2020 Q2 Form 10-Q Financial Statement

#000121070820000028 Filed on August 05, 2020

View on sec.gov

Income Statement

Concept 2020 Q2 2019 Q2 2019 Q1
Revenue $24.57M $26.41M $16.19M
YoY Change -6.97% 55.24% -0.17%
Cost Of Revenue $15.60M $14.76M $6.791M
YoY Change 5.73% 137.45% 12.04%
Gross Profit $8.900M $11.66M $9.396M
YoY Change -23.66% 7.94% -7.47%
Gross Profit Margin 36.22% 44.14% 58.05%
Selling, General & Admin $9.800M $12.40M $11.40M
YoY Change -20.97% 7.83% -10.94%
% of Gross Profit 110.11% 106.36% 121.33%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $30.00K $20.00K $18.00K
YoY Change 50.0% -97.35%
% of Gross Profit 0.34% 0.17% 0.19%
Operating Expenses $25.46M $27.21M $18.17M
YoY Change -6.43% 136.57% 41.95%
Operating Profit -$883.0K -$792.0K -$1.982M
YoY Change 11.49% -37.09% -25.43%
Interest Expense $40.00K $125.0K $313.0K
YoY Change -68.0% 108.33%
% of Operating Profit
Other Income/Expense, Net $337.0K -$91.00K -$37.00K
YoY Change -470.33% 102.22% -44.78%
Pretax Income -$506.0K -$758.0K -$1.706M
YoY Change -33.25% -39.07% -37.39%
Income Tax $266.0K $142.0K $65.00K
% Of Pretax Income
Net Earnings -$772.0K -$900.0K -$1.902M
YoY Change -14.22% -34.02% -117.74%
Net Earnings / Revenue -3.14% -3.41% -11.75%
Basic Earnings Per Share -$0.27
Diluted Earnings Per Share -$0.27 -$290.3K -$575.8K
COMMON SHARES
Basic Shares Outstanding 2.839M shares 3.082M shares 3.288M shares
Diluted Shares Outstanding 2.839M shares 3.082M shares 3.288M shares

Balance Sheet

Concept 2020 Q2 2019 Q2 2019 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $29.50M $28.50M $30.30M
YoY Change 3.51% -26.17% -29.37%
Cash & Equivalents $29.52M $28.54M $30.27M
Short-Term Investments
Other Short-Term Assets $1.600M $1.300M $1.200M
YoY Change 23.08% 30.0% 50.0%
Inventory
Prepaid Expenses
Receivables $12.30M $15.69M $12.59M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $43.34M $44.26M $44.03M
YoY Change -2.09% -17.81% -23.21%
LONG-TERM ASSETS
Property, Plant & Equipment $146.0K $217.0K $184.0K
YoY Change -32.72% 4240.0% 2528.57%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $7.000K $7.000K $7.000K
YoY Change 0.0% -98.12% -97.94%
Total Long-Term Assets $1.399M $2.886M $1.827M
YoY Change -51.52% 330.75% 185.47%
TOTAL ASSETS
Total Short-Term Assets $43.34M $44.26M $44.03M
Total Long-Term Assets $1.399M $2.886M $1.827M
Total Assets $44.74M $47.15M $45.85M
YoY Change -5.12% -13.52% -20.9%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $670.0K $1.022M $983.0K
YoY Change -34.44% 26.8% -44.78%
Accrued Expenses $9.300M $8.600M $7.500M
YoY Change 8.14% -3.37% 0.0%
Deferred Revenue
YoY Change
Short-Term Debt $589.0K $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $10.51M $9.603M $8.508M
YoY Change 9.49% -4.67% -23.52%
LONG-TERM LIABILITIES
Long-Term Debt $700.0K $0.00 $0.00
YoY Change
Other Long-Term Liabilities $187.0K $168.0K $151.0K
YoY Change 11.31% -70.93% -83.11%
Total Long-Term Liabilities $187.0K $168.0K $151.0K
YoY Change 11.31% -70.93% -83.11%
TOTAL LIABILITIES
Total Short-Term Liabilities $10.51M $9.603M $8.508M
Total Long-Term Liabilities $187.0K $168.0K $151.0K
Total Liabilities $12.34M $12.13M $11.04M
YoY Change 1.75% -3.94% -21.12%
SHAREHOLDERS EQUITY
Retained Earnings -$437.8M -$438.4M -$437.5M
YoY Change -0.13% 0.99% 1.1%
Common Stock $486.3M $485.7M $485.3M
YoY Change 0.12% 0.26% 0.21%
Preferred Stock
YoY Change
Treasury Stock (at cost) $15.33M $12.74M $12.50M
YoY Change 20.31% 54.08% 60.37%
Treasury Stock Shares 987.0K shares 698.0K shares 6.828M shares
Shareholders Equity $32.39M $34.00M $34.82M
YoY Change
Total Liabilities & Shareholders Equity $44.74M $46.13M $45.85M
YoY Change -3.03% -15.39% -20.9%

Cashflow Statement

Concept 2020 Q2 2019 Q2 2019 Q1
OPERATING ACTIVITIES
Net Income -$772.0K -$900.0K -$1.902M
YoY Change -14.22% -34.02% -117.74%
Depreciation, Depletion And Amortization $30.00K $20.00K $18.00K
YoY Change 50.0% -97.35%
Cash From Operating Activities $1.870M -$1.520M -$6.216M
YoY Change -223.03% -57.06% -57.73%
INVESTING ACTIVITIES
Capital Expenditures $0.00 -$30.00K -$40.00K
YoY Change -100.0% -85.71%
Acquisitions
YoY Change
Other Investing Activities $0.00 $0.00
YoY Change -100.0% -100.0%
Cash From Investing Activities $0.00 -$30.00K -$35.00K
YoY Change -100.0% 200.0% -100.13%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $3.703M
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 1.320M -230.0K -$4.018M
YoY Change -673.91% -54.0% -150.87%
NET CHANGE
Cash From Operating Activities 1.870M -1.520M -$6.216M
Cash From Investing Activities 0.000 -30.00K -$35.00K
Cash From Financing Activities 1.320M -230.0K -$4.018M
Net Change In Cash 3.190M -1.780M -$10.22M
YoY Change -279.21% -56.05% -147.99%
FREE CASH FLOW
Cash From Operating Activities $1.870M -$1.520M -$6.216M
Capital Expenditures $0.00 -$30.00K -$40.00K
Free Cash Flow $1.870M -$1.490M -$6.176M
YoY Change -225.5% -57.91% -57.19%

Facts In Submission

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us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">ACCOUNTING PRONOUNCEMENTS</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Adoption of New Accounting Pronouncements</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On October 1, 2019, we elected to adopt Accounting Standards Update ("ASU") No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer&#8217;s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15") on a prospective basis. This ASU provides guidance on implementation costs incurred in a cloud computing arrangement (&#8220;CCA&#8221;) that is a service contract. ASU 2018-15 aligns the accounting for such costs with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amends Accounting Standards Codification ("ASC") 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350 to determine which implementation costs should be capitalized in such a CCA.&#160; The amendments in ASU 2018-15 are effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods.&#160; ASU 2018-15 had no impact on the Company's consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On January 1, 2019, we adopted ASU No. 2016-02, "Leases (Topic 842)"</font><font style="font-family:inherit;font-size:10pt;font-style:italic;"> </font><font style="font-family:inherit;font-size:10pt;">("ASU 2016-02"). This ASU requires a company to recognize lease assets and liabilities arising from operating leases in the statement of financial position. This ASU does not significantly change the previous lease guidance for how a lessee should recognize the recognition, measurement, and presentation of expenses and cash flows arising from a lease. Additionally, the criteria for classifying a finance lease versus an operating lease are substantially the same as the previous guidance. In July 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements" ("ASU 2018-11"). This ASU allows adoption of the standard as of the effective date without restating prior periods. We did not elect to recognize the lease assets and liabilities in the statement of financial position for short-term leases. For more information, see Note 9.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On January 1, 2019, we adopted&#160;ASU No.&#160;2018-02,</font><font style="font-family:inherit;font-size:10pt;font-style:italic;"> </font><font style="font-family:inherit;font-size:10pt;">"Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU 2018-02"), which provides guidance on reclassification of certain stranded income tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), enacted on December 22, 2017. ASU 2018-02&#160;allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the application of the Tax Act. Additionally, ASU 2018-02&#160;requires financial statement preparers to disclose (1) a description of their accounting policy for releasing income tax effects from accumulated other comprehensive income, (2) whether they elect to reclassify the stranded income tax effects from the Tax Act, and (3) information about other income tax effects related to the application of the Tax Act that are reclassified from accumulated other comprehensive income to retained earnings, if any. The adoption had no impact on the Company's consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Recent Accounting Standard Update Not Yet Adopted</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In June 2016, FASB issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (&#8220;ASU 2016-13&#8221;). This standard requires an impairment model (known as the current expected credit loss ("CECL") model) that is based on expected losses rather than incurred losses. Under the new guidance, each reporting entity should estimate an allowance for expected credit losses, which is intended to result in more timely recognition of losses. This model replaces multiple existing impairment models in current U.S. GAAP, which generally requires a loss to be incurred before it is recognized. The new standard applies to trade receivables arising from revenue transactions such as contract assets and accounts receivable. Under ASC 606, revenue is recognized when, among other criteria, it is probable that an entity will collect the consideration it is entitled to when goods or services are transferred to a customer. When trade receivables are recorded, they become subject to the CECL model and estimates of expected credit losses on trade receivables over their contractual life will be required to be recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. This guidance is effective for smaller reporting companies for annual periods beginning after December 15, 2022, including the interim periods in the year. Early adoption is permitted. The Company will adopt the guidance when it becomes effective.</font></div></div>
us-gaap Nature Of Operations
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">DESCRIPTION OF BUSINESS</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company is comprised of the operations, assets, and liabilities of the Company's </font><font style="font-family:inherit;font-size:10pt;">three</font><font style="font-family:inherit;font-size:10pt;"> regional businesses of Hudson Americas, Hudson Asia Pacific, and Hudson Europe. The Company provides Recruitment Process Outsourcing ("RPO") permanent recruitment and contracting outsourced recruitment solutions. These services are tailored to the individual needs of primarily mid-to-large-cap multinational companies. The Company's RPO delivery teams utilize state-of-the-art recruitment process methodologies and project management expertise in their flexible, turnkey solutions to meet clients' ongoing business needs. The Company's RPO services include complete recruitment outsourcing, project-based outsourcing, contingent workforce solutions, and recruitment consulting.</font></div><div style="line-height:120%;padding-top:12px;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company operates directly in </font><font style="font-family:inherit;font-size:10pt;">ten</font><font style="font-family:inherit;font-size:10pt;"> countries with </font><font style="font-family:inherit;font-size:10pt;">three</font><font style="font-family:inherit;font-size:10pt;"> reportable geographic business segments: Americas, Asia Pacific, and Europe. See Note 12 for further details regarding the reportable segments. </font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Corporate expenses are reported separately from the reportable segments and pertain to certain functions, such as executive management, corporate governance, human resources, accounting, tax, marketing, information technology, and treasury. A portion of these expenses are attributed to the reportable segments for providing the above services to them and have been allocated to the segments as management service expenses and are included in the segments&#8217; non-operating other income (expense).</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In December 2019, a novel strain of coronavirus, referred to as COVID-19, was reported to have originated in Wuhan, Hubei Province, China. On January 30, 2020, the World Health Organization (&#8220;WHO&#8221;) declared that the virus had become a global public-health emergency. On March 11, 2020, the WHO declared the outbreak to be a pandemic, based on the rapid increase in exposure globally. Many countries around the world have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus. During July and August 2020 our business continues to be impacted by the outbreak and the accompanying economic downturn. Some of our customers continue to have instituted hiring freezes, while other customers operating in the banking, pharmaceutical and technology industries, which may be considered as essential businesses in different jurisdictions, or customers that are more capable of working remotely than other industries, have been allowed to operate as usual. The inability to conduct in-person interviews has also impacted our business. The expected timeline for this reduction in demand for our services remains uncertain and difficult to predict considering the rapidly evolving landscape.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In connection with the COVID-19 pandemic, certain foreign government organizations have begun to offer wage assistance subsidies and tax credits to companies in exchange for maintaining specified levels of compensation and related costs for employees residing in those countries. The Company recognizes the receipt of funds from these organizations in the Other income (expense), net caption on the Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2020, </font><font style="font-family:inherit;font-size:10pt;">$265</font><font style="font-family:inherit;font-size:10pt;"> related to foreign government assistance has been received and is included within Other income (expense), net. In the United States, the Company received a </font><font style="font-family:inherit;font-size:10pt;">$1.3 million</font><font style="font-family:inherit;font-size:10pt;"> loan in connection with the Paycheck Protection Program (&#8220;PPP&#8221;), administered by the U.S. Small Business Administration (&#8220;SBA&#8221;), under the Coronavirus Aid, Relief, and Economic Security Act (the &#8220;CARES Act&#8221;). All or a portion of the PPP loan may be forgiven by the SBA under certain conditions. The Company intends to apply for loan forgiveness in the third quarter of 2020. To the extent that forgiveness is obtained for any portion of the loan in the future, it will be reflected in Other income (expense), net. For more information, see Note 9. </font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;padding-bottom:10px;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On June 10, 2019, the Company announced a reverse stock split of its outstanding shares of common stock at a ratio of 1-for-10 (the &#8220;Reverse Split&#8221;) and that it had filed a Certificate of Amendment of the Company's Amended and Restated Certificate of Incorporation in order to effect the Reverse Split. The filed certificate also reduced the number of authorized shares of common stock to </font><font style="font-family:inherit;font-size:10pt;">20 million</font><font style="font-family:inherit;font-size:10pt;"> shares. The Reverse Split and reduction in authorized shares was approved by the Company's Board of Directors (the "Board") on February 25, 2019, and it was approved by the stockholders of the Company at the annual meeting on May 6, 2019. The Board approved the ratio of 1-for-10 on May 24, 2019, and the Reverse Split became effective as of the close of business on June 10, 2019. The Reverse Split had no effect on the par value of the Company's common stock but it reduced the number of issued and outstanding shares of common stock by a factor of 10. Accordingly, the issued and outstanding shares, stock-based compensation disclosures, net loss per share, and other share and per share disclosures for all periods presented have been retrospectively adjusted to reflect the impact of this Reverse Split.</font></div></div>

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