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What changed in Nixxy, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Nixxy, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+296 added−322 removedSource: 10-K (2024-04-16) vs 10-K (2023-03-31)

Top changes in Nixxy, Inc.'s 2023 10-K

296 paragraphs added · 322 removed · 161 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

49 edited+48 added−87 removed42 unchanged
Biggest changeWe believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations. 19 Table of Contents Legal Proceedings Except for the BKR lawsuit and related counterclaim described under Item 3, as of the date of this filing, there are no material pending legal or governmental proceedings relating to our Company or properties to which we are a party, and, to our knowledge, there are no material proceedings to which any of our directors, executive officers, or affiliates are a party adverse to us or which have a material interest adverse to us.
Biggest changeExcept for the aforementioned proceedings described above, as of the date of this filing, there are no material pending legal or governmental proceedings relating to our Company or properties to which we are a party, and, to our knowledge, there are no material proceedings to which any of our directors, executive officers, or affiliates are a party adverse to us or which have a material interest adverse to us. 16 Table of Contents Employees As of April 3, 2024, the Company employed 4 full time employees and a number of independent contractors.
We refer to the recruiting and talent acquisition professionals that connect with our various assets as our “Recruiter Network” or our “network of recruiters.” This network of recruiters allows us to maintain a close connection to the industry as a whole and be responsive to our clients’ demand for project-based and full-time recruiters.
We refer to the recruiting and talent acquisition professionals that connect with our various assets as our “Recruiter Network” or our “network of recruiters.” This network of recruiters allows us to maintain a close connection to the industry and be responsive to our clients’ demand for project-based and full-time recruiters.
With hundreds of thousands of people involved in the general human resource and employment industry in the United States alone, and many more interested in referral-based, work-from-home earning opportunities, we believe our addressable network and potential audience is significant.
With hundreds of thousands of people involved in the general human resource and employment industry in the United States alone, and many more interested in referral-based, work-from-home earning opportunities, we believe the addressable network and potential audience is significant.
This includes expanding on our lead generation capabilities. 12 Table of Contents 2) Build Business Model Innovations : ● Continue to Innovate and Improve the Platform to Build Best-in-Class User Experiences: We aim to create the most innovative and easy-to-use solutions for empowering businesses and recruiters to recruit talent faster. ● Invest in Scalable Business Models: We plan to continue to invest in low- and light-touch products and services to increase our gross margins and the efficiency of our business. ● Leverage Our Platform to Launch New Products: We believe we can continue to innovate to solve complex challenges involving recruitment and hiring, and we plan to use our highly extensible platform to support the introduction of additional products and services.
This includes expanding on our lead generation capabilities. 2) Build Business Model Innovations : ● Continue to Innovate and Improve the Platform to Build Best-in-Class User Experiences: We aim to create the most innovative and easy-to-use solutions for empowering businesses and recruiters to recruit talent faster. ● Invest in Scalable Business Models: We plan to continue to invest in low- and light-touch products and services to increase our gross margins and the efficiency of our business. ● Leverage Our Platform to Launch New Products: We believe we can continue to innovate to solve complex challenges involving recruitment and hiring, and we plan to use our highly extensible platform to support the introduction of additional products and services.
Specific projects include: · Improvements in the user interface of our career communities · Improvements in automation of our On Demand recruiting services 16 Table of Contents Sales and Marketing Strategy Our sales and marketing strategy is centered around driving cost-effective awareness of our brand and the benefits of our platform among recruiters and employers of all sizes, from small businesses to Fortune 100 companies.
Specific projects include: · Improvements in the user interface of our career communities · Improvements in automation of our On Demand recruiting services 13 Table of Contents Sales and Marketing Strategy Our sales and marketing strategy is centered around driving cost-effective awareness of our brand and the benefits of our platform among recruiters and employers of all sizes, from small businesses to Fortune 100 companies.
In addition, our President and Chief Operating Officer served as the Chief Executive Officer of Pre-Merger Recruiter.com and the majority of our directors at the time were directors (or designees) prior to the Merger.
In addition, our President and Chief Financial Officer served as the Chief Executive Officer of Pre-Merger Recruiter.com and the majority of our directors at the time were directors (or designees) prior to the Merger.
Upon the employer hiring one or more of our candidate referrals, we earn a “full-time placement fee”, an amount separately negotiated with each employer client.
Upon the employer hiring one or more of our candidate referrals, we earned a “full-time placement fee”, an amount separately negotiated with each employer client.
We generate full-time placement revenue by earning one-time fees for each time that employers hire one of the candidates that we refer. Employers alert us of their hiring needs through our Platform, or other communications. We source qualified candidate referrals for the employers’ available jobs through independent recruiter users that access the Platform and other tools.
We generated full-time placement revenue by earning one-time fees for each time that employers hire one of the candidates that we refer. Employers alert us of their hiring needs through our Platform, or other communications. We sourced qualified candidate referrals for the employers’ available jobs through independent recruiter users that access the Platform and other tools.
We support and supplement the independent recruiters’ efforts with dedicated internal employees we call our internal talent delivery team. Our talent delivery team selects and delivers candidate profiles and resumes to our employer clients for their review and ultimate selection.
We supported and supplemented the independent recruiters’ efforts with dedicated internal employees we call our internal talent delivery team. Our talent delivery team selects and delivers candidate profiles and resumes to our employer clients for their review and ultimate selection.
The Company generally may be impacted by corporate layoffs of professional employees, if they are substantive, long-term, and/or widespread. 8 Table of Contents Operating Businesses and Revenue We generate revenue from the following activities: · Software Subscriptions : We offer a subscription to our web-based platforms that help employers recruit talent.
The Company generally may continue to be impacted by corporate layoffs of professional employees, if they are substantive, long-term, and/or widespread. Operating Businesses and Revenue We generate revenue or have generated from the following activities: · Software Subscriptions : We offered a subscription to our web-based platforms that help employers recruit talent.
Further, our Executive Chairman and Chief Executive Officer was retained as a consultant prior to the Merger with the understanding that if the Merger occurred, he would be appointed as our Executive Chairman. Reincorporation and Reverse Stock Split On May 13, 2020, we effected a reincorporation from the State of Delaware to the State of Nevada.
Further, our current Chairman was retained as a consultant prior to the Merger with the understanding that if the Merger occurred, he would be appointed as our Executive Chairman. On May 13, 2020, we effected a reincorporation from the State of Delaware to the State of Nevada.
Our Growth Strategy We seek to unlock the full potential of our brand by executing our strategic plans, which include organic growth, opportunistic acquisitions, and making use of capital provided by the public market. In short, we look to realize the potential of our market position.
Our Growth Strategy We seek to unlock the full potential of our brand by executing our strategic plans, which include strategic divestitures, organic growth, opportunistic acquisitions, and making use of capital provided by the public market.
Management believes in the transformational power of new technologies, including AI, and plans to continue exploring various opportunities in the sector. 3) Monetize the Businesses and Candidates Seeking to Access the Community and Platform : We intend to not only develop new clients for all of our services but also expand relationships with our existing clients and increase their spending on the Platform by investing in building new products and features. ● Attract New Clients Through Strategic Partnerships with MSP and HR Providers: We intend to expand our marketing efforts with partners to attract new clients by increasing awareness of the Platform and the benefits of using flexible and On Demand recruiting. ● Broaden and Deepen Categories: We intend to focus on customizing experiences for vertical industry groups, such as Information Technology or Accounting and Finance, through tailored features and functionalities, making it easier and more efficient for clients to connect with the right recruiters. ● Build Effective Candidate Solutions: We plan to continue to expand our candidate offerings from basic resume distribution to training programs, career coaching, resume writing, job alerts, and other SaaS services to monetize our traffic and help people effectively connect with opportunities. 13 Table of Contents 4) Acquire Complementary Assets and Businesses : From time to time, we evaluate opportunities to acquire complementary businesses and personnel within the recruitment and staffing sector.
Management believes in the transformational power of new technologies, including AI, and plans to continue exploring various opportunities in the sector. 11 Table of Contents 3) Monetize the Businesses and Candidates Seeking to Access the Community and Platform : We intend to invest in building new products and features to develop new clients for all of our services, expand relationships with our existing clients, and increase their spending on the Platform. ● Broaden and Deepen Categories: We intend to focus on customizing experiences for vertical industry groups, such as Information Technology or Accounting and Finance, through tailored features and functionalities, making it easier and more efficient for clients to connect with the right recruiters. ● Build Effective Candidate Solutions: We plan to continue to expand our candidate offerings from basic resume distribution to training programs, career coaching, resume writing, job alerts, and other SaaS services to monetize our traffic and help people effectively connect with opportunities. 4) Acquire Complementary Assets and Businesses : From time to time, we evaluate opportunities to acquire complementary businesses and personnel within the recruitment and staffing sector.
We will strive to be bold leaders in human-centric technology by always positioning that technology for the benefit and economic empowerment of people. We believe that the future holds great promise for further connectivity, collaboration, and community.
We will strive to be bold leaders in human-centric technology by always positioning that technology for the benefit and economic empowerment of people. We believe that the future holds great promise for further connectivity, collaboration, and community. We aim to be opportunistic in the development and acquisition of such technologies for our users.
Employment Rate The unemployment rate in January 2023 stood at 3.4%, which is historically low, signaling a “tight” labor market and a general lack of available qualified talent. However, many large companies, particularly in the technology sector, have implemented layoffs.
Employment Rate The unemployment rate in April 2024 stood at 3.9%, which is historically low, signaling a “tight” labor market and a general lack of available qualified talent. However, many large companies, particularly in the technology, media, finance and retail sectors, implemented layoffs in 2023.
ITEM 1. BUSINESS Overview Recruiter.com Group, Inc., a Nevada corporation (along with its subsidiaries, “we”, “the Company”, “us”, and “our”), is a holding company based in New York, New York, that, through its subsidiaries, operates an On Demand recruiting platform aimed at transforming the $28.5 billion dollar Employment and Recruitment Agency industry.
ITEM 1. BUSINESS Overview Recruiter.com Group, Inc., a Nevada corporation (along with its subsidiaries, “we”, “the Company”, “us”, and “our”), is a holding company that, through its subsidiaries, operates an On Demand recruiting platform aimed at transforming the $46.7 billion dollar Employment and Recruiting Agency industry (Per IBIS World Employment& Recruiting Agencies in the US 2005-2030).
Effective March 31, 2019 (the “Effective Date”), we completed a merger with Recruiter.com, Inc. (“Pre-Merger Recruiter.com”), an affiliate of the Company, pursuant to a Merger Agreement and Plan of Merger, dated March 31, 2019 (the “Merger”).
Corporate History We were incorporated in February 2015 as a Delaware corporation. Effective March 31, 2019 (the “Effective Date”), we completed a merger with Recruiter.com, Inc. (“Pre-Merger Recruiter.com”), an affiliate of the Company, pursuant to a Merger Agreement and Plan of Merger, dated March 31, 2019 (the “Merger”).
Our platforms allow our customers to source, contact, screen and sort candidates using data science, advanced email campaigning tools, and predictive analytics. As part of our software subscriptions, we offer enhanced support packages and On Demand recruiting support services for an additional fee.
Our platforms allow customers to source, contact, screen, and sort candidates using data science, advanced email campaigning tools, and predictive analytics. As part of our software subscriptions, we offered enhanced support packages and On Demand recruiting support services for an additional fee. Additional fees may be charged when we place a candidate with our customer, depending on the subscription type.
The principles of our approach to community management include: ● Value : Each member of the recruiter network is an asset to our business. ● Understanding : We form relationships with a human touch and develop real understandings of recruiters’ business needs and capacities. ● Personal: Every On Demand recruiter has a named contact. ● Shared Success : We take pride in our community, and we incentivize success and connections.
The principles of our approach to community management include: ● Value : Each member of the recruiter network is an asset to our business. ● Understanding : We form relationships with a human touch and develop real understandings of recruiters’ business needs and capacities. ● Personal: Every On Demand recruiter has a named contact. ● Shared Success : We take pride in our community, and we incentivize success and connections. 14 Table of Contents Competition The market for online staffing and recruitment services is highly competitive, fragmented, and undergoing rapid changes following increasing demand, technological advancements, and shifting needs.
Our combination of innovative use of technology, a broad network of specialized recruiting professionals, and curated talent communities enable a traditionally service-heavy industry to be scalable in an entirely new way. We believe our brand and technology put us in a unique position in the market.
In short, we look to realize the potential of our market position. 10 Table of Contents Overall Market Position Potential Our combination of innovative use of technology, a broad network of specialized recruiting professionals, and curated talent communities enables a traditionally service-heavy industry to be scalable in an entirely new way.
Most notably, as of February 2023, we operated four of the top ten largest professional groups globally on the social media platform LinkedIn, out of approximately 2.3 million groups in total. These groups include the Recruiter.com Network, and groups for the professions of Project Managers, Marketers, and Information Technology.
Most notably, as of April 2024, we operated three of the top thirty largest professional groups globally on the social media platform LinkedIn, out of over 2.5 million groups in total. These groups include the Recruiter.com Network, and groups for the professions of Artificial Intelligence, Marketers, and Information Technology.
Overall, we are a well-known brand in the recruiting industry, and our vision is to build upon this success to become a clear leader in terms of traffic, mindshare, and usage within the recruiting business. 10 Table of Contents A comprehensive search engine optimization strategy fuels our marketing.
Overall, we are a well-known brand in the recruiting industry, and our vision is to build upon this success to become a clear leader in terms of traffic, mindshare, and usage within the recruiting business. We are also active on social media.
As of December 31, 2021, two customers, accounted for more than 10% of the accounts receivable balance, at 14% and 12%, respectively, for a total of 26%. For the year ended December 31, 2022, one customer accounted for more than 10% of total revenue, at 14%.
As of December 31, 2022, one customer accounted for more than 10% of the accounts receivable balance, at 28%. For the year ended December 31, 2023, one customer accounted for more than 10% of total revenue, at 57%. For the year ended December 31, 2022, one customer accounted for more than 10% of total revenue, at 14%.
Investments in content, community sponsorship, and thought leadership will continue to drive people back to the platform, creating a "hub" for recruiters. ● Increase Growth and Earning Opportunities for Recruiters on the Platform: We plan to continue investing in new products and features to help recruiters grow their businesses by expanding their access to technology, developing their professional and marketing skills, and increasing their earning opportunities.
Strategy Recruiter.com intends to grow its business by focusing efforts on the following five main areas: 1) Grow Our Community : ● Grow Engagement: We plan to continue to invest in community management initiatives, including enhancement of outreach and communications. ● Grow the Number of Recruiters on the Platform: Investments in content, community sponsorship, and thought leadership will continue to drive people back to the platform, creating a "hub" for recruiters. ● Increase Growth and Earning Opportunities for Recruiters on the Platform: We plan to continue investing in new products and features to help recruiters grow their businesses by expanding their access to technology, developing their professional and marketing skills, and increasing their earning opportunities.
Furthermore, we are dispersing the economic benefits of successful recruitment to a broad group of people. By doing so, we help businesses recruit talent faster and more efficiently than ever before. Community and Network We operate various publishing, social media, groups, and career communities that allow for user registration.
By doing so, we help businesses recruit talent faster and more efficiently than ever before. Community and Network We operate various publishing, social media, groups, and career communities that allow for user registration. We provide content, community, and resources for recruitment and talent acquisition professionals.
Upon completion of the program, we issue a certificate of completion and make available a digital badge to certify their achievement for display on their online recruiter profile on the Platform.
Upon completion of the program, we issue a certificate of completion and make available a digital badge to certify their achievement for display on their online recruiter profile on the Platform. · Consulting and Staffing: Consists of providing consulting and staffing personnel services to employers to satisfy their demand for long- and short-term consulting and temporary employee needs.
Disrupting an Industry - Recruit Talent Faster We believe we are fundamentally modernizing the recruiting process by digitizing and democratizing the recruiting process. We are distributing both the work and opportunity of recruiting to a broader community than ever before, enabling people to earn money through our platform and be their own bosses.
We are distributing both the work and opportunity of recruiting to a broader community than ever before, enabling people to earn money through our platform and be their own bosses. Furthermore, we are dispersing the economic benefits of successful recruitment to a broad group of people.
Our Strengths ● Reliable Brand: As the name “Recruiter.com” defines an entire profession and captures the essence of the business and software platform, we benefit from strong brand recognition. ● People: Several of our key executives and personnel have extensive experience and successful track records with internet-enabled recruitment and staffing. ● Platform Technology: We offer a proprietary, fully operational software platform complete with sophisticated machine-learning technology. ● Power of Our Reach: We benefit from excellent placement and visibility within popular search engines and broad distribution and followings on social media networks.
Our “Mediabistro” brand is highly significant to the media industry and has a long operating history as a key job board for the niche. ● People: Several of our key executives and personnel have extensive experience and successful track records with internet-enabled recruitment and staffing. ● Platform Technology: We offer a proprietary, fully operational software platform and have additionally developed software-as-a-service platforms leveraging artificial intelligence. ● Power of Our Reach: We benefit from excellent placement and visibility within popular search engines and broad distribution and followings on social media networks.
Companies prepay for a certain number of consulting hours at an agreed-upon, time-based rate. We source and provide the independent consultants that provide the service.
Companies prepay for a certain number of consulting hours at an agreed-upon, time-based rate. We source and provide the independent consultants that provide the service. In March 2023, we announced a strategic partnership with Job Mobz to transition certain Recruiters on Demand clients and staff to Job Mobz in exchange for an ongoing revenue stream.
Subsequent to the sale, we continued to provide recruiting solutions leveraging third-party tools. Our Career Communities We own and develop a proprietary tool for job posting and career community sites, which originated from the purchase of certain assets from Parrut, Inc. known as Uncubed Technology and has since been further developed.
The Recruiter.com website and the directly associated social media assets are planned to be transitioned to Job Mobz as part of the planned Asset Purchase Agreement. 9 Table of Contents Our Career Communities We own and develop a proprietary tool for job posting and career community sites, which originated from the purchase of certain assets from Parrut, Inc. known as Uncubed Technology and has since been further developed.
We rely upon a combination of trademarks, trade secrets, copyrights, confidentiality procedures, contractual commitments, and other legal rights to establish and protect our intellectual property.
We rely upon a combination of trademarks, trade secrets, copyrights, confidentiality procedures, contractual commitments, and other legal rights to establish and protect our intellectual property. We generally enter into confidentiality agreements and invention or work product assignment agreements with our employees and consultants to control access to and clarify ownership of our software, documentation, and other proprietary information.
Additional fees may be charged when we place a candidate with our customer, depending on the subscription type. In such cases, if the candidate ceases to be employed by the customer during the initial 90 days (the 90-day guarantee), we refund the customer in full for all fees paid by the customer.
In such cases, if the candidate ceases to be employed by the customer during the initial 90 days (the 90-day guarantee), we refund the customer in full for all fees paid by the customer. In December of 2022, we sold one of our software platforms to Talent, Inc. that was used in the delivery of the subscription service.
Our goal is to enable employers to identify and engage with top talent faster than ever before. Roadmap The following roadmap outlines Platform improvements that we intend to launch over the next year. While our overall strategic direction changes little, these specific projects cannot be guaranteed and often change.
Product Development We continue to invest in product development, develop new products and features, and further build our infrastructure. Our goal is to enable employers to identify and engage with top talent faster than ever before. Roadmap The following roadmap outlines Platform improvements that we intend to launch over the next year.
The career community is currently located at https://www.mediabistro.com . Benefits for Career Community Users We empower professionals to find suitable career opportunities, surfacing relevant jobs and connecting them with economic opportunity. 11 Table of Contents Benefits to Employer Clients Enterprises can leverage our niche communities of professionals to tap into highly unique talent pools.
Users may search for and find suitable job opportunities, create job alerts for notifications, and easily apply to open roles. The career community is currently located at https://www.mediabistro.com . Benefits for Career Community Users We empower professionals to find suitable career opportunities, surfacing relevant jobs and connecting them with economic opportunity.
Most of our new recruiter and employer registrations come from direct navigation to our website through unpaid search engine results listings, social media, and other content-based, no-cost referrals. We draw on our robust recruiting and staffing business foundation to build a sales pipeline and grow account relationships.
Most of our new recruiter and employer registrations come from direct navigation to our website through unpaid search engine results listings, social media, and other content-based, no-cost referrals. Sales Strategy Most of our sales opportunities are derived from internet marketing and content strategies, which generate interest and traffic from search engines, such as Google, which index our website content.
We have the unique ability to survey our vast network of independent recruiting and talent acquisition specialists to uncover job market trends.
We have the unique ability to survey our vast network of independent recruiting and talent acquisition specialists to uncover job market trends. Given the Recruiter Index’s ® consistent media appearances beginning in June 2020, including on CNBC, there appears to be strong demand for leading labor market indicators.
Given the Recruiter Index’s ® consistent media appearances beginning in June 2020, including on CNBC, there appears to be strong demand for leading indicators of the labor market. 17 Table of Contents Community Management We consider our community management an essential part of our revenue generation strategy, as active engagement of our network leads to the further output of successful candidate matches.
Community Management We consider our community management an essential part of our revenue generation strategy, as active engagement of our network leads to the further output of successful candidate matches.
We generally enter into confidentiality agreements and invention or work product assignment agreements with our employees and consultants to control access to and clarify ownership of our software, documentation, and other proprietary information. 18 Table of Contents As of March 22, 2023, our trademarks include the terms “Recruiter.com” and “Recruiter Index.” Government Regulation We are subject to a number of U.S. federal and state and foreign laws and regulations that apply to internet companies and businesses that operate online marketplaces connecting businesses with recruiters.
As of April 3, 2024, our trademarks include the terms “Recruiter.com,” “OneWire,” and “Matchbook.” The Company also has trademarks in the process of becoming registered, which include “Mediabistro,” “Recruiter Index,” and “MyRecruiter.” 15 Table of Contents Government Regulation We are subject to a number of U.S. federal and state and foreign laws and regulations that apply to internet companies and businesses that operate online marketplaces connecting businesses with recruiters.
The information contained on, or that can be accessed through, our site is not a part of this filing. Investors should not rely on any such information in deciding whether to purchase our securities. 20 Table of Contents
Investors should not rely on any such information in deciding whether to purchase our securities.
MediaBistro - a Career Community for Media Professionals We own and operate MediaBistro, a specialized career community for media and creative professionals. The community focuses on providing access to job opportunities at companies in the media space. Users may search and find suitable job opportunities, create job alerts for notifications, and easily apply to open roles.
MediaBistro - a Career Community for Media Professionals We own and operate MediaBistro, a specialized job board for media and creative professionals. Clients include broadcasters, television networks, traditional publishing companies, online publications, and many other types of media-related companies. The platform focuses on providing access to job opportunities at media companies.
We typically focus on filling highly skilled and senior-level roles in specialized fields, including technology, healthcare, finance, logistics/transportation, communications, engineering, energy, and many others. The majority of our revenue (approximately 90%) is generated by providing Recruiting Solutions for employers, consisting of success-based placement fees for fulltime employee referrals and hourly and project-based fees for professional consulting and staffing.
Our Clients Our recruiting solutions allow us to meet the hiring needs of a variety of clients. We typically have focused on filling highly skilled and senior-level roles in specialized fields, including media, technology, healthcare, finance, logistics/transportation, communications, engineering, energy, and others.
We bill these employer clients for our placed candidates’ ongoing work at an agreed-upon, time-based rate, typically on a weekly schedule of invoicing. We have a sales team and sales partnerships with direct employers as well as Vendor Management System companies and Managed Service companies that help create sales channels for clients that buy staffing, direct hire, and sourcing services.
We bill these employer clients for our placed candidates’ ongoing work at an agreed-upon, time-based rate, typically on a weekly schedule of invoicing. Through a strategic sale to Futuris, Inc. In October, 2023, we exited the Consulting and Staffing line of business, and consider it discontinued.
All share and per share data in the accompanying consolidated financial statements and footnotes and throughout this annual report has been retroactively adjusted to reflect the effects of the reverse stock split. 5 Table of Contents The reincorporation did not result in any change in our corporate name, business, management, fiscal year, accounting, location of the principal executive office, or assets or liabilities.
All share and per share data in the accompanying consolidated financial statements and footnotes and throughout this annual report has been retroactively adjusted to reflect the effects of the reverse stock split. 6 Table of Contents Market Opportunity Industry Overview Employers invest significant amounts of capital in finding qualified employees, the practice of “talent acquisition.” Market opportunities within talent acquisition are diverse.
From time to time, we also engage technical personnel on an as-needed basis from other locations, including overseas locations. Outsourced personnel are managed by the Product and web teams as well. Product Development We continue to invest in product development, develop new products and features, and further build our infrastructure.
Our Platform and Technology Our Technology Infrastructure Hosting We currently host websites and data with Amazon’s web hosting service. Personnel Software development, database management, remote server administration, quality assurance, and administrative systems access is managed by our development team. From time to time, we also engage technical personnel on an as-needed basis from other locations, including overseas locations.
Once we have secured the relationship and contract with the interested Enterprise customer, the delivery and product teams will provide the service to fulfill any or all of the revenue segments. The costs of our revenue primarily consist of employee costs, third-party staffing costs and other fees, outsourced recruiter fees and commissions based on a percentage of our gross margin.
The costs of our revenue primarily consist of employee costs, third-party staffing costs and other fees, outsourced recruiter fees and commissions based on a percentage of our gross margin. 8 Table of Contents Disrupting an Industry - Recruit Talent Faster We believe we are fundamentally modernizing the recruiting process by digitizing and democratizing the recruiting process.
(“VocaWorks”), Recruiter.com Scouted Inc. (“Scouted”), Recruiter.com Upsider Inc. (“Upsider”) and Recruiter.com OneWire Inc. (“OneWire”). As of March 27, 2023, the Company employed 18 tull time employees and 27 outside staffing professionals in 12 states. For employers needing talent acquisition services, we place independent recruiters from our network with our clients on a project basis.
Additionally, the Company owns a controlling interest in Atlantic Energy Solutions, Inc., a Colorado company that is traded on the OTC Markets (OTC:AESO). For employers needing talent acquisition services, we place independent recruiters from our network with our clients on a project basis.
Sales Strategy Most of our sales opportunities are derived from internet marketing and content strategies, which generate interest and traffic from search engines, such as Google, which index our website content. Word of mouth, customer and user referrals, and general brand recall and recognition also generate a significant number of visits to our website.
Word of mouth, customer and user referrals, and general brand recall and recognition also generate a significant number of visits to our website. Visitors to our website then express interest and contact us through standard electronic forms on our website. Public Relations For PR and marketing purposes, we rely mostly on the continued development of our thought leadership content.
Facilities Our corporate headquarters are located in New York City, New York. We operate from time to time in leased flexible office space, such as WeWork offices.
Facilities We operate virtually and from time to time in leased flexible office space, such as WeWork offices. We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations.
To round out our offerings, we provide other talent acquisition support services, including job posting, consulting, staffing, and full-time placement services. Our mission is to help recruit the right talent faster and become the preferred solution for hiring specialized talent. Corporate History We were incorporated in February 2015 as a Delaware corporation.
To round out our offerings, we provide other talent acquisition support services, including job posting, consulting, and staffing. The Company is currently undergoing a strategic transformation, having sold its staffing business in 2023 and planning to sell its Recruiter.com website in 2024.
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The Company offers recruiting services and operates web-based platforms (the “Platform”) and a network of independent recruiters. Businesses from startups to the Fortune 100 use Recruiter.com to help address their critical talent needs and solve recruiting and hiring challenges. We have seven operating subsidiaries, Recruiter.com, Inc., Recruiter.com Recruiting Solutions LLC (“Recruiting Solutions”), Recruiter.com Consulting, LLC, VocaWorks, Inc.
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The Company offers recruiting related services, including on-demand contract recruiting, job board platforms, recruitment education services, and a candidate marketing software. We have seven operating subsidiaries, Recruiter.com, Inc., Recruiter.com Recruiting Solutions LLC (“Recruiting Solutions”), VocaWorks, Inc. (“VocaWorks”), Recruiter.com Scouted Inc. (“Scouted”), Recruiter.com Upsider Inc. (“Upsider”), Recruiter.com OneWire Inc. (“OneWire”), and Recruiter.com Consulting, LLC (“Recruiter.com Consulting”).
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Simultaneously with the reincorporation, the number of shares of common stock that we, as a Nevada corporation, are authorized to issue was increased from 31,250,000 shares to 250,000,000 shares. On June 18, 2021, we filed an Amendment to our Articles of Incorporation to effectuate a reverse split of our issued and outstanding common stock at an exchange ratio of 1-for-2.5.
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The Company has announced plans to shift its focus, along with its license agreement with GoLogiq, and spin out the recruitment related businesses to Atlantic Energy Solutions, which is currently undergoing a name change to CognoGroup, Inc. There can be no assurance that the Company will be able to complete its planned spin out and strategic transformation.
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The reverse stock split was effective as of June 18, 2021. Simultaneously with the reverse stock split, we reduced our authorized shares from 250,000,000 to 100,000,000.
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On June 5, 2023, the Company entered into a stock purchase agreement (“GoLogiq Stock Purchase Agreement”) with GoLogiq Inc. ("Seller"), a Delaware corporation (“GoLogiq”). GoLogiq owns all of the issued and outstanding membership interests (the “Membership Interests”) of GOLQ LLC, a Nevada limited liability company, that was further amended on August 18 and 29, 2023.
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Scouted Asset Purchase Effective January 31, 2021, we, through a wholly owned subsidiary, acquired all of the assets of RLJ Talent Consulting, Inc., dba Scouted, a Delaware corporation (“Scouted”) (the “Scouted Asset Purchase”).
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On February 23, 2024, the Company entered into a certain Technology License and Commercialization Agreement with GoLogiq, Inc. that supersedes and replaces in its entirety the GOLQ Agreement, as amended by the August 29 Amendment and the August 18 Amendment.
Removed
As consideration in the Scouted Asset Purchase, Scouted shareholders received a total of 224,163 shares of our restricted Common Stock (valued at $1,625,183 based on a $7.25 per share acquisition date price), of which 33,151 shares of stock were held in reserve and recorded as contingent consideration, a current liability in the accompanying financial statements, and an additional amount of $180,000 in cash consideration for a total purchase price of approximately $1.8 million.
Added
Under the GOLQ Licensing Agreement, GOLQ grants the Company a worldwide, exclusive license (the “GOLQ License”) to the Company to develop its fintech technology (the “GOLQ Technology”) and sell products derived thereof, including its Createapp, Paylogiq, Gologiq, and Radix AI technology and products (the “Licensed Products”), for a term of 10 years, with automatic two (2) year renewals as further described therein (the “Term”).
Removed
The 33,151 shares held in reserve were issued on December 13, 2021. The Scouted Asset Purchase was accounted for as a business acquisition. The assets acquired in the Scouted Asset Purchase consist primarily of sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets (the “Scouted Assets”).
Added
In exchange with such license, the Company will issue to GOLQ such number of shares of Company common stock that represents 19.99% of the number of issued and outstanding shares of the Company common stock on the business day prior to the effective date as defined therein (the “Shares”).
Removed
We utilized the Scouted Assets to expand our video hiring solutions and curated talent solutions, through our Recruiting Solutions subsidiary. Upsider Asset Purchase Effective March 25, 2021, we, through a wholly owned subsidiary, entered into an Asset Purchase Agreement and Plan of Reorganization with Upsider, Inc., (“Upsider”), to acquire all the assets and certain liabilities of Upsider (the “Upsider Purchase”).
Added
Following the issuance of the Shares, GOLQ will own 16.66% of the issued and outstanding shares of the Company common stock. In addition, the Company shall pay to GOLQ a royalty of eight percent (8%) of net sales of Licensed Products, as defined therein, during the Term.
Removed
As consideration for the Upsider Purchase, Upsider’s shareholders received net cash of $69,983 and a total of 323,094 shares of our Common Stock (the “Upsider Shares”) (valued at $2,544,362, based on a $7.88 per share acquisition date price), of which 51,940 of the Upsider Shares were held in reserve and were recorded as a current liability, contingent consideration in the accompanying financial statements.
Added
Further, GOLQ grants to the Company the option to purchase the GOLQ Technology and the Licensed Products for a purchase price of $400,000 for the duration of the Term, subject to shareholder approval if required under applicable laws and regulations at the time of notice of exercise.
Removed
The shareholders of Upsider were paid earn-out consideration in the form of the issuance of 321,390 shares of our Common Stock on September 1, 2021 based on the attainment of specific targets during the nine months following closing. The total purchase price was approximately $3.9 million.
Added
On March 28, 2024, the Company and GoLogiq entered into an Amendment to Technology License and Commercialization Agreement (the “Amendment”). Under the Amendment, the Company and GoLogiq agreed to and added Section 3.3 to further detail technical assistance from GOLQ to the Company.
Removed
The assets acquired in the Upsider Purchase consist primarily of sales and client relationships, contracts, intellectual property, partnership and vendor agreements and a de minimis amount of other assets. We also assumed a small amount of liabilities in the form of net payables.
Added
In addition, Section 5.1 was amended such that the royalty was lowered from eight percent (8%) to five percent (5%) for which the Company granted to GoLogiq a warrant to purchase two hundred ninety-two thousand (292,000) shares of Company Common Stock (the “Warrant”) for a price equal to $0.01 per share (the “Exercise Price”).
Removed
We utilize Upsider’s machine learning artificial intelligence to provide a more predictive and efficient recruiting tool that enhances our current technology. On December 5, 2022, The Company entered into an asset purchase agreement in which the Company sold to a third party Upsider’s candidate sourcing and engagement platform and all related intellectual property for $1,000,000 in cash consideration.
Added
The Warrant may be exercised at any time commencing upon the date that is six (6) months from the Effective Date and terminating at 5:00 P.M., New York time, on the three (3) year anniversary of the Effective Date, unless the closing sale price for the common stock of the Company has closed at or above $5.00 for ten consecutive trading days.
Removed
The recorded value of the internal use software developed at the date of the sale was $1,000,000 resulting in no gain or loss on the sale. For a period of eighteen months from the date of the sale, the Company will have continued access to this platform.
Added
Further, the Amendment contains a blocker provision that limits shares issuable under the Warrant such that the shares beneficially owned by GoLogiq does not exceed 9.99% of the total number of issued and outstanding shares of the Company’s Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). 5 Table of Contents On March 5, 2024, the Company amended the August 16, 2023, agreement.
Removed
OneWire Asset Purchase Effective May 10, 2021, we, through a wholly owned subsidiary, entered into an Asset Purchase Agreement and Plan of Reorganization with OneWire Holdings, LLC, a Delaware limited liability company (“OneWire”), to acquire all the assets and several liabilities of OneWire (the “OneWire Purchase”).
Added
On August 16, 2023, the Company entered into an Asset Purchase Agreement (the “Job Mobz Purchase Agreement”) with Job Mobz Inc., a California corporation (“Job Mobz”).
Removed
As consideration for the OneWire Purchase, OneWire’s shareholders received a total of 155,327 shares (the “Consideration Shares”) of Common Stock, (valued at $1,255,000, based on a price per share of $8.0797, the volume-weighted average price of the Common Stock for the 30 day period immediately prior to the closing date), of which 31,066 of the Consideration Shares are subject to forfeiture as security against a post-closing working capital adjustment and a revenue true-up and pursuant to OneWire’s indemnity obligations.
Added
Upon the terms and subject to the conditions of the Job Mobz Purchase Agreement, the Company has agreed to sell and assign its right, title, and interest in the domain name and the assets generally used to operate the business associated therewith to Job Mobz for an aggregate purchase price of $1,800,000, subject to certain adjustments.
Removed
At the date of closing, the common stock was valued at $1,436,777 and there was a to be determined working capital adjustment to be paid in additional common shares recorded as a liability at a fair value of $45,751 for a total purchase price of $1,482,528.
Added
On March 5, 2024, the Company entered into an amendment to the August 16, 2023, Asset Purchase Agreement with Job Mobz, resulting in the extension of the closing date to June 30, 2024. Furthermore, the Company received non-refundable payments totaling $250,000 from Job Mobz in April of 2024, per the terms of the latest amendment.
Removed
The assets acquired in the OneWire Purchase consist primarily of sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

40 edited+10 added−12 removed95 unchanged
Biggest changeWe use third-party cloud infrastructure service providers and co-located data centers in the United States and abroad to host the Platform. Software development, remote server administration, quality assurance, and administrative access is managed overseas by Recruiter Mauritius Ltd. under the direction of our Chief Web Officer, Ashley Saddul.
Biggest changeWe rely on third parties to host our Platform, and any disruption of service from such third parties or material change to, or termination of, our arrangement with them could adversely affect our business. We use third-party cloud infrastructure service providers and co-located data centers in the United States and abroad to host the Platform.
Any significant change in the applicable laws, regulations, or industry practices regarding the collection, use, retention, security, or disclosure of user data, or their interpretation, or any changes regarding the manner in which the express or implied consent of users for the collection, use, retention, or disclosure of such data must be obtained, could increase our costs and require us to modify our platform and our products and services, in a manner that could materially affect our business. 28 Table of Contents The laws, regulations, and industry standards concerning privacy, data protection, and information security also continue to evolve.
Any significant change in the applicable laws, regulations, or industry practices regarding the collection, use, retention, security, or disclosure of user data, or their interpretation, or any changes regarding the manner in which the express or implied consent of users for the collection, use, retention, or disclosure of such data must be obtained, could increase our costs and require us to modify our platform and our products and services, in a manner that could materially affect our business. 25 Table of Contents The laws, regulations, and industry standards concerning privacy, data protection, and information security also continue to evolve.
We have recently experienced significant growth following our acquisitions of Scouted, Upsider, OneWire, Parrut, and Novo during 2021. Businesses that grow rapidly often have difficulty managing their growth while maintaining their compliance and quality standards.
We have experienced significant growth following our acquisitions of Scouted, Upsider, OneWire, Parrut, and Novo during 2021. Businesses that grow rapidly often have difficulty managing their growth while maintaining their compliance and quality standards.
If we record impairment charges related to our goodwill and long-lived assets, our operating results would likely be materially and adversely affected. 26 Table of Contents If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
If we record impairment charges related to our goodwill and long-lived assets, our operating results would likely be materially and adversely affected. 23 Table of Contents If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
Our management has determined that there is substantial doubt about our ability to continue as a going concern and the report of our independent registered public accounting firm on our consolidated financial statements for the years ended December 31, 2022 and 2021 includes an explanatory paragraph with respect to the foregoing.
Our management has determined that there is substantial doubt about our ability to continue as a going concern and the report of our independent registered public accounting firm on our consolidated financial statements for the years ended December 31, 2023, and 2022 includes an explanatory paragraph with respect to the foregoing.
This determination was based on the following factors: (i) used cash in operations of approximately $6.9 million in 2022, and our available cash as of the date of this filing will not be sufficient to fund our anticipated level of operations for the next 12 months; (ii) we will require additional financing for the fiscal year ending December 31, 2023 to continue at our expected level of operations; and (iii) if we fail to obtain the needed capital, we will be forced to delay, scale back, or eliminate some or all of its development activities or perhaps cease operations.
This determination was based on the following factors: (i) used cash in operations of approximately $0.9 million in 2023, and our available cash as of the date of this filing will not be sufficient to fund our anticipated level of operations for the next 12 months; (ii) we will require additional financing for the fiscal year ending December 31, 2024, to continue at our expected level of operations; and (iii) if we fail to obtain the needed capital, we will be forced to delay, scale back, or eliminate some or all of its development activities or perhaps cease operations.
There may be additional risks that we do not know of or that we believe are immaterial that could also impair our business and financial condition. Risks Related to Our Business and Industry There is substantial doubt regarding our ability to continue as a going concern absent obtaining adequate new debt or equity financing and achieving sufficient sales levels .
There may be additional risks that we do not know of or that we believe are immaterial that could also impair our business and financial condition. 17 Table of Contents Risks Related to Our Business and Industry There is substantial doubt regarding our ability to continue as a going concern absent obtaining adequate new debt or equity financing and achieving sufficient sales levels .
Additionally, any such reclassification would require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition. Approximately 40% of visitors to our websites originate from countries outside the United States, which exposes us to risks related to operating abroad.
Additionally, any such reclassification would require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition. 24 Table of Contents Approximately 40% of visitors to our websites originate from countries outside the United States, which exposes us to risks related to operating abroad.
As of the date of this Annual Report, there were approximately 15.4 million shares of Common Stock issuable upon conversion of our outstanding convertible preferred stock, stock options and exercise of warrants (including warrants issued to the placement agent in our private placement transactions). In the future, we may grant additional options, warrants and convertible securities.
As of the date of this Annual Report, there were approximately 1 million shares of Common Stock issuable upon conversion of our outstanding convertible preferred stock, stock options and exercise of warrants (including warrants issued to the placement agent in our private placement transactions). In the future, we may grant additional options, warrants and convertible securities.
Any failure to protect or any loss of our intellectual property may have an adverse effect on our ability to compete and may adversely affect our business, financial condition, and operating results. If we cannot manage our growth effectively, our results of operations would be materially and adversely affected.
Any failure to protect or any loss of our intellectual property may have an adverse effect on our ability to compete and may adversely affect our business, financial condition, and operating results. 22 Table of Contents If we cannot manage our growth effectively, our results of operations would be materially and adversely affected.
Any failure to achieve and maintain profitability would continue to have an adverse effect on our stockholders’ deficit and working capital and could result in a decline in our stock price or cause us to cease operations. 22 Table of Contents Because we have a limited operating history under our current platform, it is difficult to evaluate our business and future prospects.
Any failure to achieve and maintain profitability would continue to have an adverse effect on our stockholders’ deficit and working capital and could result in a decline in our stock price or cause us to cease operations. Because we have a limited operating history under our current platform, it is difficult to evaluate our business and future prospects.
Because we have a history of net losses, we may never achieve or sustain profitability or positive cash flow from operations . We have incurred net losses in each fiscal year since our inception, including net losses of approximately $16.5 million for the year ended December 31, 2022 and $16.3 million for the year ended December 31, 2021.
Because we have a history of net losses, we may never achieve or sustain profitability or positive cash flow from operations . We have incurred net losses in each fiscal year since our inception, including net losses of approximately $6.7 million for the year ended December 31, 2023 and, $16.5 million for the year ended December 31, 2022.
We cannot be certain if this ruling in California will impact us. 27 Table of Contents If a court or an administrative agency were to determine that the recruiters on our platform must be classified as employees rather than independent contractors, we and/or our clients would become subject to additional regulatory requirements, including but not limited to tax, wages, and wage and hour laws and requirements (such as those pertaining to minimum wage and overtime); employee benefits, social security, workers’ compensation and unemployment; discrimination, harassment, and retaliation under civil rights laws; claims under laws pertaining to unionizing, collective bargaining, and other concerted activity; and other laws and regulations applicable to employers and employees.
If a court or an administrative agency were to determine that the recruiters on our platform must be classified as employees rather than independent contractors, we and/or our clients would become subject to additional regulatory requirements, including but not limited to tax, wages, and wage and hour laws and requirements (such as those pertaining to minimum wage and overtime); employee benefits, social security, workers’ compensation and unemployment; discrimination, harassment, and retaliation under civil rights laws; claims under laws pertaining to unionizing, collective bargaining, and other concerted activity; and other laws and regulations applicable to employers and employees.
As of December 31, 2022, we had an accumulated deficit of approximately $69.3 million. We expect to continue to incur substantial expenditures to develop and market our services and could continue to incur losses and negative operating cash flow for the foreseeable future.
As of December 31, 2023, we had an accumulated deficit of approximately $76.4 million. We expect to continue to incur substantial expenditures to develop and market our services and could continue to incur losses and negative operating cash flow for the foreseeable future.
This concentration of ownership may have the effect of delaying or preventing any change in control transaction, and by limiting the number of shares of our stock traded in public markets could adversely affect liquidity and price of our Common Stock.
This concentration of ownership may have the effect of delaying or preventing any change in control transaction, and by limiting the number of shares of our stock traded in public markets could adversely affect liquidity and price of our Common Stock. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
We do not have the ability to control the workplace environment. As the employer of record of our temporary employees, we incur a risk of liability to our temporary employees for various workplace events, including claims of physical injury, discrimination, harassment, or failure to protect confidential personal information.
As the employer of record of our temporary employees, we incur a risk of liability to our temporary employees for various workplace events, including claims of physical injury, discrimination, harassment, or failure to protect confidential personal information.
Because we rely on Mr. Saddul and his staff who are based in Mauritius, we face a risk based upon any local conditions and difficulties we may face in enforcing our intellectual property rights there. Further, such enforcement efforts may result in a ruling that our intellectual property rights are unenforceable.
Because we rely on development staff who are internationally located, we face a risk based upon any local conditions and difficulties we may face in enforcing our intellectual property rights there. Further, such enforcement efforts may result in a ruling that our intellectual property rights are unenforceable.
See “ Certain Relationships and Related Person Transactions ” for further details. Although we believe that the terms of our arrangements with related parties are reasonable and generally consistent with market standards, such terms do not necessarily reflect terms that we or such related parties would agree to in arms-length negotiations with an independent third party.
Although we believe that the terms of our arrangements with related parties are reasonable and generally consistent with market standards, such terms do not necessarily reflect terms that we or such related parties would agree to in arms-length negotiations with an independent third party.
Our success depends in large part on our proprietary technology and data, including our trade secrets, software code, the content of our website, workflows, proprietary databases, registered domain names, registered and unregistered trademarks, trademark applications, copyrights, and inventions (whether or not patentable).
Failure to protect our intellectual property could adversely affect our business. Our success depends in large part on our proprietary technology and data, including our trade secrets, software code, the content of our website, workflows, proprietary databases, registered domain names, registered and unregistered trademarks, trademark applications, copyrights, and inventions (whether or not patentable).
Any shortage of candidates could materially adversely affect our business, financial condition, results of operations or cash flows. 21 Table of Contents We may incur potential liability to employees and clients. Our consulting and staffing business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces.
Any shortage of candidates could materially adversely affect our business, financial condition, results of operations or cash flows. We may incur potential liability to employees and clients. Our consulting and staffing business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces. We do not have the ability to control the workplace environment.
In addition, we may require additional funds to respond to business challenges, including the need to develop new features or enhance our solutions, improve our operating infrastructure, or acquire or develop complementary businesses and technologies.
We intend to continue to make substantial investments to fund our business and support our growth. In addition, we may require additional funds to respond to business challenges, including the need to develop new features or enhance our solutions, improve our operating infrastructure, or acquire or develop complementary businesses and technologies.
During the period from March 2019 through January 2021, we engaged in a series of private placement transactions issuing to several accredited investors shares of convertible preferred stock and warrants to purchase Common Stock.
During the period from March 2019 through April 2024, we engaged in a series of private placement and conversion transactions issuing to several accredited investors shares of stock and/or warrants to purchase Common Stock.
If we fail to comply with the terms of an applicable open source software license, we may need to seek licenses from third parties to continue offering the Platform and the terms on which such licenses are available may not be economically feasible, to re-engineer the Platform to remove or replace the open source software, to limit or stop offering the Platform if re-engineering could not be accomplished on a timely or cost-effective basis, to pay monetary damages, or to make available the source code for aspects of our proprietary technology, any of which could adversely affect our business, operating results, and financial condition. 24 Table of Contents Our future growth depends in part on our ability to form new and maintain existing strategic partnerships with third party solution providers and continued performance of such solution providers under the terms of our strategic partnerships with them.
If we fail to comply with the terms of an applicable open source software license, we may need to seek licenses from third parties to continue offering the Platform and the terms on which such licenses are available may not be economically feasible, to re-engineer the Platform to remove or replace the open source software, to limit or stop offering the Platform if re-engineering could not be accomplished on a timely or cost-effective basis, to pay monetary damages, or to make available the source code for aspects of our proprietary technology, any of which could adversely affect our business, operating results, and financial condition.
Any errors, defects, disruptions in service, or other performance or stability problems with the Platform could result in negative publicity, loss of or delay in market acceptance of the Platform, loss of competitive position, delay of payment to us or recruiters, or claims by users for losses sustained by them, which could adversely impact our brand and reputation, operating results, and future prospects. 23 Table of Contents We rely on third parties to host our Platform, and any disruption of service from such third parties or material change to, or termination of, our arrangement with them could adversely affect our business.
Any errors, defects, disruptions in service, or other performance or stability problems with the Platform could result in negative publicity, loss of or delay in market acceptance of the Platform, loss of competitive position, delay of payment to us or recruiters, or claims by users for losses sustained by them, which could adversely impact our brand and reputation, operating results, and future prospects.
We do not control the physical operation of any of the data centers we use. These facilities are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cyber security attacks, terrorist attacks, power losses, telecommunications failures, and similar events.
Software development, remote server administration, quality assurance, and administrative access is managed by international personnel. We do not control the physical operation of any of the data centers we use. These facilities are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cyber security attacks, terrorist attacks, power losses, telecommunications failures, and similar events.
For example, we currently rely on a related party provider of information technology and computer services located in Mauritius, an island country located off the eastern coast of Africa, for software development and maintenance related to our website and the Platform. Our Chief Web Officer is an employee of this service provider.
For example, we currently rely on a related party provider of information technology and computer services located in Mauritius, an island country located off the eastern coast of Africa, for software development and maintenance related to our website and the Platform. See “ Certain Relationships and Related Person Transactions ” for further details.
We have also issued shares of our Common Stock in connection with the Scouted Asset Purchase, the Upsider Purchase, the OneWire Purchase, the Parrut Purchase, and the Novo Purchase. See “ Part I - Item 1. Business ” for further details.
We have also issued shares of our Common Stock in connection with the Scouted Asset Purchase, the Upsider Purchase, the OneWire Purchase, the Parrut Purchase, and the Novo Purchase.
Our future success depends on our ability to retain and attract high-quality personnel, and the efforts, abilities and continued service of our senior management, and unsuccessful succession planning could adversely affect our business.
If the overall economy experiences a reduced need for specialized personnel, our results of operations would be materials and adversely affected. Our future success depends on our ability to retain and attract high-quality personnel, and the efforts, abilities and continued service of our senior management, and unsuccessful succession planning could adversely affect our business.
If we are unsuccessful in establishing or maintaining our relationships with third parties, our growth prospects could be impaired, and our operating results may be adversely impacted. Even if we are successful in establishing and maintaining these strategic relationships with third parties, they may not result in the growth of our client base or increased revenue.
If we are unsuccessful in establishing or maintaining our relationships with third parties, our growth prospects could be impaired, and our operating results may be adversely impacted.
If we are unable to respond to technological advancements and other changes in our industry by developing and releasing new services, or improving our existing services, in a timely and cost-effective manner or at all, our business could be materially and adversely affected.
Given our limited operating history, we may be unable to effectively implement our business plan which could materially harm our business or cause us to scale down or cease our operations. 19 Table of Contents If we are unable to respond to technological advancements and other changes in our industry by developing and releasing new services, or improving our existing services, in a timely and cost-effective manner or at all, our business could be materially and adversely affected.
While such claims have not historically had a material adverse effect upon our business or financial condition, there can be no assurance that we will continue to be able to obtain insurance at a cost that does not have a material adverse effect on our business or financial condition or that such claims will be covered by such available insurance.
While such claims have not historically had a material adverse effect upon our business or financial condition, there can be no assurance that we will continue to be able to obtain insurance at a cost that does not have a material adverse effect on our business or financial condition or that such claims will be covered by such available insurance. 18 Table of Contents We may require additional capital to fund our business and support our growth, and our inability to generate and obtain such capital on acceptable terms, or at all, could harm our business, operating results, financial condition, and prospects.
The loss of qualified executives and key employees, or inability to attract, retain, and motivate high-quality executives and employees required for the planned expansion of our business, may harm our operating results and impair our ability to grow.
The loss of qualified executives and key employees, or inability to attract, retain, and motivate high-quality executives and employees required for the planned expansion of our business, may harm our operating results and impair our ability to grow. We depend on the continued services of our key personnel, including Directors Evan Sohn, Lillian Mbeki, Deborah Leff, Steve Pemberton, Wallace D.
In order to protect our intellectual property, we rely on a combination of copyright, trademark, and trade secrets, as well as confidentiality provisions and contractual arrangements. 25 Table of Contents Despite our efforts, third parties may infringe upon or misappropriate our intellectual property by copying or reverse-engineering information that we regard as proprietary, including our platform, to create products and services that compete with ours.
Despite our efforts, third parties may infringe upon or misappropriate our intellectual property by copying or reverse-engineering information that we regard as proprietary, including our platform, to create products and services that compete with ours.
We rely in part on certain software that we license from related and third parties as part of our service offerings, and if we were to lose the ability to use such software our business and operating results would be materially and adversely affected.
Even if we are successful in establishing and maintaining these strategic relationships with third parties, they may not result in the growth of our client base or increased revenue. 21 Table of Contents We rely in part on certain software that we license from related and third parties as part of our service offerings, and if we were to lose the ability to use such software our business and operating results would be materially and adversely affected.
Any termination of a business relationship with, or a significant sustained reduction in business from, one or more of these customers could have a material adverse effect on our operating results and cash flows. Failure to protect our intellectual property could adversely affect our business.
For the year ended December 31, 2022, one customer accounted for more than 10% of total revenue, at 14%. Any termination of a business relationship with, or a significant sustained reduction in business from, one or more of these customers could have a material adverse effect on our operating results and cash flows.
If these providers increase the cost of their services, we may have to increase the fees to use the Platform, which could cause us to lose clients, or we may have to assume those increased costs, and our operating results may be adversely impacted.
If these providers increase the cost of their services, we may have to increase the fees to use the Platform, which could cause us to lose clients, or we may have to assume those increased costs, and our operating results may be adversely impacted. 20 Table of Contents Because we have historically had arrangements with related parties affecting a significant part of our operations, such arrangements may not reflect terms that would otherwise be available from unaffiliated third parties .
Because we have arrangements with related parties affecting a significant part of our operations, such arrangements may not reflect terms that would otherwise be available from unaffiliated third parties . We rely on arrangements with related parties for support of our operations, including technical support, and may engage in additional related party transactions in the future.
We rely on arrangements with related parties for support of our operations, including technical support, and may engage in additional related party transactions in the future.
For the year ended December 31, 2022 one customer accounted for 10% or more of total revenue, at 14%. For the year ended December 31, 2021 one customer accounted for 10% or more of total revenue, at 12%.
As of December 31, 2023, one customer accounted for more than 10% of the accounts receivable balance, at 93%. As of December 31, 2022, one customer accounted for more than 10% of the accounts receivable balance, at 28%. For the year ended December 31, 2023, one customer accounted for more than 10% of total revenue, at 57%.
A small number of seven stockholders, including members of our management, controls approximately 27% of our outstanding voting power as of March 22, 2023 and therefore is able to exert a significant amount of influence over our management and affairs and all matters requiring stockholder approval, including significant corporate transactions.
This could also cause the market price of our Common Stock shares to drop significantly, even if our business is performing well. 26 Table of Contents A small number of ten stockholders, including members of our management, controls approximately 14% of our outstanding voting power as of March 31, 2024, and therefore is able to exert a significant amount of influence over our management and affairs and all matters requiring stockholder approval, including significant corporate transactions.
Our work with each of these key personnel are subject to changes and/or termination, and our inability to effectively retain the services of our key management personnel, could materially and adversely affect our operating results and future prospects. If we sustain an impairment in the carrying value of long-lived assets and goodwill, it will negatively affect our operating results.
Ruiz, our Chief Executive Officer Granger Whitelaw, and our Interim Chief Financial Officer Miles Jennings. Our work with each of these key personnel is subject to changes and/or termination, and our inability to effectively retain the services of our key management personnel, could materially and adversely affect our operating results and future prospects.
Removed
We may require additional capital to fund our business and support our growth, and our inability to generate and obtain such capital on acceptable terms, or at all, could harm our business, operating results, financial condition, and prospects. We intend to continue to make substantial investments to fund our business and support our growth.
Added
Our future growth depends in part on our ability to form new and maintain existing strategic partnerships with third party solution providers and continued performance of such solution providers under the terms of our strategic partnerships with them.
Removed
Given our limited operating history, we may be unable to effectively implement our business plan which could materially harm our business or cause us to scale down or cease our operations.
Added
In order to protect our intellectual property, we rely on a combination of copyright, trademark, and trade secrets, as well as confidentiality provisions and contractual arrangements.
Removed
Our future growth depends on our ability to attract, retain, and incentivize a community of recruiters and employers, and the loss of existing recruiters and employers, or failure to attract new ones, could adversely impact our business and future prospects. The size of our user community of recruiters and employers on our platform is critical to our success.
Added
If we sustain an impairment in the carrying value of long-lived assets and goodwill, it will negatively affect our operating results.
Removed
Our ability to achieve profitability in the future will depend, in large part, on our ability to attract new users to, and retain existing users on, the Platform. Recruiters and employers on the Platform can generally decide to cease using the Platform at any time.
Added
Risks Related to Strategic Transactions and Resource Limitations Our company is currently engaged in a series of strategic transactions that involve complex financial and legal arrangements, characterized by a multitude of contingencies and obligations. These transactions are integral to our strategy for growth and expansion in a competitive marketplace.
Removed
While we have experienced rapid growth in the number of recruiters on the Platform in recent months, with numbers rising from 27,011 on September 30, 2020 to over 42,000 in February 2023, this growth may not continue at the same pace in the future or at all.
Added
However, the intricate nature of these deals, combined with our limited resources and capital, present significant risks that could materially and adversely affect our business, financial condition, and operational results. The successful execution of these transactions demands a high degree of financial acumen, legal expertise, and strategic foresight, areas where our resources are constrained.
Removed
In addition, it is possible that the ongoing effects of COVID-19 may have a deleterious effect on our user growth in the future. Achieving growth in our community of users may require us to engage in increasingly sophisticated and costly sales and marketing efforts that may not result in additional users.
Added
The complexity and scope of the arrangements increase the likelihood of unforeseen challenges, including but not limited to regulatory hurdles, integration obstacles, and potential disputes with counterparties.
Removed
We may also need to modify our pricing model to attract and retain such users. If we fail to attract new users or fail to maintain or expand existing relationships in a cost-effective manner, our business and future prospects would be materially and adversely impacted.
Added
Given our limited capital, any delays or unexpected costs arising from these transactions could strain our financial resources, forcing us to reallocate funds from other critical areas of our business or seek additional capital at unfavorable terms. Moreover, the contingencies associated with these transactions introduce uncertainty regarding their ultimate benefit to our company.
Removed
We derive our revenue from a limited number of customers. As of December 31, 2022, one customer, accounted for more than 10% of the accounts receivable balance, at 28%. As of December 31, 2021, two customers, accounted for more than 10% of the accounts receivable balance, at 14% and 12%, for a total of 26%.
Added
While we anticipate that these strategic endeavors will enhance our competitive position and operational capabilities, their complexity and the inherent unpredictability of their outcomes mean that we cannot guarantee these benefits will be realized as expected, or at all. In light of these factors, our future performance and ability to execute our business strategy effectively could be compromised.
Removed
If the overall economy experiences a reduced need for specialized personnel, our results of operations would be materials and adversely affected. The job market and unemployment rate held up throughout 2022, but there can be no guarantee of a continued strong demand for professional labor.
Added
Investors should consider the risks associated with our involvement in these complex strategic transactions, especially in the context of our limited resources and capital, before making an investment decision.
Removed
Layoffs may pick up, and the general unemployment rate may move up, due to macroeconomic changes, which would be negative for our business. In addition, rapid changes due to disruptive technology may change the demand for specialized and skilled human workers, which could change the overall demand for our services.
Added
We cannot be certain if this ruling in California will impact us.
Removed
We depend on the continued services of our key personnel, including Evan Sohn, our Chief Executive Officer and Chairman, Miles Jennings, our President and Chief Operating Officer, and Judy Krandel, our Chief Financial Officer. We entered into employment agreements with Evan Sohn, Miles Jennings and Judy Krandel.
Removed
This could also cause the market price of our Common Stock shares to drop significantly, even if our business is performing well.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable space will be available to accommodate any such expansion of our operations.
Biggest changeITEM 2. PROPERTIES We do not currently own any physical properties and operate virtually. We do not currently have other leased offices. We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable space will be available to accommodate any such expansion of our operations.
Removed
ITEM 2. PROPERTIES We do not currently own any physical properties. Our corporate headquarters are located in New York, NY, where we lease WeWork office space at 500 7 th Avenue as needed. We do not currently have other leased offices.
Removed
Apart from disruptions caused by COVID-19, all of our senior executives including our Chief Executive Officer and Executive Chairman, Chief Financial Officer, President and Chief Operating Officer, and former Chief Technology Officer worked remotely.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeProceedings in the other lawsuit remain ongoing. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 30 Table of Contents PART II
Biggest changeITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 27 Table of Contents PART II
We consider settlement of cases when, in management’s judgment, it is in the best interests of both the Company and its shareholders to do so. Recruiter.com Group, Inc. v. BKR Strategy Group. We are currently pursuing two related collections matters against BKR Strategy Group. Since 2013, BKR Strategy Group has provided talent acquisition strategy and services to top companies.
We consider settlement of cases when, in management’s judgment, it is in the best interests of both the Company and its shareholders to do so. We are currently pursuing two related collections matters against BKR Strategy Group. Since 2013, BKR Strategy Group has provided talent acquisition strategy and services to top companies.
Added
Proceedings in the other lawsuit remain ongoing. On September 6, 2023, Recruiter.com Group, Inc. (the "Company") was served with a civil lawsuit filed by Pipl, Inc. in the Superior Court of the State of Connecticut, Judicial District of New Britain.
Added
The lawsuit alleges that the Company failed to pay for goods and/or services provided by Pipl, Inc. between January 3, 2021, and December 7, 2022, with the claimed amount due exceeding $266,562.59 plus interest, costs, and attorneys' fees. The Company is currently evaluating the complaint with counsel and intends to vigorously defend against the claims.
Added
Given the early stage of the litigation, the Company is unable to predict the outcome of the case or estimate the possible loss or range of loss, if any. On April 1, 2024, Recruiter.com Group, Inc. ("the Company") became involved in legal proceedings initiated by Creditors Adjustment Bureau, Inc.
Added
("CAB"), as documented in the Superior Court of California, County of Santa Clara, case number 24CV433086. CAB's complaint, filed on March 13, 2024, alleges that the Company failed to fulfill payment obligations under contracts with CAB's assignor, totaling approximately $213,899.94. CAB seeks recovery of the owed amounts, interest, attorney fees, costs, and other damages deemed appropriate by the court.
Added
The Company is currently reviewing the complaint and intends to defend itself vigorously. At this stage, the Company is unable to predict the outcome of the case or estimate the potential financial impact.
Added
Except for the aforementioned proceedings described above, as of the date of this filing, there are no material pending legal or governmental proceedings relating to our Company or properties to which we are a party, and, to our knowledge, there are no material proceedings to which any of our directors, executive officers, or affiliates are a party adverse to us or which have a material interest adverse to us.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 30 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6 Reserved 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32
Biggest changeItem 4. Mine Safety Disclosures 27 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28 Item 6 Reserved 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis is not the actual number of beneficial owners of our Common Stock, as shares are held in “street name” by brokers and others on behalf of such owners. As of March 22, 2023, there was one holder of record of our Series E Convertible Preferred Stock.
Biggest changeThis is not the actual number of beneficial owners of our Common Stock, as shares are held in “street name” by brokers and others on behalf of such owners. As of March 31, 2024, there were no holders of record of our Series E Convertible Preferred Stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock trades on the Nasdaq Capital Market under the symbol “RCRT.” Holders The number of shareholders of record of our Common Stock as of March 22, 2023 was approximately 612 recordholders.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock trades on the Nasdaq Capital Market under the symbol “RCRT.” Holders The number of shareholders of record of our Common Stock as of March 31, 2024, was approximately 612 recordholders.
Unregistered Sales of Equity Securities We have previously disclosed all sales of securities without registration under the Securities Act of 1933. Repurchases of Equity Securities by the Issuer and Affiliated Purchasers None. 31 Table of Contents
Unregistered Sales of Equity Securities We have previously disclosed all sales of securities without registration under the Securities Act of 1933. Repurchases of Equity Securities by the Issuer and Affiliated Purchasers None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThis increase resulted primarily from an increase in compensation expense to support revenue growth, third party staffing costs and other fees related to the recruitment and staffing businesses acquired, as well as costs for contract recruiters supporting the Recruiters On Demand business. Our gross profit for 2022 was $8.7 million which produced a gross profit margin of 35%.
Biggest changeCost of Revenue Cost of revenue for the year ended December 31, 2023, was $2.7 million, compared to $13.7 million in the prior year. This decrease resulted primarily due to decreases in compensation expense, third party staffing costs, and other fees related to the recruitment and staffing businesses acquired.
We operate a cloud-based scalable software for professional hiring, which provides prospective employers access to a rich and diverse data set of prospective candidates. Our mission is to become a preferred solution for hiring specialized talent.
We operate cloud-based scalable software for professional hiring, which provides prospective employers access to a rich and diverse data set of prospective candidates. Our mission is to become a preferred solution for hiring specialized talent.
Marketplace advertising revenues are recognized on a gross basis when the advertising is placed and displayed or when lead generation activities and online publications are completed, which is the point at which the performance obligations are satisfied. Payments for marketing and publishing are typically due within 30 days of completion of services.
Payments for marketing and publishing are typically due within 30 days of completion of services. Marketplace advertising revenues are recognized on a gross basis when the advertising is placed and displayed or when lead generation activities and online publications are completed, which is the point at which the performance obligations are satisfied.
The Company is also obligated to pay the Lender a cash fee equal to 1.25% of the aggregate principal amount of the Advances that is outstanding on each anniversary of the Closing Date if (i) the average closing price of the Company’s common stock for the thirty (30) day period prior to such anniversary date is less than $2.00 or (ii) the closing price of the Company’s common stock for the date immediately prior to such anniversary date is less than $2.00.
The Company is also obligated to pay the Lender a cash fee equal to 1.25% of the aggregate principal amount of the Advances that is outstanding on each anniversary of the Closing Date if (i) the average closing price of the Company’s common stock for the thirty (30) day period prior to such anniversary date is less than $30.00 or (ii) the closing price of the Company’s common stock for the date immediately prior to such anniversary date is less than $30.00.
Pursuant to the Loan Agreement, the Lender will make advances (“Advances”) in the aggregate principal amount of $2,250,000, with the first Advance of $2,000,000 being provided on or around the Closing Date and the second Advance of $250,000 being available to the Company upon request prior to April 30, 2023.
(the “Lender”). Pursuant to the Loan Agreement, the Lender will make advances (“Advances”) in the aggregate principal amount of $2,250,000, with the first Advance of $2,000,000 being provided on or around the Closing Date and the second Advance of $250,000 being available to the Company upon request prior to April 30, 2023.
We also offer a recruiter certification program that encompasses our recruitment related training content, which we make accessible through our online learning management system. Customers of the recruiter certification program use a self-managed system to navigate through a digital course of study.
We also offer a recruiter certification program which encompasses our recruitment related training content, which we make accessible through our online learning management system. Customers of the recruiter certification program use a self-managed system to navigate through a digital course of study.
In April 2022, we negotiated a reduction in this promissory note with Novo Group due to employee turnover that occurred following the acquisition. We entered into an agreement with Novo Group to reduce the outstanding principal balance by $600,000 and changed the maturity date to November 30, 2023.
In April 2022, we negotiated a reduction in this promissory note with Novo Group due to employee turnover that occurred following the acquisition. We entered into an agreement with Novo Group to reduce the outstanding principal balance by $600,000 and changed the maturity date to November 1, 2023.
Upon the earlier of the Maturity Date or a sale of the Company or other change in control, the Lender has the right to cause the Company to repurchase the Warrants (“Puttable Warrant”) for up to $703,125 ($600,000 if only the first Advance has been made and $703,125 if both Advances have been made).
Upon the earlier of the Maturity Date or a sale of the Company or other change in control, the Lender has the right to cause the Company to repurchase the Warrants for up to $703,125 ($600,000 if only the first Advance has been made and $703,125 if both Advances have been made).
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”) describes the matters that we consider to be important to understanding the results of our operations for each of the two years in the years ended December 31, 2022 and 2021, and our capital resources and liquidity as of December 31, 2022 and 2021.
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”) describes the matters that we consider to be important to understanding the results of our operations for each of the two years in the years ended December 31, 2023, and 2022, and our capital resources and liquidity as of December 31, 2023, and 2022.
The full-time placement fee is typically either a percentage of the referred candidates’ first year base salary or an agreed-upon flat fee. · Marketplace: Our Marketplace category comprises services for businesses and individuals that leverage our online presence and career communities.
The full-time placement fee is typically either a percentage of the referred candidates’ first year base salary or an agreed-upon flat fee. 29 Table of Contents · Marketplace: Our Marketplace category comprises services for businesses and individuals that leverage our online presence and career communities.
The Warrants are exercisable for ten years from the Closing Date at an exercise price of $2.00 per share, subject to certain adjustments.
The Warrants are exercisable for ten years from the Closing Date at an exercise price of $30.00 per share, subject to certain adjustments.
Subsequently, we continued providing the service, but leveraged third-party tools in the delivery of services. 32 Table of Contents · Recruiters On Demand: Consists of a consulting and staffing service specifically for the placement of professional recruiters, which we market as Recruiters On Demand.
Subsequently, we continued providing the service, but leveraged third-party tools in the delivery of services. · Recruiters On Demand : Consists of a consulting and staffing service specifically for the placement of professional recruiters, which we market as Recruiters On Demand.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements made by or on behalf of the Company. Overview We operate an On Demand recruiting platform aimed at transforming the $28.5 billion dollar Employment and Recruitment Agency industry. Recruiter.com combines an online hiring software solution with On Demand recruiting services.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements made by or on behalf of the Company. 28 Table of Contents Overview We operate an On Demand recruiting platform aimed at transforming the Employment and Recruitment Agency industry. Recruiter.com combines an online hiring software solution with On Demand recruiting services.
As part of our software subscriptions, we offer enhanced support packages and On Demand recruiting support services for an additional fee. Additional fees may be charged when we place a candidate with our customer, depending on the subscription type.
As part of our software subscriptions, we offered enhanced support packages and On Demand recruiting support services for an additional fee. Additional fees may be charged when we placed a candidate with our customer, depending on the subscription type.
Marketplace Solutions revenues are recognized either on a gross basis when the advertising is placed and displayed or when lead generation activities and online publications are completed, which is the point at which the performance obligations are satisfied. Payments for marketing and publishing are typically due within 30 days of completion of services.
Payments for recruitment services are typically due within 90 days of completion of services. Marketplace Solutions revenues are recognized either on a gross basis when the advertising is placed and displayed or when lead generation activities and online publications are completed, which is the point at which the performance obligations are satisfied.
Based on cash on hand as of March 22, 2023 of approximately $428,000, we do not have the capital resources to meet our working capital needs for the next 12 months.
Based on cash on hand as of March 26, 2024, of approximately $428,000, we do not have the capital resources to meet our working capital needs for the next 12 months.
Operating Businesses and Revenue We generate revenue from the following activities: · Software Subscriptions : We offer a subscription to our web-based platforms that help employers recruit talent. Our platforms allow our customers to source, contact, screen and sort candidates using data science, advanced email campaigning tools, and predictive analytics.
Operating Businesses and Revenue We generate revenue from the following activities: · Software Subscriptions : We offered a subscription to our web-based platforms that helped employers recruit talent. Our platforms allowed customers to source, contact, screen, and sort candidates using data science, advanced email campaigning tools, and predictive analytics.
For the year ended December 31, 2022, we recorded a net loss of $16.5 million. We have not yet established an ongoing source of revenue that is sufficient to cover our operating costs and allow us to continue as a going concern.
For the year ended December 31, 2023, we recorded a net loss of $6.7 million. We have not yet established an ongoing source of revenue that is sufficient to cover our operating costs and allow us to continue as a going concern.
Job posting revenue is recognized at the end of the period the job is posted. Marketplace career services revenues are recognized on a gross basis upon distribution of resumes or completion of training courses, which is the point at which the performance obligations are satisfied. Payments for career services are typically due upon distribution or completion of services.
Payments for marketing and publishing are typically due within 30 days of completion of services. Job posting revenue is recognized at the end of the period the job is posted. Marketplace career services revenues are recognized on a gross basis upon distribution of resumes or completion of training courses, which is the point at which the performance obligations are satisfied.
The note bears interest at 12% per year and matures on May 6, 2023. In April 2022, we paid off the total principal balance of the note and the accrued interest. We issued a promissory note in the original principal amount of $1.75 million pursuant to the Parrut acquisition agreement dated July 7, 2021.
The note bears interest at 12% per year and matures on May 6, 2023. In April 2022, we paid off the total principal balance of the note and the accrued interest. We issued a promissory note for $1,750,000 pursuant to the Parrut acquisition agreement dated July 7, 2021.
Since December 31, 2022, we: ● Announced a client case study with First, a leading global brand experience agency, which Recruiter.com helped grow its specialized talent pool. ● Launched a ChatGPT content series that explores the impact of this powerful artificial intelligence technology on talent acquisition and recruiting. 35 Table of Contents ● Formed a strategic partnership with hireEZ, the award winning outbound recruiting platform, to provide the recruitment industry with an elevated level of efficiency and effectiveness when hiring talent. · Launched RecruitingClasses.com, a training platform for recruitment professionals.
Since December 31, 2022, we: · Announced a client case study with First, a leading global brand experience agency, which Recruiter.com helped grow its specialized talent pool. · Launched a ChatGPT content series that explores the impact of this powerful artificial intelligence technology on talent acquisition and recruiting. · Formed a strategic partnership with hireEZ, the award-winning outbound recruiting platform, to provide the recruitment industry with an elevated level of efficiency and effectiveness when hiring talent. · Launched a Marketplace Platform at ondemand.Recruiter.com for providing recruiters and launched RecruitingClasses.com, a training platform for recruitment professionals. · Launched CandidatePitch, a software tools using artificial intelligence for the instant generation of candidate profiles.
Changes in operating assets and liabilities include primarily the following: accounts receivable increased by $1.5 million and prepaid expenses and other current assets decreased by $253 thousand. Accounts payable, accrued liabilities, deferred payroll taxes, other liabilities, and deferred revenue decreased in total by $1.3 million.
Changes in operating assets and liabilities include primarily the following: accounts receivable decreased by $1.9 million and prepaid expenses and other current assets decreased by $96 thousand. Accounts payable, accrued liabilities, deferred payroll taxes, other liabilities, and deferred revenue decreased in total by $84 thousand.
Consulting and Staffing Services revenues represent services rendered to customers less sales adjustments and allowances. Reimbursements, including those related to travel and out- of-pocket expenses, are also included in the net service revenues and equivalent amounts of reimbursable expenses are included in costs of revenue.
Payments for career services are typically due upon distribution or completion of services. Consulting and Staffing Services revenues represent services rendered to customers less sales adjustments and allowances. Reimbursements, including those related to travel and out-of-pocket expenses, are also included in the net service revenues and equivalent amounts of reimbursable expenses are included in costs of revenue.
When evaluating the potential impairment of goodwill, management first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of our reporting units.
We perform our annual goodwill impairment assessment on December 31st of each year or as impairment indicators dictate. 41 Table of Contents When evaluating the potential impairment of goodwill, management first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of our reporting units.
Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results.
Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions.
The decrease in cash used in operating activities was attributable to the change in operating expenses outlined previously supporting the changes in our business. For the year ended December 31, 2022, net loss was $16.5 million.
The decrease in cash used in operating activities was attributable to the change in operating expenses outlined previously to support the changes in our business. For the year ended December 31, 2023, net loss was $6.7 million.
For the year ended December 31, 2022, our general and administrative expense was $15.3 million including $4.1 million of non-cash stock-based compensation and $493 thousand in bad debt expense. In 2021, our general and administrative expense was $17.3 million including $5.4 million of non- cash stock-based compensation and $928 thousand in bad debt expense.
For the year ended December 31, 2023, our general and administrative expense was $6.1 million including $1.5 million of non-cash stock-based compensation. In 2022, our general and administrative expense was $15.3 million including $4.1 million of non-cash stock-based compensation.
Net loss In the year ended December 31, 2022, we incurred a net loss of $16.5 million compared to a net loss of $16.3 million in the year ended December 31, 2021. 37 Table of Contents Definition of Non-GAAP Financial Measures The following discussion and analysis include both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures.
Net loss from continuing operations In the year ended December 31, 2023, we incurred a net loss of $7.7 million compared to a net loss of $17.6 million in the year ended December 31, 2022. 34 Table of Contents Definition of Non-GAAP Financial Measures The following discussion and analysis include both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures.
Revenue generated from placement fees that are related to the software subscription are recognized at the point-in-time when the 60 or 90-day guarantee expires. Recruiters On Demand services are billed to clients as either monthly subscriptions or time-based billings. Revenues for Recruiters On Demand are recognized on a gross basis when each monthly subscription service is completed.
Revenue generated from placement fees that are related to the software subscription are recognized at the point-in-time when the 60 or 90-day guarantee expires. 30 Table of Contents Recruiters On Demand services are billed to clients as either monthly subscriptions or time-based billings.
We had a decrease in Permanent Placement fees of $154 thousand or 14% and a decrease in our Consulting and Staffing business of $2.7 million or 36% as we focused resources on growing more strategic lines of business.
We had a decrease in Permanent Placement fees of $917 thousand or 98% and a decrease in our Consulting and Staffing business of $567 thousand or 81% as we focused resources on growing more strategic lines of business.
Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. 42 Table of Contents Revenues as presented on the statement of operations represent services rendered to customers less sales adjustments and allowances.
Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.
We test goodwill for impairment for its reporting units on an annual basis, or when events occur, or circumstances indicate the fair value of a reporting unit is below its carrying value. 43 Table of Contents We perform our annual goodwill impairment assessment on December 31st of each year or as impairment indicators dictate.
We test goodwill for impairment for its reporting units on an annual basis, or when events occur, or circumstances indicate the fair value of a reporting unit is below its carrying value.
For 2022, cash used in investing activities was $350 thousand as a result of capitalized software development costs of $1.3 million offset by proceeds received from the sale of intangible assets of $1.1 million, compared to $2.2 million of cash used in investing activities in 2021 principally as a result of cash paid for acquisitions.
For 2023, cash used in investing activities was $0 compared to $350 thousand of cash used in investing activities in 2022 principally as a result of cash paid for software development costs offset by proceeds from sale of intangibles assets. In 2023, net cash provided by financing activities was $1.0 million.
In 2021, product development expense included $162 thousand paid to Recruiter.com Mauritius. Amortization of Intangibles and Impairment Expense For the year ended December 31, 2022, we incurred a non-cash amortization charge of $3.7 million as compared to $2.7 million for the corresponding period in 2021.
Amortization of Intangibles and Impairment Expense For the year ended December 31, 2023, we incurred a non-cash amortization charge of $1.3 million as compared to $3.7 million for the corresponding period in 2022. For the year ended December 31, 2023, we incurred a non-cash impairment expense of $0 as compared to $4.4 million for the corresponding period in 2022.
Sales and Marketing Our sales and marketing expense for the year ended December 31, 2022 was $726 thousand compared to $472 thousand for the prior year, which reflects an increase in personnel, advertising, and marketing expense to help drive growth in our business.
Sales and Marketing Our sales and marketing expense for the year ended December 31, 2023, was $0.4 million compared to $0.7 million for the prior year, which reflects a decrease in personnel, advertising, and marketing expense to help drive growth in our business.
In October 2022, Novo Group entered into a Subordination Agreement (“Subordination Agreement”), pursuant to which Novo agreed to subordinate all its indebtedness and obligations we owe to Novo to all the indebtedness and obligations we owe to Montage Capital.
The reduction in the promissory note was accounted for as gain on debt extinguishment on the consolidated statement of operations. In October 2022, Novo Group entered into a Subordination Agreement (“Subordination Agreement”), pursuant to which Novo agreed to subordinate all its indebtedness and obligations we owe to Novo to all the indebtedness and obligations we owe to Montage Capital.
Talent Effectiveness consulting services are billed to clients upfront for a period of months. Revenue is recognized on a gross basis monthly over the period the consulting services are provided. Full time placement revenues are recognized on a gross basis when the guarantee period specified in each customer’s contract expires.
Revenues for Recruiters On Demand are recognized on a gross basis when each monthly subscription service is completed. Talent Effectiveness consulting services are billed to clients upfront for a period of 12 months. Revenue is recognized on a gross basis monthly over the period the consulting services are provided.
Upon completion of the program, we issue a certificate of completion and make available a digital badge to certify their achievement for display on their online recruiter profile on the Platform.
Upon completion of the program, we issue a certificate of completion and make available a digital badge to certify their achievement for display on their online recruiter profile on the Platform. · Consulting and Staffing: Consists of providing consulting and staffing personnel services to employers to satisfy their demand for long- and short-term consulting and temporary employee needs.
Future stock-based compensation expense and unearned stock- based compensation may increase to the extent we grant additional stock options or other stock-based awards. 44 Table of Contents Recently Issued Accounting Pronouncements There have not been any recent changes in accounting pronouncements and ASU issued by the FASB that are of significance or potential significance to the Company except as disclosed below.
Recently Issued Accounting Pronouncements There have not been any recent changes in accounting pronouncements and ASU issued by the FASB that are of significance or potential significance to the Company except as disclosed below.
The Montage Amendment modifies that certain Loan and Security Agreement by and among the Company, its subsidiaries, and Montage to provide the Company with additional time to meet certain post-closing covenants. Off-Balance Sheet Arrangements None.
The Montage Amendment modifies that certain Loan and Security Agreement by and among the Company, its subsidiaries, and Montage to provide the Company with additional time to meet certain post-closing covenants. On August 16, 2023, we entered into a Second Amendment to Loan and Security Agreement (the “the Second Montage Amendment”), by and among the Company, its subsidiaries Montage.
In connection with the October 19, 2022 Loan Agreement, the Company will issue 706,551 warrants to purchase common stock of the Company (the “Warrants”) to the Lender, with 622,803 Warrants issued and exercisable upon the Closing Date and the additional 83,708 Warrants becoming exercisable upon funding of the second Advance.
In addition, in connection with the Loan Agreement, the Company issued 47,103 warrants to purchase common stock of the Company (the “Warrants”) to the Lender, with 41,520 Warrants issued and exercisable upon the Closing Date and the additional 5,580 Warrants becoming exercisable upon funding of the second Advance.
Upon the employer hiring one or more of our candidate referrals, we earn a “full-time placement fee”, an amount separately negotiated with each employer client.
Our talent delivery team selected and delivered candidate profiles and resumes to our employer clients for their review and ultimate selection. Upon the employer hiring one or more of our candidate referrals, we earned a “full-time placement fee”, an amount separately negotiated with each employer client.
Net loss includes non-cash items of depreciation and amortization expense of $3.7 million, bad debt expense of $493 thousand, gain on debt extinguishment of $1.2 million, equity-based compensation expense of $4.1 million, amortization of debt discount and debt costs of $499 thousand, impairment expense of $4.4 million, and a warrant modification expense of $152 thousand.
Net loss includes non-cash items of depreciation and amortization expense of $1.3 million, bad debt expense (recovery) of ($143) thousand, equity-based compensation expense of $1.5 million, and amortization of debt discount and debt costs of $1.3 million.
No fees for direct hire placement services are charged to the employment candidates. Any payments received prior to the expiration of the guarantee period are recorded as a deferred revenue liability. Payments for recruitment services are typically due within 90 days of completion of services.
Full-time placement revenues are recognized on a gross basis when the guarantee period specified in each customer’s contract expires. No fees for direct hire placement services are charged to the employment candidates. Any payments received prior to the expiration of the guarantee period are recorded as a deferred revenue liability.
The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The adoption of ASU 2021-04 did not have a material impact on our consolidated financial statements.
The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The amendments should be applied prospectively. Early adoption of the amendments is permitted, including adoption in an interim period. The adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements.
Companies prepay for a certain number of consulting hours at an agreed-upon, time-based rate. We source and provide the independent consultants that provide the service.
Companies prepay for a certain number of consulting hours at an agreed-upon, time-based rate. We source and provide the independent consultants that provide the service. In March 2023, we announced a strategic partnership with Job Mobz to transition certain Recruiters on Demand clients and staff to Job Mobz in exchange for an ongoing revenue stream.
We generate full-time placement revenue by earning one-time fees for each time that employers hire one of the candidates that we refer. Employers alert us of their hiring needs through our Platform, or other communications. We source qualified candidate referrals for the employers’ available jobs through independent recruiter users that access the Platform and other tools.
(See below Revenue Share). · Full-time Placement: Consists of providing referrals of qualified candidates to employers to hire staff for full-time positions. We generated full-time placement revenue by earning one-time fees for each time that employers hire one of the candidates that we referred. Employers alerted us of their hiring needs through our Platform, or other communications.
The guidance was issued as improvements to ASU No. 2016-13 described above. The vintage disclosure changes require an entity to disclose current-period gross write-offs by year of origination for financing receivables. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The amendments should be applied prospectively.
In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The guidance was issued as improvements to ASU No. 2016-13 described above. The vintage disclosure changes require an entity to disclose current-period gross write-offs by year of origination for financing receivables.
As of December 31, 2022, per amendments to the note, the note bore interest at 12% and matured on November 30, 2023. In February 2023, we entered into an Amendment to the Promissory Note with Novo Group, Inc. (the “Novo Amendment”).
In February 2023, we entered into an additional Amendment to the Promissory Note with Novo Group, Inc. (the “Novo Amendment”).
The following table presents a reconciliation of net loss to Adjusted EBITDA: Year Ended December 31, 2022 2021 Net loss $ (16,474,688 ) $ (16,334,615 ) Interest expense and finance cost, net 965,323 3,137,050 Depreciation & amortization 3,663,953 2,742,162 EBITDA (loss) (11,845,412 ) (10,455,403 ) Bad debt expense 492,906 927,847 Gain on debt extinguishment (1,205,195 ) (24,925 ) Warrant modification expense - 12,624 Initial derivative expense - 3,585,983 Loss (gain) on change in fair value of derivative - (7,315,580 ) Impairment expense 4,420,539 2,530,325 Stock-based compensation 4,106,040 5,400,975 Adjusted EBITDA (Loss) $ (4,031,122 ) $ (5,338,154 ) 38 Table of Contents Liquidity and Capital Resources For the year ended December 31, 2022, net cash used in operating activities was $6.9 million, compared to net cash used in operating activities of $9.0 million for 2021.
The following table presents a reconciliation of net loss to Adjusted EBITDA: Year Ended December 31, 2023 2022 Net loss $ (7,734,290 ) $ (17,595,945 ) Interest expense and finance cost, net 2,645,694 965,323 Depreciation & amortization 1,302,384 3,663,953 EBITDA (loss) (3,786,212 ) (12,980,416 ) Bad debt (recovery) expense (143,774 ) 492,906 Gain on debt extinguishment - (1,205,195 ) Impairment expense - 4,420,539 Stock-based compensation 1,490,903 4,106,040 Adjusted EBITDA (Loss) $ (2,439,083 ) $ (5,389,761 ) 35 Table of Contents Liquidity and Capital Resources For the year ended December 31, 2023, net cash used in operating activities was $0.9 million, compared to net cash used in operating activities of $6.9 million for 2022.
The note amortized over 24 months, bore interest at 6% and originally matured on July 1, 2023. On October 19, 2022, Parrut agreed to subordinate their note to the loan owed to Montage Capital II, L.P. In return, we increased the interest rate to 12% and restructured the payment schedule to Parrut with a maturity date of August 31, 2023.
The note had a term of 24 months, accrued interest at 6%, and originally matured on July 1, 2023. The note required monthly payments of $77,561. On October 19, 2022, Parrut agreed to subordinate their note to a promissory note issued to Montage Capital II, L.P.
In 2022, the other income was mostly from a gain on debt extinguishment of $1.2 million, offset by interest expense of $965 thousand.
Other Income (Expense) Other income (expense) for the year ended December 31, 2023, consisted of other income of $2 thousand compared to other income of $258 thousand in 2022. In 2023, the other income was mostly from ERC income of $2.1 million in the period offset by the interest expense of $2.1 million.
This increase resulted primarily from an increase in our Recruiters On Demand business of $4.6 million or 40% due to contributions from acquisitions as well as growth in new customers. Additionally, Software Subscriptions contributed $2.5 million in revenue in 2022, compared to $1.4 million in 2021.
This decrease resulted primarily from a decrease in our Recruiters on Demand business of $14.2 million or 87.8%. Additionally, Software Subscriptions contributed $0.4 million in revenue in 2023, compared to $2.5 million in 2022. We had a decrease in our Marketplace Solutions revenue of $468 thousand or 40.9%.
General and Administrative General and administrative expense include compensation-related costs for our employees dedicated to general and administrative activities, legal fees, audit and tax fees, consultants and professional services, and general corporate expenses.
The impairment expense decrease was a direct result of the acquisitions of intangible assets that occurred in 2021, with a full year of amortization and impairment charges in 2022 and amortization in 2023. 33 Table of Contents General and Administrative General and administrative expenses include compensation-related costs for our employees dedicated to general and administrative activities, legal fees, audit and tax fees, consultants and professional services, and general corporate expenses.
Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The Company is currently evaluating the impact the adoption of this ASU would have on the Company’s consolidated financial statements. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.
Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. On January 1, 2023, the adoption of ASU 2021-08 did not have a material impact on the Company’s consolidated financial statements.
Product Development Our product development expense for the year ended December 31, 2022 increased to $1.4 million from $1.2 million for the prior year. This increase was attributable to the continued investment in our product offerings. The product development expense in 2022 included approximately $36 thousand paid to Recruiter.com Mauritius, a related party.
Product Development Our product development expense for the year ended December 31, 2023, decreased to $0.4 million from $1.4 million for the prior year. This decrease was attributable to the continued investment in our product offerings which primarily occurred during 2022. Technology and design expenses were $26 thousand for the current period compared to $772 thousand for the prior period.
We have also entered into arrangements with factoring companies to receive advances against certain future accounts receivable in order to supplement our liquidity. 39 Table of Contents Financing Arrangements Term Loans We had outstanding balances of $0 and $50,431 pursuant to two term loans as of December 31, 2022 and 2021, respectively, which mature in 2023.
We have also entered into arrangements with factoring companies to receive advances against certain future accounts receivable in order to supplement our liquidity. 36 Table of Contents Financing Arrangements Promissory Notes Payable We received $250,000 in proceeds from an institutional investor pursuant to a promissory note dated May 6, 2021.
This increase was primarily due to increases in amortization expense of $909 thousand, impairment expense of $1.9 million, sales and marketing of $253 thousand, and product and development of $206 thousand, offset by a decrease in bad debt expense of $435 thousand in 2022 compared to 2021.
This decrease was primarily due to decreases in sales and marketing expense of $338 thousand, product and development of $942 thousand, amortization of intangibles of $2.4 million, impairment expense of $4.4 million, and other general and administrative expenses of $9.2 million.
The increase in the gross profit margin from 2021 to 2022 reflects the shift in the mix in sales for the period as areas of our business with higher gross margins grew while our staffing business declined. 36 Table of Contents Operating Expenses We had total operating expenses of $25.5 million for the year ended December 31, 2022 compared to $24.2 million for the year ended December 31, 2021.
The decrease in the gross profit margin from 2022 to 2023 reflects the decreases in both revenue and cost of revenue discussed above. Operating Expenses We had total operating expenses of $8.2 million for the year ended December 31, 2023, compared to $25.4 million for the year ended December 31, 2022.
On October 19, 2022, the “Company closed a Loan and Security Agreement (the “Loan Agreement”), by and among the Company and Montage Capital II, L.P. (the “Lender”).
As of December 31, 2023, and December 31, 2022, the outstanding balance on the 8/30/22 Notes, net of the unamortized debt issuance costs and debt discounts of $0 and $466,441, respectively, was $1,194,445 and $839,115, respectively. 37 Table of Contents On October 19, 2022, the “Company closed a Loan and Security Agreement (the “Loan Agreement”), by and among the Company and Montage Capital II, L.P.
We bill these employer clients for our placed candidates’ ongoing work at an agreed-upon, time-based rate, typically on a weekly schedule of invoicing. 33 Table of Contents We have a sales team and sales partnerships with direct employers as well as Vendor Management System companies and Managed Service companies that help create sales channels for clients that buy staffing, direct hire, and sourcing services.
We bill these employer clients for our placed candidates’ ongoing work at an agreed-upon, time-based rate, typically on a weekly schedule of invoicing. Through a strategic sale to Futuris, Inc. In October, 2023, we exited the Consulting and Staffing line of business, and consider it discontinued.
We support and supplement the independent recruiters’ efforts with dedicated internal employees we call our internal talent delivery team. Our talent delivery team selects and delivers candidate profiles and resumes to our employer clients for their review and ultimate selection.
We sourced qualified candidate referrals for the employers’ available jobs through independent recruiter users that access the Platform and other tools. We supported and supplemented the independent recruiters’ efforts with dedicated internal employees we call our internal talent delivery team.
We issued a promissory note in the original principal amount of $3.0 million pursuant to the Novo Group acquisition agreement dated August 27, 2021. The note originally amortized over 30 months, bore interest at 6% and was set to mature on February 1, 2024.
As of December 31, 2023, and December 31, 2022, the outstanding balance on the promissory note with Parrut was $238,723 and $444,245, respectively. We issued a promissory note for $3,000,000 pursuant to the Novo Group acquisition agreement dated August 27, 2021.
Results of Operations Revenue Our revenue for the year ended December 31, 2022 was $25.4 million compared to $22.2 million for the prior year representing an increase of $3.2 million or 14%.
The agreement was subsequently amended on February 23, 2024. · Announced on March 7, 2024 the appointment of Granger Whitelaw as Chief Executive Officer of the Company. 32 Table of Contents Results of Operations Revenue Our revenue for the year ended December 31, 2023, was $3.2 million compared to $21.3 million for the prior year, representing a decrease of $18.1 million or 85%.
Additionally, we continued investing and partnering to expand our service offerings and client and candidate reach. All the while, we shared our progress with media outreach and a focused investor relations effort.
Additionally, we continued investing in software development, including new functionality, developing our Mediabistro candidate and employer traffic, and improving the administration of our web-based assets. All the while, we shared our progress with media outreach and focused on providing clear updates to investors.
Removed
In March 2023, we announced a strategic partnership with Job Mobz to transition certain Recruiters on Demand clients and staff to Job Mobz in exchange for an ongoing revenue stream. · Full-time Placement: Consists of providing referrals of qualified candidates to employers to hire staff for full-time positions.
Added
Revenue Share: We refer certain clients to a third party in exchange for a referral fee. The amount of the referral fee is dependent upon whether the referral is an existing client of ours and what services we currently provide that client, or a client of a third party who is not historically serviced by us.
Removed
Additionally, we partner with Careerdash, a high-quality training company, to provide Recruiter.com Academy, an immersive training experience for career changers. · Consulting and Staffing: Consists of providing consulting and staffing personnel services to employers to satisfy their demand for long- and short-term consulting and temporary employee needs.
Added
Referral fees under the revenue share arrangement are subject to certain minimum and maximum payout amounts. We record referral fees earned under our revenue share arrangement on a net basis. Revenues as presented on the consolidated statements of operations represent services rendered to customers less sales adjustments and allowances.
Removed
Once we have secured the relationship and contract with the interested Enterprise customer, the delivery and product teams will provide the service to fulfill any or all of the revenue segments.
Added
Payments for recruitment services are typically due within 90 days of completion of services. Marketplace advertising revenues are recognized on a gross basis when the advertising is placed and displayed or when lead generation activities and online publications are completed, which is the point at which the performance obligations are satisfied.
Removed
The costs of our revenue primarily consist of employee costs, third-party staffing costs and other fees, outsourced recruiter fees and commissions based on a percentage of our gross margin. 2022 Business Update In 2022, we focused on improving our product offerings, financial position, corporate governance, and streamlining operations.
Added
Consulting and staffing revenues are recognized when the services are rendered by the temporary employees. We assume the risk of the acceptability of the employees to customers. Payments for consulting and staffing services are typically due within 90 days of completion of services.
Removed
Key Highlights include: Corporate Organization ● Signed a strategic partnership with Talent, Inc, a leading career services company that provides a job seeker platform, professional resume writing and interview coaching, that included: the sale of certain intellectual property of our AI Software and a revenue-sharing agreement for the promotion and reselling of career services.
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Revenue share revenues represent a percentage of revenue we have earned in relation to client referrals we made to a third party. We record revenue in relation to revenue share on a net basis as an agent under this arrangement.
Removed
No such revenues were recorded in fiscal 2022. ● Awarded a trademark registration (Reg. No. 6,565,232) from the U.S.
Added
We have concluded that net reporting is appropriate because we do not provide the underlying services and arrangements to meet the demands of the client that we referred to the third party.
Removed
Trademark Office for the word-mark “Recruiter.com.”; 34 Table of Contents Partnerships/Acquisitions • Launched Recruiter.com shortlist, a service to provide clients a shortlist of ten hand-selected candidates to help fill open roles; • Selected by Deel, a platform that streamlines worldwide compliance and payments for international teams, to join their exclusive new Talent Marketplace; • Partnered with Professional Diversity Network, Inc. to help employers access diverse talent; • Announced multiple partnerships with leading global employment platforms, including Velocity Global, Deel, Oyster, and Multiplier. • Signed an Accounts Receivable-backed with recourse factoring agreement to support our growth from Bay View Funding, a subsidiary of Heritage Bank of Commerce (HTBK), a premier community business bank in the heart of Silicon Valley.
Added
Revenue is recorded based on a net percentage of revenue that is shared between us and the third party and earned upon delivery of the services by the third party. The third party provides the underlying services in this arrangement.
Removed
We had an increase in our Marketplace Solutions revenue of $417 thousand or 57% from contributions from recent acquisitions as well as growth in new customers.

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