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Contingencies and Commitments
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9 Months Ended |
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Jun. 30, 2013
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| Contingencies and Commitments [Abstract] | |
| Contingencies and Commitments |
8. Contingencies and Commitments
On April 22, 2013 the Company finalized an Amendment to the Asset Purchase Agreement by and among DMCC Staffing, LLC, an Ohio limited liability company, RFFG of Cleveland, LLC an Ohio limited liability company (each a "Seller" and together, "Sellers"), General Employment Enterprises, Inc., an Illinois corporation ("Parent"), and Triad Personnel Services, Inc., an Illinois corporation and wholly owned subsidiary of Parent ("Buyer").
The Company has agreed to pay the Sellers additional cash consideration of between $550,000 and $650,000 depending on the length of payments and 1,100,000 shares of Parent common stock, in full satisfaction of all amounts owed to Seller, related to the Asset Purchase Agreement. The Company issued 1,100,000 shares of common stock on July 2, 2013 which was valued at approximately $330,000. The Company has accrued approximately $700,000 in short term liabilities as of June 30, 2013.
As with any asset purchase of a business the purchaser may be held accountable for the seller's debts and liabilities where; (i) there is an express or implied agreement of assumption; (ii) the transaction amounts to a de facto consolidation or merger of the buyer or seller corporation; (iii) the purchaser is merely a continuation of the seller; or (iv) the transaction is for the fraudulent purpose of escaping liability for the seller's obligations. There are always several factors in the determination of any successor corporation legal liabilities related to the predecessor company. Other than the Ohio Bureau of Workers Compensation, the Company has not been noticed of any additional claims, however additional claims could be material to the business.
Lease
The Company leases space for all of its branch offices, which are located either in downtown or suburban business centers, and for its corporate headquarters. Branch offices are generally leased over periods from three to five years. The corporate office lease expires in 2015. The leases generally provide for payment of basic rent plus a share of building real estate taxes, maintenance costs and utilities.
Rent expense was approximately $257,000 and $812,000 and $296,000 and $741,000 for the three and nine month periods ended June 30, 2013 and 2012, respectively. As of June 30, 2013, future minimum lease payments due under non-cancelable lease agreements having initial terms in excess of one year, including certain closed offices, totaled approximately $1,925,000, as follows: fiscal 2013 - $230,000, fiscal 2014 - $703,000, fiscal 2015 - $481,000, fiscal 2016 - $236,000 and thereafter - $275,000.
In August of 2013, the Company executed a termination agreement for the San Mateo office, which has not been in operation for the past eight months. This termination required the Company pay approximately $25,000 immediately, which has been accrued as of June 30, 3013, however the termination will relieve the Company of approximately $80,000 of additional lease payments over the next two years.
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