Revenue Performance - Revenue for the three months ended June 30, 2023, was $2.0 million, a decrease of $5.1 million or 71% compared to $7.1 million for the same period in 2022[223] - The decrease in revenue was primarily due to a 96% decline in the Recruiters on Demand business, which fell by $4.5 million as the business transitioned to JobMobz[223] - Consulting and Staffing Services revenue increased by approximately 61% to $1.5 million, driven by growth in the healthcare staffing business[223] - For the six months ended June 30, 2023, revenue was $5.3 million, a decrease of $8.6 million or 62% compared to $14.0 million for the same period in 2022[232] Cost and Expenses - Cost of revenue decreased to $1.6 million for the three months ended June 30, 2023, down $2.6 million or 62% from $4.2 million in the same period in 2022[224] - Cost of revenue decreased by 50% to $4.2 million for the six-month period ended June 30, 2023, compared to $8.4 million in the same period of 2022[233] - Total operating expenses for the three months ended June 30, 2023, were $1.4 million, a decrease of $3.9 million or 74% compared to $5.3 million in the same period in 2022[226] - Total operating expenses decreased by 59% to $4.9 million for the six-month period ended June 30, 2023, compared to $12.1 million in the same period of 2022[235] - General and administrative expenses for the three months ended June 30, 2023, were $887 thousand, a 78% decrease from $4.1 million in the same period in 2022[229] - General and administrative expenses were $3.7 million for the six-month period ended June 30, 2023, a 60% decrease from $9.2 million in 2022[240] Profitability - Gross profit for the three months ended June 30, 2023, was $437 thousand, resulting in a gross profit margin of 21.5%, down from 41% in the corresponding 2022 period[225] - Gross profit for the six-month period ended June 30, 2023 was $1.2 million, with a gross profit margin of 22%, down from $5.6 million and 40% in the corresponding 2022 period[234] - The company reported a net loss of $980 thousand for the three months ended June 30, 2023, compared to a net loss of $1.2 million in the same period in 2022[231] - Net loss for the six-month period ended June 30, 2023 was $4.3 million, an improvement from a net loss of $5.4 million in the same period of 2022[242] - The company reported an Adjusted EBITDA loss of $1.7 million for the six-month period ended June 30, 2023, compared to a loss of $1.75 million in 2022[250] Cash Flow and Financing - Net cash used in operating activities was $1.7 million for both the six-month periods ended June 30, 2023 and 2022[251] - Net cash provided by financing activities was $1.2 million for the six-month period ended June 30, 2023, compared to $1.6 million in the same period of 2022[255] - As of August 11, 2023, the company had approximately $442 thousand in cash, insufficient to meet working capital needs for the next 12 months[256] - The company has incurred net losses and negative operating cash flows since inception, raising substantial doubt about its ability to continue as a going concern[257] - The company entered into a Novo Amendment, modifying the payment schedule of a promissory note, allowing interest-only payments from November 1, 2022, to June 30, 2023, with principal and interest payments resuming on April 1, 2023[265] - The company issued promissory notes totaling $1,111,111 on August 17, 2022, with a net proceeds of $960,000, maturing on August 17, 2023, and granted 694,445 warrants valued at $463,737[266] - On August 30, 2022, the company issued additional promissory notes for $1,305,556, with net proceeds of $1,175,000, maturing on August 30, 2023, and granted 815,972 warrants valued at $569,106[267] - The company closed a Loan and Security Agreement for $2,250,000, with a first advance of $2,000,000 at an interest rate of 12.75%, maturing 42 months from the closing date[268] - The company entered into a factoring agreement to fund general working capital needs, allowing advances of up to 85% of eligible trade accounts receivable, capped at $3,000,000[273][275] Revenue Recognition - The company recognizes revenue from software subscriptions over the term of the subscription, with payments typically due within 90 days of service completion[283][285] - Revenue from consulting and staffing services is recognized when services are rendered, with payments typically due within 90 days of completion[288] Goodwill and Impairment - Goodwill is tested for impairment annually or when circumstances indicate that the fair value of a reporting unit is below its carrying value[292] - The company performs its annual goodwill impairment assessment on December 31st each year or as impairment indicators dictate[293] - Management evaluates potential impairment of goodwill by assessing qualitative factors including macroeconomic conditions, industry conditions, and overall financial performance[294] - If the carrying value of a reporting unit exceeds its fair value, the impairment amount recognized is the difference between the carrying amount and fair value[295] - Fair value estimates may use a discounted cash flow methodology, requiring significant judgment on future cash flows and discount rates[296] - Long-lived assets are reviewed for impairment whenever events indicate that the book value may not be recoverable, estimating future undiscounted net cash flows[297] Financial Instruments and Stock Compensation - Derivative financial instruments are recorded at fair value, with changes in fair value recorded as non-operating, non-cash income or expense[298] - Stock-based compensation is accounted for under ASC 718, with compensation cost measured at grant date and recognized over the service or vesting period[299] - The fair value of stock options is estimated using the Black-Scholes option pricing model, requiring judgment on volatility and exercise behaviors[299]
Recruiter.com(RCRT) - 2023 Q2 - Quarterly Report