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

FORM 10-Q

x
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 20202021
or
oTRANSITION 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.)
53 Forest Avenue, Suite 102, Old Greenwich, CT 06870
(Address of principal executive offices) (Zip Code)
(203) 409-5628
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x    No   o
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  x     No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of "largelarge accelerated filer"filer, "accelerated filer"accelerated filer, "smallersmaller reporting company"company and "emergingemerging growth company"company in Rule 12b-2 of the Exchange Act. 
Large accelerated fileroAccelerated filero
Non-accelerated fileroSmaller 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 July 15, 202030, 2021
Common Stock - $0.001 par value2,684,9712,689,920




HUDSON GLOBAL, INC.
INDEX

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





PART I – FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS


HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
2020 2019 2020 20192021202020212020
Revenue$24,573
 $26,414
 $48,704
 $42,601
Revenue$39,674 $24,573 $74,135 $48,704 

       
Operating expenses:       Operating expenses:
Direct contracting costs and reimbursed expenses

15,643
 14,755
 29,976
 21,546
Direct contracting costs and reimbursed expenses24,583 15,643 46,326 29,976 
Salaries and related8,335
 9,729
 16,552
 18,901
Salaries and related12,281 8,335 22,871 16,552 
Other selling, general and administrative1,454
 2,701
 3,535
 4,889
Other selling, general and administrative2,402 1,454 4,402 3,535 
Depreciation and amortization24
 21
 48
 39
Depreciation and amortization113 24 223 48 
Total operating expenses

25,456
 27,206
 50,111
 45,375
Total operating expenses39,379 25,456 73,822 50,111 
Operating loss(883) (792) (1,407) (2,774)
Operating income (loss)Operating income (loss)295 (883)313 (1,407)
Non-operating income (expense):       Non-operating income (expense):
Interest income, net40
 125
 119
 438
Interest income, net40 19 119 
Other income (expense), net337
 (91) 378
 (128)
Loss from continuing operations before provision for income taxes(506) (758) (910) (2,464)
Provision for income taxes from continuing operations266
 142
 373
 207
Loss from continuing operations(772) (900) (1,283) (2,671)
Loss from discontinued operations, net of income taxes
 
 
 (131)
Other (expense) income, netOther (expense) income, net(37)337 (90)378 
Net income (loss) before provision for income taxesNet income (loss) before provision for income taxes267 (506)242 (910)
Provision for income taxesProvision for income taxes389 266 567 373 
Net loss$(772) $(900) $(1,283) $(2,802)Net loss$(122)$(772)$(325)$(1,283)
Basic and diluted loss per share:       Basic and diluted loss per share:
Loss per share from continuing operations$(0.27) $(0.29) $(0.43) $(0.84)
Loss per share from discontinued operations
 
 
 (0.04)
BasicBasic
Loss per shareLoss per share$(0.04)$(0.27)$(0.11)$(0.43)
DilutedDiluted
Loss per share$(0.27) $(0.29) $(0.43) $(0.88)Loss per share$(0.04)$(0.27)$(0.11)$(0.43)
Weighted-average shares outstanding:       Weighted-average shares outstanding:
Basic2,839
 3,082
 2,952
 3,184
Basic2,906 2,839 2,899 2,952 
Diluted2,839
 3,082
 2,952
 3,184
Diluted2,906 2,839 2,899 2,952 
 






See accompanying notes to condensed consolidated financial statements.





- 1 -


HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Comprehensive loss:
Net loss$(122)$(772)$(325)$(1,283)
Other comprehensive loss:
Foreign currency translation adjustment, net of applicable income taxes(18)444 (244)(343)
Total other comprehensive loss, net of income taxes(18)444 (244)(343)
Comprehensive loss$(140)$(328)$(569)$(1,626)
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Comprehensive loss:       
Net loss$(772) $(900) $(1,283) $(2,802)
Other comprehensive loss:       
Foreign currency translation adjustment, net of applicable income taxes444
 (106) (343) (41)
Total other comprehensive income (loss), net of income taxes444
 (106) (343) (41)
Comprehensive loss$(328) $(1,006) $(1,626) $(2,843)


See accompanying notes to condensed consolidated financial statements.

- 2 -



HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(Unaudited)
June 30,
2021
December 31,
2020
ASSETS  
Current assets:  
Cash and cash equivalents$24,195 $25,806 
Accounts receivable, less allowance for doubtful accounts of $1 and $10, respectively19,569 13,445 
Restricted cash, current116 152 
Prepaid and other817 889 
Total current assets44,697 40,292 
Property and equipment, net174 115 
Operating lease right-of-use assets630 210 
Deferred tax assets1,253 1,037 
Restricted cash217 241 
Goodwill2,088 2,088 
Intangible assets, net1,240 1,400 
Other assets
Total assets$50,303 $45,386 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:  
Accounts payable$538 $576 
Accrued expenses and other current liabilities13,203 9,241 
Operating lease obligations, current396 192 
Total current liabilities14,137 10,009 
Income tax payable923 887 
Operating lease obligations243 22 
Other liabilities197 188 
Total liabilities15,500 11,106 
Commitments and contingencies00
Stockholders' equity:  
Preferred stock, $0.001 par value, 10,000 shares authorized; 0ne issued or outstanding
Common stock, $0.001 par value, 20,000 shares authorized; 3,677 and
3,672 shares issued; 2,690 and 2,685 shares outstanding, respectively
Additional paid-in capital487,921 486,825 
Accumulated deficit(438,075)(437,750)
Accumulated other comprehensive loss, net of applicable tax282 526 
Treasury stock, 987 and 987 shares, respectively, at cost(15,329)(15,325)
Total stockholders' equity34,803 34,280 
Total liabilities and stockholders' equity$50,303 $45,386 
 June 30,
2020
 December 31,
2019
ASSETS 
  
Current assets: 
  
Cash and cash equivalents$29,517
 $31,190
Accounts receivable, less allowance for doubtful accounts of $155 and $174, respectively12,300
 12,795
Restricted cash, current154
 148
Prepaid and other1,366
 804
Total current assets43,337
 44,937
Property and equipment, net146
 186
Operating lease right-of-use assets325
 401
Deferred tax assets696
 793
Restricted cash225
 380
Other assets7
 7
Total assets$44,736
 $46,704
LIABILITIES AND STOCKHOLDERS' EQUITY 
  
Current liabilities: 
  
Accounts payable$670
 $1,064
Accrued expenses and other current liabilities8,988
 8,178
Short-term debt589
 
Operating lease obligations, current267
 246
Total current liabilities10,514
 9,488
Income tax payable843
 845
Operating lease obligations63
 160
Long-term debt737
 
Other liabilities187
 177
Total liabilities12,344
 10,670
Commitments and contingencies

 

Stockholders' equity: 
  
Preferred stock, $0.001 par value, 10,000 shares authorized; none issued or outstanding
 
Common stock, $0.001 par value, 20,000 shares authorized; 3,672 and
3,663 shares issued; 2,685 and 2,936 shares outstanding, respectively
4
 4
Additional paid-in capital486,325
 486,088
Accumulated deficit(437,790) (436,507)
Accumulated other comprehensive loss, net of applicable tax(822) (479)
Treasury stock, 987 and 726 shares, respectively, at cost(15,325) (13,072)
Total stockholders' equity32,392
 36,034
Total liabilities and stockholders' equity$44,736
 $46,704






See accompanying notes to condensed consolidated financial statements.

- 3 -


HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Six Months Ended June 30,Six Months Ended June 30,
2020 201920212020
Cash flows from operating activities: 
  
Cash flows from operating activities:  
Net loss$(1,283) $(2,802)Net loss$(325)$(1,283)
Adjustments to reconcile net loss to net cash used in operating activities: 
  
Adjustments to reconcile net loss to net cash used in operating activities:  
Depreciation and amortization48
 39
Depreciation and amortization223 48 
Provision for doubtful accounts9
 (9)Provision for doubtful accounts
Provision for (benefit from) deferred income taxes78
 (146)
(Benefit from) Provision for deferred income taxes(Benefit from) Provision for deferred income taxes(245)78 
Stock-based compensation237
 609
Stock-based compensation1,096 237 
Changes in assets and liabilities, net of effect of dispositions:   Changes in assets and liabilities, net of effect of dispositions:
Decrease (increase) in accounts receivable105
 (4,565)
(Increase) decrease in prepaid and other assets(592) 246
Increase (decrease) in accounts payable, accrued expenses and other liabilities543
 (1,107)
(Increase) decrease in accounts receivable(Increase) decrease in accounts receivable(6,392)105 
Decrease (increase) in prepaid and other assetsDecrease (increase) in prepaid and other assets66 (592)
Increase in accounts payable, accrued expenses and other liabilitiesIncrease in accounts payable, accrued expenses and other liabilities4,164 543 
Net cash used in operating activities(855) (7,735)Net cash used in operating activities(1,413)(855)
Cash flows from investing activities: 
  
Cash flows from investing activities:  
Capital expenditures(11) (69)Capital expenditures(122)(11)
Net cash used in investing activities(11) (69)Net cash used in investing activities(122)(11)
Cash flows from financing activities: 
  
Cash flows from financing activities:  
Borrowings under credit agreements34,427
 16,406
Repayments under credit agreements(34,427) (16,406)
Proceeds from government lending1,326
 
Proceeds from government lending1,326 
Purchase of treasury stock(2,239) (4,211)Purchase of treasury stock(2,239)
Purchase of restricted stock from employees(14) (41)Purchase of restricted stock from employees(4)(14)
Net cash used in financing activities(927) (4,252)Net cash used in financing activities(4)(927)
Effect of exchange rates on cash, cash equivalents and restricted cash(29) 54
Effect of exchange rates on cash, cash equivalents and restricted cash(132)(29)
Net decrease in cash, cash equivalents and restricted cash(1,822) (12,002)Net decrease in cash, cash equivalents and restricted cash(1,671)(1,822)
Cash, cash equivalents, and restricted cash, beginning of the period31,718
 41,060
Cash, cash equivalents, and restricted cash, beginning of the period26,199 31,718 
Cash, cash equivalents, and restricted cash, end of the period$29,896
 $29,058
Cash, cash equivalents, and restricted cash, end of the period$24,528 $29,896 
Supplemental disclosures of cash flow information:   Supplemental disclosures of cash flow information:
Cash paid during the period for interest$1
 $
Cash paid during the period for interest$$
Cash received during the period for interest$121
 $162
Cash received during the period for interest$19 $121 
Net cash payments during the period for income taxes$271
 $436
Net cash payments during the period for income taxes$458 $271 
Cash paid for amounts included in operating lease liabilities$129
 $169
Cash paid for amounts included in operating lease liabilities$238 $129 
Supplemental non-cash disclosures:   Supplemental non-cash disclosures:
Right-of-use assets obtained in exchange for operating lease liabilities$77
 $723
Right-of-use assets obtained in exchange for operating lease liabilities$672 $77 
 
See accompanying notes to condensed consolidated financial statements.

- 4 -


HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
Three Months EndedSix Months Ended
 June 30, 2021June 30, 2020June 30, 2021June 30, 2020
 SharesValueSharesValueSharesValueSharesValue
Total stockholders' equity, beginning balance2,688 $34,151 2,682 $32,630 2,685 $34,280 2,936 $36,034 
Common stock and additional paid-in capital:
Beginning balance3,675 487,131 3,669 486,236 3,672 486,829 3,663 486,092 
Stock-based compensation expense794 93 1,096 237 
 Ending balance3,677 487,925 3,672 486,329 3,677 487,925 3,672 486,329 
Treasury stock:
Beginning balance(987)(15,327)(987)(15,322)(987)(15,325)(726)(13,072)
Purchase of treasury stock(260)(2,239)
Purchase of restricted stock from employees(2)(3)(4)(1)(14)
 Ending balance(987)(15,329)(987)(15,325)(987)(15,329)(987)(15,325)
Accumulated other comprehensive (loss) income:
Beginning balance300 (1,266)526 (479)
Other comprehensive loss(18)444 (244)(343)
 Ending balance282 (822)282 (822)
Accumulated deficit:
Beginning balance(437,953)(437,018)(437,750)(436,507)
Net loss(122)(772)(325)(1,283)
 Ending balance(438,075)(437,790)(438,075)(437,790)
Total stockholders' equity, ending balance2,690 $34,803 2,685 $32,392 2,690 $34,803 2,685 $32,392 
                 
  Three Months Ended Six Months Ended
  June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
  Shares Value 
Shares (a)
 Value Shares Value 
Shares (a)
 Value
Total stockholders' equity, beginning balance 2,682
 $32,630
 2,939
 $34,816
 2,936
 $36,034
 3,190
 $40,487
                 
Common stock and additional paid-in capital:                
Beginning balance 3,669
 486,236
 3,622
 485,315
 3,663
 486,092
 3,613
 485,131
Stock-based compensation expense 3
 93
 36
 425
 9
 237
 45
 609
 Ending balance 3,672
 486,329
 3,658
 485,740
 3,672
 486,329
 3,658
 485,740
                 
Treasury stock:                
Beginning balance (987) (15,322) (683) (12,504) (726) (13,072) (423) (8,486)
Purchase of treasury stock 
 
 (15) (230) (260) (2,239) (273) (4,212)
Purchase of restricted stock from employees 
 (3) 
 (4) (1) (14) (2) (40)
 Ending balance (987) (15,325) (698) (12,738) (987) (15,325) (698) (12,738)
                 
Accumulated other comprehensive (loss) income:                
Beginning balance   (1,266)   (541)   (479)   (606)
Other comprehensive income (loss)   444
   (106)   (343)   (41)
 Ending balance   (822)   (647)   (822)   (647)
                 
Accumulated deficit:                
Beginning balance   (437,018)   (437,454)   (436,507)   (435,552)
Net loss   (772)   (900)   (1,283)   (2,802)
 Ending balance   (437,790)   (438,354)   (437,790)   (438,354)
                 
Total stockholders' equity, ending balance 2,685
 $32,392
 2,960
 $34,001
 2,685
 $32,392
 2,960
 $34,001
                 
                 


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


See accompanying notes to condensed consolidated financial statements.
- 5 -

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 States Securities and Exchange Commission ("SEC"(“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, 2019.2020.
    
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of operating revenues and expenses. These estimates are based on management’s knowledge and judgments. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows at the dates and for the periods presented have been included. The results of operations for interim periods are not necessarily indicative of the results of operations for the full year. The condensed consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. Intra-entity balances and transactions between and among the Company and its subsidiaries have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current year presentation with no material impact on the condensed consolidated financial statements. All per share amounts and shares outstanding for the three and six months ended June 30, 2020 and all prior periods reflect the Company's 1-for-10 reverse stock split, which was effective June 10, 2019. For more information, see Note 2.2 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 three3 regional businesses of Hudson Americas, Hudson Asia Pacific, and Hudson Europe. The Company provides Recruitment Process Outsourcing ("RPO"(“RPO”) permanent recruitment and contracting outsourced recruitment solutions. These services are tailored to the individual needs of primarily mid-to-large-cap multinational companies. The Company's RPO delivery teams utilize state-of-the-art recruitment process methodologies and project management expertise in their flexible, turnkey solutions to meet clients' ongoing business needs. The Company's RPO services include complete recruitment outsourcing, project-based outsourcing, contingent workforce solutions, and recruitment consulting.
On October 1, 2020, the Company completed its acquisition of Coit Staffing, Inc., which expanded its presence in the technology sector and 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 space, enabling the Company to better serve its clients around the world.
The Company operates directly in ten12 countries with three3 reportable geographic business segments: Americas, Asia Pacific, and Europe. See Note 1213 to the Condensed Consolidated Financial Statements for further details regarding the reportable segments.

Corporate expenses are reported separately from the reportable segments and pertain to certain functions, such as executive management, corporate governance, human resources, accounting, tax, marketing, information technology, and treasury. A portion of these expenses are attributed to the reportable segments for providing the above services to them and have been allocated to the segments as management service expenses and are included in the segments’ non-operating other income (expense).


In December 2019, a novel strain of coronavirus, referred to as COVID-19, was reported to have originated in Wuhan, Hubei Province, China. On January 30, 2020, the World Health Organization (“WHO”) declared that the virus had become a global public-health emergency. On March 11, 2020, the WHO declared the outbreak to be a pandemic, based on the rapid increase in exposure globally. Many countries around the world have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus. During July and August 2020 our businessCOVID-19 continues to be impacted byhave an impact around the outbreakworld 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 to take appropriate actions to manage the business in this challenging environment due to the flexibility of its workforce and the accompanying economic downturn. Somestrength of our customers continue to have instituted hiring freezes, while other customers operating in the banking, pharmaceutical and technology industries, which may be considered as essential businesses in different jurisdictions, or customers that are more capable of working remotely than other industries, have been allowed to operate as usual. The inability to conduct in-person interviews has also impacted our business. The expected timeline for this reduction in demand for our services remains uncertain and difficult to predict considering the rapidly evolving landscape.its balance sheet.


In 2020 in connection with the COVID-19 pandemic, certain foreign government organizations have begun to offeroffered wage assistance subsidies and tax credits to companies in exchange for maintaining specified levels of compensation and related costs for employees residing in those countries. The Company recognizesrecognized the receipt of funds from these organizations in the Other income (expense), net caption on the Condensed Consolidated Statements of Operations. For the three and six months ended June
- 6 -

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

June 30, 2020 the Company received $265 related to foreign government assistance, has been received and is included within Other income (expense), net. In the United States,U.S, the Company received a $1.3 million loan in the second quarter of 2020 in connection with the Paycheck Protection Program (“PPP”), administered by the U.S. Small Business Administration (“SBA”), under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). All or a portionThe SBA approved the forgiveness of the PPP loan may be forgiven by the SBA under certain conditions. The Company intends to apply for loan forgiveness in the third quarter of 2020. To the extent that forgiveness is obtained for any portionfull amount of the loan in the future, it will be reflected in Other income (expense), net.on November 30, 2020. For more information, see Note 9.10.

On June 10, 2019, the Company announced a reverse stock split of its outstanding shares of common stock at a ratio of 1-for-10 (the “Reverse Split”) and that it had filed a Certificate of Amendment of the Company's Amended and Restated Certificate of Incorporation in order to effect the Reverse Split. The filed certificate also reduced the number of authorized shares of common stock to 20 million shares. The Reverse Split and reduction in authorized shares was approved by the Company's Board of Directors (the "Board") on February 25, 2019, and it was approved by the stockholders of the Company at the annual meeting on May 6, 2019. The Board approved the ratio of 1-for-10 on May 24, 2019, and the Reverse Split became effective as of the close of business on June 10, 2019. The Reverse Split had no effect on the par value of the Company's common stock but it reduced the number of issued and outstanding shares of common stock by a factor of 10. Accordingly, the issued and outstanding shares, stock-based compensation disclosures, net loss per share, and other share and per share disclosures for all periods presented have been retrospectively adjusted to reflect the impact of this Reverse Split.


NOTE 3 – ACCOUNTING PRONOUNCEMENTS


Adoption of New Accounting Pronouncements


On OctoberJanuary 1, 2019, we elected to adopt2021, the Company adopted Accounting Standards Update ("ASU"(“ASU”) No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)2019-12, “Income Taxes (“Topic 740”): Customer’sSimplifying the Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15") on a prospective basis. This ASU provides guidance on implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU 2018-15 aligns theIncome Taxes”. The standard simplifies accounting for such costs withincome taxes by removing certain exceptions to the general principles in Topic 740. The ASU also clarifies and amends existing guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amends Accounting Standards Codification ("ASC") 350 to include in its scope implementation costs of a CCA thatimprove consistent application. For public business entities, this standard is a service contract and clarifies that a customer should apply ASC 350 to determine which implementation costs should be capitalized in such a CCA.  The amendments in ASU 2018-15 are effective for annual periods beginning after December 15, 2019fiscal years and interim periods within those annual periods.  ASU 2018-15 had nofiscal years beginning after December 15, 2020. The adoption of this standard did not have a material impact on the Company'scondensed consolidated financial statements.
        
On January 1, 2019, we adopted ASU No. 2016-02, "Leases (Topic 842)"("ASU 2016-02"). This ASU requires a company to recognize lease assets and liabilities arising from operating leases in the statement of financial position. This ASU does not significantly change the previous lease guidance for how a lessee should recognize the recognition, measurement, and presentation of expenses and cash flows arising from a lease. Additionally, the criteria for classifying a finance lease versus an operating lease are substantially the same as the previous guidance. In July 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements" ("ASU 2018-11"). This ASU allows adoption of the standard as of the effective date without restating prior periods. We did not elect to recognize the lease assets and liabilities in the statement of financial position for short-term leases. For more information, see Note 9.

On January 1, 2019, we adopted ASU No. 2018-02,"Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU 2018-02"), which provides guidance on reclassification of certain stranded income tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), enacted on December 22, 2017. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the application of the Tax Act. Additionally, ASU 2018-02 requires financial statement preparers to disclose (1) a description of their accounting policy for releasing income tax effects from accumulated other comprehensive income, (2) whether they elect to reclassify the stranded income tax effects from the Tax Act, and (3) information about other income tax effects related to the application of the Tax Act that are reclassified from accumulated other comprehensive income to retained earnings, if any. The adoption had no impact on the Company's consolidated financial statements.

Recent Accounting Standard Update Not Yet Adopted


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

In June 2016, FASBthe Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, "Financial“Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments"Instruments” (“ASU 2016-13”). This standard requires an impairment model (known as the current expected credit loss ("CECL"( “CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, each reporting entity should estimate an allowance for expected credit losses, which is intended to result in more timely recognition of losses. This model replaces multiple existing impairment models in current U.S. GAAP, which generally requires a loss to be incurred before it is recognized. The new standard applies to trade receivables arising from revenue transactions such as contract assets and accounts receivable. Under Accounting Standards Codification (“ASC 606,606”), revenue is recognized when, among other criteria, it is probable that an entity will collect the consideration it is entitled to when goods or services are transferred to a customer. When trade receivables are recorded, they become subject to the CECL model and estimates of expected credit losses on trade receivables over their contractual life will be required to be recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. This guidance is effective for smaller reporting companies for annual periods beginning after December 15, 2022, including the interim periods in the year. Early adoption is permitted. The Company is evaluating the effect of adopting this new accounting guidance, and will adopt the guidancestandard when it becomes effective.





NOTE 4 – REVENUE RECOGNITION


Nature of Services


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


We generally determine standalone selling prices based on the prices included in the client contracts, using expected cost plus profit, or other observable prices. The price as specified in our client contracts is generally considered the standalone selling price as it is an observable input that depicts the price as if sold to a similar client in similar circumstances. Certain client contracts have variable consideration, including usage-based fees that increase the transaction price and volume rebates or other similar items that generally reduce the transaction price. We estimate variable consideration using the expected value method based on the terms of the client contract and historical evidence. These amounts may be constrained and are only included in revenue to the extent we do not expect a significant reversal when the uncertainty associated with the variable consideration is
- 7 -

Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)
resolved. Our estimated amounts of variable consideration subject to constraints are not material and we do not believe that there will be significant changes to our estimates.


We record accounts receivable when our right to consideration becomes unconditional. Contract assets primarily relate to our rights to consideration for services provided that they are conditional on satisfaction of future performance obligations. A contract liability for deferred revenue is recorded when consideration is received, or is unconditionally due, from a client prior to transferring control of services to the client under the terms of a contract. Deferred revenue balances typically result from advance payments received from clients prior to transfer services. We do not have any material contract assets or liabilities as of and for the six months ended June 30, 2020.2021.


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


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


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


We maintain control over our contractors while the services to the client are being performed, including our contractors' billing rates, and are ultimately responsible for paying them.
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)


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 containscontain both fixed fees and variable consideration. Variable consideration is constrained by candidates accepting offers of permanent employment. We recognize revenue on the fixed fees as the performance obligations are satisfied and variable fees as the constraint is lifted. We do not incur incremental costs to obtain our RPO recruitment contracts. The costs to fulfill these contracts are expensed as incurred.


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


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


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


Disaggregation of Revenue


The following table presents our disaggregated revenues from continuing operations by revenue source. For additional information on the disaggregated revenues by geographical segment, see Note 12 of the Notes13 to the Condensed Consolidated Financial Statements.
- 8 -
 Three Months Ended June 30,
 2020 2019 
RPO Recruitment$8,870
 $11,716
 
Contracting15,703
 14,698
 
Total Revenue$24,573
 $26,414
 
     


 Six Months Ended June 30,
 2020 2019 
RPO Recruitment$18,708
 $21,283
 
Contracting29,996
 21,318
 
Total Revenue$48,704
 $42,601
 
     


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

Three Months Ended June 30,
 20212020
RPO Recruitment$14,646 $8,870 
Contracting25,028 15,703 
Total Revenue$39,674 $24,573 
Six Months Ended June 30,
20212020
RPO Recruitment$27,032 $18,708 
Contracting47,103 29,996 
Total Revenue$74,135 $48,704 

NOTE 5 – DISCONTINUED OPERATIONSACQUISITION

On March 31, 2018,October 1, 2020, the Company, entered into an asset purchase agreement (the “APA”) by and among the Company, Hudson Coit, Inc., a wholly-owned subsidiary of the Company (“Buyer”), Coit Staffing, Inc. (“Seller”), Joe Belluomini, and Tim Farrelly (together with Mr. Belluomini, the “Principals”) and completed the saleacquisition by Buyer of its Recruitment and Talent Management ("RTM") businessessubstantially all of the assets used in Belgium, Europe (excluding Belgium), and Asia Pacific ("APAC") in separate transactions to Value Plus NV, Morgan Philips Group S.A., and Apache Group Holdings Pty Limited, respectively. The gross proceeds from the sale were $38,960. In addition, $17,626business of debt was assumed by the buyers. The RTM businesses met the criteria for discontinued operationsSeller, as set forth in ASC 205.the APA (the “Acquisition”).


Reported resultsPer 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 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 worth of 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 discontinued operationsfive 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 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 follows:part of Office and general on the Consolidated Statements of Operations 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, 2021, the Company recognized $92 and $182, respectively, in stock-based compensation associated with the 52,226 restricted shares of common stock to be issued over 30 months (see Note 6 to the Condensed Consolidated Financial Statements). In addition, in the three and six months ended June 30, 2021, the Company recognized expense of $90 and $181 related to the promissory note, and $300 and $500 related to earn-out payments, respectively. The amount due associated with the promissory note payable to the Seller is reflected in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. The compensation expense recognized of $482 and $863 for the three and six months ended June 30, 2021, 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, 2021 included revenue of $1,900 and $3,216 and net loss of $154 and $488 from the acquired company, respectively.

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Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)
  Three Months Ended Six Months Ended
  June 30, 2019 June 30, 2019
Loss from sale of discontinued operations $
 $(131)
Loss from discontinued operations before income taxes 
 (131)
Provision for income taxes 
 
Loss from discontinued operations, net of income taxes $
 $(131)
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.

Fair Value
Assets Acquired:
Accounts receivable$518 
Intangible assets1,480 
Goodwill2,088 
Assets Acquired$4,086 
Liabilities Assumed:
Accrued commissions$44 
Deferred revenue45 
Liabilities Assumed$89 
Fair value of assets acquired and consideration transferred$3,997 
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 as of the date of acquisition.

Fair ValueUseful Life
Non-compete agreements$80 2 years
Trade name400 5 years
Customer lists1,000 5 years
Total identifiable assets$1,480 
Unaudited Pro Forma Financial Information

The following unaudited consolidated pro forma information gives effect to the acquisition of Coit Staffing, Inc. as if the transaction had occurred on January 1, 2020.
Three Months EndedSix Months Ended
June 30, 2020June 30, 2020
Revenue$25,126 $50,655 
Net loss$(1,023)$(1,416)

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 months and six ended June 30, 2020. This supplemental pro forma information has been prepared for comparative purposes and is not intended to reflect what would have occurred had the Acquisition taken place on January 1, 2020.



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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"“Compensation Committee”) of the Board will establish such conditions as it deems appropriate on the granting or vesting of stock options, restricted stock, restricted stock units, and other types of equity-based awards. As determined by the Compensation Committee, equity awards also may be subject to immediate vesting upon the occurrence of certain events following a change in control of the Company. The Company primarily grants restricted stock and restricted stock units to its employees. A restricted stock unit is equivalent to one share of the Company’s common stock and is payable only in common stock of the Company issued under the ISAP.
The Compensation Committee administers the ISAP and may designate any of the following as a participant under the ISAP: any officer or other employee of the Company or its affiliates or individuals engaged to become an officer or employee; consultants or other independent contractors who provide services to the Company or its affiliates; and non-employee directors of the Company. On May 24, 2016,September 14, 2020, the Company's stockholders approved an amendment and restatement ofamendments to the ISAP to, among other things, increase the number of shares of the Company's common stock that are reserved for issuance by 240,000250,000 shares. As of June 30, 2020,2021, there were 46,900100,134 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 plans.
In the three months ended March 31, 2021, the Company granted restricted stock units subject to performance vesting conditions for the years ended December 31, 2020 and December 31, 2021 of 53,075 and 73,596, respectively. In addition the Company granted 25,500 of discretionary time-vested stock units to certain employees that were not subject to performance conditions. During the three months ended June 30, 2021, no stock-based units were granted to employees.
A summary of the quantity and vesting conditions for stock-based units granted to the Company's employees for the six months ended June 30, 2021 was as follows:
Vesting conditionsNumber of Restricted Stock Units Granted
Performance and service conditions - Type 1 (1) (2)
66,220 
Performance and service conditions - Type 2 (1) (2)
60,451 
Service conditions only - Type 1 (2)
25,500 
Total shares of stock award granted152,171 

(1)The performance conditions with respect to restricted stock units may be satisfied as follows: 
(a)For employees from the Americas, APAC, and Europe 70% of the restricted stock units may be earned on the basis of performance as measured by a “regional adjusted EBITDA”, and 30% of the restricted stock units may be earned on the basis of performance as measured by a “group adjusted EBITDA”; and
(b)For grants to Corporate office employees subject to 2020 performance conditions, 75% of the restricted stock units may be earned on the basis of performance as measured by a “group adjusted EBITDA”, and 25% of the restricted stock units may be earned on the basis of performance as measured by a “corporate costs” target. For grants to Corporate office employees subject to 2021 performance conditions, 100% of the restricted stock units may be earned on the basis of performance as measured by a “group adjusted EBITDA”.
(c)For grants to Coit Principals subject to 2021 performance conditions, 100% of the restricted stock units may be earned on the basis of performance as measured by a “Coit EBITDA”.

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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 Company's Board. The restricted stock units vest immediately upon grant and are credited to each of the non-employee director's retirement accounts under the Director Plan. Restricted stock units issued under the Director Plan contain the right to a dividend equivalent award in the form of additional restricted stock units. The dividend equivalent award is calculated using the same rate as the cash dividend paid on a share of the Company's common stock, and then divided by the closing price of the Company’s common stock on the date the dividend is paid to determine the number of additional restricted stock units to grant. Dividend equivalent awards have the same vesting terms as the underlying awards. During the six months ended June 30, 2020,2021, the Company granted 10,31019,862 restricted stock units to its non-employee directors pursuant to the Director Plan.
As of June 30, 2020, 165,0872021, 228,185 restricted stock units are deferred under the Company’s ISAP.
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

For the three and six months ended June 30, 20202021 and 2019,2020, the Company’s stock-based compensation expense related to stock options and restricted stock units was as follows:
Three Months Ended June 30,Six Months Ended June 30,
 Three Months Ended June 30, Six Months Ended June 30,2021202020212020
 2020 2019 2020 2019
Stock options $
 $
 $
 $
Restricted shares of common stock (see Note 5)Restricted shares of common stock (see Note 5)$92 $$182 $
Restricted stock units 93
 425
 237
 609
Restricted stock units702 93 914 237 
Total $93
 $425
 $237
 $609
Total$794 $93 $1,096 $237 
 
Stock Options
Stock options granted by the Company generally expire between five and ten years after the date of grant and have an exercise price of at least 100% of the fair market value of the underlying share of common stock on the date of grant.
As of June 30, 2020, theThe Company had no unrecognized stock-based compensation expense related to outstanding unvested5,000 stock options.
Changesoptions with a weighted average exercise price of $24.90 per share that expired in the Company’s stock options for the six months ended June 30, 2020 and 2019 were as follows: 
 Six Months Ended June 30,
 2020 2019
 
Number of
Options
 
Weighted
Average
Exercise Price
per Share
 
Number of
Options
 
Weighted
Average
Exercise Price
per Share
Options outstanding at January 1,5,000
 $24.90
 5,000
 $24.90
Expired/forfeited
 
 
 
Options outstanding at June 30,5,000
 $24.90
 5,000
 $24.90
Options exercisable at June 30,5,000
 $24.90
 5,000
 $24.90

fourth quarter of 2020.
Restricted Stock Units
As of June 30, 2020,2021, the Company had approximately $116$1,713 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 1.701.45 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 six months ended June 30, 2020 and 2019 were as follows:
- 12 -
 Six Months Ended June 30,
 2020 2019
 
Number of
Restricted
Stock Units
 
Weighted
Average
Grant-Date
Fair Value
 
Number of
Restricted
Stock Units
 
Weighted
Average
Grant-Date
Fair Value
Unvested restricted stock units at January 1,63,436
 $15.12
 57,773
 $15.68
Granted10,310
 $9.01
 78,978
 $15.24
Shares earned above target (a)

 $
 723
 $17.00
Vested(33,188) $12.83
 (55,451) $15.19
Forfeited(22,384) $15.20
 (15,090) $15.38
Unvested restricted stock units at June 30,18,174
 $15.75
 66,933
 $15.22


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

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

    Changes in the Company’s restricted stock units for the six months ended June 30, 2021 and 2020 were as follows:
 Six Months Ended June 30,
 20212020
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 1,14,676 $15.45 63,436 $15.12 
Granted172,033 $15.83 10,310 $9.01 
Vested(28,405)$17.09 (33,188)$12.83 
Forfeited(11,411)$14.54 (22,384)$15.20 
Unvested restricted stock units at June 30,146,893 $15.65 18,174 $15.75 

Restricted Shares of Common Stock
As of June 30, 2021, the Company had approximately $226 of unrecognized stock-based compensation expense related to 52,226 restricted shares of common stock issued in connection with the Acquisition (see Note 5). These shares had a grant price of $9.57 and a remaining average expected life of 0.92 years. Restricted stock units have no voting or dividend rights until the awards are vested.    

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.


In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus packages. These measures may include deferring the due dates of tax payments or other changes to their income and non-income-based tax laws. The CARES Act, which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based-tax laws. The enactment of the CARES Act and other COVID-19 measures did not result in any material adjustments to our income tax provision for the three and six months ended June 30, 2020,2021, or to our net deferred tax assets as of June 30, 2020.2021. The Company continues to monitor federal, state, and international regulatory developments in relation to COVID-19 and their potential impact on our operations.

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Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)
Effective Tax Rate
The provision for income taxes for the six months ended June 30, 20202021 was $373$567 on a pre-tax loss from continuing operationsincome of $910,$242, compared to a provision for income taxes of $207$373 on pre-tax loss from continuing operations of $2,464$910 for the same period in 2019.2020. The Company’s effective income tax rate was negative 41%positive 234% and negative 8%41% for the six months ended June 30, 20202021 and 2019,2020, respectively. For the six months ended June 30, 20202021 and 2019,2020, the effective tax rates differed from the U.S. Federal statutory rate of 21% primarily due to changes in valuation allowances in the U.S. and certain foreign jurisdictions, which reduces or eliminates the effective tax rate on current year profits or losses, changes to unrecognized tax benefits, foreign tax rate differences, and non-deductible expenses.
Uncertain Tax Positions
As of June 30, 20202021 and December 31, 2019,2020, the Company had $648$678 and $663,$669, respectively, of unrecognized tax benefits, excluding interest and penalties, which if recognized in the future, would lower the Company’s effective income tax rate.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of the provision for income taxes. As of June 30, 20202021 and December 31, 2019,2020, the Company had $544$632 and $551,$594, respectively, of accrued interest and penalties associated with unrecognized tax benefits.
Based on information available as of June 30, 2020,2021, it is reasonably possible that the total amount of unrecognized tax benefits could decrease by up to $200 over the next 12 months as a result of projected resolutions of global tax examinations and controversies and potential expirations of the applicable statutes of limitations.
In many cases, the Company’s unrecognized tax benefits are related to tax years that remain subject to examination by the relevant tax authorities. Tax years with net operating losses ("NOLs"(“NOLs”) remain open until such losses expire or until the statutes of limitations for those years when the NOLs are used expire. As of June 30, 2020,2021, the Company's open tax years, which remain subject to examination by the relevant tax authorities, were principally as follows:
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except shareare between 2013 and per share amounts)
(unaudited)

2020 depending on the jurisdiction.
Year
Earliest tax years which remain subject to examination by the relevant tax authorities:
U.S. Federal2016
Majority of U.S. state and local jurisdictions2015
Australia2017
Belgium2017
Canada2015
Netherlands2014
Switzerland2015
United Kingdom2018
Jurisdictions in Asia2018
The Company believes that its unrecognized tax benefits as of June 30, 20202021 are appropriately recorded for all years subject to examination above.
    
NOTE 8 – LOSS PER SHARE
Basic earnings (loss) per share is computed by dividing the Company’s net income (loss) by the weighted average number of shares outstanding during the period. When the effects are not anti-dilutive, diluted earnings (loss) per share is computed by dividing the Company’s net income (loss) by the weighted average number of shares outstanding and the impact of all dilutive potential common shares, primarily stock options "in-the-money"“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 loss per share calculations for the three and six months ended June 30, 20202021 and 20192020 were as follows:


- 14 -

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



 Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Loss per share (“EPS”):    
EPS - basic and diluted:
Loss per share$(0.04)$(0.27)$(0.11)$(0.43)
EPS numerator - basic and diluted:
Net loss$(122)$(772)$(325)$(1,283)
EPS denominator (in thousands):   
Weighted average common stock outstanding - basic2,906 2,839 2,899 2,952 
Common stock equivalents: stock options and restricted stock units (a)
Weighted average number of common stock outstanding - diluted2,906 2,839 2,899 2,952 

  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Loss per share ("EPS"):  
  
  
  
EPS - basic and diluted:        
Loss per share from continuing operations $(0.27) $(0.29) $(0.43) $(0.84)
Loss per share from discontinued operations 
 
 
 (0.04)
Loss per share $(0.27) $(0.29) $(0.43) $(0.88)
EPS numerator - basic and diluted:        
Loss from continuing operations $(772) $(900) $(1,283) $(2,671)
Loss from discontinued operations 
 
 
 (131)
Net loss $(772) $(900) $(1,283) $(2,802)
EPS denominator (in thousands):  
  
  
  
Weighted average common stock outstanding - basic 2,839
 3,082
 2,952
 3,184
Common stock equivalents: stock options and restricted stock units (a)
 
 
 
 
Weighted average number of common stock outstanding - diluted 2,839
 3,082
 2,952
 3,184


(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 outstanding stock options and unvested restricted stock units) were anti-dilutive and therefore not included in the calculation of the denominator of dilutive earnings per share.

(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 and unvested restricted stock units) were anti-dilutive and therefore not included in the calculation of the denominator of dilutive earnings per share.
The weighted average number of shares outstanding used in the computation of diluted net income (loss)loss per share for the three and six months ended June 30, 20202021 and 20192020 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,
2021202020212020
Unvested restricted shares of common stock52,226 52,226 
Unvested restricted stock units146,893 18,174 146,893 18,174 
Stock options5,000 5,000 
Total199,119 23,174 199,119 23,174 

- 15 -
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Unvested restricted stock units 18,174
 66,933
 18,174
 66,933
Stock options 5,000
 5,000
 5,000
 5,000
Total 23,174
 71,933
 23,174
 71,933

HUDSON GLOBAL, INC.

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


NOTE 9– GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company recorded goodwill of $2,088 on October 1, 2020 in connection with its acquisition of Coit Staffing Inc. (see Note 5 for further information) and the Company has not had any subsequent acquisitions. Prior to the Acquisition the Company had 0 goodwill.

Intangible Assets

In connection with the Acquisition the Company’s Intangible assets consisted of the following components:

June 30, 2021Average Remaining Amortization Useful Lives
(in years)
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Non-compete agreements1.25$80 $(30)$50 
Trade name4.25400 (60)340 
Customer lists4.251,000 (150)850 
$1,480 $(240)$1,240 

December 31, 2020Average Remaining Amortization Useful Lives
(in years)
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Non-compete agreements1.75$80 $(10)$70 
Trade name4.75400 (20)380 
Customer lists4.751,000 (50)950 
$1,480 $(80)$1,400 
Intangible assets are amortized on a straight-line basis over their estimated useful lives. Non-compete agreements are amortized over 2 years and Trade names and Customer lists are amortized over 5 years. Amortization expense for the three and six months ended June 30, 2021 was $80 and $160, respectively. No impairment in the value of amortizing or non-amortizing intangible assets was recognized during the three and six months ended June 30, 2021, respectively.

Estimated future amortization expense for intangible assets for the remainder of the fiscal year ending December 31, 2021, and for each of the next four fiscal years are as follows:

2021$160 
2022310 
2023280 
2024280 
2025210 
$1,240 


- 16 -

Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)
NOTE 910 – 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
Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

claims cannot be determined, the Company believes that the final resolution of these matters will not have a material adverse effect on the Company’s financial condition, results of operations or liquidity.
For matters that reach the threshold of probable and estimable, the Company establishes reserves for legal, regulatory, and other contingent liabilities. The legal reserves are included under the caption "Other“Other non-current liabilities"liabilities” in the Condensed Consolidated Balance Sheets. The Company's reserves were $0 as of June 30, 20202021 and December 31, 2019,2020, respectively.

Departure of Chief Financial Officer

As previously disclosed, on May 31, 2019, the Company and Patrick Lyons determined that Mr. Lyons would leave his positions with the Company effective June 30, 2019. As a result, during the three and six months ended June 30, 2019, the Company recognized compensation expense of $485 to its former Chief Financial Officer classified within salaries and related expense in the Company's Condensed Consolidated Statements of Operations. Additionally, Mr. Lyons agreed to serve as a consultant to the Company to assist with certain financial and operational matters from July 1, 2019 through December 31, 2019. In consideration for his services as a consultant, the Company paid Mr. Lyons 750 shares of the Company’s common stock at the end of each month during the term of his consulting agreement with the Company.
Operating Leases
Effective January 1, 2019, the Company adopted the new lease guidelines detailed in ASU 2016-02. Lease payments for short-term leases with terms of 12 months or less based on original lease commencement date are recognized on a straight-line basis over the lease term. Adoption of this standard resulted in the recording of net operating lease right-of-use assets and corresponding operating lease liabilities of $0.7 million for rented office spaces.


Our office space leases have remaining lease terms of one year to three years. Some of these operating leases include options to extend the lease terms, and some operating leases include options to terminate the leases earlier than the full terms. These options are considered in our determination of the valuation of our right-of-use assets and lease liabilities.
None of our operating leases include implicit rates, and we have determined that the difference between the contractual cost basis and the present value of lease payments calculated using incremental borrowing rates is not material. Our operating lease costs for the six months ended June 30, 2021 and 2020 were $358 and 2019 were $277, and $271, respectively (reflected in Net cash used in operating activities). The weighted average remaining lease term of our operating leases as of June 30, 20202021 was 1.41.7 years.
As of June 30, 2020,2021, future minimum operating lease payments are as follows:
 2020 2021 2022 Total
Minimum lease payments$134
 $175
 $21
 $330
202120222023Total
Minimum lease payments$232 $286 $121 $639 
    
Invoice Finance Credit Facility


On April 8, 2019, the Company’s Australian subsidiary (“Australian Borrower”) entered into an invoice finance credit facility agreement (the “NAB Facility Agreement”) with National Australia Bank Limited ("NAB"(“NAB”). The NAB Facility Agreement provides the Australian Borrower with the ability to borrow funds based on a percentage of eligible trade receivables up to a maximum of 4 million Australian dollars. No receivables have terms greater than 90 days, and any risk of loss is retained by the Australian Borrower. The interest rate is calculated as the variable receivable finance indicator rate, plus a margin of 1.60% per annum. Borrowings under this facility are secured by substantially all of the assets of the Australian Borrower. The NAB Facility Agreement does not have a stated maturity date and can be terminated by either the Australian Borrower or NAB upon 90 days written notice. As of June 30, 2020,2021, there were no amounts outstanding under the NAB Facility Agreement. Interest expense and fees incurred on the NAB Facility Agreement were$5 and $10 for the three and six months ended June 30, 2021, respectively, and $5 and $10 for the three and six months ended June 30, 2020, respectively.


The NAB Facility Agreement contains various restrictions and covenants for the Australian Borrower including (1) that EBITDA must be at least two2 times total interest paid on debt on a 12-month rolling basis; (2) minimum tangible net worth must be at least 2.5 million Australian dollars and be equal to at least 25% of total tangible assets on June 30 and December 31 (as defined in the NAB Facility Agreement); and (3) additional periodic reporting requirements to NAB. The CompanyAustralian Borrower was in compliance with all financial covenants under the NAB Facility Agreement as of June 30, 2020.2021.

- 17 -

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

    Amounts borrowed from the NAB Facility are large, contain short maturities and have quick turnovers. Amounts borrowed and repaid are presented on a net basis on the Condensed Consolidated Statements of Cash Flows.


Paycheck Protection Program


On April 26, 2020, the Company'sCompany’s wholly owned U.S. subsidiary, Hudson Global Resources Management, Inc., received a $1.3 million$1,326 loan in connection with the PPP as part of the CARES Act, administered by the U.S. SBA. As a result of the COVID-19 pandemic, in applying for the loan the Company made a good faith assertion based upon the degree of uncertainty introduced to the capital markets and the industries affecting the Company'sCompany’s customers and the Company'sCompany’s dependency to curtail expenses to fund ongoing operations as the anticipated reduction in RPO recruitment revenue iswas expected to impact the business. The PPP loan proceeds arewere used to help offset payroll costs as stipulated in the legislation. All or a portion of the PPP loan may be forgiven by the SBA upon application by the Company and upon documentation of expenditures in accordance with the SBA requirements. Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and covered utilities. The Company intends to comply with the loan forgiveness provisions in the legislation, however, there are no assurances that the Company will obtain forgiveness for any portion of the loan.


The PPP loan hashad a 1.00% interest rate and iswas scheduled to mature on April 26, 2022. The loan iswas subject to the terms and conditions applicable to loans administered by the SBA under the CARES Act. The loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. As of June 30, 2020, $589 of the PPP loan proceeds are reflected in Short-term debt, $737 are reflected in Long-term debt on the Condensed Consolidated Balance Sheets, and the Company recorded $2 of interest expense. As of June 30, 2020 the Company is in compliancecomplied with all provisions related to the PPP loan. The Company submitted its application for loan forgiveness in September 2020, and the SBA approved the forgiveness of the full amount of the loan on November 30, 2020.




NOTE 1011 – ACCUMULATED OTHER COMPREHENSIVE LOSS


Accumulated other comprehensive loss, net of applicable tax, consisted of the following:
June 30,December 31,
20212020
Foreign currency translation adjustments$282 $526 
Accumulated other comprehensive loss$282 $526 


  June 30, December 31,
  2020 2019
Foreign currency translation adjustments $(822) $(479)
Accumulated other comprehensive loss $(822) $(479)


NOTE 1112 – STOCKHOLDERS' EQUITY
Common Stock
    
On July 30, 2015, the Company announced that its Board authorized the repurchase of up to $10,000 of the Company's common stock. The Company intends to make purchases from time to time as market conditions warrant. This authorization does not expire. During the six months ended June 30, 2021 and 2020, no purchases of shares were made under this authorization. The Company repurchased 26,155 shares on the open market for $384 during the same period last year. As of June 30, 2020,2021, under the July 30, 2015 authorization, the Company had repurchased 432,563 shares for a total cost of $8,297.


In addition to the shares repurchased above under the $10,000 authorization plan, on February 22, 2019, the Company commenced a tender offer to purchase up to 315,000 shares of the Company’s common stock, par value $0.001 per share, at a purchase price of $15.00 per share.  The tender offer expired on March 22, 2019. In accordance with the terms and conditions of the tender offer, the Company acquired 246,863 shares for an aggregate cost of $3,703, excluding fees and expenses of $125.

On March 27, 2020, the Company in addition to the $10,000 authorization plan, completed transactions with certain stockholders to repurchase 259,331 shares of the Company's common stock, for an aggregate cost of $2,238, excluding fees of $1.


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

Reverse Stock Split

On June 10, 2019, the Company announced a Reverse Split of its outstanding shares of common stock at a ratio of 1-for-10 and that it had also reduced the number of authorized shares of common stock to 20 million shares. The Reverse Split had no effect on the par value of the Company's common stock, but it reduced the number of issued and outstanding shares of common stock by a factor of 10. All issued and outstanding shares, stock-based compensation disclosures, net loss per share, and other share and per share disclosures for all periods presented have been retrospectively adjusted to reflect the impact of this Reverse Split.

NOTE 1213 – SEGMENT AND GEOGRAPHIC DATA
Segment Reporting
The Company operates in three3 reportable segments: the Hudson regional businesses of Americas, Asia Pacific, and Europe. Corporate expenses are reported separately from the three3 reportable segments and pertain to certain functions, such as executive management, corporate governance, human resources,investor relations, legal, accounting, administration, tax, and treasury. A portion of these expenses are attributed to the reportable segments for providing the above services to them, and have been allocated to the segments as management service expenses, and are included in the segments’ non-operating other income (expense). Segment information is presented in accordance with ASC 280, "Segment Reporting." This standard is based on a management approach that requires segmentation based upon the Company’s internal organization and disclosure of revenue and certain expenses based upon internal accounting methods. The Company’s financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Accounts receivable, net is the only significant asset separated by segment for internal reporting purposes.
- 18 -

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

run the business, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Accounts receivable and long-lived assets are the only significant asset separated by segment for internal reporting purposes.
AmericasAsia PacificEuropeCorporateInter-Segment EliminationTotal
For The Three Months Ended June 30, 2021
Revenue, from external customers$5,366 $28,801 $5,507 $$$39,674 
Inter-segment revenue15 (15)
Total revenue$5,366 $28,816 $5,507 $$(15)$39,674 
Adjusted net revenue, from external customers (a)
$4,993 $6,880 $3,218 $$$15,091 
Inter-segment adjusted net revenue(15)15 
Total adjusted net revenue$4,978 $6,895 $3,218 $$$15,091 
EBITDA (loss) (b)
$(173)$1,003 $476 $(935)$$371 
Depreciation and amortization(87)(17)(8)(1)(113)
Intercompany interest (expense) income, net(86)86 
Interest income, net
(Loss) income before income taxes$(260)$901 $468 $(842)$$267 
Provision for income taxes$$243 $123 $15 $$389 
For The Six Months Ended June 30, 2021
Revenue, from external customers$9,927 $54,141 $10,067 $$$74,135 
Inter-segment revenue15 (15)
Total revenue$9,927 $54,156 $10,067 $$(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)$$446 
Depreciation and amortization(173)(31)(17)(2)(223)
Intercompany interest (expense) income, net(171)171 
Interest income, net17 19 
(Loss) income before income taxes$(624)$1,565 $529 $(1,228)$$242 
Provision for (benefit from) income taxes$17 $437 $140 $(27)$$567 
As of June 30, 2021
Accounts receivable, net$3,863 $10,853 $4,846 $$$19,569 
Long-lived assets, net of accumulated depreciation and amortization (b)
$3,388 $75 $35 $$$3,502 
Total assets$9,386 $18,871 $8,745 $13,301 $$50,303 

- 19 -
 Americas Asia Pacific Europe Corporate Inter-Segment Elimination Total
For The Three Months Ended June 30, 2020      
Total revenue$2,206
 $18,833
 $3,534
 $
 $
 $24,573
Total adjusted net revenue$1,893
 $4,818
 $2,219
 $
 $
 $8,930
EBITDA (loss) (b)
$(918) $1,025
 $300
 $(929) $
 $(522)
Depreciation and amortization(5) (13) (5) (1) 
 (24)
Intercompany interest (expense) income, net
 (73) 
 73
 
 
Interest (expense) income, net(2) 
 
 42
 
 40
Income (loss) from continuing operations before income taxes$(925) $939
 $295
 $(815) $
 $(506)
            
For The Six Months Ended June 30, 2020        
Revenue, from external customers$5,394
 $35,784
 $7,526
 $
 $
 $48,704
Inter-segment revenue
 6
 
 
 (6) 
Total revenue$5,394
 $35,790
 $7,526
 $
 $(6) $48,704
Adjusted net revenue, from external customers (a)
$4,753
 $9,329
 $4,646
 $
 $
 $18,728
Inter-segment adjusted net revenue
 6
 (6) 
 
 
Total adjusted net revenue$4,753
 $9,335
 $4,640
 $
 $
 $18,728
EBITDA (loss) (b)
$(978) $1,362
 $363
 $(1,728) $
 $(981)
Depreciation and amortization(9) (25) (11) (3) 
 (48)
Intercompany interest (expense) income, net
 (159) 
 159
 
 
Interest (expense) income, net(2) 
 
 121
 
 119
Income (loss) from continuing operations before income taxes$(989) $1,178
 $352
 $(1,451) $
 $(910)
            
As of June 30, 2020           
Accounts receivable, net$1,857
 $7,514
 $2,843
 $86
 $
 $12,300
Total assets$4,726
 $14,349
 $6,928
 $18,733
 $
 $44,736


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, 2020    
Total revenue$2,206 $18,833 $3,534 $$$24,573 
Total adjusted net revenue (a)
$1,893 $4,818 $2,219 $$$8,930 
EBITDA (loss) (b)
$(918)$1,025 $300 $(929)$$(522)
Depreciation and amortization(5)(13)(5)(1)(24)
Intercompany interest (expense) income, net(73)73 
Interest (expense) income, net(2)42 40 
Income (loss) from continuing operations
before income taxes
$(925)$939 $295 $(815)$$(506)
Provision for (benefit from) income taxes$$273 $(7)$(9)$$266 
For The Six Months Ended June 30, 2020    
Revenue, from external customers$5,394 $35,784 $7,526 $$$48,704 
Inter-segment revenue(6)
Total revenue$5,394 $35,790 $7,526 $$(6)$48,704 
Adjusted net revenue, from external customers (a)
$4,753 $9,329 $4,646 $$$18,728 
Inter-segment adjusted net revenue(6)
Total adjusted net revenue$4,753 $9,335 $4,640 $$$18,728 
EBITDA (loss) (b)
$(978)$1,362 $363 $(1,728)$$(981)
Depreciation and amortization(9)(25)(11)(3)(48)
Intercompany interest (expense) income, net(159)159 
Interest (expense) income, net(2)121 119 
Income (loss) from continuing operations before income taxes$(989)$1,178 $352 $(1,451)$$(910)
Provision for income taxes$17 $337 $$16 $$373 
As of June 30, 2020      
Accounts receivable, net$1,857 $7,514 $2,843 $86 $$12,300 
Long-lived assets, net of accumulated depreciation and amortization (b)
$24 $84 $29 $$$146 
Total assets$4,726 $14,349 $6,928 $18,733 $$44,736 

(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. 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.

- 20 -
 Americas Asia Pacific Europe Corporate 
Inter-
Segment
Elimination
 Total
For The Three Months Ended June 30, 2019        
Revenue, from external customers$3,982
 $17,454
 $4,978
 $
 $
 $26,414
Inter-segment revenue28
 
 2
 
 (30) 
Total revenue$4,010
 $17,454
 $4,980
 $
 $(30) $26,414
Adjusted net revenue, from external customers (a)
$3,591
 $5,420
 $2,648
 $
 $
 $11,659
Inter-segment adjusted net revenue26
 (28) 3
 
 (1) 
Total adjusted net revenue$3,617
 $5,392
 $2,651
 $
 $(1) $11,659
EBITDA (loss) (b)
$428
 $362
 $31
 $(1,683) $
 $(862)
Depreciation and amortization(4) (10) (6) (1) 
 (21)
Intercompany interest (expense) income, net
 (100) 
 100
 
 
Interest income, net
 
 
 125
 
 125
Income (loss) from continuing operations before income taxes$424
 $252
 $25
 $(1,459) $
 $(758)
            
For The Six Months Ended June 30, 2019        
Revenue, from external customers$7,122
 $26,133
 $9,346
 $
 $
 $42,601
Inter-segment revenue63
 
 3
 
 (66) 
Total revenue$7,185
 $26,133
 $9,349
 $
 $(66) $42,601
Adjusted net revenue, from external customers (a)
$6,353
 $10,010
 $4,692
 $
 $
 $21,055
Inter-segment adjusted net revenue61
 (58) 3
 
 (6) 
Total adjusted net revenue$6,414
 $9,952
 $4,695
 

 $(6) $21,055
EBITDA (loss) (b)
$14
 $314
 $(317) $(2,874) $
 $(2,863)
Depreciation and amortization(9) (15) (13) (2) 
 (39)
Intercompany interest (expense) income, net
 (201) 
 201
 
 
Interest income, net
 
 
 438
 
 438
Income (loss) from continuing operations before income taxes$5
 $98
 $(330) $(2,237) $
 $(2,464)
            
As of June 30, 2019 
  
  
  
  
  
Accounts receivable, net$3,336
   $8,106
 $3,005
 $(65) $
 $14,382
Total assets$4,742
 $11,654
 $6,674
 $23,063
 $
 $46,133

(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. 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)


Geographic Data Reporting
A summary of revenues for the three and six months ended June 30, 20202021 and 20192020 and net assets by geographic area as of June 30, 20202021 and 2019, presented net of discontinued operations,2020, were as follows:
AustraliaUnited
States
United
Kingdom
OtherTotal
 Australia
United
Kingdom
 
United
States
 Other Total
For The Three Months Ended June 30, 2021For The Three Months Ended June 30, 2021  
Revenue (a)
Revenue (a)
$26,543 $5,067 $5,005 $3,059 $39,674 
For The Three Months Ended June 30, 2020For The Three Months Ended June 30, 2020  
  
For The Three Months Ended June 30, 2020  
Revenue (a)
 $16,966
$3,027
 $1,900
 $2,680
 $24,573
Revenue (a)
$16,966 $1,900 $3,027 $2,680 $24,573 
For The Three Months Ended June 30, 2019  
  
For The Six Months Ended June 30, 2021For The Six Months Ended June 30, 2021
Revenue (a)
 $15,289
$4,488
 $3,689
 $2,948
 $26,414
Revenue (a)
$50,017 $9,315 $8,876 $5,927 $74,135 
For The Six Months Ended June 30, 2020For The Six Months Ended June 30, 2020    For The Six Months Ended June 30, 2020
Revenue (a)
 $31,997
$6,478
 $4,773
 $5,456
 $48,704
Revenue (a)
$31,997 $4,773 $6,478 $5,456 $48,704 
For The Six Months Ended June 30, 2019    
Revenue (a)
 $22,057
$8,499
 $6,540
 $5,505
 $42,601
As of June 30, 2021As of June 30, 2021    
Long-lived assets, net of accumulated depreciation and amortization (b)
Long-lived assets, net of accumulated depreciation and amortization (b)
$34 $3,392 $35 $41 $3,502 
Net assetsNet assets$6,843 $18,608 $2,537 $6,815 $34,803 
As of June 30, 2020   
  
  
  
As of June 30, 2020    
Long-lived assets, net of accumulated depreciation and amortization (b)
Long-lived assets, net of accumulated depreciation and amortization (b)
$30 $33 $29 $54 $146 
Net assets $4,354
$1,927
 $19,580
 $6,531
 $32,392
Net assets$4,354 $19,580 $1,927 $6,531 $32,392 
As of June 30, 2019   
  
  
  
Net assets $3,745
$2,447
 $22,862
 $4,970
 $34,024
  
(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, net of accumulated depreciation and amortization.



NOTE 1314 – STOCKHOLDER RIGHTS PLAN


On October 15, 2018, the Company’s Board declared a dividend to the Company’s stockholders of record as of the close of business on October 25, 2018 (the "Record Date"“Record Date”), for each outstanding share of the Company’s common stock, of one1 right (a "Right"“Right”) to purchase one one-hundredth of a share of a new series of participating preferred stock of the Company. The terms of the Rights are set forth in the Rights Agreement, dated as of October 15, 2018 (the "Rights Agreement"“Rights Agreement”), by and between the Company and Computershare Trust Company, N.A., as rights agent. The Company's stockholders approved the Rights Agreement at the Company’s 2019 annual meeting of stockholders held on May 6, 2019. Each Right allows its holder to purchase from the Company one one-hundredth of a share of the Company’s Series B Junior Participating Preferred Stock ("(“Series B Preferred Stock"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 one1 share of common stock. Prior to exercise, however, a Right does not give its holder any dividend, voting or liquidation rights.


The Board entered into the Rights Agreement in an effort to preserve the value of the Company’s significant U.S. NOLs and other tax benefits. The Company’s ability to utilize its NOLs may be substantially limited if the Company experiences an "ownership change"“ownership change” within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"“Code”). In general, an "ownership change"“ownership change” would occur if the percentage of the Company’s ownership by one or more "5-percent shareholders"“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"“ownership change” under Section 382 of the Code.


- 21 -

Index
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)
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"“Charter Provision”) which generally prohibits transfers of its common stock that could result in an ownership change. The Company believes that in light of the significant amount of the NOLs, it is advisable to adopt the Rights Agreement in addition to the Charter Provision. In general terms, the Rights Agreement imposes a significant penalty upon any person or group that acquires beneficial ownership (as defined under the Rights
HUDSON GLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)

Agreement) of 4.99% or more of the outstanding common stock without the prior approval of the Board (an "Acquiring Person"“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"“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 two2 times the purchase price (a "Flip-in Event"“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 two2 times the purchase price of the Rights. Rights may be exercised to purchase Series B Preferred Stock only after the Distribution Date occurs and prior to the occurrence of a Flip-in Event as described above. A Distribution Date resulting from the commencement of a tender offer or an exchange offer as described in the second bullet point above could precede the occurrence of a Flip-in Event, in which case the Rights could be exercised to purchase Series B Preferred Stock. A Distribution Date resulting from any occurrence described in the first bullet point above would necessarily follow the occurrence of a Flip-in Event, in which case the Rights could be exercised to purchase shares of common stock (or other securities or assets) as described above.


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

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


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


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


Before the time the Rights cease to be redeemable, the Board may amend or supplement the Rights Agreement without the consent of the holders of the Rights, except that no amendment may decrease the redemption price below $0.001 per Right. At any time thereafter, the Board may amend or supplement the Rights Agreement to cure an ambiguity, to alter time period
- 22 -

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

provisions, to correct inconsistent provisions or to make any additional changes to the Rights Agreement, but only to the extent that those changes do not impair or adversely affect the interests of the holders of Rights and do not result in the Rights again becoming redeemable. The limitations on the Board’s ability to amend the Rights Agreement does not affect the Board’s power or ability to take any other action that is consistent with its fiduciary duties, including, without limitation, accelerating or extending the expiration date of the Rights, or making any amendment to the Rights Agreement that is permitted by the Rights Agreement or adopting a new rights agreement with such terms as the Board determines in its sole discretion to be appropriate.


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 Part I of this Form 10-Q. The reader should also refer to the Condensed Consolidated Financial Statements and notes of Hudson Global, Inc. and its subsidiaries (the "Company"Company) filed in its Annual Report on Form 10-K for the year ended December 31, 2019.2020. 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 1213 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 MD&A were derived from exact numbers and may have immaterial rounding differences.
This MD&A includes the following sections:
Executive Overview
Results of Operations
Liquidity and Capital Resources
Contingencies
Recent Accounting Pronouncements
Critical Accounting Policies
Forward-Looking Statements


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


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


We continue to explore all strategic alternatives to maximize value for shareholders, including without limitation, improving the market position and profitability of our services in the marketplace, and enhancing our valuation.shareholders. We may pursue
our goals through organic growth, strategic initiatives, or other alternatives. We will also continue to monitor capital markets for opportunities to repurchase shares, and consider other actions designed to enhance shareholder value, as well asincluding to review information regarding potential acquisitions, andas 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 RPO businesses for the three and six months ended June 30, 20202021 and 2019.2020.
- 23 -

Index

Current Market Conditions


Economic    After a challenging year in 2020, economic conditions in most of the world'sworld’s major markets are projectedexpected to declinerebound in 2020 compared2021, although activity is expected to 2019, primarily dueremain below pre-COVID levels, and millions have dropped out of the global labor force. The approval and rollout of COVID-19 vaccines in many countries provides a potential path for an eventual end to the pandemic, however expectations for recovery are hampered by rising infections and new variants of the virus. Policy measures enacted by country governments to combat the economic impact of the coronavirus (COVID-19). Thesevirus are expected declines haveto continue to provide support to local economies. In addition, the continued uncertainty has resulted in increased volatility in global currencies. WeakerEffective containment measures in China have resulted in a stronger recovery, and agreement on the terms of the United Kingdom’s exit from the European Union have eliminated some of the uncertainty in that country. Stronger foreign currencies in these and other markets compared to the U.S. dollar during a reporting period causescause local currency results of the Company'sCompany’s foreign operations to be translated into fewermore U.S. dollars. The Company closely monitors the economic environment and business climate in its markets and responds accordingly.


COVID-19 Pandemic


The emergencecontinuing impact of COVID-19 around the world presents significant risks to the Company, not all of which the Company is ableunable to fully evaluate or even to foresee at the current time. WhileHowever, the COVID-19 pandemic did not materially adversely affectCompany is vigilantly monitoring the Company’s financial resultsbusiness 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 operations in this challenging environment due to the Company’s threeflexibility of its workforce and six month period ended June 30, 2020, economic and health conditions in the United States and across moststrength of the globe have changed rapidly since the end of the quarter.  In the short-term, some of our customers have instituted hiring freezes, while other customers operating in the banking, pharmaceutical and technology industries, which may be considered as essential businesses in different jurisdictions, or customers that are more capable of working remotely than other industries, have been allowed to operate as usual. The inability to conduct in-person interviews has also impacted our business. In addition,its balance sheet.

Although the COVID-19 pandemic has negatively impacted certain currencies compared to the U.S. dollar in several countries we operate in, including Australia.

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


Due to the above circumstances and as described generally in this Form 10-Q, the Company’s results of operations for the three and six month periodmonths ended June 30, 20202021 are not necessarily indicative of the results to be expected for the full fiscal year. Management cannot predict the full impact of the COVID-19 pandemic on the Company’s sales or toon economic conditions generally. The ultimate extent of the effects of the COVID-19 pandemic on the Company is highly uncertain and will depend on future developments, and such effects could exist for an extended period of time even after the pandemic might end.


Financial Performance
The Company achieved mixed financial performance for the second quarter of 2020. On a constant currency basis, for the three months ended June 30, 2020, revenue decreased by $0.7 million, or 3%.
    
The decrease in revenue was driven by the U.S. and the United Kingdom, partly offset by strong results in Australia.

The following is a summary of the highlights for the three and six months ended June 30, 20202021 and 2019.2020. This summary should be considered in the context of the additional disclosures in this MD&A which further highlight the results by segment.


Revenue was $24.6$39.7 million for the three months ended June 30, 2020,2021, compared to $26.4$24.6 million for the same period in 2019,2020, for an increase of $15.1 million, or 61.5%.
On a decreaseconstant currency basis, the Company's revenue increased $11.6 million, or 41.4%, primarily due to an increase in contracting revenue of 7.0%.$6.8 million, or 37.2% compared to the same period in 2020. RPO recruitment revenue also contributed $4.8 million, or 49.3%, compared to the same period in 2020.
On a constant currency basis, the Company's revenue decreased $0.7 million, or 3.0%, primarily due to a decrease of RPO recruitment revenue of $2.5 million, or 22.2%, partly offset by an increase of $1.8 million in contracting revenue (up 12.8%) compared to the same period in 2019.
Revenue was $48.7$74.1 million for the six months ended June 30, 2020,2021, compared to $42.6$48.7 million for the same period in 2019,2020, an increase of $6.1$25.4 million, or 14.3%52.2%.
On a constant currency basis, the Company's revenue increased $18.9 million, or 34.1%, primarily due to an increase in contracting revenue of $12.3 million, or 35.4% while RPO recruitment revenue increased by $6.5 million, or 32.0% compared to the same period in 2020.
On a constant currency basis, the Company's revenue increased $7.8 million, or 19.2%, primarily due to an increase of $9.8 million in contracting revenue (up 48.4% compared to the same period in 2019).
Adjusted net revenue was $8.9$15.1 million for the three months ended June 30, 2020,2021, compared to $11.7$8.9 million for the same period in 2019, a decrease2020, an increase of $2.7$6.2 million, or 23.4%69.0%.
On a constant currency basis, adjusted net revenue increased $5.2 million, or 52.7%, primarily due to an increase in RPO recruitment adjusted net revenue of $4.8 million, or 51.9% compared to the same period in 2020.
- 24 -


On a constant currency basis, adjusted net revenue decreased $2.4 million, or 21.3%, primarily due to a decrease of $2.4 million in RPO recruitment adjusted net revenue (down 22.6% compared to the same period in 2019).
Adjusted net revenue was $18.7$27.8 million for the six months ended June 30, 2020,2021, compared to $21.1$18.7 million for the same period in 2019, a decrease2020, an increase of $2.3$9.1 million, or 11.1%48.5%.
On a constant currency basis, adjusted net revenue decreased $1.7 million, or 8.3%, mainly due to a decrease of $1.8 million in RPO recruitment adjusted net revenue (down 9.3% compared to the same period in 2019), partly offset by an increase of $0.1 million in contracting adjusted net revenue (up 9.1% compared to the same period in 2019).
On a constant currency basis, adjusted net revenue increased $7.3 million, or 35.4%, mainly due to an increase in RPO recruitment adjusted net revenue of $6.4 million, or 33.3% compared to the same period in 2020. Contracting adjusted net revenue increased by $0.9 million, or 64.8% compared to the same period in 2020.
Selling, general and administrative expenses (including salaries and related expenses) and other non-operating income (expense) ("(“SG&A and Non-Op"Non-Op”) was $9.5$14.7 million for the three months ended June 30, 2020,2021, compared to $12.5$9.5 million for the same period in 2019, a decrease2020, an increase of $3.1$5.3 million, or 24.5%55.7%.
On a constant currency basis, SG&A and Non-Op decreased $2.7 million, or 22.5%. SG&A and Non-Op, as a percentage of revenue, was 38.5% for the three months ended June 30, 2020, compared to 48.1% for the same period in 2019.
On a constant currency basis, SG&A and Non-Op increased $4.5 million, or 44.2%. SG&A and Non-Op, as a percentage of revenue, was 37.1% for the three months ended June 30, 2021, compared to 36.4% for the same period in 2020.
SG&A and Non-Op was $19.7$27.4 million for the six months ended June 30, 2020,2021, compared to $23.9$19.7 million for the same period in 2019, a decrease2020, an increase of $4.2$7.7 million, or 17.6%38.8%.
On a constant currency basis, SG&A and Non-Op decreased $3.6 million, or 15.3%. SG&A and Non-Op, as a percentage of revenue, was 40.5% for the six months ended June 30, 2020, compared to 56.9% for the same period in 2019.
On a constant currency basis, SG&A and Non-Op increased $6.1 million, or 28.8%. SG&A and Non-Op, as a percentage of revenue, was 36.9% for the six months ended June 30, 2021, compared to 38.4% for the same period in 2020.
EBITDA loss was $0.5$0.4 million for the three months ended June 30, 2020,2021, compared to EBITDA loss of $0.9$0.5 million for the same period in 2019, a decrease2020, an increase in EBITDA loss of $0.3$0.9 million. On a constant currency basis, EBITDA loss also decreased $0.3increased $0.7 million.
EBITDA loss was $1.0$0.4 million for the six months ended June 30, 2020,2021, compared to EBITDA loss of $2.9$1.0 million for the same period in 2019, a decrease2020, an increase in EBITDA loss of $1.9$1.4 million. On a constant currency basis, EBITDA loss also decreased $1.9increased $1.2 million.
Net loss was $0.8$0.1 million for the three months ended June 30, 2020,2021, compared to net loss of $0.9$0.8 million for the same period in 2019,2020, a decrease in net loss of $0.1$0.6 million. On a constant currency basis, net loss also decreased $0.1$0.5 million.
Net loss was $1.3$0.3 million for the six months ended June 30, 2020,2021, compared to net incomeloss of $2.8$1.3 million for the same period in 2019, a decrease2020, an increase in net loss of $1.5$1.0 million. On a constant currency basis, net loss also decreased $1.5increased $0.8 million.
Constant Currency
The Company operates on a global basis, with the majority of its revenue generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect the Company's results of operations. For the discussion of reportable segment results of operations, the Company uses constant currency information. Constant currency compares financial results between periods as if exchange rates had remained constant period-over-period. The Company defines the term "constant currency"“constant currency” to mean that financial data for a previously reported period are translated into U.S. dollars using the same foreign currency exchange rates that were used to translate financial data for the current period. The Company’s management reviews and analyzes business results in constant currency and believes these results better represent the Company’s underlying business trends. Changes in foreign currency exchange rates generally impact only reported earnings.
Changes in revenue, adjusted net revenue, SG&A and Non-Op, operating income (loss), net income (loss), and EBITDA (loss) from continuing operations include the effect of changes in foreign currency exchange rates. The tables below summarize the impact of foreign currency exchange adjustments on the Company’s operating results for the three and six months ended June 30, 20202021 and 2019.2020.
- 25 -


 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
 As As Currency Constant As As Currency Constant
$ in thousandsreported reported translation currency reported reported translation currency
Revenue: 
  
  
  
  
  
  
  
Americas$2,206
 $3,982
 $(11) $3,971
 $5,394
 $7,122
 $(14) $7,108
Asia Pacific18,833
 17,454
 (937) 16,517
 35,784
 26,133
 (1,497) 24,636
Europe3,534
 4,978
 (146) 4,832
 7,526
 9,346
 (223) 9,123
Total$24,573
 $26,414
 $(1,094) $25,320
 $48,704
 $42,601
 $(1,734) $40,867
Adjusted net revenue (a):
 
  
  
  
  
  
  
  
Americas$1,893
 $3,591
 $(5) $3,586
 $4,753
 $6,353
 $(4) $6,349
Asia Pacific4,818
 5,420
 (249) 5,171
 9,329
 10,010
 (523) 9,487
Europe2,219
 2,648
 (67) 2,581
 4,646
 4,692
 (100) 4,592
Total$8,930
 $11,659
 $(321) $11,338
 $18,728
 $21,055
 $(627) $20,428
SG&A and Non-Op (b):
   
  
  
    
  
  
Americas$2,813
 $3,189
 $(9) $3,180
 $5,732
 $6,400
 $(8) $6,392
Asia Pacific3,792
 5,028
 (247) 4,781
 7,972
 9,637
 (533) 9,104
Europe1,918
 2,618
 (75) 2,543
 4,277
 5,011
 (114) 4,897
Corporate929
 1,686
 (4) 1,682
 1,728
 2,870
 (1) 2,869
Total$9,452
 $12,521
 $(335) $12,186
 $19,709
 $23,918
 $(656) $23,262
Operating loss:   
  
  
    
  
  
Americas$(900) $590
 $
 $590
 $(828) $293
 $(1) $292
Asia Pacific927
 683
 (4) 679
 1,441
 843
 (12) 831
Europe85
 136
 11
 147
 144
 (66) 7
 (59)
Corporate(995) (2,201) (2) (2,203) (2,164) (3,844) (2) (3,846)
Total$(883) $(792) $5
 $(787) $(1,407) $(2,774) $(8) $(2,782)
Net loss, consolidated$(772) $(900) $19
 $(881) $(1,283) $(2,802) $37
 $(2,765)
EBITDA loss from continuing operations (c):
  
  
  
  
  
Americas$(918) $428
 $
 $428
 $(978) $14
 $
 $14
Asia Pacific1,025
 362
 3
 365
 1,362
 314
 15
 329
Europe300
 31
 12
 43
 363
 (317) 14
 (303)
Corporate(929) (1,683) 1
 (1,682) (1,728) (2,874) 1
 (2,873)
Total$(522) $(862) $16
 $(846) $(981) $(2,863) $30
 $(2,833)
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
AsAsCurrencyConstantAsAsCurrencyConstant
$ in thousandsreportedreportedtranslationcurrencyreportedreportedtranslationcurrency
Revenue:        
Americas$5,366 $2,206 $39 $2,245 $9,927 $5,394 $58 $5,452 
Asia Pacific28,801 18,833 3,020 21,853 54,141 35,784 5,785 41,569 
Europe5,507 3,534 426 3,960 10,067 7,526 731 8,257 
Total$39,674 $24,573 $3,485 $28,058 $74,135 $48,704 $6,574 $55,278 
Adjusted net revenue (a):
        
Americas$4,993 $1,893 $38 $1,931 $9,202 $4,753 $57 $4,810 
Asia Pacific6,880 4,818 658 5,476 12,638 9,329 1,303 10,632 
Europe3,218 2,219 258 2,477 5,969 4,646 443 5,089 
Total$15,091 $8,930 $954 $9,884 $27,809 $18,728 $1,803 $20,531 
SG&A and Non-Op (b):
      
Americas$5,151 $2,813 $37 $2,850 $9,638 $5,732 $64 $5,796 
Asia Pacific5,892 3,792 500 4,292 10,888 7,972 1,078 9,050 
Europe2,742 1,918 222 2,140 5,423 4,277 392 4,669 
Corporate935 929 — 929 1,414 1,728 — 1,728 
Total$14,720 $9,452 $759 $10,211 $27,363 $19,709 $1,534 $21,243 
Operating income (loss):      
Americas$(168)$(900)$(5)$(905)$(466)$(828)$(7)$(835)
Asia Pacific1,338 927 135 1,062 2,402 1,441 222 1,663 
Europe553 85 92 753 144 23 167 
Corporate(1,428)(995)— (995)(2,376)(2,164)— (2,164)
Total$295 $(883)$137 $(746)$313 $(1,407)$238 $(1,169)
Net loss, consolidated$(122)$(772)$150 $(622)$(325)$(1,283)$180 $(1,103)
EBITDA (loss) (c):
     
Americas$(173)$(918)$(2)$(920)$(451)$(978)$(8)$(986)
Asia Pacific1,003 1,025 155 1,180 1,764 1,362 204 1,566 
Europe476 300 36 336 546 363 51 414 
Corporate(935)(929)— (929)(1,413)(1,728)— (1,728)
Total$371 $(522)$189 $(333)$446 $(981)$247 $(734)
 
(a)Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations.

(a)Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations.
(b)SG&A and Non-Op is a measure that management uses to evaluate the segments’ expenses, which include the following captions on the Condensed Consolidated 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.
(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.
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"(“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.
 
- 26 -


The reconciliation of EBITDA loss(loss) to the most directly comparable GAAP financial measure is provided in the table below:
 
 Three Months Ended Six Months EndedThree Months EndedSix Months Ended
 June 30, June 30, June 30,June 30,
$ in thousands 2020 2019 2020 2019$ in thousands2021202020212020
Net loss $(772) $(900) $(1,283) $(2,802)Net loss$(122)$(772)$(325)$(1,283)
Adjustment for loss from discontinued operations, net of income taxes 
 
 
 (131)
Loss from continuing operations (772) (900) (1,283) (2,671)
Adjustments to loss from continuing operations        
Adjustments to Net lossAdjustments to Net loss
Provision for income taxes 266
 142
 373
 207
Provision for income taxes389 266 567 373 
Interest income, net (40) (125) (119) (438)Interest income, net(9)(40)(19)(119)
Depreciation and amortization expense 24
 21
 48
 39
Depreciation and amortization expense113 24 223 48 
Total adjustments from net loss to EBITDA loss 250
 38
 302
 (192)
EBITDA loss from continuing operations $(522) $(862) $(981) $(2,863)
Total adjustments from net loss to EBITDA (loss) Total adjustments from net loss to EBITDA (loss)493 250 771 302 
EBITDA (loss)EBITDA (loss)$371 $(522)$446 $(981)
 
- 27 -

Index

Results of Operations
Americas(reported currency)
Revenue


 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
$ in millions As reported  As reported    As reported  As reported  
Americas               
Revenue$2.2
 $4.0
 $(1.8) (45)% $5.4
 $7.1
 $(1.7) (24)%
Revenue
 Three Months Ended June 30,Six Months Ended June 30,
 20212020Change in amountChange in %20212020Change in amountChange in %
$ in millions As reported As reported As reported As reported
Americas
Revenue$5.4 $2.2 $3.2 143 %$9.9 $5.4 $4.5 84 %
 
For the three months ended June 30, 2020,2021, RPO recruitment revenue decreasedincreased by $1.8$3.1 million, slightly offsetor 172%, while contracting revenue increased by an6%. The increase in contracting revenue of $0.1 million. The decrease in RPO recruitment revenue was due to slower demand for services from existing clients, due in partprimarily driven by the acquisition of Coit Staffing, Inc. (see Note 5 to the impactCondensed Consolidated Financial Statements in Part I, Item 1 of COVID-19, whilethis Form 10-Q), which contributed 86 percentage points to the increase in contracting revenue was attributable to growth of existing clients.growth.


For the six months ended June 30, 2020,2021, RPO recruitment revenue decreasedincreased by $1.8$4.4 million, slightly offsetor 95%, while contracting revenue increased by an$0.1 million, or 15%. The increase in contracting revenue of $0.1 million. The decrease in RPO recruitment revenue was dueprimarily driven by the acquisition of Coit Staffing, Inc., which contributed 60percentage points to the same factors noted above.revenue growth.


Adjusted net revenue
Three Months Ended June 30,Six Months Ended June 30,
20212020Change in amountChange in %20212020Change in amountChange in %
$ in millions As reported As reported As reported As reported
Americas
Adjusted net revenue$5.0 $1.9 $3.1 164 %$9.2 $4.8 $4.4 94 %
Adjusted net revenue as a percentage of revenue93 %86 %N/AN/A93 %88 %N/AN/A
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
$ in millions As reported  As reported    As reported  As reported  
Americas               
Adjusted net revenue$1.9
 $3.6
 $(1.7) (47)% $4.8
 $6.4
 $(1.6) (25)%
Adjusted net revenue as a percentage of revenue86% 90% N/A
 N/A
 88% 89% N/A
 N/A


    For the three and six months ended June 30, 2020,2021, RPO recruitment adjusted net revenue decreasedincreased by $1.7$3.1 million, or 49%174%, and $1.6$4.5 million, or 26%98%, respectively.respectively, compared to 2020. The decreaseincrease in RPO recruitment adjusted net revenue was due to the same factors noted above for revenue.acquisition of Coit Staffing, Inc. (see Note 5 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q), which contributed 100 percentage points and 67 percentage points, respectively, to the adjusted net revenue growth.


For the three months ended June 30, 2020,2021, total adjusted net revenue as a percentage of revenue was 86%93%, as compared to 90% for the same period86% in 2019.2020. The decreaseincrease in total adjusted net revenue as a percentage of revenue was attributed to the lowerhigher mix of RPO recruitment to contracting revenue in 2020 as compared to 2019.revenue.


For the six months ended June 30, 2020,2021, total adjusted net revenue as a percentage of revenue was 88%93%, as compared to 89%88% for the same period in 2019.2020. The decreaseincrease in total adjusted net revenue as a percentage of revenue was due to the same factors noted above.
    
- 28 -

Index

SG&A and Non-Op 
Three Months Ended June 30,Six Months Ended June 30,
 20212020Change in amountChange in %20212020Change in amountChange in %
 $ in millions As reported As reported As reported As reported
Americas
SG&A and Non-Op$5.2 $2.8 $2.3 83 %$9.6 $5.7 $3.9 68 %
SG&A and Non-Op as a percentage of revenue96 %127 %N/AN/A97 %106 %N/AN/A
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
 $ in millions As reported  As reported    As reported  As reported  
Americas               
SG&A and Non-Op$2.8
 $3.2
 $(0.4) (12)% $5.7
 $6.4
 $(0.7) (10)%
SG&A and Non-Op as a percentage of revenue127% 80% N/A
 N/A
 106% 90% N/A
 N/A


    For the three months ended June 30, 2021, SG&A and Non-Op increased $2.3 million, or 83%, compared to 2020. The increase was primarily due to the acquisition of Coit Staffing, Inc. (see Note 5 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q).
For the six months ended June 30, 2021, SG&A and Non-Op increased $3.9 million, or 68%, compared to the same period in 2020 due to the factors noted above.
Operating Income and EBITDA
Three Months Ended June 30,Six Months Ended June 30,
 20212020Change in amountChange in %20212020Change in amountChange in %
$ in millions As reported As reported As reported As reported
Americas    
Operating loss$(0.2)$(0.9)$0.7 N/M$(0.5)$(0.8)$0.4 N/M
EBITDA (loss)$(0.2)$(0.9)$0.7 N/M$(0.5)$(1.0)$0.5 N/M
EBITDA (loss) as a percentage of revenue(3)%(42)%N/AN/A(5)%(18)%N/AN/A
N/M = not meaningful
For the three months ended June 30, 2021, operating loss was $0.2 million, compared to operating loss of $0.9 million in 2020. The operating loss decline was primarily due to the stronger adjusted net revenue results and lower SG&A and Non-Op as a percentage of revenue, partially offset by compensation expense of $0.5 million and amortization expense of $0.1 million associated with the acquisition of Coit Staffing, Inc. (see Note 5 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q).    
For the three months ended June 30, 2020,2021, EBITDA loss was $0.2 million, or 3% of revenue, compared to EBITDA loss of $0.9 million in 2020. The decrease in EBITDA loss was due to the same factors noted above.
For the six months ended June 30, 2021 operating loss was $0.5 million, compared to operating loss of $0.8 million in 2020. The operating loss decline was primarily due to the stronger adjusted net revenue results and lower SG&A and Non-Op decreased $0.4as a percentage of revenue, partially offset by compensation expense of $0.9 million or 12%, as compared to and amortization expense of $0.2 million associated with the same period in 2019, primarily due to lower support staff and overhead costs.acquisition of Coit Staffing, Inc.    
For the six months ended June 30, 2020, SG&A and Non-Op decreased $0.72021, EBITDA loss was $0.5 million, or 10%, as5% of revenue, compared to EBITDA loss of $1.0 million, or 18% of revenue in 2020. The decrease in EBITDA loss was due to the same period in 2019 due to the factors noted above.
Operating Income and EBITDA
- 29 -

Index
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
$ in millions As reported  As reported    As reported  As reported  
Americas 
  
      
  
    
Operating income (loss)$(0.9) $0.6
 $(1.5) (253)% $(0.8) $0.3
 $(1.1) N/M
EBITDA loss$(0.9) $0.4
 $(1.3) (314)% $(1.0) $
 $(1.0) N/M
EBITDA loss as a percentage of revenue(42)% 11% N/A
 N/A
 (18)% % N/A
 N/A
Asia Pacific(constant currency)
N/M = not meaningfulRevenue
 Three Months Ended June 30,Six Months Ended June 30,
 20212020Change in amountChange in %20212020Change in amountChange in %
$ in millionsAs
reported
Constant
currency
As
reported
Constant
currency
Asia Pacific
Revenue$28.8 $21.9 $6.9 32 %$54.1 $41.6 $12.6 30 %
For the three months ended June 30, 2020, EBITDA loss was $0.92021, contracting revenue increased $5.8 million, or 42% of35%, and RPO recruitment revenue asincreased by $1.2 million, or 22%, compared to EBITDA of $0.42020.

    In Australia, revenue increased $6.7 million, or 11% of revenue, for the same period in 2019. The decrease in EBITDA33%, for the three months ended June 30, 20202021, compared to 2020. The increase was principallyprimarily in contracting revenue of $5.5 million, which increased 34%, while RPO recruitment revenue increased by $1.2 million, or 30%. The increase in contracting revenue was primarily due to the decreaseimplementation of a new contract win, while the increase in adjusted net revenue.RPO recruitment revenue was due higher volume from existing clients.

    In Asia, revenue increased $0.2 million, or 12%, for the three months ended June 30, 2021 compared to 2020. The increase for the three months ended June 30, 2021 was due to higher demand from existing clients.        

For the six months ended June 30, 2020, EBITDA loss was $1.02021, contracting revenue increased by $11.1 million, or 18% of36%, while RPO recruitment revenue as compared to EBITDA of $0.0increased by $1.4 million, for the same period in 2019. The decrease in EBITDAor 14%.

    In Australia, revenue increased $12.4 million, or 33%, for the six months ended June 30, 2020 was principally due to the decline in adjusted net revenue.


Asia Pacific(constant currency)
Revenue
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
$ in millionsAs
reported
 Constant
currency
   
As
reported
 
Constant
currency
  
Asia Pacific              
Revenue$18.8
 $16.5
 $2.3
 14% $35.8
 $24.6
 $11.1
 45%
For the three months ended June 30, 2020, contracting revenue increased $2.8 million, or 25%, and RPO recruitment revenue, decreased by $0.5 million, or 10%, as2021, compared to the same period in 2019.

In Australia, revenue increased $2.6 million, or 18%, for the three months ended June 30, 2020, as compared to the same period in 2019.2020. The increase was primarily in contracting revenue, of $2.9which increased by $10.9 million, or 27%36%, partly offset by a decrease inwhile RPO recruitment of $0.3revenue increased by $1.6 million, or 9%, partly reflecting the impact of COVID-19.20%. The increase in contracting revenue primarily reflected the implementation of a new contract win, andwhile the increase in RPO recruitment revenue was due to higher volumedemand from existing clients, as compared to 2019.clients.


In Asia, revenue decreased $0.3increased $0.1 million, or 15%1%, for the six months ended June 30, 2021 compared to in 2020, reflecting higher demand from existing clients.
Adjusted net revenue
 Three Months Ended June 30,Six Months Ended June 30,
 20212020Change in amountChange in %20212020Change in amountChange in %
 $ in millionsAs
reported
Constant
currency
As
reported
Constant
currency
Asia Pacific
Adjusted net revenue$6.9 $5.5 $1.4 26 %$12.6 $10.6 $2.0 19 %
Adjusted net revenue as a percentage of revenue24 %25 %N/AN/A23 %26 %N/AN/A
    For the three months ended June 30, 2021, RPO recruitment adjusted net revenue increased $1.0 million, or 19%, while contracting adjusted net revenue increased $0.5 million, or 89%, compared to 2020.

    In Australia, adjusted net revenue increased by $1.3 million, or 32%, for the three months ended June 30, 2020, as2021, compared to the same period in 2019. The decrease for the three months ended June 30, 2020 was due to lower demand from existing clients, reflecting in part the impact of COVID-19, as well as social unrest in Hong Kong.        

For the six months ended June 30, 2020, contracting revenue increased by $11.5 million, or 76%, partially offset by a decrease in RPO recruitment revenue of $0.4 million, or 4%, as compared to the same period in 2019.

In Australia, revenue increased $11.4 million, or 55%, for the six months ended June 30, 2020, as compared to the same period in 2019.2020. The increase was primarily in contracting revenue, which increased by $11.5 million, or 83%, partially offset by a decrease in RPO recruitment revenue of $0.2 million, or 3%, for the six months ended June 30, 2020, as compared to the same period in 2019. The increase in contracting for the six months ended June 30, 2020 primarily reflected the implementation of a new contract win while the decrease in RPO recruitment revenue was due to lower demand from existing clients.

In Asia, revenue decreased $0.3 million, or 8%, for the six months ended June 30, 2020, as compared to the same period in 2019. The decrease in revenue for the six months ended June 30, 2020 was a result of the same factors noted above.

Adjusted net revenue
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
 $ in millionsAs
reported
 
Constant
currency
   
As
reported
 
Constant
currency
  
Asia Pacific              
Adjusted net revenue$4.8
 $5.2
 $(0.4) (7)% $9.3
 $9.5
 $(0.2) (2)%
Adjusted net revenue as a percentage of revenue26% 31% N/A
 N/A
 26% 39% N/A
 N/A
For the three months ended June 30, 2020, RPO recruitment adjusted net revenue, decreased $0.4which grew $0.9 million, or 8%24%, while contracting adjusted net revenue increased $0.1by $0.5 million, or 13%, as compared to the same period in 2019.94%.


In Australia,Asia, adjusted net revenue decreased by $0.1 million,increased slightly, or 4%2%, for the three months ended June 30, 2020, as2021, compared to the same period in 2019. The decrease was primarily in RPO recruitment adjusted net revenue of $0.2 million, or 6%, partly offset by an increase in contracting adjusted net revenue of $0.1 million, or 19%, for the three months ended June 30, 2020, as compared to the same period in 2019.     2020.

In Asia, adjusted net revenue decreased $0.2 million, or 15%, for the three months ended June 30, 2020, as compared to the same period in 2019.


For the six months ended June 30, 2020, RPO recruitment adjusted net revenue decreased by $0.3 million, or 4%, while contracting adjusted net revenue increased by $0.2 million, or 24%, as compared to the same period in 2019.

In Australia, adjusted net revenue increased by $0.1 million, or 2%, for the six months ended June 30, 2020, as compared to the same period in 2019. The increase was primarily in contracting adjusted net revenue of $0.2 million, or 33%, for the six months ended June 30, 2020, as compared to the same period in 2019. This increase was partially offset by a decrease in RPO recruitment adjusted net revenue of $0.1 million, or 1%.

In Asia, adjusted net revenue decreased $0.3 million, or 10%, for the six months ended June 30, 2020, as compared to the same period in 2019.

Total adjusted net revenue as a percentage of revenue was 26%24% for the three months ended June 30, 2020, as2021, compared to 31%25% in 2020. The decrease was attributed to the higher mix of lower margin contracting revenue to RPO recruitment revenue.

- 30 -

Index
For the six months ended June 30, 2021, RPO recruitment adjusted net revenue increased by $1.1 million, or 11%, while contracting adjusted net revenue increased by $0.9 million, or 93%, compared to the same period in 2020.

    In Australia, adjusted net revenue increased by $2.0 million, or 24%, for the six months ended June 30, 2021, compared to the same period in 2020. The increase was primarily reflected in RPO recruitment adjusted net revenue, which grew $1.0 million, or 14%, while contracting adjusted net revenue increased by $1.0 million, or 100%.

    In Asia, adjusted net revenue increased slightly for the six months ended June 30, 2021, compared to 2020.

Total adjusted net revenue as a percentage of revenue was 23% for the six months ended June 30, 2021, compared to 26% for the same period in 2019.2020. The decrease in total adjusted net revenue as a percentage of revenue was attributeddue to the higher mix of contracting revenue and a lower margin service to RPO recruitment revenue, in 2020 as compared to 2019.

Total adjusted net revenue as a percentage of revenue was 26% for the six months ended June 30, 2020, as compared to 39% for the same period in 2019. The decrease in total adjusted net revenue as a percentage of revenue was attributed to the higher mix of contracting revenue and a lower margin service to RPO recruitment revenue, in 2020 as compared to 2019.factor noted above.
SG&A and Non-Op
Three Months Ended June 30,Six Months Ended June 30,
 20212020Change in amountChange in %20212020Change in amountChange in %
$ in millionsAs
reported
Constant
currency
As
reported
Constant
currency
Asia Pacific
SG&A and Non-Op$5.9 $4.3 $1.6 37 %$10.9 $9.0 $1.8 20 %
SG&A and Non-Op as a percentage of revenue20 %20 %N/AN/A20 %22 %N/AN/A
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
$ in millionsAs
reported
 Constant
currency
   As
reported
 Constant
currency
  
Asia Pacific
SG&A and Non-Op$3.8
 $4.8
 $(1.0) (21)% $8.0
 $9.1
 $(1.1) (12)%
SG&A and Non-Op as a percentage of revenue20% 29% N/A
 N/A
 22% 37% N/A
 N/A


For the three months ended June 30, 2020,2021, SG&A and Non-Op decreased $1.0increased $1.6 million, or 21%37%. The increase was primarily due to higher consultant staff and overhead costs.

For the six months ended June 30, 2021, SG&A and Non-Op increased $1.8 million, or 20%, as compared to the same period in 2019. The decrease was primarily due to lower consultant staff costs and overhead costs, partly reflecting cost-cutting efforts due to the impact of COVID-19.

For the six months ended June 30, 2020, SG&A and Non-Op decreased $1.1 million, or 12%, as compared to the same period in 2019.2020. The decrease was principally due to the factors noted above.

For the three months ended June 30, 2021 and 2020 SG&A and Non-Op as a percentage of revenue was 20%, as compared to 29% for the same period in 2019. The decrease was principally due to higher revenue and lower costs..


For the six months ended June 30, 2020,2021, SG&A and Non-Op as a percentage of revenue was 22%20%, as compared to 37%22% for the same period in 2019.2020. The decrease was principally due to the factors noted above.higher mix of contracting revenue, where the majority of costs are reflected in adjusted net revenue.    
    
Operating Income and EBITDA
Three Months Ended June 30,Six Months Ended June 30,
 20212020Change in amountChange in %20212020Change in amountChange in %
$ in millionsAs
reported
Constant
currency
As
reported
Constant
currency
Asia Pacific
Operating income$1.3 $1.1 $0.3 26 %$2.4 $1.7 $0.7 44 %
EBITDA$1.0 $1.2 $(0.2)(15)%$1.8 $1.6 $0.2 13 %
EBITDA as a percentage of revenue%%N/AN/A%%N/AN/A
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
$ in millionsAs
reported
 Constant
currency
   As
reported
 Constant
currency
  
Asia Pacific               
Operating income$0.9
 $0.7
 $0.2
 37% $1.4
 $0.8
 $0.6
 73%
EBITDA$1.0
 $0.4
 $0.7
 181% $1.4
 $0.3
 $1.0
 N/M
EBITDA as a percentage of revenue5% 2% N/A
 N/A
 4% 1% N/A
 N/A

N/M = not meaningful

For the three months ended June 30, 2020, EBITDA was $1.0 million, or 5% of revenue, as compared to EBITDA of $0.4 million, or 2% of revenue, for the same period in 2019.
For the six months ended June 30, 2020, EBITDA was $1.4 million, or 4% of revenue, as compared to EBITDA of $0.3 million, or 1% of revenue, for the same period in 2019. The increase in EBITDA was principally due to the decrease in SG&A and Non-Op noted above.
For the three months ended June 30, 2020,2021, operating income was $0.9$1.3 million, as compared to operating income of $0.7$1.1 million for the same period in 2019.2020. The increase in operating income was principally due to the change in EBITDAadjusted net revenue, partially offset by higher SG&A and Non-op, as described above.
For the six months ended June 30, 2020,2021, operating income was $1.4$2.4 million, as compared to operating income of $0.8$1.7 million for the same period in 2019.2020. The increase in operating income was principally due to the change in EBITDAsame factors described above.

Europe(constant currency)
Revenue
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
$ in millionsAs
reported
 Constant
currency
   As
reported
 Constant
currency
  
Europe 
  
  
    
  
  
  
Revenue$3.5
 $4.8
 $(1.3) (27)% $7.5
 $9.1
 $(1.6) (18)%
For the three months ended June 30, 2020,2021, EBITDA was $1.0 million, or 3% of revenue, compared to EBITDA of $1.2 million, or 5% of revenue, in 2020.
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Index
For the six months ended June 30, 2021, EBITDA was $1.8 million, or 3% of revenue, compared to EBITDA of $1.6 million, or 4% of revenue. The increase in EBITDA was principally due to the change in adjusted net revenue, partially offset by higher SG&A and Non-op, as described above.
Europe(constant currency)
Revenue
Three Months Ended June 30,Six Months Ended June 30,
 20212020Change in amountChange in %20212020Change in amountChange in %
$ in millionsAs
reported
Constant
currency
As
reported
Constant
currency
Europe      
Revenue$5.5 $4.0 $1.5 39 %$10.1 $8.3 $1.8 22 %
    For the three months ended June 30, 2021, contracting revenue increased $1.0 million, or 80%, and RPO recruitment revenue decreased by $1.1increased $0.6 million, or 50%21%, and $0.2 million, or 7%, respectively, as compared to the same period in 2019, due in part to the impact of COVID-19.2020.     


In the U.K., for the three months ended June 30, 2020,2021, revenue decreasedincreased by $1.3$1.6 million, or 30%, as compared to the same period in 2019.47%. The change was driven by an decreaseincrease in contracting and RPO recruitment revenue of $1.1$1.0 million or 50%, as comparedand $0.6 million, respectively. The increases were due to higher demand from existing clients and the same period in 2019.implementation of new client contracts.


In Continental Europe, total revenue of $0.5 million for the three months ended June 30, 2020 was2021 decreased 8%, compared to $0.5 million in line with the same period in 2019.2020.


For the six months ended June 30, 2020,2021, contracting revenue decreasedincreased by $1.8$1.1 million, or 42%38%, while RPO recruitment revenue increased by $0.2$0.8 million, or 5%14%, as compared to the same period in 2019.2020.


In the U.K., for the six months ended June 30, 2020,2021, revenue decreasedincreased by $1.8 million, or 22%, to $6.5 million, from $8.3 million for the same period in 2019.25%. The decreaseincrease was primarily driven by a decline inhigher contracting revenue of $1.8$1.1 million, or 42%.as well as higher RPO recruitment revenue of $0.7 million.


In Continental Europe, total revenue was $1.0of $1.2 million for the six months ended June 30, 2020, as compared to $0.92021 increased from $1.1 million for the same period in 2019, for an increase of $0.2 million, or 22%,2020, due to higher demand at existing recruitment clients.
Adjusted net revenue
 Three Months Ended June 30,Six Months Ended June 30,
20212020Change in amountChange in %20212020Change in amountChange in %
$ in millionsAs
reported
Constant
currency
As
reported
Constant
currency
Europe      
Adjusted net revenue$3.2 $2.5 $0.7 30 %$6.0 $5.1 $0.9 17 %
Adjusted net revenue as a percentage of revenue58 %63 %N/AN/A59 %62 %N/AN/A
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
$ in millions
As
reported
 Constant
currency
   
As
reported
 Constant
currency
  
Europe 
  
  
    
  
  
  
Adjusted net revenue$2.2
 $2.6
 $(0.4) (14)% $4.6
 $4.6
 $0.1
 1%
Adjusted net revenue as a percentage of revenue63% 53% N/A
 N/A
 62% 50% N/A
 N/A


For the three months ended June 30, 2020,2021, adjusted net revenue decreasedincreased by $0.4$0.7 million, or 14%30%, primarily driven by a declinean increase in RPO recruitment of $0.3 million, or 12%, as compared to the same period in 2019, due to the same factors noted for revenue above.$0.7 million.
    
In the U.K., total adjusted net revenue for the three months ended June 30, 2020 decreased2021 increased by $0.4$0.8 million, or 18%43%, as compared to the same period in 2019.2020. The decreaseincrease was driven by RPO recruitment adjusted net revenue, which delinedincreased by $0.3 million, or 16%, as compared to the same period in 2019.$0.8 million.


In Continental Europe, total adjusted net revenue of $0.4 million for the three months ended June 30, 2021 decreased 18% compared to $0.5 million in 2020, total adjusted net revenue was in line with the same period in 2019.due to lower demand at existing clients.


For the six months ended June 30, 2020,2021, adjusted net revenue increased by $0.1$0.9 million, or 1%17%, driven by aan increase in RPO recruitment increaserevenue of $0.1$0.9 million or 3%18%, partially offset by a decrease in contracting revenue of $0.1 million, or 34%, as compared to the same period in 2019.2020.



In the U.K., total adjusted net revenue for the six months ended June 30, 2020 decreased $0.12021 increased $0.9 million, or 4%23%, as compared to the same period in 2019.2020. The change in the U.K. was driven by a decreasean increase in RPO recruitment and contracting of $0.1 million, or 1%, and $0.1 million, or 34%, respectively as compared to the same period in 2019.$0.9 million.

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In Continental Europe, for the six months ended June 30, 2020,2021, total adjusted net revenue increased $0.2 million asdecreased slightly, or 3%, compared to the same period in 2019.2020.
SG&A and Non-Op
Three Months Ended June 30,Six Months Ended June 30,
 20212020Change in amountChange in %20212020Change in amountChange in %
$ in millionsAs
reported
Constant
currency
As
reported
Constant
currency
Europe      
SG&A and Non-Op$2.7 $2.1 $0.6 28 %$5.4 $4.7 $0.8 16 %
SG&A and Non-Op as a percentage of revenue50 %54 %N/AN/A54 %57 %N/AN/A
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
$ in millions
As
reported
 Constant
currency
   
As
reported
 Constant
currency
  
Europe 
  
  
    
  
  
  
SG&A and Non-Op$1.9
 $2.5
 $(0.6) (25)% $4.3
 $4.9
 $(0.6) (13)%
SG&A and Non-Op as a percentage of revenue54% 53% N/A
 N/A
 57% 54% N/A
 N/A
    For the three months ended June 30, 2021, SG&A and Non-Op increased $0.6 million, or 28%, compared to 2020. The increase in SG&A and Non-Op was primarily due to higher consultant staff costs in the current year, as well as credits of $0.2 million recognized in the prior year due to COVID-19 foreign government assistance programs.

For the three months ended June 30, 2020,2021, SG&A and Non-Op decreased $0.6 million, or 25%as a percentage of revenue was 50%, as compared to the same period54% in 2019, partly reflecting cost-cutting efforts due to the impact of COVID-19.2020. The decrease in SG&A and Non-Op as a percentage of revenue was a result of lower consultant and overhead costs as comparedprimarily due to the prior year.

increase in revenue noted above.
For the six months ended June 30, 2020,2021, SG&A and Non-Op decreased $0.6increased $0.8 million, or 13%16%, as compared to the same period in 2019.2020. The decreaseincrease in SG&A and Non-Op was due to the same factors noted above.

For the threesix months ended June 30, 2020,2021, SG&A and Non-Op as a percentage of revenue was 54%, as compared to 53%57% for the same period in 2019. The increase in SG&A and Non-Op, as a percentage of revenue, for the three months ended June 30, 2020 was primarily due to the decline in revenue noted above.

For the six months ended June 30, 2020, SG&A and Non-Op, as a percentage of revenue, was 57%, as compared to 54% for the same period in 2019.2020. The decrease in SG&A and Non-Op as a percentage of revenue, for the six months ended June 30, 2020 was primarily due to the same factors noted above.


Operating Income and EBITDA
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 Change in amount Change in % 2020 2019 Change in amount Change in %
$ in millionsAs
reported
 Constant
currency
   As
reported
 Constant
currency
  
Europe 
  
  
    
  
  
  
Operating income (loss)$0.1
 $0.1
 $(0.1) (42)% $0.1
 $(0.1) $0.2
 N/M
EBITDA (loss)$0.3
 $
 $0.3
 N/M
 $0.4
 $(0.3) $0.7
 N/M
EBITDA (loss) as a percentage of revenue9% 1% N/A
 N/A
 5% (3)% N/A
 N/A
Three Months Ended June 30,Six Months Ended June 30,
 20212020Change in amountChange in %20212020Change in amountChange in %
$ in millionsAs
reported
Constant
currency
As
reported
Constant
currency
Europe      
Operating income$0.6 $0.1 $0.5 N/M$0.8 $0.2 $0.6 352 %
EBITDA$0.5 $0.3 $0.1 42 %$0.5 $0.4 $0.1 32 %
EBITDA as a percentage of revenue%%N/AN/A%%N/AN/A
N/M = not meaningful


For the three months ended June 30, 2020, EBITDA2021, operating income was $0.3$0.6 million, or 9% of revenue, as compared to EBITDAoperating income of $0.0$0.1 million or 1% of revenue, for the the same period in 2019.

For the six months ended June 30, 2020, EBITDA was $0.4 million, or 5% of revenue, as compared to EBITDA loss of $0.3 million, or 3% of revenue, for the same period in 2019.2020. The increase in EBITDA was principally due to the decreasegains in SG&A and Non-OpRPO recruitment revenue noted above.
For the three months ended June 30, 2020, operating income2021, EBITDA was $0.1$0.5 million, asor 9% of revenue, compared to operating incomeEBITDA of $0.1$0.3 million, for the same periodor 8% of revenue, in 2019. The increase in income was principally due to the decrease in SG&A and Non-Op noted above.

2020.
For the six months ended June 30, 2020,2021, operating income was $0.1$0.8 million as compared to operating lossincome of $0.1$0.2 million for the same period in 2019.2020. The increase in operating income was due to the same factors noted above.
    For the six months ended June 30, 2021, EBITDA was $0.5 million, or 5% of revenue, compared to EBITDA of $0.4 million, or 5% of revenue, for the same period in 2020.
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The following are discussed in reported currency


Corporate Expenses, Net of Corporate Management Expenses Allocations
 
Corporate expenses wereof $0.9 million for the three months ended June 30, 2021 and 2020 asincreased by 1%.

    For the six months ended June 30, 2021, corporate expenses were $1.4 million compared to $1.7 million for the same period in 2019, representing2020, for a decrease of $0.8$0.3 million. The decrease for the three months ended June 30, 2020 was primarily due to lower staff costs, which in 20192020 reflected severance expense of $0.5 million (see Note 9), compared to severance expense of $0.1 million in 2020. The decrease also reflected lower stock compensation expense and professional fees.million.

For the six months ended June 30, 2020, corporate expenses were $1.7 million as compared to $2.9 million for the same period in 2019, for a decrease of $1.1 million. The decrease for the six months ended June 30, 2020 was due to the same factors noted as above.


Depreciation and Amortization Expense


Depreciation and amortization expense was $0.0$0.1 million and $0.2 million for the three and six months ended June 30, 2020,2021, respectively, as compared to $0.0 million for the same periods in 2019.2020. The increases were driven by amortization expense associated with the acquisition of Coit Staffing, Inc. (see Note 5 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q) of $0.1 million and $0.2 million for the three and six months ended June 30, 2021, respectively.

Interest Income,Other income (expense), Net


Interest incomeOther expense was $0.0 million and $0.1 million for the three and six months ended June 30, 2020,2021, respectively, as compared to $0.1other income of $0.3 million and $0.4 million for the same periods in 2019, respectively.

Other income (expense), Net

Other income was $0.3 million and $0.4 million for the three and six months ended June 30, 2020, respectively, as compared to $0.1 million expense for the same periods in 2019.2020. The increasedecrease was primarily due to government assistance received in 2020 in exchange for maintaining certain levels of compensation and other costs in response to the COVID-19 pandemic, mainly in the U.K., Hong Kong, and in Singapore. See Note 2 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for additional information.
    
Provision for Income Taxes


The provision for income taxes for the six months ended June 30, 2020,2021 was $0.6 million on $0.2 million of pre-tax income, compared to a provision for income tax of $0.4 million on $0.9 million of pre-tax loss from continuing operations, as compared to a provision for income tax of $0.2 million on $2.5 million of pre-tax loss from continuing operations for the same period in 2019.2020. The effective tax rates for the six months ended June 30, 2021 and 2020 were positive 234% and 2019 were negative 41% and negative 8%, respectively. For the six months ended June 30, 2020,2021, the effective tax rate differed from the U.S. Federal statutory rate of 21% primarily due state income taxes, changes in valuation allowances in the U.S. and certain foreign jurisdictions which reduces or eliminates the effective tax rate on current year profits or losses, variations from the U.S. Federal statutory rate in foreign jurisdictions, taxes on repatriations or deemed repatriation of foreign profits, and non-deductible expenses.


Net Income (Loss)Loss


Net loss was $0.1 million for the three months ended June 30, 2021, compared to net loss of $0.8 million for the three months ended June 30, 2020 as compared to net2020. Basic and diluted loss of $0.9 millionper share were $0.04 for the three months ended June 30, 2019. Basic and diluted loss per share were $0.27 for the three months ended June 30, 2020, as2021, compared to basic and diluted loss per share of $0.29$0.27 for the same period in 2019.2020.


Net loss was $1.3$0.3 million for the six months ended June 30, 2020, as2021, compared to net loss of $2.8$1.3 million for the same period in 2019,2020, a decrease in net loss of $1.5$1.0 million. Basic and diluted loss per share were $0.43$0.11 for the six months ended June 30, 2020, as compared to basic and diluted loss per share of $0.88$0.43 for the same period in 2019.2020.


Liquidity and Capital Resources


As of June 30, 2020,2021, cash and cash equivalents and restricted cash totaled $29.9$24.5 million, , as compared to $31.7$26.2 million as of December 31, 2019.2020. The following table summarizes the Company's cash flow activities for the six months ended June 30, 20202021 and 2019:2020:
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Index
 For the Six Months Ended June 30,For the Six Months Ended June 30,
$ in millions 2020 2019$ in millions20212020
Net cash used in operating activities $(0.9) $(7.7)Net cash used in operating activities$(1.4)$(0.9)
Net cash used in by investing activities 
 (0.1)Net cash used in by investing activities(0.1)— 
Net cash used in financing activities (0.9) (4.3)Net cash used in financing activities— (0.9)
Effect of exchange rates on cash, cash equivalents, and restricted cash 
 0.1
Effect of exchange rates on cash, cash equivalents, and restricted cash(0.1)— 
Net decrease in cash, cash equivalents, and restricted cash $(1.8) $(12.0)Net decrease in cash, cash equivalents, and restricted cash$(1.7)$(1.8)
 
Cash Flows from Operating Activities


For the six months ended June 30, 2020,2021, net cash used in operating activities was $0.9$1.4 million, as compared to $7.7$0.9 million of net cash used in operating activities for the same period in 2019,2020, resulting in a decreasean increase in net cash used in operating activities of $6.9$0.6 million. The decreaseincrease in net cash used in operating activities resulted principally from moreless favorable working capital comparisons to the prior year, as well aspartially offset by the decrease inlower net loss.


Cash Flows from Investing Activities


For the six months ended June 30, 2020,2021, net cash used in investing activities was $0.0$0.1 million, as compared to $0.1$0.0 million of net cash provided byused in investing activities for the same period in 2019.2020.


Cash Flows from Financing Activities


For the six months ended June 30, 2020,2021, net cash used in financing activities was $0.9$0.0 million, as compared to net cash used in financing activities of $4.3$0.9 million for the same period in 2019, resulting in a decrease in net cash used by financing activities of $3.3 million. The decrease in net2020. Net cash used in financing activities in 2020 was attributable to fewer shares repurchased for an aggregate of $2.3 million, partially offset by proceeds received in 2020 compared to $4.3 million in 2019, as well as proceeds from the PPP loan of $1.3 million in 2020.million.


Invoice Finance Credit Facility


On April 8, 2019, the Company’s Australian subsidiary (“Australian Borrower”) entered into an invoice finance credit facility agreement (the “NAB Facility Agreement”) with National Australia Bank Limited ("NAB"(“NAB”). The NAB Facility Agreement provides the Australian Borrower with the ability to borrow funds based on a percentage of eligible trade receivables up to a maximum of $4 million Australian dollars. No receivables have terms greater than 90 days, and any risk of loss is retained by the Australian Borrower. The interest rate is calculated as the variable receivable finance indicator rate, plus a margin of 1.60% per annum. Borrowings under this facility are secured by substantially all of the assets of the Australian Borrower. The NAB Facility Agreement does not have a stated maturity date and can be terminated by either the Australian Borrower or NAB upon 90 days written notice. As of June 30, 2020,2021, there were no amounts outstanding under the NAB Facility Agreement. Interest expense and fees incurred on the NAB Facility Agreement were$5 and $10 for the three and six months ended June 30, 2021, respectively, and $5 and $10 thousand for the three and six months ended June 30, 2020, respectively. The CompanyAustralian Borrower was in compliance with all financial covenants under the NAB Facility Agreement as of June 30, 2020.
Index


2021.
Liquidity Outlook


As of June 30, 2020,2021, the Company had cash and cash equivalents on hand of $29.5 million, supplemented by a loan of $1.3 million received in connection with the Paycheck Protection Program (“PPP”) as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), administered by the U.S. Small Business Administration (“SBA”).$24.2 million. The Company also has the capability to borrow an additional 4 million Australian dollars under the NAB Facility Agreement. Other than as described above, the Company has no financial guarantees, outstanding debt or other lease agreements or arrangements 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 financial position as of June 30, 2020.2021. The Company's near-term cash requirements during 20202021 are primarily related to funding operations. For the full year 2020,2021, the Company expects to make capital expenditures of less than $0.5 million.
As of June 30, 2020, $20.12021, $14.3 million of the Company's cash and cash equivalents noted above were held in the U.S. and the remainder were held outside the U.S., primarily in Australia ($2.92.8 million), Switzerland ($1.41.6 million), Hong Kong ($1.1 million), Belgium ($1.01.5 million), China ($1.01.2 million), the U.K. ($0.91.0 million), Canada ($0.7 million), and Singapore ($0.6 million). The majority of the Company's offshore cash is available to it as a source of funds, net of any tax obligations or assessments.

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Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.


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 type of audits, claims, lawsuits, contract disputes, or complaints asserted against the Company. Events can also change the likelihood of assertion and the behavior of third parties to reach resolution regarding such matters.
The economic conditions 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 reachedreach the threshold of probable and estimable, the Company establishes reserves for legal, regulatory, and other contingent liabilities. The Company’s reserves were $0.0 million as of June 30, 20202021 and December 31, 2019,2020, respectively. 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.


Index


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
See "Critical“Critical Accounting Policies"Policies” under Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20192020 filed with the SEC on March 31, 202011, 2021 and incorporated by reference herein. There were no changes to the Company’s critical accounting policies during the three months ended June 30, 2020.2021.
    
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 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 adverse impacts of the recent coronavirus, or COVID-19 outbreak, (3) the Company’s ability to successfully achieve its strategic initiatives, (4) risks related to the Company’s large cash balance relative to its market capitalization as a small public company, (5) risks related to potential acquisitions or dispositions of businesses by the Company, (6)(5) the Company’s ability to retain and recruit qualified management and/or advisors, (7)(6) the Company’s ability to operate successfully as a company focused on its RPO business, (8)(7) risks related to fluctuations in the Company'sCompany’s operating results from quarter to quarter, (8) the loss of or material reduction in our business with any of the Company’s largest customers, (9) the ability of clients to terminate their relationship with the Company at any time, (10) competition in the Company'sCompany’s markets, (11) the negative cash flows and operating losses that may recur in the future, (12) risks
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relating to how future credit facilities may affect or restrict our operating flexibility, (13) risks associated with the Company'sCompany’s investment strategy, (14) risks related to international operations, including foreign currency fluctuations, political events, natural disasters or health crises, including the ongoing COVID-19 outbreak, (15) the Company'sCompany’s dependence on key management personnel, (16) the Company'sCompany’s ability to attract and retain highly skilled professionals, (17) the Company'sCompany’s ability to collect accounts receivable, (18) the Company’s ability to maintain costs at an acceptable level, (19) the Company'sCompany’s heavy reliance on information systems and the impact of potentially losing or failing to develop technology, (20) risks related to providing uninterrupted service to clients, (21) 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, (22) the Company’s ability to utilize net operating loss carry-forwards, (23) volatility of the Company'sCompany’s stock price, (24) the impact of government regulations, and (25) restrictions imposed by blocking arrangements, and (26) those risks set forth in "Risk“Risk Factors." The foregoing list should not be construed to be exhaustive. Actual results could differ materially from the forward-looking statements contained in this Form 10-Q. In view of 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 six months ended June 30, 2020,2021, the Company earned approximately 90%87% of its revenue from continuing operations 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.


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 recent COVID-19 pandemic has negatively impacted certain currencies compared to the U.S. dollar in the countries where we do business, including in Australia.





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) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2020.2021.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting that occurred during the six months ended June 30, 20202021 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 subject, 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 June 30, 2020,2021, there have not been any material changes to the information set forth in Item 1A. "Risk Factors"“Risk Factors” disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.2020.


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 June 30, 2020.2021.
 
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)
April 1, 2020 - April 30, 2020 
 $
 
 $1,703,000
May 1, 2020 - May 31, 2020 
 $
 
 $1,703,000
June 1, 2020 - June 30, 2020 
 $
 
 $1,703,000
Total 
 $
 
 $1,703,000
(a)PeriodOn July Total Number
 of Shares 
Purchased
 Average Price Paid per ShareTotal 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)
April 1, 2021 - April 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 11 for further details. As of2021— $— — $1,703,000 
May 1, 2021 - May 31, 2021— $— — $1,703,000 
June 1, 2021 - June 30, 2020, the Company had repurchased 432,563 shares for a total cost of approximately $8.3 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.2021— $— — $1,703,000 
Total— $— — $1,703,000 

(a)On March 27, 2020,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, 2021, the Company had repurchased 432,563 shares for a total cost of approximately $8.3 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.

In addition to the shares repurchased above under the $10 million authorization plan, the Company completed the purchase of 259,331 shares in connection with transactions with certain stockholders for a total cost of $2.2 million, including fees (see Note 1112 to the Condensed Consolidated Financial Statements in Item 1 included in Part I of this Form 10-Q for further information).
    


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


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Index



ITEM 6.    EXHIBITS


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
31.1*
31.2*
32.1**
32.2**
101*The following materials from Hudson Global, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 20202021 are filed herewith, formatted in XBRL (ExtensibleiXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 20202021 and 2019,2020, (ii) the Condensed Consolidated Statements of Other Comprehensive Income (Loss) for the three and six months ended June 30, 20202021 and 2019,2020, (iii) the Condensed Consolidated Balance Sheets as of June 30, 20202021 and December 31, 2019,2020, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 20202021 and 2019,2020, (v) the Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 20202021 and 2019,2020, 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, 2021, formatted in iXBRL and contained in Exhibit 101.
 


*Filed herewith.


** Furnished, not filed.


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Index

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:August 6, 2021By:/s/ JEFFREY E. EBERWEIN
Jeffrey E. Eberwein
Chief Executive Officer
(Principal Executive Officer)
Dated:August 6, 2021By:/s/ MATTHEW K. DIAMOND
Matthew K. Diamond
Chief Financial Officer
(Principal Financial Officer)
HUDSON GLOBAL, INC.
(Registrant)
Dated:August 5, 2020By:/s/ JEFFREY E. EBERWEIN
Jeffrey E. Eberwein
Chief Executive Officer
(Principal Executive Officer)
Dated:August 5, 2020By:/s/ MATTHEW K. DIAMOND
Matthew K. Diamond
Chief Financial Officer
(Principal Financial Officer)
 



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