CIRCLE8 GROUP INCCIRC

CIRCLE8 GROUP INC Segments Disclosure

10-KFiled Apr 15, 20262 min read
Segment Reporting
The Company reports information about operating segments in accordance with ASU 2023-07, which requires financial information to be reported based on the way management organizes segments within a company for making operating decision and evaluating performance. The Company derives revenue from hourly fees charged from the placement of “light industrial” temporary staffing and placement fees earned from the placement of professional permanent
employees at its customers. Revenues are accounted for and tracked by each branch location by temporary or permanent placement. The direct costs are not reported by temporary or permanent placement, but rather reported together. Direct costs, primarily payroll and payroll related costs are included in cost of revenue which is deducted from revenues to determine gross profit. Each branch’s operating expenses, which, similar to direct costs, are not separated into temporary or permanent placement costs are then deducted from gross profit. So ultimately the segment manager does not review discrete financial information summarized by temporary or permanent placement, but rather total by operating branch. Therefore, the Company has one reportable segment, which is the business of providing commercial staffing solutions.
The accounting policies of the commercial staffing solutions segment are the same as those described in Note 3: Summary of Significant Accounting Policies. The Company’s CEO is the CODM and reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. The CODM assess performance for the commercial staffing solutions segment and decides how to allocate resources based on net income/(loss) that is also reported on the consolidated statement of operations as consolidated net income/(loss). The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets.
The CODM uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the current business segment or into other parts of the entity or parent, such as for acquisitions or other public costs such as investor relations and marketing and does not evaluate operating segments using asset or liability information.
The Company does not have intra-entity sales or transfers.
Segment information for the years ended December 31, 2025 and 2024 is as follows:
Year Ended December 31,
December 31, 2025December 31, 2024
Service revenue, net$435,878,730 $442,609,814 
Cost of revenue:
Payroll and payroll related costs387,678,534 393,773,643 
Other costs of revenue2,214,433 1,657,848 
Total cost of revenue389,892,967 395,431,491 
Gross profit45,985,763 47,178,323 
Selling, general and administrative
91,289,682 64,021,052 
Depreciation and amortization
4,928,514 4,991,863 
(Loss) income from operations
(50,232,433)(21,834,592)
Loss on debt extinguishment
— 1,213,379 
Advisory fees paid in merger— 43,000,000 
Interest expense
9,164,495 12,004,860 
Other expense— 52,047,957 
Net loss before provision for income taxes
(59,396,928)(130,100,788)
Income tax expense
(33,991)(5,379,102)
Net loss
$(59,430,919)$(135,479,890)
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Historical Timeline

Fiscal YearFiled
2025Apr 15, 2026Showing above
2024Mar 28, 2025

About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.

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