Financial Performance - Service revenue for Q3 2024 was $107,803,843, an increase of $10,018,687 or 10.2% compared to Q3 2023[198] - Cost of revenue for Q3 2024 was $95,918,373, reflecting an increase of $9,738,392 or 11.3% from Q3 2023[201] - Gross profit for Q3 2024 was $11,885,470, a slight increase of $280,295 or 2.4% compared to Q3 2023[201] - Service revenue for the nine months ended September 30, 2024 was $313,063,328, an increase of $27,885,448 or 9.8% from the same period in 2023[200] - Cost of revenue for the nine months ended September 30, 2024 was $279,222,830, an increase of $28,334,443 or 11.3% from the same period in 2023[202] - Gross profit for the nine months ended September 30, 2024 was $33,840,498, a decrease of $448,995 or 1.3% compared to the same period in 2023[202] - Net loss for Q3 2024 was $7,049,629, an increase of $3,128,677 or 79.8% compared to Q3 2023[198] - Net loss per share for Q3 2024 was $0.16, compared to $0.15 in Q3 2023, reflecting a 6.5% increase[198] Operating Expenses - Selling, general and administrative expenses for Q3 2024 were $17,151,567, up $6,779,445 or 65.4% from Q3 2023[204] - Total operating expenses for Q3 2024 were $18,397,124, an increase of $6,411,275 or 53.5% from Q3 2023[203] - Depreciation and amortization expense for the quarter ended September 30, 2024 was $1,245,557, a decrease of $18,263 or 1.4% from $1,263,820 in 2023[208] - Interest expense for the quarter ended September 30, 2024 was $1,472,564, a significant decrease of $3,414,683 or 69.9% compared to $4,887,247 in 2023, due to deconsolidation of joint debt obligations[211] - Other expense for the three months ended September 30, 2024 was $285,483, related to stock compensation expense for third-party advisors[213] Tax and Advisory Fees - Income tax benefit for the quarter ended September 30, 2024 was $1,220,072, a decrease of $126,897 from $1,346,969 in 2023, driven by an increase in net loss before taxes[215] - Income tax benefit for the nine months ended September 30, 2024 was $19,732,646, an increase of $15,941,259 compared to $3,791,387 in 2023, attributed to a significant increase in net loss before taxes[216] - Advisory fees paid in the merger for the nine months ended September 30, 2024 totaled $43,000,000, reflecting the issuance of 18,220,338 shares at a market value of $2.36 per share[210] Cash Flow and Liquidity - Cash used in operating activities for the nine months ended September 30, 2024 was $(5,558,718), compared to $2,626,303 for the same period in 2023[242] - The company recorded a net increase in cash and cash equivalents of $44,833 for the nine months ended September 30, 2024, compared to a decrease of $(527,184) in 2023[242] - The Company assessed its liquidity position, reporting cash and cash equivalents of $1,397,760 and total committed resources available of $(10,284,615) as of September 30, 2024[287] Debt and Financing - The company issued a Merger Note in the principal amount of $35,000,000, which does not bear interest unless an event of default occurs[221] - The company entered into a forbearance agreement with its lender under the Revolver, extending the forbearance period through September 30, 2024[229] - The company failed to repay an over-advance of $4,662,495 as of May 31, 2024[230] - The company has received conditional approval for a new credit facility expected to close by the end of November 2024, with a minimum funding commitment of $8 million from a current lender[231] - The total balance on the Revolver was $53,337,869 as of September 30, 2024, down from $90,906,217 as of December 31, 2023[246] - The company is exploring refinancing opportunities to address the assumed debt and the IDC portion of the Revolver, with a new credit facility expected to provide credit availability of up to $40,000,000[241] - The Company plans to replace its obligations under the Revolver with a new revolving credit facility with a borrowing capacity of up to $60,000,000[287] Liabilities and Notes - The company recorded a liability of $42,778,061 on the Revolver as of September 30, 2024[246] - The balance of Year 1 Earnout Notes payable to Lyneer Management Holdings LLC was $0 as of September 30, 2024, down from $5,127,218 as of December 31, 2023[289] - Total amounts payable to IDC, including taxes, amounted to $2,833,169 as of September 30, 2024, down from $4,384,178 as of December 31, 2023[293] - The Company entered into non-convertible promissory notes totaling $1,375,000 with St. Laurent Investments LLC, bearing interest at 5% per annum, increasing to 10% from August 1, 2024, through July 31, 2025[281] - The Company entered into a secured bridge loan in the principal amount of $1,950,000 at an interest rate of 5% per annum[279] - The maturity date of the Credit Agreement was extended to June 18, 2026[280] Amendments and Agreements - The Company has entered into multiple amendments and forbearance agreements with lenders to address events of default and extend repayment schedules[252] - The Initial Capital Raise milestone was extended to September 15, 2024, with additional milestones including an uplisting milestone date of September 15, 2024[256] - The Merger Note was amended to extend the maturity date to the earlier of March 31, 2026, or completion of a capital raise of at least $40,000,000[284] - On April 17, 2024, the available borrowing capacity under the Revolver decreased to $70 million, further decreasing to $40 million upon the consummation of the Merger[254] Impairments - The Company has not recognized any impairments on its intangible assets for the nine months ended September 30, 2024[308]
SEQLL(SQL) - 2024 Q3 - Quarterly Report