Revenue and Profit - Service revenue for Q3 2025 was $110,127,203, an increase of $2,323,360 or 2.2% compared to Q3 2024, primarily driven by a 1.9% increase in temporary placement services[166] - Gross profit for Q3 2025 was $12,401,976, reflecting a 4.3% increase from $11,885,470 in Q3 2024, with a gross profit margin of 11.3%[168] - For the nine months ended September 30, 2025, service revenue was $315,833,003, a slight increase of $2,769,675 or 0.9% compared to the same period in 2024[167] - Gross profit for the nine months ended September 30, 2025 was $35,006,792, an increase of 3.4% from $33,840,498 in 2024, with a gross profit margin of 11.1%[169] Expenses - Selling, general and administrative expenses for Q3 2025 were $19,888,692, up 16.0% from $17,151,567 in Q3 2024, attributed mainly to stock compensation expenses[171] - Total operating expenses for Q3 2025 were $21,118,999, compared to $18,397,124 in Q3 2024, reflecting an increase driven by higher selling, general and administrative costs[170] - Selling, general and administrative expenses for the nine months ended September 30, 2025 increased by $12,112,952, or 26.3%, to $58,158,706 compared to $46,045,754 in the same period of 2024[172] - Selling, general and administrative costs as a percentage of service revenue increased to 18.4% for the nine months ended September 30, 2025, up from 14.7% in the same period of 2024[172] Net Loss and Operations - Net loss for Q3 2025 was $10,820,344, a 53.5% increase from $7,049,629 in Q3 2024, with net loss per share increasing to $0.20 from $0.16[165] - The company reported a loss from operations of $8,717,023 for Q3 2025, a 33.9% increase from $6,511,654 in Q3 2024[165] Interest Expense - Interest expense for Q3 2025 was $2,094,177, a significant increase of 42.2% from $1,472,564 in Q3 2024[165] - Interest expense for the three months ended September 30, 2025 was $2,094,177, an increase of $621,613, or 42.2%, compared to $1,472,564 in the same period of 2024[177] - Interest expense for the nine months ended September 30, 2025 decreased by $5,091,859, or 48.5%, to $5,402,959 from $10,494,818 in the same period of 2024[178] - Total interest expense for the three months ended September 30, 2025, was $2,094,177, compared to $1,472,564 for the same period in 2024[218] Cash Flow - Net cash provided by operating activities for the nine months ended September 30, 2025 was $3,782,051, compared to a net cash used of $(5,558,718) in the same period of 2024[191] - Cash used in investing activities for the nine months ended September 30, 2025 was $(44,495), a decrease compared to $(50,372) in the same period of 2024[193] - Cash used in financing activities for the nine months ended September 30, 2025 was $(4,332,826), compared to cash provided of $5,653,923 in the same period of 2024[191] Debt and Liabilities - The Company entered into a new revolving credit facility on April 29, 2025, replacing the previous Revolver with a maturity date of April 29, 2028[188] - As of September 30, 2025, the Company recorded a liability of $38,363,904, with total available borrowing capacity on the Revolver at $342,712[198] - The Term Note, amounting to $30,300,000, matures on February 28, 2026, and initially bore interest at 14% per annum[199] - 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[208] - The Company closed on a new ABL credit facility on April 29, 2025, replacing the previous Revolver, with an increased borrowing capacity of up to $70 million[219] - As of September 30, 2025, total committed resources available were $426,118, compared to a negative $620,787 as of December 31, 2024[219] Tax and Advisory Fees - The provision for income taxes for the nine months ended September 30, 2025 was $(28,379), compared to a benefit of $19,732,646 in the same period of 2024[182] - Advisory fees incurred in connection with the Merger for the nine months ended September 30, 2024 amounted to $43,000,000[176] Revenue Recognition - The Company recognizes revenue from temporary placement services when services are rendered, with invoicing occurring concurrently with payroll, and payment terms generally being 30 days[233] - Permanent placement revenue is recognized when candidates accept offers and begin work, with a 30-day guarantee period for replacements if necessary[236] Intangible Assets - As of September 30, 2025, the Company's identifiable intangible assets consisted of customer relationships and tradenames, amortized over their estimated useful lives[238] - The Company has not recognized any impairments on its intangible assets for the nine months ended September 30, 2025, and the year ended December 31, 2024[240] - 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[243] Related Party Transactions - As of September 30, 2025, total amounts receivable from IDC, including taxes payable, amounted to $7,417,863, while total amounts payable to IDC were $2,091,035 as of December 31, 2024[226] - The Company recorded a liability payable to IDC for taxes attributable to its operations, amounting to $548,432 as of both September 30, 2025 and December 31, 2024[225] - During the nine months ended September 30, 2024, the Company recognized $402,500 as an expense paid by IDC, recorded as a deemed capital contribution, all related to interest[227] - The Company entered into a $35,000,000 Merger Note with IDC on June 18, 2024, and issued 25,423,729 shares of common stock to IDC at a market value of $2.36 per share, totaling $60,000,000[228] Off-Balance Sheet Arrangements - The Company has not entered into any off-balance sheet arrangements and does not hold any variable interest entities[229]
SEQLL(SQL) - 2025 Q3 - Quarterly Report