	474	997
Lease liabilities, non current	3,571
Other long-term liabilities	2,237	4,659
Total Liabilities	91,974	92,242
Commitments and contingencies
Series E-1 Preferred Stock, 6,500 designated, $0.00001 par value, 567 and 81 shares issued and outstanding as of September 28, 2019 and December 29, 2018, respectively	0	0
Staffing 360 Solutions, Inc. Equity:
Common stock, $0.00001 par value, 40,000,000 and 20,000,000 shares authorized as of September 28, 2019 and December 29, 2018, respectively; 8,680,148 and 5,326,068 shares issued and outstanding, as of September 28, 2019 and December 29, 2018, respectively	1	0
Additional paid in capital	76,673	73,772
Accumulated other comprehensive income	2,772	2,053
Accumulated deficit	(73,993)	(71,643)
Total Stockholders' Equity	5,466	4,195
Total Liabilities and Stockholders' Equity	97,440	96,437
Series A Preferred Stock - Related Party [Member]
Staffing 360 Solutions, Inc. Equity:
Preferred stock value	0	0
Series E Preferred Stock [Member]
Staffing 360 Solutions, Inc. Equity:
Preferred stock value	$ 13	$ 13

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COMMITMENTS AND CONTINGENCIES (Details Textual) $ in Thousands							1 Months Ended			9 Months Ended
	Aug. 30, 2019 USD ($)	Aug. 30, 2019 GBP (£)	Aug. 29, 2019 USD ($)	Jul. 26, 2019 GBP (£)	Jul. 05, 2019 GBP (£)	Mar. 01, 2019 USD ($)	Sep. 28, 2019 USD ($)	Sep. 29, 2018 USD ($)	Sep. 29, 2018 GBP (£)	Sep. 28, 2019 USD ($)	Sep. 29, 2018 USD ($)	Sep. 11, 2019 USD ($)	Jun. 26, 2019 GBP (£)	Aug. 27, 2018 USD ($)	Jun. 28, 2018 USD ($)	Jun. 28, 2018 GBP (£)	Sep. 15, 2017 USD ($) Installment	Sep. 15, 2017 GBP (£) Installment
Commitments And Contingencies [Line Items]
Proceeds from related party used for payment										$ 2,538	$ 8,428
CBS Butler [Member]
Commitments And Contingencies [Line Items]
Business combination deferred consideration | £																		£ 150,000
Business combination earn-out payment payable month and year										2018-12
Business combination deferred consideration paid								$ 195	£ 150,000
Accrual final payments | £				£ 2,500,000	£ 2,150,000
Gain on final settlement of litigation	$ 1,138	£ 894,000
CBS Butler [Member] | Jackson Investment Group, LLC [Member]
Commitments And Contingencies [Line Items]
Proceeds from related party used for payment			$ 2,538
CBS Butler [Member] | Maximum [Member]
Commitments And Contingencies [Line Items]
Business combination earn-out payment | £																		£ 4,214,000
FirstPro [Member]
Commitments And Contingencies [Line Items]
Business acquisition cost of acquired entity each quarterly installment payment																	$ 75
Business acquisition cost of acquired entity annual equal installment payment																	$ 2,675
Business combination number of equal annual installments. | Installment																	3	3
Business acquisition quarterly installment payment beginning date										Oct. 01, 2017
Business acquisition annual equal installment payment beginning date										Sep. 15, 2018
Business combination remaining liability paid						$ 1,125
Business combination purchase gain recognized						$ 847
Clement May Limited [Member] | Share Purchase Agreement [Member]
Commitments And Contingencies [Line Items]
Business combination deferred consideration													£ 350,000		$ 444	£ 350,000
Clement May Limited [Member] | Maximum [Member] | Share Purchase Agreement [Member]
Commitments And Contingencies [Line Items]
Business combination earn-out payment | £																£ 500,000
Key Resources Inc. [Member] | Share Purchase Agreement [Member] | Earnout Consideration on August 27, 2019 [Member]
Commitments And Contingencies [Line Items]
Business combination, earnout consideration payable														$ 2,027
Key Resources Inc. [Member] | Share Purchase Agreement [Member] | Earnout Consideration on August 27, 2020 [Member]
Commitments And Contingencies [Line Items]
Business combination, earnout consideration payable														$ 2,027
Key Resources Inc. [Member] | Amended Share Purchase Agreement [Member] | Earnout Consideration Postpone Date on February 27, 2020 [Member]
Commitments And Contingencies [Line Items]
Business combination, earnout consideration payable												$ 2,027
Business combination earnout consideration interest payment							$ 10
Key Resources Inc. [Member] | Amended Share Purchase Agreement [Member] | Earnout Consideration Prepone Date on February 27, 2020 [Member]
Commitments And Contingencies [Line Items]
Business combination, earnout consideration payable												$ 2,027
Business combination earnout consideration interest payment							$ 10

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EQUITY - Stock Options (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Stockholders Equity [Line Items]
Stock based compensation			$ 621	$ 951
Stock Options [Member]
Stockholders Equity [Line Items]
Stock based compensation	$ 7	$ 33	$ 43	$ 168

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EQUITY - Series E Preferred Stock (Details Textual) - USD ($)			3 Months Ended	9 Months Ended
	Feb. 08, 2019	Jan. 22, 2019	Sep. 28, 2019	Sep. 28, 2019	Sep. 29, 2018
Stockholders Equity [Line Items]
Common stock shares issued				3,354,080	1,094,030
Gross proceeds from issuance of common stock				$ 5,515,000	$ 2,286,000
Fair Value of Shares Issued				5,553,000	2,964,000
Dividends paid				$ 1,125,000	$ 150,000
Series E Preferred Stock [Member]
Stockholders Equity [Line Items]
Number of common stock issuable on conversion of preferred stock			561.8	561.8
Convertible preferred stock, term				Each share of Series E Preferred Stock is initially convertible into 561.8 shares of our common stock at any time after October 31, 2020 or the occurrence of a Preferred Default. A holder of Series E Preferred Stock is not required to pay any additional consideration in exchange for conversion of such Series E Preferred Stock into our common stock.
Preferred stock, stated value per share			$ 1,000	$ 1,000
Fair Value of Shares Issued	$ 2,425,000
Shares Issued, price per share	$ 1.65
Proceeds from offering in excess to redeem preferred stock	$ 3,000,000
Common stock issued to holder				7,303,371
Dividends paid			$ 975,000
Series E Preferred Stock [Member] | Registered Direct Offering [Member]
Stockholders Equity [Line Items]
Common stock shares issued		387,500
Gross proceeds from issuance of common stock		$ 775,000
Series E Preferred Stock [Member] | Maximum [Member]
Stockholders Equity [Line Items]
Gross proceeds from equity offering				$ 3,000,000
Series E1 Preferred Stock [Member]
Stockholders Equity [Line Items]
Common stock issued to holder				341,566

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SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Cash paid for:
Interest	$ 6,494	$ 4,775
Income taxes	146	104
Non-Cash Investing and Financing Activities:
Deferred purchase price of UK factoring facility	10,502	7,086
Shares issued	0	21
HSBC Invoice Finance (UK) Ltd Factoring Facility [Member]
Non-Cash Investing and Financing Activities:
Deferred purchase price of UK factoring facility	10,833	8,418
Jackson Investment Group Term Loan [Member]
Non-Cash Investing and Financing Activities:
Shares issued	0	371
Warrants issued in connection with Jackson term loan	$ 0	$ 682

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ACQUISITIONS (Details) - KRI and CML [Member] - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 29, 2018	Sep. 29, 2018
Business Acquisition Pro Forma Information Nonrecurring Adjustment [Line Items]
Revenues	$ 76,749	$ 234,001
Net loss from continuing operations	$ (2,269)	$ (5,392)

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ACQUISITIONS

9 Months Ended

Sep. 28, 2019

Business Combinations [Abstract]

Acquisitions

NOTE 10 – ACQUISITIONS

The following unaudited pro forma consolidated results of operations have been prepared, as if the acquisition of KRI and CML were acquired on January 1, 2017.

	Q3 2018			Q3 2018 YTD
Revenues	$	76,749		$	234,001
Net loss from continuing operations		(2,269	)		(5,392	)

Included in revenues for Q3 2018 and Q3 2018 YTD, is $0 and $7,653 associated with PeopleServe Inc., which was disposed in June 2018.

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LEASES

9 Months Ended

Sep. 28, 2019

Leases [Abstract]

Leases

NOTE 6 – LEASES

On December 30, 2018, the Company adopted ASC 842 using the modified retrospective transition approach allowed under ASU 2018-11 which releases companies from presenting comparative periods and related disclosures under ASC 842 and requires a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company has elected to apply the short-term lease exception to all leases of one year or less. As of September 28, 2019, as a result of the adoption of ASC 842, we have recorded a right of use (“ROU”) lease asset of approximately $5,262 with a corresponding lease liability of approximately $5,344 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.

Quantitative information regarding the Company’s leases for the period ended September 28, 2019 is as follows:

Lease Cost	Classification	Q3 2019 YTD
Operating lease cost	SG&A Expenses		1,285

Other information
Weighted average remaining lease term (years)		3.7
Weighted average discount rate		6.4	%
Future Lease Payments
2019	$	624
2020		1,734
2021		1,432
2022		583
2023		326
Thereafter		1,464
	$	6,163

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.

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LEASES (Details) $ in Thousands	9 Months Ended
	Sep. 28, 2019 USD ($)
SG&A Expenses [Member]
Lessee Lease Description [Line Items]
Operating lease cost	$ 1,285

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019 USD ($) Reporting_Unit	Sep. 29, 2018 USD ($)	Sep. 28, 2019 USD ($)	Sep. 29, 2018 USD ($)	Dec. 29, 2018 USD ($)
Accounting Policies [Line Items]
Accumulated deficit	$ 73,993		$ 73,993		$ 71,643
Working capital deficit	51,005		51,005
Debt instrument carrying amount	39,409		39,409		37,393
Cash	$ 1,797		1,797		$ 3,181
Number of reporting units | Reporting_Unit	3
Aggregate goodwill to reporting unit	$ 26,000		26,000
Revenue	$ 67,320	$ 71,317	$ 214,644	$ 186,835
Effective income tax rate	(2.60%)	(0.31%)	11.20%	1.59%
Foreign currency remeasurement loss	$ 467	$ 186	$ 484	$ 332
Operating lease, right-of-use asset	5,262		5,262
ASU 2016-02 Leases [Member]
Accounting Policies [Line Items]
Operating lease, liability	5,344		5,344
Operating lease, right-of-use asset	5,262		5,262
Temporary Contractor Revenue [Member]
Accounting Policies [Line Items]
Revenue	63,821	68,683	205,809	178,518
Permanent Placement Revenue [Member]
Accounting Policies [Line Items]
Revenue	$ 3,499	$ 2,634	$ 8,835	$ 8,317

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ACCOUNTS RECEIVABLE BASED FINANCING FACILITIES - ABN AMRO Commercial Finance (Details Textual)	9 Months Ended
	Sep. 28, 2019
Accounts Receivable Financing [Member]
Accounts Receivable Based Financing Activities [Line Items]
Line of Credit Facility, Maturity Date	Feb. 08, 2018

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OTHER RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 28, 2019

Related Party Transactions [Abstract]

Summary of Other Related Party Transactions

The Company had the following activity with its Board and Committee Members:

	Q3 2019								Q3 2018
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized		Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	19		1,400	$	2	$	8	$	19		1,400	$	2	$	22
Jeff Grout		19		1,400		2		8		19		1,400		2		22
Nick Florio		19		1,400		2		8		19		1,400		2		22
Alicia Barker		—		1,400		2		1		—		1,400		2		—
	$	57		5,600	$	8	$	25	$	57		5,600	$	8	$	66
	Q3 2019 YTD								Q3 2018 YTD
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized		Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	56		4,200	$	7	$	23	$	56		4,200	$	9	$	62
Jeff Grout		56		4,200		7		23		56		4,200		9		62
Nick Florio		56		4,200		7		23		56		4,200		9		62
Alicia Barker		-		4,200		7		3		19		2,800		4		-
	$	168		16,800	$	28	$	72	$	187		15,400	$	31	$	186

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ORGANIZATION AND DESCRIPTION OF BUSINESS

9 Months Ended

Sep. 28, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Description of Business

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 changed its state of domicile to Delaware.

The Company effected a one-for-ten reverse stock split on September 17, 2015 and a one-for-five reverse stock split on January 3, 2018. All share and per share information in these consolidated financial statements has been retroactively adjusted to reflect these reverse stock splits.

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LEASES (Tables)

9 Months Ended

Sep. 28, 2019

Leases [Abstract]

Schedule of Quantitative Information Regarding Leases

Quantitative information regarding the Company’s leases for the period ended September 28, 2019 is as follows:

Lease Cost	Classification	Q3 2019 YTD
Operating lease cost	SG&A Expenses		1,285

Lessee Operating Lease Liability Maturity and Other Information

Other information
Weighted average remaining lease term (years)		3.7
Weighted average discount rate		6.4	%
Future Lease Payments
2019	$	624
2020		1,734
2021		1,432
2022		583
2023		326
Thereafter		1,464
	$	6,163

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Revenue	$ 67,320	$ 71,317	$ 214,644	$ 186,835
Cost of Revenue, excluding depreciation and amortization stated below	54,835	58,821	177,949	150,876
Gross Profit	12,485	12,496	36,695	35,959
Operating Expenses:
Selling, general and administrative expenses	11,361	11,097	32,552	33,315
Depreciation and amortization	867	741	2,621	2,251
Total Operating Expenses	12,228	11,838	35,173	35,566
Income From Operations	257	658	1,522	393
Other (Expenses) Income:
Interest expense and amortization of debt discount and deferred financing costs	(2,059)	(2,435)	(5,977)	(6,578)
Gain in fair value of warrant liability	0	0	0	879
Re-measurement loss on intercompany note	(467)	(186)	(484)	(332)
Gain on sale of business	0	0	0	238
Gain on settlement of deferred consideration	1,138	0	1,985	0
Other income (loss), net	51	(14)	308	227
Total Other Expenses, net	(1,337)	(2,635)	(4,168)	(5,566)
Loss Before Provision for Income Tax	(1,080)	(1,977)	(2,646)	(5,173)
(Provision) Benefit from income taxes	(28)	(3)	296	78
Net Loss	(1,108)	(1,980)	(2,350)	(5,095)
Net Loss Attributable to Common Stock Holders	$ (1,730)	$ (2,030)	$ (4,216)	$ (5,245)
Basic and Diluted Loss per Share:
Net Loss Attributable to Common Stock Holders	$ (0.20)	$ (0.43)	$ (0.53)	$ (1.23)
Weighted Average Shares Outstanding – Basic and Diluted	8,821,607	4,721,364	7,974,186	4,250,500
Series A Preferred Stock - Related Party [Member]
Other (Expenses) Income:
Dividends - related party	$ 50	$ 50	$ 150	$ 150
Series E Preferred Stock - Related Party [Member]
Other (Expenses) Income:
Dividends - related party	390	0	1,170	0
Series E-1 Preferred Stock - Related Party [Member]
Other (Expenses) Income:
Dividends - related party	$ 182	$ 0	$ 546	$ 0

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EQUITY - Restricted Shares (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Stockholders Equity [Line Items]
Stock based compensation			$ 621	$ 951
2015 And 2016 Omnibus Incentive Plan [Member] | Restricted Shares [Member]
Stockholders Equity [Line Items]
Share-based compensation restricted period			3 years
Stock based compensation	$ 132	$ 248	$ 407	$ 728
2015 And 2016 Omnibus Incentive Plan [Member] | Employees and Board and Committee Members [Member] | Restricted Shares [Member]
Stockholders Equity [Line Items]
Shares issued			495,690

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EQUITY - Long-Term Incentive Plan (Details Textual) - 2019 Long-Term Incentive Plan [Member] - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended
	Jan. 31, 2019	Sep. 28, 2019	Sep. 28, 2019
Stockholders Equity [Line Items]
Stock options granted	380,000
Units vesting upon employees being in good standing, Percentages	50.00%
Units vesting upon average share price, Percentages	50.00%
Stock based compensation expenses		$ 72	$ 161
Long term incentive plan determined value			$ 519

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OTHER RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Related Party Transaction [Line Items]
Compensation Expense Recognized			$ 621	$ 951
Board and Committee members [Member]
Related Party Transaction [Line Items]
Cash Compensation	$ 57	$ 57	$ 168	$ 187
Shares Issued	5,600	5,600	16,800	15,400
Value of Shares Issued	$ 8	$ 8	$ 28	$ 31
Compensation Expense Recognized	25	66	72	186
Board and Committee members [Member] | Dimitri Villard [Member]
Related Party Transaction [Line Items]
Cash Compensation	$ 19	$ 19	$ 56	$ 56
Shares Issued	1,400	1,400	4,200	4,200
Value of Shares Issued	$ 2	$ 2	$ 7	$ 9
Compensation Expense Recognized	8	22	23	62
Board and Committee members [Member] | Jeff Grout [Member]
Related Party Transaction [Line Items]
Cash Compensation	$ 19	$ 19	$ 56	$ 56
Shares Issued	1,400	1,400	4,200	4,200
Value of Shares Issued	$ 2	$ 2	$ 7	$ 9
Compensation Expense Recognized	8	22	23	62
Board and Committee members [Member] | Nick Florio [Member]
Related Party Transaction [Line Items]
Cash Compensation	$ 19	$ 19	$ 56	$ 56
Shares Issued	1,400	1,400	4,200	4,200
Value of Shares Issued	$ 2	$ 2	$ 7	$ 9
Compensation Expense Recognized	$ 8	$ 22	$ 23	62
Board and Committee members [Member] | Alicia Barker [Member]
Related Party Transaction [Line Items]
Cash Compensation				$ 19
Shares Issued	1,400	1,400	4,200	2,800
Value of Shares Issued	$ 2	$ 2	$ 7	$ 4
Compensation Expense Recognized	$ 1		$ 3

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ACCOUNTS RECEIVABLE BASED FINANCING FACILITIES- HSBC Invoice Finance (UK) Ltd New Facility (Details Textual) - CBS Butler Holdings Limited, Staffing 360 Solutions Limited and The JM Group [Member] - HSBC Invoice Finance (UK) Ltd - New Facility [Member]	Jun. 28, 2018 GBP (£)	Feb. 08, 2018 GBP (£) Subsidiary	Jul. 31, 2019 GBP (£)
Accounts Receivable Based Financing Activities [Line Items]
Lending facility		£ 11,500,000
Number of subsidiaries | Subsidiary		3
Factoring Arrangement Advance Percentage Eligible Receivable		90.00%
Percentage of secured borrowing line of unbilled receivables		70.00%
Unbilled receivables, maximum secured borrowing		£ 1,000,000
Arrangement initial term		12 months
Arrangement automatic rolling extension period		3 months
Percentage of service charge		1.80%
Clement May Limited [Member]
Accounts Receivable Based Financing Activities [Line Items]
Minimum agreement term for purchase of debt	12 months
Clement May Limited [Member] | Agreement Purchase Debt [Member]
Accounts Receivable Based Financing Activities [Line Items]
Lending facility	£ 20,000,000		£ 22,500,000
Unbilled receivables, maximum secured borrowing	£ 1,500,000
Unbilled receivables period	90 days

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DEBT (Details Textual) - USD ($) $ in Thousands		9 Months Ended
	Aug. 29, 2019	Sep. 28, 2019	Nov. 12, 2019
Jackson Investment Group - related party [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Number of shares issued waiver of interest payments			100,000
Jackson Investment Group, LLC [Member] | 18% Senior Secured Note Due December 31, 2019 [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate	18.00%
Debt instrument maturity date	Dec. 31, 2019
Debt instrument, aggregate principal amount	$ 2,538
Debt instrument, interest payment description		All accrued and unpaid interest on the outstanding principal balance of this term note will be due and payable monthly on the first day of each month, beginning on October 1, 2019
Debt instrument, date of first interest payment	Oct. 01, 2019
Debt instrument, default of payment description		Pursuant to the terms of this note, if this term note is not repaid by December 31, 2019, the Company will be required to issue 100,000 shares of its common stock to Jackson on a monthly basis until this term note is fully repaid, subject to certain exceptions to comply with Nasdaq listing standards
Number of common shares issuable on monthly basis in event of default	100,000

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SUPPLEMENTAL CASH FLOW INFORMATION

9 Months Ended

Sep. 28, 2019

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

	Q3 2019 YTD		Q3 2018 YTD
Cash paid for:
Interest	$	6,494	$	4,775
Income taxes		146		104
Non-Cash Investing and Financing Activities:
Deferred purchase price of UK factoring facility	$	10,833	$	8,418
Shares issued in connection with acquisition of business		—		21
Shares issued in connection with Jackson term loan		—		371
Warrants issued in connection with Jackson term loan		—		682

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 28, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Earn-out Liabilities and Stock Value Guarantees

Pursuant to the acquisition of CBS Butler on September 15, 2017, the purchase price includes an earn-out payment of up to £4,214 (payable in December 2018, based upon CBS Butler’s operating performance during the period September 1, 2017 through August 31, 2018) and deferred consideration of £150 less the aggregate amount of any net asset shortfall amount, if any, as determined pursuant to the acquisition agreements for the acquisition of CBS Butler. In September 2018, the Company paid the deferred consideration of £150 ($195).

While the Company had recognized the liability for the contingent earn-out due the sellers of CBS Butler within current liabilities as of December 29, 2018, in March 2019 the Company filed a warranty claim against the sellers asserting certain misrepresentations for an amount which approximates the contingent earn-out. In April 2019, the sellers of CBS Butler responded denying the Company’s warranty claim and asserting that the earn-out amount is due. On July 5, 2019, the Company entered into a settlement agreement with the selling shareholders of CBS Butler for the full and final satisfaction of claims in exchange for a payment of approximately £2,150 by the Company to the CBS Butler shareholders.  The payment was due no later than July 26, 2019. The Company did not make the payment on July 26, 2019, as such the parties agreed to adjust the amount payable to £2,500. The Company paid this in full on August 30, 2019 and recorded a gain of approximately £894 ($1,138) on final settlement. The Company used the proceeds from the term note entered into with Jackson on August 29, 2019 for $2,538, to satisfy this obligation.  

Pursuant to the acquisition of FirstPro Inc., on September 15, 2017, the purchase price includes deferred quarterly installments of $75 beginning on October 1, 2017, and $2,675 is payable annually in three equal installments beginning on September 15, 2018. On March 1, 2019, the Company paid $1,125 in full satisfaction of the remaining liability, recognizing a gain of $847.

Pursuant to the acquisition of CML on June 28, 2018, the purchase price includes an earnout payment of up to £500 to be paid on or around December 28, 2019; and deferred consideration of £350, the amount to be calculated and paid pursuant to the Share Purchase Agreement, on or around June 28, 2019. The Company paid deferred consideration of £350 ($444) on June 26, 2019.

Pursuant to the acquisition of Key Resources Inc. (“KRI”) on August 27, 2018, the purchase price includes earnout consideration payable to the seller of $2,027each on August 27, 2019 and August 27, 2020. The payment of the earnout consideration is 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 shall 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. The Company paid interest of $10 in September 2019.

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ACCOUNTS RECEIVABLE BASED FINANCING FACILITIES

9 Months Ended

Sep. 28, 2019

Accounts Receivable Based Financing Activities [Abstract]

Accounts Receivable Based Financing Facilities

NOTE 4 – ACCOUNTS RECEIVABLE BASED FINANCING FACILITIES

HSBC Invoice Finance (UK) Ltd – New Facility

On February 8, 2018, CBS Butler Holdings Limited (“CBS Butler”), Staffing 360 Solutions Limited and The JM Group, entered into a new arrangement with HSBC Invoice Finance (UK) Ltd (“HSBC”) which provides for HSBC to purchase the subsidiaries’ accounts receivable up to an aggregate amount of £11,500 across all three subsidiaries. The terms of the arrangement provide for HSBC to fund 90% of the purchased accounts receivable upfront and, a secured borrowing line of 70% of unbilled receivables capped at £1,000 (within the overall aggregate total facility of £11,500). The arrangement has an initial term of 12 months, with an automatic rolling three-month extension and carries a service charge of 1.80%.

On June 28, 2018, Clement May Limited (“CML”), the Company’s new subsidiary entered into a new agreement with a minimum term of 12 months for purchase of debt (“APD”) with HSBC, joining CBS Butler, Staffing 360 Solutions Limited and The JM Group (collectively, with CML, the “Borrowers”) as “Connected Clients” as defined in the APD. The new Connected Client APDs carry an aggregate Facility Limit of £20,000 across all Borrowers. The obligations of the Borrowers are secured by a fixed charge and a floating charge on the Borrowers’ respective accounts receivable and are subject to cross-company guarantees among the Borrowers. In addition, the secured borrowing line against unbilled receivables was increased to £1,500 for a period of 90 days. In July 2019, the aggregate Facility Limit was extended to £22,500 across all Borrowers.

Under ASU 2016-16, “Statement of Cash Flows (Topic 230, Classification of Certain Cash Receipts and Cash Payments, a consensus of the FASB Emerging Issues Task Force), the upfront portion of the sale of accounts receivable is classified within operating activities, while the deferred purchase price portion (or beneficial interest), once collected, is classified within investing activities.

Midcap Funding Trust

On August 2, 2019, the Company amended the facility with Midcap to allow for additional borrowing against the unbilled receivables by $1,000 to a cap of $2,300 and extended the maturity of the facility to August 2020.

ABN AMRO Commercial Finance

In conjunction with the HSBC Invoice Finance (UK) Ltd – New Facility, on February 8, 2018, Staffing 360 Solutions Limited and The JM Group terminated its facility with ABN AMRO Commercial Finance and the remaining balance was paid in full.

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ACQUISITIONS (Details Textual) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 29, 2018	Sep. 29, 2018
PeopleServe Inc [Member]
Business Acquisition [Line Items]
Revenues	$ 0	$ 7,653

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ACCOUNTS RECEIVABLE BASED FINANCING FACILITIES - Midcap Funding Trust (Details Textual) - Amended Midcap Facility [Member]	Aug. 02, 2019 USD ($)
Accounts Receivable Based Financing Activities [Line Items]
Unbilled receivables, minimum incremental borrowing	$ 1,000,000
Unbilled receivables, maximum incremental borrowing	$ 2,300,000
Line of credit facility, extended maturity period	2020-08

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LEASES (Details Textual) $ in Thousands	Sep. 28, 2019 USD ($)
Lessee Lease Description [Line Items]
Operating lease, right-of-use asset	$ 5,262
ASU 2016-02 Leases [Member]
Lessee Lease Description [Line Items]
Operating lease, right-of-use asset	5,262
Operating lease, liability	$ 5,344

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EQUITY

9 Months Ended

Sep. 28, 2019

Stockholders Equity Note [Abstract]

Equity

NOTE 7 – EQUITY

Common Stock

The Company issued the following shares of common stock during the nine month period ended September 28, 2019:

Shares issued to/for:	Number of Common Shares Issued		Fair Value of Shares Issued		Fair Value at Issuance (minimum and maximum per share)
Equity raise		3,331,280	$	5,515	$	1.40	$	2.00
Consultants		6,000		10		1.56		1.56
Board and Committee members		16,800		28		1.58		1.79
		3,354,080	$	5,553

The Company issued the following shares of common stock during the nine month period ended September 29, 2018:

Shares issued to/for:	Number of Common Shares Issued		Fair Value of Shares Issued		Fair Value at Issuance (minimum and maximum per share)
At-the-Market Facility		726,821	$	2,286	$	1.61	$	3.59
Jackson Investment Group		192,000		371		1.93		1.93
Employees		125,000		199		1.54		1.61
Consultants		19,383		55		1.40		3.42
Acquisition		15,000		21		1.38		1.38
Board and Committee members		15,400		32		1.40		3.25
Reverse stock split (rounding up shares)		426		-		-		-
		1,094,030	$	2,964

Restricted Shares

The Company has issued shares to employees and board and committee members under its 2015 Omnibus Incentive Plan and 2016 Omnibus Incentive Plan. Under these plans, the shares are restricted for a period of three years from issuance. As of September 28, 2019, the Company has a total of495,690shares issued to employees and Board and committee 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. The Company recorded compensation expense associated with these restricted shares of $132, $407, $248 and $728, for the periods ended Q3 2019, Q3 2019 YTD, Q3 2018 and Q3 2018 YTD, respectively.

Stock Options

The Company recorded share based payment expense of $7, $43, $33 and $168 for the periods ended Q3 2019, Q3 2019 YTD, Q3 2018 and Q3 2018 YTD, respectively.

Convertible Preferred Shares

Series A Preferred Stock – Related Party

In the periods ended Q3 2019, Q3 2019 YTD, Q3 2018 and Q3 2018 YTD, the Company paid $50, $150, $50 and $150, respectively, in dividends to its Series A preferred stock holders. The Company did not have any Series A dividends payable to preferred stock holders at the end of Q3 2019 YTD and Q3 2018 YTD.  

Series E Preferred Stock - Related Party

The Series E Preferred Stock ranks senior to common stock and any other series or classes of preferred stock now or after issued or outstanding with respect to dividend rights and rights on liquidation, winding up and dissolution. Each share of Series E Preferred Stock is initially convertible into 561.8 shares of our common stock at any time after October 31, 2020 or the occurrence of a Preferred Default. A holder of Series E Preferred Stock is not required to pay any additional consideration in exchange for conversion of such Series E Preferred Stock into our common stock. Series E Preferred Stock is redeemable by the Company at any time at a price per share equal to the stated value ($1,000 per share) plus all accrued and unpaid dividends thereon. While the Series E Preferred Stock is outstanding, the Company is required to use the proceeds of any sales of equity securities, exclusively to redeem any outstanding shares of Series E Preferred Stock, except that the Company is permitted to use up to an aggregate of $3,000 of the gross proceeds from any equity offering completed on or before November 15, 2019 for working capital purposes.

On January 22, 2019, the Company completed a registered direct offering of 387,500 common stock that generated $775 in gross proceeds that were used for working capital purposes. On February 12, 2019, the Company closed its previously announced firm commitment underwritten public offering in which, pursuant to an underwriting agreement between the Company and the underwriter, dated as of February 8, 2019, the Company issued and sold 2,425,000 shares of its common stock, at a public offering price of $1.65 per share. Notwithstanding the terms of the certificate of designations for Series E Preferred Stock, Jackson, the holder our outstanding shares of Series E Preferred Stock, did not require us to use the proceeds from our recent offerings in excess of $3,000 to redeem outstanding shares of the Series E Preferred Stock.  Instead, we used such excess proceeds to make a terminal payment to the sellers of FirstPro Inc. in final settlement of all deferred consideration due under our asset purchase agreement with such sellers.

As of September 28, 2019, 7,303,371 shares and 341,566 of common stock were issuable upon the potential conversion of Series E Preferred Stock and Series E-1 Preferred Stock, respectively. Due to the contingent nature of the cash redemption feature of the Series E-1 Preferred Stock, the Company classified the shares as mezzanine equity on the consolidated balance sheets.

In the period ended Q3 2019, the Company paid $975 in dividends to its Series E preferred stock holders.

Warrants

The Company had accounted for certain warrants issued to Jackson as a liability under ASC 815-40 due to certain anti-dilution protection provisions. The warrants issued to Jackson are considered to be Level 3 liabilities under ASC 820.  On April 25, 2018, the Company and Jackson amended the warrant to remove the anti-dilution clauses. No economic terms were adjusted. These clauses were the basis for recording the warrants as a liability. Therefore, upon execution of this amendment, the Company recorded a mark-to-market gain and reclass the remaining liability to Additional paid-in capital. The Company recorded a change in fair value of the warrant liability of  $0 and $879 in Q3 2018 and Q3 2018 YTD, respectively, using Black-Scholes valuation model.

2019 Long-Term Incentive Plan

In January 2019, the Company’s Board approved the 2019 Long-Term Incentive Plan (the “2019 LTIP”).

The Board granted 380,000 units to adequately motivate the participants and drive performance for the period.  

Units vest upon the following:

• 50% upon the employee being in good standing on December 31, 2020; and,

• 50% upon the average share price of the Company’s common stock during the 90-day period leading up to December 31, 2020, based upon the following Vesting Rate table:

Average 2019 Price	Vesting Rate
<$8 per share	0
>$8 per share	Pro-rated
>=$12 per share	Full Vesting

The Company performed a valuation of these units and determined them to be valued at $519 using a combination of Black-Sholes and Monte Carlo valuation models. The Company recorded share based expense of approximately $72 and $161 in Q3 2019 and Q3 2019 YTD in connection with these awards.

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LOSS PER COMMON SHARE

9 Months Ended

Sep. 28, 2019

Earnings Per Share [Abstract]

Loss Per Common Share

NOTE 3 – 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. Our Series A preferred stock holders (related parties) receive certain dividends or dividend equivalents that are considered participating securities and our loss per share is computed using the two-class method. For Q3 2019 and Q3 2018, pursuant to the two-class method, as a result of the net loss attributable to common stock holders, losses were not allocated to the participating securities.

Diluted earnings per share are computed using the weighted average number of common stock shares and dilutive common share equivalents outstanding during the period. Dilutive common stock equivalents consist of common shares 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 share equivalent basis and outstanding as of September 28, 2019 and September 29, 2018 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 September 28, 2019 and September 29, 2018:

	September 28,		September 29,
	2019		2018
Convertible preferred shares		7,688,175		43,239
Warrants		925,935		925,935
Restricted shares - unvested		495,690		595,272
Long term incentive plan (LTIP)		380,000		123,515
Options		79,560		125,400
Total		9,569,360		1,813,361

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OTHER RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 28, 2019

Related Party Transactions [Abstract]

Other Related Party Transactions

NOTE 11 – OTHER RELATED PARTY TRANSACTIONS

In addition to the Series E and Series E-1 Preferred Shares and notes issued to Jackson, the following are other related party transactions:

Board and Committee Members

The Company had the following activity with its Board and Committee Members:

	Q3 2019								Q3 2018
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized		Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	19		1,400	$	2	$	8	$	19		1,400	$	2	$	22
Jeff Grout		19		1,400		2		8		19		1,400		2		22
Nick Florio		19		1,400		2		8		19		1,400		2		22
Alicia Barker		—		1,400		2		1		—		1,400		2		—
	$	57		5,600	$	8	$	25	$	57		5,600	$	8	$	66
	Q3 2019 YTD								Q3 2018 YTD
	Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized		Cash Compensation		Shares Issued		Value of Shares Issued		Compensation Expense Recognized
Dimitri Villard	$	56		4,200	$	7	$	23	$	56		4,200	$	9	$	62
Jeff Grout		56		4,200		7		23		56		4,200		9		62
Nick Florio		56		4,200		7		23		56		4,200		9		62
Alicia Barker		-		4,200		7		3		19		2,800		4		-
	$	168		16,800	$	28	$	72	$	187		15,400	$	31	$	186

The Briand Separation Agreement

Matthew Briand, the Company’s former employee, board member and officer, resigned from his positions with the Company and subsidiaries. The Company entered into an agreement (the “Briand Separation Agreement”) with Mr. Briand dated December 21, 2017, with an effective date (“Separation Date”) of January 31, 2018, pursuant to which Mr. Briand may provide advisory services, if requested by the Company, through the effective date. The Company paid approximately $190 in Q3 2019 YTD to Mr. Briand in full settlement of his separation agreement.

The Faiman Separation Agreement

On September 11, 2019, David Faiman, the Company’s Chief Financial Officer, and the Company entered into an agreement whereby Mr. Faiman agreed to transition his position and responsibilities with the Company (“Faiman Separation Agreement”), and Mr. Faiman’s Employment Agreement, dated February 5, 2016, was terminated.

Under the terms of the Faiman Separation Agreement, Mr. Faiman will continue as the Company’s Chief Financial Officer, including acting as the Company’s principal financial officer, for a period lasting until the earlier of (i) December 31, 2019 and (ii) either (a) such date that is a reasonable time, as determined by the Company, prior to the commencement of a new position by Mr. Faiman, or (b) upon the Company’s termination of Mr. Faiman’s obligation to provide transition services for Cause.

Pursuant to the Faiman Separation Agreement, Mr. Faiman will be entitled to receive, among other things, (i) pay in an amount equal to his base salary through the separation date, payable in equal installments in accordance with the Company’s normal payroll policies, (ii) continuation of Mr. Faiman’s current Company-sponsored employee benefits through the separation date, (iii) accelerated vesting of any outstanding equity awards held by Mr. Faiman and the elimination of any obligations to forfeit such awards upon the termination of Mr. Faiman’s employment (provided that no award shall be extended beyond its original term) and (iv) a positive reference from the management of the Company.

In exchange for the consideration described above, Mr. Faiman granted a general release of claims in favor of the Company covering the period leading up to, and including, the date of the Separation Agreement. The Separation Agreement provides that, following the Separation Date and subject to Mr. Faiman executing another general release of claims in favor of the Company covering any claims leading up to, and including, the Separation Date, Mr. Faiman will also be entitled to additional consideration of, among other things, (i) severance in an amount equal to Mr. Faiman’s annual base salary for six (6) months, payable in equal installments in accordance with the Company’s normal payroll policies, and (ii) coverage under COBRA, payable directly by the Company, for all health insurance plan benefits to which Mr. Faiman was entitled prior to the Separation Date for a six (6) month period.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net Loss	$ (1,108)	$ (1,980)	$ (2,350)	$ (5,095)
Other Comprehensive loss
Foreign exchange translation adjustment	717	356	719	694
Comprehensive Loss Attributable to the Company	$ (391)	$ (1,624)	$ (1,631)	$ (4,401)

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Document And Entity Information - shares	9 Months Ended
	Sep. 28, 2019	Nov. 12, 2019
Cover [Abstract]
Entity Registrant Name	Staffing 360 Solutions, Inc.
Entity Central Index Key	0001499717
Current Fiscal Year End Date	--12-28
Entity Filer Category	Non-accelerated Filer
Trading Symbol	STAF
Entity Small Business	true
Entity Emerging Growth Company	false
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 28, 2019
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019
Entity Common Stock, Shares Outstanding		8,680,148
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	001-37575
Entity Tax Identification Number	68-0680859
Entity Address, Address Line One	641 Lexington Avenue
Entity Address, Address Line Two	Suite 2701
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10022
City Area Code	646
Local Phone Number	507-5710
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common stock
Security Exchange Name	NASDAQ
Entity Incorporation, State or Country Code	DE
Document Quarterly Report	true
Document Transition Report	false

XML

ACQUISITIONS (Tables)

9 Months Ended

Sep. 28, 2019

Business Combinations [Abstract]

Schedule of Unaudited Pro Forma Consolidated Results of Operations

The following unaudited pro forma consolidated results of operations have been prepared, as if the acquisition of KRI and CML were acquired on January 1, 2017.

	Q3 2018			Q3 2018 YTD
Revenues	$	76,749		$	234,001
Net loss from continuing operations		(2,269	)		(5,392	)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 28, 2019

Accounting Policies [Abstract]

Summary of significant accounting policies

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.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.  

These unaudited 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.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 29, 2018 are included in the Company’s December 29, 2018 Form 10-K (“Fiscal 2018”), filed with the United States Securities and Exchange Commission on March 25, 2019. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the period ended September 28, 2019 are not necessarily indicative of results for the entire year ending December 28, 2019. This report is for the period December 30, 2018 to September 28, 2019 (“Q3 2019 YTD”), June 30, 2019 to September 28, 2019 (“Q3 2019”), December 31, 2017 to September 29, 2018 (“Q3 2018 YTD”) and July 1, 2018 to September 29, 2018 (“Q3 2018”).

Liquidity

The accompanying 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 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. As shown in the accompanying financial statements as of the quarter ended September 28, 2019, the Company has an accumulated deficit of $73,993 and a working capital deficit of $51,005. At September 28, 2019, we had total debt of $39,409 and $1,797 of cash on hand. We have historically met our cash needs through a combination of cash flows from operating activities, term loans, promissory notes, bonds, convertible notes, private placement offerings and sales of equity. Our cash requirements are generally for operating activities and debt repayments

The financial statements included in this quarterly report 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, our note issued to Jackson Investment Group LLC(“Jackson”) includes certain financial customary covenants and the Company has had instances of non-compliance. Management has historically been able to obtain from Jackson waivers of any non-compliance and management expects to continue to be able to obtain necessary waivers in the event of future non-compliance; however, there can be no assurance that the Company will be able to obtain such waivers, and should Jackson refuse to provide a waiver in the future, the outstanding debt under the agreement could become due immediately.

Going concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern. The Company debt obligations and certain unsecured payments associated with historical acquisitions are due in the next 12 months and are in excess of cash and cash equivalents on hand. 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. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Goodwill

During Q3 2019, the Company performed an interim goodwill impairment test for three of its reporting units, resulting in each case, the fair value of each reporting unit exceeding their carrying values by a minimal percentage. Goodwill, in the aggregate, for these three reporting units is approximately $26 million. A reduction in the projected long-term operating performance of any of these reporting units, market declines, changes in discount rates or other conditions could result in an impairment in the future. In connection with the interim impairment test, the Company used a combination of the income approach, which incorporates the use of a discounted cash flow method, and the market approach, which incorporates the use of earnings and cash flow multiples based on market data. The income approach and the market approach both require the exercise of significant judgment, including judgment about the amount and timing of expected future cash flows, assumed terminal value and appropriate discount rates.

Revenue Recognition

On December 31, 2017, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers for all open contracts and related amendments as of December 31, 2017 using the modified retrospective method.  The adoption had no impact to the reported results. Results for reporting periods beginning after December 31, 2017 are presented under ASC 606, while the comparative information will not be restated and will continue to be reported under the accounting standards in effect for those periods.

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.

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 basis. The contracts stipulate weekly 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 in Q3 2019 YTD was comprised of $205,809 of temporary contractor revenue and $8,835 of permanent placement revenue, compared with $178,518 and $8,317 for Q3 2018 YTD, respectively. Revenue in Q3 2019 was comprised of $63,821 of temporary contractor revenue and $3,499 of permanent placement revenue, compared with $68,683 and $2,634 for Q3 2018, respectively. Refer to Note 9 for further details on breakdown by segments.  

Reclassifications

We may make certain reclassifications to prior period amounts to conform with the current year’s presentation. These reclassifications did not have a material effect on our condensed consolidated statement of financial position, results of operations or cash flows.

Income Taxes

The Company's provision for income taxes is based upon an estimated annual tax rate for the year applied to federal, state and foreign income. On a quarterly basis, the annual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter. 

The Company’s effective tax rate may change from period to period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes, and tax audit settlements.  The effective income tax rate was (2.6)%, (0.31)%, 11.2% and 1.59% for the period ending Q3 2019, Q3 2018, Q3 2019 YTD and Q3 2018 YTD, respectively.

Foreign Currency

The Company recorded a non cash foreign currency remeasurement loss of $467, $186, $484 and $332 in Q3 2019, Q3 2018, Q3 2019 YTD and Q3 2018 YTD, respectively, associated with its U.S dollar denominated intercompany note.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842).  The Company adopted this guidance effective December 30, 2018. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less.  All other leases will fall into one of two categories: (i) Financing leases, similar to capital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) Operating leases which will require the recognition of an asset and liability measured at the present value of the lease payments. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, the sale will only be recognized if the criteria in the new revenue recognition standard are met. The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the ‘package of practical expedients’ which allow us to not reassess i) whether existing or expired arrangements contain a lease, ii) the lease classification of existing or expired leases, or iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company has also elected to apply i) the practical expedient which allows us to not separate lease and non-lease components, and (2) the short-term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new standard. The adoption of the new standard resulted in the recognition of additional lease liabilities of approximately $5,344, and right-of-use assets of approximately $5,262 as of September 28, 2019 related to the Company’s operating leases. The new standard did not have a material impact to the Company’s consolidated statement of operations or consolidated statement of cash flows.

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DEBT (Tables)

9 Months Ended

Sep. 28, 2019

Debt Disclosure [Abstract]

Schedule of Debt

	September 28,			December 29,
	2019			2018
Jackson Investment Group - related party	$	38,278		$	35,740
HSBC Term Loan		1,131			1,653
Total Debt, Gross		39,409			37,393
Less: Debt Discount and Deferred Financing Costs		(867	)		(1,171	)
Total Debt, Net		38,542			36,222
Less: Current Portion, Net		(38,068	)		(657	)
Total Long-Term Debt, Net	$	474		$	35,565

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EQUITY - Series A Preferred Stock (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Stockholders Equity [Line Items]
Dividends paid			$ 1,125,000	$ 150,000
Series A Preferred Stock - Related Party [Member]
Stockholders Equity [Line Items]
Dividends paid	$ 50,000	$ 50,000	150,000	150,000
Preferred stock accrued dividends	$ 0	$ 0	$ 0	$ 0

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EQUITY (Details 2) - 2019 Long-Term Incentive Plan [Member]	9 Months Ended
	Sep. 28, 2019 $ / shares
Less Than 8 Per Share [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting rate	0.00%
Less Than 8 Per Share [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Average share price	$ 8
More Than 8 Per Share [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting rate, Description	Pro-rated
More Than 8 Per Share [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Average share price	$ 8
More Than or Equal to 12 Per Share [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting rate, Description	Full Vesting
Average share price	$ 12