Financial Performance - Service revenue for Q1 2025 was $102.81 million, an increase of $2.19 million or 2.2% compared to $100.62 million in Q1 2024, primarily driven by a strong sales initiative in temporary placement services [159]. - Gross profit for Q1 2025 was $11.19 million, reflecting a $720,740 increase or 6.9% from $10.47 million in Q1 2024, with a gross profit margin of 10.9% [161]. - The net loss for Q1 2025 was $10.74 million, compared to a net loss of $4.87 million in Q1 2024, marking an increase in loss of $5.88 million [158]. - Selling, general and administrative expenses surged to $19.40 million in Q1 2025, an increase of $9.06 million or 87.6% from $10.34 million in Q1 2024, largely due to stock compensation and merger-related costs [163]. Cash Flow and Liquidity - For the three months ended March 31, 2025, net cash provided by operating activities was $14,568,690, an increase of 30.8% compared to $11,234,774 for the same period in 2024 [173]. - Atlantic's liquidity is primarily supported by cash generated from operations and borrowings under its revolving credit agreement, with a focus on meeting working capital needs for the next 12 months [169]. - The total balance on the Revolver as of March 31, 2025, was $40,793,199, down from $53,983,962 as of December 31, 2024, indicating a reduction of approximately 24.4% [177]. - The Company recorded a liability of $28,739,104 on the Revolver as of March 31, 2025, compared to $42,508,379 as of December 31, 2024, reflecting a decrease of 32.5% [177]. - Cash used in financing activities for the three months ended March 31, 2025, was $13,769,275, an increase from $11,599,192 in the same period of 2024 [173]. Debt and Financing - Interest expense decreased significantly by $3.74 million or 74.4%, from $5.02 million in Q1 2024 to $1.28 million in Q1 2025, attributed to the deconsolidation of joint debt obligations [165]. - Total interest expense for the three months ended March 31, 2025, was $1,284,822, a decrease from $5,022,230 in the same period of 2024 [199]. - Total cash paid for interest for the three months ended March 31, 2025, was $1,458,889, down from $2,306,490 in 2024 [199]. - The Term Note, originally for $30,300,000, matures on February 28, 2026, with no scheduled principal payments prior to maturity [180]. - The Merger Note, issued for $35,000,000, has been extended to March 31, 2027, and does not bear interest unless an event of default occurs [195][197]. - The Company has not made principal and interest payments due on the Seller Notes and Earnout Notes during 2023 or the first six months of 2024, resulting in defaults [190][191]. - The Seller Notes, totaling $15,750,000, require quarterly installments of $1,575,000, with $3,150,000 due at amended maturity dates of April 30, 2024 [186]. - The Company expects to refinance or satisfy joint and several indebtedness, with the Merger Note's maturity extended to March 31, 2027 [172][196]. Tax and Deferred Assets - The company reported a valuation allowance on deferred tax assets, resulting in an income tax expense of $(9,617) for Q1 2025, compared to a benefit of $1.29 million in Q1 2024 [167]. - The company assesses deferred tax assets quarterly, establishing a valuation allowance when it is more likely than not that some portion will not be realized [223]. Company Operations and Strategy - Atlantic's management believes it has established a strong reputation as a premier workforce solutions partner in the U.S. staffing industry, with over 100 locations nationwide [153]. - The company closed on a new ABL lender on April 29, 2025, converting its existing Revolver into a term loan with a maturity date of April 29, 2028 [170]. - The company closed on a new ABL lender credit facility on April 29, 2025, with an increased borrowing capacity of up to $70 million [200]. - The company has not entered into any off-balance sheet arrangements and does not have holdings in variable interest entities [209]. - The company’s identifiable intangible assets as of March 31, 2025, included customer relationships and tradenames, with no impairments recognized during the period [218][220]. Other Financial Metrics - The weighted average shares outstanding increased from 25.42 million in Q1 2024 to 53.98 million in Q1 2025, reflecting a significant rise of 28.55 million shares [158]. - As of March 31, 2025, total committed resources available were $1,593,549, compared to a negative $620,787 as of December 31, 2024 [200]. - Amounts payable to IDC, including taxes, totaled $1,379,210 as of March 31, 2025, down from $2,091,035 as of December 31, 2024 [206]. - The company recorded a liability payable to IDC for taxes amounting to $548,432 as of March 31, 2025, consistent with the previous period [205]. - Interest expense incurred on the Earnout Notes to LMH was $0 for the three months ended March 31, 2025, compared to $173,737 in 2024 [203].
SEQLL(SQL) - 2025 Q1 - Quarterly Report