Company Quick10K Filing
Hudson Global
Price11.70 EPS-1
Shares3 P/E-15
MCap37 P/FCF-5
Net Debt-29 EBIT-2
TEV8 TEV/EBIT-4
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-06
10-K 2019-12-31 Filed 2020-03-31
10-Q 2019-09-30 Filed 2019-11-01
10-Q 2019-06-30 Filed 2019-08-14
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-03-08
10-Q 2018-09-30 Filed 2018-11-01
10-Q 2018-06-30 Filed 2018-08-02
10-Q 2018-03-31 Filed 2018-05-15
10-K 2017-12-31 Filed 2018-03-01
10-Q 2017-09-30 Filed 2017-11-02
10-Q 2017-06-30 Filed 2017-08-03
10-Q 2017-03-31 Filed 2017-05-04
10-K 2016-12-31 Filed 2017-03-03
10-Q 2016-09-30 Filed 2016-10-28
10-Q 2016-06-30 Filed 2016-07-28
10-Q 2016-03-31 Filed 2016-04-28
10-K 2015-12-31 Filed 2016-03-03
10-Q 2015-09-30 Filed 2015-10-30
10-Q 2015-06-30 Filed 2015-07-30
10-Q 2015-03-31 Filed 2015-05-11
10-K 2014-12-31 Filed 2015-02-26
10-Q 2014-09-30 Filed 2014-11-10
10-Q 2014-06-30 Filed 2014-08-04
10-Q 2014-03-31 Filed 2014-05-01
10-K 2013-12-31 Filed 2014-02-27
10-Q 2013-09-30 Filed 2013-10-31
10-Q 2013-06-30 Filed 2013-07-31
10-Q 2013-03-31 Filed 2013-05-07
10-K 2012-12-31 Filed 2013-02-26
10-Q 2012-09-30 Filed 2012-11-01
10-Q 2012-06-30 Filed 2012-07-31
10-Q 2012-03-31 Filed 2012-05-02
10-K 2011-12-31 Filed 2012-02-28
10-Q 2011-09-30 Filed 2011-11-04
10-Q 2011-06-30 Filed 2011-08-03
10-Q 2011-03-31 Filed 2011-04-27
10-K 2010-12-31 Filed 2011-02-23
10-Q 2010-09-30 Filed 2010-10-29
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-04-28
10-K 2009-12-31 Filed 2010-02-23
8-K 2020-05-06 Earnings, Exhibits
8-K 2020-04-26 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2020-03-30 Earnings, Exhibits
8-K 2020-03-13 Earnings, Exhibits
8-K 2019-12-10 Officers
8-K 2019-11-01 Earnings, Exhibits
8-K 2019-08-14 Earnings, Exhibits
8-K 2019-07-01 Officers, Exhibits
8-K 2019-06-10 Amend Bylaw, Other Events, Exhibits
8-K 2019-06-04 Officers
8-K 2019-05-09 Earnings, Exhibits
8-K 2019-05-06 Officers, Shareholder Vote
8-K 2019-04-01 Accountant, Exhibits
8-K 2019-03-08 Earnings, Exhibits
8-K 2019-02-19 Other Events, Exhibits
8-K 2019-02-11 Officers, Other Events, Exhibits
8-K 2018-12-04 Other Events, Exhibits
8-K 2018-11-01 Earnings, Exhibits
8-K 2018-10-15 Enter Agreement, Shareholder Rights, Amend Bylaw, Other Events, Exhibits
8-K 2018-08-02 Earnings, Exhibits
8-K 2018-07-19 Shareholder Vote
8-K 2018-06-29 Officers
8-K 2018-05-15 Earnings, Exhibits
8-K 2018-04-01 Officers, Exhibits
8-K 2018-03-31 M&A, Exhibits
8-K 2018-03-20 Shareholder Vote
8-K 2018-03-09 Officers, Exhibits
8-K 2018-03-09 Other Events
8-K 2018-03-01 Earnings, Exhibits
8-K 2018-01-25 Enter Agreement

HSON 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1 - Basis of Presentation
Note 2 - Description of Business
Note 3 - Accounting Pronouncements
Note 4 - Revenue Recognition
Note 6 - Stock - Based Compensation
Note 7 - Income Taxes
Note 8 - Loss per Share
Note 9 - Commitments and Contingencies
Note 10 - Accumulated Other Comprehensive Loss
Note 11 - Stockholders' Equity
Note 12 - Segment and Geographic Data
Note 13 - Stockholder Rights Plan
Note 14 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 hson-20200331exx311.htm
EX-31.2 hson-20200331exx312.htm
EX-32.1 hson-20200331exx321.htm
EX-32.2 hson-20200331exx322.htm

Hudson Global Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
195156117783902012201420172020
Assets, Equity
1851451056525-152012201420172020
Rev, G Profit, Net Income
3020100-10-202012201420172020
Ops, Inv, Fin

10-Q 1 hson20200331-10q.htm 10-Q Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549  

 
FORM 10-Q 

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2020
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number: 000-50129 

HUDSON GLOBAL, INC.
(Exact name of registrant as specified in its charter)  

DELAWARE
 
59-3547281
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)
53 Forest Avenue, Old Greenwich, CT 06870
(Address of principal executive offices) (Zip Code)
(203) 409-5628
(Registrant’s telephone number, including area code) 

  
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
Common Stock, $0.001 par value
 
HSON
 
The NASDAQ Stock Market LLC
Preferred Share Purchase Rights
 
 
 
The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x    No   o
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  x     No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
o
 
Accelerated filer
o
Non-accelerated filer
o
 
Smaller reporting company
x
 
 
 
Emerging growth company
o
 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
Outstanding on April 30, 2020
Common Stock - $0.001 par value
 
2,682,183



HUDSON GLOBAL, INC.
INDEX


 
 
Page
 
 
Item 1.
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 
 



PART I – FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS

HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(unaudited) 
 
Three Months Ended March 31,
 
2020
 
2019
Revenue
$
24,131

 
$
16,187


 
 
 
Operating expenses:
 
 
 
Direct contracting costs and reimbursed expenses

14,333

 
6,791

Salaries and related
8,217

 
9,172

Other selling, general and administrative
2,081

 
2,188

Depreciation and amortization
24

 
18

Total operating expenses

24,655

 
18,169

Operating loss
(524
)
 
(1,982
)
Non-operating income (expense):
 
 
 
Interest income, net
79

 
313

Other income (expense), net
41

 
(37
)
Loss from continuing operations before provision for income taxes
(404
)
 
(1,706
)
Provision for income taxes from continuing operations
107

 
65

Loss from continuing operations
(511
)
 
(1,771
)
Loss from discontinued operations, net of income taxes

 
(131
)
Net loss
$
(511
)
 
$
(1,902
)
Basic and diluted loss per share:(a)
 
 
 
Loss per share from continuing operations
$
(0.17
)
 
$
(0.54
)
Loss per share from discontinued operations

 
(0.04
)
Loss per share
$
(0.17
)
 
$
(0.58
)
Weighted-average shares outstanding:(a)
 
 
 
Basic
3,065

 
3,288

Diluted
3,065

 
3,288


(a) Earnings per share and weighted average shares outstanding for all periods presented reflect the Company's 1-for-10 reverse stock split, which was effective June 10, 2019.
 



See accompanying notes to condensed consolidated financial statements.



- 1 -


HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE LOSS
(in thousands, except per share amounts)
(unaudited)
 
Three Months Ended March 31,
 
2020
 
2019
Comprehensive loss:
 
 
 
Net Loss
$
(511
)
 
$
(1,902
)
Other comprehensive loss:
 
 
 
Foreign currency translation adjustment, net of applicable income taxes
(787
)
 
65

Total other comprehensive loss, net of income taxes
(787
)
 
65

Comprehensive Loss
$
(1,298
)
 
$
(1,837
)

See accompanying notes to condensed consolidated financial statements.

- 2 -




HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(Unaudited)
 
March 31,
2020
 
December 31,
2019
ASSETS
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
26,127

 
$
31,190

Accounts receivable, less allowance for doubtful accounts of $156 and $174, respectively
12,778

 
12,795

Restricted cash, current
146

 
148

Prepaid and other
846

 
804

Total current assets
39,897

 
44,937

Property and equipment, net
164

 
186

Operating lease right-of-use assets
391

 
401

Deferred tax assets
626

 
793

Restricted cash
227

 
380

Other assets
7

 
7

Total assets
$
41,312

 
$
46,704

LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
697

 
$
1,064

Accrued expenses and other current liabilities
6,607

 
8,178

Operating lease obligations, current
267

 
246

Total current liabilities
7,571

 
9,488

Income tax payable
819

 
845

Operating lease obligations
129

 
160

Other liabilities
163

 
177

Total liabilities
8,682

 
10,670

Commitments and contingencies


 


Stockholders' equity:
 

 
 

Preferred stock, $0.001 par value, 10,000 shares authorized; none issued or outstanding

 

Common stock, $0.001 par value, 20,000 shares authorized; 3,669 and
3,663 shares issued; 2,682 and 2,936 shares outstanding, respectively
4

 
4

Additional paid-in capital
486,232

 
486,088

Accumulated deficit
(437,018
)
 
(436,507
)
Accumulated other comprehensive loss, net of applicable tax
(1,266
)
 
(479
)
Treasury stock, 987 and 726 shares, respectively, at cost
(15,322
)
 
(13,072
)
Total stockholders' equity
32,630

 
36,034

Total liabilities and stockholders' equity
$
41,312

 
$
46,704




See accompanying notes to condensed consolidated financial statements.

- 3 -


HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
 
 
Three Months Ended March 31,
 
2020
 
2019
Cash flows from operating activities:
 

 
 

Net loss
$
(511
)
 
$
(1,902
)
Adjustments to reconcile net loss to net cash used in operating activities:
 

 
 

Depreciation and amortization
24

 
18

Provision for doubtful accounts
2

 

Provision for (benefit from) deferred income taxes
66

 
(32
)
Stock-based compensation
144

 
184

Changes in assets and liabilities, net of effect of dispositions:
 
 
 
Increase in accounts receivable
(1,083
)
 
(2,617
)
(Increase) decrease in prepaid and other assets
(94
)
 
484

Decrease in accounts payable, accrued expenses and other liabilities
(1,278
)
 
(2,351
)
Net cash used in operating activities
(2,730
)
 
(6,216
)
Cash flows from investing activities:
 

 
 

Capital expenditures
(10
)
 
(35
)
Net cash used in investing activities
(10
)
 
(35
)
Cash flows from financing activities:
 

 
 

Borrowings under credit agreements
15,298

 

Repayments under credit agreements
(15,298
)
 

Purchase of treasury stock
(2,239
)
 
(3,982
)
Purchase of restricted stock from employees
(11
)
 
(36
)
Net cash used in financing activities
(2,250
)
 
(4,018
)
Effect of exchange rates on cash, cash equivalents and restricted cash
(228
)
 
51

Net decrease in cash, cash equivalents and restricted cash
(5,218
)
 
(10,218
)
Cash, cash equivalents, and restricted cash, beginning of the period
31,718

 
41,060

Cash, cash equivalents, and restricted cash, end of the period
$
26,500

 
$
30,842

Supplemental disclosures of cash flow information:
 
 
 
Cash paid during the period for interest
$
1

 
$

Cash received during the period for interest
$
79

 
$
156

Net cash payments during the period for income taxes
$
202

 
$
47

     Cash paid for amounts included in operating lease liabilities
$
67

 
$
87

Supplemental non-cash disclosures:
 
 
 
Right-of-use assets obtained in exchange for operating lease liabilities
$
77

 
$
723

 
See accompanying notes to condensed consolidated financial statements. 

- 4 -


HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31, 2020
 
March 31, 2019
 
 
Shares (a)
 
Value
 
Shares (a)
 
Value
Total stockholders' equity, beginning balance
 
2,936

 
$
36,034

 
3,190

 
$
40,487

 
 
 
 
 
 
 
 
 
Common stock and additional paid-in capital:
 
 
 
 
 
 
 
 
Beginning balance
 
3,663

 
486,092

 
3,613

 
485,131

Stock-based compensation expense
 
6

 
144

 
9

 
184

 Ending balance
 
3,669

 
486,236

 
3,622

 
485,315

 
 
 
 
 
 
 
 
 
Treasury stock:
 
 
 
 
 
 
 
 
Beginning balance
 
(726
)
 
(13,072
)
 
(423
)
 
(8,486
)
Purchase of treasury stock
 
(260
)
 
(2,239
)
 
(258
)
 
(3,982
)
Purchase of restricted stock from employees
 
(1
)
 
(11
)
 
(2
)
 
(36
)
 Ending balance
 
(987
)
 
(15,322
)
 
(683
)
 
(12,504
)
 
 
 
 
 
 
 
 
 
Accumulated other comprehensive (loss) income:
 
 
 
 
 
 
 
 
Beginning balance
 
 
 
(479
)
 
 
 
(606
)
Other comprehensive (loss) income
 
 
 
(787
)
 
 
 
65

 Ending balance
 
 
 
(1,266
)
 
 
 
(541
)
 
 
 
 
 
 
 
 
 
Accumulated deficit:
 
 
 
 
 
 
 
 
Beginning balance
 
 
 
(436,507
)
 
 
 
(435,552
)
Net loss
 
 
 
(511
)
 
 
 
(1,902
)
 Ending balance
 
 
 
(437,018
)
 
 
 
(437,454
)
 
 
 
 
 
 
 
 
 
Total stockholders' equity, ending balance
 
2,682

 
$
32,630

 
2,939

 
$
34,816

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(a) Common stock and Treasury stock for all periods presented reflect the Company's 1-for-10 reverse stock split, which was effective June 10, 2019.

See accompanying notes to condensed consolidated financial statements.

- 5 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)


NOTE 1 – BASIS OF PRESENTATION

These interim unaudited condensed consolidated financial statements have been prepared in accordance with United States of America ("U.S.") generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission ("SEC") for interim financial reporting and should be read in conjunction with the consolidated financial statements and related notes of Hudson Global, Inc. and its subsidiaries (the "Company") filed in its Annual Report on Form 10-K for the year ended December 31, 2019.
    
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of operating revenues and expenses. These estimates are based on management’s knowledge and judgments. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows at the dates and for the periods presented have been included. The results of operations for interim periods are not necessarily indicative of the results of operations for the full year. The condensed consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. Intra-entity balances and transactions between and among the Company and its subsidiaries have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation with no material impact on the condensed consolidated financial statements. All per share amounts and shares outstanding for the three months ended March 31, 2020 and all prior periods reflect the Company's 1-for-10 reverse stock split, which was effective June 10, 2019. For more information, see Note 2.

NOTE 2 – DESCRIPTION OF BUSINESS

The Company is comprised of the operations, assets, and liabilities of the Company's three 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 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.
The Company operates directly in ten countries with three reportable geographic business segments: Americas, Asia Pacific, and Europe. See Note 12 for further details regarding the reportable segments.

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’ non-operating other income (expense).

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 “Reverse Split”) 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 20 million 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.


- 6 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

NOTE 3 – ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Pronouncements

On October 1, 2019, we elected to adopt Accounting Standards Update ("ASU") ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’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 (“CCA”) 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") 350-40 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in such a CCA.  The amendments in ASU 2018-15 are effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. ASU 2018-15 had no impact on the Company's consolidated financial statements.
    
On January 1, 2019, we adopted ASU No. 2016-02, "Leases (Topic 842)" ("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.

On January 1, 2019, we adopted ASU No. 2018-02, "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 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 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.

Recent Accounting Standard Update Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (“ASU 2016-13”). 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.



- 7 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)


NOTE 4 – REVENUE RECOGNITION

Nature of Services

We account for a contract when both parties to the contract have approved the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Revenues are recognized over time, using an output measure, as the control of the promised services is transferred to the client in an amount that reflects the consideration we expect to be entitled to in exchange for those services. The majority of our contracts are short-term in nature as they include termination clauses that allow either party to cancel within a short termination period, without cause. Revenue includes billable travel and other reimbursable costs and is reported net of sales or use taxes collected from clients and remitted to taxing authorities.

We generally determine standalone selling prices based on the prices included in the client contracts, using expected cost plus profit, or other observable prices. The price as specified in our client contracts is generally considered the standalone selling price as it is an observable input that depicts the price as if sold to a similar client in similar circumstances. Certain client contracts have variable consideration, including usage-based fees that increase the transaction price and volume rebates or other similar items that generally reduce the transaction price. We estimate variable consideration using the expected value method based on the terms of the client contract and historical evidence. These amounts may be constrained and are only included in revenue to the extent we do not expect a significant reversal when the uncertainty associated with the variable consideration is resolved. Our estimated amounts of variable consideration subject to constraints are not material and we do not believe that there will be significant changes to our estimates.

We record accounts receivable when our right to consideration becomes unconditional. Unbilled accounts receivable represent revenue recorded in advance of processing formal invoices pursuant to the completion of contract provisions and, generally, become billable at contractually specified dates. Unbilled receivables of $3.7 million and $3.6 million as of March 31, 2020 and 2019, respectively, are expected to be invoiced and collected within one year. Contract assets primarily relate to our rights to consideration for services provided that they are conditional on satisfaction of future performance obligations. A contract liability for deferred revenue is recorded when consideration is received, or is unconditionally due, from a client prior to transferring control of services to the client under the terms of a contract. Deferred revenue balances typically result from advance payments received from clients prior to transfer services. We do not have any material contract assets or liabilities as of and for the three months ended March 31, 2020.

Payment terms vary by client and the services offered. We consider payment terms that exceed one year to be extended payment terms. Substantially all of the Company's contracts include payment terms of 90 days or less and we do not extend payment terms beyond one year.

We primarily record revenue on a gross basis as a principal in the Consolidated Statements of Operations and Comprehensive Income based upon the following key factors:

We maintain the direct contractual relationship with the client and are responsible for fulfilling the service promised to the client.

We maintain control over our contractors while the services to the client are being performed, including our contractors' billing rates, and are ultimately responsible for paying them.

RPO Recruitment. We provide complete recruitment outsourcing, project-based outsourcing, and recruitment consulting for clients' permanent staff hires. We recognize revenue for our RPO recruitment over time in an amount that reflects the consideration we expect to be entitled to and have an enforceable right to payment in exchange for our services. The client simultaneously receives and consumes the benefits of the services as they are provided. The transaction prices contains both fixed fees and variable consideration. Variable consideration is constrained by candidates accepting offers of permanent employment. We recognize revenue on the fixed fees as the performance obligations are satisfied and variable fees as the constraint is lifted. We do not incur incremental costs to obtain our RPO recruitment contracts. The costs to fulfill these contracts are expensed as incurred.


- 8 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

We recognize permanent placement revenue when employment candidates accept offers of permanent employment. We have a substantial history of estimating the financial impact of permanent placement candidates who do not remain with our clients through a guarantee period. Fees to clients are generally calculated as a percentage of the new employee’s annual compensation. No fees for permanent placement services are charged to employment candidates.

Contracting. We provide RPO clients with a range of outsourced professional contract staffing services and managed service provider services offered sometimes on a standalone basis and sometimes as part of a blended total talent solution. We recognize revenue for our contracting services over time as services are performed in an amount that reflects the consideration we expect to be entitled to and have an enforceable right to payment in exchange for our services, which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur incremental costs to obtain our contracting contracts. The costs incurred to fulfill these contracts are expensed as incurred.

Unsatisfied performance obligations. As a practical expedient, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an expected original duration of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Disaggregation of Revenue

The following table presents our disaggregated revenues from continuing operations by revenue source. For additional information on the disaggregated revenues by geographical segment, see Note 12 of the Notes to the Condensed Consolidated Financial Statements.
 
Three Months Ended March 31,
 
2020
 
2019
 
RPO Recruitment
$
9,838

 
$
9,567

 
Contracting
14,293

 
6,620

 
Total Revenue
$
24,131

 
$
16,187

 
 
 
 
 
 

NOTE 5 – DISCONTINUED OPERATIONS
    
On March 31, 2018, the Company completed the sale of its Recruitment and Talent Management ("RTM") businesses in Belgium, Europe (excluding Belgium), and Asia Pacific ("APAC") in separate transactions to Value Plus NV, Morgan Philips Group S.A., and Apache Group Holdings Pty Limited, respectively. The gross proceeds from the sale were $38,960. In addition, $17,626 of debt was assumed by the buyers. The RTM businesses met the criteria for discontinued operations set forth in ASC 205.

Reported results for the discontinued operations were as follows:
 
Three Months Ended
 
 
March 31, 2019
Loss from sale of discontinued operations
 
$
(131
)
Loss from discontinued operations before income taxes
 
(131
)
Provision for income taxes
 

Loss from discontinued operations, net of income taxes
 
$
(131
)

NOTE 6 – STOCK-BASED COMPENSATION
Incentive Compensation Plan
The Company maintains the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, as amended and restated May 24, 2016 (the "ISAP"), pursuant to which it can issue equity-based compensation incentives to eligible participants. The ISAP

- 9 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

permits the granting of stock options, restricted stock, restricted stock units, and other types of equity-based awards. The Compensation Committee (the "Compensation Committee") of the Board will establish such conditions as it deems appropriate on the granting or vesting of stock options, restricted stock, restricted stock units, and other types of equity-based awards. As determined by the Compensation Committee, equity awards also may be subject to immediate vesting upon the occurrence of certain events following a change in control of the Company. The Company primarily grants restricted stock and restricted stock units to its employees. A restricted stock unit is equivalent to one share of the Company’s common stock and is payable only in common stock of the Company issued under the ISAP.
The Compensation Committee administers the ISAP and may designate any of the following as a participant under the ISAP: any officer or other employee of the Company or its affiliates or individuals engaged to become an officer or employee; consultants or other independent contractors who provide services to the Company or its affiliates; and non-employee directors of the Company. On May 24, 2016, the Company's stockholders approved an amendment and restatement of the ISAP to, among other things, increase the number of shares of the Company's common stock that are reserved for issuance by 240,000 shares. As of March 31, 2020, there were 55,765 shares of the Company’s common stock available for future issuance under the ISAP.
The Company also maintains the Director Deferred Share Plan (the "Director Plan") pursuant to which it can issue restricted stock units to its non-employee directors. A restricted stock unit is equivalent to one share of the Company’s common stock and is payable only in common stock issued under the ISAP upon a director ceasing service as a member of the Company's Board. The restricted stock units vest immediately upon grant and are credited to each of the non-employee director's retirement accounts under the Director Plan. Restricted stock units issued under the Director Plan contain the right to a dividend equivalent award in the form of additional restricted stock units. The dividend equivalent award is calculated using the same rate as the cash dividend paid on a share of the Company's common stock, and then divided by the closing price of the Company’s common stock on the date the dividend is paid to determine the number of additional restricted stock units to grant. Dividend equivalent awards have the same vesting terms as the underlying awards. During the three months ended March 31, 2020, the Company did not grant any restricted stock units to its non-employee directors pursuant to the Director Plan.
As of March 31, 2020, 141,412 restricted stock units are deferred under the Company’s ISAP.
For the three months ended March 31, 2020 and 2019, the Company’s stock-based compensation expense related to restricted stock units was as follows:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Restricted stock units
 
$
144

 
$
184

 
Stock Options
Stock options granted by the Company generally expire between five and ten years after the date of grant and have an exercise price of at least 100% of the fair market value of the underlying share of common stock on the date of grant.
As of March 31, 2020, the Company had no unrecognized stock-based compensation expense related to outstanding unvested stock options.
Changes in the Company’s stock options for the three months ended March 31, 2020 and 2019 were as follows: 
 
Three Months Ended March 31,
 
2020
 
2019
 
Number of
Options
 
Weighted
Average
Exercise Price
per Share
 
Number of
Options
 
Weighted
Average
Exercise Price
per Share
Options outstanding at January 1,
5,000

 
$
24.90

 
5,000

 
$
24.90

Expired/forfeited

 

 

 

Options outstanding at March 31,
5,000

 
$
24.90

 
5,000

 
$
24.90

Options exercisable at March 31,
5,000

 
$
24.90

 
5,000

 
$
24.90


- 10 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)


Restricted Stock Units
As of March 31, 2020, the Company had approximately $181 of unrecognized stock-based compensation expense related to outstanding unvested restricted stock units. The Company expects to recognize that cost over a weighted average service period of 1.21 years. Restricted stock units have no voting or dividend rights until the awards are vested.
Changes in the Company’s restricted stock units for the three months ended March 31, 2020 and 2019 were as follows:
 
Three Months Ended March 31,
 
2020
 
2019
 
Number of
Restricted
Stock Units
 
Weighted
Average
Grant-Date
Fair Value
 
Number of
Restricted
Stock Units
 
Weighted
Average
Grant-Date
Fair Value
Unvested restricted stock units at January 1,
63,436

 
$
15.12

 
57,773

 
$
15.68

Granted

 
$

 
25,105

 
$
15.30

Shares earned above target (a)

 
$

 
723

 
$
17.00

Vested
(6,384
)
 
$
12.39

 
(27,794
)
 
$
16.25

Forfeited
(21,281
)
 
$
15.14

 
(6,071
)
 
$
17.00

Unvested restricted stock units at March 31,
35,771

 
$
15.60

 
49,736

 
$
15.37


(a)
The number of shares earned above target are based on the performance target established by the Compensation Committee at the initial grant date.

NOTE 7 – INCOME TAXES

Income Tax Provision

Under ASC 270, "Interim Reporting", and ASC 740-270, "Income Taxes – Intra Period Tax Allocation", the Company is required to adjust its effective tax rate for each quarter to be consistent with the estimated annual effective tax rate. Jurisdictions with a projected loss for the full year where no tax benefit can be recognized are excluded from the calculation of the estimated annual effective tax rate. Applying the provisions of ASC 270 and ASC 740-270 could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus packages. These measures may include deferring the due dates of tax payments or other changes to their income and non-income-based tax laws. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based-tax laws. For the three months ended March 31, 2020, the enactment of the CARES Act and other COVID-19 measures did not result in any material adjustments to our income tax provision, or to our net deferred tax assets as of March 31, 2020. The Company continues to monitor federal, state, and international regulatory developments in relation to COVID-19 and their potential impact on our operations.


- 11 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

Effective Tax Rate
The provision for income taxes for the three months ended March 31, 2020 was $107 on a pre-tax loss from continuing operations of $404, compared to a provision for income taxes of $65 on pre-tax loss from continuing operations of $1,706 for the same period in 2019. The Company’s effective income tax rate was negative 26.5% and negative 3.8% for the three months ended March 31, 2020 and 2019, respectively. For the three months ended March 31, 2020 and 2019, the effective tax rates differed from the U.S. Federal statutory rate of 21% primarily due to changes in valuation allowances in the U.S. and certain foreign jurisdictions which reduces or eliminates the effective tax rate on current year profits or losses, changes to unrecognized tax benefits, foreign tax rate differences, and non-deductible expenses.
Uncertain Tax Positions 
As of March 31, 2020 and December 31, 2019, the Company had $636 and $663, respectively, of unrecognized tax benefits, excluding interest and penalties, which if recognized in the future, would lower the Company’s effective income tax rate.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of the provision for income taxes. As of March 31, 2020 and December 31, 2019, the Company had $519 and $551, respectively, of accrued interest and penalties associated with unrecognized tax benefits.
Based on information available as of March 31, 2020, it is reasonably possible that the total amount of unrecognized tax benefits could decrease by up to $200 over the next 12 months as a result of projected resolutions of global tax examinations and controversies and potential expirations of the applicable statutes of limitations.
In many cases, the Company’s unrecognized tax benefits are related to tax years that remain subject to examination by the relevant tax authorities. Tax years with net operating losses ("NOLs") remain open until such losses expire or until the statutes of limitations for those years when the NOLs are used expire. As of March 31, 2020, the Company's open tax years, which remain subject to examination by the relevant tax authorities, were principally as follows:
 
 
Year
Earliest tax years which remain subject to examination by the relevant tax authorities:
 
 
U.S. Federal
 
2016
Majority of U.S. state and local jurisdictions
 
2015
Australia
 
2017
Belgium
 
2017
Canada
 
2015
Netherlands
 
2014
Switzerland
 
2015
United Kingdom
 
2018
Jurisdictions in Asia
 
2018
The Company believes that its unrecognized tax benefits as of March 31, 2020 are appropriately recorded for all years subject to examination above.
    
NOTE 8 – LOSS PER SHARE
Basic earnings (loss) per share is computed by dividing the Company’s net income (loss) by the weighted average number of shares outstanding during the period. When the effects are not anti-dilutive, diluted earnings (loss) per share is computed by dividing the Company’s net income (loss) by the weighted average number of shares outstanding and the impact of all dilutive potential common shares, primarily stock options "in-the-money", unvested restricted stock, and unvested restricted stock units. The dilutive impact of stock options, unvested restricted stock, and unvested restricted stock units is determined by applying the "treasury stock" method. Performance-based restricted stock awards are included in the computation of diluted earnings per share only to the extent that the underlying performance conditions: (i) are satisfied prior to the end of the reporting period; or (ii) would be satisfied if the end of the reporting period were the end of the related performance period and the result would be dilutive under

- 12 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)


the treasury stock method. Stock awards subject to vesting or exercisability based on the achievement of market conditions are included in the computation of diluted earnings per share only when the market conditions are met.
A reconciliation of the numerators and denominators of the basic and diluted earnings (loss) per share calculations for the three months ended March 31, 2020 and 2019 were as follows:

 
 
Three Months Ended March 31,
(a) 
 
2020
 
2019
Earnings (loss) per share ("EPS"):
 
 

 
 

EPS - basic and diluted:
 
 
 
 
Loss per share from continuing operations
 
$
(0.17
)
 
$
(0.54
)
Loss per share from discontinued operations
 

 
(0.04
)
Loss per share
 
$
(0.17
)
 
$
(0.58
)
EPS numerator - basic and diluted:
 
 
 
 
Loss from continuing operations
 
$
(511
)
 
$
(1,771
)
Loss from discontinued operations
 

 
(131
)
Net loss
 
$
(511
)
 
$
(1,902
)
EPS denominator (in thousands):
 
 

 
 
Weighted average common stock outstanding - basic
 
3,065

 
3,288

Common stock equivalents: stock options and restricted stock units (b)
 

 

Weighted average number of common stock outstanding - diluted
 
3,065

 
3,288


(a)
Earnings per share and weighted average shares outstanding for all periods presented reflect the Company's 1-for-10 reverse stock split, which was effective June 10, 2019. 

(b)
The diluted weighted average number of shares of common stock outstanding did not differ from the basic weighted average number of shares of common stock outstanding because the effects of any potential common stock equivalents (see Note 6 for further details on outstanding stock options and unvested restricted stock units) were anti-dilutive and therefore not included in the calculation of the denominator of dilutive earnings per share.
The weighted average number of shares outstanding used in the computation of diluted net income (loss) per share for the three months ended March 31, 2020 and 2019 did not include the effect of the following potentially outstanding shares of common stock because the effect would have been anti-dilutive:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Unvested restricted stock units
 
35,771

 
49,736

Stock options
 
5,000

 
5,000

Total
 
40,771

 
54,736


NOTE 9 – COMMITMENTS AND CONTINGENCIES
Consulting, Employment, and Non-compete Agreements
The Company has entered into various consulting and employment agreements with certain key members of management. These agreements generally (i) are one year in length, (ii) contain restrictive covenants, (iii) under certain circumstances, provide for compensation and, subject to providing the Company with a release, severance payments, and (iv) are automatically renewed annually unless either party gives sufficient notice of termination.

- 13 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

Litigation and Complaints 
The Company is subject, from time to time, to various claims, lawsuits, contracts disputes, and other complaints from, for example, clients, candidates, suppliers, landlords for both leased and subleased properties, former and current employees, and regulators or tax authorities arising in the ordinary course of business. The Company routinely monitors claims such as these, and records provisions for losses when the claim becomes probable and the amount due is estimable. Although the outcome of these claims cannot be determined, the Company believes that the final resolution of these matters will not have a material adverse effect on the Company’s financial condition, results of operations or liquidity.
For matters that reach the threshold of probable and estimable, the Company establishes reserves for legal, regulatory, and other contingent liabilities. The legal reserves are included under the caption "Other non-current liabilities" in the Condensed Consolidated Balance Sheets. The Company's reserves were $0 as of March 31, 2020 and December 31, 2019, respectively.
Operating Leases
Effective January 1, 2019, the Company adopted the new lease guidelines detailed in ASU 2016-02. Lease payments for short-term leases with terms of 12 months or less based on original lease commencement date are recognized on a straight-line basis over the lease term. Adoption of this standard resulted in the recording of net operating lease right-of-use assets and corresponding operating lease liabilities of $0.7 million for rented office spaces.

Our office space leases have remaining lease terms of one year to three years. Some of these operating leases include options to extend the lease terms, and some operating leases include options to terminate the leases earlier than the full terms. These options are considered in our determination of the valuation of our right-of-use assets and lease liabilities.
None of our operating leases include implicit rates, and we have determined that the difference between the contractual cost basis and the present value of lease payments calculated using incremental borrowing rates is not material. Our operating lease costs for the three months ended March 31, 2020 and March 31, 2019 were $139 and $136, respectively, (reflected in Net cash used in operating activities). The weighted average remaining lease term of our operating leases as of March 31, 2020 was 1.6 years.
As of March 31, 2020, future minimum operating lease payments are as follows:
 
2020
 
2021
 
2022
 
Total
Minimum lease payments
$
200

 
$
175

 
$
21

 
$
396

    
Invoice Finance Credit Facility

On April 8, 2019, the Company’s Australian subsidiary (“Australian Borrower”) entered into an invoice finance credit facility agreement (the “NAB Facility Agreement”) with National Australia Bank Limited ("NAB"). The NAB Facility Agreement provides the Australian Borrower with the ability to borrow funds based on a percentage of eligible trade receivables up to a maximum of 4 million Australian dollars. No receivables have terms greater than 90 days, and any risk of loss is retained by the Australian Borrower. The interest rate is calculated as the variable receivable finance indicator rate, plus a margin of 1.60% per annum. Borrowings under this facility are secured by substantially all of the assets of the Australian Borrower. The NAB Facility Agreement does not have a stated maturity date and can be terminated by either the Australian Borrower or NAB upon 90 days written notice. As of March 31, 2020, there were no amounts outstanding under the NAB Facility Agreement. Interest expense and fees incurred on the NAB Facility Agreement were $5 for the three months ended March 31, 2020.

The NAB Facility Agreement contains various restrictions and covenants for the Australian Borrower including (1) that EBITDA must be at least two times total interest paid on debt on a 12-month rolling basis; (2) minimum tangible net worth must be at least 2.5 million Australian dollars and be equal to at least 25% of total tangible assets on June 30 and December 31 (as defined in the NAB Facility Agreement); and (3) additional periodic reporting requirements to NAB. The Company was in compliance with all financial covenants under the NAB Facility Agreement as of March 31, 2020.



- 14 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss, net of applicable tax, consisted of the following:
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Foreign currency translation adjustments
 
$
(1,266
)
 
$
(479
)
Accumulated other comprehensive loss
 
$
(1,266
)
 
$
(479
)


NOTE 11 – STOCKHOLDERS' EQUITY
Common Stock
    
On July 30, 2015, the Company announced that its Board authorized the repurchase of up to $10,000 of the Company's common stock. The Company intends to make purchases from time to time as market conditions warrant. This authorization does not expire. During the three months ended March 31, 2020, no purchases of shares were made under this authorization. The Company repurchased 10,630 shares on the open market for $154 during the same period last year. As of March 31, 2020, under the July 30, 2015 authorization, the Company had repurchased 432,563 shares for a total cost of $8,297.

In addition to the shares repurchased above under the $10,000 authorization plan, on February 22, 2019, the Company commenced a tender offer to purchase up to 315,000 shares of the Company’s common stock at a purchase price of $15.00 per share.  The tender offer expired on March 22, 2019. In accordance with the terms and conditions of the tender offer, the Company acquired 246,863 shares for an aggregate cost of $3,703, excluding fees and expenses of $125.
On March 27, 2020, the Company, in addition to the $10,000 authorization plan, completed transactions with certain stockholders to repurchase 259,331 shares of the Company's common stock for an aggregate cost of $2,238, excluding fees of $1.

Reverse Stock Split

On June 10, 2019, the Company announced a Reverse Split of its outstanding shares of common stock at a ratio of 1-for-10 and that it had also reduced the number of authorized shares of common stock to 20 million shares. 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. All 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.

NOTE 12 – SEGMENT AND GEOGRAPHIC DATA
Segment Reporting
The Company operates in three reportable segments: the regional businesses of Americas, Asia Pacific, and Europe. Corporate expenses are reported separately from the three reportable segments and pertain to certain functions, such as executive management, corporate governance, human resources, accounting, administration, tax, and treasury. Segment information is presented in accordance with ASC 280, "Segment Reporting." This standard is based on a management approach that requires segmentation based upon the Company’s internal organization and disclosure of revenue and certain expenses based upon internal accounting methods. The Company’s financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Accounts receivable, net is the only significant asset separated by segment for internal reporting purposes.

- 15 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

 
Americas
 
Asia Pacific
 
Europe
 
Corporate
 
Inter-Segment Elimination
 
Total
For The Three Months Ended March 31, 2020
 
 
 
 
 
 
Revenue, from external customers
$
3,188

 
$
16,951

 
$
3,992

 
$

 
$

 
$
24,131

Inter-segment revenue

 
6

 

 

 
(6
)
 

Total revenue
$
3,188

 
$
16,957

 
$
3,992

 
$

 
$
(6
)
 
$
24,131

Adjusted net revenue, from external customers (a)
$
2,860

 
$
4,511

 
$
2,427

 
$

 
$

 
$
9,798

Inter-segment adjusted net revenue

 
6

 
(6
)
 

 

 

Total adjusted net revenue
$
2,860

 
$
4,517

 
$
2,421

 
$

 
$

 
$
9,798

EBITDA (loss) (b)
$
(60
)
 
$
337

 
$
63

 
$
(799
)
 
$

 
$
(459
)
Depreciation and amortization
(5
)
 
(12
)
 
(6
)
 
(1
)
 

 
(24
)
Intercompany interest (expense) income, net

 
(86
)
 

 
86

 

 

Interest (expense) income, net

 

 

 
79

 

 
79

Income (loss) from continuing operations before income taxes
$
(65
)
 
$
239

 
$
57

 
$
(635
)
 
$

 
$
(404
)
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2020
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable, net
$
2,857

 
$
7,172

 
$
2,715

 
$
34

 
$

 
$
12,778

Total assets
$
3,998

 
$
11,568

 
$
6,234

 
$
19,512

 
$

 
$
41,312


 
Americas
 
Asia Pacific
 
Europe
 
Corporate
 
Inter-
Segment
Elimination
 
Total
For The Three Months Ended March 31, 2019
 
 
 
 
 
 
 
 
Revenue, from external customers
$
3,140

 
$
8,679

 
$
4,368

 
$

 
$

 
$
16,187

Inter-segment revenue
35

 

 
1

 

 
(36
)
 

Total revenue
$
3,175

 
$
8,679

 
$
4,369

 
$

 
$
(36
)
 
$
16,187

Adjusted net revenue, from external customers (a)
$
2,762

 
$
4,590

 
$
2,044

 
$

 
$

 
$
9,396

Inter-segment adjusted net revenue
35

 
(30
)
 


 

 
(5
)
 

Total adjusted net revenue
$
2,797

 
$
4,560

 
$
2,044

 
$

 
$
(5
)
 
$
9,396

EBITDA (loss) (b)
$
(414
)
 
$
(48
)
 
$
(348
)
 
$
(1,191
)
 
$

 
$
(2,001
)
Depreciation and amortization
(5
)
 
(5
)
 
(7
)
 
(1
)
 

 
(18
)
Intercompany interest (expense) income, net

 
(101
)
 

 
101

 

 

Interest income, net

 

 

 
313

 

 
313

Income (loss) from continuing operations before income taxes
$
(419
)
 
$
(154
)
 
$
(355
)
 
$
(778
)
 
$

 
$
(1,706
)
 
 
 
 
 
 
 
 
 
 
 
 
As of March 31, 2019
 

 
 

 
 

 
 

 
 

 
 

Accounts receivable, net
$
3,169

   
$
6,083

 
$
3,298

 
$
37

 
$

 
$
12,587

Total assets
$
3,737

 
$
10,246

 
$
6,886

 
$
24,984

 
$

 
$
45,853


(a)
Adjusted net revenue is net of the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations. Direct contracting costs and reimbursed expenses include the direct staffing costs of salaries, payroll taxes, employee benefits, travel expenses, and insurance costs for the Company’s contractors and reimbursed out-of-pocket expenses and other direct costs. The region where services are provided, the mix of RPO recruitment and contracting, and the functional nature of the staffing services provided can affect operating income and

- 16 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

EBITDA. The salaries, commissions, payroll taxes, and employee benefits related to recruitment professionals are included under the caption "Salaries and related" in the Consolidated Statements of Operations.

(b)
SEC Regulation S-K Item 229.10(e)1(ii)(A) defines EBITDA as earnings before interest, taxes, depreciation and amortization. EBITDA is presented to provide additional information to investors about the Company's operations on a basis consistent with the measures that the Company uses to manage its operations and evaluate its performance. Management also uses this measurement to evaluate working capital requirements. EBITDA should not be considered in isolation or as a substitute for operating income and net income prepared in accordance with U.S. GAAP or as a measure of the Company's profitability.

Geographic Data Reporting
A summary of revenues for the three months ended March 31, 2020 and 2019 and net assets by geographic area as of March 31, 2020 and 2019, presented net of discontinued operations, were as follows:
 
 
Australia
United
Kingdom
 
United
States
 
Other
 
Total
For The Three Months Ended March 31, 2020
 
 
 
 
Revenue (a)
 
$
15,031

$
3,452

 
$
2,873

 
$
2,775

 
$
24,131

For The Three Months Ended March 31, 2019
 
 
 
 
Revenue (a)
 
$
6,768

$
4,011

 
$
2,851

 
$
2,557

 
$
16,187

As of March 31, 2020
 
 
 

 
 

 
 

 
 

Net assets
 
$
3,308

$
2,159

 
$
21,185

 
$
5,978

 
$
32,630

As of March 31, 2019
 
 
 

 
 

 
 

 
 

Net assets
 
$
3,148

$
2,645

 
$
24,176

 
$
4,870

 
$
34,839

  
(a) Revenue by geographic region disclosed above is net of any inter-segment revenue and, therefore, represents only revenue from external customers according to the location of the operating subsidiary.


NOTE 13 – STOCKHOLDER RIGHTS PLAN

On October 15, 2018, the Company’s Board declared a dividend to the Company’s stockholders of record as of the close of business on October 25, 2018 (the "Record Date"), for each outstanding share of the Company’s common stock, of one right (a "Right") to purchase one one-hundredth of a share of a new series of participating preferred stock of the Company. The terms of the Rights are set forth in the Rights Agreement, dated as of October 15, 2018 (the "Rights Agreement"), by and between the Company and Computershare Trust Company, N.A., as rights agent. The Company's stockholders approved the Rights Agreement at the Company’s 2019 annual meeting of stockholders held on May 6, 2019. Each Right allows its holder to purchase from the Company one one-hundredth of a share of the Company’s Series B Junior Participating Preferred Stock ("Series B Preferred Stock") for a purchase price of $3.50. Each fractional share of Series B Preferred Stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of common stock. Prior to exercise, however, a Right does not give its holder any dividend, voting or liquidation rights.

The Board entered into the Rights Agreement in an effort to preserve the value of the Company’s significant U.S. NOLs and other tax benefits. The Company’s ability to utilize its NOLs may be substantially limited if the Company experiences an "ownership change" within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"). In general, an "ownership change" would occur if the percentage of the Company’s ownership by one or more "5-percent shareholders" (as defined in the Code) increases by more than 50 percent over the lowest percentage owned by such stockholders at any time during the prior three years. The Rights Agreement is designed to preserve the Company’s tax benefits by deterring transfers of common stock that could result in an "ownership change" under Section 382 of the Code.

The Rights Agreement replaced the Company’s prior rights agreement designed to preserve the value of the Company’s NOLs, which was approved by stockholders in 2015 and expired in accordance with its terms in January 2018. The Company also has a provision in its Amended and Restated Certificate of Incorporation (the "Charter Provision") which generally prohibits

- 17 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

transfers of its common stock that could result in an ownership change. The Company believes that in light of the significant amount of the NOLs, it is advisable to adopt the Rights Agreement in addition to the Charter Provision. In general terms, the Rights Agreement imposes a significant penalty upon any person or group that acquires beneficial ownership (as defined under the Rights Agreement) of 4.99% or more of the outstanding common stock without the prior approval of the Board (an "Acquiring Person"). Any Rights held by an Acquiring Person are void and may not be exercised.

The Rights will not be exercisable until the earlier of (i) 10 days after a public announcement by the Company that a person or group has become an Acquiring Person; and (ii) 10 business days (or a later date determined by the Board) after a person or group begins a tender or an exchange offer that, if completed, would result in that person or group becoming an Acquiring Person.
    
Until the date that the Rights become exercisable (the "Distribution Date"), common stock certificates will also evidence the Rights and will contain a notation to that effect. Any transfer of shares of common stock prior to the Distribution Date will constitute a transfer of the associated Rights. After the Distribution Date, the Rights will separate from the common stock and be evidenced by Right certificates, which the Company will mail to all holders of Rights that have not become void. After the Distribution Date, if a person or group already is or becomes an Acquiring Person, all holders of Rights, except the Acquiring Person, may exercise their Rights upon payment of the purchase price to purchase shares of common stock (or other securities or assets as determined by the Board) with a market value of two times the purchase price (a "Flip-in Event"). After the Distribution Date, if a Flip-in Event has already occurred and the Company is acquired in a merger or similar transaction, all holders of Rights, except the Acquiring Person, may exercise their Rights upon payment of the purchase price, to purchase shares of the acquiring or other appropriate entity with a market value of two times the purchase price of the Rights. Rights may be exercised to purchase Series B Preferred Stock only after the Distribution Date occurs and prior to the occurrence of a Flip-in Event as described above. A Distribution Date resulting from the commencement of a tender offer or an exchange offer as described in the second bullet point above could precede the occurrence of a Flip-in Event, in which case the Rights could be exercised to purchase Series B Preferred Stock. A Distribution Date resulting from any occurrence described in the first bullet point above would necessarily follow the occurrence of a Flip-in Event, in which case the Rights could be exercised to purchase shares of common stock (or other securities or assets) as described above.

The Rights Agreement grants discretion to the Board to designate a person as an "Exempt Person" or to designate a transaction involving common stock as an "Exempt Transaction." An "Exempt Person" cannot become an Acquiring Person under the Rights Agreement. The Board can revoke an "Exempt Person" designation if it subsequently makes a contrary determination regarding whether a transaction by such person may jeopardize the availability of the Company’s tax benefits.

The Rights will expire on the earliest of (i) October 15, 2021, the third anniversary of the date on which the Board authorized and declared a dividend of the Rights, or such earlier date as of which the Board determines that the Rights Agreement is no longer necessary for the preservation of the Company’s tax benefits, (ii) the time at which the Rights are redeemed, (iii) the time at which the Rights are exchanged, (iv) the effective time of the repeal of Section 382 of the Code if the Board determines that the Rights Agreement is no longer necessary for the preservation of the Company’s tax benefits, (v) the first day of a taxable year to which the Board determines that no NOLs or other tax benefits may be carried forward, and (vi) the day following the certification of the voting results of the Company’s 2019 annual meeting of stockholders, if stockholder ratification of the adoption of the Rights Agreement has not been obtained prior to that date.

The Board may redeem all (but not less than all) of the Rights for a redemption price of $0.001 per Right at any time before the later of the Distribution Date and the date of the first public announcement or disclosure by the Company that a person or group has become an Acquiring Person. Once the Rights are redeemed, the right to exercise the Rights will terminate, and the only right of the holders of such Rights will be to receive the redemption price. The redemption price will be adjusted if the Company declares a stock split or issues a stock dividend on common stock. After the later of the Distribution Date and the date of the first public announcement by the Company that a person or group has become an Acquiring Person, but before an Acquiring Person owns 50% or more of the outstanding common stock, the Board may exchange each Right (other than Rights that have become void) for one share of common stock or an equivalent security.

The Board may adjust the purchase price of the Series B Preferred Stock, the number of shares of Series B Preferred Stock issuable and the number of outstanding Rights to prevent dilution that may occur as a result of certain events, including, among others, a stock dividend, a stock split or a reclassification of the Series B Preferred Stock or common stock. No adjustments to the purchase price of less than one percent will be made.


- 18 -

HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

Before the time the Rights cease to be redeemable, the Board may amend or supplement the Rights Agreement without the consent of the holders of the Rights, except that no amendment may decrease the redemption price below $0.001 per Right. At any time thereafter, the Board may amend or supplement the Rights Agreement to cure an ambiguity, to alter time period provisions, to correct inconsistent provisions or to make any additional changes to the Rights Agreement, but only to the extent that those changes do not impair or adversely affect the interests of the holders of Rights and do not result in the Rights again becoming redeemable. The limitations on the Board’s ability to amend the Rights Agreement does not affect the Board’s power or ability to take any other action that is consistent with its fiduciary duties, including, without limitation, accelerating or extending the expiration date of the Rights, or making any amendment to the Rights Agreement that is permitted by the Rights Agreement or adopting a new rights agreement with such terms as the Board determines in its sole discretion to be appropriate.


NOTE 14 – SUBSEQUENT EVENTS

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 (“WHO”) 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 April and May 2020 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. In addition, the COVID-19 pandemic has negatively impacted certain currencies compared to the U.S. dollar in several countries we operate in, including Australia. While the Company expects this matter to negatively impact its operating results, the expected impact cannot be reasonably estimated at this time.

In early April 2020, the Company's wholly owned U.S. subsidiary, Hudson Global Resources Management, Inc. applied for a $1.3 million loan in connection with the Paycheck Protection Program (“PPP”) as part of the CARES Act, administered by the U.S. Small Business Administration (“SBA”). As a result of the COVID-19 pandemic, in applying for the loan the Company made a good faith assertion based upon the degree of uncertainty introduced to the capital markets and the industries affecting the Company's customers and the Company's dependency to curtail expenses to fund ongoing operations as the anticipated reduction in RPO recruitment revenue is expected to impact the business. The loan proceeds were received on April 26, 2020. The PPP loan proceeds will be used to help offset payroll costs over the course of eight weeks as stipulated in the legislation. All or a portion of the PPP loan may be forgiven by the SBA upon application by the Company and upon documentation of expenditures in accordance with the SBA requirements. Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and covered utilities during the eight-week period beginning on the date of loan approval. The Company intends to comply with the loan forgiveness provisions in the legislation, however, there are no assurances that the Company will obtain forgiveness for any portion of the loan.









- 19 -


ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto, included in Part I of this Form 10-Q. The reader should also refer to the Condensed Consolidated Financial Statements and notes of Hudson Global, Inc. and its subsidiaries (the "Company") filed in its Annual Report on Form 10-K for the year ended December 31, 2019. This MD&A contains forward-looking statements. Please see "FORWARD-LOOKING STATEMENTS" for a discussion of the uncertainties, risks and assumptions associated with these statements. This MD&A also uses the non-generally accepted accounting principle measure of earnings before interest, taxes, depreciation and amortization ("EBITDA"). See Note 12 to the Condensed Consolidated Financial Statements of this Form 10-Q for EBITDA segment reconciliation information. The tables and information in this MD&A were derived from exact numbers and may have immaterial rounding differences.
This MD&A includes the following sections:
Executive Overview
Results of Operations
Liquidity and Capital Resources
Contingencies
Recent Accounting Pronouncements
Critical Accounting Policies
Forward-Looking Statements

Executive Overview
    
The Company's strategy is to provide global Recruitment Process Outsourcing (“RPO") solutions to customers. With direct operations in ten countries and relationships with specialized professionals and organizations around the globe, the Company brings a strong ability to match talent with opportunities by assessing, recruiting, developing, and engaging highly successful people for the Company's clients. The Company combines broad geographic presence, world-class talent solutions and a tailored, consultative approach to help businesses and professionals achieve maximum performance. The Company's focus is to continually upgrade its service offerings and delivery capability tools to make candidates more successful in achieving its clients' business requirements.

The Company’s proprietary frameworks, assessment tools and leadership development programs, coupled with its global footprint allows the Company to design and implement regional and global outsourced recruitment solutions that the Company believes greatly enhance the quality and efficiency of its clients' hiring.
To accelerate the implementation of the Company's strategy, the Company engaged in the following initiatives:
Facilitating growth and development of the global RPO business through strategic investments in people, innovation and technology.
Building and differentiating the Company's brand through its unique outsourcing solutions offerings.
Improving the Company’s cost structure and efficiency of its support functions and infrastructure.    

We continue to explore all strategic alternatives to maximize value for shareholders, including without limitation, improving the market position and profitability of our services in the marketplace, and enhancing our valuation. We may pursue
our goals through organic growth, strategic initiatives, or other alternatives. We will also continue to monitor capital markets for opportunities to repurchase shares, and consider other actions designed to enhance shareholder value, as well as review information regarding potential acquisitions and provide information to third parties, from time to time.

This MD&A discusses the results of the Company’s RPO businesses for the three months ended March 31, 2020 and 2019.


- 20 -



Current Market Conditions

Economic conditions in most of the world's major markets are projected to decline in 2020 compared to 2019, primarily due to the impact of the coronavirus (COVID-19). These expected declines have resulted in increased volatility in global currencies. Weaker foreign currencies compared to the U.S. dollar during a reporting period causes local currency results of the Company's foreign operations to be translated into fewer U.S. dollars. The Company closely monitors the economic environment and business climate in its markets and responds accordingly.

COVID-19 Pandemic

The emergence of COVID-19 around the world presents significant risks to the Company, not all of which the Company is able to fully evaluate or even to foresee at the current time. While the COVID-19 pandemic did not materially adversely affect the Company’s financial results and business operations in the Company’s first fiscal quarter ended March 31, 2020, economic and health conditions in the United States and across most of the globe have changed rapidly since the end of the quarter.  In the short-term, some of our customers 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. In addition, the COVID-19 pandemic has negatively impacted certain currencies compared to the U.S. dollar in several countries we operate in, including Australia.

The COVID-19 pandemic is affecting the Company’s operations in the second quarter, and may continue to do so in future quarters. All of these factors may have far reaching impacts on the Company’s business, operations, and financial results and conditions, directly and indirectly, including without limitation impacts on the health of the Company’s management and employees, marketing and sales operations, customer and consumer behaviors, and on the overall economy. The scope and nature of these impacts, most of which are beyond the Company’s control, continue to evolve and the outcomes are uncertain.

Due to the above circumstances and as described generally in this Form 10-Q, the Company’s results of operations for the three month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the full fiscal year. Management cannot predict the full impact of the COVID-19 pandemic on the Company’s sales or on economic conditions generally. The ultimate extent of the effects of the COVID-19 pandemic on the Company is highly uncertain and will depend on future developments, and such effects could exist for an extended period of time even after the pandemic.

Financial Performance
    
The Company achieved mixed financial performance for the first quarter of 2020 in the markets in which it operates. On a constant currency basis, for the three months ended March 31, 2020, revenue increased by $8.6 million, or 55%. The changes in revenue were driven by strong results in Australia slightly offset by the United Kingdom.

The following is a summary of the highlights for the three months ended March 31, 2020 and 2019. This summary should be considered in the context of the additional disclosures in this MD&A which further highlight the results by segment.
Revenue was $24.1 million for the three months ended March 31, 2020, compared to $16.2 million for the same period in 2019, an increase of $7.9 million, or 49%.
On a constant currency basis, the Company's revenue increased $8.6 million, or 55%, primarily due to an increase of $8.0 million in contracting revenue (up 127% compared to the same period in 2019).
Adjusted net revenue was $9.8 million for the three months ended March 31, 2020, compared to $9.4 million for the same period in 2019, an increase of $0.4 million, or 4%.
On a constant currency basis, adjusted net revenue increased $0.7 million, or 8%, due to a increase of $0.6 million and $0.1 million in RPO recruitment adjusted net revenue and in contracting adjusted net revenue, respectively.


- 21 -


Selling, general and administrative expenses (including salaries and related expenses) and other non-operating income (expense) ("SG&A and Non-Op") were $10.3 million for the three months ended March 31, 2020, compared to $11.4 million for the same period in 2019, a decrease of $1.1 million, or 10%.
On a constant currency basis, SG&A and Non-Op decreased $0.8 million, or 7%. SG&A and Non-Op, as a percentage of revenue, was 43% for the three months ended March 31, 2020, compared to 71% for the same period in 2019.
EBITDA loss was $0.5 million for the three months ended March 31, 2020, compared to EBITDA loss of $2.0 million for the same period in 2019, a decrease in EBITDA loss of $1.5 million. On a constant currency basis, EBITDA loss decreased $1.5 million.
Net loss was $0.5 million for the three months ended March 31, 2020, compared to net loss of $1.9 million for the same period in 2019, a decrease in net loss of $1.4 million. On a constant currency basis, net loss decreased $1.4 million.
Constant Currency
The Company operates on a global basis, with the majority of its revenue generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect the Company's results of operations. For the discussion of reportable segment results of operations, the Company uses constant currency information. Constant currency compares financial results between periods as if exchange rates had remained constant period-over-period. The Company defines the term "constant currency" to mean that financial data for a previously reported period are translated into U.S. dollars using the same foreign currency exchange rates that were used to translate financial data for the current period. The Company’s management reviews and analyzes business results in constant currency and believes these results better represent the Company’s underlying business trends. Changes in foreign currency exchange rates generally impact only reported earnings.
Changes in revenue, adjusted net revenue, SG&A and Non-Op, operating income (loss), net income (loss), and EBITDA (loss) from continuing operations include the effect of changes in foreign currency exchange rates. The tables below summarize the impact of foreign currency exchange adjustments on the Company’s operating results for the three months ended March 31, 2020 and 2019.

- 22 -


 
 
Three Months Ended March 31,
 
2020
 
2019
 
As
 
As
 
Currency
 
Constant
$ in thousands
reported
 
reported
 
translation
 
currency
Revenue:
 

 
 

 
 

 
 

Americas
$
3,188

 
$
3,140

 
$
(3
)
 
$
3,137

Asia Pacific
16,951

 
8,679

 
(560
)
 
8,119

Europe
3,992

 
4,368

 
(77
)
 
4,291

Total
$
24,131

 
$
16,187

 
$
(640
)
 
$
15,547

Adjusted net revenue (a):
 

 
 

 
 

 
 

Americas
$
2,860

 
$
2,762

 
$
1

 
$
2,763

Asia Pacific
4,511

 
4,590

 
(274
)
 
4,316

Europe
2,427

 
2,044

 
(33
)
 
2,011

Total
$
9,798

 
$
9,396

 
$
(306
)
 
$
9,090

SG&A and Non-Op (b):
 
 
 

 
 

 
 

Americas
$
2,919

 
$
3,211

 
$
1

 
$
3,212

Asia Pacific
4,180

 
4,609

 
(286
)
 
4,323

Europe
2,359

 
2,393

 
(39
)
 
2,354

Corporate
799

 
1,184

 
3

 
1,187

Total
$
10,257

 
$
11,397

 
$
(321
)
 
$
11,076

Operating loss:
 
 
 

 
 

 
 

Americas
$
72

 
$
(297
)
 
$
(1
)
 
$
(298
)
Asia Pacific
514

 
160

 
(8
)
 
152

Europe
59

 
(202
)
 
(4
)
 
(206
)
Corporate
(1,169
)
 
(1,643
)
 

 
(1,643
)
Total
$
(524
)
 
$
(1,982
)
 
$
(13
)
 
$
(1,995
)
Net loss, consolidated
$
(511
)
 
$
(1,902
)
 
$
18

 
$
(1,884
)
EBITDA loss from continuing operations (c):
 

 
 

 
 

 
 

Americas
$
(60
)
 
$
(414
)
 
$

 
$
(414
)
Asia Pacific
337

 
(48
)
 
12

 
(36
)
Europe
63

 
(348
)
 
2

 
(346
)
Corporate
(799
)
 
(1,191
)
 

 
(1,191
)
Total
$
(459
)
 
$
(2,001
)
 
$
14

 
$
(1,987
)
 
(a)
Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations.

(b)
SG&A and Non-Op is a measure that management uses to evaluate the segments’ expenses, which include the following captions on the Condensed Consolidated Statement of Operations: Salaries and related, other selling, general and administrative, and Other expense, net. Corporate management service allocations are included in the segments’ other income (expense).

(c)
See EBITDA reconciliation in the following section.
Use of EBITDA (Non-GAAP measure)
Management believes EBITDA is a meaningful indicator of the Company’s performance that provides useful information to investors regarding the Company’s financial condition and results of operations. Management also considers EBITDA to be the best indicator of operating performance and most comparable measure across the regions in which the Company operates. Management also uses this measure to evaluate capital needs and working capital requirements. EBITDA should not be considered in isolation or as a substitute for operating income, or net income prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") or as a measure of the Company’s profitability. EBITDA is derived from net income (loss) adjusted for the provision for (benefit from) income taxes, interest expense (income), and depreciation and amortization.
 

- 23 -


The reconciliation of EBITDA loss to the most directly comparable GAAP financial measure is provided in the table below:
 
 
 
Three Months Ended
 
 
March 31,
$ in thousands
 
2020
 
2019
Net loss
 
$
(511
)
 
$
(1,902
)
Adjustment for loss from discontinued operations, net of income taxes
 

 
(131
)
Loss from continuing operations
 
(511
)
 
(1,771
)
Adjustments to loss from continuing operations
 
 
 
 
Provision for income taxes
 
107

 
65

Interest income, net
 
(79
)
 
(313
)
Depreciation and amortization expense
 
24

 
18

   Total adjustments from net loss to EBITDA loss
 
52

 
(230
)
EBITDA loss from continuing operations
 
$
(459
)
 
$
(2,001
)
 

- 24 -


Results of Operations
Americas (reported currency) 
Revenue 

 
Three Months Ended March 31,
 
2020
 
2019
 
Change in amount
 
Change in %
$ in millions
 As reported
 
 As reported
 
 
Americas
 
 
 
 
 
 
 
Revenue
$
3.2

 
$
3.1

 
$

 
2
%
 
For the three months ended March 31, 2020, RPO recruitment and contracting revenue each increased slightly by 1% and 5%, respectively, as compared to the same period in 2019. The increase in revenue was attributable to new clients and growth of existing clients.

Adjusted net revenue
 
Three Months Ended March 31,
 
2020
 
2019
 
Change in amount
 
Change in %
$ in millions
 As reported
 
 As reported
 
 
Americas
 
 
 
 
 
 
 
Adjusted net revenue
$
2.9

 
$
2.8

 
$
0.1

 
4
%
Adjusted net revenue as a percentage of revenue
90
%
 
88
%
 
N/A

 
N/A

 
For the three months ended March 31, 2020, RPO recruitment adjusted net revenue increased $0.1 million, or 4%, as compared to the same period in 2019. The increase in RPO recruitment adjusted net revenue was driven by the revenue growth.

For the three months ended March 31, 2020, total adjusted net revenue as a percentage of revenue was 90%, as compared to 88% for the same period in 2019.
    
SG&A and Non-Op 
 
Three Months Ended March 31,
 
2020
 
2019
 
Change in amount
 
Change in %
 $ in millions
 As reported
 
 As reported
 
 
Americas
 
 
 
 
 
 
 
SG&A and Non-Op
$
2.9

 
$
3.2

 
$
(0.3
)
 
(9
)%
SG&A and Non-Op as a percentage of revenue
92
%
 
102
%
 
N/A

 
N/A


For the three months ended March 31, 2020, SG&A and Non-Op decreased $0.3 million, or 9%, as compared to the same period in 2019, primarily due to lower consultant staff costs.



- 25 -


Operating Income and EBITDA
 
Three Months Ended March 31,
 
2020
 
2019
 
Change in amount