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Staffing 360 Solutions reveals net revenues increased to $33.9m in Q2 2015

In addition, we have achieved the major threshold event of positive Adjusted EBITDA ahead of schedule. This has been a strategic objective within our Pathway to Profitability and we will continue to strive toward our longer term goal of reaching positive net income as we grow both organically and through additional M&A activity."

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

Net revenues increased to $33.9 million, compared to $2.0 million in the quarter ended November 30, 2013.

Gross profit increased to $6.1 million, compared to approximately $631,000 in the quarter ended November 30, 2013.

Net loss increased to $8.8 million*, compared to a net loss of approximately $1.4 million in the quarter ended November 30, 2013.

Adjusted EBITDA was approximately $572,000* in the quarter ended November 30, 2014.

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

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

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

Analysis of Financial Results

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

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

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

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

Highlights of Fiscal Q2 2015 and Subsequent Events

Announced the Company's application for uplisting its common stock on the NASDAQ Capital Market.

Projected that positive Adjusted EBITDA would be realized two quarters ahead of schedule. Successfully achieved this objective through the issuance of the Company's financial results for the fiscal quarter ending November 30, 2014.

Maintained focus on the Company's Pathway to Profitability through the successful deleveraging of various balance sheet items and effective conversion and/or deferral of various debt obligations, including the Company's Series A Bonds.

Reduced corporate overheads through the cancelation of various on-going employment and consulting agreements. Management believes overall costs of corporate are now in line with industry levels.

Completed an offering of approximately $1 million in Series B Convertible Bonds to continue to fund the Company's organic growth and acquisition strategy.

Demonstrated management's deep faith in the Company with the above-market conversion of $3.3 million of principal and interest relating to the promissory notes of the Initio acquisition. Both Executive Chairman Brendan Flood, and CEO Matt Briand, were among the note holders that converted into equity at $1.00 per share.

Engaged a New York-based investment bank with a particular expertise in emerging small-cap companies. Currently, the Company would like to undertake a "best efforts" round of financing up to $4 million to fund its next acquisition, followed by additional financings to support its high-growth M&A strategy.

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


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