UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
x
FORM 10-Q/A

(Amendment No. 1)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended SeptemberJune 30, 20172022
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: 000-50129001-38704

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

59-3547281
Delaware59-3547281
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
132553 Forest Avenue, of the Americas, New York, NY 10019Suite 102, Old Greenwich, CT 06870
(Address of principal executive offices) (Zip Code)
(212) 351-7300(475) 988-2068
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par valueHSONThe NASDAQ Stock Market LLC
Preferred Share Purchase RightsThe 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 Registrantregistrant 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes  x☒     No  o☐
 
Indicate by check mark whether the Registrantregistrant 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“large accelerated filer"filer”, "accelerated filer"“accelerated filer”, "smaller“smaller reporting company"company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filero☐Accelerated filerx☐
Non-accelerated filero☒(do not check if a smaller reporting company)Smaller reporting companyx☒
Emerging growth companyo☐

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.

ClassOutstanding on September 30, 2017July 20, 2022
Common Stock - $0.001 par value31,265,0512,822,187




HUDSON GLOBAL, INC.
INDEX



Page
Item 1.
Condensed Consolidated StatementStatements of Operations - Three and NineSix Months Ended SeptemberJune 30, 20172022 and 20162021
1
Condensed Consolidated StatementStatements of Other Comprehensive Income (Loss) - Three and NineSix Months Ended SeptemberJune 30, 20172022 and 20162021
2
Condensed Consolidated Balance Sheets – SeptemberJune 30, 20172022 and December 31, 20162021
3
Condensed Consolidated Statements of Cash Flows - NineSix Months Ended SeptemberJune 30, 20172022 and 20162021
4
Condensed Consolidated StatementStatements of Stockholders’ Equity – NineThree and Six Months Ended SeptemberJune 30, 20172022 and 2021
5
Notes to Condensed Consolidated Financial Statements
6
Item 2.
2726
Item 3.
4741
Item 4.
4741
Item 1.
4842
Item 1A.
4842
Item 2.
4842
Item 3.
4843
Item 4.
4843
Item 5.
4843
Item 6.
4844
5044
4945




EXPLANATORY NOTE

Hudson Global, Inc. (the “Company” or “Hudson”, “we”, “us”, and “our”) is filing this Amendment (this “Amended Form 10-Q”) to its Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2022 (the “Original Form 10-Q”), originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 11, 2022.

As disclosed in the Company’s Current Report on Form 8-K, as filed with the SEC on March 30, 2023, the Company is restating its previously issued unaudited condensed consolidated financial statements for the three- and six-month periods ended June 30, 2022. Subsequent to the filing of the Original Form 10-Q, management identified an error related to the accounting treatment of a discretionary bonus paid by the Company on behalf of a customer. The effect of this error is an understatement of revenue and direct contracting costs and reimbursed expenses in the amount of $5.762 million for the three- and six-month periods ended June 30, 2022. This Amended Form 10-Q amends revenue and direct contracting costs and reimbursed expenses accordingly. The error had no impact on the Company’s consolidated balance sheet, consolidated statement of cash flows, net income, the presentation of non-GAAP metrics EBITDA and adjusted EBITDA, or any other accounts for such periods. Please see Note 16 to this Amended Form 10-Q, Restatement of Previously Reported Financial Statements for additional information and a summary of the accounting impacts of these adjustments to revenue and direct contracting costs and reimbursed expenses.

As a result of the error, the Company has concluded there was a material weakness in the Company’s internal control over financial reporting as of June 30, 2022 and that its disclosure controls and procedures were ineffective as of June 30, 2022. See additional discussion included in Part I Item 4 and Part II Item 1A of this Amended Form 10-Q.

We are filing this Amended Form 10-Q to amend and restate the Original Form 10-Q with modification as necessary to reflect the restatement. The following items have been amended to reflect the restatement:

Part I, Item 1. Condensed Consolidated Statements of Operations

Part I, Item 1. Note 4 - Revenue Recognition

Part I, Item 1. Note 14 - Segment and Geographic Data

Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Part 1, Item 3. Quantitative and Qualitative Disclosures about Market Risk

Part I, Item 4. Controls and Procedures

Part II, Item 1A. Risk Factors

In addition, this Amended Form 10-Q updates the signature page. In accordance with Rule 12b-15 under the Exchange Act, the Company is also including with this Amended Form 10-Q new certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2022 from the Company’s Chief Executive Officer (as principal executive officer) and Chief Financial Officer (as principal financial officer) dated as of the filing date of this Amended Form 10-Q (included in Part II, Item 6. “Exhibits” and attached as Exhibits 31.1, 31.2, 32.1, and 32.2).

This Amended Form 10-Q is presented as of the filing date of the Original Form 10-Q and does not reflect events occurring after that date, or modify or update disclosures in any way other than as required to reflect the restatements as described below. Accordingly, this Amended Form 10-Q should be read in conjunction with our filings with the SEC subsequent to the date on which we filed the Original Form 10-Q. Among other things, forward-looking statements made in the Original Form 10-Q have not been revised to reflect events, results or developments that occurred or facts that became known to the Company after the date of the Original Form 10-Q, other than the restatement.





PART I – FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS


HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
(As restated, see Note 16)(As restated, see Note 16)
Revenue$56,723 $39,674 $108,640 $74,135 
Operating expenses:
Direct contracting costs and reimbursed expenses29,449 24,583 55,793 46,326 
Salaries and related19,221 12,281 37,482 22,871 
Office and general2,757 2,018 5,188 3,642 
Marketing and promotion1,079 384 2,034 760 
Depreciation and amortization337 113 661 223 
Total operating expenses52,843 39,379 101,158 73,822 
Operating income3,880 295 7,482 313 
Non-operating income (expense):
Interest income, net3 9 5 19 
Other expense, net(9)(37)(58)(90)
Income before income taxes3,874 267 7,429 242 
Provision for income taxes781 389 1,317 567 
Net income (loss)$3,093 $(122)$6,112 $(325)
Earnings (loss) per share:
Basic$1.02 $(0.04)$2.04 $(0.11)
Diluted$0.98 $(0.04)$1.95 $(0.11)
Weighted-average shares outstanding:
Basic3,028 2,906 2,997 2,899 
Diluted3,146 2,906 3,132 2,899 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Revenue$118,108
 $108,136
 $335,104
 $322,430
Direct costs70,863
 64,594
 197,101
 190,787
Gross margin47,245
 43,542
 138,003
 131,643
Operating expenses:       
Salaries and related36,473
 34,151
 105,978
 106,282
Other selling, general and administrative9,699
 9,193
 27,888
 29,019
Depreciation and amortization697
 801
 2,050
 2,294
Business reorganization477
 183
 636
 964
Operating income (loss)(101) (786) 1,451
 (6,916)
Non-operating income (expense):       
Interest income (expense), net(110) (109) (317) (264)
Other income (expense), net(121) (295) (511) (445)
Income (loss) from continuing operations before provision for income taxes(332) (1,190) 623
 (7,625)
Provision for income taxes from continuing operations500
 718
 1,525
 1,200
Income (loss) from continuing operations(832) (1,908) (902) (8,825)
Income (loss) from discontinued operations, net of income taxes(16) 35
 (34) 327
Net income (loss)$(848) $(1,873) $(936) $(8,498)
Basic and diluted earnings (loss) per share:       
Basic and diluted earnings (loss) per share from continuing operations$(0.03) $(0.06) $(0.03) $(0.26)
Basic and diluted earnings (loss) per share from discontinued operations—
 —
 —
 0.01
Basic and diluted earnings (loss) per share$(0.03) $(0.06) $(0.03) $(0.25)
Weighted-average shares outstanding:       
Basic32,151
 33,572
 32,120
 34,121
Diluted32,151
 33,572
 32,120
 34,121
Dividends declared per common share$—
 $—
 $—
 $0.10




See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.





- 1 -

HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Comprehensive income (loss):
Net income (loss)$3,093 $(122)$6,112 $(325)
Other comprehensive income (loss):
Foreign currency translation adjustment, net of income taxes(1,412)(18)(1,275)(244)
Total other comprehensive loss, net of income taxes(1,412)(18)(1,275)(244)
Comprehensive income (loss)$1,681 $(140)$4,837 $(569)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Comprehensive income (loss):       
Net income (loss)$(848) $(1,873) $(936) $(8,498)
Other comprehensive income (loss):       
Foreign currency translation adjustment, net of applicable income taxes965
 300
 3,594
 (864)
Pension liability adjustment, net of income taxes—
 (4) 4
 (11)
Total other comprehensive income (loss), net of income taxes965
 296
 3,598
 (875)
Comprehensive income (loss)$117
 $(1,577) $2,662
 $(9,373)


See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.

- 2 -


HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
(Unaudited)
September 30,
2017		 December 31,
2016		June 30,
2022		December 31,
2021
ASSETS 
  
ASSETS  
Current assets: 
  
Current assets:  
Cash and cash equivalents$16,835
 $21,322
Cash and cash equivalents$25,849 $21,714 
Accounts receivable, less allowance for doubtful accounts of $778 and $799, respectively71,325
 58,517
Accounts receivable, less allowance for doubtful accounts of $64 and $196, respectivelyAccounts receivable, less allowance for doubtful accounts of $64 and $196, respectively31,646 25,748 
Restricted cash, currentRestricted cash, current165 222 
Prepaid and other4,962
 4,265
Prepaid and other1,770 1,476 
Current assets of discontinued operations—
 38
Total current assets93,122
 84,142
Total current assets59,430 49,160 
Property and equipment, net6,173
 7,041
Deferred tax assets, non-current6,698
 6,494
Other assets, non-current3,814
 4,135
Property and equipment, net of accumulated depreciation of $823 and $807, respectivelyProperty and equipment, net of accumulated depreciation of $823 and $807, respectively446 371 
Operating lease right-of-use assetsOperating lease right-of-use assets943 477 
Deferred tax assets, netDeferred tax assets, net1,494 1,345 
Restricted cashRestricted cash190 177 
GoodwillGoodwill4,219 4,219 
Intangible assets, net of accumulated amortization of $1,087 and $532, respectivelyIntangible assets, net of accumulated amortization of $1,087 and $532, respectively4,933 5,488 
Other assetsOther assets5 5 
Total assets$109,807
 $101,812
Total assets$71,660 $61,242 
LIABILITIES AND STOCKHOLDERS' EQUITY 
  
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities: 
  
Current liabilities:  
Accounts payable$4,688
 $4,666
Accounts payable$999 $871 
Accrued salaries, commissions, and benefitsAccrued salaries, commissions, and benefits13,965 10,961 
Accrued expenses and other current liabilities42,179
 36,154
Accrued expenses and other current liabilities8,245 6,748 
Short-term borrowings8,206
 7,770
Accrued business reorganization1,523
 1,756
Current liabilities of discontinued operations29
 233
Note payable – short term
Note payable – short term
1,869 750 
Operating lease obligations, currentOperating lease obligations, current491 363 
Total current liabilities56,625
 50,579
Total current liabilities25,569 19,693 
Deferred rent and tenant improvement contributions2,198
 2,968
Income tax payable, non-current2,204
 2,211
Other non-current liabilities4,004
 4,169
Income tax payableIncome tax payable78 470 
Operating lease obligationsOperating lease obligations462 118 
Note payable – long term
Note payable – long term
— 1,250 
Other liabilitiesOther liabilities383 395 
Total liabilities65,031
 59,927
Total liabilities26,492 21,926 
Commitments and contingencies

 

Commitments and contingencies
Stockholders' equity: 
  
Stockholders' equity:  
Preferred stock, $0.001 par value, 10,000 shares authorized; none issued or outstanding—
 —
Preferred stock, $0.001 par value, 10,000 shares authorized; none issued or outstanding— — 
Common stock, $0.001 par value, 100,000 shares authorized; issued 34,959 and 34,910 shares, respectively34
 34
Common stock, $0.001 par value, 20,000 shares authorized; 3,816 and
3,694 shares issued; 2,822 and 2,707 shares outstanding, respectively
Common stock, $0.001 par value, 20,000 shares authorized; 3,816 and
3,694 shares issued; 2,822 and 2,707 shares outstanding, respectively
4 4 
Additional paid-in capital483,202
 482,265
Additional paid-in capital490,490 489,249 
Accumulated deficit(441,414) (440,478)Accumulated deficit(428,411)(434,523)
Accumulated other comprehensive income, net of applicable tax10,529
 6,931
Treasury stock, 3,694 and 3,145 shares, respectively, at cost(7,575) (6,867)
Accumulated other comprehensive loss, net of applicable taxAccumulated other comprehensive loss, net of applicable tax(1,360)(85)
Treasury stock, 994 and 987 shares, respectively, at costTreasury stock, 994 and 987 shares, respectively, at cost(15,555)(15,329)
Total stockholders' equity44,776
 41,885
Total stockholders' equity45,168 39,316 
Total liabilities and stockholders' equity$109,807
 $101,812
Total liabilities and stockholders' equity$71,660 $61,242 

See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
- 3 -




HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 Nine Months Ended September 30,
 2017 2016
Cash flows from operating activities: 
  
Net income (loss)$(936) $(8,498)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: 
  
Depreciation and amortization2,050
 2,294
Provision for (recovery of) doubtful accounts78
 224
Provision for (benefit from) deferred income taxes345
 690
Stock-based compensation937
 1,278
Other, net—
 190
Changes in assets and liabilities:   
Decrease (increase) in accounts receivable(7,596) (3,542)
Decrease (increase) in prepaid and other assets268
 502
Increase (decrease) in accounts payable, accrued expenses and other liabilities2,438
 (5,627)
Increase (decrease) in accrued business reorganization(1,129) (2,566)
Net cash used in operating activities(3,545) (15,055)
Cash flows from investing activities: 
  
Capital expenditures(679) (1,820)
Proceeds from sale of assets—
 42
Net cash used in investing activities(679) (1,778)
Cash flows from financing activities: 
  
Borrowings under credit agreements133,404
 89,804
Repayments under credit agreements(133,935) (84,280)
Repayment of capital lease obligations(69) (63)
Dividend payments—
 (3,401)
Purchase of treasury stock(703) (4,917)
Purchase of restricted stock from employees(5) (65)
Net cash used in financing activities(1,308) (2,922)
Effect of exchange rates on cash and cash equivalents1,045
 (506)
Net decrease in cash and cash equivalents(4,487) (20,261)
Cash and cash equivalents, beginning of the period21,322
 37,663
Cash and cash equivalents, end of the period$16,835
 $17,402
Supplemental disclosures of cash flow information:   
Cash paid during the period for interest$312
 $249
Net cash payments during the period for income taxes$1,543
 $731
Six Months Ended June 30,
20222021
Cash flows from operating activities:  
Net income (loss)$6,112 $(325)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:  
Depreciation and amortization661 223 
Provision for doubtful accounts11 — 
Benefit from deferred income taxes(232)(245)
Stock-based compensation1,241 1,096 
Changes in operating assets and liabilities, net of effect of dispositions:
Increase in accounts receivable(7,353)(6,392)
(Increase) decrease in prepaid and other assets(394)66 
Increase in accounts payable, accrued expenses and other liabilities5,135 4,164 
Net cash provided by (used in) operating activities5,181 (1,413)
Cash flows from investing activities:  
Capital expenditures(130)(122)
Net cash used in investing activities(130)(122)
Cash flows from financing activities:  
Cash paid for net settlement of employee restricted stock units(226)(4)
Net cash used in financing activities(226)(4)
Effect of exchange rates on cash, cash equivalents and restricted cash(734)(132)
Net increase (decrease) in cash, cash equivalents and restricted cash4,091 (1,671)
Cash, cash equivalents, and restricted cash, beginning of the period22,113 26,199 
Cash, cash equivalents, and restricted cash, end of the period$26,204 $24,528 
Supplemental disclosures of cash flow information:
Cash received during the period for interest$6 $19 
Net cash payments during the period for income taxes$1,614 $458 
     Cash paid for amounts included in operating lease liabilities$264 $238 
Supplemental non-cash disclosures:
Right-of-use assets obtained in exchange for operating lease liabilities$772 $672 
 
See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.

- 4 -

HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
Three Months EndedSix Months Ended
 June 30, 2022June 30, 2021June 30, 2022June 30, 2021
 SharesValueSharesValueSharesValueSharesValue
Total stockholders' equity, beginning balance2,805 $42,792 2,688 $34,151 2,707 $39,316 2,685 $34,280 
Common stock and additional paid-in capital:
Beginning balance3,799 489,799 3,675 487,131 3,694 489,253 3,672 486,829 
Stock-based compensation expense17 695 2 794 122 1,241 5 1,096 
 Ending balance3,816 490,494 3,677 487,925 3,816 490,494 3,677 487,925 
Treasury stock:
Beginning balance(994)(15,555)(987)(15,327)(987)(15,329)(987)(15,325)
Purchase of treasury stock— — — — — — — — 
Purchase of net settled restricted stock from employees— — — (2)(7)(226)— (4)
 Ending balance(994)(15,555)(987)(15,329)(994)(15,555)(987)(15,329)
Accumulated other comprehensive income (loss):
Beginning balance52 300 (85)526 
Other comprehensive loss(1,412)(18)(1,275)(244)
 Ending balance(1,360)282 (1,360)282 
Accumulated deficit:
Beginning balance(431,504)(437,953)(434,523)(437,750)
Net income (loss)3,093 (122)6,112 (325)
 Ending balance(428,411)(438,075)(428,411)(438,075)
Total stockholders' equity, ending balance2,822 $45,168 2,690 $34,803 2,822 $45,168 2,690 $34,803 

 Common stock 
Additional
paid-in
capital
 
Accumulated
deficit
 
Accumulated
other
comprehensive
income (loss)
 
Treasury
stock
 Total
 Shares Value          
Balance at December 31, 201631,765
 $34
 $482,265
 $(440,478) $6,931
 $(6,867) $41,885
Net income (loss)—
 —
 —
 (936) —
 —
 (936)
Other comprehensive income (loss), currency translation adjustments, net of applicable tax—
 —
 —
 —
 3,594
 —
 3,594
Other comprehensive income (loss), pension liability adjustment, net of income tax—
 —
 —
 —
 4
 —
 4
Purchase of treasury stock(544) —
 —
 —
 —
 (703) (703)
Purchase of restricted stock from employees(5) —
 —
 —
 —
 (5) (5)
Stock-based compensation49
 

 937
 —
 —
 —
 937
Balance at September 30, 201731,265
 $34
 $483,202
 $(441,414) $10,529
 $(7,575) $44,776

See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
- 5 -
Index
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"GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United StatesU.S. 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"“Company”) filed in its Annual Report on Form 10-K for the year ended December 31, 2016.2021.
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 Statementscondensed consolidated financial statements include the accounts of the Company and all of its wholly-owned and majority-ownedwholly owned subsidiaries. All significant intra-entityIntra-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. For more information, see Note 2 to the Condensed Consolidated Financial Statements.



NOTE 2 – DESCRIPTION OF BUSINESS

The Company is comprised of the operations, assets, and liabilities of the Company’s three Hudson regional businesses of Hudsonbusinesses: the Americas, Hudson Asia Pacific, and Hudson Europe ("Hudson regional businesses" or "Hudson").Europe. The Company provides specialized professional-level recruitment and related talent solutions. The Company’s core service offerings include Permanent Recruitment, Contracting, Recruitment Process Outsourcing ("RPO"(“RPO”) and Talent Management Solutions.
The Company operates in 13 countries with three reportable geographic business segments: Hudson Americas, Hudson Asia Pacific, and Hudson Europe. See Note 17 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 fees and are included in the segments’ non-operating other income (expense).

The Company’s core service offerings include:
Permanent Recruitment: Offered on both a retained and contingent basis, Hudson’s Permanent Recruitment services leverage its consultants, psychologists and other professionals in the development and delivery of its proprietary methods to identify, select and engage the best-fit talent for critical client roles.
Contracting: In Contracting, Hudson provides a range of project management, interim management and professional contract staffing services. These services draw upon a combination of specialized recruiting and project management competencies to deliver a wide range of solutions. Hudson-employed professionals - either individually or as a team - are placed with client organizations for a defined period of time based on a client's specific business need.
RPO: Hudson RPO delivers permanent recruitment and contracting outsourced recruitment solutionssolutions. These services are tailored to the individual needs of primarily mid-to-large-cap multinational companies. Hudson RPO'sThe 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'clients’ ongoing business needs. HudsonThe Company’s RPO services include complete recruitment outsourcing, project-based outsourcing, contingent workforce solutions, and recruitment consulting.
Talent Management Solutions: Featuring embedded proprietary talent assessmentOn October 29, 2021, Hudson completed the acquisition of Karani, LLC, a Chicago-headquartered recruiting services provider that primarily serves U.S.-based customers from its operations in India and selection methodologies, Hudson’s Talent Management capability encompassesthe Philippines. Karani, LLC partners with recruitment and staffing firms to assist with recruiting, sourcing, screening, onboarding, and other talent-related services such as talent assessment (utilizingacross a variety of competency, attitudeindustries. This acquisition has enhanced the Company’s global delivery capability by adding a substantial presence in India and experiential testing)the Philippines, fostering business in new markets, and further developing the Company’s technology recruitment capabilities.
On October 1, 2020, the Company completed its acquisition of Coit Staffing, Inc., interview training, executive coaching, employee developmentwhich expanded its presence in the technology sector and outplacement.established a Technology Group located in San Francisco. In addition to providing RPO services to clients in the tech sector, the Technology Group operates jointly with the Company’s existing teams in the Americas, Asia Pacific, and Europe to provide continuous access to knowledge regarding new and emerging technologies in the RPO, Managed Solutions Provider, and Total Talent Solutions spaces, enabling the Company to better serve its clients around the world.
    The Company operates directly in fourteen countries with three reportable geographic business segments: Americas, Asia Pacific, and Europe. See Note 14 to the Condensed Consolidated Financial Statements for further details regarding the reportable segments.

In December 2019, a novel strain of coronavirus, referred to as COVID-19, was reported. On March 11, 2020, the World Health Organization declared the outbreak to be a pandemic, based on the rapid increase in exposure globally. Some countries around the world have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus. COVID-19 continues to have an impact around the world and presents risks to the Company, which the Company is unable to fully evaluate or foresee at the current time. However, the Company is vigilantly monitoring the business environment surrounding COVID-19 and continues to proactively address this situation as it evolves. The Company believes it can continue
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Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

to take appropriate actions to manage the business in this challenging environment due to the flexibility of its workforce and the strength of its balance sheet.


NOTE 3 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Pronouncements

On January 1, 2021, the Company adopted Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes”. The standard simplifies accounting for income taxes by removing certain exceptions to the general principles in Topic 740. This ASU also clarifies and amends existing guidance to improve consistent application. For public business entities, this standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.
Recent Accounting Standard Update Not Yet Adopted

In May 2017,June 2016, the Financial Accounting Standards Board (the "FASB"“FASB”) issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. 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 require 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 Accounting Standards Update ("ASU"Codification (“ASC”) No. 2017-09, "Compensation - Stock Compensation: Scope of Modification Accounting," which provides guidance about which changes606, 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 terms orCECL 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, of a share-based payment award require an entity to apply modification accounting. An entity will account for the effects of a modification unless the fair value of the modified award is the same as the original award, the vesting conditions of the modified award are the same as the original award and the classification of the modified award as an equity instrument or liability instrument is the same as the original award. ASU 2017-09reasonable and supportable forecasts. This guidance is effective for all annual periods, and interim periods within thosesmaller reporting companies with annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating2022, including the effect of this update but does not believe it will have a material impact on its financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment." ASU 2017-04 eliminates the previous two-step process that required identification of potential impairment and a separate measure of the actual impairment. The annual assessment of goodwill impairment will be determined by using the difference between the carrying amount and the fair value of the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the effect of this update but does not believe it will have a material impact on its consolidated financial statements.
In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" ("ASU 2016-18"), which requires the inclusion of restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the effect of this update but does not believe it will have a material impact on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"), which provides clarification on how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 will be effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is currently evaluating the impact to its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"), which amends the existing standards for lease accounting. This new standard requires the recognition of lease assets and lease liabilities on the balance sheet and the disclosure of key information about leasing arrangements including the amounts, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 will be effective for the Company on January 1, 2019 and will require modified retrospective application as of the beginning of the earliest year presented in the financial statements.year. Early adoption is permitted. The Company is currently evaluating the impacteffect of adopting this new accounting guidance, and will adopt the guidance when it becomes effective.


NOTE 4 – REVENUE RECOGNITION

Nature of Services

    We account for a contract when both parties to its consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09contract 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 a comprehensive new revenue recognition model that requires a companyprobable. Revenues are recognized over time, using an input or output method, as the control of the promised services is transferred to recognize revenue to depict the transfer of goods or services to a customer atclient in an amount that reflects the consideration it expectswe expect to receivebe entitled to in exchange for those goodsservices. 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 services. ASU 2014-09 also requires additional disclosure aboutuse taxes collected from clients and remitted to taxing authorities.

    We generally determine standalone selling prices based on the nature, amount, timing and uncertainty of revenue and cash flows arising from customerprices included in our client contracts, including significant judgments and changesusing expected cost plus profit, or other observable prices. The price as specified in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015,our client contracts is generally considered the FASB amended the effective date of ASU 2014-09 to fiscal years beginning after December 15, 2017 and early adoption is permitted only for fiscal years beginning after December 15, 2016. In March, April and May 2016, the FASB issued ASU 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU 2016-10 “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU 2016-12 "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients" which provide further clarifications to be considered when implementing ASU 2014-09. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. We are evaluating the impact of this ASUstandalone selling price as it relatesis 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 revenue streams, as well as certain associated expenses. In the third quarter we have made progress in evaluating the impact of this ASU. Based on our assessment (which hasestimates.

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

not yet been completed),    We record accounts receivable when our right to consideration becomes unconditional. Contract assets primarily relate to our rights to consideration for services provided that such rights to consideration 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 transferring control of services. Other than deferred revenue, we do not expect our adoptionhave any material contract assets or liabilities as of and for the six months ended June 30, 2022 and 2021. As of June 30, 2022 and December 31, 2021, deferred revenue was $132 and $533, respectively.

    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 standardCompany’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 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 contain both fixed fees and variable consideration. Variable consideration is constrained by candidates accepting offers of permanent employment. We recognize revenue on 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.

    We recognize permanent placement revenue when employment candidates accept offers of permanent employment. We have a materialsubstantial 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, sometimes offered on a standalone basis and sometimes offered as part of a blended total talent solution. We recognize revenue for our revenuecontracting services over time as services are performed in an amount that reflects the consideration we expect to be entitled to and net income. Duringhave an enforceable right to payment in exchange for our services, which is generally calculated as hours worked multiplied by the fourthagreed-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.

In the first quarter of 2017, we will complete our assessment2022, one contracting customer ended its agreement with the Company. For the full year ended December 31, 2021, the contracting customer had revenue of $44,888, or 27% of the Company’s revenue, which is reported as revenue in the Company’s Condensed Consolidated Statements of Operations, and implementation process prior toDirect contracting costs and reimbursed expenses of $43,980, which is reported as Direct contracting costs and reimbursed expenses in the adoptionCompany’s Condensed Consolidated Statements of ASU 2014-09 on January 1, 2018. We expect to adoptOperations. Revenue less direct contracting costs and reimbursed expenses for this customer was $908, or 1% of the guidance usingCompany’s total revenue less direct contracting costs and reimbursed expenses of $68,157, for the modified retrospective approach.
There are no other recently issued accounting pronouncements that have had, orfull year ended December 31, 2021. The Company does not believe that the Company believesloss of this customer will have a material adverse impact on the Company's consolidated financial statements.Company and its subsidiaries.


    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.

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

Disaggregation of Revenue

    The following table presents our disaggregated revenues by revenue source. For additional information on the revenues by geographical segment, see Note 14 to the Condensed Consolidated Financial Statements.
Three Months Ended June 30,
 20222021
(As restated)
RPO Recruitment$26,714 $14,646 
Contracting30,009 25,028 
Total Revenue$56,723 $39,674 
Six Months Ended June 30,
20222021
(As restated)
RPO Recruitment$51,974 $27,032 
Contracting56,666 47,103 
Total Revenue$108,640 $74,135 

NOTE 45 – DISCONTINUED OPERATIONSACQUISITIONS


Effective November 9, 2014,Karani, LLC

On October 29, 2021, the Company entered into a membership interest purchase agreement (the “MIPA”) by and among the Company, Hudson Global Resources Management, Inc. (“HGRM”), a wholly owned subsidiary of the Company, and Daniel Williams (“Williams”), and completed the saleacquisition (the “Karani Acquisition”) by HGRM of substantially all of the assetsmembership interests of Karani, LLC, a Delaware limited liability company.

Karani, LLC partners with recruitment and certain liabilitiesstaffing firms to assist with recruiting, sourcing, screening, onboarding, and other talent-related services across a variety of its Legal eDiscovery businessindustries to customers primarily located in the U.S.United States. On the date of acquisition, Karani, LLC had approximately 560 employees in India and United Kingdom ("U.K.")120 employees in the Philippines.

As outlined in the MIPA, Williams received (i) $6,805 in cash subject to Document Technologies, LLC and DTI of London Limited. The Company concluded that the divestiture of the Legal eDiscovery business meets the criteria for discontinued operationscertain adjustments set forth in ASC 205. The Company reclassified its discontinued operations for all periods presented and has excluded the results of its discontinued operations from continuing operations and from segment results for all periods presented.

The carrying amountsMIPA at the closing of the classesKarani Acquisition; and (ii) a non-interest bearing promissory note in the aggregate principal amount of $2,000, payable in installments on the six-month and eighteen-month anniversaries of the closing date subject to the satisfaction of certain conditions as further described in the MIPA. There are no employment stipulations for Williams associated with the MIPA.

The Karani Acquisition was accounted for as a business combination under the acquisition method of accounting. The purchase price of $8,673, which consists of the amount paid in cash of $6,805, a promissory note of $2,000, and a working capital credit of $132, was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date of October 29, 2021, with the excess recorded as goodwill. The purchase price included $737 of cash and cash equivalents acquired. The Company incurred transaction costs related to the acquisition of approximately $200 that were expensed as part of Office and general on the Consolidated Statements of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In addition to the purchase price, Hudson agreed to pay a $250 retention payment to the Chief Financial Officer of Karani, LLC, which is classified as compensation expense, recorded on a straight-line basis.

The Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2022 included external revenue of $2,548 and $5,116, respectively and net income of $124 and $359, from the Legal eDiscovery business included in discontinued operations were as follows:acquired company, respectively.


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  September 30, 2017 December 31, 2016
Total current assets $—
 $38
Total liabilities (a) $59
 $291

(a) Total liabilities primarily consisted of restructuring liabilities for lease termination payments.

Reported results for the discontinued operations by period were as follows:
  Three Months Ended September 30,
  2017 2016
Revenue $—
 $30
Gross margin —
 71
Reorganization 16
 34
Operating income (loss), excluding gain (loss) from sale of business (16) 29
Income (loss) from discontinued operations before income taxes (16) 29
Provision (benefit) for income taxes —
 (6)
Income (loss) from discontinued operations $(16) $35
     
  Nine Months Ended September 30,
  2017 2016
Revenue $—
 $30
Gross margin —
 130
Reorganization 34
 (309)
Operating income (loss), excluding gain (loss) from sale of business (34) 385
Income (loss) from discontinued operations before income taxes (34) 385
Provision (benefit) for income taxes —
 58
Income (loss) from discontinued operations $(34) $327

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

Below is a summary of the fair value of the net assets acquired on the acquisition date based on external valuations at the date of acquisition.
NOTE 5 – REVENUE, DIRECT COSTS AND GROSS MARGIN
 The Company’s revenue, direct costs and gross margin were as follows: 
 Three Months Ended September 30, 2017
 Contracting  Permanent Recruitment Talent Management Other Total
Revenue$77,097
 $31,783
 $8,680
 $548
 $118,108
Direct costs (1)68,260
 535
 1,500
 568
 70,863
Gross margin$8,837
 $31,248
 $7,180
 $(20) $47,245
          
 Three Months Ended September 30, 2016
 Contracting  Permanent Recruitment Talent Management (2) Other Total
Revenue$70,440
 $28,437
 $8,540
 $719
 $108,136
Direct costs (1)61,619
 627
 1,756
 592
 64,594
Gross margin$8,821
 $27,810
 $6,784
 $127
 $43,542
 Nine Months Ended September 30, 2017
 Contracting  Permanent Recruitment Talent Management Other Total
Revenue$213,813
 $91,991
 $27,656
 $1,644
 $335,104
Direct costs (1)188,778
 1,751
 4,915
 1,657
 197,101
Gross margin$25,035
 $90,240
 $22,741
 $(13) $138,003
          
 Nine Months Ended September 30, 2016
 Contracting  Permanent Recruitment Talent Management (2) Other Total
Revenue$208,330
 $84,499
 $27,989
 $1,612
 $322,430
Direct costs (1)181,797
 1,812
 5,555
 1,623
 190,787
Gross margin$26,533
 $82,687
 $22,434
 $(11) $131,643

(1)Direct costs in Contracting include the direct staffing costs of salaries, payroll taxes, employee benefits, travel expenses, rentFair Value
Assets Acquired:
Cash and insurance costs for the Company’s contractors and reimbursed out-of-pocketcash equivalents$737 
Accounts receivable1,521 
Restricted cash, current50 
Prepaid expenses and other direct costs. Permanent Recruitment, Talent Managementassets177 
Property and equipment119 
Operating lease right-of-use assets100 
Restricted cash3 
Other category include direct costs for out-of-pocket expenses and third party suppliers. The region where services are provided, the mix of contracting and permanent recruitment, and the functional nature of the staffing services provided can affect gross margin. The salaries, commissions, payroll taxes and employee benefits related to recruitment professionals are included under the caption "Salaries and related" in the Condensed Consolidated Statement of Operations.long-term assets19 

Intangible assets4,540 
Goodwill2,131 
Assets Acquired$9,397 
Liabilities Assumed:
(2)Accrued expenses and other current liabilitiesTalent Management has been recast from $436 
Operating lease obligations, current88 
Operating lease obligations, non current12 
Other in this disclosure.long-term liabilities188 
Liabilities Assumed$724 
Fair value of assets acquired and consideration transferred$8,673 

Intangible assets are amortized on a straight-line basis over their estimated useful lives. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives on the date of acquisition.

Fair ValueUseful Life
Developed technology$640 3 years
Customer lists2,800 6 years
Trade name1,100 10 years
Total identifiable assets$4,540 
Unaudited Pro Forma Financial Information

The following unaudited consolidated pro forma information gives effect to the acquisition of Karani, LLC as if the transaction had occurred on January 1, 2021.
Three Months EndedSix Months Ended
June 30, 2021June 30, 2021
Revenue$41,731 $77,883 
Net loss$(9)$(237)

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

The unaudited pro forma supplemental information provided above is based on estimates and assumptions that the Company believes are reasonable, and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets for the three and six months ended June 30, 2021. This supplemental pro forma information has been prepared for comparative purposes and is not intended to reflect what would have occurred had the Karani Acquisition taken place on January 1, 2021.

Coit Staffing, Inc.

On October 1, 2020, the Company, entered into an asset purchase agreement (the “APA”) by and among the Company, Hudson Coit, Inc. (“Buyer”), a wholly-owned subsidiary of the Company Coit Staffing, Inc. (“Seller”), Joe Belluomini, and Tim Farrelly (together with Mr. Belluomini, the “Principals”) and completed the acquisition by Buyer of substantially all of the assets used in the business of the Seller, as set forth in the APA (the “Coit Acquisition”).

Per the terms of the APA, the Seller received (i) $3,997 in cash subject to certain adjustments set forth in the APA at the closing of the Coit Acquisition; (ii) a promissory note in the aggregate principal amount of $1,350, payable in annual installments of $450 per year on the first, second, and third anniversaries of the closing; (iii) $500 in shares of the Company’s common stock, with the amount of such shares to be determined by dividing $500 by the weighted average price of the Company’s common stock for the five trading days prior to the closing date, to be issued in three equal installments on each of the 10-month, 20-month, and 30-month anniversaries of the closing date; and (iv) earn-out payments not to exceed $1,500 and $2,030 in the years ended December 31, 2021 and 2022, respectively, based upon the achievement of certain performance thresholds in those years. In addition the Principals each entered into employment agreements with the Company for a term of two years.

The Coit Acquisition was accounted for as a business combination under the acquisition method of accounting. The purchase price consists of the amount paid in cash of $3,997, which was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date of October 1, 2020, with the excess recorded as goodwill. The Company incurred transaction costs related to the acquisition of $436 that were expensed as part of Office and general on the Consolidated Statements of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The promissory note and shares of the Company’s common stock to be paid to the Seller as outlined in the APA are tied to the continuing employment of the Principals at the Company, and therefore have been accounted for as compensation expense. This compensation expense is recorded on a straight-line basis under the assumption that the Principals will remain employed by the Company, and therefore that the note will be paid in full and the shares will be issued. For the three and six months ended June 30, 2022, the Company recognized $32 and $74, respectively, in stock-based compensation associated with the 52,226 restricted shares of common stock which were issued over 30 months (for additional information, see Note 6 to the Condensed Consolidated Financial Statements). In addition, in the three and six months ended June 30, 2022, the Company recognized expense of $113 and $225, respectively, related to the promissory note, and $507 and $1,015, respectively, related to earn-out payments. The amount due associated with the promissory note payable to the Principals is reflected in Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. The compensation expense recognized of $652 and $1,314 for the three and six months ended June 30, 2022, respectively, is reflected in Salaries and related expenses on the Condensed Consolidated Statements of Operations.

The Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2022 included revenue of $5,915 and $11,897, respectively, and net income of $995 and $2,254, respectively, from the acquired company.



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Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)
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 on May 24, 2016 and further amended on September 14, 2020 (the "ISAP"“ISAP”), pursuant to which it can issue equity-based compensation incentives to eligible participants. The ISAP 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 Company’s Board of Directors (the "Compensation Committee"“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, 2016,17, 2022, the Company'sCompany’s stockholders at the 2022 Annual Meeting of Stockholdersapproved an amendment and restatement ofamendments to the ISAP to, among other things, increase the number of shares of the Company'sCompany’s common stock that are reserved for issuance by 2,400,000250,000 shares. As of SeptemberJune 30, 2017,2022, there were 1,814,807237,138 shares of the Company’s common stock available for future issuance under the ISAP.
All share issuances related to stock compensation plans are issued from the aforementioned stock available for future issuance under stockholder approved compensation plan.
In the first quarter of 2021, the Company granted restricted stock units subject to performance vesting conditions for the years ended December 31, 2021 and December 31, 2020 of 73,596 and 53,075, respectively. In addition, in the first quarter of 2021, the Company granted 25,500 of discretionary time-vested stock units to certain employees that were not subject to performance conditions. For the six months ended June 30, 2022, the Company granted 50,160 restricted stock units subject to performance vesting conditions for the year ended December 31, 2022, and granted 4,250 of discretionary time-vested stock units to certain employees that were not subject to performance conditions.
A summary of the quantity and vesting conditions for stock-based units granted to the Company'sCompany’s employees for the ninesix months ended SeptemberJune 30, 20172022 was as follows:
Vesting conditionsNumber of Restricted Stock Units Granted
Performance and service conditions - Type 1 (1) (2)
990,000
34,493 
Performance and service conditions - Type 2 (1) (2)
The performance conditions with respect to restricted stock units may be satisfied as follows: 
15,667 
(a)
Service conditions only - Type 1 (2)
For employees from the Americas, Asia Pacific and Europe 80% of the restricted stock units may be earned on the basis of performance as measured by a "regional adjusted EBITDA," and 20% of the restricted stock units may be earned on the basis of performance as measured by a "group adjusted EBITDA"; and
4,250 
(b)Total shares of stock award grantedFor employees from the Corporate office 100% of the restricted stock units may be earned on the basis of performance as measured by a "group adjusted EBITDA."
54,410 
(2)To the extent restricted stock units are earned on the basis of performance, such restricted stock units will vest on the basis of service as follows:
(a)33% of the restricted stock units will vest on the first anniversary of the grant date;
(b)33% of the restricted stock units will vest on the second anniversary of the grant date; and
(c)34% of the restricted stock units will vest on the third anniversary of the grant date; provided that, in each case, the employee remains employed by the Company from the grant date through the applicable service vesting date.

(1)The performance conditions with respect to restricted stock units may be satisfied as follows: 
(a)For employees from the Americas, Asia Pacific, and Europe, (i) 70% of the restricted stock units may be earned on the basis of performance as measured by a “regional adjusted EBITDA”, and (ii) 30% of the restricted stock units may be earned on the basis of performance as measured by a “group adjusted EBITDA”;
(b)For grants to Corporate office employees subject to 2022 performance conditions, 100% of the restricted stock units may be earned on the basis of performance as measured by a “group adjusted EBITDA”; and.
(c)For grants to Coit Principals subject to 2022 performance conditions, 100% of the restricted stock units may be earned on the basis of performance as measured by a “Coit EBITDA”.

- 12 -
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)
(2)To the extent restricted stock units are earned, such restricted stock units will vest on the basis of service as follows:
(a)33% and 66.6% for Type 1 and Type 2, respectively, of the restricted stock units will vest on the first anniversary of the grant date;
(b)33% and 16.7% for Type 1 and Type 2, respectively, of the restricted stock units will vest on the second anniversary of the grant date; and
(c)34% and 16.7% for Type 1 and Type 2, respectively, of the restricted stock units will vest on the third anniversary of the grant date; provided that, in each case, the employee remains employed by the Company from the grant date through the applicable service vesting date.
The Company also maintains the Director Deferred Share Plan (the "Director Plan"“Director Plan”) as part of the ISAP 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 Board of Directors of the Company.Company’s Board. The restricted stock units vest immediately upon grant and are credited to each of the non-employee director'sdirector’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'sCompany’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.
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

Dividend equivalent awards have the same vesting terms as the underlying awards. During the ninesix months ended SeptemberJune 30, 2017,2022, the Company granted 366,8287,161 restricted stock units to its non-employee directors pursuant to the Director Plan.
    As of SeptemberJune 30, 2017, non-employee directors held a total of 826,484 deferred2022, 221,447 restricted stock units.units are deferred under the Company’s ISAP.
On October 1, 2020, the Company granted 52,226 restricted shares of common stock to be issued over 30 months in connection with the acquisition of Coit Staffing, Inc. See Note 5 for additional information.
For the three and ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, the Company’s stock-based compensation expense related to stock options, restricted stock and restricted stock units were as follows:
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Stock options $—
 $5
 $—
 $15
Restricted stock —
 172
 —
 632
Restricted stock units 229
 (25) 937
 631
Total $229
 $152
 $937
 $1,278
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 sharerestricted shares of common stock on the date of grant.
As of September 30, 2017, the Company had no unrecognized stock-based compensation expense related to outstanding unvested stock options.
Changes in the Company’s stock options for the nine months ended September 30,2017 and 2016were as follows:
 Nine Months Ended September 30,
 2017 2016
 
Number of
Options
 
Weighted
Average
Exercise Price
per Share
 
Number of
Options
 
Weighted
Average
Exercise Price
per Share
Options outstanding at January 1,123,500
 $6.16
 206,000
 $8.13
Expired/forfeited(23,500) 15.97
 (82,500) 11.09
Options outstanding at September 30,100,000
 $3.86
 123,500
 $6.16
Options exercisable at September 30,100,000
 $3.86
 98,500
 $7.09
Restricted Stock
As of September 30, 2017, the Company had no unrecognized stock-based compensation expense related to outstanding unvested restricted stock. Restricted stock awards have voting and dividend rights as of the grant date.
Changes in the Company’s restricted stock for the nine months ended September 30,2017 and 2016 were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Restricted shares of common stock (see Note 5)$32 $92 $74 $182 
Restricted stock units663 702 1,167 914 
Total$695 $794 $1,241 $1,096 
 
 Nine Months Ended September 30,
 2017 2016
 
Number of
Shares of
Restricted
Stock
 
Weighted
Average
Grant Date
Fair Value
 
Number of
Shares of
Restricted
Stock
 
Weighted
Average
Grant Date
Fair Value
Unvested restricted stock at January 1,—
 $—
 680,000
 $1.60
Granted—
 —
 —
 —
Vested—
 —
 (180,000) 2.49
Forfeited—
 —
 (51,800) 0.79
Unvested restricted stock at September 30,—
 $—
 448,200
 $1.38

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

Restricted Stock Units
As of SeptemberJune 30, 2017,2022, the Company had approximately $748$2,688 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 1.571.46 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 ninesix months ended SeptemberJune 30,2017 2022 and 20162021 were as follows:

- 13 -
 Nine Months Ended September 30,
 2017 2016
 
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 1,480,000
 $2.79
 —
 $—
Granted1,356,828
 1.08
 712,440
 2.64
Vested(415,555) 1.47
 (212,440) 2.28
Forfeited(332,340) 2.79
 —
 —
Unvested restricted stock units at September 30,1,088,933
 $1.16
 500,000
 $2.79
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

Six Months Ended June 30, 2022
Performance-basedTime-based/DirectorTotal
Number of Shares of Restricted Stock UnitsWeighted Average Grant-Date Fair ValueNumber of Shares of Restricted Stock UnitsWeighted Average Grant-Date Fair ValueNumber of Shares of Restricted Stock UnitsWeighted Average Grant-Date Fair Value
Unvested restricted stock units at January 1,121,393 $15.88 46,500 $17.15 167,893 $16.23 
Granted50,160 $35.37 11,411 $38.39 61,571 $35.93 
Shares earned above target (a)36,884 $16.70 — $— 36,884 $16.70 
Vested(78,251)$15.99 (15,246)$26.10 (93,497)$17.63 
Forfeited— $— (3,675)$16.04 (3,675)$16.04 
Unvested restricted stock units at June 30,130,186 $23.56 38,990 $19.97 169,176 $22.73 
(a)    The number of shares earned above target are based on the performance target established by the Compensation Committee at the initial grant date.
(a)    The number of shares earned above target are based on the performance targets established by the Compensation Committee at the initial grant date.

Six Months Ended June 30, 2021
Performance-basedTime-based/DirectorTotal
Number of Shares of Restricted Stock UnitsWeighted Average Grant-Date Fair ValueNumber of Shares of Restricted Stock UnitsWeighted Average Grant-Date Fair ValueNumber of Shares of Restricted Stock UnitsWeighted Average Grant-Date Fair Value
Unvested restricted stock units at January 1,14,676 $15.45 — $— 14,676 $15.45 
Granted126,671 $15.79 45,362 $15.92 172,033 $15.83 
Vested(8,543)$15.68 (19,862)$17.70 (28,405)$17.09 
Forfeited(11,411)$14.54 — $— (11,411)$14.54 
Unvested restricted stock units at June 30,121,393 $15.88 25,500 $14.54 146,893 $15.65 
(a)    The number of shares earned above target are based on the performance target established by the Compensation Committee at the initial grant date.
Shares of Common Stock
As of June 30, 2022, the Company had approximately $50 of unrecognized stock-based compensation expense related to outstanding unvested restricted shares of common stock issued in connection with the Coit Acquisition (for additional information, see Note 5). These shares had a grant price of $9.57 and a remaining average expected life of 0.75 years. Restricted shares of common stock have no voting or dividend rights until the awards are vested.    
Changes in the Company’s restricted shares of common stock for the six months ended June 30, 2022 and 2021 were as follows:
- 14 -
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)
 Six Months Ended June 30,
 20222021
Number of
Restricted
Shares of Common Stock		Weighted
Average
Grant-Date
Fair Value		Number of
Restricted
Shares of Common Stock		Weighted
Average
Grant-Date
Fair Value
Unvested restricted shares of common stock at January 1,34,818 $9.57 52,226 $9.57 
Vested(17,408)$9.57 — $— 
Unvested restricted shares of common stock at June 30,17,410 $9.57 52,226 $9.57 


NOTE 7 – INCOME TAXES

Income Tax Provision

Under ASC 270, "Interim Reporting"“Interim Reporting”, and ASC 740-270, "Income“Income Taxes – Intra Period Tax Allocation"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.
Effective Tax Rate

The provision for income taxes for the ninesix months ended SeptemberJune 30, 20172022 was $1,525$1,317 on a pre-tax income from continuing operations of $623,$7,429, compared to a provision for income taxes of $1,200$567 on pre-tax loss from continuing operationsincome of $7,625$242 for the same period in 2016.2021. The Company’s effective income tax rate was positive 244.8%18% and negative 15.7%positive 234% for the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. For the ninesix months ended SeptemberJune 30, 2017,2022 and 2021, the effective tax raterates differed from the U.S. Federal statutory rate of 35%21% primarily due to the inability of the Company to recognize tax benefits on certain losses until positive earnings are achievedchanges in valuation allowances in the U.S. and certain other foreign jurisdictions, non-deductible expenses, and variations from the U.S. tax rate in foreign jurisdictions. For the nine months ended September 30, 2016,which reduces or eliminates the effective tax rate differed from the U.S. Federal statutory rate of 35% primarily due to the inability of the Company to recognize tax benefits on certaincurrent year profits or losses, until positive earnings are achieved in the U.S. and certain other foreign jurisdictions, a decrease in tax benefits that were previously recognized, non-deductible expenses, and variations from the U.S. tax rate indifferences, taxes on repatriations or deemed repatriation of foreign jurisdictions.profits, and non-deductible expenses.
Uncertain Tax Positions 
As of Septemberboth June 30, 20172022 and December 31, 2016,2021, the Company had $2,204 and $2,211,$360, respectively, of unrecognized tax benefits, includingexcluding interest and penalties, which if recognized in the future, would lower the Company’s annual effective income tax rate. Accrued
     The Company recognizes accrued interest and penalties were $671 and $610 as of September 30, 2017 and December 31, 2016, respectively. Estimated interest and penalties are classifiedrelated to unrecognized tax benefits as part of the provision for income taxes intaxes. As of June 30, 2022 and December 31, 2021, the Company’s Condensed Consolidated StatementCompany had $119 and $110, respectively, of Operationsaccrued interest and totaledpenalties associated with unrecognized tax benefits.
        Based on information available as of June 30, 2022, it is reasonably possible that the total amount of unrecognized tax benefits could decrease by up to $400 over the next 12 months as a provisionresult of $29projected resolutions of global tax examinations and $31 forcontroversies and potential expirations of the nine months ended September 30, 2017 and 2016, respectively.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"(“NOLs”) remain open until such losses expire or until the statutes of limitations for those years when the NOLs are used expire. As of SeptemberJune 30, 2017,2022, the Company'sCompany’s open tax years, which remain subject to examination by the relevant tax authorities, were principally as follows:
are between 2014 and 2021 depending on the jurisdiction.
Year
Earliest tax years which remain subject to examination by the relevant tax authorities:
U.S. Federal2014
Majority of U.S. state and local jurisdictions2012
United Kingdom2015
Australia2013
Majority of other non-U.S. jurisdictions2012
The Company believes that its unrecognized tax reservesbenefits as of June 30, 2022 are adequateappropriately reflected for all years that remain subject to examination or are currently under examination.above.
Based on information available as of September 30, 2017, it is reasonably possible that the total amount of unrecognized tax benefits could decrease in the range of $200 to $500 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.

- 15 -
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

Net Operating Losses (“NOLs”), Capital Losses, and Valuation Allowance

The Company recorded a valuation allowance against all of our deferred tax assets for NOLs and Capital Losses as of June 30, 2022 and December 31, 2021. We intend to continue maintaining a full valuation allowance on our deferred tax assets for NOLs until there is sufficient evidence to support the reversal of all or some portion of these allowances in the future.
NOTE 8 – EARNINGS (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"“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"“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 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 and ninesix months ended SeptemberJune 30,2017 2022 and 20162021 were as follows:


 Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Earnings (loss) per share (“EPS”):    
Basic$1.02 $(0.04)$2.04 $(0.11)
Diluted$0.98 $(0.04)$1.95 $(0.11)
EPS numerator - basic and diluted:
Net income (loss)$3,093 $(122)$6,112 $(325)
EPS denominator (in thousands):   
Weighted average common stock outstanding - basic3,028 2,906 2,997 2,899 
Common stock equivalents: restricted stock units and restricted shares of common stock118 — (a)135 — (a)
Weighted average number of common stock outstanding - diluted3,146 2,906 3,132 2,899 


(a)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 to the Condensed Consolidated Financial Statements for further details on unvested restricted stock units) were anti-dilutive and therefore not included in the calculation of the denominator of dilutive earnings (loss) per share.
- 16 -
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Earnings (loss) per share ("EPS"):  
  
  
  
EPS - basic and diluted:        
Income (loss) from continuing operations $(0.03) $(0.06) $(0.03) $(0.26)
Income (loss) from discontinued operations —
 —
 —
 0.01
Net income (loss) $(0.03) $(0.06) $(0.03) $(0.25)
EPS numerator - basic and diluted:        
Income (loss) from continuing operations $(832) $(1,908) $(902) $(8,825)
Income (loss) from discontinued operations (16) 35
 (34) 327
Net income (loss) $(848) $(1,873) $(936) $(8,498)
EPS denominator (in thousands):  
  
  
  
Weighted average common stock outstanding - basic 32,151
 33,572
 32,120
 34,121
Common stock equivalents: stock options and other stock-based awards (a) —
 —
 —
 —
Weighted average number of common stock outstanding - diluted 32,151
 33,572
 32,120
 34,121

(a)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, unvested restricted stock units and unvested restricted stock) were anti-dilutive and therefore not included in the calculation of the denominator of dilutive earnings per share.
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)


The weighted average number of shares outstanding used in the computation of diluted net income (loss)earnings or loss per share for the three and ninesix months ended SeptemberJune 30, 20172022 and 20162021 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 June 30,Six Months Ended June 30,
2022202120222021
Unvested restricted shares of common stock— 52,226 — 52,226 
Unvested restricted stock units30,493 146,893 15,338 146,893 
Total30,493 199,119 15,338 199,119 

  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Unvested restricted stock —
 150,000
 —
 150,000
Unvested restricted stock units 1,088,933
 50,769
 1,088,933
 50,769
Stock options 100,000
 98,500
 100,000
 98,500
Total 1,188,933
 299,269
 1,188,933
 299,269


NOTE 9 – RESTRICTED CASH9– GOODWILL AND INTANGIBLE ASSETS
A summary
Goodwill

The Company recorded goodwill of $2,131 on October 29, 2021 in connection with the Karani Acquisition and goodwill of $2,088 in connection with the Coit Acquisition. (See Note 5 for further information).

Intangible Assets
The Company’s intangible assets consisted of the Company’s restricted cash includedfollowing components:

June 30, 2022Weighted Average Remaining Amortization Useful Lives
(in years)		Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount
Non-compete agreements0.3$80 $(70)$10 
Trade name7.71,500 (213)1,287 
Customer lists4.83,800 (661)3,139 
Developed technology2.3640 (143)497 
$6,020 $(1,087)$4,933 

December 31, 2021Weighted Average Remaining Amortization Useful Lives
(in years)		Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount
Non-compete agreements0.8$80 $(50)$30 
Trade name8.21,500 (118)1,382 
Customer lists5.33,800 (328)3,472 
Developed technology2.8640 (36)604 
$6,020 $(532)$5,488 
Amortization expense for the three and six months ended June 30, 2022 was $278 and $555, respectively. Intangible assets are amortized on a straight-line basis over their estimated useful lives. No impairment in the accompanying Condensed Consolidated Balance Sheets asvalue of Septemberamortizable intangible assets was recognized during six months ended June 30, 20172022 and December 31, 2016 was as follows: 2021.
- 17 -
 September 30,
2017		 December 31,
2016
Included under the caption "Prepaid and other": 
  
Client guarantees$190
 $139
Other114
 108
Total amount under the caption "Prepaid and other"$304
 $247
Included under the caption "Other assets": 
  
Collateral accounts$132
 $557
Rental deposits553
 385
Total amount under the caption "Other assets"$685
 $942
Total restricted cash$989
 $1,189

Client guarantees were held in banks in Belgium as deposits for various client projects. Other primarily includes a bank guarantee for licensing in Switzerland. Collateral accounts under the caption "Other assets" primarily include deposits held under a collateral trust agreement, which supports the Company’s workers’ compensation policy. The rental deposits with banks include amounts held as guarantees from subtenants in the U.K.
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)



NOTE 10 – PROPERTY AND EQUIPMENT, NET
AsEstimated future amortization expense for intangible assets for the remainder of September 30, 2017 and the fiscal year ending December 31, 2016, property2022, and equipment, net, was as follows:
 September 30,
2017		 December 31,
2016
Computer equipment$6,180
 $5,888
Furniture and equipment2,506
 2,244
Capitalized software costs18,532
 17,010
Leasehold improvements14,745
 13,699
 41,963
 38,841
Less: accumulated depreciation and amortization35,790
 31,800
Property and equipment, net$6,173
 $7,041
The Company had expenditures of approximately $160 and $235 for acquired property and equipment, mainly consisting of software, that had not been placed in service as of September 30, 2017 and December 31, 2016, respectively. Depreciation expense is not recorded for such assets until they are placed in service.
Non-Cash Capital Expenditures
The Company has acquired certain computer equipment under capital lease agreements. The current portioneach of the capital lease obligationsnext fiscal years are included under the caption "Accrued expenses and other current liabilities" in the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 and the non-current portion of the capital lease obligations are included under the caption "Other non-current liabilities" in the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016. A summary of the Company’s lease obligations for equipment acquired under capital lease agreements were as follows:

 September 30,
2017		 December 31,
2016
Capital lease obligation, current$74
 $65
Capital lease obligation, non-current$78
 $140
2022$545 
20231,070 
20241,034 
2025787 
2026577 
Thereafter920 
$4,933 


NOTE 11 – GOODWILL
The following is a summary of the changeschange in the carryingbook value of the Company’s goodwill, which was included under the caption "Other Assets" in the accompanying Condensed Consolidated Balance Sheets,amortizable intangible assets is as of September 30, 2017 and December 31, 2016. The goodwill related to the earn-out payment made in 2010 for the Company’s 2007 acquisition of the businesses of Tong Zhi (Beijing) Consulting Service Ltd and Guangzhou Dong Li Consulting Service Ltd. The goodwill is recorded in the Asia Pacific segment.follows:

January 1, 2022
Beginning Balance
AcquisitionAmortization
June 30, 2022
Ending Balance
Non-compete agreements$30 $— $(20)$10 
Trade name1,382 — (95)1,287 
Customer lists3,472 — (333)3,139 
Developed technology604 — (107)497 
$5,488 $— $(555)$4,933 
 Carrying Value
 2017
Goodwill, January 1,$1,812
Currency translation84
Goodwill, September 30,$1,896
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

NOTE 12 – BUSINESS REORGANIZATION

The Board approved reorganization plans in prior years (the "Previous Plans"). Business exit costs associated with Previous Plans primarily consisted of employee termination benefits, lease termination payments and costs for elimination of contracts for certain discontinued services and locations.

For the nine months ended September 30, 2017, restructuring charges associated with these initiatives primarily included changes in estimates for lease termination payments for rationalized offices in Europe under the Previous Plans. Business reorganization for the three and nine months ended September 30, 2017 and 2016 by plan were as follows:
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Previous Plans $477
 $183
 $636
 $964
Total reorganization in continuing operations $477
 $183
 $636
 $964
The following table contains amounts for Changes in Estimate and Payments related to the Previous Plans that were incurred or recovered during the nine months ended September 30,2017 in continuing operations. The amounts in the "Changes in Estimate" and "Additional Charges" columns are classified as business reorganization in the Company’s Condensed Consolidated Statement of Operations. Changes in the accrued business reorganization for the nine months ended September 30,2017 were as follows:
 December 31,
2016		 Changes in
Estimate		 Additional
Charges		 Payments September 30,
2017
Lease termination payments$2,273
 $613
 $—
 $(1,183) $1,703
Employee termination benefits266
 (8) —
 (132) 126
Other associated costs32
 31
 —
 (33) 30
Total$2,571
 $636
 $—
 $(1,348) $1,859
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

NOTE 1310 – 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.
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 have reachedreach the threshold of probable and estimable, the Company has establishedestablishes reserves for legal, regulatory, and other contingent liabilities. The legal reserves are included under the caption "Other“Other non-current liabilities"liabilities” in the Condensed Consolidated Balance Sheets. The Company’sCompany did not have any legal reserves were $118 and $105 as of SeptemberJune 30, 20172022 and December 31, 2016, respectively.2021.
Costs Associated with TerminationOperating Leases
As previously disclosed,    Our office space leases have lease terms of one year to five 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 expiration of the full terms. These options are considered in May 2015,our determination of the Company incurred compensationvaluation of our right-of-use assets and benefits obligations to its former Chairmanlease liabilities.
    None of our operating leases include implicit rates, and Chief Executive Officer, Manuel Marquez, under his employment agreement, dated March 7, 2011,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 six months ended June 30, 2022 and 2021 were $586 and $358, respectively (reflected in connection with the Company providing Mr. Marquez noticeNet cash used in operating activities). The weighted average remaining lease term of non-renewal of his employment agreement, which was treated as a termination without cause. The Company had accrued $747our operating leases as of March 31, 2016 in connection with compensation and benefits Mr. MarquezJune 30, 2022 was entitled to upon a termination without cause, subject to his execution of a release. Mr. Marquez did not agree with the Company’s treatment of compensation and benefits under his employment agreement and, in August 2015, filed an arbitration claim against the Company for additional amounts of up to approximately $2,000 and reimbursement of his legal fees.
     On May 27, 2016, the arbitrator issued his decision on Mr. Marquez’s claim and awarded Mr. Marquez approximately $1,800 in additional compensation and benefits and approximately $700 toward the reimbursement of a portion of his legal fees incurred pursuing his claim. For the three and nine months ended September 30, 2016, the Company recorded an additional charge of $0 and $3,025, respectively for the resolution of this arbitration.

Asset Retirement Obligations
The Company has certain asset retirement obligations that are primarily the result of legal obligations for the removal of leasehold improvements and restoration of premises to their original condition upon termination of leases. The non-current asset retirement obligations are included under the caption "Other non-current liabilities" in the Condensed Consolidated Balance Sheets. The Company’s asset retirement obligations that are included in the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016 were as follows:2.9 years.
- 18 -
 September 30,
2017		 December 31,
2016
Current portion of asset retirement obligations$65
 $78
Non-current portion of asset retirement obligations1,912
 1,693
Total asset retirement obligations$1,977
 $1,771
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

    As of June 30, 2022, future minimum operating lease payments are as follows:
NOTE 14 – CREDIT AGREEMENTS
202220232024202520262027Total
Minimum lease payments$260 $346 $152 $92 $94 $9 $953 

ReceivablesInvoice Finance Agreement with Lloyds Bank Commercial Finance Limited and Lloyds Bank PLCCredit Facility


On August 1, 2014,April 8, 2019, the Company’s U.K.Australian subsidiary ("U.K. Borrower"(“Australian Borrower”) entered into a receivablesan invoice finance credit facility agreement for an asset-based lending funding facility (the "Lloyds Agreement"“NAB Facility Agreement”) with LloydsNational Australia Bank PLC and Lloyds Bank Commercial Finance Limited (together, "Lloyds"(“NAB”). Until September 15, 2016,The NAB Facility Agreement provides the Lloyds Agreement provided the U.K.Australian Borrower with the ability to borrow up to $20,099 (£15,000), at which time the U.K. Borrower entered into an amendment to the Lloyds Agreement that reduced the borrowing limit to $16,079 (£12,000). Extensions of credit arefunds 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 eligible accountsAustralian Borrower. The interest rate is calculated as the variable receivable less required reserves from the Company's U.K. operations.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 U.K.Australian Borrower. The initial term was two years with renewal periods every three months thereafter.

On September 15, 2017, the Lloyds Agreement was further amended to (1) reduce the maximum core facility borrowing to $12,729 (£9,500) from $15,409 (£11,500), which as a result, reduced the maximum borrowings to $13,399 (£10,000) from $16,079 (£12,000), (2) extend the term by 12 months from the date of the amendment, and (3) reduce the month end minimum excess availability to $2,010 (£1,500) from $2,680 (£2,000).

The credit facility under the Lloyds Agreement contains two tranches. The first tranche is a revolving facility based on the billed contracting and permanent recruitment activities in the U.K. operations ("Lloyds Tranche A"). The borrowing limit of Lloyds Tranche A is $12,729 (£9,500) and is based on 83% of eligible billed contracting and permanent recruitment receivables. The second tranche is a revolving facility that is based on the unbilled work-in-progress (as defined under the receivables finance agreement) activities in the Company's U.K. operations ("Lloyds Tranche B"). The borrowing limit of Lloyds Tranche B is $670 (£500) and is based on 25% of eligible work-in-progress from permanent recruitment activities. For both tranches, borrowings may be made with an interest rate based on a base rate as determined by Lloyds Bank PLC, based on the Bank of England base rate, plus 1.75%.

The Lloyds Agreement contains various restrictions and covenants including (1) that true credit note dilution may not exceed 5%, measured at audit on a regular basis; (2) debt turn may not exceed 55 days over a three month rolling period; (3) dividends by the U.K. Borrower to the Company are restricted to the value of post-tax profits; and (4) at the end of each month, there must be a minimum excess availability of $2,010 (£1,500).
The details of the Lloyds Agreement as of September 30, 2017 were as follows:
  September 30,
2017
Borrowing capacity $7,149
Less: outstanding borrowing (1,873)
Additional borrowing availability $5,276
Interest rates on outstanding borrowing 2.00%

The Company was in compliance with all financial covenants under the Lloyds Agreement as of September 30, 2017.

Facility Agreement with National Australia Bank Limited

On October 30, 2015, Hudson Global Resources (Aust) Pty Limited ("Hudson Australia") and Hudson Global Resources (NZ) Limited ("Hudson New Zealand"), both subsidiaries of Hudson Global, Inc., entered into a Finance Agreement, dated as of October 27, 2015 (the "Finance Agreement"), with National Australia Bank Limited ("NAB"), a NAB Corporate Receivables Facility Agreement, dated as of October 27, 2015 (the "Australian Receivables Agreement"), with NAB and a BNZ Corporate Receivables Facility Agreement, dated as of October 27, 2015 (the "New Zealand Receivables Agreement"), with Bank of New Zealand ("BNZ").
The Finance Agreement provides a bank guarantee facility of up to $2,350 (AUD 3,000) for Hudson Australia and Hudson New Zealand. The Finance Agreement matures and becomes due and payable on October 27, 2018. A fee equal to 1.5% per
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

annum will be charged on each bank guarantee issued under the Finance Agreement. The Finance Agreement bears a fee, payable semiannually in arrears, equal to 0.3% per annum of NAB’s commitment under the Finance Agreement.

The Australian Receivables Agreement provides a receivables facility of up to $19,583 (AUD 25,000) for Hudson Australia, which is based on an agreed percentage of eligible accounts receivable, and of which up to $3,133 (AUD 4,000) may be used to support the working capital requirements of operations in China, Hong Kong and Singapore. The Australian Receivables Agreement does not have a stated maturity date and can be terminated by Hudson Australiaeither the Australian Borrower or NAB upon 90 days written notice. BorrowingsAs of June 30, 2022, there were no amounts outstanding under the Australian ReceivablesNAB Facility Agreement. Interest expense and fees incurred on the NAB Facility Agreement may be made with an interest rate based on a market rate plus a margin of 1.5% per annum.were$4 and $9 for the three and six months ended June 30, 2022, respectively, and $5 and $10 for the three and six months ended June 30, 2021, respectively.

    The Australian Receivable Agreement bears a fee, payable monthly in advance, equal to $5 (AUD 6) per month.

The New Zealand Receivables Agreement provides a receivables facility of up to $3,605 (NZD 5,000) for Hudson New Zealand, which is based on an agreed percentage of eligible accounts receivable. The New Zealand Receivables Agreement does not have a stated maturity date and can be terminated by Hudson New Zealand or BNZ upon 90 days written notice. Borrowings under the New Zealand Receivables Agreement may be made with an interest rate based on a market rate. The New Zealand Receivables Agreement bears a fee, payable monthly in advance, equal to $1 (NZD 1) per month.

The details of the Finance Agreement, Australian Receivables Agreement and New Zealand Receivables Agreement as of September 30, 2017 were as follows:
 September 30,
2017
Finance Agreement: 
Financial guarantee capacity$2,350
Less: outstanding financial guarantees(2,055)
Additional availability for financial guarantees$295
Interest rates on outstanding financial guarantees1.50%
  
Australian Receivables Agreement: 
Borrowing capacity$17,753
Less: outstanding borrowing(6,309)
Additional borrowing availability$11,444
Interest rates on outstanding borrowing3.15%
  
New Zealand Receivables Agreement: 
Borrowing capacity$2,075
Less: outstanding borrowing—
Additional borrowing availability$2,075
Interest rates on outstanding borrowing3.99%

Amounts owing under the Finance Agreement, the Australian Receivables Agreement and the New Zealand Receivables Agreement are secured by substantially all of the assets of Hudson Australia and Hudson New Zealand. Each of the Finance Agreement, the Australian Receivables Agreement and the New Zealand ReceivablesNAB Facility Agreement contains various restrictions and covenants applicablefor 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 Hudson Australiaat least 25% of total tangible assets on June 30 and Hudson New Zealand, including: a requirement that Hudson Australia and Hudson New Zealand maintain (1) a minimum Fixed Charge Coverage RatioDecember 31 (as defined in the NAB Facility Agreement) of 1.50x as of the last day of each calendar quarter;; and (2) a minimum Receivables Ratio (as defined by the NAB Facility Agreement) of 1.20x.

(3) additional periodic reporting requirements to NAB. The CompanyAustralian Borrower was in compliance with all financial covenants under the NAB Facility Agreement as of SeptemberJune 30, 2017.2022.
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

Other Credit Agreements
The Company also has lending arrangements with local banks through its subsidiaries in Belgium and Singapore. The Belgium subsidiary has a $1,181 (€1,000) overdraft facility. Borrowings under    Amounts borrowed from the Belgium arrangementNAB Facility may be made using an interest rate basedlarge, contain short maturities and have quick turnovers. Amounts borrowed and repaid are presented on a net basis on the one-month EURIBOR plus a margin, and the interest rate was 2.75% asCondensed Consolidated Statements of September 30, 2017. The lending arrangement in Belgium has no expiration date and can be terminated with a 15-day notice period. There were no outstanding borrowings under the Belgium lending agreement as of September 30, 2017.Cash Flows.
In Singapore, the Company’s subsidiary can borrow up to $147 (SGD 200) for working capital purposes. Interest on borrowings under the Singapore overdraft facility is based on the Singapore Prime Rate plus a margin of 1.75%, and it was 6.00% on September 30, 2017. The Singapore overdraft facility expires annually each August, but can be renewed for one year periods at that time. As of September 30, 2017, the Singapore overdraft facility had outstanding borrowings of $24(SGD 32) and additional borrowings availability of $124 (SGD 168).
The average aggregate monthly outstanding borrowings under the Lloyds Agreement, NAB Facility Agreement and the credit agreements in Belgium and Singapore were $11,771 for the nine months ended September 30,2017. The weighted average interest rate on all outstanding borrowings for the nine months ended September 30, 2017 was 3.04%.
The Company continues to use the aforementioned credit to support its ongoing global working capital requirements, capital expenditures and other corporate purposes and to support letters of credit. Letters of credit and bank guarantees are used primarily to support office leases.
NOTE 1511 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)LOSS


Accumulated other comprehensive income (loss),loss, net of applicable tax, consisted of the following:
June 30,December 31,
20222021
Foreign currency translation adjustments$(1,360)$(85)
Accumulated other comprehensive loss$(1,360)$(85)


  September 30, December 31,
  2017 2016
Foreign currency translation adjustments $10,420
 $6,826
Pension plan obligations 109
 105
Accumulated other comprehensive income (loss) $10,529
 $6,931
NOTE 12 – STOCKHOLDERS’ EQUITY

Common Stock
NOTE 16 – STOCKHOLDERS' EQUITY

On July 30, 2015, the Company announced that its Board of Directors authorized the repurchase of up to $10,000 of the Company'sCompany’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 and ninesix months ended SeptemberJune 30, 2017,2022 and 2021, no purchases of shares were made by the Company repurchased 125,770 and 543,634 shares on the open market for a total cost of $181 and $703, respectively. During 2016, the Company purchased 1,100,000 shares from Sagard Capital Partners, L.P. in a private transaction pursuant to a securities purchase agreement for a total cost of $1,980 or $1.80 per share.under this authorization. As of SeptemberJune 30, 2017,2022, under the July 30, 2015 authorization, the Company had repurchased 3,532,761an aggregate of 432,563 shares for a total cost of $7,217.$8,297.
- 19 -
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

NOTE 13 – SHELF REGISTRATION STATEMENT
On June 30, 2022, the Company filed a shelf registration on Form S-3 with the SEC. Under the Form S-3, the Company may offer, issue and sell, from time to time, in one or more offerings and series, together or separately, shares of its common stock, shares of preferred stock, debt securities, subscription rights, purchase contracts, or units, which together shall have an aggregate initial offering price not to exceed $100,000,000. The registration statement was declared effective by the SEC on July 26, 2022. As of June 30, 2022, no securities had been offered or issued under the registration statement.

NOTE 1714 – SEGMENT AND GEOGRAPHIC DATA
Segment Reporting
The Company operates in three reportable segments: the Hudson regional businesses of Hudson Americas, Hudson Asia Pacific, and Hudson Europe. Corporate expenses are reported separately fromfor the three reportable segments and pertain to certain functions, such as executive management, corporate governance, human resources,investor relations, legal, accounting, administration, tax, and treasury,treasury. A portion of these expenses are attributed to the majority of which are attributablereportable segments for providing the above services to them, and have been allocated to the reportable segments.segments as management service expenses, and are included in the segments’ non-operating other income (expense). Segment information is presented in accordance with ASC 280, "Segments“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 and long-lived assets are the only significant assetsasset separated by segment for internal reporting purposes.

- 20 -
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

AmericasAsia PacificEuropeCorporateInter-Segment EliminationTotal
(As restated)(As restated)
For The Three Months Ended June 30, 2022
Revenue, from external customers$14,415 $29,944 $12,364 $— $— $56,723 
Inter-segment revenue46 — 7 — (53)— 
Total revenue$14,461 $29,944 $12,371 $— $(53)$56,723 
Adjusted net revenue, from external customers (a)
$13,809 $9,174 $4,291 $— $— $27,274 
Inter-segment adjusted net revenue45 (45)(4)— 4 — 
Total adjusted net revenue$13,854 $9,129 $4,287 $— $4 $27,274 
EBITDA (loss) (b)
$2,291 $2,262 $551 $(896)$— $4,208 
Depreciation and amortization(321)(9)(6)(1)— (337)
Intercompany dividend/interest (expense) income, net— (81)1,214 1,300 (2,433)— 
Interest income, net— 1 — 2 — 3 
Provision for income taxes$(26)$(544)$(92)$(119)— $(781)
Net income (loss)$1,944 $1,629 $1,667 $286 $(2,433)$3,093 
For The Six Months Ended June 30, 2022
Revenue, from external customers$29,026 $61,077 $18,537 $— $— $108,640 
Inter-segment revenue99 12 38 — (149)— 
Total revenue$29,125 $61,089 $18,575 $— $(149)$108,640 
Adjusted net revenue, from external customers (a)
$27,511 $17,387 $7,949 $— $— $52,847 
Inter-segment adjusted net revenue61 (53)(12)— 4 — 
Total adjusted net revenue$27,572 $17,334 $7,937 $— $4 $52,847 
EBITDA (loss) (b)
$4,705 $4,289 $698 $(1,607)$— $8,085 
Depreciation and amortization(626)(20)(13)(2)— (661)
Intercompany dividend/interest (expense) income, net— (156)1,214 1,375 (2,433)— 
Interest income, net— 2 — 3 — 5 
Provision for income taxes$(68)$(1,075)$(76)$(98)$— $(1,317)
Net income (loss)$4,011 $3,040 $1,823 $(329)$(2,433)$6,112 
As of June 30, 2022
Accounts receivable, net$11,531 $13,557 $6,332 $226 $— $31,646 
Long-lived assets, net of accumulated depreciation and amortization (b)
$9,479 $67 $50 $2 $— $9,598 
Total assets$26,543 $24,072 $13,008 $8,037 $— $71,660 

- 21 -
 
Hudson
Americas
 
Hudson
Asia Pacific
 
Hudson
Europe
 Corporate Elimination Total
For The Three Months Ended September 30, 2017      
Revenue, from external customers$4,044
 $76,509
 $37,555
 $—
 $—
 $118,108
Inter-segment revenue47
 —
 78
 —
 (125) —
Total revenue$4,091
 $76,509
 $37,633
 $—
 $(125) $118,108
Gross margin, from external customers$3,668
 $25,407
 $18,170
 $—
 $—
 $47,245
Inter-segment gross margin43
 (63) 20
 —
 —
 —
Total gross margin$3,711
 $25,344
 $18,190
 $—
 $—
 $47,245
Business reorganization$—
 $—
 $477
 $—
 $—
 $477
EBITDA (loss) (a)$483
 $1,685
 $(380) $(1,313) $—
 $475
Depreciation and amortization—
 445
 173
 79
 —
 697
Intercompany interest income (expense), net—
 —
 (47) 47
 —
 —
Interest income (expense), net—
 (103) (2) (5) —
 (110)
Income (loss) from continuing operations before income taxes$483
 $1,137
 $(602) $(1,350) $—
 $(332)
            
For The Nine Months Ended September 30, 2017        
Revenue, from external customers$12,519
 $205,483
 $117,102
 $—
 $—
 $335,104
Inter-segment revenue47
 —
 206
 —
 (253) —
Total revenue$12,566
 $205,483
 $117,308
 $—
 $(253) $335,104
Gross margin, from external customers$11,239
 $68,573
 $58,191
 $—
 $—
 $138,003
Inter-segment gross margin35
 (181) 146
 —
 —
 —
Total gross margin$11,274
 $68,392

$58,337

$—

$—
 $138,003
Business reorganization$(91) $—
 $749
 $(22) $—
 $636
EBITDA (loss) (a)$1,117
 $2,253
 $3,117
 $(3,497) $—
 $2,990
Depreciation and amortization2
 1,311
 501
 236
 —
 2,050
Intercompany interest income (expense), net—
 —
 (136) 136
 —
 —
Interest income (expense), net—
 (314) 3
 (6) —
 (317)
Income (loss) from continuing operations before income taxes$1,115
 $628
 $2,483
 $(3,603) $—
 $623
            
As of September 30, 2017           
Accounts receivable, net$2,436
 $40,793
 $28,096
 $—
 $—
 $71,325
Long-lived assets, net of accumulated depreciation and amortization$—
 $6,587
 $1,446
 $122
 $—
 $8,155
Total assets$6,317
 $58,638
 $42,662
 $2,190
 $—
 $109,807
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

AmericasAsia PacificEuropeCorporateInter-
Segment
Elimination		Total
For The Three Months Ended June 30, 2021    
Revenue, from external customers$5,366 $28,801 $5,507 $— $— $39,674 
Inter-segment revenue— 15 — — (15)— 
Total revenue$5,366 $28,816 $5,507 $— $(15)$39,674 
Adjusted net revenue, from external customers (a)
$4,993 $6,880 $3,218 $— $— $15,091 
Inter-segment adjusted net revenue(15)15 — — — — 
Total adjusted net revenue (a)
$4,978 $6,895 $3,218 $— $— $15,091 
EBITDA (loss) (b)
$(173)$1,003 $476 $(935)$— $371 
Depreciation and amortization(87)(17)(8)(1)— (113)
Intercompany (expense) interest income, net— (86)— 86 — — 
Interest (expense) income, net— 1 — 8 — 9 
Provision for income taxes$(8)$(243)$(123)$(15)$— $(389)
Net income (loss)$(268)$658 $345 $(857)$— $(122)
For The Six Months Ended June 30, 2021    
Revenue, from external customers$9,927 $54,141 $10,067 $— $— $74,135 
Inter-segment revenue— 15 — — (15)— 
Total revenue$9,927 $54,156 $10,067 $— $(15)$74,135 
Adjusted net revenue, from external customers (a)
$9,202 $12,638 $5,969 $— $— $27,809 
Inter-segment adjusted net revenue(15)15 — — — — 
Total adjusted net revenue$9,187 $12,653 $5,969 $— $— $27,809 
EBITDA (loss) (b)
$(451)$1,765 $546 $(1,414)$— $446 
Depreciation and amortization(173)(31)(17)(2)— (223)
Intercompany (expense) interest income, net— (171)— 171 — — 
Interest (expense) income, net— 2 — 17 — 19 
(Provision for) benefit from income taxes$(17)$(437)$(140)$27 $— $(567)
Net income (loss)$(641)$1,128 $389 $(1,201)$— $(325)
As of December 31, 2021      
Accounts receivable, net$8,765 $12,073 $4,910 $— $— $25,748 
Long-lived assets, net of accumulated depreciation and amortization (b)
$9,964 $68 $42 $4 $— $10,078 
Total assets$22,214 $21,744 $9,370 $7,914 $— $61,242 

(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 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.
- 22 -
 
Hudson
Americas
 
Hudson
Asia Pacific
 
Hudson
Europe
 Corporate 
Inter-
segment
elimination
 Total
For The Three Months Ended September 30, 2016        
Revenue, from external customers$4,163
 $64,607
 $39,366
 $—
 $—
 $108,136
Inter-segment revenue42
 —
 73
 —
 (115) —
Total revenue$4,205
 $64,607
 $39,439
 $—
 $(115) $108,136
Gross margin, from external customers$3,691
 $22,414
 $17,437
 $—
 $—
 $43,542
Inter-segment gross margin13
 (59) 46
 —
 —
 —
Total gross margin$3,704
 $22,355
 $17,483
 $—
 $—
 $43,542
Business reorganization$(3) $(1) $188
 $(1) $—
 $183
EBITDA (loss) (a)$326
 $275
 $(466) $(415) $—
 $(280)
Depreciation and amortization$12
   $457
 $253
 $79
 $—
 801
Intercompany interest income (expense), net—
   —
 (48) 48
 —
 —
Interest income (expense), net$—
   $(101) $(6) $(2) $—
 $(109)
Income (loss) from continuing operations before income taxes$314
   $(283) $(773) $(448) $—
 $(1,190)
            
For The Nine Months Ended September 30, 2016        
Revenue, from external customers$11,660
 $177,717
 $133,053
 $—
 $—
 $322,430
Inter-segment revenue21
 (1) 220
 —
 (240) —
Total revenue$11,681
 $177,716
 $133,273
 $—
 $(240) $322,430
Gross margin, from external customers$10,210
   $63,601
 $57,832
 $—
 $—
 $131,643
Inter-segment gross margin(11) (182) 193
 —
 —
 —
Total gross margin$10,199
 $63,419
 $58,025
 $—
 $—
 $131,643
Business reorganization$(41) $273
 $781
 $(49) $—
 $964
EBITDA (loss) (a)$313
 $(370) $761
 $(5,771) $—
 $(5,067)
Depreciation and amortization43
 1,296
 629
 326
 —
 2,294
Intercompany interest income (expense), net—
 —
 (163) 163
 —
 —
Interest income (expense), net—
 (230) (28) (6) —
 (264)
Income (loss) from continuing operations before income taxes$270
 $(1,896) $(59) $(5,940) $—
 $(7,625)
            
As of September 30, 2016 
  
  
  
  
  
Accounts receivable, net$2,937
   $34,806
 $27,187
 $—
 $—
 $64,930
Long-lived assets, net of accumulated depreciation and amortization$8
   $7,364
 $1,431
 $445
 $—
 $9,248
Total assets$5,383
 $53,778
 $42,978
 $2,802
 $—
 $104,941

(a)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.


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

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 ninethree and six months ended SeptemberJune 30, 20172022 and 2016 and long-lived assets2021 and net assets by geographic area as of SeptemberJune 30, 20172022 and 20162021 and as of December 31, 2021, were as follows:

AustraliaUnited
States		United
Kingdom		OtherTotal
United
Kingdom
 Australia China 
United
States
 
Continental
Europe
 
Other
Asia Pacific
 
Other
Americas
 Total(As restated)(As restated)
For The Three Months Ended September 30, 2017  
  
  
  
For The Three Months Ended June 30, 2022For The Three Months Ended June 30, 2022  
Revenue (a)$24,265
 $58,980
 $4,875
 $3,860
 $13,290
 $12,653
 $185
 $118,108
Revenue (a)
$26,724 $13,866 $11,946 $4,187 $56,723 
For The Three Months Ended September 30, 2016  
  
  
  
For The Three Months Ended June 30, 2021For The Three Months Ended June 30, 2021  
Revenue (a)$27,010
 $49,799
 $4,087
 $3,921
 $12,356
 $10,721
 $242
 $108,136
Revenue (a)
$26,543 $5,067 $5,005 $3,059 $39,674 
For The Nine Months Ended September 30, 2017  
  
  
  
For The Six Months Ended June 30, 2022For The Six Months Ended June 30, 2022
Revenue (a)$73,751
 $158,845
 $12,891
 $11,907
 $43,351
 $33,747
 $612
 $335,104
Revenue (a)
$55,110 $27,762 $17,720 $8,048 $108,640 
For The Nine Months Ended September 30, 2016  
  
  
  
For The Six Months Ended June 30, 2021For The Six Months Ended June 30, 2021
Revenue (a)$93,671
 $136,813
 $12,362
 $11,016
 $39,382
 $28,542
 $644
 $322,430
Revenue (a)
$50,017 $9,315 $8,876 $5,927 $74,135 
As of September 30, 2017 
  
    
  
  
  
  
As of June 30, 2022As of June 30, 2022    
Long-lived assets, net of accumulated depreciation and amortization (b)$1,114
 $3,712
 $2,355
 $130
 $323
 $521
 $—
 $8,155
Long-lived assets, net of accumulated depreciation and amortization (b)
$33 $9,482 $50 $33 $9,598 
Net assets$9,025
 $13,542
 $6,592
 $2,762
 $9,176
 $3,900
 $(221) $44,776
Net assets$9,869 $24,949 $3,375 $6,975 $45,168 
As of September 30, 2016 
  
    
  
  
  
  
As of December 31, 2021As of December 31, 2021    
Long-lived assets, net of accumulated depreciation and amortization (b)$1,235
 $4,457
 $2,523
 $445
 $196
 $384
 $8
 $9,248
Long-lived assets, net of accumulated depreciation and amortization (b)
$29 $9,968 $42 $39 $10,078 
Net assets$11,962
 $8,601
 $7,143
 $2,954
 $8,777
 $5,321
 $(56) $44,702
Net assets$7,925 $21,510 $2,729 $7,152 $39,316 
  
(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.

(b) Comprised of property and equipment, intangible assets and goodwill. Corporate assetsgoodwill, net of accumulated depreciation and amortization.


NOTE 15 – STOCKHOLDER RIGHTS PLAN

    On October 15, 2018, the Company’s Board of Directors 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 includedset forth in the United States.Rights Agreement, dated as of October 15, 2018 (as amended, the “Rights Agreement”), by and between the Company and Computershare Trust Company, N.A., as rights agent (the “Rights Agent”). The Company’s stockholders approved the Rights Agreement at the Company’s 2019 Annual Meeting of Stockholders held on May 6, 2019. On September 28, 2021, the Company and the Rights Agent entered into a First Amendment to Rights Agreement (the “Amendment”) that amended the Rights Agreement to extend its term through October 15, 2024. The amendment was approved by the Board on September 28, 2021, subject to stockholder approval, and the Company’s stockholders approved the Amendment at the Company’s 2022 Annual Meeting of Stockholders held on May 17, 2022.

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


    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 transfers of its common stock that could result in an ownership change. 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 will expire on the earliest of (i) October 15, 2024, 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 close of business on the first business day following the certification of the voting results of the Company’s 2022 Annual Meeting of Stockholders, if stockholder approval has not been obtained prior to such 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 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.

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Index
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.

NOTE 16 – RESTATEMENT OF PREVIOUSLY REPORTED FINANCIAL STATEMENTS

Subsequent to the filing of the Original Form 10-Q, management identified an error related to the accounting treatment of a discretionary bonus paid by the Company on behalf of a customer, specifically on the failure to properly evaluate whether the Company was to be considered the principal or the agent in a non-routine transaction. The effect of this error is an understatement of revenue and direct contracting costs and reimbursed expenses in the amount of $5.762 million for the three- and six-month periods ended June 30, 2022. This Amended Form 10-Q amends revenue and direct contracting costs and reimbursed expenses accordingly. The error had no impact on the Company’s consolidated balance sheet, consolidated statement of cash flows, net income, or any other accounts for such periods.

SEC Staff Accounting Bulletin No. 99, “Materiality,” and FASB, Statement of Financial Accounting Concepts No. 2 “Qualitative Characteristics of Accounting Information” indicate that quantifying and aggregating errors is only the beginning of an analysis of materiality and that both quantitative and qualitative factors must be considered in determining whether individual errors are material. The Company evaluated the corrections and has determined that the impact is material for the period ended June 30, 2022. The assessment resulted in the amendment of the previously reported financial statements reported in the Company’s Form 10-Q for the second quarter of 2022.

The condensed consolidated financial statements and certain of the notes to the condensed consolidated financial statements for the three and six months ended June 30, 2022 have been restated to reflect the corrections. The impact of the restatement is shown in the tables below.

Three Months Ended
June 30, 2022		Six Months Ended
June 30, 2022
As Previously
Reported		AdjustmentAs RestatedAs Previously
Reported		AdjustmentAs Restated
Revenue50,961 5,762 56,723 102,878 5,762 108,640 
Direct contracting costs and reimbursed expenses23,687 5,762 29,449 50,031 5,762 55,793 
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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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"&A”) should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto, included in Item 1Part 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"“Company”) filed in its Annual Report on Form 10-K for the year ended December 31, 2016.2021. This MD&A contains forward-looking statements. Please see "FORWARD-LOOKING STATEMENTS"“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"(“EBITDA”). See Note 17 of this Form 10-Q14 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for EBITDA segment reconciliation information. The tables and information in this "Management's Discussion and Analysis of Financial Conditions and Results of Operations"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 has expertise in recruiting mid-level professional talent across all management disciplines in a wide range of industries. The Company matches clients and candidates’s objective is to address client needs on a part time, full time and interim basis. Part of that expertise is derived from research on hiring trends and the Company's clients’ current successes and challenges with their staff. This research has helped enhance the Company's understanding about the number of new hires that do not meet its clients’ long-term goals, the reasons why, and the resulting costsincrease value to the Company's clients.Company’s stockholders by providing global Recruitment Process Outsourcing (“RPO”) solutions to customers. With direct operations in 13fourteen countries and relationships withspecialized professionals and organizations around the globe, the Company brings a strong ability to match talent with opportunities by assessing, recruiting, developing, and engaging the best and brightesthighly successful people for the Company'sCompany’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 isCompany seeks to continually upgrade its service offerings and delivery capability and assessment tools to make candidates more successful in achieving its clients'clients’ business requirements.


The Company’s proprietary frameworks, assessment tools, and leadership development programs, coupled with its broad geographicglobal footprint, have allowedallow 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'clients’ hiring.
To accelerate the implementation of the Company's strategy,meet the Company engaged’s objective, the Company engages in the following initiatives:
Investing in the core businesses and practices that present the greatest potential for profitable growth.
•Facilitating growth and development of the global RPO business.business through strategic investments in people, innovation, and technology;
•Building and differentiating the Company'sCompany’s brand through its unique talentoutsourcing solutions offerings.offerings; and
•Improving further the Company’s cost structure and efficiency of its support functions and infrastructure.

    We continue to explore all strategic alternatives to maximize value for stockholders. We may pursue our goals through organic growth, strategic initiatives, or other alternatives. Additionally, we will also continue to monitor capital markets for opportunities to repurchase shares, and consider other actions designed to enhance value to our stockholders, including to review information regarding potential acquisitions, as well as to provide information about our business to third parties, from time to time.

    This MD&A discusses the results of the Company’s business for the three and six months ended June 30, 2022 and 2021.
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Index

Current Market Conditions
Economic
    After a partial recovery in 2021, economic conditions in most of the world'sworld’s major markets remain mixed.are expected to slow down in 2022. Higher than expected inflation in most markets and the continuing impact of the war in Ukraine, as well as new variants of the COVID-19 virus, have tempered earlier expectations of continued recovery. Policy measures enacted by U.S. and foreign governments to combat the economic impact of the virus provided support to local economies, but many of these measures have since been discontinued. In addition, the U.K., the referendum to exit the European Union (commonly referred to as “Brexit”) adversely impacted global markets, including currencies, andcontinued uncertainty has resulted in a declinevolatility in the value of the British pound as compared to the U.S. dollar. A weaker British poundglobal currencies. Stronger foreign currencies in other markets compared to the U.S. dollar during a reporting period causescause local currency results of the Company's U.K.Company’s foreign operations to be translated into fewermore U.S. dollars. The Company's U.K. operations, future financial performance and translation of results may be affected, in part, by the outcome of tariff, trade, regulatory, and other negotiations as the U.K. negotiates its exit from the European Union.
Conditions in Continental Europe have shown improvement with GDP growth in most of the major markets, as well as forecasted GDP growth for the remainder of 2017, although the political situation in Spain could negatively impact GDP growth in the short term. Australia faces a modest GDP growth outlook for the remainder of 2017, and the outlook for Asia is improving as China's growth outlook has stabilized.
The Company closely monitors the economic environment and business climate in its markets and responds accordingly. At this time,

COVID-19 Pandemic

The continuing impact of COVID-19 and its variants around the world presents significant risks to the Company, which the Company is unable to accuratelyfully evaluate or even to foresee at the current time. However, the Company is vigilantly monitoring the business environment surrounding COVID-19 and continues to proactively address this situation as it evolves. The Company believes it can continue to take appropriate actions to manage the business in this challenging environment due to the flexibility of its workforce and the strength of its balance sheet.

The COVID-19 pandemic affected the Company’s operations in prior years and may continue to do so in the future. The COVID-19 pandemic may impact 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, as well as 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.

Management cannot predict the outcome of these events or changes in general economic and political conditions and their effectcontinued impact that the COVID-19 pandemic may continue to have on the demand for the Company's services.
Financial Performance
Company’s sales or on economic conditions generally. The Company achieved positive financial performance for the third quarter of 2017 in mostultimate extent of the markets in which it operates. On a constant currency basis,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 three months ended September 30, 2017, revenue increased by $7.2 million, or 6.5%, and gross margin increased by $2.6 million, or 5.7%, respectively, compared to the same period in 2016.pandemic might ends.

The changes in revenue and gross margin were driven by strong results in Asia, Australia/New Zealand, and Continental Europe, partially offset by declines in revenue and gross margin in the U.K.

The following is a summary of the Company’s financial performance highlights for the three and ninesix months ended SeptemberJune 30, 20172022 and 2016.2021. This summary should be considered in the context of the additional disclosures in this MD&A which further highlight the Companyresults by segment.


Summary of Financial Performance Highlights for the Three Months Ended June 30, 2022

•Revenue was $118.1$56.7 million for the three months ended SeptemberJune 30, 2017,2022, compared to $108.1$39.7 million for the same period in 2016, 2021, an increase of $10.0$17.0 million, or 43.0%.The increase in revenue was principally driven by growth in the Americas.
◦On a constant currency basis, the Company’s revenue increased $19.6 million, or 53.0%, primarily due to an increase in RPO recruitment revenue of $12.8 million, or 9.2%.
◦
On a constant currency basis, the Company's revenue increased$7.2 million, or 6.5%, mainly due to an increase of $4.9 million in contracting revenue (up 6.8% compared to the same period in 2016) and $2.7 million in permanent recruitment revenue (up 9.3% compared to the same period in 2016).
92.2%, compared to the same period in 2021. Contracting revenue increased $6.8 million, or 29.4%, compared to the same period in 2021, which also contributed to the increase in the Company’s revenue. Revenue also included an increase of $2.5 million from the Karani Acquisition (for additional information on the Karani Acquisition, see Note 5 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q).
•Adjusted net revenue was $335.1$27.3 million for the ninethree months ended SeptemberJune 30, 2017,2022, compared to $322.4$15.1 million for the same period in 2016,2021, an increase of $12.2 million, or 80.7%.
◦On a constant currency basis, adjusted net revenue increased $13.0 million, or 90.6%, primarily due to an increase in RPO recruitment adjusted net revenue of $12.7 million, or 3.9%.94.9% compared to the same period in 2021. Contracting adjusted net revenue increased by $0.3 million, or 29.5%, compared to the same period in 2021. Adjusted net revenue included an increase of $2.5 million from the Karani Acquisition.
◦
On a constant currency basis, the Company's revenue increased $16.5 million, or 5.2%, mainly due to an increase of $8.4 million in permanent recruitment revenue (up 10.0% compared to the same period in 2016
•Selling, general and administrative expenses (including salaries and related expenses) and other non-operating income (expense) (“SG&A and Non-Op”) and $8.3 million in contracting revenue (up 4.1% compared to the same period in 2016).
Gross margin was $47.2$23.1 million for the three months ended SeptemberJune 30, 2017,2022, compared to $43.5 million for the same period in 2016, an increase of $3.7 million, or 8.5%.
◦
On a constant currency basis, gross margin increased$2.6 million, or 5.7%, mainly due to an increase of $2.8 million in permanent recruitment gross margin (up 9.9% compared to the same period in 2016) partially offset by a decrease of $0.2 million in contracting gross margin (down 2.1% compared to the same period in 2016).
Gross margin was $138.0 million for the nine months ended September 30, 2017, compared to $131.6$14.7 million for the same period in 2016,2021, an increase of $6.4$8.3 million, or 4.8%56.7%.
◦
- 27 -
◦On a constant currency basis, gross margin increased $7.7 million, or 5.9%, mainly due to an increase of $8.4 million in permanent recruitment gross margin (up 10.3% compared to the same period in 2016) partially offset by a decrease of $1.0 million in contracting gross margin (down 4.0% compared to the same period in 2016).
Index

Selling, general and administrative expenses and other non-operating income (expense) ("SG&A and Non-Op") were $46.3Non-Op increased $9.0 million, or 64.1%, as compared to the same period in 2021. SG&A and Non-Op as a percentage of revenue was 40.7% for the three months ended SeptemberJune 30, 2017,2022, compared to $43.6 million37.9% for the same period in 2016, an increase of $2.7 million, or 6.1%.2021.
◦
On a constant currency basis, SG&A and Non-Op increased$1.6 million, or 3.6%. SG&A and Non-Op, as a percentage of revenue, were 39.2% for the three months ended September 30, 2017, compared to 40.3% for the same period in 2016.
SG&A and Non-Op were $134.4•EBITDA was $4.2 million for the ninethree months ended SeptemberJune 30, 2017,2022, compared to $135.7EBITDA of $0.4 million for the same period in 2016, a decrease of $1.4 million, or 1.0%.
◦
On a constant currency basis, SG&A and Non-Op increased $0.2 million, or 0.1%. SG&A and Non-Op, as a percentage of revenue, were 40.1% for the nine months ended September 30, 2017, compared to 42.1% for the same period in 2016.
Business reorganization was $0.5 million for the three months ended September 30, 2017, compared to expense of $0.2 million for the same period in 2016, an increase of approximately $0.3 million. On a constant currency basis, business reorganization increased $0.3 million.
Business reorganization was $0.6 million for the nine months ended September 30, 2017, compared to $1.0 million for the same period in 2016, a decrease of approximately $0.3 million. On a constant currency basis, business reorganization decreased $0.3 million.
EBITDA was $0.5 million for the three months ended September 30, 2017, compared to EBITDA loss of $0.3 million for the same period in 2016,2021, an increase in EBITDA of $0.8 million.$3.8 million. On a constant currency basis, EBITDA increased $0.6 million.
$4.0 million.
EBITDA•Net income was $3.0$3.1 million for the ninethree months ended SeptemberJune 30, 2017,2022, compared to EBITDAnet loss of $5.1$0.1 million for the same period in 20162021, an increase in net income of $3.2 million. On a constant currency basis, net income increased $3.3 million.
Summary of Financial Performance Highlights for the Six Months Ended June 30, 2022
•Revenue was $108.6 million for the six months ended June 30, 2022, compared to $74.1 million for the same period in 2021, an increase of $34.5 million, or 46.5%. The increase in revenue was principally driven by growth in the Americas.
◦On a constant currency basis, the Company’s revenue increased $38.7 million, or 55.3%, primarily due to an increase in RPO recruitment revenue of $26.0 million, or 100.4%, while contracting revenue increased by $12.7 million, or 28.7% compared to the same period in 2021. Revenue included an increase of $5.1 million from the Karani Acquisition.
•Adjusted net revenue was $52.8 million for the six months ended June 30, 2022, compared to $27.8 million for the same period in 2021, an increase of $25.0 million, or 90.0%.
◦On a constant currency basis, adjusted net revenue increased $26.2 million, or 98.2%, mainly due to an increase in RPO recruitment adjusted net revenue of $25.6 million, or 102.8%, compared to the same period in 2021. Contracting adjusted net revenue increased $0.6 million, or 33.0%, compared to the same period in 2021, which also contributed to the Company’s increase in adjusted net revenue. Adjusted net revenue included an increase of $5.1 million from the Karani Acquisition.
•SG&A and Non-Op was $44.8 million for the six months ended June 30, 2022, compared to $27.4 million for the same period in 2021, an increase of $17.4 million or 63.6%.
◦On a constant currency basis, SG&A and Non-Op increased $18.4 million or 69.7%, as compared to the same period in 2021. SG&A and Non-Op as a percentage of revenue was 41.2% for the six months ended June 30, 2022, compared to 37.7% for the same period in 2021.
•EBITDA was $8.1 million for the six months ended June 30, 2022, compared to EBITDA of $0.4 million for the same period in 2021, an increase in EBITDA of $8.1$7.6 million. On a constant currency basis, EBITDA increased $7.8 million.
•Net lossincome was $0.8$6.1 million for the threesix months ended SeptemberJune 30, 2017,2022, compared to net loss of $1.9$0.3 million for the same period in 2016, a decrease2021, an increase in net lossincome of $1.0$6.4 million. On a constant currency basis, net loss decreased $0.9income increased $6.6 million.
Net loss was $0.9 million for the nine months ended September 30, 2017, compared to net loss of $8.5 million for the same period in 2016, a decrease in net loss of $7.6 million. On a constant currency basis, net loss decreased $7.4 million.
Constant Currency (Non-GAAP measure)
The Company operates on a global basis, with the majority of its gross marginrevenue generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect the Company'sCompany’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"“constant currency” to mean that financial data for a previously reported period areis translated into U.S. dollars using the same foreign currency exchange rates that were used to translate financial data for the current period. Constant currency metrics should not be considered in isolation or as a substitute for reported results prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. 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, gross margin,adjusted net revenue, SG&A and Non-Op, business reorganization, 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
- 28 -
Index
foreign currency exchange adjustments on the Company’s operating results for the three and ninesix months ended SeptemberJune 30, 20172022 and 2016.2021.
Index

 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
 As As Currency Constant As As Currency Constant
$ in thousandsreported reported translation currency reported reported translation currency
Revenue: 
  
  
  
  
  
  
  
Hudson Americas$4,044
 $4,163
 $10
 $4,173
 $12,519
 $11,660
 $11
 $11,671
Hudson Asia Pacific76,509
 64,607
 2,208
 66,815
 205,483
 177,717
 4,518
 182,235
Hudson Europe37,555
 39,366
 575
 39,941
 117,102
 133,053
 (8,307) 124,746
Total$118,108
 $108,136
 $2,793
 $110,929
 $335,104
 $322,430
 $(3,778) $318,652
Gross margin: 
  
  
  
  
  
  
  
Hudson Americas$3,668
 $3,691
 $8
 $3,699
 $11,239
 $10,210
 $9
 $10,219
Hudson Asia Pacific25,407
 22,414
 625
 23,039
 68,573
 63,601
 966
 64,567
Hudson Europe18,170
 17,437
 521
 17,958
 58,191
 57,832
 (2,318) 55,514
Total$47,245
 $43,542
 $1,154
 $44,696
 $138,003
 $131,643
 $(1,343) $130,300
SG&A and Non-Op (a):   
  
  
    
  
  
Hudson Americas$3,230
 $3,382
 $3
 $3,385
 $10,248
 $9,928
 $5
 $9,933
Hudson Asia Pacific23,660
 22,072
 516
 22,588
 66,095
 63,521
 783
 64,304
Hudson Europe18,092
 17,756
 517
 18,273
 54,525
 56,475
 (2,335) 54,140
Corporate1,311
 429
 —
 429
 3,509
 5,822
 —
 5,822
Total$46,293
 $43,639
 $1,036
 $44,675
 $134,377
 $135,746
 $(1,547) $134,199
Business reorganization:  
  
  
Hudson Americas$—
 $(3) $—
 $(3) $(91) $(41) $—
 $(41)
Hudson Asia Pacific—
 (1) (3) (4) —
 273
 (2) 271
Hudson Europe477
 188
 3
 191
 749
 781
 (45) 736
Corporate—
 (1) —
 (1) (22) (49) —
 (49)
Total$477
 $183
 $—
 $183
 $636
 $964
 $(47) $917
Operating income (loss):   
  
  
    
  
  
Hudson Americas$558
 $409
 $5
 $414
 $1,333
 $538
 $3
 $541
Hudson Asia Pacific1,868
 714
 122
 836
 2,961
 507
 174
 681
Hudson Europe(75) (389) 43
 (346) 3,811
 1,289
 129
 1,418
Corporate(2,452) (1,520) —
 (1,520) (6,654) (9,250) —
 (9,250)
Total$(101) $(786) $170
 $(616) $1,451
 $(6,916) $306
 $(6,610)
Net income (loss), consolidated$(848) $(1,873) $77
 $(1,796) $(936) $(8,498) $169
 $(8,329)
EBITDA (loss) from continuing operations (b):  
  
  
  
  
Hudson Americas$483
 $326
 $(2) $324
 $1,117
 $313
 $5
 $318
Hudson Asia Pacific1,685
 275
 118
 393
 2,253
 (370) 175
 (195)
Hudson Europe(380) (466) 20
 (446) 3,117
 761
 81
 842
Corporate(1,313) (415) —
 (415) (3,497) (5,771) —
 (5,771)
Total$475
 $(280) $136
 $(144) $2,990
 $(5,067) $261
 $(4,806)
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
AsAsCurrencyConstantAsAsCurrencyConstant
$ in thousandsreportedreportedtranslationcurrencyreportedreportedtranslationcurrency
(As restated)(As restated)
Revenue:        
Americas$14,415 $5,366 $(10)$5,356 $29,026 $9,927 $(10)$9,917 
Asia Pacific29,944 28,801 (2,018)26,783 61,077 54,141 (3,475)50,666 
Europe12,364 5,507 (565)4,942 18,537 10,067 (707)9,360 
Total$56,723 $39,674 $(2,593)$37,081 $108,640 $74,135 $(4,192)$69,943 
Adjusted net revenue (a):
        
Americas$13,809 $4,993 $(10)$4,983 $27,511 $9,202 $(10)$9,192 
Asia Pacific9,174 6,880 (438)6,442 17,387 12,638 (718)11,920 
Europe4,291 3,218 (333)2,885 7,949 5,969 (423)5,546 
Total$27,274 $15,091 $(781)$14,310 $52,847 $27,809 $(1,151)$26,658 
SG&A and Non-Op (b):
      
Americas$11,563 $5,151 $(9)$5,142 $22,867 $9,638 $(9)$9,629 
Asia Pacific6,867 5,892 (370)5,522 13,045 10,888 (601)10,287 
Europe3,736 2,742 (286)2,456 7,239 5,423 (370)5,053 
Corporate900 935 — 935 1,611 1,414 — 1,414 
Total$23,066 $14,720 $(665)$14,055 $44,762 $27,363 $(980)$26,383 
Operating income (loss):      
Americas$2,093 $(168)$— $(168)$4,414 $(466)$— $(466)
Asia Pacific2,575 1,338 (97)1,241 4,849 2,402 (159)2,243 
Europe681 553 (57)496 937 753 (67)686 
Corporate(1,469)(1,428)— (1,428)(2,718)(2,376)— (2,376)
Total$3,880 $295 $(154)$141 $7,482 $313 $(226)$87 
Net income (loss), consolidated$3,093 $(122)$(79)$(201)$6,112 $(325)$(119)$(444)
EBITDA (loss) (c):
     
Americas$2,291 $(173)$(1)$(174)$4,705 $(451)$(1)$(452)
Asia Pacific2,262 1,003 (69)934 4,289 1,764 (116)1,648 
Europe551 476 (47)429 698 546 (54)492 
Corporate(896)(935)— (935)(1,607)(1,413)(1)(1,414)
Total$4,208 $371 $(117)$254 $8,085 $446 $(172)$274 
 
(a)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 income (expense), net. Corporate management service allocations are included in the segments’ other income (expense).

(a)Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations.
(b)See EBITDA reconciliation in the following section.

(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 Statements 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.
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Index

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")U.S. 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.
 
The reconciliation of EBITDA to the most directly comparable GAAP financial measure is provided in the table below:
 
  Three Months Ended Nine Months Ended
  September 30, September 30,
$ in thousands 2017 2016 2017 2016
Net income (loss) $(848) $(1,873) $(936) $(8,498)
Adjustment for income (loss) from discontinued operations, net of income taxes (16) 35
 (34) 327
Income (loss) from continuing operations $(832) $(1,908) $(902) $(8,825)
Adjustments to net income (loss) from continuing operations        
Provision for (benefit from) income taxes 500
 718
 1,525
 1,200
Interest expense, net 110
 109
 317
 264
Depreciation and amortization expense 697
 801
 2,050
 2,294
   Total adjustments from net income (loss) to EBITDA (loss) 1,307
 1,628
 3,892
 3,758
EBITDA (loss) from continuing operations $475
 $(280) $2,990
 $(5,067)
Three Months EndedSix Months Ended
 June 30,June 30,
$ in thousands2022202120222021
Net income (loss)$3,093 $(122)$6,112 $(325)
Adjustments to Net income (loss)
Provision for income taxes781 389 1,317 567 
Interest income, net(3)(9)(5)(19)
Depreciation and amortization expense337 113 661 223 
   Total adjustments from net income (loss) to EBITDA1,115 493 1,973 771 
EBITDA$4,208 $371 $8,085 $446 
 
- 30 -
Index

Contracting Data
The following table sets forth the Company’s contracting revenue, gross margin, and gross margin as a percentage of revenue for the three and nine months ended September 30, 2017 and 2016. 
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
$ in thousands As reported As reported 
Currency
translation
 
Constant
currency
 As reported As reported 
Currency
translation
 
Constant
currency
CONTRACTING DATA (a):
Revenue:                
Hudson Americas $279
 $346
 $1
 $347
 $961
 $1,093
 $1
 $1,094
Hudson Asia Pacific 55,924
 46,657
 1,742
 48,399
 149,929
 125,995
 3,939
 129,934
Hudson Europe 20,894
 23,437
 —
 23,437
 62,923
 81,242
 (6,795) 74,447
Total $77,097
 $70,440
 $1,743
 $72,183
 $213,813
 $208,330
 $(2,855) $205,475
Gross margin:                
Hudson Americas $16
 $43
 $(1) $42
 $84
 $165
 $—
 $165
Hudson Asia Pacific 6,135
 5,601
 202
 5,803
 16,556
 15,150
 467
 15,617
Hudson Europe 2,686
 3,177
 8
 3,185
 8,395
 11,218
 (926) 10,292
Total $8,837
 $8,821
 $209
 $9,030
 $25,035
 $26,533
 $(459) $26,074
Gross margin as a percentage of revenue:
Hudson Americas 5.7% 12.4% N/A
 12.1% 8.7% 15.1% N/A
 15.1%
Hudson Asia Pacific 11.0% 12.0% N/A
 12.0% 11.0% 12.0% N/A
 12.0%
Hudson Europe 12.9% 13.6% N/A
 13.6% 13.3% 13.8% N/A
 13.8%
Total 11.5% 12.5% N/A
 12.5% 11.7% 12.7% N/A
 12.7%
(a)Contracting gross margin and gross margin as a percentage of revenue are shown to provide further comparability relative to the Company's peers. Contracting gross margin is derived by deducting the direct costs of contracting from contracting revenue. The Company’s calculation of gross margin may differ from that of other companies. See Note 5 to the Condensed Consolidated Financial Statements for direct costs and gross margin information.

Index

Results of Operations
Hudson Americas(reported currency)
Revenue


 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
$ in millions As reported  As reported    As reported  As reported  
Hudson Americas               
Revenue$4.0
 $4.2
 $(0.1) (2.9)% $12.5
 $11.7
 $0.9
 7.4%
Revenue
 Three Months Ended June 30,Six Months Ended June 30,
 20222021Change in amountChange in %20222021Change in amountChange in %
$ in millions As reported As reported As reported As reported
Americas
Revenue$14.4 $5.4 $9.0 169 %$29.0 $9.9 $19.1 192 %
 
For the three months ended SeptemberJune 30, 2017, contracting revenue decreased by $0.1 million, or 19.4%, as a result of a decline in demand for contracting services from2022, RPO clients, as compared to the same period in 2016.

For the nine months ended September 30, 2017, permanent recruitment revenue increased $1.0by $8.8 million or 9.6%177%, while contracting revenue increased by $0.3 million, or 62%, as compared to the same period in 2016.2021. The increase was attributableKarani Acquisition contributed 47 percentage points to the revenue growth (for additional information, see Note 5 to the Condensed Consolidated Financial Statements in Part I, Item 1 of existing RPO clients and new business implementations.this Form 10-Q).
Gross Margin
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
$ in millions As reported  As reported    As reported  As reported  
Hudson Americas               
Gross margin$3.7
 $3.7
 $—
 (0.6)% $11.2
 $10.2
 $1.0
 10.1%
Gross margin as a percentage of revenue90.7% 88.7% N/A
 N/A
 89.8% 87.6% N/A
 N/A
Contracting gross margin as a percentage of contracting revenue5.7% 12.4% N/A
 N/A
 8.7% 15.1% N/A
 N/A

    
For the threesix months ended SeptemberJune 30, 2017,2022, RPO recruitment revenue increased by $18.4 million, or 202%, while contracting and permanent recruitment gross margin remained flatrevenue increased by $0.7 million, or 81%, as compared to the same period in 2016.2021. The Karani Acquisition contributed 52 percentage points to the revenue growth.


Adjusted Net Revenue
Three Months Ended June 30,Six Months Ended June 30,
20222021Change in amountChange in %20222021Change in amountChange in %
$ in millions As reported As reported As reported As reported
Americas
Adjusted net revenue$13.8 $5.0 $8.8 177 %$27.5 $9.2 $18.3 199 %
Adjusted net revenue as a percentage of revenue96 %93 %N/AN/A95 %93 %N/AN/A

For the ninethree and six months ended SeptemberJune 30, 2017, permanent2022, RPO recruitment gross marginadjusted net revenue increased $1.2by $8.8 million, or 11.5%178%, as a result of growth in RPO, asand $18.2 million, or 201%, respectively, compared to 2021. The Karani Acquisition contributed 51 and 56 percentage points to the same period in 2016.adjusted net revenue growth for the three and six months ended June 30, 2022, respectively.


For the three months ended SeptemberJune 30, 2017,2022, total gross marginadjusted net revenue as a percentage of revenue was 90.7%96%, as compared to 88.7% for the same period93% in 2016. For the nine months ended September 30, 2017, total gross margin as a percentage of revenue was 89.8%, as compared to 87.6% for the same period in 2016.2021. The increase in total gross marginadjusted net revenue as a percentage of revenue was attributed to the higher mix of permanentRPO recruitment in 2017to contracting revenue.

    For the six months ended June 30, 2022, total adjusted net revenue as a percentage of revenue was 95%, compared to 2016.93% for the same period in 2021. The increase in total adjusted net revenue as a percentage of revenue was due to the same factors noted above.

- 31 -
Index

SG&A and Non-Op 
Three Months Ended June 30,Six Months Ended June 30,
 20222021Change in amountChange in %20222021Change in amountChange in %
 $ in millions As reported As reported As reported As reported
Americas
SG&A and Non-Op$11.6 $5.2 $6.4 124 %$22.9 $9.6 $13.2 137 %
SG&A and Non-Op as a percentage of revenue80 %96 %N/AN/A79 %97 %N/AN/A
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
 $ in millions As reported  As reported    As reported  As reported  
Hudson Americas               
SG&A and Non-Op$3.2
 $3.4
 $(0.2) (4.5)% $10.2
 $9.9
 $0.3
 3.2%
SG&A and Non-Op as a percentage of revenue79.9% 81.2% N/A
 N/A
 81.9% 85.1% N/A
 N/A


    For the three months ended June 30, 2022, SG&A and Non-Op increased $6.4 million, or 124%, compared to the same period in 2021, while SG&A and Non-Op as a percentage of revenue decreased from 96% to 80%.

For the six months ended June 30, 2022, SG&A and Non-Op increased $13.2 million, or 137%, compared to the same period in 2021, while SG&A and Non-Op as a percentage of revenue decreased from 97% to 79%.

The decreases in SG&A and Non-Op as a percentage of revenue were primarily due to gains in adjusted net revenue outpacing higher consultant staff costs from investments in the sales team and industry marketing activities.

Operating Income and EBITDA
Three Months Ended June 30,Six Months Ended June 30,
 20222021Change in amountChange in %20222021Change in amountChange in %
$ in millions As reported As reported As reported As reported
Americas    
Operating income (loss)$2.1 $(0.2)$2.3 N/M$4.4 $(0.5)$4.9 N/M
EBITDA (loss)$2.3 $(0.2)$2.5 N/M$4.7 $(0.5)$5.2 N/M
EBITDA (loss) as a percentage of revenue16 %(3)%N/AN/A16 %(5)%N/AN/A
N/M = not meaningful
For the three months ended SeptemberJune 30, 2017,2022, operating income was $2.1 million, compared to an operating loss of $0.2 million in 2021, and EBITDA was $2.3 million, or 16% of revenue, compared to EBITDA loss of $0.2 million in 2021.
For the six months ended June 30, 2022, operating income was $4.4 million, compared to operating loss of $0.5 million in 2021, and EBITDA was $4.7 million, or 16% of revenue, compared to EBITDA loss of $0.5 million in 2021.
The increases in operating income and EBITDA were primarily due to the stronger adjusted net revenue results and lower SG&A and Non-Op decreased $0.2as a percentage of revenue.

- 32 -
Index
Asia Pacific(constant currency)
Revenue
 Three Months Ended June 30,Six Months Ended June 30,
 20222021Change in amountChange in %20222021Change in amountChange in %
$ in millionsAs
reported		Constant
currency		As
reported		Constant
currency
Asia Pacific
Revenue$29.9 $26.8 $3.2 12 %$61.1 $50.7 $10.4 21 %
    For the three months ended June 30, 2022, RPO recruitment revenue increased $2.5 million, or 4.5%42%, and contracting revenue increased by $0.7 million, or 3%, compared to 2021, as discussed below.

    In Australia, revenue increased $2.1 million, or 9%, for the three months ended June 30, 2022, compared to the same period in 20162021. The increase was primarily in RPO recruitment revenue which grew $2.0 million, or 42%, while contracting revenue increased by $0.2 million, or 1%, compared to 2021. The change in recruitment revenue was due to lower costs of service delivery teams.new client wins and higher demand from existing clients.
For
    In Asia, revenue increased $0.7 million, or 35%, for the ninethree months ended SeptemberJune 30, 2017, SG&A and Non-Op increased $0.3 million, or 3.2%, as2022, compared to the same period in 2016 due to higher costs of service delivery teams attributable to the growth in RPO.

Business Reorganization

For the three months ended September 30, 2017 and 2016, there was no business reorganization expense. For the nine months ended September 30, 2017, business reorganization was a credit of $0.1 million as compared to $0.0 million for the same period in 2016.
Operating Income and EBITDA
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
$ in millions As reported  As reported    As reported  As reported  
Hudson Americas 
  
      
  
    
Operating income (loss)$0.6
 $0.4
 $0.1
 25.0% $1.3
 $0.5
 $0.8
 (a)
EBITDA (loss)$0.5
 $0.3
 $0.2
 66.7% $1.1
 $0.3
 $0.8
 (a)
EBITDA (loss) as a percentage of revenue11.9% 7.8% N/A
 N/A
 8.9% 2.7% N/A
 N/A

(a)Information was not provided because the Company did not consider the2021. The change in percentage a meaningful measure for the periods in comparison.
For the three months ended September 30, 2017, EBITDA was $0.5 million, or 11.9% of revenue, as compared to EBITDA of $0.3 million, or 7.8% of revenue, for the same period in 2016. For the nine months ended September 30, 2017, EBITDA was $1.1 million, or 8.9% of revenue, as compared to EBITDA of $0.3 million, or 2.7% of revenue, for the same period in 2016. The increase in EBITDA for the three months ended SeptemberJune 30, 20172022 was principally due to new client wins and higher demand from existing clients.        

For the decrease in SG&A and Non-Op. The increase in EBITDA for the ninesix months ended SeptemberJune 30, 2017 was principally due to the increase in gross margin partially offset2022, contracting revenue increased by the increase in SG&A and Non-Op.

Index

Hudson Asia Pacific(constant currency)
Revenue
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
$ in millions
As
reported
 
Constant
currency
   
As
reported
 
Constant
currency
  
Hudson Asia Pacific              
Revenue$76.5
 $66.8
 $9.7
 14.5% $205.5
 $182.2
 $23.2
 12.8%
For the three months ended September 30,2017$5.4 million, or 14%, contracting and permanentwhile RPO recruitment revenue increased $7.5 million and $1.6by $5.0 million, or 15.5% and 10.9%46%.

    In Australia, revenue increased $8.5 million, or 18%, respectively, asfor the six months ended June 30, 2022, compared to the same period in 2016.

In Australia and New Zealand, revenue increased $8.0 million, or 13.3%, for the three months ended September 30,2017, as compared to the same period in 2016.2021. The increase was primarily in contracting revenue, and talent management, which increased $7.5 million and $0.7by $4.4 million, or 15.6%12%, while RPO recruitment revenue increased by $4.1 million, or 48%. The increases in contracting and 25.5%recruitment revenue were primarily due to higher demand from existing clients, as well as the implementation of new client contracts.

    In Asia, revenue increased $1.5 million, or 38%, respectively, for the six months ended June 30, 2022 compared to 2021, reflecting new client wins and higher demand from existing clients.
Adjusted net revenue
 Three Months Ended June 30,Six Months Ended June 30,
 20222021Change in amountChange in %20222021Change in amountChange in %
 $ in millionsAs
reported		Constant
currency		As
reported		Constant
currency
Asia Pacific
Adjusted net revenue$9.2 $6.4 $2.7 42 %$17.4 $11.9 $5.5 46 %
Adjusted net revenue as a percentage of revenue31 %24 %N/AN/A28 %24 %N/AN/A
    For the three months ended SeptemberJune 30, 2017, as2022, RPO recruitment adjusted net revenue increased $2.5 million, or 44%, while contracting adjusted net revenue increased $0.2 million, or 29%, compared to the same period in 2016. The increase in contracting2021.

    In Australia, adjusted net revenue increased by $2.2 million, or 42%, for the three months ended SeptemberJune 30, 2017 was in the Company's public sector practice partially offset by declines in the financial services and technical and engineering practices.

In Asia, revenue increased $1.7 million, or 25.1%, for the three months ended September 30,2017, as2022, compared to the same period in 2016.2021. The increase in Asia was primarily reflected in Hong Kong and China.RPO recruitment adjusted net revenue, which grew $2.0 million, or 45%, while contracting adjusted net revenue increased by $0.2 million, or 26%, compared to 2021.


For    In Asia, adjusted net revenue increased by $0.6 million, or 45%, for the ninethree months ended SeptemberJune 30, 2017, contracting and permanent recruitment revenue increased $20.0 million and $2.8 million, or 15.4% and 6.6%, respectively, as2022, compared to the same period in 2016.2021.

In Australia and New Zealand,Total adjusted net revenue as a percentage of revenue was 31% for the three months ended June 30, 2022, compared to 24% for the same period in 2021. The increase in total adjusted net revenue as a percentage of revenue was attributed to a greater mix of higher margin RPO recruitment revenue to contracting revenue.
- 33 -
Index

For the six months ended June 30, 2022, RPO recruitment adjusted net revenue increased $20.8by $5.0 million, or 12.7%48%, for the nine months ended September 30, 2017, aswhile contracting adjusted net revenue increased by $0.4 million, or 30%, compared to the same period in 2016. The increase was primarily in contracting2021.

    In Australia, adjusted net revenue and talent management, which increased $19.8 million and $0.9by $4.5 million, or 15.3% and 10.1%47%, respectively, for the ninesix months ended SeptemberJune 30, 2017, as2022, compared to the same period in 2016.2021. The increasesincrease was primarily reflected in RPO recruitment adjusted net revenue, which grew $4.1 million, or 51%, while contracting adjusted net revenue for the nine months ended September 30, 2017 were a result of the same factors noted above.increased by $0.4 million, or 27%, compared to 2021.


In Asia, adjusted net revenue increased $2.5by $1.0 million, or 13.1%41%, for the ninesix months ended SeptemberJune 30, 2017, as2022, compared to the same period in 2016. The increase in Asia was primarily in Hong Kong and China.2021.

Gross Margin
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
 $ in millionsAs
reported		 
Constant
currency
   
As
reported
 
Constant
currency
  
Hudson Asia Pacific              
Gross margin$25.4
 $23.0
 $2.4
 10.3% $68.6
 $64.6
 $4.0
 6.2%
Gross margin as a percentage of revenue33.2% 34.5% N/A
 N/A
 33.4% 35.4% N/A
 N/A
Contracting gross margin as a percentage of contracting revenue11.0% 12.0% N/A
 N/A
 11.0% 12.0% N/A
 N/A
For the three months ended September 30, 2017, permanent recruitment and contracting gross margin increased $1.5 million and $0.3 million, or 10.3% and 5.7%, respectively, as compared to the same period in 2016.

In Australia and New Zealand, gross margin increased $0.8 million, or 5.0%, for the three months ended September 30, 2017, as compared to the same period in 2016. The increase was primarily in talent management and contracting which
Index

increased $0.6 million and $0.3 million, or 32.4% and 5.8%, respectively, for the three months ended September 30,2017, as compared to the same period in 2016.

In Asia, gross margin increased $1.5 million, or 24.4%, for the three months ended September 30,2017, as compared to the same period in 2016. The increase in Asia was primarily in Hong Kong and China.

For the nine months ended September 30, 2017, permanent recruitment and contracting gross margin increased $2.6 million and $0.9 million, or 6.1% and 6.0%, respectively, as compared to the same period in 2016.

In Australia and New Zealand, gross margin increased $1.8 million, or 3.8%, for the nine months ended September 30, 2017, as compared to the same period in 2016. The increase was primarily in contracting and talent management increasing $0.9 million and $0.8 million or 6.1% and 13.3%, respectively, for the nine months ended September 30, 2017, as compared to the same period in 2016.

In Asia, gross margin increased $2.2 million, or 12.4%, for the nine months ended September 30, 2017, as compared to the same period in 2016. The increase in Asia was primarily in Hong Kong and China.


Total gross marginadjusted net revenue as a percentage of revenue was 33.2%28% for the threesix months ended SeptemberJune 30, 2017, as2022, compared to 34.5%24% for the same period in 2016. Total gross margin2021. The increase in total adjusted net revenue as a percentage of revenue was 33.4% forattributed to the nine months ended September 30, 2017, as comparedhigher mix of higher margin RPO recruitment revenue to 35.4% for the same period in 2016. The decrease in total gross margin as a percentage of revenue forcontracting revenue.
SG&A and Non-Op
Three Months Ended June 30,Six Months Ended June 30,
 20222021Change in amountChange in %20222021Change in amountChange in %
$ in millionsAs
reported		Constant
currency		As
reported		Constant
currency
Asia Pacific
SG&A and Non-Op$6.9 $5.5 $1.3 24 %$13.0 $10.3 $2.8 27 %
SG&A and Non-Op as a percentage of revenue23 %21 %N/AN/A21 %20 %N/AN/A

For the three and ninesix months ended SeptemberJune 30, 2017 resulted from a decline in the contracting gross margin percentage as2022, SG&A and Non-Op increased $1.3 million or 24%, and $2.8 million or 27%, respectively, compared to the same periods in 2016.
SG&A and Non-Op
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
$ in millionsAs
reported		 Constant
currency		   As
reported		 Constant
currency		  
Hudson Asia Pacific
SG&A and Non-Op$23.7
 $22.6
 $1.1
 4.7% $66.1
 $64.3
 $1.8
 2.8%
SG&A and Non-Op as a percentage of revenue30.9% 33.8% N/A
 N/A
 32.2% 35.3% N/A
 N/A

For the three months ended September 30, 2017,2021. The increases in SG&A and Non-Op increased $1.1 million, or 4.7%, as compared to the same period in 2016. The increase waswere primarily due to higher selling costs and higher overhead costs associated with the growth in the business. consultant staff costs.
For the ninethree and six months ended SeptemberJune 30, 2017, SG&A and Non-Op increased $1.8 million, or 2.8%, as compared to the same period in 2016. The increase was primarily due to the reason stated above.

For the three months ended September 30,2017,2022, SG&A and Non-Op as a percentage of revenue was 30.9%23% and 21%, as compared to 33.8%21% and 20%, respectively, for the same periodperiods in 2016. 2021.
For the ninethree and six months ended SeptemberJune 30, 2017, SG&A and Non-Op, as a percentage of revenue, were 32.2%, as compared to 35.3% for2022, the same period in 2016. The decreaseincrease in SG&A and Non-Op as a percentage of revenue was principally due to the lower mix of contracting revenue, growing at a faster rate than SG&A and Non-op.where the majority of costs are reflected in adjusted net revenue.
    
Business ReorganizationOperating Income and EBITDA

Three Months Ended June 30,Six Months Ended June 30,
 20222021Change in amountChange in %20222021Change in amountChange in %
$ in millionsAs
reported		Constant
currency		As
reported		Constant
currency
Asia Pacific
Operating income$2.6 $1.2 $1.3 108 %$4.8 $2.2 $2.6 116 %
EBITDA$2.3 $0.9 $1.3 142 %$4.3 $1.6 $2.6 160 %
EBITDA as a percentage of revenue8 %3 %N/AN/A7 %3 %N/AN/A

For the three months ended SeptemberJune 30, 20172022, operating income was $2.6 million, compared to operating income of $1.2 million, and 2016, thereEBITDA was no business reorganization. $2.3 million or 8% of revenue, compared to EBITDA of $0.9 million or 3% of revenue, compared to the same period in 2021.
For the ninesix months ended SeptemberJune 30, 2017, there2022, operating income was no business reorganization, as$4.8 million, compared to $0.3operating income of $2.2 million, and EBITDA was $4.3 million or 7% of revenue, compared to EBITDA of $1.6 million or 3% of revenue, compared to for the same period in 2021.
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Index
The increases in operating income and EBITDA were principally due to the changes in adjusted net revenue, as described above.

Europe(constant currency)
Revenue
Three Months Ended June 30,Six Months Ended June 30,
 20222021Change in amountChange in %20222021Change in amountChange in %
(As restated)Constant
currency		(As restated)Constant
currency
$ in millions(As restated)(As restated)(As restated)(As restated)
Europe    
Revenue$12.4 $4.9 $7.4 150 %$18.5 $9.4 $9.2 98 %
    For the three months ended June 30, 2022, RPO recruitment revenue increased by $1.5 million or 51%, and contracting revenue increased $5.9 million or 299%, compared to the same period in 2021, as further discussed below.     

    In the U.K., for the three months ended June 30, 2022, revenue increased by $7.5 million, or 166%. The change was driven by increases in RPO recruitment and contracting revenue of $1.5 million and $5.9 million, respectively, due to higher demand from existing clients and the implementation of new client contracts.

    In Continental Europe, total revenue decreased to $0.4 million for the three months ended June 30, 2022, a decrease of 6% compared to 2021, due to lower demand from existing recruitment clients.

For the six months ended June 30, 2022, RPO recruitment revenue increased by $2.6 million or 44%, while contracting revenue increased by $6.6 million or 185%, compared to the same period in 2021.

    In the U.K., for the six months ended June 30, 2022, revenue increased by $9.5 million or 115%, compared to the same period in 2021. The increase was driven by higher RPO recruitment revenue of $2.8 million and higher contracting revenue of $6.6 million.

    In Continental Europe, revenue decreased to $0.8 million for the six months ended June 30, 2022, compared to revenue of $1.1 million for the same period in 2016. Business reorganization2021, due to the same factor noted above.
Adjusted Net Revenue
 Three Months Ended June 30,Six Months Ended June 30,
20222021Change in amountChange in %20222021Change in amountChange in %
$ in millions(As restated)Constant
currency		(As restated)Constant
currency
Europe      
Adjusted net revenue$4.3 $2.9 $1.4 49 %$7.9 $5.5 $2.4 43 %
Adjusted net revenue as a percentage of revenue35 %58 %N/AN/A43 %59 %N/AN/A

    For the three months ended June 30, 2022, adjusted net revenue increased by $1.4 million or 49%, driven by an increase in 2016RPO recruitment of $1.4 million, led by the U.K. as discussed below.
    In the U.K., total adjusted net revenue for the three months ended June 30, 2022 increased by $1.4 million or 56%, compared to 2021. The increase was driven by RPO recruitment adjusted net revenue, which also increased by $1.4 million or 58%, compared to 2021.

    In Continental Europe, total adjusted net revenue was $0.4 million for the three months ended June 30, 2022, for an increase of 2% compared to $0.4 million in 2021, due to higher demand from existing clients.

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Index
For the six months ended June 30, 2022, adjusted net revenue increased by $2.4 million or 43%, driven by an increase in RPO recruitment revenue, which also grew $2.4 million or 44%, compared to the same period in 2021.

    In the U.K., total adjusted net revenue for the six months ended June 30, 2022 increased $2.6 million or 57%, compared to the same period in 2021. The increase in total adjusted net revenue in the U.K. was driven by an increase in RPO recruitment of $2.6 million.

    In Continental Europe, for the six months ended June 30, 2022, total adjusted net revenue decreased by $0.2 million, or 21%, compared to the same period in 2021, due to lower demand from existing clients.
SG&A and Non-Op
Three Months Ended June 30,Six Months Ended June 30,
 20222021Change in amountChange in %20222021Change in amountChange in %
$ in millions(As restated)Constant
currency		(As restated)Constant
currency
Europe      
SG&A and Non-Op$3.7 $2.5 $1.3 52 %$7.2 $5.1 $2.2 43 %
SG&A and Non-Op as a percentage of revenue30 %50 %N/AN/A39 %54 %N/AN/A
For the three and six months ended June 30, 2022, SG&A and Non-Op increased $1.3 million or 52%, and $2.2 million or 43%, respectively, compared to the same periods in 2021. The increases in SG&A and Non-Op were a result of higher consultant staff costs and increased advertising activities in the current year.

For the three and six months ended June 30, 2022, SG&A and Non-Op as a percentage of revenue was 30% and 39%, compared to 50% and 54%, respectively in 2021. The increases in SG&A and Non-Op as a percentage of revenue were primarily due to severance costs.the higher consultant staff costs and increased advertising activities outpacing gains in RPO recruitment revenue.

Index


Operating Income and EBITDA
Three Months Ended June 30,Six Months Ended June 30,
 20222021Change in amountChange in %20222021Change in amountChange in %
$ in millions(As restated)Constant
currency		(As restated)Constant
currency
Europe      
Operating income$0.7 $0.5 $0.2 37 %$0.9 $0.7 $0.3 37 %
EBITDA$0.6 $0.4 $0.1 29 %$0.7 $0.5 $0.2 42 %
EBITDA as a percentage of revenue4 %9 %N/AN/A4 %5 %N/AN/A
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
$ in millionsAs
reported		 Constant
currency		   As
reported		 Constant
currency		  
Hudson Asia Pacific               
Operating income (loss)$1.9
 $0.8
 $1.0
 (a) $3.0
 $0.7
 $2.3
 (a)
EBITDA (loss)$1.7
 $0.4
 $1.3
 (a) $2.3
 $(0.2) $2.4
 (a)
EBITDA (loss) as a percentage of revenue2.2% 0.6% N/A
 N/A 1.1% (0.1)% N/A
 N/A



(a)Information was not provided because the Company did not consider the change in percentage a meaningful measure for the periods in comparison.
For the three months ended SeptemberJune 30,2017, 2022, operating income was $0.7 million, compared to operating income of $0.5 million for the same period in 2021, and EBITDA was $1.7$0.6 million, or 2.2%4% of revenue, as compared to EBITDA of $0.4 million or 0.6% of revenue, for the same period in 2016. 2021.
For the ninesix months ended SeptemberJune 30, 2017, EBITDA was $2.3 million, or 1.1% of revenue, as compared to EBITDA loss of $0.2 million, or 0.1% of revenue, for the same period in 2016. The increase in EBITDA for the three and nine months ended September 30, 2017 was principally due to the increase in gross margin and decline in business reorganization partially offset by an increase in SG&A and Non-Op.
For the three months ended September 30, 2017,2022, operating income was $1.9$0.9 million, as compared to operating income of $0.8 million for the same period in 2016. For the nine months ended September 30, 2017, operating income was $3.0 million, as compared to operating income of $0.7 million for the same period in 2016. The difference between operating income (loss)2021, and EBITDA (loss) for the three and nine months ended September 30, 2017 and 2016 was principally due to corporate management fees, foreign currency gains and losses and depreciation.
Index

Hudson Europe(constant currency)
Revenue
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
$ in millionsAs
reported		 Constant
currency		   As
reported		 Constant
currency		  
Hudson Europe 
  
  
    
  
  
  
Revenue$37.6
 $39.9
 $(2.4) (6.0)% $117.1
 $124.7
 $(7.6) (6.1)%
For the three months ended September 30, 2017, contracting and talent management revenue decreased $2.5 million and $0.9$0.7 million or 10.9% and 16.5%, respectively, as4% of revenue, compared to the same period in 2016. The decline was partially offset by an increase in permanent recruitment revenueEBITDA of $1.1 million, or 11.0%, as compared to the same period in 2016.

For the nine months ended September 30, 2017, contracting and talent management revenue decreased $11.5 million and $0.9 million, or 15.5% and 5.0%, respectively, as compared to the same period in 2016. The decline was partially offset by an increase in permanent recruitment revenue of $4.6 million, or 15.0%, as compared to the same period in 2016.

In the U.K., for the three months ended September 30, 2017, revenue decreased by $2.7 million, or 9.9%, to $24.3 million, from $26.9 million for the same period in 2016. For the three months ended September 30, 2017, the decrease in the U.K. was driven by a decline in contracting revenue of $2.7 million, or 12.5%, as compared to the same period in 2016, partially offset by an increase in permanent recruitment revenue of $0.4 million, or 8.3%, as compared to the same period in 2016. The decline in contracting revenue is primarily a result of reduced demand from large financial services and public sector clients.

In the U.K., for the nine months ended September 30, 2017, revenue decreased by $11.7 million, or 13.7%, to $73.8 million, from $85.5 million for the same period in 2016. For the nine months ended September 30, 2017, the decrease in the U.K. was driven by a decline in contracting revenue of $12.4 million, or 17.6%, as compared to the same period in 2016, partially offset by an increase in permanent recruitment revenue of $0.9 million, or 7.0%, as compared to the same period in 2016. The decline in contracting revenue is due to the same factors noted above.

In Continental Europe, total revenue was $13.3 million for the three months ended September 30, 2017, as compared to $13.0 million for the same period in 2016, an increase of $0.3 million, or 2.1%.

In Continental Europe, for the nine months ended September 30, 2017, total revenue was $43.4 million, as compared to $39.3 million for the same period in 2016, an increase of $4.1 million, or 10.4%.

Gross Margin
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
$ in millions
As
reported
 Constant
currency		   
As
reported
 Constant
currency		  
Hudson Europe 
  
  
    
  
  
  
Gross margin$18.2
 $18.0
 $0.2
 1.2% $58.2
 $55.5
 $2.7
 4.8%
Gross margin as a percentage of revenue48.4% 45.0% N/A
 N/A
 49.7% 44.5% N/A
 N/A
Contracting gross margin as a percentage of contracting revenue12.9% 13.6% N/A
 N/A
 13.3% 13.8% N/A
 N/A

For the three months ended September 30, 2017, permanent recruitment gross margin increased $1.3 million, or 12.7%, as compared to the same period in 2016. The increase was partially offset by declines in talent management and contracting gross margins of $0.6 million and $0.5 million or 11.6% and 15.7%, respectively, as compared to the same period in 2016.
Index

For the nine months ended September 30, 2017, permanent recruitment gross margin increased $4.7 million, or 15.7%, partially offset by declines in contracting and talent management gross margins of $1.9 million and $0.4 million, or 18.4% and 2.4%, respectively, as compared to the same period in 2016.

In the U.K., total gross margin for the three months ended September 30, 2017 decreased $0.2 million, or 2.6%, as compared to the same period in 2016. The decrease in the U.K. was driven by a decline in contracting gross margin of $0.6 million, or 20.2%, as compared to the same period in 2016, partially offset by an increase in permanent recruitment gross margin of $0.4 million, or 10.7%, as compared to the same period in 2016.

In the U.K., total gross margin for the nine months ended September 30, 2017 decreased $1.2 million, or 5.4%, as compared to the same period in 2016. The decrease in the U.K. was driven by a decline in contracting gross margin of $2.2 million, or 23.1%, as compared to the same period in 2016, partially offset by an increase in permanent recruitment gross margin of $1.0 million, or 7.6%, as compared to the same period in 2016.

In Continental Europe, for the three months ended September 30, 2017, total gross margin increased $0.4 million, or 3.8%, as compared to the same period in 2016.

In Continental Europe, for the nine months ended September 30, 2017, total gross margin increased $3.9 million, or 12.1%, as compared to the same period in 2016.
For the three months ended September 30, 2017, gross margin, as a percentage of revenue, was 48.4%, as compared to 45.0% for 2016. For the nine months ended September 30, 2017, gross margin, as a percentage of revenue, was 49.7%, as compared to 44.5% for 2016. The increase in gross margin, as a percentage of revenue, resulted from an increase in the relative mix of higher margin permanent recruitment compared to lower margin contracting revenues. The contracting gross margin, as a percentage of revenue, for the three months ended September 30, 2017, was 12.9%, as compared to 13.6%, for the same period in 2016. For the nine months ended September 30, 2017, the contracting gross margin, as a percentage of revenue, was 13.3%, as compared to 13.8% for the same period in 2016.

SG&A and Non-Op
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
$ in millions
As
reported
 Constant
currency		   
As
reported
 Constant
currency		  
Hudson Europe 
  
  
    
  
  
  
SG&A and Non-Op$18.1
 $18.3
 $(0.2) (1.0)% $54.5
 $54.1
 $0.4
 0.7%
SG&A and Non-Op as a percentage of revenue48.2% 45.7% N/A
 N/A
 46.6% 43.4% N/A
 N/A
For the three months ended September 30, 2017, SG&A and Non-Op decreased $0.2 million, or 1.0%, as compared to the same period in 2016. The decrease in SG&A and Non-Op were a result of lower staff and occupancy costs.

For the nine months ended September 30, 2017, SG&A and Non-Op increased $0.4 million, or 0.7%, as compared to the same period in 2016. The increase in SG&A and Non-Op were a result of higher staff costs partially offset by lower occupancy costs.

For the three months ended September 30, 2017, SG&A and Non-Op, as a percentage of revenue, was 48.2%, as compared to 45.7% for the same period in 2016. For the nine months ended September 30, 2017, SG&A and Non-Op, as a percentage of revenue, was 46.6%, as compared to 43.4% for the same period in 2016. The increase in SG&A and Non-Op, as a percentage of revenue, for the three and nine months ended September 30, 2017 were primarily due to the decline in lower margin contracting revenue.

Index

Business Reorganization

For the three months ended September 30,2017, business reorganization was $0.5 million, as compared to $0.2 million for the same period in 2016. For the nine months ended September 30, 2017, business reorganization was $0.7 million as compared to $0.7 million for the same period in 2016. The business reorganization for the three and nine months ended September 30, 2017 was primarily due to changes in lease exit cost estimates in the U.K.

Operating Income and EBITDA
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Change in amount Change in % 2017 2016 Change in amount Change in %
$ in millionsAs
reported		 Constant
currency		   As
reported		 Constant
currency		  
Hudson Europe 
  
  
    
  
  
  
Operating income (loss)$(0.1) $(0.3) $0.3
 (78.3)% $3.8
 $1.4
 $2.4
 (a)
EBITDA (loss)$(0.4) $(0.4) $0.1
 (14.8)% $3.1
 $0.8
 $2.3
 (a)
EBITDA (loss) as a percentage of revenue(1.0)% (1.1)% N/A
 N/A
 2.7% 0.7% N/A
 N/A
For the three months ended September 30,2017, EBITDA loss was $0.4 million, or 1.0% of revenue, as compared to EBITDA loss of $0.4 million, or 1.1%5% of revenue, for the same period in 2016. 2021.
The decreaseincreases in EBITDA loss of $0.1 million for the three months ended September 30, 2017, as compared to the same period in 2016, was principally due to an increase in gross margin and lower SG&A and Non-Op.

For the nine months ended September 30, 2017, EBITDA was $3.1 million, or 2.7% of revenue, as compared to EBITDA of $0.8 million, or 0.7% of revenue, for the same period in 2016. The increase in EBITDA for the nine months ended September 30, 2017, as compared to the same period in 2016, was principally due to an increase in gross margin partially offset by higher SG&A and Non-Op.
For the three months ended September 30, 2017, operating loss was $0.1 million, as compared to operating loss of $0.3 million for the same period in 2016. For the nine months ended September 30, 2017 and 2016, operating income was $3.8 million and $1.4 million, respectively. The differences between operating income and EBITDA for the three and nine months ended September 30, 2017 and 2016 were principally due to corporate management fees, foreign currencythe gains and losses and depreciation.in RPO recruitment revenue noted above.

- 36 -
Index

The following are discussed in reported currency


Corporate Expenses, Net of Corporate Management FeeExpense Allocations
 
Corporate expenses were $1.3$0.9 million for the three months ended SeptemberJune 30, 2017, as2022 compared to $0.4$0.9 million for the three months ended June 30, 2021. The slight decrease was primarily due to lower stock compensation expense and an increase in corporate allocations, which were partially offset by higher professional fees.

    For the six months ended June 30, 2022, corporate expenses were $1.6 million compared to $1.4 million for the same period in 2016,2021, for an increase of $0.9$0.2 million. The increase for the three months ended September 30, 2017, was principallyprimarily due to higher incentive compensation accruals resulting from improved financial performance and higherstaff costs, professional fees, as compared to the same period in 2016.

For the nine months ended September 30, 2017, corporateand travel and entertainment expenses, which were $3.5 million as compared to $5.8 million for the same period in 2016, a decrease of $2.3 million. The decrease for the nine months ended September 30, 2017 was principally due to legal settlement costs associated with an arbitration claim to the condensed consolidated financial statements during 2016 (see Note 13), partially offset by the factors noted above.higher corporate allocations.


Depreciation and Amortization Expense


Depreciation and amortization expense was $0.3 million and $0.7 million for the three and six months ended SeptemberJune 30, 2017, as2022, compared to $0.8$0.1 million and $0.2 million for the same periodperiods in 2016,2021, respectively. The increases were driven by a decreasemortization expense associated with the acquisitions of $0.1Coit Staffing, Inc and Karani, LLC of $0.3 million or 13.0%. For the nine months ended September 30, 2017, depreciation and amortization expense was $2.1 million, as compared to $2.3 million for the same period in 2016, a decrease of $0.2 million, or 10.6%. The decrease was due to the lower level of capital expenditures incurred by the company in recent years.

Interest Expense, Net of Interest Income

Interest expense remained flat at $0.1$0.6 million for the three and six months ended SeptemberJune 30, 2017 and 2016. Interest2022, respectively. (See Note 5 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q)

Other Income (expense), Net

Other expense remained flat at $0.3was $0.0 million for each of the ninethree months ended SeptemberJune 30, 20172022 and 2016.2021. For the six months ended June 30, 2022, other expense of $0.1 million decreased slightly compared to other expense of $0.1 million in 2021.

Provision for (Benefit from) Income Taxes


The provision for income taxes for the ninesix months ended SeptemberJune 30, 20172022 was $1.5$1.3 million on $0.6$7.4 million of pre-tax income, from continuing operations, as compared to a provision for income tax of $1.2$0.6 million on $7.6$0.2 million of pre-tax loss from continuing operationsincome for the same period in 2016.2021. The effective tax raterates for the ninesix months ended SeptemberJune 30, 2017 was 244.8%2022 and 2021 were positive 18% and positive 234%, as compared to beneficial rate of 15.7% for the same period in 2016.respectively. For the ninesix months ended SeptemberJune 30, 2017,2022, the effective tax rate differed from the U.S. Federal statutory rate of 35%21% primarily due to the inability of the Company to recognize tax benefits on certain losses until positive earnings are achievedstate income taxes, changes in valuation allowances in the U.S. and certain other foreign jurisdictions non-deductible expenses, and variations from the U.S. tax rate in foreign jurisdictions. For the nine months ended September 30, 2016,which reduces or eliminates the effective tax rate differed from the U.S. Federal statutory rate of 35% primarily due to the inability of the Company to recognize tax benefits on certaincurrent year profits or losses, until positive earnings are achieved in the U.S. and certain other foreign jurisdictions, a decrease in tax benefits that were previously recognized, non-deductible expenses, and variations from the U.S. tax rate indifferences, taxes on repatriations or deemed repatriation of foreign jurisdictions.profits, and non-deductible expenses.


Net Income (Loss)


Net lossincome was $0.8$3.1 million for the three months ended SeptemberJune 30, 2017, as2022, compared to net loss of $1.9$0.1 million for the same period in 2016, a decrease in net loss of $1.0 million. Basic and diluted loss per share were $0.03 for the three months ended SeptemberJune 30, 2017, as2021. Basic and diluted earnings per share were $1.02 and $0.98, respectively, for the three months ended June 30, 2022, compared to basic and diluted loss per share of $0.06$0.04 for the same period in 2016.2021.


Net lossincome was $0.9$6.1 million for the ninesix months ended SeptemberJune 30, 2017, as2022, compared to net loss of $8.5$0.3 million for the same period in 2016, a decrease2021, an increase in net lossincome of $7.6$6.4 million. Basic and diluted lossearnings per share were $0.03$2.04 and $1.95, respectively, for the ninesix months ended SeptemberJune 30, 2017, as2022, compared to basic and diluted loss per share of $0.25$0.11 for the same period in 2016.
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2021.

Liquidity and Capital Resources

As of SeptemberJune 30, 2017,2022, cash and cash equivalents and restricted cash totaled $16.8$26.2 million,, as compared to $21.3$22.1 million as of December 31, 2016.2021. The following table summarizes the Company'sCompany’s cash flow activities for the ninesix months ended SeptemberJune 30,2017 2022 and 2016:2021:
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  For the Nine Months Ended September 30,
$ in millions 2017 2016
Net cash provided by (used in) operating activities $(3.5) $(15.1)
Net cash provided by (used in) investing activities (0.7) (1.8)
Net cash provided by (used in) financing activities (1.3) (2.9)
Effect of exchange rates on cash and cash equivalents 1.0
 (0.5)
Net increase (decrease) in cash and cash equivalents $(4.5) $(20.3)
For the Six Months Ended June 30,
$ in millions20222021
Net cash provided by (used in) operating activities$5.2 $(1.4)
Net cash used in by investing activities(0.1)(0.1)
Net cash used in financing activities(0.2)— 
Effect of exchange rates on cash, cash equivalents, and restricted cash(0.7)(0.1)
Net increase (decrease) in cash, cash equivalents, and restricted cash$4.1 $(1.7)
 
Cash Flows from Operating Activities

For the ninesix months ended SeptemberJune 30, 2017,2022, net cash provided by operating activities was $5.2 million, compared to $1.4 million of net cash used in operating activities was $3.5 million, as compared to $15.1 million net cash used in operating activities for the same period2021, resulting in 2016, a decreasean increase in net cash used in operating activitiesprovided by of $11.5$6.6 million. The declineincrease in net cash used in operating activitiesprovided resulted principally from a decrease inhigher net loss partially offset by an increase inincome and more favorable working capital. Forcapital comparisons to the nine months ended September 30, 2017, net cash used in operating activities from discontinued operations was $0.2 million, as compared to $0.7 million for the same period in 2016.prior year.


Cash Flows from Investing Activities

For each of the ninesix months ended SeptemberJune 30,2017, 2022 and 2021, net cash used in investing activities was $0.7 million, as compared to $1.8 million of net cash used in investing activities for the same period in 2016. The decrease in net cash used in investing activities was due to a decrease in capital expenditures.$0.1 million.

Cash Flows from Financing Activities

For the ninesix months ended SeptemberJune 30, 2017,2022, net cash used in financing activities was $1.3$0.2 million, as compared to net cash used in financing activities of $2.9$0.0 million for the same period in 2016, an decrease in net cash used in financing activities of $1.6 million.2021. The decreaseincrease in net cash used in financing activities was primarily attributable to a decreasethe payment of $0.2 million in taxes in connection with the net borrowings, treasuryissuance of common stock purchases and dividend payments.upon the vesting of restricted stock units.


Invoice Finance Credit AgreementsFacility


Receivables Finance Agreement with Lloyds Bank Commercial Finance Limited and Lloyds Bank PLC

On August 1, 2014,April 8, 2019, the Company’s U.K.Australian subsidiary ("U.K. Borrower"(“Australian Borrower”) entered into a receivablesan invoice finance credit facility agreement for an asset-based lending funding facility (the "Lloyds Agreement"“NAB Facility Agreement”) with LloydsNational Australia Bank PLC and Lloyds Bank Commercial Finance Limited (together, "Lloyds"(“NAB”). Until September 15, 2016,The NAB Facility Agreement provides the Lloyds Agreement provided the U.K.Australian Borrower with the ability to borrow up to $20.1 million (£15.0 million), at which time the U.K. Borrower entered into an amendment to the Lloyds Agreement that reduced the borrowing limit to $16.1 million (£12.0 million). Extensions of credit arefunds 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 eligible accountsAustralian Borrower. The interest rate is calculated as the variable receivable less required reserves from the Company's U.K. operations. The initial term was two years with renewal periods every three months thereafter.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 U.K.Australian Borrower.

On September 15, 2017, the Lloyds Agreement was further amended to (1) reduce the maximum core facility borrowing to $12.7 million (£9.5 million) from $15,409 (£11.5 million), which as a result, reduced the maximum borrowings to $13.4 million (£10.0 million) from $16.1 million (£12.0 million), (2) extend the term by 12 months from the date of the amendment, and (3) reduce the month end minimum excess availability to $2.0 million (£1.5 million) from $2.7 million (£2.0 million).

The credit facility under the Lloyds Agreement contains two tranches. The first tranche is a revolving facility based on the billed contracting and permanent recruitment activities in the U.K. operations ("Lloyds Tranche A"). The borrowing limit of Lloyds Tranche A is $12.7 million (£9.5 million) and is based on 83% of eligible billed contracting and permanent recruitment receivables. The second tranche is a revolving facility that is based on the unbilled work-in-progress (as defined under the receivables finance agreement) activities in the Company's U.K. operations ("Lloyds Tranche B"). The borrowing limit of
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Lloyds Tranche B is $0.7 million (£0.5 million) and is based on 25% of eligible work-in-progress from permanent recruitment activities. For both tranches, borrowings may be made with an interest rate based on a base rate as determined by Lloyds Bank PLC, based on the Bank of England base rate, plus 1.75%.

The Lloyds Agreement contains various restrictions and covenants including (1) that true credit note dilution may not exceed 5%, measured at audit on a regular basis; (2) debt turn may not exceed 55 days over a three month rolling period; (3) dividends by the U.K. Borrower to the Company are restricted to the value of post-tax profits; and (4) at the end of each month, there must be a minimum excess availability of $2.0 million (£1.5 million).
The details of the Lloyds Agreement as of September 30, 2017 were as follows:
$ in millions September 30,
2017
Borrowing capacity $7.1
Less: outstanding borrowing (1.9)
Additional borrowing availability $5.2
Interest rates on outstanding borrowing 2.00%

The Company was in compliance with all financial covenants under the Lloyds Agreement as of September 30, 2017.

Facility Agreement with National Australia Bank Limited

On October 30, 2015, Hudson Global Resources (Aust) Pty Limited ("Hudson Australia") and Hudson Global Resources (NZ) Limited ("Hudson New Zealand"), both subsidiaries of the Company, entered into a Finance Agreement, dated as of October 27, 2015 (the "Finance Agreement"), with National Australia Bank Limited ("NAB"), a NAB Corporate Receivables Facility Agreement, dated as of October 27, 2015 (the "Australian Receivables Agreement"), with NAB and a BNZ Corporate Receivables Facility Agreement, dated as of October 27, 2015 (the "New Zealand Receivables Agreement"), with Bank of New Zealand ("BNZ").

The Finance Agreement provides a bank guarantee facility of up to $2.3 million (AUD 3.0 million) for Hudson Australia and Hudson New Zealand. The Finance Agreement matures and becomes due and payable on October 27, 2018. A fee equal to 1.5% per annum will be charged on each bank guarantee issued under the Finance Agreement. The Finance Agreement bears a fee, payable semiannually in arrears, equal to 0.3% per annum of NAB’s commitment under the Finance Agreement.

The Australian Receivables Agreement provides a receivables facility of up to $19.6 million (AUD 25.0 million) for Hudson Australia, which is based on an agreed percentage of eligible accounts receivable, and of which up to $3.1 million (AUD 4.0 million) may be used to support the working capital requirements of operations in China, Hong Kong and Singapore. The Australian Receivables Agreement does not have a stated maturity date and can be terminated by Hudson Australiaeither the Australian Borrower or NAB upon 90 days written notice. BorrowingsAs of June 30, 2022, there were no amounts outstanding under the Australian Receivables Agreement may be made with an interest rate based on a market rate plus a margin of 1.5% per annum. The Australian Receivable Agreement bears a fee, payable monthly in advance, equal to $5 thousand (AUD 6 thousand) per month.

The New Zealand Receivables Agreement provides a receivables facility of up to $3.6 million (NZD 5.0 million) for Hudson New Zealand, which is based on an agreed percentage of eligible accounts receivable. The New Zealand Receivables Agreement does not have a stated maturity date and can be terminated by Hudson New Zealand or BNZ upon 90 days written notice. Borrowings under the New Zealand Receivables Agreement may be made with an interest rate based on a market rate. The New Zealand Receivables Agreement bears a fee, payable monthly in advance, equal to $1 thousand (NZD 1 thousand) per month.

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The details of the Finance Agreement, Australian Receivables Agreement and New Zealand Receivables Agreement as of September 30, 2017 were as follows:
$ in millionsSeptember 30,
2017
Finance Agreement: 
Financial guarantee capacity$2.3
Less: outstanding financial guarantees(2.1)
Additional availability for financial guarantees$0.3
Interest rates on outstanding financial guarantees1.50%
  
Australian Receivables Agreement: 
Borrowing capacity$17.8
Less: outstanding borrowing(6.3)
Additional borrowing availability$11.5
Interest rates on outstanding borrowing3.15%
  
New Zealand Receivables Agreement: 
Borrowing capacity$2.1
Less: outstanding borrowing—
Additional borrowing availability$2.1
Interest rates on outstanding borrowing3.99%

Amounts owing under the Finance Agreement, the Australian Receivables Agreement and the New Zealand Receivables Agreement are secured by substantially all of the assets of Hudson Australia and Hudson New Zealand. Each of the Finance Agreement, the Australian Receivables Agreement and the New Zealand Receivables Agreement contains various restrictions and covenants applicable to Hudson Australia and Hudson New Zealand, including: a requirement that Hudson Australia and Hudson New Zealand maintain (1) a minimum Fixed Charge Coverage Ratio (as defined in the NAB Facility Agreement) of 1.50x as of the last day of each calendar quarter;Agreement. Interest expense and (2) a minimum Receivables Ratio (as defined byfees incurred on the NAB Facility Agreement) of 1.20x.

Agreement were$4 and $9 for the three and six months ended June 30, 2022, respectively, and $5 and $10 for the three and six months ended June 30, 2021, respectively. The CompanyAustralian Borrower was in compliance with all financial covenants under the NAB Facility Agreement as of SeptemberJune 30, 2017.

Other Credit Agreements
The Company also has lending arrangements with local banks through its subsidiaries in Belgium and Singapore. The Belgium subsidiary has a $1.2 million (€1.0 million) overdraft facility. Borrowings under the Belgium lending arrangements may be made with an interest rate based on the one-month EURIBOR plus a margin, and was 2.75% as of September 30, 2017. The lending arrangement in Belgium has no expiration date and can be terminated with a 15-day notice period. There were no outstanding borrowings under the Belgium lending agreement as of September 30, 2017.
In Singapore, the Company’s subsidiary can borrow up to $0.1 million (SGD 0.2 million) for working capital purposes. Interest on borrowings under the Singapore overdraft facility is based on the Singapore Prime Rate plus a margin of 1.75%, and it was 6.00% on September 30, 2017. The Singapore overdraft facility expires annually each August, but can be renewed for one-year periods at that time. As of September 30, 2017, the Singapore overdraft facility had outstanding borrowings of $24 thousand (SGD 32 thousand) and additional borrowings availability of $124 thousand (SGD 168 thousand).
The average aggregate monthly outstanding borrowings for the credit agreements above was $11.8 million for the nine months ended September 30,2017. The weighted average interest rate on all outstanding borrowings for the nine months ended September 30, 2017 was 3.04%.
The Company continues to use the aforementioned credit to support its ongoing global working capital requirements, capital expenditures and other corporate purposes and to support letters of credit. Letters of credit and bank guarantees are used primarily to support office leases.
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2022.
Liquidity Outlook

As of SeptemberJune 30, 2017,2022, the Company had cash and cash equivalents on hand of $16.8$25.8 million. The Company also has the capability to borrow an additional 4 million supplemented by additional borrowing availability of $20.1 millionAustralian dollars under the Lloyds Agreement, the NAB Facility Agreement andAgreement. In addition, the Company issued a promissory note of $2.0 million, in connection with the acquisition of Karani, LLC. Other than as described above, the Company has no financial guarantees, outstanding debt or other lendinglease agreements or arrangements in Belgium and Singapore.that could trigger a requirement for an early payment or that could change the value of our assets. The Company believes that it has sufficient liquidity to satisfy its needs through at least the next 12 months, based on the Company's total liquidityCompany’s financial position as of SeptemberJune 30, 2017.2022. The Company'sCompany’s near-term cash requirements during 20172022 are primarily related to the funding of the Company’s operations. For the full year 2017,2022, the Company expects to make capital expenditures of approximatelyless than $1.0 million to $1.5 million and payments in connection with previous years restructuring actions of $2.0 million to $2.5 million.
As of SeptemberJune 30, 2017, $5.22022, $10.6 million of the Company'sCompany’s cash and cash equivalents noted above were held in the U.S. and the remainder were held outside the U.S., primarily in BelgiumAustralia ($3.26.1 million), the U.K. ($2.14.8 million), SpainHong Kong ($1.61.0 million), Mainland China ($1.50.6 million), Singapore ($0.6 million), Belgium ($0.5 million), India ($0.5 million), and France ($1.4Switzerland
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($0.3 million). The majority of the Company'sCompany’s offshore cash is available to it as a source of funds, net of any tax obligations or assessments. Unrepatriated cumulative earnings of certain foreign subsidiaries are considered to be invested indefinitely outside of the U.S., except where the Company is able to repatriate these earnings to the U.S. without a material incremental tax provision. In managing its day-to-day liquidity and its capital structure, the

Off-Balance Sheet Arrangements
    The Company does not relyhave any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the unrepatriated earnings as a sourceour financial condition, changes in financial condition, revenues or expenses, results of funds. The Company has not provided for U.S. Federal incomeoperations, liquidity, capital expenditures or foreign withholding taxes on these undistributed foreign earnings because a distribution of these foreign earnings withcapital resources that are material incremental tax provision is unlikely to occur in the foreseeable future. It is not practicable to determine the amount of tax associated with such undistributed earnings.investors.

The Company believes that future external market conditions remain uncertain, particularly access to credit, rates of near-term projected economic growth and levels of unemployment in the markets in which the Company operates. Due to these uncertain external market conditions, the Company cannot provide assurance that its actual cash requirements will not be greater in the future than those currently expected, especially if market conditions deteriorate substantially. If sources of liquidity are not available or if the Company cannot generate sufficient cash flow from operations, the Company could be required to obtain additional sources of funds through additional operating improvements, capital market transactions, asset sales or financing from third parties, or a combination of those sources. The Company cannot provide assurance that these additional sources of funds will be available or, if available, would have reasonable terms.


Contingencies
From time to time in the ordinary course of business, the Company is subject to compliance audits by U.S. federal, state, local, and foreign government regulatory, tax, and other authorities relating to a variety of regulations, including wage and hour laws, unemployment taxes, workers' compensation, immigration, and income, value-added, and sales taxes. The Company is also subject to, from time to time in the ordinary course of business, various claims, lawsuits, 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. Periodic events and management actions such as business reorganization initiatives can change the number and typetypes of audits, claims, lawsuits, contract disputes, or complaints asserted against the Company. EventsSuch events can also change the likelihood of assertion and the behavior of third parties to reach resolution regarding such matters.
The economic circumstancesconditions in the recent past have given rise to many news reports and bulletins from clients, tax authorities, and other parties about changes in their procedures for audits, payment, plans to challenge existing contracts, and other such matters aimed at being more aggressive in the resolution of such matters in their own favor. The Company believes that it has appropriate procedures in place for identifying and communicating any matters of this type, whether asserted or likely to be asserted, and it evaluates its liabilities in light of the prevailing circumstances. Changes in the behavior of third parties could cause the Company to change its view of the likelihood of a claim and what might constitute a trend. Employment laws vary in the markets in which we operate, and in some cases, employees and former employees have extended periods during which they may bring claims against the Company.
For matters that have reachedreach the threshold of probable and estimable, the Company has establishedestablishes reserves for legal, regulatory, and other contingent liabilities. The Company’sCompany did not have any reserves were $0.1 million and $0.1 million as of SeptemberJune 30, 20172022 and December 31, 2016, respectively.2021. Although the outcome of these matters cannot be determined, the Company believes that none of the currently pending matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, results of operations or liquidity.

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Recent Accounting Pronouncements

See Note 3 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for a full description of relevant recent accounting pronouncements, including the respective expected dates of adoption.
Critical Accounting Policies & Estimates
See "Critical“Critical Accounting Policies"Policies & Estimates” under Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20162021 filed with the SEC on March 3, 201711, 2022 and incorporated by reference herein. There were no changes to the Company’s critical accounting policies during the three months ended SeptemberJune 30, 2017.2022.

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FORWARD-LOOKING STATEMENTS
This Form 10-Q contains statements that the Company believes to be "forward-looking statements"“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Form 10-Q, including statements regarding the Company’s future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "predict," "believe"“anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,” “believe,” and similar words, expressions, and variations of these words and expressions are intended to identify forward-looking statements. All forward-looking statements are subject to important factors, risks, uncertainties, and assumptions, including industry and economic conditions that could cause actual results to differ materially from those described in the forward-looking statements. Such factors, risks, uncertainties, and assumptions include, but are not limited to, (1) global economic fluctuations, (2) the Company'sadverse impacts of the coronavirus, or COVID-19 pandemic, (3) the Company’s ability to successfully executeachieve its strategic initiatives, (3)(4) risks related to potential acquisitions or dispositions of businesses by the Company, (5) the Company’s ability to operate successfully as a company focused on its RPO business, (6) risks related to fluctuations in the Company'sCompany’s operating results from quarter to quarter, (4)(7) the loss of or material reduction in our business with any of the Company’s largest customers, (8) the ability of clients to terminate their relationship with the Company at any time, (5)(9) competition in the Company'sCompany’s markets, (6)(10) the negative cash flows and operating losses that the Company has experienced in recent periods and may experience from time to timerecur in the future, (7) restrictions on the Company's(11) risks relating to how future credit facilities may affect or restrict our operating flexibility, due to(12) risks associated with the terms of its credit facilities, (8)Company’s investment strategy, (13) risks related to international operations, including foreign currency fluctuations, (9)political events, natural disasters or health crises, including the Company'songoing COVID-19 pandemic, (14) the Company’s dependence on key management personnel, (10)(15) the Company'sCompany’s ability to attract and retain highly-skilledhighly skilled professionals, (11)management, and advisors, (16) the Company'sCompany’s ability to collect its accounts receivable, (12)(17) the Company'sCompany’s ability to achieve anticipated cost savings throughmaintain costs at an acceptable level, (18) the Company's cost reduction initiatives, (13) the Company'sCompany’s heavy reliance on information systems and the impact of potentially losing or failing to develop technology, (14)(19) risks related to providing uninterrupted service to clients, (15)(20) the Company'sCompany’s exposure to employment-related claims from clients, employers and regulatory authorities, current and former employees in connection with the Company’s business reorganization initiatives, and limits on related insurance coverage, (16)(21) the Company'sCompany’s ability to utilize net operating loss carry-forwards, (17)(22) volatility of the Company'sCompany’s stock price, (18)(23) the impact of government regulations, (24) restrictions imposed by blocking arrangements, and (19)(25) those risks relatedset forth in “Risk Factors in the Company’s Annual Report on From 10-K for the year ended December 31, 2021.” The foregoing list should not be construed to potential acquisitions or dispositionsbe exhaustive. Actual results could differ materially from the forward-looking statements contained in this Form 10-Q. In view of businesses by the Company.these uncertainties, you should not place undue reliance on any forward-looking statements, which are based on our current expectations. These forward-looking statements speak only as of the date of this Form 10-Q. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

 
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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company conducts operations in various countries and faces both translation and transaction risks related to foreign currency exchange. For the ninesix months ended SeptemberJune 30,2017, 2022, the Company earned approximately 92%74% of its gross marginrevenue outside the U.S., and it collected payments in local currency, and paid related operating expenses in such corresponding local currency. Revenues and expenses in foreign currencies translate into higher or lower revenues and expenses in U.S. dollars as the U.S. dollar weakens or strengthens against other currencies. Therefore, changes in exchange rates may affect our consolidated revenues and expenses (as expressed in U.S. dollars) from foreign operations. Specifically, the ongoing COVID-19 pandemic has negatively impacted certain currencies compared to the U.S. dollar in the countries where we do business.

Amounts invested in our foreign operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income in the stockholders’ equity section of the Condensed Consolidated Balance Sheets. The translation of foreign currency into U.S. dollars is reflected as a component of stockholders' equity and does not impact our reported net income (loss).
The Brexit referendum resulted in a decline in the value of the British pound, as compared to the U.S. dollar. The Company's U.K. operations, future financial performance and translation of results may be affected, in part, by the outcome of tariff, trade, regulatory, and other negotiations as the U.K. negotiates its exit from the European Union.
As more fully described in Item 2 "Management’s Discussion and Analysis of Financial Condition and Results of Operations," the Company has credit agreements with Lloyds Bank PLC and Lloyds Bank Commercial Finance Limited, National Australia Bank Limited and other credit agreements with lenders in Belgium and Singapore. The Company does not hedge the interest risk on borrowings under the credit agreements, and accordingly, it is exposed to interest rate risk on the borrowings under such credit agreements. Based on the Company's annual average borrowings in the current year, a 1% increase or decrease in interest rates on the Company's borrowings would not have a material impact on the Company's earnings.


ITEM 4.    CONTROLS AND PROCEDURES
Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the design and operation of the Company’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) underof the Securities Exchange Act of 1934, as amended. Based on this evaluation,At the Company’stime of the Original 10-Q Filing, management, including our Chief Executive Officer and Chief Financial Officer, initially concluded that the Company’sour disclosure controls and procedures were effective as of SeptemberJune 30, 2017.2022. As a result of the restatement of the Company’s financial statements and the material weakness identified below, disclosure controls and procedures were not effective.
Changes
In connection with the preparation of the audited financial statements to be included in the 2022 Annual Report on Form 10-K, management identified a material weakness in the design and implementation of internal controls over the revenue recognition process, specifically the failure to properly evaluate whether the Company was to be considered the principal or the agent in a non-routine transaction involving a discretionary bonus paid by the Company on behalf of a customer. The material weakness resulted in an understatement of revenue and direct contracting costs and reimbursed expenses in the amount of $5.762 million for the three- and six-month periods ended June 30, 2022. The Company’s remediation plan is described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Management is committed to remediating the material weakness in a timely fashion and to making continuous improvements to the Company’s internal control over financial reportingreporting. Management will continually assess the effectiveness of the remediation efforts and may determine to take additional measures to address control deficiencies or modify the remediation plan.
ThereChanges in Internal Control Over Financial Reporting
    Other than the material weakness discussed above, there were no changes in the Company’s internal control over financial reporting that occurred during the nine monthsquarter ended SeptemberJune 30, 20172022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


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PART II - OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS
The Company is involved insubject, from time to time, to various legal proceedings that are incidental to the conduct of its business. The Company is not involved in any pending legal proceeding that it believes would reasonably be expected to have a material adverse effect on its financial condition or results of operations.

ITEM 1A.    RISK FACTORS
As of September 30, 2017, there have not been any material changes
    In addition to the risks set forth below and the information set forth in this Form 10-Q/A, you should carefully consider the “Risk Factors” included under Item 1A. "Risk Factors" disclosed in the Company'sto Part I of our Annual Report on Form 10-K for the year ended December 31, 2016.2021. You should be aware that these risk factors and other information may not describe every risk facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could adversely affect our business, financial condition and results of operations.


We have identified a material weakness in our internal control over financial reporting which could, if not remediated or if we identify additional material weaknesses or other adverse findings in the future, impair our ability to report accurate and timely financial information, adversely affect investor confidence, and have a material and adverse effect on our financial condition and results of operations.
Management identified an error related to the accounting treatment of a discretionary bonus paid by the Company on behalf of a customer. The effect of this error is an understatement of revenue and direct contracting costs and reimbursed expenses in the amount of $5.762 million. The error had no impact on the Company’s consolidated balance sheet, consolidated statement of cash flows, net income, the presentation of the non-GAAP metric EBITDA, or any other accounts for such periods. As a result of the error, we identified a material weakness in the design and implementation of internal controls over the revenue recognition process, specifically the failure to properly evaluate whether the Company was to be considered the principal or the agent in a non-routine transaction involving a discretionary bonus paid by the Company on behalf of a customer. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Management is developing new controls and anticipates that the new controls, as implemented and when tested for a sufficient period of time, will remediate the material weakness. If we are not successful in implementing these remediation measures or in developing other internal controls, it may impair our ability to report accurate and timely financial information. These remediation measures may be time consuming and costly and there is no assurance that the measures we take will remediate the material weakness identified or be sufficient to avoid potential future material weaknesses. Further, we will not be able to fully assess whether the steps we are taking will remediate the material weakness in our internal control over financial reporting until we have completed our implementation efforts and sufficient time passes in order to evaluate their effectiveness.
In addition, until we remediate the material weakness, or if we identify additional material weaknesses in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our stock price may decline as a result.


ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table summarizes purchases of common stock by the Company during the quarter ended SeptemberJune 30, 2017.2022.
 
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Period 
 Total Number
 of Shares 
Purchased
  Average Price Paid per Share 
Total Number of
Shares 
Purchased as
Part of Publicly
Announced 
Plans
or Programs
 Approximate Dollar 
Value of Shares
that May Yet Be
Purchased Under
the Plans or Programs (a)
July 1, 2017 - July 31, 2017 30,305
 $1.38
 30,305
 $2,922,922
August 1, 2017 - August 31, 2017 32,580
 1.48
 32,580
 2,874,564
September 1, 2017 - September 30, 2017 62,885
 1.45
 62,885
 2,783,408
Total 125,770
 $1.44
 125,770
 $2,783,408
(a)Period Total Number
 of Shares 
Purchased		 Average Price Paid per ShareTotal Number of
Shares 
Purchased as
Part of Publicly
Announced 
Plans
or Programs
On JulyApproximate Dollar 
Value of Shares
that May Yet Be
Purchased Under
the Plans or Programs (a)
April 1, 2022 - April 30, 2015, the Company announced that its Board of Directors authorization the repurchase of up to $10.0 million of the Company's common stock. The authorization does not expire. See Note 16 for further details. As of September2022— $— — $1,703,000 
May 1, 2022 - May 31, 2022— $— — $1,703,000 
June 1, 2022 - June 30, 2017, the Company had repurchased 3,532,761 shares for a total cost of approximately $7.2 million under this authorization. From time to time, the Company may enter into a Rule 10b5-1 trading plan for purposes of repurchasing common stock under this authorization.2022— $— — $1,703,000 
Total— $— — $1,703,000 


(a)On July 30, 2015, the Company announced that its Board authorized the repurchase of up to $10.0 million of the Company’s common stock. The authorization does not expire. See Note 12 to the Condensed Consolidated Financial Statements in Item 1 included in Part I of this Form 10-Q for further details. As of June 30, 2022, the Company had repurchased an aggregate of 432,563 shares for a total cost of approximately $8.3 million under this authorization. There were no share repurchases by the Company during the three months ended June 30, 2022. From time to time, the Company may enter into a Rule 10b5-1 trading plan for purposes of repurchasing common stock under this authorization.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
None.
 
ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.
 
ITEM 5.    OTHER INFORMATION
None.


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ITEM 6.    EXHIBITS
The exhibits to this Form 10-Q are listed in the Exhibit Index included elsewhere herein. 
Index


HUDSON GLOBAL, INC.
FORM 10-Q
EXHIBIT INDEX


The exhibits to this Form 10-Q are listed in the following Exhibit Index:
Exhibit No.Description
4.131.1*
31.1
Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
31.231.2*
32.132.1**
32.232.2**
101101*The following materials from Hudson Global, Inc.’s Quarterly Report on Form 10-Q for the quarter ended SeptemberJune 30, 20172022 are filed herewith, formatted in XBRL (ExtensibleiXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three months and ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, (ii) the Condensed Consolidated StatementStatements of Other Comprehensive Income (Loss) for the three months and ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, (iii) the Condensed Consolidated Balance Sheets as of SeptemberJune 30, 20172022 and December 31, 2016,2021, (iv) the Condensed Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, (v) the Condensed Consolidated StatementStatements of Stockholders’ Equity for the ninethree months and six months ended SeptemberJune 30, 2017,2022 and 2021, and (vi) Notes to Condensed Consolidated Financial Statements.
104*
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in iXBRL and contained in Exhibit 101.


*Filed herewith.

** Furnished, not filed.

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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
HUDSON GLOBAL, INC.
(Registrant)
Dated:April 28, 2023By:/s/ JEFFREY E. EBERWEIN
Jeffrey E. Eberwein
Chief Executive Officer
(Principal Executive Officer)
Dated:April 28, 2023By:/s/ MATTHEW K. DIAMOND
Matthew K. Diamond
Chief Financial Officer
(Principal Financial Officer)
HUDSON GLOBAL, INC.
(Registrant)
By:/s/ STEPHEN A. NOLAN
Stephen A. Nolan
Chief Executive Officer
(Principal Executive Officer)
Dated:November 2, 2017
By:/s/ PATRICK LYONS
Patrick Lyons
Chief Financial Officer and Chief Accounting Officer
(Principal Financial Officer and Principal Accounting Officer)
Dated:November 2, 2017
 



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