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 entirety
of this Annual Report, including the "Risk Factors" in Item 1A of this Annual
Report and the other reports and documents we file from time to time with the
Securities and Exchange Commission ("SEC"), particularly 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 Business Stream and Commercial Business Stream
disciplines.



Recent Developments



COVID-19




In December 2019, a strain of coronavirus ("COVID-19") was reported to have
surfaced in Wuhan, China, and has spread globally, resulting in
government-imposed quarantines, travel restrictions and other public health
safety measures in affected countries. The COVID-19 pandemic is impacting
worldwide economic activity, and activity in the United States and the United
Kingdom where our operations are based. Much of the independent contractor work
we provide to our clients is performed at the site of our clients. As a result,
we are subject to the plans and approaches our clients have made to address the
COVID-19 pandemic, such as whether they support remote working or if they have
simply closed their facilities and furloughed employees. To the extent that our
clients were to decide or are required to close their facilities, or not permit
remote work when they close facilities, we would no longer generate revenue and
profit from that client. In addition, in the event that our clients' businesses
suffer or close as a result of the COVID-19 pandemic, we may experience decline
in our revenue or write-off of receivables from such clients. Moreover,
developments such as social distancing and shelter-in-place directives have
impacted our ability to deploy our staffing workforce effectively, thereby
impacting contracts with customers in our commercial staffing and professional
staffing business streams, where we have had declines in revenues during Q2
2020, Q3 2020 and Q4 2020 compared with the respective periods in 2019. While
some government-imposed precautionary measures have been relaxed in certain
countries or states, more strict measures have been or may be put in place again
due to a resurgence in COVID-19 cases, as has occurred recently in the United
Kingdom in response to the spread of a new strain of COVID-19. As a result of
the newly imposed government restrictions in the United Kingdom, we had to close
both of our offices in the United Kingdom, and our employees have been forced to
operate remotely from their homes. Employees are returning to our offices in the
United Kingdom on a voluntary basis on March 29, 2021. Therefore, the ongoing
COVID-19 pandemic may continue to affect our operation and to disrupt the
marketplace in which we operate and may negatively impact our sales in fiscal
year 2021 and our overall liquidity.



21







While the ultimate economic impact brought by, and the duration of, the COVID-19
pandemic may be difficult to assess or predict, including new information which
may emerge concerning the severity of COVID-19 and the actions to contain
COVID-19 or treat its impact, among others, the pandemic has resulted in
significant disruptions in general commercial activity and the global economy
and caused financial market volatility and uncertainty in significant and
unforeseen ways in the recent months. A continuation or worsening of the levels
of market disruption and volatility seen in the recent past could have an
adverse effect on our ability to access capital and on the market price of our
common stock, and we may not be able to successfully raise needed capital. If we
are unsuccessful in raising capital in the future, we may need to reduce
activities, curtail or cease operations.

In addition, the continuation or worsening of the COVID-19 pandemic or an outbreak of other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, resulting in an economic downturn that could impact our business, financial condition and results of operations.

Nasdaq Minimum Stockholders' Equity Requirement





On June 3, 2020, we received a letter from the Listing Qualifications Department
notifying us that we are no longer in compliance with the minimum stockholders'
equity requirement for continued listing on Nasdaq. Nasdaq Listing Rule
5550(b)(1) requires listed companies to maintain stockholders' equity of at
least $2.5 million. Further, as of June 9, 2020, we did not meet the alternative
compliance standards relating to the market value of listed securities or net
income from continuing operations.



In accordance with the Nasdaq Listing Rules, we were afforded the opportunity to
submit a plan to regain compliance with the minimum stockholders' equity
standard. Based on our submissions, the Listing Qualifications Department
granted us an extension to regain compliance with Rule 5550(b)(1) until November
30, 2020.



On December 1, 2020, we received notice that because we had not met the terms of
the extension, our common stock would be subject to delisting from Nasdaq,
unless we timely requested a hearing before a Nasdaq Hearings Panel (the
"Panel".) We timely requested a hearing before the Panel, which automatically
stayed any suspension or delisting action pending the issuance of a decision by
the Panel following the hearing and the expiration of any additional extension
period granted by the Panel. The hearing occurred on January 21, 2021. At the
hearing, we provided the Panel with an update on our compliance plan and
requested a further extension of time in which to regain compliance. On February
3, 2021, we received a letter from the Panel noting it has granted our request
for an extension until February 28, 2021 to regain compliance with the minimum
$2.5 million stockholders' equity requirement, or the alternative compliance
standards as set forth in Nasdaq Listing Rule 5550(b)(1). On March 4, 2021 the
Company received a letter extending the deadline for compliance to May 31, 2021.



Although we are taking actions intended to restore our compliance with the
listing requirements, we can provide no assurance that any action taken by us
will be successful. Should a delisting occur, an investor would likely find it
significantly more difficult to dispose of, or to obtain accurate quotations as
to the value of our common stock, and our ability to raise future capital
through the sale of our common stock could be severely limited. In addition,
delisting could harm our ability to raise capital through alternative financing
sources on terms acceptable to us, or at all, and may result in the potential
loss of confidence by investors, suppliers, customers and employees and fewer
business development opportunities.



December 2020 Public Offering



On December 29, 2020, we closed the sale of an aggregate of 4,816,665 shares of
common stock in an underwritten public offering (the "December 2020 Public
Offering"), at an offering price to the public of $0.60 per share. We received
net proceeds from the December 2020 Public Offering, after deducting
underwriting discounts and commissions and other estimated offering expenses
payable by us, of approximately $2.4 million. We used 75% of the net proceeds
from such underwritten offering to redeem a portion of our outstanding Jackson
Note due September 30, 2022, and 25% of the net proceeds from such underwritten
offering to redeem a portion of our Series E Preferred Stock.

December 2020 Registered Direct Offering





On December 31, 2020, we closed the sale of an aggregate of 2,662,596 shares of
common stock in a registered direct offering (the "December 2020 Registered
Direct Offering"), at an offering price of $0.66 per share. We received net
proceeds from the December 2020 Registered Direct Offering, after deducting
placement agent fees and other estimated offering expenses payable by us, of
approximately $1.5 million. We used 75% of the net proceeds from such registered
direct offering to redeem a portion of our outstanding Jackson Note, and 25% of
the net proceeds from such registered direct offering to redeem a portion of our
Base Series E Preferred Stock.



22

February 2021 Public Offering





On February 9, 2021, we announced the pricing of a public offering of an
aggregate of 21,855,280 shares of its common stock at a public offering price of
$0.90 per share (the "Offering".) The Offering was made pursuant to the
Company's registration statement on Form S-1 initially filed on January 13,
2021, as subsequently amended and declared effective on February 9, 2021. The
Offering was made only by means of a prospectus forming a part of the effective
registration statement.



The Offering closed on February 12, 2021. In the Offering, the Company issued
20,851,199 shares of common stock and pre-funded warrants to purchase up to
1,004,081 shares of common stock, at an exercise price of $0.0001 per share (the
"Pre-funded Warrants".) The Pre-funded Warrants were sold at $0.8999 per
Pre-Funded Warrant. The Pre-funded Warrants were immediately exercisable and
could be exercised at any time after their original issuance until such
Pre-funded Warrants were exercised in full. The Pre-funded Warrants were
exercised immediately upon issuance, and 1,004,081 shares of common stock were
issued on February 12, 2021.




The net proceeds to the Company from the Offering were approximately $18.1
million, after deducting placement agent fees and estimated offering expenses
payable by the Company. While the Company's Series E Preferred Stock is
outstanding, the Company is required to use the proceeds of any sales of equity
securities, including the securities offered in the Offering, exclusively to
redeem any outstanding shares of the Company's Series E Preferred Stock, subject
to certain limitations. On February 12, 2021, the Company used approximately 75%
of the net proceeds from the Offering to redeem a portion of the outstanding
Jackson Note, which had an outstanding principal amount and accrued interest of
$32,710 as of February 9, 2021, and 25% of the net proceeds from the Offering to
redeem a portion of the Company's Series E Preferred Stock. Pursuant to the
Limited Consent (as defined below), upon closing of the Offering, the Company
redeemed a portion of the 2020 Jackson Note with an outstanding principal amount
of $13,556 and interest accrued thereon and redeemed 4,518 shares of the Base
Series E Preferred Stock. Following the redemption of the Base Series E
Preferred Stock, the Company has 6,172 shares of Base Series E Preferred Stock
outstanding with an aggregate stated value of $6,172.



Jackson Waivers



On February 5, 2021, we entered into a Limited Consent and Waiver (the "Limited
Consent") with Jackson Investment Group, LLC ("Jackson") whereby, among other
things, Jackson agreed that we may use 75% of the proceeds from the Offering to
redeem a portion of the 2020 Jackson Note, which at the time had an outstanding
principal amount and accrued interest of $32,710, and 25% of the net proceeds
from the Offering to redeem a portion of our Base Series E Preferred Stock,
notwithstanding certain provisions of the Series E Certificate of Designation
that would have required us to use all the proceeds from the Offering to redeem
the Base Series E Preferred Stock. In addition, we also agreed in the Limited
Consent to additional limits on our ability to incur other indebtedness,
including limits on advances under our revolving loan facility with MidCap
Funding [X] Trust. We also agreed that to the extent that any of our PPP Loans
are forgiven after the Offering, Jackson may convert the Base Series E Preferred
Stock and Series E-1 Preferred Stock that remains outstanding into a secured
note that is substantially similar to the 2020 Jackson Note. On April 8, 2021,
the limited waiver was extended to June 17 ,2021.



Jackson also entered into a Limited Waiver and Agreement with us on February 5,
2021, whereby Jackson agreed that it would not convert any shares of the Base
Series E Preferred Stock or Series E-1 Preferred Stock into shares of our common
stock or exercise any warrants to purchase shares to the extent that doing so
would cause the number of our authorized shares of common stock to be less than
the number of shares being offered in the Offering. Jackson also waived any
event of default under the Series E Certificate of Designation and the 2020
Jackson Note that would have resulted from the Company having an insufficient
number of authorized shares of common stock to honor conversions of the Base
Series E Preferred Stock and the exercise of Jackson's warrants. On April 8,
2021, the limited waiver was extended to June 17 ,2021.

Business Model, Operating History and Acquisitions





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



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") 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) the assignment
of certain outstanding debt owed to the CML Majority Holder to the Principal as
set forth in that Share Purchase Agreement, (iv) 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 (v) 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 transaction, the Company entered into a term loan with HSBC Bank plc.




23

Key Resources Inc. Acquisition


On August 27, 2018, the Company and Monroe Staffing Services, LLC ("Monroe
Staffing"), an indirect subsidiary of the Company, entered into a share purchase
agreement with Pamela D. Whitaker (for purposes of this paragraph, the
"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. While the Company had recognized
the liability for the earnout consideration due the seller of KRI, Pamela D.
Whitaker ("Whitaker"), within current liabilities as of December 28, 2019, in
February 2020 the Company filed an action against Whitaker for breach of
contract, which more than offsets the earnout consideration recognized. The
Company paid interest of $30 in Fiscal 2019 and $40 in Fiscal 2020. Refer to
legal proceedings below for action filed against Whitaker, the former owner

of
KRI.



To finance the above transaction, the Company entered into an agreement with
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 in the Company.



firstPRO Transaction




On September 24, 2020, we and Staffing 360 Georgia, LLC d/b/a firstPRO, our
wholly-owned subsidiary (for purposes of this paragraph and the succeeding two
paragraphs, the "Seller"), entered into an Asset Purchase Agreement with
firstPRO Recruitment, LLC (for purposes of this paragraph, the "Buyer"),
pursuant to which the Seller sold to the Buyer substantially all of the Seller's
assets used in or related to the operation or conduct of its professional
staffing and recruiting business in Georgia (the "Assets," and such sale, the
"firstPRO Transaction"). In addition, the Buyer agreed to assume certain
liabilities related to the Assets. The purchase price in connection with the
firstPRO Transaction was $3,300, of which (a) $1,220 was paid at closing (the
"Initial Payment") and (b) $2,080 was held in a separate escrow account (the
"Escrow Funds"), which will be released upon receipt of the forgiveness of the
Seller's Paycheck Protection Program loan by the SBA. In the event that all or
any portion of the PPP Loan is not forgiven by the SBA, all or portion of the
certain funds being held in escrow will be used to repay any unforgiven portion
of the PPP Loan in full. The firstPRO Transaction closed on September 24, 2020.
In September, we submitted the PPP Loan forgiveness applications to the SBA. As
of the date of this filing, the PPP Loan has not been approved for forgiveness,
and there is no guarantee that all or portion of the PPP Loan will be forgiven.



In connection with execution of the Asset Purchase Agreement, we and certain of
our subsidiaries entered into a Consent Agreement with Jackson (the "Consent"),
a noteholder pursuant to that certain Amended and Restated Note Purchase
Agreement, dated as of September 15, 2017, as amended (the "Existing Note
Purchase Agreement"). Under the terms of the Consent and the Series E
Certificate of Designation, in consideration for Jackson's consent to the
firstPRO Transaction, the Initial Payment was used to redeem a portion of the
Series E Preferred Stock, and the Escrow Funds, subject to the forgiveness of
PPP Loan discussed above, will be used to redeem a portion of the Series E
Preferred Stock. As this provision results in a contingent redemption feature,
approximately $2.1 million of the Series E Preferred Stock was reclassified to
mezzanine equity during the year ended January 2, 2021.



To induce the Buyer to enter into the Asset Purchase Agreement, the Seller also
entered into a Transition Services Agreement with the Buyer, pursuant to which
each party will provide certain transition services to minimize any disruption
to the businesses of the Seller and the Buyer arising from the firstPRO
Transaction.

For Fiscal 2020 and Fiscal 2019





                                 Fiscal                           Fiscal
                                  2020        % of Revenue         2019        % of Revenue        Growth
Revenue                         $ 204,527             100.0  %   $ 278,478             100.0  %       (26.6 )%
Cost of revenue                   169,714              83.0  %     230,169              82.7  %       (26.3 )%
Gross profit                       34,813              17.0  %      48,309              17.3  %       (27.9 )%
Operating expenses                 43,593              21.3  %      47,686              17.1  %        (8.6 )%

(Loss) Income from operations      (8,780 )            (4.3 )%         623               0.2  %     (1509.3 )%
Other expenses                     (6,962 )            (3.4 )%      (5,852 )            (2.1 )%        19.0  %
Benefit for income taxes              100              (0.0 )%         335               0.1  %       (70.1 )%
Net loss                        $ (15,642 )            (7.6 )%   $  (4,894 )            (1.8 )%       219.6  %




24







Revenue



Fiscal 2020 revenue decreased by 26.6% to $204,527 as compared with $278,478 for
Fiscal 2019. Of that decline, $74,386 was attributable to organic revenue
decline, slightly offset by $435 of favorable foreign currency translation.
Within organic revenue, temporary contractor revenue declined $69,321 and
permanent placement declined $5,065. The revenue decline in 2020 as compared to
2019 is the result of the impact of the Covid-19 pandemic. In addition, the sale
of firstPRO in September 2020 resulted in 9 months of revenue for fiscal 2020
versus 12 months in fiscal 2019.



Revenue in Fiscal 2020 was comprised of $198,066 of temporary contractor revenue
and $6,461 of permanent placement revenue, compared with $266,974 and $11,504
for Fiscal 2019, respectively.

Cost of revenue, Gross profit and gross margin





Cost of revenue includes the variable cost of labor and various non-variable
costs (e.g., workers' compensation insurance) relating to employees (temporary
and permanent) as well as sub-contractors and consultants. For Fiscal 2020, cost
of revenue was $169,714, a decrease of 26.3% from $230,169 in Fiscal 2019,
compared with revenue decline of 26.6%.



Gross profit for Fiscal 2020 was $34,813, a decrease of 27.9% from $48,309 for
Fiscal 2019, representing gross margin of 17.0% and 17.3% for each period,
respectively. The decline was driven by $13,557 of organic decline and only nine
months of activity for firstPRO, slightly offset by $61 of favorable foreign
currency translation.



Operating expenses



Operating expenses for Fiscal 2020 were $43,593, a decrease of 8.6% from $47,686
for Fiscal 2019. The decrease in operating expenses was driven by headcount
reductions, only nine months of activity for firstPRO, goodwill impairment of
firstPRO, lower variable costs and savings attributable to synergies within the
subsidiaries, and cost savings initiatives.



Other Expenses



Other expenses for Fiscal 2020 were $6,962, an increase of 19.0% from $5,852 in
Fiscal 2019. The increase was driven by the following: $41 interest income
restructuring charge in Fiscal 2020 versus $0 in Fiscal 2019; a $124 gain on
sales of firstPRO in Fiscal 2020 versus a gain of $1,077 on CBS Butler earnout
settlement in Fiscal 2019 and $847 gain on settlement of firstPRO deferred
consideration in Fiscal 2019. These were partially offset by $584 gain in
remeasuring the intercompany note in Fiscal 2020 compared with a gain of $383 in
Fiscal 2019; other income of $125 in Fiscal 2020 versus $326 in Fiscal 2019;
$433 lower interest expense recorded in Fiscal 2020 versus Fiscal 2019 due to
the restructuring of $35 million debt in Fiscal 2020; and $298 of lower net
amortization of debt discount and deferred financing costs.



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 Business Streams 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.



25

The following table details Revenue and Gross Profit by Business Streams:





                                      Fiscal 2020      Mix       Fiscal 2019      Mix

        Revenue

Commercial Staffing - US $ 113,970 56 % $ 127,330 46 %

Professional Staffing - US 23,477 11 % 37,294 13 %

Professional Staffing - UK 67,080 33 % 113,854 41 %


        Total Service Revenue        $     204,527              $

278,478

Gross Profit

Commercial Staffing - US $ 17,845 51 % $ 20,080 42 %


        Professional Staffing - US           7,546       22 %

14,081 29 %


        Professional Staffing - UK           9,422       27 %

14,148 29 %


        Total Gross Profit           $      34,813              $

48,309

Gross Margin


        Commercial Staffing - US              15.7 %

15.8 %


        Professional Staffing - US            32.1 %

37.8 %


        Professional Staffing - UK            14.0 %                     12.4 %
        Total Gross Margin                    17.0 %                     17.3 %





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.



                                                       Fiscal 2020        Fiscal 2019
Net loss                                              $      (15,642 )   $       (4,894 )

Interest expense                                               7,195              7,628
Benefit from income taxes                                       (100 )             (335 )
Depreciation and amortization                                  3,677              4,226
EBITDA                                                $       (4,870 )   $        6,625

Acquisition, capital raising and other
non-recurring expenses (1)                                     6,714              4,956
Other non-cash charges (2)                                       662                840
Impairment of Goodwill                                         2,969                  -

Re-measurement gain on intercompany note                        (584 )             (383 )
Gain on settlement of deferred consideration                       -       

     (1,924 )
Restructuring charges                                             21                (10 )
Gain from sale of business                                      (124 )                -
Other income                                                    (125 )             (326 )
Adjusted EBITDA                                       $        4,663     $        9,778
Adjusted EBITDA of Divested Business (3)              $         (507 )   $

(908 )


Pro Forma Adjusted EBITDA (4)                         $        4,156     $ 

      8,870

Adjusted Gross Profit (5)                             $       31,199     $       40,425

Adjusted EBITDA as percentage of Adjusted Gross
Profit                                                          14.9 %             24.2 %

(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. In addition, the Company included non-recurring expenses

related to salaries, rent and bad debts which were a direct result of the

Covid-19 pandemic. Due to government mandated restrictions, the Company had

to temporarily close all of its offices and, due to social distancing

restrictions, could not make full use of these facilities for significant

periods of time during the year, both in the US and UK. These restrictions

are still ongoing in 2021. The Company calculated an adjustment of $1.4

million for the time these offices were closed or partially not used due to

Covid-19 related restrictions. In addition, the Company reduced headcounts

throughout the Company. The reduction in 2019 related to performance and in

2020 related to Covid-19 staff reductions. These positions are no longer

included in the current cost structure. The Company had internal staff of

291 just before the onset of the pandemic and 196 by the end of the Fiscal

2020. Salary adjustments are standard treatment for adjustment to EBITDA for


      management reporting purposes.




26







  (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) Adjusted EBITDA of Divested Business for the period prior to the divestment

date.

(4) Pro Forma Adjusted EBITDA excludes the Adjusted EBITDA of Divested Business


      for the period prior to the divestment date.

  (5) Adjusted Gross Profit excludes gross profit of business divested in
      September 2020, for the period prior to divestment date.




Operating Leverage This measure is calculated by dividing the growth in Adjusted
EBITDA by the growth in 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.



                                                 Fiscal 2020       Fiscal 2019

Gross Profit - TTM (Current Period) $ 34,813 $ 48,309


       Gross Profit - TTM (Prior Period)               48,309

48,304

Gross Profit - Growth (Decline) $ (13,496 ) $

5

Adjusted EBITDA - TTM (Current Period) $ 4,663 $ 9,778


       Adjusted EBITDA - TTM (Prior Period)             9,778

9,007


       Adjusted EBITDA - Growth (Decline)       $      (5,115 )   $         771

       Operating Leverage                                  38 %           15420 %

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.





                                                       Fiscal 2020        Fiscal 2019


Total Term Debt, Net                                  $       54,810     $

38,816


Addback: Total Debt Discount and Deferred Financing
Costs                                                            559                497
Total Debt                                            $       55,369     $       39,313

TTM Adjusted EBITDA                                   $        4,663     $        9,778
Pro Forma TTM Adjusted EBITDA                         $        4,156     $ 

      8,870

Pro Forma Leverage Ratio                                      13.32x              4.43x




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.



                                                       Fiscal 2020        Fiscal 2019


Net cash flow used in operating activities            $      (14,256 )   $

(10,840 )



Collection of UK factoring facility deferred
purchase price                                                 8,654

13,970


Repayments on accounts receivable financing                   (2,426 )

(2,708 )

Net cash (used in) provided by operating activities including proceeds from accounts receivable financing

$       (8,028 )   $          422




27

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.

For Fiscal 2020 the Company had a working capital deficiency of $20,793, an accumulated deficit of $92,179, and a net loss of $15,642.


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 payment due in the next 12 months associated with a
historical acquisition and secured current debt arrangements which are in excess
of cash and cash equivalents on hand, in addition to funding operational growth
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. Additionally, with the onset of COVID-19 pandemic, there is
further uncertainty related to our future revenues, gross profit and cash flows.
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.



Operating activities



For Fiscal 2020, net cash used in operations of $14,256 was primarily
attributable to changes in operating assets and liabilities totalling $7,800 and
a net loss of $15,642, offset by non-cash adjustments of $9,186. Changes in
operating assets and liabilities primarily relates to a decrease in accounts
receivable of $7,314, decrease in other assets of $941, increase in accounts
payable and accrued expenses of $1,659, decrease in other current liabilities of
$2,058, and decrease in other long-term liabilities of $1,657, offset by
increase in accounts payable - related party of $1,598, increase in prepaid
expenses of $427, and increase in other of $424. Non-cash add backs of $9,186
primarily relates to amortization of intangible assets and depreciation of
$3,275, right of use assets amortization of $1,521, amortization of debt
discount and deferred financing of $559, stock-based compensation of $637, bad
debt expense of $933, and write-off of goodwill of $2,969, offset by
remeasurement gain on intercompany note of $584 and gain on sale of subsidiary
of $124.



28







For Fiscal 2019, net cash used in operations of $10,840 was primarily
attributable to changes in operating assets and liabilities totalling $10,230
and a net loss of $4,894, offset by non-cash adjustments of $4,284. Changes in
operating assets and liabilities primarily relates to an increase in accounts
receivable of $7,574, increase in other assets of $2,123, decrease in accounts
payable and accrued expenses of $1,893, decrease in other current liabilities of
$94, and decrease in other long-term liabilities of $85, offset by increase in
accounts payable - related party of $1,114, decrease in prepaid expenses of
$367, and increase in other of $58. Non-cash add backs of $4,284 primarily
relates to amortization of intangible assets and depreciation of $3,369, right
of use assets amortization of $1,533, amortization of debt discount and deferred
financing of $857, and stock-based compensation of $832, offset by remeasurement
gain on intercompany note of $383 and gain on settlement of deferred
consideration of $1,924.



Investing activities



For Fiscal 2020, net cash flows provided by investing activities was $11,697, of
which $8,654 was from the collection of UK factoring facility deferred purchase
price and $3,300 was attributable to proceeds from the sale of a subsidiary,
partially offset by purchase of property and equipment of $257.



For Fiscal 2019, net cash flows provided by investing activities was $13,460, of
which $13,970 was related to the collection of the UK factoring facility
deferred purchase price, partially offset by purchase of property and equipment
of $510.



Financing activities



For Fiscal 2020, net cash flows provided by financing activities totalled
$11,553, of which $2,426 relates to repayments on accounts receivable financing,
net, payment of third-party financing costs of $795, dividends paid to related
parties of $3,333, redemption of Series E Preferred Stock of $1,920, repayment
of term loans of $4,734; and financing costs - related party of $488; offset by
proceeds from equity raise of $4,634, proceeds from PPP loans of $19,395 and
proceeds from term loans of $1,220.



For Fiscal 2019, net cash flows used in financing activities totalled $4,389, of
which $2,708 relates to repayments on accounts receivable financing, net,
payment on deferred consideration for $6,230, payment of third-party financing
costs of $1,154, dividends paid to related parties of $1,175, dividends paid to
shareholders of $337, and repayment on HSBC loan of $650; 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.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

See Note 2 in the accompanying financial statements.

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