Financial Performance - Service revenue for Q2 2025 was $102,896,993, a decrease of $1,739,280 or 1.7% compared to Q2 2024's $104,636,273, primarily due to lower temporary placement services revenue [158]. - Gross profit for Q2 2025 was $11,418,694, a decrease of $70,952 or 0.6% from Q2 2024's $11,489,646, with a gross profit margin of 11.1% [160]. - Net loss for Q2 2025 was $10,718,169, a significant reduction of $44,193,550 or 80.5% compared to a net loss of $54,911,719 in Q2 2024 [157]. - For the six months ended June 30, 2025, service revenue was $205,705,800, an increase of $446,315 or 0.2% compared to $205,259,485 in the same period of 2024 [159]. - Gross profit for the six months ended June 30, 2025 was $22,604,816, an increase of $649,788 or 3.0% from $21,955,028 in 2024, with a gross profit margin of 11.0% [161]. - The company reported a net loss of $21,462,354 for the six months ended June 30, 2025, a decrease of $38,316,209 or 64.1% from a net loss of $59,778,563 in 2024 [157]. Revenue Breakdown - Temporary placement services revenue for Q2 2025 was $102,033,461, down $1,864,205 or 1.8% from $103,897,666 in Q2 2024, reflecting slower customer demand [158]. - Permanent placement and other services revenue increased by $124,925 or 16.9% in Q2 2025, driven by strong demand from current clients [158]. Expenses - Selling, general and administrative expenses for Q2 2025 increased by $317,385 or 1.7% to $18,870,535, attributed to stock compensation and merger-related expenses [163]. - Selling, general and administrative expenses for the six months ended June 30, 2025 increased by $9,375,827, or 32.4%, to $38,270,014 compared to $28,894,187 in the same period of 2024, representing 18.6% of service revenue, net [164]. - Depreciation and amortization expense for the six months ended June 30, 2025 decreased by $39,469, or 1.6%, to $2,469,139 from $2,508,608 in 2024 [166]. - Interest expense for the six months ended June 30, 2025 decreased by $5,713,472, or 63.3%, to $3,308,782 compared to $9,022,254 in the same period of 2024 [170]. Cash Flow - Net cash provided by operating activities for the six months ended June 30, 2025 was $5,037,229, an increase from $(4,217,266) in 2024 [179]. - Cash used in investing activities for the six months ended June 30, 2025 was $(30,073), a decrease from $(35,306) in 2024 [181]. - Cash used in financing activities for the six months ended June 30, 2025 increased to $(5,311,087) compared to $3,339,123 in 2024 [182]. Debt and Financing - The Company entered into a new revolving credit facility on April 29, 2025, with a maturity date of April 29, 2028, replacing the previous Revolver [175]. - The Term Note, amounting to $30,300,000, matures on February 28, 2026, and initially bore interest at 14% per annum [187]. - The Seller Notes issued to former owners total $15,750,000, with quarterly installments of $1,575,000 due [190]. - The Company missed principal and interest payments on the Seller Notes and Earnout Notes during 2023 and the first half of 2024, leading to a default situation [196]. - The Credit Agreement entered on June 18, 2024, is a secured bridge loan of $1,950,000 at an interest rate of 5% per annum, with an extended maturity date to June 18, 2026 [198][199]. - The Merger Note issued to IDC amounts to $35,000,000, originally maturing on September 30, 2024, and is now extended to March 31, 2027, contingent on a $40 million capital raise [201][203]. Tax and Valuation - The provision for income taxes for the six months ended June 30, 2025 was $(19,235), compared to $18,512,574 in 2024, primarily due to a valuation allowance on deferred tax assets [173]. - The Company assesses the likelihood of realizing deferred tax assets quarterly, establishing a valuation allowance when it is more likely than not that some portion will not be realized [230]. Assets and Liabilities - As of June 30, 2025, the total available borrowing capacity on the Revolver was $7,832,330, with a liability recorded of $37,385,643 [186][206]. - The Company has a total committed liquidity resource of $8,207,075 as of June 30, 2025, compared to a negative $620,787 as of December 31, 2024 [206]. - The Company recorded a liability of $548,432 payable to IDC for taxes attributable to its operations as of June 30, 2025 [212]. - Total amounts receivable from IDC amounted to $6,067,963 as of June 30, 2025, with no formalized repayment terms [213]. Intangible Assets - As of June 30, 2025, the Company's identifiable intangible assets included customer relationships and tradenames, amortized over their estimated useful lives [225]. - No impairments were recognized on the Company's intangible assets for the six months ended June 30, 2025, and the year ended December 31, 2024 [227].
SEQLL(SQL) - 2025 Q2 - Quarterly Report