# CIRCLE8 Group Inc: Form 10-Q for the period ended Mar 31, 2024

- Company: [CIRCLE8 Group Inc](/companies/circ.md) (CIK 1605888)
- Form: 10-Q
- Filed: 2024-05-17
- Accepted by EDGAR: May 17, 2024, 16:30 ET
- Period: 2024-03-31
- Accession: 0001213900-24-044770
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1605888/000121390024044770/ea0205676-10q_seqll.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1605888/000121390024044770/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2024-01-01 to 2024-03-31 | $316.3k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$1.1m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$1.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$2.87 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$2.87 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 382,151 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$991.0k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2024-03-31 | $1.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $1.7m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $3.4m | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $2.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $3.8m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-03-31 | −$422.2k | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 15,785 characters.

*You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and related notes included elsewhere in this filing. This discussion and analysis and other parts of this filing contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this filing. You should carefully read the “Risk Factors” section of this filing to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Cautionary Note Regarding Forward-Looking Statements” in this filing.*

### Overview

This overview and outlook provide a high-level discussion of our operating results and significant known trends that affect our business. We believe that the understanding of these trends is important to understanding our financial results for the periods being reported herein as well as our future financial performance. This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this report.

#### About SeqLL

We are an early commercial-stage life sciences instrumentation and research services company engaged in the development of scientific assets and novel intellectual property across multiple “omics” fields. We leverage our expertise with True Single Molecule Sequencing (tSMS) technology enabling researchers and clinicians to contribute major advancements to scientific research and development.

Our customers are primarily the early adopters of genomics technology and tSMS in academic research, biomarker discovery, and molecular diagnostic product development.

Our financial results have been, and will continue to be, impacted by several significant trends, which are described below. While these trends are important to understanding and evaluating our financial results, this discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto within the Condensed Consolidated Financial Statements section of this report, and trends discussed in “Risk Factors” in Item 1A of Part II of this report.

#### Proposed Merger Agreement

Terms used and not defined in the following discussion have the respective meanings set forth in Note 1 to our unaudited condensed consolidated financial statements included in Part I to this report.

On May 29, 2023, we entered into the Merger Agreement with Atlantic, Atlantic Merger Sub, SeqLL Merger Sub, Lyneer, and the Sellers subject to the approval of our stockholders at a special meeting, which approval has been obtained. Pursuant to the Merger Agreement and subject to the terms and conditions set forth therein, Atlantic Merger Sub will initially be merged into Lyneer, and SeqLL Merger Sub will then be merged into Lyneer, with Lyneer continuing as the surviving entity and as our wholly-owned subsidiary. In connection with the consummation of the Merger, we will be renamed “Atlantic International Corp.”

Lyneer, through its subsidiaries, specializes in the placement of temporary and temporary-to-permanent labor across various industries within the United States. Lyneer primarily places individuals in accounting and finance, administrative and clerical, information technology, legal, light industrial, and medical roles. It is also a leading provider of productivity consulting and workforce management solutions. Lyneer is headquartered in Lawrenceville, New Jersey and has more than 100 locations in the U.S.

For further description of the terms of the Merger Agreement, please refer to Note 1 to the condensed consolidated financial statements.

#### Results of operations

We incurred net losses of $1,095,580 and $1,718,366 for the three months ended March 31, 2024 and 2023, respectively. We had negative cash flow from operating activities of $991,039 and $1,122,036 for the three months ended March 31, 2024 and 2023, respectively, and had an accumulated deficit of $25,231,855 as of March 31, 2024.

Results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, inflation, increases in interest rates, and geopolitical instability, such as the military conflict in Ukraine and the Israel-Hamas war. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business.

Our financial results have been, and will continue to be, impacted by several significant trends, which are described below. While these trends are important to understanding and evaluating our financial results, this discussion should be read in conjunction with our consolidated financial statements and the notes thereto within the Consolidated Financial Statements section of this report, and trends discussed in “Risk Factors” in Item 1A of Part II of this report.

### Comparison of the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023:

| Operating expenses | Three months ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Research and development | 316,263 | 776,720 |
| General and administrative | 749,558 | 981,107 |
| Total operating expenses | 1,065,821 | 1,757,827 |
| **Operating loss** | (1,065,821) | (1,757,827) |
| **Other (income) and expenses** |  |  |
| Investment income | (10,061) | (56,267) |
| Interest expense | 39,820 | 16,806 |
| Net loss | (1,095,580) | (1,718,366) |
| **Other comprehensive income** |  |  |
| Unrealized gain on marketable debt securities | - | 17,569 |
| Reclassification adjustment for net gains included in net loss | - | (22,081) |
| Net change | - | (4,512) |
| Total comprehensive loss | $(1,095,580) | $(1,722,878) |
| **Net loss per share - basic and diluted** | $(2.87) | $(4.83) |
| **Weighted average common shares - basic and diluted** | 382,151 | 355,648 |

15

#### Research and Development Expenses

Research and development expenses decreased by $460,457, or 59%, from $776,720 for the three-month period ended March 31, 2023 compared to $316,263 for the three-month period ended March 31, 2024. The decrease in expenses was a result of the Company’s reduction in research and development activities.

#### General and Administrative Expenses

General and administrative expenses decreased by $231,549 or 24%, from $981,107 for the three-month period ended March 31, 2023 compared to $749,558 for the three-month period ended March 31, 2024. The decrease in expenses was primarily due to the inventory write-off of $165,852 and the write off of bad debts of $78,491 in the three-month period ended March 31, 2023.

#### Interest and other Income/Loss

We recognized $10,061 of investment income related to cash invested in money market accounts during the three-month period ended March 31, 2024 as compared to $56,267 of income from money market accounts and marketable debt securities during the three months ended March 31, 2023. The decrease in investment income is due to the decrease in the cash equivalents and the sale of the Company’s holdings in marketable securities.

For the three months ended March 31, 2024 and 2023, the interest expense on the Promissory Notes was $35,754 and $16,806, respectively. The increase in the interest expense is due to the annual compounding of the interest on the outstanding accrued interest balance.

#### Net Loss

Overall, the net loss decreased by $622,786, or 36%, to $1,095,580 as compared to $1,718,366 for the three-month period ended March 31, 2023, primarily due to a reduction of general and administrative and research and development expenses in the three-month period ended March 31, 2024 due to the decrease in research and development activities and due to the inventory write-off of $165,852 and the write off of bad debts of $78,491 in the three month period ended March 31, 2023.

### Liquidity and Going Concern Uncertainty

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We experienced negative cash flows from operations of $991,039 for the three months ended March 31, 2024, which included our costs and expenses related to the transactions contemplated by the Merger Agreement. We had cash and cash equivalents of $1,688,926 at March 31, 2024 and an accumulated deficit of $25,231,855.

We will need additional capital to fund its planned operations for the next 12 months if the Merger is not completed. These conditions raise substantial doubt about our ability to continue as a going concern.

The condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 were prepared under the assumption that we will continue as a going concern, which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business.

### Cash Flows

The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented.

| Cash proceeds (used in) provided by: | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Operating activities | $(991,039) | $(1,122,036) |
| Investing activities | - | 2,486,112 |
| Financing activities | (14,026) | 1,499,250 |
| Net (decrease) increase in cash and cash equivalents | $(1,005,065) | $2,863,326 |

#### Net cash used in operating activities

Net cash used in operating activities was approximately $1.0 million and $1.1 million for the three months ended March 31, 2024 and 2023, respectively. The decrease in operating spending was due to a reduction in research and development activities in the three month period ended March 31, 2024.

#### Net cash provided by investing activities

Net cash provided by investing activities was approximately $0 and $2.5 million for the three months ended March 31, 2024 and 2023, respectively. The decrease was primarily attributable to the maturities of marketable securities of approximately $2.5 million during the three months ended March 31, 2023, while there were no such investments for the three months ended March 31, 2024.

#### Net cash (used in) provided by financing activities

Net cash (used in) provided by financing activities was less than ($.1) million, and $1.5 million, for the three-month periods ended March 31, 2024 and 2023, respectively. The decrease in cash provided by financing activities is attributable to the issuance of 50,000 shares of common stock to investors at a price of $36.00 per share during the three-month period ended March 31, 2023 (after the effect of the Reverse Stock Split). The gross proceeds of the issuance were $1.8 million. Additionally, we incurred offering costs of approximately $0.3 million, which were paid with proceeds from the common stock issuance. No such transaction occurred during the three-month period ended March 31, 2024.

### Recent Accounting Pronouncements

There were no recently issued but not yet effective accounting pronouncements will have a material effect on the accompanying consolidated financial statements.

### Critical Accounting Policies and Estimates

We prepare our financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions about future events that affect reported amounts. Estimations are considered critical accounting estimates based on, among other things, its impact on the portrayal of our financial condition, results of operations, or liquidity, as well as the degree of difficulty, subjectivity, and complexity in its deployment. Critical accounting estimates address accounting matters that are inherently uncertain due to unknown future resolution of such matters. Management routinely discusses the development, selection, and disclosure of each critical accounting estimates.

There have been no significant changes to our critical accounting policies and estimates during the three month period ended March 31, 2024 as compared to the information contained in our 2023 Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC. Reference should be made to the consolidated financial statements and related notes included in the 2023 Form 10-K for a full description of other significant accounting policies.

### JOBS Act

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of new or revised accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

For as long as we remain an emerging growth company under the recently-enacted JOBS Act, we will, among other things:

- be permitted to have only two years of audited financial statements and only two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations disclosure;
- be entitled to rely on an exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act;
- be entitled to reduced disclosure obligations about executive compensation arrangements in our periodic reports, registration statements and proxy statements; and
- be exempt from the requirements to seek non-binding advisory votes on executive compensation or golden parachute arrangements.

We currently intend to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an “emerging growth company.” Among other things, this means that our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or deficiencies in our internal control over financial reporting go undetected.

Likewise, so long as we qualify as an emerging growth company, we may elect not to provide certain information, including certain financial information and certain information regarding compensation of our executive officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more difficult for investors and securities analysts to evaluate our company. As a result, investor confidence in our company and the market price of our common stock may be materially and adversely affected.

## Controls and procedures

As filed, 1,842 characters.

#### Evaluation of disclosure controls and procedures

Our Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer), conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of March 31, 2024. As of March 31, 2024, based upon the evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective. Disclosure controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

#### Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the most recent fiscal quarter that materially affected, or was reasonably likely to materially affect, our internal control over financial reporting.

#### Inherent Limitations on Effectiveness of Controls

Our disclosure controls and procedures and internal control over financial reporting are designed to reasonably ensure that designed control objectives are achieved. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

## Risk factors

As filed, 4,475 characters.

There have been no material changes to the risk factors set forth in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 10, 2024 (our “Annual Report”), except for the risk factors relating to the Merger, the Merger Agreement and the Asset Sale Agreement set forth in our Information Statement dated August 10, 2023 filed with the SEC on August 10, 2023 (the “Information Statement”) and except as follows:

***Our securities were recently delisted by Nasdaq and our failure to relist our securities in the future, could limit investors’ ability to effect transactions in our securities and subject us to additional trading restrictions.***

As previously reported, on September 8, 2023, we received a letter from the Listing Qualifications Staff ( the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) regarding compliance with Nasdaq Listing Rule 5550(a)(4) (the “Rule”), which required us to have a minimum of 500,000 publicly held shares, exclusive of shares held by officers, directors and 10% stockholders. On November 10, 2023, we received a letter from Nasdaq advising us that in light of our inability to meet the requirements of the Rule by October 31, 2023, Nasdaq had determined to delist our securities from Nasdaq and suspend trading in those securities effective at the open of trading on November 13, 2023. The letter further advised that Nasdaq will complete the delisting by filing a Form 25 Notice of Delisting with the Securities and Exchange Commission, after applicable appeal periods have lapsed. We have appealed the decision of Nasdaq and paid the applicable filing fee for such appeal. On November 17, 2023, Nasdaq advised us that the decision to delist our securities will be reviewed by the Nasdaq Listing and Hearing Review Council, and that we may submit a memorandum in support of our appeal no later than December 1, 2023.

As previously disclosed, in connection with the transactions contemplated by the Merger Agreement, we have filed a registration statement on Form S-1 for the sale of our securities in connection with the closing of the transactions contemplated by the Merger Agreement. As previously reported, we had intended to cure our Nasdaq listing deficiency by consummating the transactions contemplated by the Merger Agreement. Subsequent to the de-listing of our common stock from Nasdaq, we filed a listing application to list our common stock on the Cboe BZX Exchange Inc. (the “CBOE”) upon the closing of our public offering of equity securities in connection with the closing of the proposed Merger.

There can be no assurance that our listing application to CBOE will be approved or that we will be able to list our securities on the CBOE. Even if our securities are listed on the CBOE following the Merger, we may be unable to maintain the listing of our securities in the future.

If our listing application is not approved, there could be significant material adverse consequences to us, including:

- the possibility that Atlantic or Lyneer will terminate the Merger Agreement due to our failure to meet a material condition to the consummation of the Merger;
- a limited availability of market quotations for our securities;
- a limited amount of news and analyst coverage for our company; and
- a decreased ability to obtain capital or pursue acquisitions by issuing additional equity or convertible securities.

Our business involves significant risks. You should carefully consider the risks and uncertainties described in the Annual Report and the Information Statement, together with all of the other information in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as included in our Annual Report. The risks and uncertainties described in our Annual Report, the Information Statement and this report are not the only ones we face. Additional risk and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects as well as our ability to accomplish our strategic objectives. In that event, the market price of our common stock could decline and you could lose part or all of your investment.

Filed May 17, 2024.
Source: SEC EDGAR, the filing index for accession 0001213900-24-044770. Last ingested by Listed: Nov 3, 2026, 20:19 ET. No prices; not investment advice.