Revenue Performance - Service revenue for Q2 2024 was $104,636,273, an increase of 17.1% from $89,364,602 in Q2 2023, primarily driven by a 17.7% increase in temporary placement services revenue [181]. - For the six months ended June 30, 2024, service revenue was $205,259,485, a 9.5% increase from $187,392,724 in the same period of 2023 [183]. - The company experienced a decrease in permanent placement services revenue by 30.7% in Q2 2024, attributed to lower demand for permanent positions [182]. - Revenues from temporary placement services are recognized when services are rendered, with most customers having payment terms of 30 days or less [273]. Profitability and Expenses - Gross profit for Q2 2024 was $11,489,646, up 5.0% from $10,937,760 in Q2 2023, with gross profit margin decreasing to 11.0% from 12.2% due to rising labor costs [184]. - Selling, general and administrative expenses for Q2 2024 were $18,553,150, a 65.8% increase from $11,187,268 in Q2 2023, largely due to higher transaction costs related to the merger [187]. - The cost of revenue for Q2 2024 was $93,146,627, an 18.8% increase from $78,426,842 in Q2 2023, driven by higher service revenue [184]. - The net loss for Q2 2024 was $54,911,719, compared to a net loss of $3,616,092 in Q2 2023, reflecting a significant increase in losses [181]. - The company reported a loss from operations of $8,312,558 in Q2 2024, a 651.3% increase from a loss of $1,106,493 in Q2 2023 [181]. Debt and Financing - The Merger Note issued to IDC has a principal amount of $35,000,000, maturing on September 30, 2024, and does not bear interest unless an event of default occurs [201]. - The Initial Capital Raise milestone has been extended to September 15, 2024, with additional milestones including an uplisting milestone date of September 15, 2024 [209]. - The maturity date of the Revolver was extended to August 31, 2025, with available borrowing capacity decreasing to $60,000,000 [231]. - The lender waived all existing events of default under the Revolver through September 30, 2024 [232]. - The Company is negotiating to refinance its debt obligations to provide greater flexibility [215]. - A new revolving credit facility is expected to provide credit availability of up to $40,000,000 [217]. - The Term Note balance increased from $34,223,489 as of December 31, 2023 to $36,062,862 as of June 30, 2024 [235]. - The Term Note interest rate was amended to vary between 14% and 16% per annum, with cash interest varying from 10% to 11% per annum [235]. - The Company entered into a secured bridge loan of $1,950,000 at an interest rate of 5% per annum, maturing on September 30, 2024 [256]. Cash Flow and Liquidity - Cash flows from operating activities for the six months ended June 30, 2024 were $(4,217,266), a decrease from $9,170,110 in the same period of 2023 [218]. - Cash and cash equivalents were reported at $439,478 on June 30, 2024, down from $1,352,927 on December 31, 2023 [261]. - As of June 30, 2024, Lyneer had total committed resources available of $81,874, a significant decrease from $(21,165,658) as of December 31, 2023 [261]. - The available borrowing capacity on the Revolver as of June 30, 2024 was negative $10,613,516, after accounting for a reserve of $1,552,329 [222]. Tax and Other Income - Income tax benefit for the quarter ended June 30, 2024 was $17,221,979, an increase of $15,698,634 compared to $1,523,345 in 2023 [197]. - Income tax benefit for the six months ended June 30, 2024 was $18,512,574, an increase of $16,068,156 compared to $2,444,418 in 2023 [198]. - Deferred tax assets and liabilities are recognized for future tax consequences, with management assessing the likelihood of realization quarterly [281][283]. Miscellaneous - The weighted average shares outstanding increased by 10.5% to 28,081,013 in Q2 2024 from 25,423,729 in Q2 2023 [181]. - Advisory fees related to the merger amounted to $43,000,000 in Q2 2024, contributing significantly to the overall increase in expenses [181]. - Loss on debt extinguishment for the three and six months ended June 30, 2024 was $1,213,379, compared to $0 in 2023 [192]. - Other expense for the three and six months ended June 30, 2024 was $15,607,737, with no expenses recorded in 2023 [196]. - The Earnout Note liability was $20,435,654 as of June 30, 2024, with missed payments leading to an increase in the interest rate to 11.25% [250]. - Total amounts payable to IDC, including taxes payable, amounted to $2,771,502 as of June 30, 2024, down from $4,384,178 as of December 31, 2023 [266]. - The Company has not recognized any impairments on intangible assets for the six months ended June 30, 2024, or the year ended December 31, 2023 [280].
SEQLL(SQL) - 2024 Q2 - Quarterly Report