The accompanying ~~unaudited~~ notes are an integral part of these unaudited condensed consolidated financial statements.

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended			Three Months Ended June 30,			Three Months Ended June 30,			Six Months Ended June 30,			Six Months Ended June 30,
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018			2020			2019			2020			2019

Revenue	$	1,945,744		$	158,706		$	4,081,527		$	687,538		$	1,853,414		$	1,972,481		$	4,166,537		$	2,135,783
Cost of revenue (including related party costs of $657,196, $0, $1,451,331 and $0, respectively)		1,491,805			-			2,953,727			-
Cost of revenue (including related party costs of $298,712, $794,135, $954,096 and $794,135, respectively)														1,418,242			1,461,922			3,169,438			1,461,922

Gross profit		453,939			158,706			1,127,800			687,538			435,172			510,559			997,099			673,861

Operating expenses:
Sales and marketing		63,423			4,205			66,392			13,619			15,068			2,969			40,311			2,969
Product development		47,728			50,690			142,516			227,563			57,401			44,934			140,494			94,788
General and administrative (including share based compensation expense of $1,411,565, $45,928, $2,979,592 and $136,956, respectively)		2,293,491			398,199			5,366,751			1,264,329
Amortization of intangibles														159,173			-			318,346			-
General and administrative (including share based compensation expense of $709,230, $1,481,322, $1,650,202 and $1,568,027 respectively)														1,626,362			2,653,432			3,775,305			3,073,260

Total operating expenses		2,404,642			453,094			5,575,659			1,505,511			1,858,004			2,701,335			4,274,456			3,171,017

Loss from operations		(1,950,703	)		(294,388	)		(4,447,859	)		(817,973	)		(1,422,832	)		(2,190,776	)		(3,277,357	)		(2,497,156	)

Other income (expenses):
Interest expense		(10,165	)		(32,570	)		(91,530	)		(104,208	)		(203,874	)		(14,340	)		(248,080	)		(81,365	)
Initial derivative expense														(3,340,554	)		-			(3,340,554	)		-
Change in derivative value due to anti-dilution adjustments														(2,642,175	)		-			(2,642,175	)		-
Change in fair value of derivative liability		951,271			-			968,898			-			(339,088	)		17,627			(904,176	)		17,627
Net recognized (loss) gain on marketable securities		(18,437	)		10,000			(119,854	)		(60,125	)
Grant income														7,262			-			7,262			-
Net recognized loss on marketable securities														46			(92,500	)		(18,740	)		(101,417	)
Total other income (expenses)		922,669			(22,570	)		757,514			(164,333	)		(6,518,383	)		(89,213	)		(7,146,463	)		(165,155	)

Loss before income taxes		(1,028,034	)		(316,958	)		(3,690,345	)		(982,306	)		(7,941,215	)		(2,279,989	)		(10,423,820	)		(2,662,311	)
Provision for income taxes		-			-			-			-			-			-			-			-
Net loss		(1,028,034	)		(316,958	)		(3,690,345	)		(982,306	)		(7,941,215	)		(2,279,989	)		(10,423,820	)		(2,662,311	)
Net loss attributable to the noncontrolling interest		-			(17,799	)		(30,716	)		(37,697	)		-			-			-			(30,716	)
Net loss attributable to the controlling interest before preferred stock dividends		(1,028,034	)		(299,159	)		(3,659,629	)		(944,609	)		(7,941,215	)		(2,279,989	)		(10,423,820	)		(2,631,595	)
Preferred stock dividend		-			(144,110	)		(140,410	)		(1,004,062	)		-			-			-			(140,410	)
Net loss attributable to Recruiter.com Group, Inc. shareholders	$	(1,028,034	)	$	(443,269	)	$	(3,800,039	)	$	(1,948,671	)	$	(7,941,215	)	$	(2,279,989	)	$	(10,423,820	)	$	(2,772,005	)

Net loss per common share – basic and diluted	$	(0.56	)	$	-		$	(3.11	)	$	-		$	(1.64	)	$	(1.27	)	$	(2.31	)	$	(3.05	)

Weighted average common shares – basic and diluted		1,837,150			-			1,221,649			-			4,834,531			1,788,401			4,508,394			908,798

The accompanying ~~unaudited~~ notes are an integral part of these unaudited condensed consolidated financial statements.

Condensed Consolidated Statement of Changes in Stockholders’ (Deficit) Equity ~~(Deficit)~~

For the Three and ~~Nine Month Periods~~Six Months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

The accompanying ~~unaudited~~ notes are an ~~integral part of these unaudited condensed consolidated financial statements.~~

~~The accompanying unaudited notes are in~~ integral part of these unaudited condensed consolidated financial statements.

Recruiter.com Group, Inc. ~~(formerly Truli Technologies, Inc.)~~, a ~~Delaware~~Nevada corporation (“RGI”), is a holding company based in Houston, Texas. The Company has ~~three~~four subsidiaries, Recruiter.com, Inc., Recruiter.com Recruiting Solutions LLC (“Recruiting Solutions”), Recruiter.com Consulting, LLC and VocaWorks, Inc. (“VocaWorks”). RGI and its subsidiaries as a consolidated group is hereinafter referred to as the “Company.” The Company operates in Connecticut, Texas, and New York.

~~Effective March 31, 2019, RGI completed~~On May 13, 2020, the Company effected a ~~merger (the “Merger”) with~~reincorporation from the State of Delaware to the State of Nevada. Following the approval by the Company’s stockholders at a special meeting held on May 8, 2020, Recruiter.com Group, Inc., ~~a New York based recruiting career services and marketing business and~~ a Delaware corporation (“~~Pre-Merger Recruiter.com”~~Recruiter.com Delaware”) ~~pursuant to a Merger~~, entered into an Agreement and Plan of Merger ~~dated March 31, 2019. At the effective time~~(the “Merger Agreement”) with Recruiter.com Group, Inc., a Nevada corporation and a wholly owned subsidiary of ~~the Merger, RGI’s newly formed wholly-owned subsidiary~~Recruiter.com Delaware (“Recruiter.com Nevada”), pursuant to which Recruiter.com Delaware merged with and into ~~Pre-Merger~~ Recruiter.com Nevada, with ~~Pre-Merger~~ Recruiter.com Nevada continuing as the surviving ~~corporation and a wholly-owned subsidiary~~entity. Simultaneously with the reincorporation, the number of ~~RGI. As consideration~~shares of common stock the Company is authorized to issue was increased from 31,250,000 shares to 250,000,000 shares.

The reincorporation did not result in any change in the ~~Merger, the equity holders of Pre-Merger Recruiter.com received a total of 775,000 shares of Series E Preferred Stock of RGI convertible into 9,687,500 shares~~corporate name, business, management, fiscal year, accounting, location of the ~~Company’s common stock. As a result, the former shareholders of Pre-Merger Recruiter.com controlled approximately 90% of RGI’s outstanding common stock and in excess of 50%~~principal executive office, or assets or liabilities of the ~~total voting power.~~Company.

Prior to the Merger, from October 30, 2017 RGI was controlled by the principal shareholders of Pre-Merger Recruiter.com. The Merger simply increased their control. RGI’s Chief Executive Officer was the Chief Executive Officer and the majority of RGI’s Board of Directors were directors (or designees) prior to the Merger. Further, RGI’s Executive Chairman was retained as a consultant prior to the Merger with the understanding that if the Merger occurred, he would be appointed Executive Chairman.

Prior to the Merger, RGI, Pre-Merger Recruiter.com and VocaWorks had been parties to a license agreement, dated October 30, 2017 (the “License Agreement”), under which Pre-Merger Recruiter.com granted VocaWorks a license to use certain of its proprietary software and related intellectual property. Prior to the Merger, RGI’s primary business was operating under the License Agreement. In consideration for the license obtained in the License Agreement, Pre-Merger Recruiter.com received 1,562,500 shares of RGI’s common stock. Pre-Merger Recruiter.com also received the right to receive shares of Series B Convertible Preferred Stock (the “Series B Preferred Stock”) of RGI upon achievement of certain milestones specified in the License Agreement. As a result, immediately prior to the completion of the Merger, Pre-Merger Recruiter.com owned approximately 98% of RGI’s outstanding common stock. In conjunction with the Merger, Pre-Merger Recruiter.com distributed the 1,562,500 shares of RGI’s common stock to its stockholders on March 25, 2019. The distribution is considered to have occurred just prior to the completion of the Merger.

For accounting purposes, the Merger is being accounted for as a reverse recapitalization of Pre-Merger Recruiter.com and combination of entities under common control (“recapitalization”) with Pre-Merger Recruiter.com considered the accounting acquirer and historical issuer. The accompanying consolidated financial statements include Pre-Merger Recruiter.com for all periods presented. Since Pre-Merger Recruiter.com previously owned a majority interest in RGI, the consolidated financial statements include the historical operations of RGI and VocaWorks since October 30, 2017. All share and per share data in the accompanying consolidated financial statements and notes have been retroactively restated to reflect the effect of the Merger.

Effective March 31, 2019, RGI acquired certain assets and assumed certain liabilities under an asset purchase agreement, dated March 31, 2019, among RGI, Genesys Talent LLC, a Texas limited liability company (“Genesys”), and Recruiting Solutions, a wholly owned subsidiary of the Company (the “Asset Purchase”). As consideration in the Asset Purchase the Company issued a total of 200,000 shares of its Series F Preferred Stock convertible into 2,500,000 shares of the Company’s common stock. The acquired assets and liabilities include certain accounts receivable, accounts payable, deferred revenue, sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets. The Company is utilizing these assets in its employment staffing business ~~to be~~ operated through Recruiting Solutions. This transaction was treated as a business combination (see Note ~~12)~~13).

As of the effective date of the Merger, the Company changed its fiscal year end from March 31 to December 31. On May 9, 2019, pursuant to the approval of its Board of Directors, the Company changed its name to Recruiter.com Group, Inc.

The unaudited condensed consolidated financial statements include the accounts of RGI and its ~~majority-owned~~wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

As discussed above, all share and per share data has been retroactively restated in the accompanying consolidated financial statements and footnotes to reflect the effects of the March 31, 2019 recapitalization. Among other effects, this causes the common stock of Pre-Merger Recruiter.com which existed during 2018 and 2017 to be retroactively reflected as though it were Series E Preferred Stock since it was exchanged for Series E Preferred Stock pursuant to the Merger and recapitalization.

Effective August 21, 2019, the Company amended its Certificate of Incorporation to effect a one-for-80 reverse stock split of the Company’s common stock. Additionally, the authorized shares of common stock was reduced to 31,250,000. All share and per share data has been retroactively restated in the accompanying consolidated financial statements and footnotes for all periods presented to reflect the effects of the August 21, 2019 amendments.

The accompanying condensed consolidated financial statements are unaudited. The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual consolidated financial statements ~~and accompanying notes~~ prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto of ~~Pre-Merger Recruiter.com and Genesys~~RGI for the years ended December 31, 2019 and 2018, ~~and 2017.~~filed with the SEC on May 8, 2020. The December 31, ~~2018~~2019 balance sheet is derived from those statements.

~~These~~In the opinion of management, these unaudited interim financial statements as of and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018 are unaudited; however, in the opinion of management, such statements~~2019 include all adjustments (consisting of normal recurring adjustments ~~and adjustments relating to the recapitalization, business combination and other equity transactions)~~ necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods ~~presented.~~presented). The results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2019~~2020 or for any future period. All references to ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 in these footnotes are unaudited.

The preparation of financial statements in conformity with ~~GAAP~~accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and outcomes may differ from management’s estimates and assumptions. Included in these estimates are assumptions used to estimate collection of accounts receivable, fair value of available for sale securities, fair value of derivative liabilities, fair value of securities issued for acquisitions, fair value of assets acquired and liabilities assumed in the business combination, fair value of intangible assets and goodwill, valuation of initial right of use assets and corresponding lease liabilities, deferred income tax asset valuation allowances, and valuation of stock based compensation expense.

The Company considers all short-term highly liquid investments with a remaining maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has not experienced any losses related to these balances as of ~~September~~June 30, ~~2019.~~2020. Uninsured balances were approximately ~~$125,000~~$1,136,000 and $0 as of ~~September~~June 30, ~~2019. There were no uninsured balances as of~~2020 and December 31, ~~2018.~~2019. The Company had no cash equivalents during or at the end of either period.

~~Adoption of ASU 2014-09, Revenue from Contracts~~The Company recognizes revenue in accordance with ~~Customers~~

~~On January 1, 2018, the Company adopted~~ Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) using the modified retrospective (cumulative effect) transition method. Under this transition method, results for reporting periods beginning January 1, 2018 or later are presented under ASC 606, while prior period results continue to be reported in accordance with previous guidance. There was no cumulative effect of the initial application of ASC 606 and therefore no cumulative adjustment was recorded to the opening balance of retained earnings. The timing of revenue recognition for our various revenue streams was not materially impacted by the adoption of this standard. The Company believes its business processes, systems, and controls are appropriate to support recognition and disclosure under ASC 606. In addition, the adoption has led to increased footnote disclosures. Overall, the adoption of ASC 606 did not have a material impact on the Company’s balance sheet, statement of operations or statement of cash flows. ASC 606 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing service revenue over the service period. ASC 606 is described in the section that follows.

~~The Company recognizes revenue in accordance with ASC 606.~~. Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. 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 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. Once we have secured the relationship and contract with the interested Enterprise customer the delivery and product teams will provide the service to ~~fulfill~~fulfil any or all of the revenue segments.

R~~evenues~~Revenues as presented on the statement of operations represent services rendered to customers less sales adjustments and allowances.

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. We record substantially all revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of this line of revenues and expenses. We have concluded that gross reporting is appropriate because we have the task of identifying and hiring qualified employees, and our discretion to select the employees and establish their compensation and duties causes us to bear the risk for services that are not fully paid for by customers. Consulting and staffing revenues are recognized when the services are rendered by the temporary employees. Payroll and related taxes of certain employees that are placed on temporary assignment are outsourced to third party payors or related party payors. The payors pay all related costs of employment for these employees, including workers’ compensation insurance, state and federal unemployment taxes, social security and certain fringe benefits. We assume the risk of acceptability of the employees to customers. Payments for consulting and staffing services are typically due within 90 days of completion of services.

Direct hire recruitment placement revenues are recognized on a gross basis when the guarantee period specified in the customer contract expires. No fees for direct hire placement services are charged to 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.

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.

Marketing and publishing services 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.

Deferred revenue results from transactions in which the Company has been paid for services by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the deferred revenues are recognized.

The Company does not have any contract assets such as work-in-process. All trade receivables on the Company’s balance sheet are from contracts with customers.

Costs incurred to obtain a contract are capitalized unless they are short term in nature. As a practical matter, costs to obtain a contract that are short term in nature are expensed as incurred. The Company does not have any contract costs capitalized as of ~~September~~June 30, ~~2019~~2020 or December 31, ~~2018.~~

The Company’s contract liabilities consist of advance customer payments and deferred revenue. Deferred revenue results from transactions in which the Company has been paid for services by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the deferred revenues are recognized.

For each of the identified periods, revenues can be categorized into the following:

	September 30,		September 30,		Three Months Ended June 30,
	2019		2018		2020		2019
Consulting and staffing services	$	3,212,496	$	-	$	1,576,662	$	1,605,894
Permanent placement fees		250,084		157,990		153,140		118,103
License and other		290,818		-		46,856		130,365
Career services		104,259		113,770		42,408		33,483
Marketing and publishing		223,870		415,778		34,348		84,636
Total revenue	$	4,081,527	$	687,538	$	1,853,414	$	1,972,481

As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, deferred revenue amounted to ~~$104,924~~$86,689 and ~~$59,468~~$145,474 respectively. As of ~~September~~June 30, ~~2019,~~2020, deferred ~~revenue~~revenues associated with placement services are ~~$104,924~~$83,189 and we expect the recognition of such services to be ~~$54,700~~$63,001 within the ~~following~~ three months ended September 30, 2020 and ~~$50,224 in~~$20,188 thereafter. As of June 30, 2020, deferred revenues associated with marketing services are $3,500 and we expect the recognition of such services to be within the three months ended September 30, 2020.

Revenue from international sources was approximately 2% and 5% for the six months ended June 30, 2020 and 2019, respectively.

Costs of revenues consist of employee costs, third party staffing costs and other fees, outsourced recruiter fees and net margin revenue share.

Credit is extended to customers based on an evaluation of their financial condition and other factors. Management periodically assesses the Company’s accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. Accounts determined to be uncollectible are charged to operations when that determination is made. The Company usually does not require collateral. We have recorded an allowance for doubtful accounts of ~~$16,000~~$33,000 and $0$21,000 as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Bad debt expense was $750 and $0 for the three month periods ended June 30, 2020 and 2019, respectively and $12,000 and $0 for six month periods ended June 30, 2020 and 2019, respectively.

As of ~~September~~June 30, 2020, two customers accounted for more than 10% of the accounts receivable balance, at 42% and 13%, for a total of 55%. As of December 31, 2019, three customers accounted for more than 10% of the accounts receivable balance, at ~~20%~~19%, 15%, and ~~12%~~13%, for a total of 47%. ~~As of December 31, 2018, four~~

For the six months ended June 30, 2020 three customers accounted for ~~more than~~ 10% of ~~the accounts receivable balance,~~more of total revenue, at ~~24%~~35%, ~~22%, 21%~~15% and ~~12%~~14%, for a total of ~~79%~~64%.

For the ~~nine~~six months ended ~~September~~June 30, 2019 three customers ~~accounted for 57% of total revenue at 30%, 17% and 10%. For the nine months ended September 30, 2018 one customer~~ accounted for 10% or more of total revenue, at ~~13%~~25%, 18% and 10%, for a total of 53%.

We use a related party firm for software development and maintenance related to our website and the platform underlying our operations. One of our officers and principal ~~stockholders~~shareholders is an employee of this firm but exerts control over this firm (see Note ~~11)~~12).

We are a party to that certain license agreement with a related party firm (see Note 12). Pursuant to the license agreement the firm has granted us an exclusive license to use certain candidate matching software and render certain related services to us. If this relationship was terminated or if the firm was to cease doing business or cease to support the applications we currently utilize, we may be forced to expend significant time and resources to replace the licensed software. Further, the necessary replacements may not be available on a timely basis on favorable terms, or at all. If we were to lose the ability to use this software our business and operating results could be materially and adversely affected.

The Company expenses all advertising and marketing costs as incurred. Advertising and marketing costs were ~~$63,423~~$15,068 and ~~$4,205~~$2,969 for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Advertising and marketing costs were ~~$66,392~~$40,311 and ~~$13,619~~$2,969 for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a hierarchical framework for measuring fair value, and enhances fair value measurement disclosure.

ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date.

Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company’s investment in available for sale securities and warrant derivative liabilities are measured at fair value. The securities are measured based on current trading prices using Level 1 fair value inputs. The Company’s derivative instruments are valued using Level 3 fair value inputs. The Company does not have any other financial instruments which require re-measurement to fair value. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and loans payable represent fair value based upon their short-term nature.

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The table below summarizes the fair values of our financial assets and liabilities as of ~~September~~June 30, ~~2019:~~2020:

	Fair Value at September 30,		Fair Value Measurement Using						Fair Value at June 30,		Fair Value Measurement Using
	2019		Level 1		Level 2		Level 3		2020		Level 1		Level 2		Level 3

Available for sale marketable securities (Note 3)	$	85,360	$	85,360	$	-	$	-	$	9,017	$	9,017	$	-	$	-
Derivative liability (Note 9)	$	781,748	$	-	$	-	$	781,748
Warrant derivative liability (Note 10)									$	9,783,912	$	-	$	-	$	9,783,912

The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows for the ~~nine~~six months ended ~~September~~June 30, ~~2019:~~2020:

OnIn January ~~1, 2018,~~2017, the ~~Company adopted Accounting Standards Update (“ASU”) 2016-01, Financial Instruments – Overall: Recognition~~FASB issued ASU 2017-04, Intangibles-Goodwill and ~~Measurement~~Other (Topic 350): Simplifying the Test for Goodwill Impairment: The objective of ~~Financial Assets and Financial Liabilities. ASU 2016-01 requires equity investments (except those accounted~~this guidance is to simplify an entity’s required test for ~~under~~impairment of goodwill by eliminating Step 2 from the ~~equity method of accounting, or those~~goodwill impairment test by permitting the entity to complete a qualitative assessment to determine if it is more likely than not that ~~result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring~~ the fair value of ~~financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities~~a reporting unit is less than its carrying amount. Under this Update, an entity should perform its annual or quarterly goodwill impairment test by ~~measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate~~comparing the fair value of the reporting unit with its carrying amount and record an impairment charge for the excess of the carrying amount over the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit and the entity must consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for a public business entity that is ~~required to be disclosed~~an SEC filer for ~~financial instruments measured at amortized cost.~~its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and early adoption is permitted. The ~~fair value allowance~~Company early adopted ASU 2017-04 as of ~~the securities of $489,591 at December 31, 2017 has been reclassified to accumulated deficit from accumulated other comprehensive income at~~ January 1, 2018 as a cumulative effect adjustment using the modified prospective method of adoption. The unrealized loss on the marketable securities during the three and nine month periods ended September 30, 2019 and 2018 has been included in a separate line item on the statement of operations, Recognized Loss on Marketable Securities. 2019.

~~Noncontrolling Interest~~Goodwill is comprised of the purchase price of business combinations in ~~Majority Owned Subsidiary~~excess of the fair value assigned at acquisition to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized. The Company tests 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.

The Company ~~follows ASC 810-10-65, Noncontrolling Interests in Consolidated Financial Statements,~~performs its annual goodwill impairment assessment on December 31st of each year, or earlier if facts and circumstances indicate that an ~~amendment~~impairment may have occured.

When evaluating the potential impairment of ~~Accounting Research Bulletin No. 51. This ASC clarifies that~~goodwill, management first assesses a ~~noncontrolling (minority) interest in a subsidiary is an ownership interest~~range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity ~~that should be reported~~specific factors such as ~~equity~~strategy and changes in key personnel, and the ~~consolidated~~overall financial ~~statements. It also requires consolidated net income to include the amounts attributable to both the parent and noncontrolling interest, with disclosure on the face~~performance for each of the ~~consolidated income statement~~Company’s reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of ~~the amounts attributed~~a reporting unit is less than its carrying value, we then proceed to the ~~parent and to~~impairment testing methodology primarily using the noncontrolling interest. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the noncontrolling interest in subsidiaries may exceed their interests in the subsidiary’s equity. The excess and any further losses attributable to the parent and the noncontrolling interest shall be attributed to those interests even if that attribution results in a deficit noncontrolling interest balance.

The average noncontrolling interest percentage in RGI was 0% and 7.57% for the three months ended September 30, 2019 and 2018, respectively, 10.04% for the three months ended March 31, 2019 and 5.51% for the nine months ended September 30, 2018. The change in percentage in 2019 and 2018 results from the issuance of RGI common stock upon the conversion of RGI preferred stock. There was no noncontrolling interest after the March 31, 2019 recapitalization.

We ~~capitalize certain software development costs incurred in connection with developing or obtaining software for internal use when both~~compare the preliminary project stage is completed and it is probable that the software will be used as intended. Capitalization ceases after the software is operational; however, certain upgrades and enhancements may be capitalized if they add functionality. Capitalized software costs include only (i) external direct costs of materials and services utilized in developing or obtaining software, (ii) compensation and related benefits for employees who are directly associated with the software project and (iii) interest costs incurred while developing internal-use software.

Intangible assets consist primarily of the assets acquired from Genesys, including sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets, acquired March 31, 2019 (see Note 12).

Intangible assets also include internal use software development costs for the Company’s website and iPhone App. These costs will be amortized over their estimated economic lives once placed in service. The assets have not been placed in service as of September 30, 2019 or December 31, 2018.

~~Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book~~carrying value of the ~~asset may not~~reporting unit, including goodwill, with its fair value, as determined by its estimated discounted cash flows. If the carrying value of a reporting unit exceeds its fair value, then the amount of impairment to be ~~recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment.~~ recognized is recognized as the amount by which the carrying amount exceeds the fair value.

When ~~impairment indicators exist, the Company~~required, we arrive at our estimates ~~the~~of fair value using a discounted cash flow methodology which includes estimates of future ~~undiscounted net~~ cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of ~~the related asset~~those anticipated cash flows. 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 asset group over the remaining life of the asset in measuring whether or not the asset values are recoverable. The Company did not recognize impairment on its long-lived assets during the periods ended September 30, 2019 or 2018.estimates for future cash flows could produce different results.

We account for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the shorter of the service period or the vesting period of the stock-based compensation. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option pricing model. Determining the fair value of stock-based compensation at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based compensation represent the ~~Company's~~Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment.

Through December 31, 2018 we used the fair value method for equity instruments granted to non-employees and used the Black-Scholes model for measuring the fair value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

On January 1, 2019, the Company adopted ASU 2018-07, which substantially aligns stock-based compensation for employees and non-employees and accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 718. The Company used the modified prospective method of adoption. There was no cumulative effect of the adoption of ASC 718.

We utilize ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.

The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not to be sustained upon examination by taxing authorities, based on the technical merits of the position. Our practice is to recognize interest and/or penalties, if any, related to income tax matters in income tax expense.

~~The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with various accounting standards.~~

ASC 480 “Distinguishing Liabilities From Equity” provides that instruments convertible predominantly at a fixed rate resulting in a fixed monetary amount due upon conversion with a variable quantity of shares (“stock settled debt”) be recorded as a liability at the fixed monetary amount.

ASC 815 “Derivatives and Hedging” generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”

The Company accounts for convertible instruments (when it has determined that the instrument is not a stock settled debt and the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the share transaction and the effective conversion price embedded in the preferred shares.

~~ASC 815-40 provides that generally if an event is not within the entity’s control and could require net cash settlement, then the contract shall be classified as an asset or a liability.~~

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): Part 1 – Accounting for Certain Financial Instruments with Down Round Features and Part 2 – Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with Scope Exception (“ASU No. 2017-11”). Part 1 of ASU No. 2017-11 addresses the complexity of accounting for certain financial instruments with down round features. Down round features are provisions in certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. The Company has early adopted the guidance under ASU 2017-11 for the year ended December 31, 2017.

The Company has determined that the conversion features of the RGI convertible preferred stock and stock purchase warrants outstanding immediately prior to the Merger do not require bifurcation as free standing derivative instruments, based on the adoption of ASU 2017-11 and the guidance related to down round features.

~~The Company has determined that the conversion features of its convertible preferred stock issued in 2019 do not require bifurcation as free standing derivative instruments.~~

The Company’s derivative financial instruments consist of the warrants issued with the sale of our convertible notes in 2020 (See Notes 8 and 10) and warrants issued with the sale of our Series D Preferred Stock in ~~2019.~~2019 and 2020 (see Notes 9 and 10). The accounting treatment of derivative financial instruments requires that we record the derivatives at their fair values as of the inception date of the debt agreements and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date, we recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, we recorded non-operating, non-cash income.

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: “Leases (Topic 842)” whereby lessees need to recognize almost all leases on their balance sheet as a right of use asset and a corresponding lease liability. The Company adopted this standard as of January 1, 2019 using the effective date method and applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected not to reassess the following: (i) whether any expired or existing contracts contain leases, and (ii) initial direct costs for any existing leases. For contracts entered into after the effective date, at the inception of a contract the Company will assess whether the contract is, or contains, a lease. The Company’s assessment will be based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. The Company has elected not to recognize right of use assets and lease liabilities for short term leases that have a term of 12 months or less.

Product development costs are included in selling, general and administrative expenses and consist of support, maintenance and upgrades of our website and IT platform and are charged to operations as incurred.

The Company follows ASC 260 “Earnings Per Share” for calculating the basic and diluted earnings (or loss) per share. Basic earnings (or loss) per share are computed by dividing earnings (or loss) available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings (or loss) per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares were dilutive. Common stock equivalents are excluded from the diluted earnings (or loss) per share computation if their effect is anti-dilutive. Common stock equivalents in amounts of ~~19,407,012~~24,381,679 and ~~21,134~~19,436,262 were excluded from the computation of diluted earnings per share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, because their effects would have been anti-dilutive.

	September 30,		September 30,		June 30,		June 30,
	2019		2018		2020		2019
Options		572,155		5,960		1,355,758		540,905
Stock awards		494,593		-		866,500		494,593
Warrants		470,939		15,174		3,653,443		470,939
Convertible notes						1,845,703		-
Convertible preferred stock		17,869,325		-		16,660,275		17,929,825
		19,407,012		21,134		24,381,679		19,436,262

The Company uses the “management approach” to identify its reportable segments. The management approach designates the internal organization used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. Using the management approach, the Company determined that it has one operating segment.

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.~~Company except as disclosed below.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This guidance, among other provisions, eliminates certain exceptions to existing guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this guidance.

These unaudited condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company’s management has evaluated whether there is substantial doubt about the Company’s ability to continue as a going concern and has determined that substantial doubt existed as of the date of the end of the period covered by this ~~Quarterly Report on Form 10-Q (“Form 10-Q”).~~report. This determination was based on the following factors: (i) the Company has a working capital deficit as of ~~September~~June 30, ~~2019~~2020 and the Company’s available cash as of the date of this filing will not be sufficient to fund its anticipated level of operations for the next 12 months; (ii) the Company will require additional financing for the ~~remainder of the~~ fiscal year ending December 31, ~~2019~~2020 to continue at its expected level of operations; and (iii) if the Company fails to obtain the needed capital, it will be forced to delay, scale back, or eliminate some or all of its development activities or perhaps cease operations. In the opinion of management, these factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern as of the date of the end of the period covered by this ~~Form 10-Q~~report and for one year from the issuance of ~~the~~these unaudited condensed consolidated financial statements.

The Company ~~recently~~ completed rounds of funding during 2019. Additionally, during 2020 the Company raised approximately $3 million in gross proceeds through the ~~first~~issuance of convertible debentures and ~~second quarters of 2019.~~warrants as more fully disclosed in Note 8. However, there is no assurance that the Company will be successful in any other capital-raising efforts that it may undertake to fund operations during the next 12 months. The Company anticipates that it will issue equity and/or debt securities as a source of liquidity, until it begins to generate positive cash flow to support its operations. Any future sales of securities to finance operations will dilute existing ~~stockholders’~~shareholders’ ownership. The Company cannot guarantee when or if it will generate positive cash flow.

In March 2020, the outbreak of COVID-19 (coronavirus) caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization, and the outbreak has become increasingly widespread in the United States, including in each of the areas in which the Company operates. While to date the Company has not been required to stop operating, management is evaluating its use of its office space, virtual meetings and the like. We have reduced certain billing rates to respond to the current economic climate. Additionally, while we have experienced, and could continue to experience, a loss of clients as the result of the pandemic, we expect that the impact of such attrition would be mitigated by the addition of new clients resulting from our continued efforts to adjust the Company’s operations to address changes in the recruitment industry. The extent to which the COVID-19 pandemic will impact our operations, ability to obtain financing or future financial results is uncertain at this time. Management has spent time evaluating shifting market demands and adjusting the Company’s focus. Due to the effects of COVID-19, the Company took steps to streamline certain expenses, such as temporarily cutting certain executive compensation packages by approximately 20%. Management also worked to reduce unnecessary marketing expenditures and worked to improve staff and human capital expenditures, while maintaining overall workforce levels. The Company expects to resume certain expenses, such as compensation, later in 2020 if conditions warrant. The Company expects but cannot guarantee that demand for its recruiting solutions will improve in the second half of 2020, as certain clients re-open or accelerate their hiring initiatives, and new clients utilize our services. The Company does not expect reductions made in the second quarter of 2020 due to COVID-19 will inhibit its ability to meet client demand. Overall, management is focused on effectively positioning the Company for a rebound in hiring which we expect in the second half of 2020. Ultimately, the recovery may be delayed and the economic conditions may worsen. The Company continues to closely monitor the confidence of its recruiter users and customers, and their respective job requirement load through offline discussions and the Company’s Recruiter Index survey.

The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

The Company’s investment in marketable equity securities is being held for an indefinite period and thus have been classified as available for sale. Cost basis of securities held as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 was ~~$708,541~~$629,720 and ~~$587,000,~~$708,541, respectively, and accumulated unrealized losses were ~~$623,181~~$620,703 and ~~$553,083~~$663,775 as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. The value of available for sale marketable securities was ~~$85,360~~$9,017 as of ~~September~~June 30, ~~2019,~~2020, based on ~~589,753~~261,333 shares of common stock held in two entities with an average per share market price of approximately ~~$0.14.~~$0.04.

The reconciliation of the investment in marketable securities is as follows for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019:

Balance at beginning of period	$	33,917
				June 30,			June 30,
				2020			2019
Balance – December 31				$	44,766		$	33,917
Additions		240,000			-			240,000
Proceeds on sales of securities		(68,703	)		(17,009	)		-
Recognized losses		(119,854	)		(18,740	)		(101,417	)
Balance at end of period	$	85,360
Balance – June 30				$	9,017		$	172,500

~~Intangible assets~~Amortization expense of $8,521,906 consist of the assets acquired from Genesys, including sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets, acquired on March 31, 2019 (see Note 12). The Company is in the process of completing its accounting and valuations of the intangible assets ~~acquired. Amortization~~was $159,173 and $318,346 for the three and six months ended June 30, 2020, respectively. Future amortization of intangible assets ~~will commence upon completion of the valuations.~~

is expected to be approximately $318,000 for 2020, $637,000 for 2021 and $159,000 for 2022.

~~We also have capitalized software costs of $113,020 relating to our website and iPhone App developed for internal use. These assets have not been placed in service as of September 30, 2019.~~

At ~~September~~June 30, ~~2019~~2020 we are party to two agreements related to the sale of future revenues. Both agreements are with the same party, have substantially the same terms, and were entered into in December 2019. Discounts related to the agreements will be amortized to expense over the term of the agreements. During the three and six months ended June 30, 2020, we amortized $33,833 and $65,809 of discount, respectively, to interest expense. Unamortized discount is $69,832 at June 30, 2020.

The Company has granted a continuing security interest in the following, to the extent and in the amount of the purchased receivables: all assets including the following property that the Company now owns or shall acquire or create immediately upon the acquisition or creation thereof: (i) any and all amounts owing to the Company now or in the future from any customers; and (ii) all other tangible and intangible personal property of every kind and nature.

In January 2020 we entered into an agreement with a lender that provides advances against the collection of accounts receivable. Advances made under the agreement are generally repayable in 45 days from the date of the advance and bear interest at 1.5% per month. Advances received under the agreement aggregated $180,778. In April 2020, the lender informed the Company that it would not be able to advance additional funds pursuant to this arrangement due to the impact of the COVID-19 pandemic. We repaid $112,622 during the three months ended June 30, 2020 and remaining advances payable were $68,156 at June 30, 2020.

At June 30, 2020 and December 31, ~~2018,~~2019 we are party to two lines of credit ~~totaling $0 and $81,067, respectively. Each~~with outstanding balances of $0. Advances under each of these lines of credit mature within 12 months of the ~~next 12 months.~~advances. Availability under the two lines was $91,300 at ~~September~~June 30, ~~2019.~~2020; however, due to COVID -19 uncertainty (see Note 2), the availability under both lines has been suspended in 2020.

We have ~~borrowed $110,059~~outstanding balances of $90,440 and ~~$127,767~~$103,800 pursuant to two term loans as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, which mature in 2023. The loans have variable interest rates, with current rates at ~~8.25%~~6.0% and 7.76%, respectively. Current monthly payments under the loans are ~~$1,776~~$1,691 and $1,008, respectively.

One of the term loans is a Small Business Administration (“SBA”) loan. As a result of the COVID-19 uncertainty, the SBA is paying the loan for a period of six months. The SBA made payments on our behalf of $7,262 during the three months ended June 30, 2020, which have been recorded as grant income in the financial statements. These payments were applied $5,964 to principal and $1,298 to interest expense.

The status of these loans as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 are summarized as follows:

	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Lines of credit and loan agreements	$	-		$	81,067
Term loans		110,059			127,767		$	90,440		$	103,800
		110,059			208,834
Less current portion		(25,521	)		(105,028	)		(27,335	)		(25,934	)
Non-current portion	$	84,538		$	103,806		$	63,105		$	77,866

Future principal payments under the ~~lines of credit and~~ term notes are as follows:

Year Ending December 31,
2019	$	6,191
2020		25,942	$	13,386
2021		28,136		28,195
2022		30,492		30,133
2023		19,298		18,726
Total minimum principal payments	$	110,059	$	90,440

Our Chief Executive Officer, who is also a ~~stockholder,~~shareholder, has personally guaranteed the loans described above.

~~On November 27, 2018, RGI~~During April and May 2020 the Company, through its four subsidiaries, received an aggregate of $398,545 in loans borrowed ~~$50,000~~from a bank pursuant to the Paycheck Protection Program under the CARES Act guaranteed by the SBA, which we expect to be forgiven in part or in full, subject to our compliance with the conditions of the Paycheck Protection Program. If not forgiven, the terms on the note provide for interest at 1% per year and ~~issued~~the note mature in 24 months, with 18 monthly payments beginning after the initial 6 month deferral period for payments. Since we expect the loans to be forgiven, we have classified them as long term at June 30, 2020.

In May and June 2020, the Company entered into a ~~$55,000 10%~~Securities Purchase Agreement, effective May 28, 2020 (the “Purchase Agreement”) with several accredited investors (the “Purchasers”). Four of the investors had previously invested in the Company’s preferred stock. Pursuant to the Purchase Agreement, the Company sold to the Purchasers a total of (i) $2,953,125 in the aggregate principal amount of 12.5% Original Issue Discount ~~Promissory Note. The note matures on or before the earlier of (i) the 90th day subsequent to the issuance date of the note,~~Senior Subordinated Secured Convertible Debentures (the “Debentures”), and (ii) 1,845,703 common stock purchase warrants (the “Warrants”), which represents 100% warrant coverage. The Company received a total of $2,226,000 in net proceeds from the ~~Company’s receipt of a minimum of $1,000,000 as a result of~~offering, after deducting the Company closing the sale (the “financing”) of any equity or debt securities of the Company (either, a “Maturity Date”). At the Company’s option, upon the Maturity Date the Company may convert all principal and interest owed to the Payee pursuant to this note into securities of the Company identical to those offered and on the same terms as those offered to the investors in the financing. Interest shall accrue on the outstanding principal balance of this note at the rate of 5% per year. Discount of $5,000 is being amortized over 90 days. During the three months ended March 31, 2019 we amortized $3,056 as interest expense.

~~In February 8, 2019, RGI borrowed $45,005, net of~~12.5% original issue discount of ~~$10,000~~$328,125, offering expenses and ~~other deductions~~commissions, including the placement agent’s commission and fees of ~~$4,995, from an institutional investor~~$295,000, reimbursement of the placement agent’s and ~~issued~~lead investor’s legal fees and the investor a $60,000 Original Issue Discount Promissory Note (the “February Note”). The February Note bears interest at 5% per annum and matures on the earlier of (i) 90 days after issuance, or (ii) RGI’s receipt of a minimum of $1,000,000 as a result of RGI closing the sale (the “financing”) of any equity or debt securities. RGI may cause the holder to convert all principal and interest owed under the February Note into securities of RGI identical to those offered to investorsCompany’s legal fees in the ~~$1,000,000 financing. Further,~~aggregate amount of $100,000 and escrow agent fees of $4,000. The Company also agreed to issue to the ~~holder of the February Note has the option to use all principal and interest owed under the Note~~placement agent, as ~~consideration to~~additional compensation, 369,141 common stock purchase ~~securities in any future RGI financing~~warrants exercisable at ~~any time.~~$2.00 per share.

~~As additional consideration~~The Debentures mature on May 28, 2021, subject to a six-month extension at the Company’s option. The Debentures bear interest at 8% per annum payable quarterly, subject to an increase in case of an event of default as provided for ~~the February Note, RGI issued the holder warrants to purchase 75,000~~therein. The Debentures are convertible into shares of ~~RGI’s common stock, exercisable for a period of five years from~~Common Stock at any time following the date of issuance at ~~an exercise~~the Purchasers’ option at a conversion price of $1.60 per share, subject to ~~adjustment upon~~certain adjustments. The Debentures are subject to mandatory conversion in the event the Company closes an equity offering of at least $5,000,000 resulting in the listing of the Company’s common stock on a national securities exchange. The Debentures rank senior to all existing and future indebtedness of the Company and its subsidiaries, except for approximately $508,000 of outstanding senior indebtedness. The Company may prepay the Debentures at any time at a premium as provided for therein.

The Warrants are exercisable for three years from May 28, 2020 at an exercise price of $2.00 per share, subject to certain adjustments.

The Company’s obligations under the Purchase Agreement and the Debentures are secured by a first priority lien on all of the assets of the Company and its subsidiaries pursuant to a Security Agreement, effective May 28, 2020 (the “Security Agreement”) by and among the Company, its wholly-owned subsidiaries, and the Purchasers, subject to certain existing senior liens. The Company’s obligations under the Debentures are guaranteed by the Company’s subsidiaries.

The Purchase Agreement contains customary representations, warranties and covenants of the Company, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company and its subsidiaries, without the prior written consent of the Debenture holders, to incur additional indebtedness, including further advances under a certain pre-existing secured loan, and repay outstanding indebtedness, create or permit liens on assets, repurchase stock, pay dividends or enter into transactions with affiliates. The Debentures contain customary events of default, including, but not limited to, failure to observe covenants under the Debentures, defaults on other specified indebtedness, loss of admission to trading on OTCQB or another applicable trading market, and occurrence of certain change of control events. Upon the occurrence of an event of default, an amount equal to 130% of the principal, accrued but unpaid interest, and other amounts owing under each Debenture will immediately come due and payable at the election of each Purchaser, and all amounts due under the Debentures will bear interest at an increased rate.

Pursuant to the Purchase Agreement, the Purchasers have certain ~~events including RGI’s issuance~~participation rights in future equity offerings by the Company or any of its subsidiaries for a period of 24 months after the closing, subject to customary exceptions. The Debentures and the Warrants also contain certain price protection provisions providing for adjustment of the number of shares of Common Stock issuable upon conversion of the Debentures and/or exercise of the Warrants and the conversion or exercise price in case of future ~~securities.~~ dilutive offerings.

We ~~valued~~have incurred a total of $1,299,677 of debt costs related to the ~~warrants at $42,000 based on its relative~~sale of the Debentures, including commissions, costs and fees of $366,500. We have also recorded a cost related to the fair value of the placement agent warrants of $933,177 (see Note 10). The costs are being amortized over the life of the notes. Amortization expense was $71,664 for the three and six months ended June 30, 2020, respectively. Unamortized debt costs were $1,228,013 at June 30, 2020.

We have recorded ~~that amount as~~a total of $1,653,448 of debt ~~discount. We also recorded~~discount related to the ~~$10,000~~sale of the Debentures, including original issue discount ~~amount~~ of $328,125. We have also recorded a discount related to the fair value of the warrants issued with the debt ~~discount. During~~of $1,325,323 (see Note 10). The discount is being amortized over the life of the notes. Amortization expense was $77,412 for the three and six months ended ~~March 31, 2019 we amortized $29,467 as interest expense.~~

~~Effective March 31, 2019, the $115,000 total principal amount of the Notes, $1,379 of accrued interest and the related warrants (see Note 9 “Warrants” and Note 6)~~June 30, 2020, respectively. Unamortized debt costs were exchanged for shares of the newly authorized Series D Preferred Stock of the Company. The effects of the exchange are included in the 389,036 deemed issuance of preferred shares as part of the recapitalization line item in the consolidated statement of stockholders’ equity.

~~Pre-Merger Recruiter.com had issued three notes totaling $250,000. Of these, two notes totaling $150,000 were held by stockholders. The notes bore interest~~$1,576,036 at 25% per year and were due on January 28, 2018. These notes were not extended and were due on demand. The notes were collateralized by certain marketable securities held by Pre-Merger Recruiter.com. Effective March 31, 2019, the notes and related accrued interest totaling $383,947 were cancelled in connection with the issuance of the Series E preferred stock to the Recruiter.com stockholders and the note holders were allocated shares of the Series E Preferred Stock. This amount has been credited to paid-in capital (see Note 8).June 30, 2020.

Pre-Merger Recruiter.com had issued four convertible notes totaling $255,000 as of March 31, 2019. Of these notes, two notes totaling $200,000 were held by stockholders. The notes were due on demand and bore interest at 10% per year. The notes could have been converted into preferred stock of Pre-Merger Recruiter.com at any time after such preferred stock was offered for sale. The conversion price was 75% of the price paid by investors. No preferred stock was authorized or offered for sale by Pre-Merger Recruiter.com. On March 31, 2019, the notes and related accrued interest totaling $322,554 were cancelled in connection with the Merger and the note holders were allocated shares of the Series E Preferred Stock of the Company issued to the stockholders of Pre-Merger Recruiter.com as consideration in the Merger. This amount has been credited to paid-in capital (see Note 8).

~~NOTE 8~~9 — STOCKHOLDERS’ EQUITY (DEFICIT), TEMPORARY EQUITY AND NONCONTROLLING INTERESTS

Effective March 31, 2019, RGI completed the Merger with Pre-Merger Recruiter.com. At the effective time of the Merger, RGI’s newly formed wholly-owned subsidiary merged with and into Pre-Merger Recruiter.com, with Pre-Merger Recruiter.com continuing as the surviving corporation and a wholly-owned subsidiary of RGI. As consideration in the Merger, the equity holders of Pre-Merger Recruiter.com received a total of 775,000 shares of Series E Preferred Stock of RGI convertible into 9,687,500 shares of RGI’s common stock. As a result, the former shareholders of Pre-Merger Recruiter.com controlled approximately 90% of RGI’s outstanding common stock and in excess of 50% of the total voting power.

Prior to the Merger, RGI, Pre-Merger Recruiter.com and VocaWorks were parties to the License Agreement. In consideration for the license, Pre-Merger Recruiter.com received 1,562,500 shares of RGI’s common stock. Pre-Merger Recruiter.com also received the right to receive shares of the Series B Preferred Stock upon achievement of certain milestones specified in the License Agreement. As a result, immediately prior to the completion of the Merger, Pre-Merger Recruiter.com owned approximately 90% of RGI’s outstanding common stock. Pre-Merger Recruiter.com distributed the 1,562,500 shares of RGI’s common stock to its stockholders on March 25, 2019, in conjunction with the Merger. The distribution is considered to have occurred just prior to the completion of the Merger.

The Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.0001 per share. As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company had ~~1,429,546~~1,332,822 and ~~775,000~~1,329,300 shares of preferred stock issued and outstanding, respectively.

~~On March 25, 2019, RGI filed a Certificate of Designations (a “COD”) with~~During 2020 we have issued to the Delaware Secretary of State (the “Secretary of State”), as amended on March 29, 2019, April 22, 2019 and May 29, 2019, designating 2,000,000 shares of its authorized preferred stock as Series D Convertible Preferred Stock (the “Series D Preferred Stock”), with a stated value of $20 per share, which is convertible at any time after issuance at the option of the holder, subject to a beneficial ownership limitation of 4.99%, into common stock based on the stated value per share divided by $1.60 per share, subject to adjustment in the event of stock splits, stock dividends or reverse splits and issuances of securities at prices below the prevailing conversion price of the Series D Preferred Stock. Holdersholders of Series D Preferred Stock ~~are entitled to vote together with holders~~an aggregate of ~~the common stock on an as-converted basis, subject to a beneficial ownership limitation of 4.99%. If at any time while any~~106,134 additional shares of Series D Preferred Stock ~~remain outstanding and any triggering event contained in the COD~~as consideration for ~~such series occurs,~~waivers of penalties discussed below.

In February 2020, the Company ~~shall pay within three days to each holder $210 per each $1,000 of the stated value of each such holder’s~~issued 161,250 shares of ~~Series D Preferred Stock.~~

~~RGI had issued~~its common stock upon conversion of 12,900 shares of Series A, Series A-1, Series C, and Series C-1 convertible preferred stock. Since the convertible preferred stock may ultimately be redeemable at the option of the holder, the carrying value of the preferred stock was classified as temporary equity on the balance sheet at December 31, 2018. Just prior to the completion of the Merger all of the then outstanding shares of Series A, A-1, C and C-1 redeemable preferred stock, certain notes and warrants were exchanged for a total of 389,036 shares ofits Series D Preferred Stock.

On March 31, 2019, the Company entered into a Securities Purchase Agreement, dated March 31, 2019 (the “Securities Purchase Agreement”) by and among the Company and the investors listed therein (the “Investors”). Pursuant to the Securities Purchase AgreementJune 9, 2020, the Company sold ~~in a private placement a total of 31,625~~1,375 Series D preferred stock units (the “Units”) at a purchase price of $18.1818 per ~~unit, or $575,000,~~Unit, taking into account a 10% ~~discount. Each~~discount, each Unit ~~consists~~consisting of ~~(i)~~ one share of Series D Preferred Stock and ~~(ii)~~ a warrant to purchase 6.25 shares of ~~the Company’s~~ common stock, subject to adjustment as provided for therein. The ~~shares of~~ Series D Preferred Stock sold in the financing ~~convert~~converts into a minimum of ~~395,313~~17,188 shares of ~~the Company’s~~ common stock. The Company received ~~net~~gross proceeds of $25,000 from the sale of the ~~Units of $434,997 after offering costs of $35,003 and direct payment of other Company obligations of $105,000. Two of the Investors have previously invested in the Company’s preferred stock.~~

Units. The 8,594 warrants are exercisable for five years from the issuance date at an exercise price of $4.80 per share, subject to adjustment as provided for therein.

~~During the three months ended~~In June 30, 2019 we sold an additional 29,975 Units, each Unit consisting of one share of our Series D Preferred Stock and 6.25 warrants, for gross proceeds of $545,000. Out of these proceeds the Company, among other things, prepaid one-year of consulting fees equal to $150,000 to an entity controlled by one of the investors in the offering under a May 2019 consulting agreement with the Company. In addition, a consultant who is a principal stockholder of the Company purchased 13,750 units for $250,000 through delivering common stock of another company which had a market value of $240,000 and $10,000 in a settlement.

~~In April 2019~~2020, the Company issued ~~62,500~~157,000 shares of its common stock upon conversion of ~~5,000~~12,560 shares of its ~~Series D Preferred Stock.~~

~~In August 2019 the Company issued 60,500 shares of its common stock upon conversion of 4,840 shares of~~ Series D Preferred Stock.

~~On March 25, 2019, RGI filed a COD with~~In January 2020, the ~~Secretary of State, as amended on March 29, 2019, designating 775,000~~Company issued 39,260 shares of its authorized preferred stock as Series E Convertible Preferred Stock (the “Series E Preferred Stock”), with a stated value of $20 per share, which is convertible at any time after issuance at the option of the holder, subject to a beneficial ownership limitation of 4.99%, into common stock ~~based on the stated value per share divided by $1.60 per share, or 9,687,500 shares~~upon conversion of the Company’s common stock, subject to adjustment in the event of stock splits, stock dividends or reverse splits. Holders of Series E Preferred Stock are entitled to vote together with holders of the common stock on an as-converted basis, subject to a beneficial ownership limitation of 4.99%. If at any time while any shares of Series E Preferred Stock remain outstanding and any triggering event contained in the COD for such series occurs, the Company shall pay within three days to each holder $210 per each $1,000 of the stated value of each such holder’s3,141 shares of Series E Preferred Stock.

On March 31, 2019, RGI issued to the equity holders of Pre-Merger Recruiter.com 775,000 shares of Series E Preferred Stock as consideration in connection with the Merger. These shares are reflected retroactively as part of the recapitalization accounting. See Note 1 for more information on the Merger and recapitalization.

~~On March 25, 2019, RGI filed a COD with~~In January and February 2020, the ~~Secretary of State, as amended on March 29, 2019, designating 200,000~~Company issued 803,414 shares of its authorized preferred stock as Series F Convertible Preferred Stock (the “Series F Preferred Stock”), with a stated value of $20 per share, which is convertible at any time after issuance at the option of the holder, subject to a beneficial ownership limitation of 4.99%, into common stock ~~based on the stated value per share divided by $1.60 per share, or 2,500,000 shares~~upon conversion of common stock of the Company, subject to adjustment in the event of stock splits, stock dividends or reverse splits. Holders of Series F Preferred Stock are entitled to vote together with holders of the common stock on an as-converted basis, subject to a beneficial ownership limitation of 4.99%. If at any time while any Series F Preferred Stock remains outstanding and any triggering event contained in the COD for such series occurs, the Company shall pay within three days to each holder $210 per each $1,000 of the stated value of each such holder’s64,272 shares of Series F Preferred Stock.

~~Effective March 31, 2019,~~In April 2020, the Company issued ~~200,000~~138,926 shares of its common stock upon conversion of 11,114 shares of Series F Preferred Stock.

On March 31, 2019, we entered into certain agreements with investors pursuant to which we issued convertible preferred stock and warrants, as described above. Each of the series of preferred stock and warrants required us to reserve shares of common stock in the amount equal to two times the common stock issuable upon conversion of the preferred stock and exercise of the warrants. We did not comply in part due to our attempts to manage the Delaware tax which increases to a maximum of $200,000 as the authorized capital increases without the simultaneous increase in the number of shares outstanding. In May 2020 following stockholder approval at a special meeting the Company effected a reincorporation from Delaware to Nevada and a simultaneous increase in our authorized common stock from 31,250,000 shares to 250,000,000 shares, which we expect will be sufficient to meet the reserve requirements. As of December 31, 2019, we estimated that we owed approximately $6 million in penalties (prior to any waivers of penalties) to holders of preferred stock. Subsequent to December 31, 2019, we have received waivers from a substantial number of the preferred shareholders with respect to these penalties. We have agreed to issue to the holders of Series D Preferred Stock an aggregate of 106,134 additional shares of Series D Preferred Stock (valued at $1,929,516) as consideration for the ~~Asset Purchase (see Note 12).~~waivers. We have accrued this cost at December 31, 2019. Additionally, certain holders of Series E and Series F Preferred Stock have not waived the penalties. We have accrued $308,893 at December 31, 2019 related to these Series E and Series F Preferred holders. Because of our ongoing liquidity problems, we will be required to cease operations if faced with material payment requests from investors who did not agree to waive the penalties. The total accrued penalty amount of $2,238,314 was included in accrued expenses on the balance sheet at December 31, 2019. The $1,929,516 accrual was reclassified to equity during the three months ended March 31, 2020 as a result of our issuance of the 106,134 shares of Series D Preferred Stock. At June 30, 2020, the remaining balance of $308,798 is included in accrued expense on the balance sheet.

The Company is authorized to issue ~~31,250,000~~250,000,000 shares of common stock, par value $0.0001 per share. The number of shares of common stock the Company is authorized to issue was increased from 31,250,000 shares to 250,000,000 shares in connection with the reincorporation from Delaware to Nevada in May 2020. As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 the Company had ~~2,366,581~~5,009,508 and no3,619,658 shares of common stock outstanding, respectively.

In March 2018, the shareholders of the Company approved a reverse stock split of the issued and outstanding shares of the Company’s common stock at the ratio ranging from one-for-50 to one-for-100. On August 21, 2019, the Company amended its Certificate of Incorporation to effect a one-for-80 reverse stock split of the Company’s common stock. Additionally, the authorized shares of common stock was reduced to 31,250,000. All share and per share data has been retroactively restated in the accompanying consolidated financial statements and footnotes to reflect the effects of the reverse split.

On March 31, 2019 the Company was deemed to issue 1,747,879 shares of common stock and 389,036 shares of Series D preferred stock that were held by the RGI shareholders just prior to the merger. Additional paid in capital was credited by $3,875,411 and noncontrolling interest was charged $1,591,221 to remove it pursuant to the reverse recapitalization (see Note 6).

~~In April 2019 the Company issued 62,500 shares of its common stock upon conversion of 5,000 shares of its Series D Preferred Stock.~~

On February 1, 2019, the Company granted to Evan Sohn, its Executive Chairman and CEO, 43,423 shares of restricted common stock, which ~~shall vest subject to his serving as Executive Chairman through~~vested on February 1, 2020. Also on that date, the Company granted Mr. Sohn five-year options to purchase 43,423 shares of the Company’s common stock at $3.50 per share, which options shall vest subject to serving as Executive Chairman through August 4, 2020. The stock portion of the awards has been valued at $151,981 and compensation expense will be recorded over the respective vesting periods (see Note 9). We recognized compensation expense of ~~$37,995 and $101,320~~$12,665 during the ~~three and nine~~six months ended ~~September~~June 30, ~~2019, respectively.~~2020.

On May 14, 2019, the Company granted to Mr. Sohn 451,170 shares of restricted common stock, which ~~shall vest subject to his serving as Executive Chairman~~vested on February 1, 2020. ~~Also on that date,~~We recognized compensation expense of $318,473 during the six months ended June 30, 2020.

On December 23, 2019 the Company granted ~~Mr. Sohn five-year options~~ to ~~purchase 451,170 shares at $6.00 per share, which options shall~~a consultant 312,500 restricted stock units (the “RSUs”) pursuant to a consultant agreement. The RSUs vest 63,500 upon grant with the balance vesting monthly in equal installments beginning January 1, 2020 and ending November 1, 2020, subject to ~~serving as Executive Chairman~~the consultants continued service to the Company on ~~November 14, 2020.~~each vesting date. The ~~stock portion of the awards~~RSU award has been valued at ~~$2,707,019~~$343,750 and compensation expense will be recorded over the respective vesting ~~periods (see Note 9).~~periods. We recognized compensation expense of ~~$955,418~~$74,999 and ~~$1,433,127~~$149,998 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively. The shares have not been issued at June 30, 2020. The vested shares will be issued at the earlier of the final vesting period or the termination of services.

Effective January 15, 2020 the Company entered into a consulting agreement. Pursuant to the agreement the Company agreed to issue 60,000 shares of restricted common stock, plus a payment of $15,000. The shares are fully vested upon issuance and have been valued at $75,000, based on the quoted market price of our common stock on the grant date. The shares were issued on April 3, 2020. We have recorded compensation expense of $37,500 and $68,750 for the share portion of the agreement during the three and six months ended June 30, 2020, respectively, and expense of $7,500 and $13,750 for the cash portion during the three months ended June 30, 2020, respectively. Prepaid expense of $6,250 for the stock portion and $1,250 for the cash portion was recorded at June 30, 2020.

Effective January 15, 2020 the Company entered into a consulting agreement. Pursuant to the agreement the Company agreed to issue 30,000 shares of restricted common stock, earned monthly over the three month term of the agreement. The shares are fully vested upon issuance and have been valued at $45,500, based on the quoted market price of our common stock on the vesting dates. The shares were issued on April 3, 2020. We have recorded compensation expense of $6,500 and $45,500 during the three and six months ended June 30, 2020, respectively.

In ~~August 2019~~January 2020, the Company issued ~~60,500~~39,260 shares of its common stock upon conversion of ~~4,840~~3,141 shares of Series E Preferred Stock.

In January and February 2020, the Company issued 803,414 shares of its common stock upon conversion of 64,272 shares of Series F Preferred Stock.

In February 2020, the Company issued 161,250 shares of its common stock upon conversion of 12,900 shares of its Series D Preferred Stock.

Pre-Merger Recruiter.com had issued into three notes aggregating $250,000. Of these notes, two notes totaling $150,000 were held by its stockholders. The notes bore interest at 25% per year and were due on January 28, 2018. These notes were not extended and were due on demand. The notes were collateralized by certain marketable securities held by Pre-Merger Recruiter.com. On March 31, 2019, the notes and related accrued interest totaling $383,947, were cancelled in connection with the Merger. This amount has been credited to paid-in capital ofIn April 2020, the Company ~~as part~~issued 138,926 shares of ~~the credit~~its common stock upon conversion of ~~$706,501.~~

Pre-Merger Recruiter.com had issued four convertible notes totaling $255,000 on March 31, 2019. Of these notes, two notes totaling $200,000 were held by its stockholders. The notes were due on demand and bore interest at 10% per year. The notes could have been converted into Pre-Merger Recruiter.com preferred stock at any time after Pre-Merger Recruiter.com offered its preferred stock for sale. The conversion price was 75%11,114 shares of the price paid by investors. No preferred stock was authorized or offered for sale by Pre-Merger Recruiter.com. On March 31, 2019, the notes and related accrued interest totaling $322,554, were cancelled in connection with the Merger. This amount has been credited to paid-in capital of the Company as part of the credit of $706,501.

Certain stockholders of Pre-Merger Recruiter.com transferred a portion of their distributive 1,562,500 RGI shares (see Note 1) to employees and consultants. These shares aggregated 218,750 RGI shares, valued at $752,500, based on the $3.44 quoted trading price on the effective date of the transfer. We have charged this amount to stock compensation expense, with a corresponding credit to paid-in capital of the Company.Series F Preferred Stock.

In ~~April 2019 a consultant (who is also a principal stockholder and noteholder of~~June 2020, the ~~Company) forgave accrued fees due to him in the amount of $187,500. This amount has been credited to paid-in capital of the Company.~~

~~The~~ Company ~~has received contributions to capital from existing stockholders, totaling $30,000 during the nine months ended September 30, 2018. These capital contributions were made for working capital purposes.~~

~~RGI equity transactions and noncontrolling interest prior to the March 31, 2019 Merger and Recapitalization~~

~~All~~issued 157,000 shares of ~~RGI’s Series A, A-1, C and C-1 convertible preferred~~its common stock ~~discussed below and outstanding as~~upon conversion of ~~March 31, 2019 were exchanged for~~12,560 shares of its Series D Preferred ~~Stock, with~~Stock.

On June 18, 2020 the ~~relevant certificates of designation subsequently withdrawn.~~

~~On October 24, 2017, RGI filed a COD with the Secretary of State designating 700,000 shares of its authorized preferred~~Company awarded to Mr. Sohn 554,000 restricted stock ~~as Series A Convertible Preferred Stock~~units (the ~~“Series A Preferred Stock”~~“RSUs”)~~, with a stated value of $1.00 per share, which converts into 2.5 shares of the Company’s common stock per share of Series A Preferred Stock,~~ subject to ~~adjustment in~~and issuable upon the event of stock splits, stock dividends or reverse splits and issuances of securities at prices below the prevailing conversion price of the Series A Preferred Stock. On October 30, 2017, RGI entered into Securities Purchase Agreements (each a “SPA”) with the two Investors who converted their Notes into Series C Convertible Preferred Stock (the “Series C Preferred Stock”) and Series C-1 Convertible Preferred Stock (the “Series C-1 Preferred Stock”), as discussed below. Pursuant to the SPAs, the Investors paid a total of $600,000 and purchased in the aggregate 600,000 of shares of Series A Preferred Stock and warrants to purchase 1,500,000 shares of the Company’s common stock. RGI received proceeds of $471,373. The balance of $128,627 was used to pay existing payables and professional fees.

Cumulative dividends accrue on the Series A Preferred Stock at a rate of 10% per annum. Holders of Series A Preferred Stock are entitled to vote together with holders of the common stock on an as-converted basis, subject to a beneficial ownership limitation of 4.99%. The Series A Preferred Stock is redeemable in the same manner as the Series C Preferred Stock and Series C-1 Preferred Stock, defined below. The Series A Preferred Stock is senior to all other preferred stock, except Series A-1 Convertible Preferred Stock (the “Series A-1 Preferred Stock”) and the common stock upon liquidation of the Company. The warrants have a five year term and an exercise price of $0.80 per share, subject to adjustment in the event of stock splits, stock dividends or reverse splits and issuances of securities at prices below the prevailing exercise price of the warrants.

On May 25, 2018, RGI filed a COD with the Secretary of State authorizing 600,000 shares of RGI’s preferred stock as Series A-1 Preferred Stock, with a stated value of $1.00 per share. The Series A-1 Preferred Stock converts into 2.5 shares of the Company’s common stock per share of Series A-1 Preferred Stock, subject to adjustment in the event of stock splits, stock dividends or reverse splits, and issuances of securities at prices below the prevailing conversion price of the Series A-1 Preferred Stock. Cumulative dividends accrue on the Series A-1 Preferred Stock at a rate of 10% per annum. Holders of Series A-1 Preferred Stock are entitled to vote together with holderslisting of the Company’s common stock on ~~an as-converted basis,~~the Nasdaq Capital Market or NYSE American, or any successor of the foregoing (the “Uplisting”). The RSUs will vest over a two-year period from the date of the Uplisting in equal quarterly installments on the last day of each calendar quarter, with the first portion vesting on the last day of the calendar quarter during which the Uplisting takes place, subject to ~~a beneficial ownership limitation~~Mr. Sohn serving as an executive officer of ~~4.99%~~the Company on each applicable vesting date, provided that the RSUs shall vest in full immediately upon the termination of Mr. Sohn’s employment by the Company without Cause (as defined in the Employment Agreement). The ~~Series A-1 Preferred~~ RSU award has been valued at $1,662,000 and compensation expense will be recorded over the estimated vesting period. We recognized compensation expense of $30,218 during the three and six months ended June 30, 2020, respectively. The shares have not been issued at June 30, 2020.

In May 2020, the ~~occurrence~~number of ~~certain triggering events.~~shares authorized for issuance under the Company’s 2017 Equity Incentive Plan was increased to 1,714,000 shares. In June 2020, the number of shares authorized for issuance under the Company’s 2017 Equity Incentive Plan was further increased to 2,770,000 shares.

On ~~June 1, 2018, RGI entered into SPAs~~May 14, 2020 the Company granted to its current Chief Financial Officer 26,087 options to purchase common stock, exercisable at $2.50 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options will vest in six equal monthly installments on the last calendar day of each calendar month, with the ~~Investors. Pursuant~~first portion vesting on May 31, 2020, subject to serving as the ~~SPAs,~~Chief Financial Officer of the ~~Investors purchased a total of 300,000 of shares of Series A-1 Preferred Stock and warrants to purchase 750,000 shares~~Company on each applicable vesting date, provided that the options shall vest in full upon the listing of the Company’s ~~common stock in exchange for a total of $300,000.~~

securities on NYSE American or the Nasdaq Capital Market. The ~~Investors agreed to waive the Series A, Series C and Series C-1 conversion price adjustments as they relate to the sale of the Series A-1 Preferred Stock.~~

The warrants have a five year term and an exercise price of $0.80 per share, subject to adjustment in the event of stock splits, stock dividends or reverse splits and issuances of securities at prices below the prevailing exercise price of the Warrants.

On October 24, 2017, RGI filed a COD with the Secretary of State designating 1,875,000 shares of RGI’s authorized preferred stock as Series B which converts into 2.5 shares of the Company’s common stock per share of Series B, subject to adjustments in the event of stock splits, stock dividends and reverse splits. In connection with the closing of the Merger, the Company and Pre-Merger Recruiter.com amended the License Agreement and on April 2, 2019, the Company filed with the Secretary of State a Certificate of Elimination effecting the elimination of the Series B Preferred Stock. As of that date, no shares of Series B Preferred Stock had been issued.

On October 24, 2017, RGI filed a COD with the Secretary of State designating 102,100 shares of RGI’s authorized preferred stock as Series C Convertible Preferred Stock, with a stated value of $20.00 per share, which converts into 12.5 shares of the Company’s common stock per share of Series C Preferred Stock, subject to adjustments in the event of stock splits, stock dividends and reverse splits and issuances of securities at prices below the prevailing conversion price of the Series C Preferred Stock. Cumulative dividends accrue on the Series C Preferred Stock at a rate of 10% per annum. On October 30, 2017 holders of RGI’s outstanding 4% Convertible Notes converted their 4% Convertible Notes and accrued interest into 102,100 shares of Series C Preferred Stock.

Also on October 24, 2017, RGI filed a COD with the Secretary of State designating 18,839 shares of RGI’s authorized preferred stock as Series C-1 Convertible Preferred Stock, with a stated value of $5.00 per share which converts into 12.5 shares of the Company’s common stock per share of Series C-1 Preferred Stock, subject to adjustments in the event of stock splits, stock dividends and reverse splits and issuances of securities at prices below the prevailing conversion price of the Series C-1 Preferred Stock. Cumulative dividends accrue on the Series C-1 Preferred Stock at a rate of 10% per annum. On October 30, 2017 holders of RGI’s 10% Convertible Notes converted their 10% Convertible Notes and accrued interest into 18,839 shares of Series C-1 Preferred Stock.

In October 2017 we recorded a credit to noncontrolling interest of $701,732 for the excess of the carrying value of the debt converted and related derivative liability over the stated value of the Series C and Series C-1 Preferred Stock issued upon conversion. The stated value is considered to be fair value due to the redemption feature of the preferred stock. The $701,732 primarily relates to the charge off of the derivative liability.

Holders of shares of Series C and Series C-1 may cause the Company to redeem in cash the outstanding shares of Series C and C-1 Preferred Stock beginning on October 30, 2019 (see amendment below), and earlier than that date upon the occurrence of certain triggering events contained in the COD for the Series C and Series C-1 Preferred Stock, at a redemption price based upon a formula contained in the COD for each series. Subject to the prior conversion, the total redemption price if redeemed after two years from issuance is equal to the amount of the principal and accrued interest on the 4% Convertible Notes and 10% Convertible Notes due as of the closing date plus potential additional amounts.

During February 2018, RGI filed an amendment to the COD for the Series C and Series C-1 Preferred Stock extending the redemption date to October 2022 and reducing the redemption amount of the preferred shares then outstanding at a redemption price equal to one-half of the Conversion Amount (as defined) of such preferred shares. During the nine months ended September 30, 2019 and 2018 we recorded a credit to noncontrolling interest of $23,852 and $1,122,411, respectively, as a result of the reduction in the redemption amount.

~~Liquidation preference of RGI Series A, Series A-1, Series C and Series C-1 Convertible Preferred Stock~~

In the event of a liquidation event, the holders of Series A, Series A-1, Series C and Series C-1 preferred stock shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its stockholders (the “Liquidation Funds”), before any amount shall be paid to the holders of any of shares of junior stock, but pari passu with any parity stock then outstanding and after any amount paid to the holders of the convertible preferred stock, an amount per preferred share equal to the greater of (A) the Conversion Amount thereof on the date of such payment and (B) the amount per share such holder would receive if such holder converted such preferred shares into the Company’s common stock immediately prior to the date of such payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the holders of the convertible preferred stock, the holders and holders of shares of parity stock, then each holder and each holder of parity stock shall receive a percentage of the Liquidation Funds equal to the full amount of Liquidation Funds payable to such holder and such holder of parity stock as a liquidation preference, in accordance with their respective certificate of designations (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of preferred shares and all holders of shares of parity stock.

As described above, RGI issued shares of Series A, Series A-1, Series C, and Series C-1 convertible preferred stock. Since the convertible preferred stock may ultimately be redeemable at the option of the holder, the carrying value of the Series A, Series A-1, Series C, and Series C-1 Preferred Stockaward has been ~~classified as temporary equity on the balance sheet~~valued at ~~December 31, 2018.~~

~~A portion of the proceeds from the sale of our Series A-1 Preferred Stock in 2018 were allocated to the warrants based on their relative fair value, which totaled $288,000~~$65,210 using the Black ~~Scholes option pricing model. Further, we attributed a beneficial conversion feature~~Sholes model and compensation expense will be recorded over the vesting period. We have recorded compensation expense of ~~$12,000~~$21,737 related to the ~~Series A-1 Preferred Stock based upon~~options during the ~~difference between the effective conversion price of those shares~~three and ~~the closing price of our common shares on the date of issuance.~~six months ended June 30, 2020. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of ~~380%~~344%, (3) risk-free interest rate of ~~2.74%~~0.31%, (4) expected term of 5 years. The amount attributable to the warrants and beneficial conversion feature, aggregating $300,000, has been recorded as a deemed dividend to the preferred shareholders and as a charge to noncontrolling interest.

~~For~~On May 14, 2020 the ~~nine months ended September 30, 2019 and 2018, the~~ Company had accrued dividends in the amount of $70,205 and $208,031, respectively. The accrued dividends were charged to noncontrolling interest and the net unpaid accrued dividends were added to the carrying value of the preferred stock. Further, we attributed a beneficial conversion feature of $70,205 and $208,031 for the nine months ended September 30, 2019 and 2018, respectively, to the preferred dividends based upon the difference between the effective conversion price of those dividends and the quarterly average closing price of our common stock. The amount attributable to the beneficial conversion feature has been recorded as a deemed dividend to the preferred shareholders and as a charge to noncontrolling interest.

Prior to the completion of the Merger RGI had shares of redeemable preferred stock outstanding as discussed above. RGI issued a total of 389,036 shares of Series D Preferred stock in exchange for the redeemable preferred stock of $2,106,117 and other debt net of discounts of $93,846 (see Note 6). The adjustment for this exchange has been reflected as part of the credit to paid in capital to reflect the effect of the Merger (see “Common Stock” disclosure above regarding “deemed issuances”).

~~RGI granted 62 options to purchase common stock in 2014, exercisable at $28.00 per share. The options have a term of five years.~~

~~During February 2018, RGI~~ granted to its current Chief ~~Executive~~Financial Officer ~~6,250~~431,251 options to purchase common stock, exercisable at $6.40 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. Of these options 521 vest upon grant and the remaining options shall vest quarterly in equal amounts over a 33-month period with the first vesting date being April 30, 2018. We have recorded compensation expense of $3,333 and $3,333 related to the options during the three months ended September 30, 2019 and 2018, respectively. We have recorded compensation expense of $10,000 and $12,221 related to the options during the nine months ended September 30, 2019 and 2018, respectively.

~~During February 2018, RGI granted to two current directors (then designees) an aggregate of 25,000 options to purchase common stock, exercisable at $6.40~~$2.50 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options will vest ~~quarterly~~over a two-year period in equal ~~amounts over a one year period~~quarterly installments on the last day of each calendar quarter, with the first portion vesting ~~occurring~~ on ~~June 30, 2018.~~the last day of the calendar quarter during which the Company’s securities begin trading on NYSE American or the Nasdaq Capital Market, subject to serving as the Chief Financial Officer of the Company on each applicable vesting date. The award has been valued at $1,077,999 using the Black Sholes model and compensation expense will be recorded over the estimated vesting period. We have recorded compensation expense of ~~$0 and $34,284~~$56,737 related to the options during the three and six months ended ~~September~~June 30, ~~2019 and 2018, respectively. We have recorded compensation expense~~2020. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of ~~$34,284 and $91,424 related to the options during the nine months ended September 30, 2019 and 2018, respectively.~~0%; (2) expected volatility of 344%, (3) risk-free interest rate of 0.31%, (4) expected term of 5 years.

~~During June 2018 RGI~~On May 14, 2020 the Company granted to ~~six nonemployee advisors an aggregate of 15,000~~a consultant 25,000 options to purchase common stock, exercisable at ~~$4.80~~$2.50 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of ~~five years.~~one year. The options will vest in full upon completion of a certain project, which is expected to occur in the ~~first anniversary~~third quarter of their grant, and were fully vested as of March 31, 2019. We have recorded compensation expense of $0 and $7,250 related to the options during the three months ended September 30, 2019 and 2018, respectively. We have recorded compensation expense of $7,121 and $32,250 related to the options during the nine months ended September 30, 2019 and 2018, respectively.

On February 21, 2019, the Company granted to its Executive Chairman an aggregate of 43,423 options to purchase common stock, exercisable at $3.52 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options vest on August 4, 2020. The award has been valued at ~~$149,730~~$49,304 using the Black Sholes model and compensation expense will be recorded over the estimated vesting period. We have recorded compensation expense of ~~$24,955 and $66,547~~$29,582 related to the options during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively.~~2020. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 250%, (3) risk-free interest rate of 0.15%, (4) expected term of 5 years.

On May 14, 2019, the Company granted to its Executive Chairman five-year options to purchase 451,170 common shares at $6.40 per share, which options shall vest subject to serving as Executive Chairman on November 14, 2020. The award has been valued at $2,217,952 and compensation expense will be recorded over the vesting period. We have recorded compensation expense of $369,659 and $554,488 related to the award duringDuring the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively.~~

2020, we recorded $451,957 and $916,542 of compensation expense, respectively, related to stock options granted in prior years.

On August 1, 2019 the Company granted to five nonemployee advisors an aggregate of 31,250 options to purchase common stock, exercisable at $3.152 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options vest in full on May 23, 2020, subject to continued service as an advisor to the Company as of the vesting date. The awards have been valued at $98,500 and compensation expense will be recorded over the vesting period. We have recorded compensation expense of $20,205 related to the options during the three and nine months ended September 30, 2019.

In connection with the sale of Series A and Series A-1 Preferred Stock prior to the completion of the March 31, 2019 Merger, RGI issued an aggregate of 2,250,000 common stock purchase warrants to the purchasers of the preferred stock. The warrants were exercisable any time on or after 90 days after the issuance date at an exercise price of $0.80 and expire on September 1, 2023. The exercise price and number of warrants were subject to adjustment in the event of stock splits, stock dividends or reverse splits and issuances of securities at prices below the prevailing conversion price of the warrants. Pursuant to and just prior to the completion of the Merger these warrants were exchanged for newly issued Series D Preferred Stock ~~(see Notes 6 and 8 and below).~~

~~In connection with the sale of Series D Preferred Stock, we issued a total of 470,939 five-year warrants with an exercise price of $4.80, subject to adjustment.~~Warrants

The Company identified embedded features in the warrants issued with Series D Preferred Stock in 2019 and 2020 which caused the warrants to be classified as a derivative liability. These embedded features included the right for the holders to request for the Company to cash settle the warrants to the holder by paying to the holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of the warrants on the date of the consummation of a fundamental transaction, as defined in the warrant instrument. The accounting treatment of derivative financial instruments requires that the Company treat the whole instrument as liability and record the fair value of the instrument as a derivative as of the inception date of the instrument and to adjust the fair value of the instrument as of each subsequent balance sheet date.

As of the issuance date of the unit warrants issued in 2020 in connection with the sale of Series D Preferred Stock (See Note 9), the Company determined a fair value for the derivative liability of $26,465 for the 8,594 warrants, which has been charged to paid in capital. The fair value of the warrants was determined using the Black-Scholes Model based on a risk-free interest rate of 0.34%, an expected term of 5 years, an expected volatility of 344% and a 0% dividend yield.

As a result of the sale of convertible notes and warrants as described in Note 8, the number and exercise price of the Series D Preferred Stock warrants outstanding was adjusted due to anti-dilution provisions in the warrants. The exercise price was reduced to $1.60 from $4.80 and the number of warrants was increased from 479,533 to 1,438,599. We have recorded an expense for the change in derivative value due to the anti-dilution adjustments of $2,642,175 as a result of the trigger of the anti-dilution provision.

During the three and six months ended June 30, 2020, the Company recorded other expense of $72,886 and $637,974, respectively, related to the change in the fair value of the derivative. The fair value of the embedded derivative was $3,918,656 as of June 30, 2020, determined using the Black Scholes model based on a risk-free interest rate of 0.235% - 0.29%, an expected term of 3.75 – 4.95 years, an expected volatility of 334 - 357% and a 0% dividend yield.

The Company identified embedded features in the warrants issued with the convertible debt and the placement agent warrants in 2020 (see Note 8) which caused the warrants to be classified as a derivative liability. These embedded features included the right for the holders to request for the Company to cash settle the warrants to the holder by paying to the holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of the warrants on the date of the consummation of a fundamental transaction, as defined in the warrant instrument. The accounting treatment of derivative financial instruments requires that the Company treat the whole instrument as liability and record the fair value of the instrument as a derivative as of the inception date of the instrument and to adjust the fair value of the instrument as of each subsequent balance sheet date.

As of the issuance date of the Debenture warrants, the Company determined a fair value of ~~$1,750,646~~$4,665,877 for the 1,845,703 warrants. The fair value of the warrants was determined using the Black-Scholes Model based on a risk-free interest rate of ~~1.83% - 2.23%~~0.22%, an expected term of ~~five~~2.93 – 3 years, an expected volatility of ~~379%~~252% - ~~385%~~341% and a 0% dividend yield. Of this amount, $1,325,323 was recorded as debt discount (see Note 8) and $3,340,554 was charged to expense as initial derivative expense.

As of the issuance date of the placement agent warrants, the Company determined a fair value of $933,177 for the 369,141 warrants. The fair value of the warrants was determined using the Black-Scholes Model based on a risk-free interest rate of 0.22%, an expected term of 2.93 – 3 years, an expected volatility of 252% - 341% and a 0% dividend yield. The value of $933,177 has been recorded as debt cost (see Note 8).

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the Company recorded ~~income~~other expense of ~~$951,271 and $968,898, respectively,~~$266,202 related to the change in the fair value of the derivative. The fair value of the embedded derivative was ~~$781,748~~$5,865,256 as of ~~September~~June 30, ~~2019,~~2020, determined using the Black Scholes ~~Model~~model based on a risk-free interest rate of ~~1.55%~~0.18%, an expected term of ~~4.5 – 4.67~~2.91 years, an expected volatility of ~~413% - 446%~~253% and a 0% dividend yield.

~~The~~Although not a party to any proceedings or claims at June 30, 2020, the Company may be subject to legal proceedings and claims from time-to-time arising out of our operations in the ordinary course of business.

On March 31, 2019, the Company entered into a sublease with a related party (see Note 12) for its current corporate headquarters. The sublease expires in November 2022. Monthly lease payments are currently ~~$7,078~~$7,307 per month and increase to $7,535 per month for the final 20 months of the lease.

For the ~~three~~six months ended ~~September~~June 30, ~~2019,~~2020, lease costs amounted to ~~$37,236~~$74,286 which includes base lease costs of ~~$21,235~~$43,155 and common area and other expenses of ~~$16,001. For the nine months ended September 30, 2019, lease costs amounted to $74,432 which includes base lease costs of $42,470 and common area and other expenses of $31,962.~~$31,131. All costs were expensed during the periods and included in general and administrative expenses on the accompanying ~~condensed~~ consolidated statements of operations.

	September 30, 2019			June 30, 2020
Operating office lease		269,054		$	269,054
Less accumulated reduction		(36,688	)		(91,723	)
Balance of ROU asset at September 30, 2019	$	232,366
Balance of ROU asset at June 30, 2020				$	177,331

	September 30, 2019			June 30, 2020
Total lease liability	$	269,054		$	269,054
Reduction of lease liability		(36,688	)		(91,723	)
Total		232,366			177,331
Less short term portion as of September 30, 2019		(73,378	)
Long term portion as of September 30, 2019	$	158,988
Less short term portion as of June 30, 2020					(73,378	)
Long term portion as of June 30, 2020				$	103,953

Future base lease payments under the ~~non-cancelable~~non-cancellable operating lease at ~~September~~June 30, ~~2019~~2020 are as follows:

In March 2020, the outbreak of COVID-19 (coronavirus) caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization, and the outbreak has become increasingly widespread in the United States, including in each of the areas in which the Company operates. While to date the Company has not been required to stop operating, management is evaluating its use of its office space, virtual meetings and the like to comply with health and safety guidelines to protect employees, contractors and customers, including in connection with a transition back to the workplace. We have reduced certain billing rates to respond to the current economic climate. Additionally, while we have experienced, and could continue to experience, a loss of clients as the result of the pandemic, we expect that the impact of such attrition would be mitigated by the addition of new clients resulting from our continued efforts to adjust the Company’s operations to address changes in the recruitment industry. The extent to which the COVID-19 pandemic will impact our operations, ability to obtain financing or future financial results is uncertain at this time. Management has spent time evaluating shifting market demands and adjusting the Company’s focus. Due to the effects of COVID-19, the Company took steps to streamline certain expenses, such as temporarily cutting certain executive compensation packages by approximately 20%. Management also worked to reduce unnecessary marketing expenditures and worked to improve staff and human capital expenditures, while maintaining overall workforce levels. The Company expects to resume certain expenses, such as compensation, later in 2020 if conditions warrant. The Company expects but cannot guarantee that demand for its recruiting solutions will improve in the second half of 2020, as certain clients re-open or accelerate their hiring initiatives, and new clients utilize our services. The Company does not expect reductions made in the second quarter of 2020 due to COVID-19 will inhibit its ability to meet client demand. Overall, management is focused on effectively positioning the Company for a rebound in hiring which we expect in the second half of 2020. Ultimately, the recovery may be delayed and the economic conditions may worsen. The Company continues to closely monitor the confidence of its recruiter users and customers, and their respective job requirement load through offline discussions and the Company’s Recruiter Index survey.

As described in Note 6 and Note 7, the Company has issued four notes to related party stockholders, totaling $350,000, of which $100,000 is held by our Chief Executive Officer. Interest expense on these stockholder notes was $0 and $14,375 for the three months ended September 30, 2019 and 2018 and was $14,375 and $43,125 for the nine months ended September 30, 2019 and 2018, respectively. Accrued interest on the notes was $121,199 at December 31, 2018. No payments of interest were made on the notes.

In April 2019 a consultant (who is also a principal stockholder and noteholder of the Company) forgave accrued fees due to him in the amount of $187,500. This amount has been credited to paid-in capital.

During 2018 we entered into a marketing agreement with an entity controlled by a consultant (who is also a principal ~~stockholder~~shareholder and former noteholder of the Company). The agreement provides for payment to this entity of 10% of applicable revenue generated through the use of the entities database. The agreement also provides for the payment to us of 10% of the revenue generated by the entity using our social media groups. Through ~~September~~June 30, ~~2019~~2020 no fees were due or payable under this arrangement.

During 2019 we entered into a two year non-exclusive consulting agreement with a principal shareholder to act as Company’s ~~non-exclusive~~ consultant with respect to introducing the Company to potential acquisition and partnership targets. The Company ~~shall~~has agreed to pay the consultant a retainer of $10,000 per month as a non-recoverable draw against any finder fees earned. The Company ~~shall~~has also agreed to pay the consultant the sum of $5,500 per month for three years ($198,000 total) as a ~~Finder’s Fee~~finder’s fee for introducing Genesys to the Company. This payment is included in the $10,000 monthly retainer payment. We have recorded consulting fees expense of $13,500 and ~~$225,000~~$27,000 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively. We have recorded consulting fees expense of $211,500 during the three and six months ended June 30, 2019. At ~~September~~June 30, ~~2019, $165,000~~2020, $132,000 of the Genesys finder’s fee and $13,500 of monthly fee expense is included in accrued compensation.

We use a related party firm of the Company, for software development and maintenance related to our website and the platform underlying our operations. The firm was formed outside of the United States solely for the purpose of performing services for the Company and has no other clients. Our Chief Technology Officer is an employee of this firm and exerts control over the firm. Payments to this firm were ~~$30,729~~$57,401 and ~~$50,690~~$44,934 for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Payments to this firm were ~~$125,517~~$118,380 and ~~$227,563~~$94,788 for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

We ~~use Genesys for~~are a party to that certain ~~recruiting tools and services. Our president~~license agreement with Genesys. An executive officer of the Company is a ~~stockholder~~significant equity holder and a member of the ~~board~~Board of directors of Genesys. Pursuant to the License Agreement Genesys has granted us an exclusive license to use certain candidate matching software and render certain related services to us. The Company has agreed to pay to Genesys a monthly license fee of $5,000 beginning June 29, 2019 and an annual fee of $1,995 for each recruiter being licensed under the License Agreement. During the three and six months ended June 30, 2020 we charged to operating expenses $48,453 and $86,930, respectively, for services provided by Genesys. During the three and ~~nine~~six months ended ~~September~~June 30, 2019 we charged to operating expenses ~~$34,581 and $41,077, respectively,~~$12,693 for services provided by Genesys.

Icon Information Consultants performs all of the back office and accounting roles for Recruiting Solutions. Icon Information Consultants then charges a fee for the services along with charging for office ~~space.~~space (see Note 11). Icon Information Consultants and Icon Industrial Solutions (collectively “Icon”) also provide “Employer of Record” (“EOR”) services to Recruiting Solutions which means that they process all payroll and payroll tax related duties of temporary and contract employees placed at customer sites and is then paid a reimbursement and fee from Recruiting Solutions. A representative of Icon is a member of our board of directors. Icon Canada also acts as an EOR and collects the customer payments and remits the net fee back to Recruiting Solutions. Revenue related to customers processed by Icon Canada is recognized on a gross basis the same as other revenues and was ~~$82,487~~$36,091 and ~~$172,568~~$69,318 for the three and ~~nine~~six months ended ~~September~~June 30, 2020, respectively, and was $90,081 for the three and six months ended June 30, 2019. EOR costs related to customers processed by Icon Canada was ~~$76,402~~$33,784 and ~~$161,362~~$64,854 for the three and ~~nine~~six months ended ~~September~~June 30, 2020, respectively, and was $84,960 for the three and six months ended June 30, 2019. Currently, there is no intercompany agreement for those charges and they are calculated on a best estimate basis. As of ~~September~~June 30, ~~2019,~~2020, the Company owes Icon ~~$844,485~~$859,193 in payables and Icon Canada owes ~~$22,200~~$7,435 (included in accounts receivable) to the Company. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we charged to cost of revenue ~~$580,794~~$264,928 and ~~$1,289,969~~$889,242, respectively, related to services provided by Icon as our employer of record. During the three and ~~nine~~six months ended ~~September~~June 30, 2019, we charged to cost of revenue $709,175 related to services provided by Icon as our employer of record. During the three and six months ended June 30, 2020, we charged to operating expenses $59,327 and $130,268 related to management fees, rent and other administrative expense. During the three and six months ended June 30, 2019, we charged to operating expenses ~~$64,377 and $117,190~~of $52,813 related to management fees, rent and other administrative expense.

We also recorded placement revenue from Icon of $7,020 and $13,430 during the three and six months ended June 30, 2020, respectively, of which $7,020 is included in accounts receivable at June 30, 2020.

On March 31, 2019, the Company, through its wholly-owned subsidiary Recruiter.com Recruiting Solutions LLC (“Recruiting Solutions”) acquired certain assets and assumed certain liabilities from Genesys pursuant to the Asset Purchase Agreement. Recruiting Solutions was formed for the purpose of completing the asset purchase transaction. For purposes of purchase accounting, the Company is referred to as the acquirer. The Company acquired the assets of Genesys for a purchase price of $8.6 million. The purchase consideration consisted of 200,000 shares of Series F Preferred Stock, which are convertible at any time after issuance at the option of the holder, subject to a beneficial ownership limitation of 4.99%, into 2,500,000 shares of the Company’s common stock. The shares of Series F Preferred Stock were valued at $8.6 million based on the conversion rate of the Series F Preferred Stock and the quoted closing price of $3.44 per share of the Company’s common stock as of March 29, 2019, the last trading day preceding the completion of the Asset Purchase.

The acquisition is accounted for by the Company in accordance with the acquisition method of accounting pursuant to ASC 805 “Business Combinations” and pushdown accounting is applied to record the fair value of the assets acquired on Recruiting Solutions. Under this method, the purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired will be allocated to goodwill. The Company will utilize these assets in its employment staffing business to be operated through Recruiting Solutions.

~~The following is a summary of the estimated fair value of the assets acquired at the date of acquisition:~~

During the quarter ended September 30, 2019 the Company reduced the fair value of accounts receivable acquired by $71,750 to $756,609 and increased the fair value of accounts payable assumed by $8,941 to $615,415. The net effect increased intangible assets by $80,691.

The Company is in the process of completing its accounting and valuations of the assets acquired and the liabilities assumed and, accordingly, the estimated fair values of assets acquired, the allocation of purchase price noted above, and the valuation of the Series F Preferred Stock issued as the purchase price is provisional pending the final valuations which will not exceed one year in accordance with ASC 805.

The results of operations of Recruiting Solutions are included in the Company’s consolidated financial statements from the date of acquisition of March 31, 2019. The following supplemental unaudited pro forma combined financial information assumes that the acquisition had occurred at the beginning of the ~~nine~~six months ended ~~September~~June 30, ~~2019 and 2018, respectively:~~2019.

	September 30,			September 30,			June 30,
	2019			2018			2019
Revenue	$	5,883,166		$	7,649,448		$	3,937,422
Net Loss	$	(4,360,330	)	$	(3,472,436	)	$	(3,650,641	)
Loss per common share, basic and diluted	$	(3.57	)	$	-		$	(4.02	)

The pro forma financial information is not necessarily indicative of the results that would have occurred if the acquisition had occurred on the dates indicated or that result in the future.

In July 2020, the Company issued 12,000 shares of restricted common stock to a consultant pursuant to a previously executed consulting agreement.

The Company issued 110,000 shares of common stock upon the conversion of 8,800 shares of Series D Preferred Stock.

We entered into an executive employment agreement on July 1, 2020 (the “Employment Agreement”) with Chad MacRae as the Senior Vice President Recruiters on Demand. The Employment Agreement specifies that certain customer contracts, databases, and computer equipment were to be transferred to the Company in connection with the hiring of Mr. MacRae. The Company’s management is currently evaluating the proper accounting treatment for this transaction. Mr. MacRae’s compensation package includes a $50,000 signing bonus and an annual base salary of $125,000. He is also entitled to earn a bonus package capped at $350,000 equal to any profit his division generates during the first full year of his employment, payable on a quarterly basis (the “Bonus”). In addition, Mr. MacRae received five-year incentive stock options to purchase 250,000 shares of the Company’s common stock with an exercise price of $1.85, issuable under the 2017 Equity Incentive Plan. The options will vest on the last calendar day of each month over a 12 month period in equal monthly increments, subject to continued employment with the Company as of each applicable vesting date and subject to execution of the Company’s standard Stock Option Agreement. Unless the Executive is terminated by the Company for Cause (as defined in the Employment Agreement) before all the stock options have vested then, upon termination, any remaining unvested stock options shall automatically accelerate and vest. Upon a termination for Cause, all unvested options shall terminate.

If the Bonus compensation totals $350,000, the Company shall issue to the Executive, subject to approval by the Company’s Board, qualified options to purchase an additional 250,000 shares of the Company’s common stock at an exercise price equal to the market price as of the date the Bonus compensation is computed, subject to adjustment for any increase or decrease in the number of issued shares resulting from a stock dividend, stock split, reverse stock split, or other subdivision or consolidation of shares. These options shall vest over a two (2) year period in equal quarterly installments on the last day of each calendar quarter beginning with the first full calendar quarter after computation of the Bonus compensation totalling $350,000, subject to the Executive’s continued employment with the Company as of each applicable vesting date.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended ~~March~~December 31, ~~2018~~2019 as filed with the Securities and Exchange Commission (the “SEC”).

For purposes of this Quarterly Report, “Recruiter.com,” “we,” “our,” “us,” or similar references refers to Recruiter.com Group, Inc. ~~(“RGI”,~~and its consolidated subsidiaries, unless the ~~“Company,” “we”~~context requires otherwise.

Recruiter.com is a hiring platform with the world’s largest network of recruiters. Recruiter.com empowers businesses to recruit specialized talent faster with virtual teams of recruiters and artificial-intelligence (“AI”) job-matching technology. The Recruiter.com network consists of over 26,000 recruiters, the majority of whom are either smaller or ~~“us”) is~~independent. The recruiters on our network utilize an ~~operator of~~innovative web platform, complete with AI-driven job matching, screening, and video interviewing to recruit talent faster and more efficiently. Recruiter.com’s “Recruiters On Demand” provides businesses with access to virtual recruiters that specialize in vertical industries to source, engage, and hire talent on an as-needed basis.

We help businesses accelerate and streamline their recruiting and hiring processes by leveraging our expert ~~network platform for recruiters, which pairs enterprises with an extensive~~ network of recruiters and our cutting-edge artificial intelligence-based candidate sourcing, matching and video screening technologies. We operate a cloud-based scalable SaaS-enabled marketplace platform for professional hiring, which provides prospective employers access to ~~drive~~our expansive network of recruiters from across the world. The recruiters in our network generally specialize in talent sourcing for a particular field, including information technology, accounting, finance, sales, marketing, operations, and healthcare.

Our mission is to create the most collaborative and connective global platform for professional recruiting and become the top of mind solution for hiring ~~of top talent faster and smarter. The Company offers recruiters SHRM certified recruitment training and independent earning opportunity.~~ specialized talent.

The Company has ~~three subsidiaries,~~four wholly-owned subsidiaries: Recruiter.com, Inc., Recruiter.com Recruiting Solutions LLC (“Recruiting Solutions”), Recruiter.com Consulting, LLC, and VocaWorks, Inc. (“VocaWorks”). The Company operates in Connecticut, Texas, and New York. Subsequently to Q2, the Company also operates in California and Vancouver, Canada.

The costs of our revenue primarily consists of employee costs, third-party staffing costs and other fees, outsourced recruiter fees and net margin revenue share.

~~Effective August 21, 2019, the Company amended its Certificate~~Our results of ~~Incorporation to effect a one-for-80 reverse stock split of the Company’s issued~~operations and ~~outstanding common stock. Additionally, the number of authorized shares of common stock was reduced to 31,250,000. All share~~financial condition may be impacted positively and ~~per share data has been retroactively restated in this Quarterly Report~~negatively by certain general macroeconomic and ~~in the accompanying consolidated financial statements and footnotes to reflect~~industry wide conditions, such as the effects of the ~~August 21, 2019 amendments.~~

Effective March 31, 2019, RGI completed a merger (the “Merger”) with Recruiter.com, Inc., a New York based recruiting career services and marketing business and a Delaware corporation (“Pre-Merger Recruiter.com”) pursuant to a Merger Agreement and Plan of Merger, dated March 31, 2019. At the effective timeCOVID-19 pandemic. The consequences of the ~~Merger, RGI’s wholly-owned subsidiary merged with~~pandemic and ~~into Pre-Merger Recruiter.com, with Pre-Merger Recruiter.com continuing~~impact on the U.S. and global economies continue to evolve and the full extent of the impact is uncertain as of the date of this Quarterly Report. The pandemic has had a detrimental effect on many recruitment technology companies and on the general employment and staffing industry. If the recovery from the COVID-19 pandemic is not robust, the impact could be prolonged and severe. We have reduced certain billing rates to respond to the current economic climate. Additionally, while we have experienced, and could continue to experience, a loss of clients as the ~~surviving corporation~~result of the pandemic, we expect that the impact of such attrition would be mitigated by the addition of new clients resulting from our continued efforts to adjust the Company’s operations to meet the demands of the greater recruitment industry. The extent to which the COVID-19 pandemic will impact our operations, ability to obtain financing or future financial results is uncertain at this time. Management has evaluated shifting market demands and ~~a wholly-owned subsidiary of RGI. As consideration in~~adjusting the ~~Merger, the equity holders of Pre-Merger Recruiter.com received a total of 775,000 shares of its Series E Preferred Stock of RGI convertible into 9,687,500 shares of its common stock.~~Company’s strategic focus. As a result of COVID-19, the ~~former shareholders~~Company took steps to streamline certain expenses, including temporarily cutting certain executive compensation packages by approximately 20%. Management also worked to reduce unnecessary marketing expenditures and worked to improve staff and human capital expenditures, while maintaining overall workforce levels. If conditions permit, the Company expects to resume certain expenses, such as compensation, later in 2020. The Company expects but cannot guarantee that demand for its recruiting solutions will improve in the second half of ~~Pre-Merger Recruiter.com controlled approximately 90%~~2020, as certain clients re-open or accelerate their hiring initiatives, and new clients utilize our services. The Company does not expect reductions made in Q2 2020 due to COVID-19 to inhibit its ability to meet client demand. Overall, management is focused on effectively positioning the Company for a rebound in hiring, which we expect to occur in the second half of 2020. Ultimately, the ~~RGI’s outstanding common stock and in excess of 50% of the total voting power.~~

Prior to the Merger, from October 30, 2017 RGI was controlled by the principal shareholders of the Pre-Merger Recrutier.com. The Merger simply increased their control. The Company’s Chief Executive Officer prior to the Merger remains as Chief Executive Officerrecovery may be delayed and the ~~majority~~economic conditions may worsen. The Company continues to closely monitor the confidence of its recruiter users and customers, and their respective job requirement load through offline discussions and the Company’s ~~Board of Directors remains with persons who were directors (or designees) prior to~~Recruiter Index survey, which surveys recruiters’ sentiment on the Merger. Further, the Company’s Executive Chairman was retained as a consultant prior to the Merger with the understanding that if the Merger occurred, he would be appointed Executive Chairman. Operating under the License Agreement, as defined below, was the primary business of the Company before the consummation of the Merger.

~~Prior to the Merger, RGI, Pre-Merger Recruiter.com~~job market and VocaWorks had been parties to a license agreement, dated October 30, 2017 (the “License Agreement”), under the Company’s subsidiary which Pre-Merger Recruiter.com granted VocaWorks a license to use certain of its proprietary software and related intellectual property. In considerationdemand for the license, Pre-Merger Recruiter.com received 125,000,000 shares of RGI’s common stock. Pre-Merger Recruiter.com also received the right to receive shares of Series B Convertible Preferred Stock (the “Series B Preferred Stock”) of RGI upon achievement of certain milestones specified in the License Agreement. As a result, immediately prior to the completion of the Merger, Pre-Merger Recruiter.com owned approximately 90% of RGI’s outstanding common stock. Pre-Merger Recruiter.com distributed the 125,000,000 shares of RGI’s common stock to its stockholders on March 25, 2019, in conjunction with the Merger. The distribution is considered in substance to have occurred just prior to the completion of the Merger.

For accounting purposes, the Merger is being accounted for as a reverse recapitalization of Pre-Merger Recruiter.com and combination of entities under common control (“recapitalization”), with Pre-Merger Recruiter.com considered the accounting acquirer and historical issuer. The consolidated financial statements included in this Quarterly Report include Pre-Merger Recruiter.com for all periods presented. Since Pre-Merger Recruiter.com previously owned a majority interest in RGI, the consolidated financial statements include the historical operations of RGI and VocaWorks since October 30, 2017. All share and per share data in the accompanying consolidated financial statements and notes have been retroactively restated to reflect the effect of the Merger.

Effective March 31, 2019, RGI also completed the acquisition of certain assets and assumed certain liabilities under an asset purchase agreement, dated March 31, 2019, with Genesys Talent LLC, a Texas limited liability company (“Genesys”), and a wholly owned subsidiary of RGI (the “Asset Purchase”). As consideration in the Asset Purchase RGI issued a total of 200,000 shares of its Series F Preferred Stock convertible into 200,000,000 shares of its common stock. The acquired assets and liabilities include certain accounts receivable, accounts payable, deferred revenue, sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets. The Company will utilize these assets in its employment staffing business operated through Recruiter.com Recruiting Solutions, LLC, a wholly owned subsidiary of RGI. This transaction was treated as a business combination.

Following the Merger, the Company changed its fiscal year end From March 31 to December 31. On May 9, 2019, pursuant to the approval of its Board of Directors, the Company changed its name to Recruiter.com Group, Inc. and its trading symbol to “RCRT.”Quarter Overview

During the ~~three months~~three-months ended ~~September~~June 30, ~~2019,~~2020, the ~~Company continued its focus on the integration into its legacy operations of the assets purchased from Genesys in March 2019 and the business operations of Pre-Merger Recruiter.com. The~~ Company focused on sales and marketing improvements, including marketing automation, and the development of a program for the hiring of ~~additional account management~~distributed, independent sales personnel in order to service a high volume of client requests and to provide quality support to its larger clients. Company management additionally focused on developing effective investor relations, product management and roadmap development, and built additional partnership and potential acquisition opportunities.

~~The Company also invested time and personnel in~~Our key highlights during the ~~continued improvement~~three-months ended June 30, 2020 include the following

Results of ~~its Recruiter Training Program, which management believes to be a key part of ongoing quality and engagement improvements for its network of recruiters.~~Operations

On September 24, 2019, the Company announced its new Recruiter Teams product for large enterprise clients. Under the new program, certain employers are assigned dedicated teams of recruiters to work on the employer job requirements through the platform. The Company also launched certain technical capabilities to assign and manage recruiters on the platform, and automatically distribute named account jobs using the platform software. Management plans to apply the teams function to many large enterprise customers that are currently either onboarding or in its pipeline, in order to provide rapid response to anticipated increased demand.

On October 2, 2019, the Company announced a partnership with Geometric Results, Inc. (“GRI”), a subsidiary of MSX International, the world’s largest independent non-employee workforce solutions provider. GRI is expected to expand its talent acquisition ecosystem by integrating the Company into its programs to provide talent solutions to their current and future clients.

Three Months Ended ~~September~~June 30, ~~2019~~2020 Compared to Three Months Ended ~~September~~June 30, ~~2018:~~2019:

The Company had revenue of ~~$1,945,744~~$1,853,414 for the ~~three months~~three-month period ended ~~September~~June 30, ~~2019,~~2020, as compared to ~~$158,706~~$1,972,481 for the ~~2018~~three-month period end June 30, 2019, representing a decrease of $119,067 or 6%. This decrease resulted primarily from enterprise accounts reducing demand for billable consultants as well as reducing bill rates clients paid for consultants, as a result of the effect of the COVID-19 pandemic. The Company also had a decline in its licensing business, as our primary licensing customer reduced demand for hiring needs also as a result of the effect of the COVID-19 pandemic. The Company also experienced a decline in marketing revenue as we shifted internal resources to focus more on our core recruiting solutions business. The extent to which the COVID-19 pandemic will impact our revenue in the subsequent future periods is uncertain at this time.

Cost of revenue for the three-month period ended June 30, 2020 was primarily attributable to third party staffing costs and other fees related to the recruitment and staffing business acquired from Genesys Talent, LLC, (currently the Company’s Recruiting Solutions division). Cost of revenue was $1,418,242 for the three-month period ended June 30, 2020, which included related party costs of $298,712, compared to $1,461,922 for the 2019 three-month period, and included related party costs of $794,135.

Our gross profit for the three-month period ended June 30, 2020 was $435,172, producing a gross profit margin of 23.5%. Our gross profit for the corresponding 2019 three month period was $510,559, producing a gross profit margin of 25.9%. The decline in gross profit from 2019 to 2020 is primarily the result of a decline in sales for the period. The decline in the gross profit margin reflects a shift in the mix of business due to the decline in our licensing business.

We had total operating expenses of $1,858,004 for the three-month period ended June 30, 2020 compared to $2,701,335 in the 2019 period, a decrease of $843,331 or 31.2%. This decrease was primarily due to a decrease in general and administrative expense of $1,027,070 or 38.7%.

Our sales and marketing expense for the three-month period ended June 30, 2020 was $15,068 compared to $2,969 for the 2019 period, which reflects the focus on growth in our business. The Company endeavored to build traffic, content, and communications for the purpose of outreach to and engagement with its network of recruiters and to further build its network of recruiters.

Our product development expense for the three-months ended June 30, 2020 increased to $57,401 from $44,934 for the corresponding period in 2019, reflecting continued investment in our product offerings. The product development expense in both periods were paid in entirety to Recruiter.com Mauritius, Ltd, a development team employed by Recruiter.com and a related party of the Company.

For the three-month period ended June 30, 2020, we incurred a non-cash amortization charge of $159,173 related to the intangible assets acquired from Genesys, now the Company’s Recruiting Solutions division.

General and administrative expenses for the three-month period ended June 30, 2020 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. For the three-month period ended June 30, 2020, our general and administrative expenses were $1,626,362, including $709,230 of non-cash stock based compensation. In 2019, for the corresponding period, our general and administrative expenses were $2,653,432 including $1,481,322 of non-cash stock-based compensation. This decrease is attributable primarily to the declines in non-cash stock-based compensation of $772,092, legal expense of $297,505 and consulting fees of $126,000 partially offset by increases in compensation, software tools and other expenses.

Other income (expenses) for the three-month period ended June 30, 2020 consisted of net expense of $6,518,383 compared to net expense of $89,213 in the corresponding 2019 period. The primary reason for the increase of $6,429,170 is a non-cash initial derivative expense of $3,340,554 related to the sale of convertible debentures as well as a non-cash expense of $2,642,175 due to a change in the derivative value of warrants due to anti-dilution adjustments. Other expense also increased due to a non-cash expense of $339,088 from the change in the fair value of the derivative liability from our outstanding warrants issued in 2019. As our common stock price increases, we incur an expense and contrarily if our common stock decreases, we recognize other income. We expect the non-cash income from the anticipated forgiveness of the loans we received under the Paycheck Protection Program to increase our other income, or alternatively decrease our other expense, as the case may be.

For the three-months ended June 30, 2020, we incurred a net loss of $7,941,215 compared to $2,279,989 in the 2019 period. After taking into account the accrued preferred stock dividends as applicable, we incurred a net loss attributable to common shareholders of $7,941,215 for the three-months ended June 30, 2020 compared to $2,279,989 in the 2019 period. It is possible the net loss may increase in near-term future periods due to the effect of the COVID-19 pandemic, which we expect will be partially offset by non-cash income from forgiveness of the loans pursuant to the Paycheck Protection Program.

The Company had revenue of $4,166,537 for the six months ended June 30, 2020, as compared to $2,135,783 for the 2019 six-month period, an increase of ~~$1,787,038~~$2,030,754 or ~~1,126%~~95.1%. The increase resulted primarily from the acquisition in March 2019 of certain assets from ~~Genesys. Revenue attributable to~~Genesys, now the ~~acquired assets was approximately $1,824,000 for the three months ended September 30, 2019, partially~~Company’s Recruiting Solutions division, offset by enterprise accounts reducing demand for billable consultants as well as reducing bill rates clients paid for consultants, as a ~~decrease~~result of the effect of the COVID-19 pandemic. The Company also had a decline in ~~revenue from Recruiter.com operations~~our licensing business as our primary licensing customer reduced demand for hiring needs also as a result of ~~approximately $37,000 (primarily from~~the effect of the COVID-19 pandemic. The Company also experienced a ~~decrease~~decline in marketing ~~and publishing revenue), due~~revenue as we shifted internal resources to focus more on our core solutions business. The extent to which the ~~management concentrating on integrating~~COVID-19 pandemic will impact our revenue in the ~~recruitment operations related to the Genesys Asset Purchase during the three months ended September 30, 2019 and a continued focus on the development and execution~~subsequent future periods is uncertain at this time.

~~Costs of revenues consist of~~revenue was primarily attributable to employee costs, third party staffing costs and other fees ~~outsourced recruiter fees and net margin revenue share. These costs are attributable~~related to the ~~assets~~recruitment and staffing business acquired from ~~Genesys.~~Genesys, now the Company’s Recruiting Solutions division. Cost of revenue was ~~$1,491,805~~$3,169,438 for the ~~three~~six months ended ~~September~~June 30, ~~2019. There were no comparable~~2020 and included related party costs of $954,096. This compares to $1,461,922 for the 2019 six-month period, which included related party costs of $794,135.

Our gross profit for the 2020 six-month period was $997,099 which produced a gross profit margin of 23.9%. Our gross profit for the 2019 six month period was $673,861 which produced a gross profit margin of 31.6%. The decline in the ~~2018 period.~~gross profit margin reflects the impact of a reduction in bill rates from certain clients as well as a shift in the mix of business due to the decline in our licensing business and reduced focus on marketing revenue.

~~Operating~~We had total operating expenses ~~totaled $2,404,642 and $453,094~~of $4,274,456 for the ~~three month periods~~six months ended ~~September~~June 30, ~~2019 and 2018, respectively. Operating expenses increased by $1,951,548, or 431%,~~2020 compared to $3,171,017 in the 2019 ~~three month~~ period, an increase of $1,103,439 or 34.8%. The increase was primarily due to the increase in general and administrative expenses of $702,045 as well as the inclusion of intangible amortization of $318,346.

Our sales and marketing expense for the six months ended June 30, 2020 was $40,311 compared to $2,969 for the ~~2018 period. Operating expenses consist primarily of compensation expense, stock based compensation, professional fees and~~2019 period, which reflects the focus on growth in the business.

Our product development ~~expenses. Stock compensation~~expense for the six months ended June 30, 2020 increased to $140,494 from $94,788 for 2019 reflecting continued investment in our product offerings. The product development expense included ~~in operating expenses was $1,411,565~~$118,380 and ~~$45,928 for~~$94,788 respectively paid to a development team employed by Recruiter.com Mauritius, a related party.

For the ~~three~~six months ended ~~September~~June 30, ~~2019 and 2018, respectively. The increase in stock compensation relates primarily~~2020, we incurred a non-cash amortization charge of $318,346 related to ~~grants of restricted stock and options made to our Executive Chairman in February and May of 2019. Additionally, there were operating expenses of approximately $512,000 attributable to~~ the intangible assets acquired from Genesys, now the Company’s Recruiting Solutions division.

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. For the six months ended June 30, 2020, our general and administrative expenses were $3,775,305, including $1,650,202 of non-cash stock-based compensation. In 2019, our general and administrative expenses were $3,073,260 including $1,568,027 of non-cash stock-based compensation. The increase is attributable primarily to increases in ~~March 2019, which were not present~~compensation, software tools, and other expenses and non-cash stock-based compensation, partially offset by a decrease in ~~the 2018 period.~~professional fees.

~~Other~~ income ~~(expense)~~(expenses) for the six months ended June 30, 2020 consisted of net expense of $7,146,463 compared to net expense of $165,155 in the 2019 period. The primary reason for the increase of $6,981,308 is ~~comprised~~a non-cash initial derivative expense of ~~interest costs, non-cash income~~$3,340,554 related to the sale of convertible debentures and warrants as well as a non-cash expense of $2,642,175 due to a change in ~~fair~~the derivative value of ~~our derivative liabilities, and gains or losses on marketable securities. The~~warrants due to anti-dilution adjustments. Other expense also increased due to a non-cash expense of $904,176 from the change in the fair value of the derivative liability from our ~~securities results from the changes in the quoted stock price of the securities.~~

~~We have determined that the~~outstanding warrants issued in ~~connection with~~2019. As our common stock price increases, we incur an expense and contrarily if our common stock decreases, we recognize other income. We expect the ~~sale~~non-cash income from the anticipated forgiveness of ~~Series D Preferred Stock during~~ the ~~three~~loans we received under the Paycheck Protection Program to increase our other income, or alternatively decrease our other expense, as the case may be.

For the six months ended June 30, ~~2019 are derivative financial instruments. The accounting treatment~~2020, we incurred a net loss of derivative financial instruments requires that we record the derivatives at their fair values as of the inception date of the agreements and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date (for example, if our stock price increases), we will record a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, we will record non-operating, non-cash income.

~~Net loss was $1,028,034 and $316,958 for the three months ended September 30, 2019 and 2018, respectively, comprised of the components discussed above.~~

~~Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018:~~

~~The Company had revenue of $4,081,527 for the nine months ended September 30, 2019, as~~$10,423,820 compared to ~~$687,538 for~~$2,662,311 in the ~~2018 nine month period, an increase of $3,393,989 or 494%. The increase in revenue resulted primarily from~~2019 period. After taking into account the ~~acquisition in March 2019 of certain assets from Genesys. Revenue~~accrued preferred stock dividends as applicable, we incurred a net loss attributable to ~~the acquired assets was approximately $3,665,000~~common shareholders of $10,423,820 for the nine months ended September 30, 2019, partially offset by a decrease in revenue from Recruiter.com operations of approximately $271,000 (primarily from a decrease in placement revenus marketing and publishing revenue), due to management concentrating on consummating the Merger, along with the Asset Purchase, and integrating the operations related to the Genesys Asset Purchase during the six months ended ~~September~~June 30, ~~2019.~~

~~Costs of revenues consist of third party staffing costs and other fees, outsourced recruiter fees and net margin revenue share. These costs are attributable~~2020 compared to ~~the assets acquired from Genesys. Cost of revenue was $2,953,727 for the nine months ended September 30, 2019. There were no comparable costs in the 2018 period.~~

~~Operating expenses totaled $5,575,659 and $1,505,511 for the nine month periods ended September 30, 2019 and 2018, respectively. Operating expenses increased by $4,070,148, or 270%,~~$2,772,005 in the 2019 ~~nine month period, as compared~~period. It is possible the net loss may increase in near-term future periods due to the ~~2018 period. Operating expenses consist primarily~~effect of ~~compensation expense, stock based compensation, professional fees~~the COVID-19 pandemic, which we expect will be partially offset by non-cash income from forgiveness of the loans pursuant to the Paycheck Protection Program.

The following discussion and ~~product development expenses. Stock compensation expense~~analysis includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to net income, operating ~~expenses was $2,979,592~~income, and ~~$136,956~~cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of Recruiter nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.

Our management uses and relies on EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the ~~nine months ended September 30, 2019~~following non-GAAP financial measures in planning, forecasting and ~~2018, respectively. Included~~analyzing future periods. Our management uses these non-GAAP financial measures in ~~stock based compensation expense for~~evaluating its financial and operational decision making and as a means to evaluate period-to-period comparison. Our management recognizes that the ~~nine months ended September 30, 2019~~non-GAAP financial measures have inherent limitations because of the described excluded items.

Recruiter defines Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table below. Adjusted EBITDA is an ~~expense~~important measure of ~~$752,500 related~~our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing the ~~value~~impact of ~~the Company’s shares~~items of common stock distributed to employees and consultants by certain stockholders of Pre-Merger Recruiter.com. Besides the charge for the distribution of shares by stockholders, the increase in stock compensation relates primarily to grants of restricted stock and options made to our Executive Chairman in February and May of 2019. There was also a one-time finder’s fee of $198,000 related to the Genesys asset acquisition. Additionally, there were operating expenses of approximately $997,000 attributable to assets acquired from Genesys in March 2019, which were not present in the 2018 period.non-operational nature that affect comparability.

~~Other income (expense) is comprised~~We have included a reconciliation of ~~interest costs, non-cash income related~~our non-GAAP financial measures to the ~~change~~most comparable financial measure calculated in ~~fair value of our derivative liabilities,~~accordance with GAAP. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between the Company and ~~losses on marketable securities. The change in~~other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the ~~fair value of our securities results from~~specific definition being used and to the ~~changes in~~reconciliation between such measure and the ~~quoted stock price of the securities.~~ corresponding GAAP measure provided by each company under applicable SEC rules.

~~We have determined that the warrants issued in connection with the sale~~The following table presents a reconciliation of Series D Preferred Stock during the nine months ended September 30, 2019 are derivative financial instruments. The accounting treatment of derivative financial instruments requires that we record the derivatives at their fair values as of the inception date of the agreements and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date (for example, if our stock price increases), we will record a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, we will record non-operating, non-cash income.net loss to Adjusted EBITDA:

~~Net loss was $3,690,345 and $982,306 for the nine months ended September 30, 2019 and 2018, respectively, comprised of the components discussed above.~~

~~We expect to continue to incur operating losses for~~For the ~~foreseeable future. As of September~~six months ended June 30, ~~2019, we had an accumulated deficit of $9,335,020 compared to $5,675,391 as of December 31, 2018.~~

~~Our~~2020, net cash used in operating activities was ~~$603,384 and $612,353~~$1,040,601, compared to net cash used in operating activities of $564,199 for the ~~nine months ended September 30,~~ 2019 ~~and 2018, respectively.~~period. The ~~decrease~~increase in cash used ~~of $8,969 is primarily~~in operating activities was attributable to ~~a net~~the increase in ~~accounts payable and accrued liabilities of approximately $761,000, partially~~operating expenses outlined previously supporting the investments to grow our business offset by ~~an increase~~non-cash charges, net of a decrease in working capital accounts primarily prepaid expenses and other current assets. Net loss (after adjusting for non-cash items) ofincreased by approximately ~~$727,000~~$333,000 and ~~a decrease in deferred revenue of approximately $25,000.~~accounts receivable, prepaid expenses and other current assets decreased by $881,989 and accounts payable and accrued liabilities decreased by $1,006,448.

~~Net cash provided by~~For the six months ended June 30, 2020, investing activities ~~for the nine months ended September 30, 2019 consisted of cash~~provided $17,009 from the sale of marketable securities, compared to $14,963 of ~~$69,000 offset by $15,000 of expenditures for software development and equipment purchases. Net~~ cash used in investing activities ~~during~~in the ~~nine~~six months ended ~~September~~June 30, ~~2018 consisted~~2019, which resulted primarily ~~of expenditures~~from cash paid for software development ~~of approximately $52,000.~~and equipment.

~~Net~~For the six months ended June 30, 2020, net cash provided by financing activities was ~~approximately $1,211,000~~$2,448,439. The principal factors were $2,226,000 from the sale of convertible notes, net of original issue discounts and offering costs and $398,545 of proceeds from notes payable, offset by $261,866 for the ~~nine months ended September 30,~~repayments of liability from sale of future revenues. In the 2019 period, financing activities provided $1,458,786, primarily due to $979,997 from the sale of preferred stock ~~of $980,000~~ and $500,000 for a ~~refundable~~ deposit on the ~~sale~~purchase of preferred ~~stock~~stock.

As of ~~$285,000 (net~~August 4, 2020 the Company had approximately $1,193,864 cash on hand. This balance is after receipt of ~~repayments made). We~~$398,545 borrowed from a bank pursuant to the Paycheck Protection Program under the CARES Act guaranteed by the SBA, which we expect to be forgiven in part or in full, subject to our compliance with the conditions of the Paycheck Protection Program. This balance also ~~made~~is after receipt of approximately $2.2 million in net ~~repayments on notes of $54,000. Net cash provided by financing activities was approximately $395,000 for the nine months ended September 30, 2018, derived primarily from the~~ proceeds from the ~~sale~~offering of ~~preferred stock of $300,000,~~ the ~~sale of~~12.5% Original Issue Discount Senior Subordinated Convertible Debentures and common stock purchase warrants completed in May and June 2020. Based on the cash on hand as of ~~approximately $67,000, and contributions~~August 4, 2020, the Company does not have the capital resources to meet its working capital needs for the next 12 months. We are also party to two lines of ~~$30,000.~~credit. Advances under each of these lines of credit mature within 12 months of the advances. Availability under these two lines of credit in the amount of $91,300 at June 30, 2020 has been suspended in 2020 due to COVID-19 uncertainty.

The Company’s unaudited condensed consolidated financial statements ~~included~~are prepared using generally accepted accounting principles in ~~this Quarterly Report have been prepared on~~the United States of America applicable to a going concern, ~~basis~~ which contemplates the realization of assets and the ~~settlement~~satisfaction of liabilities ~~and commitments~~ in the normal course of business. The ~~Company’s management~~Company has ~~evaluated whether there is substantial doubt about~~incurred net losses and negative operating cash flows since inception. For the ~~Company’s ability~~three-months ended June 30, 2020 and the six months ended June 30, 2020, the Company recorded net losses of $7,941,215 and $10,423,820, respectively. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern and has determined that substantial doubt existed as of the date of the end of the period covered by this Quarterly Report. This determination was based on the following factors: (i) the Company has a working capital deficit as of September 30, 2019 and the Company’s available cash of approximately $502,000 as of November 13, 2019 will not be sufficient to fund its anticipated level of operations for the next 12 months; (ii) the Company will require additional financing for the remainder of the year ending December 31, 2019 to continue at its expected level of operations; and (iii) if the Company fails to obtain the needed capital, it will be forced to delay, scale back, or eliminate some or all of its development activities or perhaps cease operations. In the opinion of management, these factors, among others, raise substantial doubt about theconcern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.

The Company’s historical operating results indicate substantial doubt exists related to the Company’s ability to continue as ~~of the date of the end of the period covered by this Quarterly Report and for one year from the issuance of the~~a going concern. We can give no assurances that any additional capital that we are able to obtain, if any, will be sufficient to meet our needs, or that any such financing will be obtainable on acceptable terms. If we are unable to obtain adequate capital, we could be forced to cease operations or substantially curtail our commercial activities. These conditions raise substantial doubt as to our ability to continue as a going concern. The accompanying unaudited ~~condensed~~ consolidated financial ~~statements.~~ statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities should we be unable to continue as a going concern.

To date, private ~~equity~~placement offerings have been our primary source of liquidity and we expect to fund future operations through additional ~~private~~securities offerings. We have also entered into arrangements with factoring companies to receive advances against certain future accounts receivable in order to supplement our liquidity. However, the COVID-19 pandemic and debt covenants under outstanding debt and other financing arrangements have affected the Company’s ability to receive advances against its future accounts receivable as discussed in more detail below.

The Company and its subsidiaries are parties to a Merchant Receivables Purchase and Security Agreement, dated December 6, 2019 (the “First Receivables Purchase Agreement”), with Change Capital Holdings I, LLC (“Change Capital”) and a Merchant Receivables Purchase and Security Agreement, dated December 16, 2019, with Change Capital (the “Second Receivables Purchase Agreement” and together with the First Receivables Purchase Agreement, the “Receivables Purchase Agreements”). Pursuant to the Receivables Purchase Agreements, Change Capital has agreed to advance a total of $450,000 in cash (the “Purchase Price”) and the Company and its subsidiaries agreed to pay Change Capital in equal weekly installments over the course of 52 weeks an amount of approximately $567,000 (the “Specified Amount”), which amount includes the fees payable by the Company under the Receivables Purchase Agreements. As long as no default has occurred under the Receivables Purchase Agreements, the Company has the right to pay the remaining balance of the Specified Amount to Change Capital prior to the due date at a total cost of 3% of the Purchase Price per month. Pursuant to the Receivables Purchase Agreements, the Company and the subsidiaries party to the Receivables Purchase Agreements also granted to Change Capital a security interest in all their assets now owned or ~~public~~acquired in the future. In May 2020, the Receivables Purchase Agreements were amended to limit the outstanding principal amount to $408,777 payable as two payments of $5,452 weekly, plus any default fees, late fees, legal fees and expenses and any other costs or expenses incurred in enforcing Change Capital’s rights under the Receivables Purchase Agreements. As of Aug 4, 2020, there are no other fees owed under the Receivables Purchase Agreements in addition to the two weekly payments. The Company does not anticipate receiving any additional advances under the Receivables Purchase Agreements. The Receivables Purchase Agreements contain covenants which limit the Company’s ability to enter into any secured financing agreements without the prior written consent of Change Capital. The transactions pursuant to the Receivables Purchase Agreements have been accounted for as “Sale of Future Revenues.”

A wholly-owned subsidiary of the Company is also a party to an arrangement with Qwil PBC, entered into in January 2020, that provides advances against the collection of accounts receivable. Advances made under the agreement are generally repayable in 45 days from the date of the advance and bear interest at 1.5% per month. In April 2020, Qwil informed the Company that it would not be able to advance additional funds pursuant to this arrangement due to the impact of the COVID-19 pandemic. In May 2020, the Company negotiated a more favorable repayment plan with Qwil PBC, which consists of payments of approximately $7,903 bi-weekly through August 14^th, 2020 and a payment of $7903 weekly from August 21^st though September 18^th, without additional interest. As of Aug 10, 2020, our outstanding balance with Qwil PBC was approximately $47,419.56.

The advances received pursuant to the arrangements with Change Capital and Qwil are carried as liabilities on our balance sheet and the accounts receivable remain on our books until collected.

In May and June 2020, the Company entered into a Securities Purchase Agreement, effective May 28, 2020 (the “Purchase Agreement”) with several accredited investors (the “Purchasers”). Four of the investors had previously invested in the Company’s preferred stock. Pursuant to the Purchase Agreement, the Company sold to the Purchasers a total of (i) $2,953,125 in the aggregate principal amount of 12.5% Original Issue Discount Senior Subordinated Secured Convertible Debentures (the “Debentures”), and (ii) 1,845,703 common stock purchase warrants (the “Warrants”), which represents 100% warrant coverage. The Company received a total of $2,226,000 in net proceeds from the offering, after deducting the 12.5% original issue discount of $328,125, offering expenses and commissions, including the placement agent’s commission and fees of $295,000 and reimbursement of the placement agent’s and lead investor’s legal fees and the Company’s legal fees in the aggregate amount of $100,000 and escrow agent fees of $4,000. The Company also agreed to issue to the placement agent, as additional compensation, 369,141 common stock purchase warrants exercisable at $2.00 per share.

The Debentures mature on May 28, 2021, subject to a six-month extension at the Company’s option. The Debentures bear interest at 8% per annum payable quarterly, subject to an increase in case of an event of default as provided for therein. The Debentures are convertible into shares of the Company’s common stock at any time following the date of issuance at the purchasers’ option at a conversion price of $1.60 per share, subject to certain adjustments. The Debentures are subject to mandatory conversion in the event the Company closes an equity offering of at least $5,000,000 resulting in the listing of the Company’s common stock on a national securities exchange. The Debentures rank senior to all existing and future indebtedness of the Company and its subsidiaries, except for approximately $508,000 of outstanding senior indebtedness. The Company may prepay the Debentures at any time at a premium as provided for therein.

The Company’s obligations under the Debentures are secured by a first priority lien on all of the assets of the Company and its subsidiaries, subject to certain existing senior liens. The Company’s obligations under the Debentures are guaranteed by the Company’s subsidiaries.

The Securities Purchase Agreement for the Debentures and Warrants contains customary representations, warranties and covenants of the Company, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company and its subsidiaries, without the prior written consent of the Debenture holders, to incur additional indebtedness, including further advances under a certain preexisting secured loan, and repay outstanding indebtedness, create or permit liens on assets, repurchase stock, pay dividends or enter into transactions with affiliates. The Debentures contain customary events of default, including, but not limited to, failure to observe covenants under the Debentures, defaults on other specified indebtedness, loss of admission to trading on OTCQB or another applicable trading market, and occurrence of certain change of control events. Upon the occurrence of an event of default, an amount equal to 130% of the principal, accrued but unpaid interest, and other amounts owing under each Debenture will immediately come due and payable at the election of each Purchaser, and all amounts due under the Debentures will bear interest at an increased rate.

In order to meet our working capital needs for the next 12 months, we expect to finance our operations through additional debt or equity offerings. ~~Additional funding~~We may not be ~~available~~able to complete these or any other financing transactions on terms acceptable to the Company, or at all. Additionally, any future sales of securities to finance our operations will likely dilute existing ~~stockholders’~~shareholders’ ownership. The Company cannot guarantee when or if it will generate positive cash flow. If we are unable to raise sufficient capital to fund our operations, it is likely that we will be forced to reduce or cease operations.

This ~~report~~Quarterly Report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding management’s beliefs with respect to the ~~expected~~impact of the COVID-19 pandemic, including the anticipated effect of client attrition, expected changes in expenses, expected increase in future demand for recruiting solutions, and the ~~partnership with GRI,~~anticipated impact of our ~~liquidity~~cost-cutting measures on our ability to meet client demand, our expected decrease in future revenues and ~~obtaining new financing.~~

increase in the net loss, our expectations regarding advances under the Receivables Purchase Agreements, expected future capital-raising activity, expected forgiveness of the loans received under the Paycheck Protection Program and the anticipated effect of such forgiveness on our operating results, and our liquidity. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including without limitation, the following:

~~The results anticipated by any or all~~Please refer to “Part I – Item 1A. Risk Factors” of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include continued partnership with GRI, events affecting capital markets in general and microcap companies in particular, and our ~~ability to complete a financing including disagreements on terms. Further information on our risk factors is contained in our filings with the SEC, including the Annual Report on~~2019 Form 10-K for additional information regarding the ~~year ended March 31, 2018. Factors or events~~risks and uncertainties that could ~~cause~~affect our ~~actual~~business, financial condition and results ~~to differ may~~of operations. New risk factors emerge from ~~time to time,~~time-to-time and it is not possible for us to predict all such risk factors, nor can we assess the impact of ~~them. We~~all such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this Quarterly Report, whether as ~~the~~a result of new information, future events, changed circumstances or ~~otherwise.~~

The preparation of consolidated financial statements in conformity with ~~GAAP~~accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of ~~revenue~~revenues and expenses during the reporting period. Actual results ~~could~~and outcomes may differ from ~~those estimates.~~management’s estimates and assumptions. Included in these estimates are assumptions ~~about inputs~~ used to estimate ~~useful lives~~collection of accounts receivable, fair value of available for sale securities, fair value of derivative liabilities, fair value of securities issued for acquisitions, fair value of assets acquired and liabilities assumed in the business combination, fair value of intangible assets ~~calculate beneficial conversion~~and goodwill, valuation of ~~convertible notes payable~~initial right of use assets and ~~convertible preferred stock,~~corresponding lease liabilities, deferred income tax asset valuation allowances, and valuation of ~~derivative liabilities.~~stock based compensation expense.

On January 1, 2018, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective (cumulative effect) transition method. Under this transition method, results for reporting periods beginning January 1, 2018 or later are presented under ASC 606, while prior period results continue to be reported in accordance with previous guidance. There was no cumulative effect of the initial application of ASC 606 and therefore no cumulative adjustment was recorded to the opening balance of retained earnings. The timing of revenue recognition for our various revenue streams was not materially impacted by the adoption of this standard. The Company believes its business processes, systems, and controls are appropriate to support recognition and disclosure under ASC 606. In addition, the adoption has led to increased footnote disclosures. Overall, the adoption of ASC 606 did not have a material impact on the Company’s balance sheet, statement of operations and statement of cash flows. ASC 606 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing service revenue over the service period.

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. 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 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 Enterprise clients that buy staffing, direct hire, and sourcing services. Once we have has 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.

Net revenues as presented on the statement of operations represent services rendered to customers less sales adjustments and allowances. The Company records revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses.

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. We record substantially all revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of this line of revenues and expenses. We have concluded that gross reporting is appropriate because we have the risk of identifying and hiring qualified employees and has the discretion to select the employees and establish their price and duties and bears the risk for services that are not fully paid for by customers. Consulting and staffing revenues are recognized when the services are rendered by the temporary employees. Payroll and related taxes of employees that are placed on temporary assignment are outsourced to third party payors or related party payors. The payors pay all related costs of employment, including workers’ compensation insurance, state and federal unemployment taxes, social security and certain fringe benefits. We assume the risk of acceptability of the employees to its customers. ~~Typical payment terms for consulting and staffing services are net 90.~~

Direct hire recruitment placement revenues are recognized on a gross basis when the guarantee period specified in the customer contract expires. No fees for direct hire placement services are charged to employment candidates. Any payments received prior to the expiration of the guarantee period are recorded as a deferred revenue liability. ~~Typical payment terms for recruitment services are net 90.~~

Career services revenues are recognized on a gross basis upon distribution of resumes or completion of training courses, which is the point that the performance obligations are satisfied. ~~Typical payment terms for career services are upon distribution or completion.~~

Marketing and publishing services 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 that the performance obligations are satisfied. ~~Typical payment terms for marketing and publishing are net 30.~~

Goodwill is comprised of the purchase price of business combinations in excess of the fair value assigned at acquisition to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized. The Company tests 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.

The Company ~~does not~~performs its annual goodwill and impairment assessment on December 31st of each year or earlier if facts and circumstances indicate that an impairment may have ~~any contract assets such as work-in-process. All trade receivables on the Company’s balance sheet are from contracts with customers.~~occured.

~~Costs incurred to obtain a contract~~Long-lived assets are capitalized unless short term in nature. As a practical expedient, costs to obtain a contract that are short term in nature are expensed as incurred. The Company does not have any contract costs capitalized as of September 30, 2019reviewed for impairment whenever events or ~~December 31, 2018.~~

~~The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with various accounting standards.~~

~~The Company accounts for convertible instruments (when it has determined~~circumstances indicate that the instrument is not a stock settled debt and the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fairbook value of the ~~underlying common stock at~~asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the ~~commitment date of~~Company estimates the ~~note transaction and the effective conversion price embedded in the note. Discounts under these arrangements are amortized over the term~~future undiscounted net cash flows of the related ~~debt to their earliest date of redemption. The Company also records when necessary deemed dividends for~~asset or asset group over the ~~intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value~~remaining life of the ~~underlying common stock at~~asset in measuring whether or not the ~~commitment date of the share transaction and the effective conversion price embedded in the preferred shares.~~asset values are recoverable.

ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control and could require net cash settlement, then the contract shall be classified as an asset or a liability.

The Company has determined that the conversion features of its convertible preferred stock and stock purchase warrants do not require bifurcation as free standing derivative instruments, based on the adoption of ASU 2017-11 and the guidance related to down round features.

~~The Company has determined that the conversion features of its convertible preferred stock sold in 2019 do not require bifurcation as free standing derivative instruments.~~

The Company’s derivative financial instruments consist of embedded derivatives related to the warrants issued with the sale of our preferred stock in ~~2019.~~2020 and 2019 and the warrants issued with the sale of convertible notes in 2020. The accounting treatment of derivative financial instruments requires that we record the derivatives at their fair values as of the inception date of the debt agreements and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date, we recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, we recorded non-operating, non-cash income.

~~We account~~The Company accounts for ~~our~~all stock-based ~~compensation under ASC 718 “Compensation – Stock Compensation” using the fair value based method. Under this method, compensation cost is measured at the grant date~~payment awards made to employees, directors and others based on ~~the value of the award~~their fair values and is recognized over the shorter of the service period or the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option pricing model.

Through September 30, 2019 we used the fair value method for equity instruments granted to non-employees and used the Black-Scholes model for measuring the fair value of options. The stock based fair valuerecognizes such awards as compensation ~~is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized~~expense over the vesting ~~periods.~~period using the straight-line method over the requisite service period for each award as required by FASB ASC Topic No. 718, Compensation-Stock Compensation. If there are any modifications or cancellations of the underlying vested or unvested stock-based awards, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense, or record additional expense for vested stock-based awards. 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.

There have not been any recent changes in accounting pronouncements and ~~Accounting Standards Update (“ASU”)~~ASU issued by the ~~Financial Accounting Standards Board (“FASB”) during the nine months ended September 30, 2019~~FASB that are of significance or potential significance to the ~~Company.~~Company except as disclosed below.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This guidance, among other provisions, eliminates certain exceptions to existing guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this guidance.

Our management carried out an evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, required by Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act. In making this assessment, our management used the criteria set forth by the Committee of Sponsor Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Based on their evaluation as of the end of the period covered by this Quarterly Report, our Chief Executive Officer and our Chief Financial Officer, have concluded as a result of the material weaknesses described below, that our disclosure controls and procedures were not effective to ensure that the information relating to our Company, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management to allow timely decisions regarding required disclosure as a result of material weaknesses in our internal control over financial reporting.

Management has ~~excluded from its evaluation~~determined that, as of June 30, 2020 there were material weaknesses in both the ~~business~~design and effectiveness of ~~Pre-Merger Recruiter.com~~our internal control over financial reporting. A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects our ability to initiate, authorize, record, process, or report external financial data reliably in accordance with GAAP such that there is more than a remote likelihood that a material misstatement of our annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified at least two material weaknesses in our internal control over financial reporting. Specifically, (1) we lack a sufficient number of employees to properly segregate duties and ~~Recruiter.com Recruiting Solutions LLC,~~provide adequate review of the preparation of the consolidated financial statements and, as of that date, (2) we lacked sufficient independent directors on our Board of Directors to maintain audit and other committees consistent with proper corporate governance standards. As of the end of the period covered by this Quarterly Report, these material weaknesses have not been cured. During the three-months ended March 31, 2020, the Company planned and developed strategies to improve accounting operations and remediate these material weaknesses, including appointing a ~~wholly owned subsidiary~~new Chief Financial Officer. In May 2020, the Board of Directors appointed Judy Krandel as the Chief Financial Officer of the Company, ~~which currently operates~~effective upon the assets acquired from Genesys in the Asset Purchase. Since the consummation of the Merger and the Asset Purchase there has not been time to integrate the processes of the acquired businesses or to test the internal controls for those processes. Management determined that it would have been impossible to appropriately perform the evaluation required by Rule 13a-15 under the Exchange Act with respect to the entities that were excluded from the evaluation.

Both Pre-Merger Recruiter.com and the assets acquired from Genesys are significant to the Company’s consolidated financial statements. The assets of Pre-Merger Recruiter.com and the assets acquired from Genesys, excluding intangible assets and goodwill, represent in the aggregate approximately 65% of the total consolidated assets of the Company at September 30, 2019 and the revenues attributable to Pre-Merger Recruiter.com and the assets acquired from Genesys represent approximately 90%filing of the Company’s ~~consolidated revenues~~Quarterly Report for the ~~nine months~~period ended ~~September 30, 2019.~~March 31, 2020, which was filed on June 25, 2020.

We determined that revenue from a customer acquired in the Asset Purchase that had been reported on a net basis for the three months ended June 30, 2019, should have been reported on a gross basis. Revenue from this customer is reported on a gross basis in the accompanying financial statements for the three and nine months ended September 30, 2019, and the Quarterly Report on Form 10-Q for the three months ended June 30, 2019 has been amended to reflect this change. This represents a material weakness in analyzing revenue streams on a customer by customer basis to ensure that revenue recognition is applied appropriately. We are implementing procedures to correct this material weakness.

At the ~~process of integration into our legacy operations~~end of the ~~assets purchased from Genesys in March 2019 and~~three-months ended June 30, 2020, the business operations, systems and processes of Pre-Merger Recruiter.com. There were no changes in our internal control over financial reporting (as defined in Rule 13a-15f of the Exchange Act) that occurred during the nine months ended September 30, 2019 that has materially affected, or areCompany hired Ms. Krandel as CFO which we believe is reasonably likely to materially affect our internal control over financial ~~reporting.~~reporting in future quarters. During July 2020, the Company hired a financial consultant to establish certain procedures that we also believe is reasonably likely to materially affect our internal control over financial reporting in future quarters.

As of the date of this Quarterly Report, 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.

~~Not applicable.~~Factors that could cause or contribute to differences in our future financial and operating results include those discussed in the risk factors set forth in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2019 and in Item 8.01 of our Current Report on Form 8-K filed on May 15, 2020 (the “May 2020 8-K”). The risks described in our Form 10-K and in the May 2020 8-K are not the only risks that we face. Additional risks not presently known to us or that we do not currently consider significant may also have an adverse effect on the Company. If any of the risks actually occur, our business, results of operations, cash flows or financial condition could suffer.

There have been no material changes to the risk factors set forth in Item 1A of our 10-K or in the May 2020 8-K.

~~None.~~ We are providing the following disclosure in lieu of filing a Current Report on Form 8-K relating to: “Item 1.01—Entry into a Material Definitive Agreement,” and “Item 3.02—Unregistered Sales of Equity Securities,” of Form 8-K.

The foregoing description of the terms of the Debentures, the Warrants, Employment Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the Employment Agreement filed as Exhibit 10.3 to this Quarterly Report on Form 10-Q.

~~Delaware~~Nevada		26-3090646
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

100 Waugh Dr. Suite 300, Houston, Texas		77007
(Address of principal executive offices)		(Zip Code)

Title of Each Class		Trading Symbol(s)		Name of each exchange on which registered
None		N/A		N/A

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐☒

		Page
		number
Part I - Financial Information
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2019~~2020 (unaudited) and December 31, ~~2018~~2019	1
	Unaudited Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity ~~(Deficit)~~ for the ~~three and nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2419
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3128
Item 4.	Controls and Procedures	3128

Part II - Other Information
Item 1.	Legal Proceedings	3229
Item 1A.	Risk Factors	3229
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3229
Item 3.	Defaults Upon Senior Securities	3229
Item 4.	Mine Safety Disclosures	3229
Item 5.	Other Information	3229
Item 6.	Exhibits	3330

	September 30,			December 31,
	2019			2018
	(Unaudited)
Assets
Current assets:
Cash	$	675,735		$	14,152
Accounts receivable, net		634,263			56,766
Accounts receivable – related party		22,200			-
Prepaid expenses and other current assets		162,045			14,883
Investments - available for sale marketable securities		85,360			33,917

Total current assets		1,579,603			119,718

Property and equipment, net of accumulated depreciation of $385		3,078			-
Right of use asset		232,366			-
Intangible assets		8,521,906			-
Software development		113,020			101,520

Total assets	$	10,449,973		$	221,238

Liabilities and Stockholders’ Equity (Deficit)

Current liabilities:
Accounts payable	$	602,990		$	222,266
Accounts payable – related parties		860,717			-
Accrued expenses		8,355			100,265
Accrued compensation		258,825			248,398
Accrued interest		-			179,768
Loans payable - current portion		25,521			105,028
Convertible notes payable		-			55,000
Convertible notes payable - related parties		-			200,000
Notes payable, net of unamortized discount of $0 and $3,056, respectively		-			151,944
Notes payable - related parties		-			150,000
Refundable deposit on preferred stock purchase		285,000			-
Warrant derivative liability		781,748			-
Lease liability - current portion		73,378			-
Deferred revenue		104,924			59,468

Total current liabilities		3,001,458			1,472,137

Lease liability - long term portion		158,988			-
Loans payable - long term portion		84,538			103,806

Total liabilities		3,244,984			1,575,943

Commitments and contingencies (Note 10)

Redeemable Preferred Stock of Subsidiary - Noncontrolling interest at redemption value (See Note 8 for liquidation value)		-			2,059,764

Stockholders’ Equity (Deficit):
Preferred stock, 10,000,000 shares authorized, $0.0001 par value: undesignated: 7,013,600 and 6,704,061 shares authorized; no shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		-			-
Preferred stock, Series D, $0.0001 par value; 2,000,000 and no shares authorized; 454,546 and no shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		46			-
Preferred stock, Series E, $0.0001 par value; 775,000 shares authorized; 775,000 and 775,000 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		78			78
Preferred stock, Series F, $0.0001 par value; 200,000 and no shares authorized; 200,000 and no shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		20			-
Common stock, $0.0001 par value; 31,250,000 shares authorized; 2,366,581 and no shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		237			-
Additional paid-in capital		16,539,628			679,259
Accumulated deficit		(9,335,020	)		(5,675,391	)
Stockholders’ equity attributable to Recruiter.com, Inc. common shareholders		7,204,989			(4,996,054	)
Stockholders’ equity attributable to the noncontrolling interest		-			1,581,585

Total stockholders’ equity (deficit)		7,204,989			(3,414,469	)

Total liabilities and stockholders’ equity (deficit)	$	10,449,973		$	221,238

	Preferred stock Series D						Preferred stock Series E					Preferred stock Series F						Common stock				Additional Paid in			Accumulated			Noncontrolling			Total Stockholders’ (Deficit)
	Shares			Amount			Shares			Amount		Shares			Amount			Shares		Amount		Capital			Deficit			Interest			Equity
Balance as of December 31, 2019		454,546		$	46			734,986		$	74		139,768		$	14			3,619,658	$	362	$	18,203,048		$	(17,488,188	)	$	-		$	715,356
Stock based compensation		-			-			-			-		-			-			-		-		870,722			-						870,722
Series D Preferred stock issued for accrued penalties		106,134			11			-			-		-			-			-		-		1,929,505			-			-			1,929,516
Issuance of common shares upon conversion of Series D preferred stock		(12,900	)		(1	)		-			-		-			-			161,250		16		(15	)		-			-			-
Issuance of common shares upon conversion of Series E preferred stock		-			-			(3,141	)		-		-			-			39,260		4		(4	)		-			-			-
Issuance of common shares upon conversion of Series F preferred stock		-			-			-			-		(64,272	)		(6	)		803,414		80		(74	)		-			-			-
Net loss three months ended March 31, 2020		-			-			-			-		-			-			-		-		-			(2,482,605	)		-			(2,482,605	)
Balance as of March 31, 2020		547,780		$	56			731,845		$	74		75,496		$	8			4,623,582	$	462	$	21,003,182		$	(19,970,793	)	$	-		$	1,032,989

Stock based compensation																							665,230									665,230
Sale of Series D Preferred stock units		1,375			-																		25,000									25,000
Reclassification of warrant derivative to liabilities related to Series D unit sale																							(26,465	)								(26,465	)
Issuance of shares for services																			90,000		9		120,491									120,500
Issuance of common shares upon conversion of Series D preferred stock		(12,560	)		(1	)		-			-		-			-			157,000		16		(15	)		-			-			-
Issuance of common shares upon conversion of Series F preferred stock		-			-			-			-		(11,114	)		(1	)		138,926		14		(13	)		-			-			-
Net loss three months ended June 30, 2020		-			-			-			-		-			-			-		-		-			(7,941,215	)		-			(7,941,215	)
Balance as of June 30, 2020		536,595		$	55			731,845		$	74		64,382		$	7			5,009,508	$	501	$	21,787,410		$	(27,912,008	)	$	-		$	(6,123,961	)


Balance as of December 31, 2018		-		$	-			775,000		$	78		-		$	-		$	-	$	-	$	679,259		$	(5,675,391	)	$	1,581,585		$	(3,414,469	)
Recapitalization		389,036			39			-			-		-			-			1,747,879		175		3,889,219			-			(1,591,221	)		2,298,212
Stock based compensation		-			-			-			-		-			-			-		-					-			86,705			86,705
Adjustment of redemption value of preferred stock		-			-			-			-		-			-			-		-		-			-			23,852			23,852
Beneficial conversion feature of preferred stock dividends		-			-			-			-		-			-			-		-		-			-			70,205			70,205
Preferred stock deemed dividend		-			-			-			-		-			-			-		-		-			-			(70,205	)		(70,205	)
Accrued preferred stock dividends		-			-			-			-		-			-			-		-		-			-			(70,205	)		(70,205	)
Series F Preferred stock issued for assets		-			-			-			-		200,000			20			-		-		8,599,980			-			-			8,600,000
Sale of Series D Preferred stock units, net of offering costs		31,625			3			-			-		-			-			-		-		539,994			-			-			539,997
Notes and accrued interest cancelled pursuant to merger		-			-			-			-		-			-			-		-		706,501			-			-			706,501
Reclassification of warrant derivative to liabilities related to Series D unit sales		-			-			-			-		-			-			-		-		(691,780	)		-			-			(691,780	)
Net loss three months ended March 31, 2019		-			-			-			-		-			-			-		-		-			(351,606	)		(30,716	)		(382,322	)
Balance as of March 31, 2019		420,661			42			775,000			78		200,000			20			1,747,879		175		13,723,173			(6,026,997	)		-			7,696,491

Sale of Series D Preferred stock units		43,725			4			-			-		-			-			-		-		794,996			-			-			795,000
Issuance of common shares upon conversion of Series D preferred stock		(5,000	)		-			-			-		-			-			62,500		6		(6	)		-			-			-
Issuance of common shares for deferred compensation		-			-			-			-		-			-			494,593		50		(50	)		-			-			-
Stock based compensation		-			-			-			-		-			-			-		-		728,822			-			-			728,822
Accrued salary foregiven pursuant to merger		-			-			-			-		-			-			-		-		187,500			-			-			187,500
Stockholder shares transferred as compensation expense		-			-			-			-		-			-			-		-		752,500			-			-			752,500
Reclassification of warrant derivative to liabilities related to Series D unit sales		-			-			-			-		-			-			-		-		(1,058,866	)		-			-			(1,058,866	)
Net loss three months ended June 30, 2019		-			-			-			-		-			-			-		-		-			(2,279,989	)		-			(2,279,989	)
Balance as of June 30, 2019		459,386		$	46			775,000		$	78		200,000		$	20			2,304,972	$	231	$	15,128,069		$	(8,306,986	)	$	-		$	6,821,458

	Preferred stock				Common stock				Common Stock			Additional Paid in		Accumulated Comprehensive			Accumulated			Noncontrolling			Total Stockholders’ Equity
	Stock		Amount		Stock		Amount		Subscribed			Capital		Income			Deficit			Interest			(Deficit)
Balance as of December 31, 2017		775,000	$	78		-	$	-	$	66,668		$	403,590	$	(489,591	)	$	(3,782,983	)	$	581,471		$	(3,220,767	)
Reclassification of comprehensive income		-		-		-		-		-			-		489,591			(489,591	)		-			-
Stock based compensation		-		-		-		-		-			-		-			-			28,411			28,411
Shares issued		-		-		-		-		(66,668	)		66,668		-			-			-			-
Subsidiary preferred stock converted to subsidiary common shares		-		-		-		-		-			76,016		-			-			3,984			80,000
Adjustment to redemption value of preferred stock - per amendment to designation		-		-		-		-		-			-		-			-			1,071,932			1,071,932
Beneficial conversion feature of preferred stock dividends		-		-		-		-		-			-		-			-			67,071			67,071
Preferred stock and warrants deemed dividends		-		-		-		-		-			-		-			-			(67,071	)		(67,071	)
Accrued preferred stock dividends		-		-		-		-		-			-		-			-			(67,071	)		(67,071	)
Net loss three months ended March 31, 2018		-		-		-		-		-			-		-			(303,058	)		(6,245	)		(309,303	)
Balance as of March 31, 2018		775,000		78		-		-		-			546,274		-			(4,575,632	)		1,612,482			(2,416,798	)

Stock based compensation		-		-		-		-		-			-		-			-			62,617			62,617
Beneficial conversion feature of preferred stock issued and preferred stock dividends		-		-		-		-		-			-		-			-			368,905			368,905
Contribution to capital		-		-		-		-		-			30,000		-			-			-			30,000
Warrants issued with preferred stock		-		-		-		-		-			-		-			-			288,000			288,000
Preferred stock and warrants deemed dividends		-		-		-		-		-			-		-			-			(656,905	)		(656,905	)
Accrued preferred stock dividends		-		-		-		-		-			-		-			-			(68,905	)		(68,905	)
Adjustment of redemption value of preferred stock		-		-		-		-		-			-		-			-			25,702			25,702
Net loss three months ended June 30, 2018		-		-		-		-		-			-		-			(342,392	)		(13,653	)		(356,045	)
Balance as of June 30, 2018		775,000	$	78		-	$	-	$	-		$	576,274	$	-		$	(4,918,024	)	$	1,618,243		$	(2,723,429	)

Stock based compensation		-		-		-		-		-			1,061		-			-			44,867			45,928
Subsidiary preferred stock converted to subsidiary common shares		-		-		-		-		-			66,570		-			-			7,430			74,000
Beneficial conversion feature of preferred stock dividends		-		-		-		-		-			-		-			-			72,055			72,055
Preferred stock and warrants deemed dividends		-		-		-		-		-			-		-			-			(72,055	)		(72,055	)
Accrued preferred stock dividends		-		-		-		-		-			-		-			-			(72,055	)		(72,055	)
Adjustment of redemption value of preferred stock		-		-		-		-		-			-		-			-			24,777			24,777
Net loss three months ended September 30, 2018		-		-		-		-		-			-		-			(299,159	)		(17,799	)		(316,958	)
Balance at September 30, 2018		775,000	$	78		-	$	-	$	-		$	643,905	$	-		$	(5,217,183	)	$	1,605,463		$	(2,967,737	)

	Six Months Ended			Six Months Ended
	June 30, 2020			June 30, 2019
Cash Flows from Operating Activities
Net loss	$	(10,423,820	)	$	(2,662,311	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense		318,923			96
Bad debt expense		12,000			-
Equity based compensation expense		1,650,202			1,568,027
Recognized loss on marketable securities		18,740			101,417
Expenses paid through financings		32,500			15,000
Loan principal paid directly through grant		(5,964	)		-
Amortization of debt discount and debt costs		214,885			32,522
Initial derivative expense		3,340,554			-
Change in derivative value due to anti-dilution adjustments		2,642,175			-
Change in fair value of derivative liability		904,176			(17,627	)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		9,849			(420,916	)
(Increase) decrease in prepaid expenses and other current assets		269,051			(182,173	)
Increase (decrease) in accounts payable and accrued liabilities		(14,641	)		991,807
Increase in other liabilities		49,554			-
Increase (decrease) in deferred revenue		(58,785	)		9,959
Net cash used in operating activities		(1,040,601	)		(564,199	)

Cash Flows from Investing Activities
Proceeds from sale of marketable securities		17,009			-
Cash paid for equipment		-			(3,463	)
Cash paid for software development		-			(11,500	)
Net cash provided by (used in) investing activities		17,009			(14,963	)

Cash Flows from Financing Activities
Proceeds from notes		398,545			45,005
Proceeds from convertible notes, net of offering costs		2,226,000			-
Payments of notes		(7,396	)		(66,216	)
Advances on receivables		180,778			-
Repayments of advances on receivables		(112,622	)		-
Repayments of liability on sale of future revenues		(261,866	)		-
Deposit on purchase of preferred stock		-			500,000
Proceeds from sale of preferred stock		25,000			979,997
Net cash provided by financing activities		2,448,439			1,458,786

Net increase in cash		1,424,847			879,624
Cash, beginning of period		306,252			14,152

Cash, end of period	$	1,731,099		$	893,776

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	86,438		$	24,245
Cash paid during the period for income taxes	$	-		$	-

Supplemental schedule of non-cash investing and financing activities:
Original issue discount deducted from convertible note proceeds	$	328,125		$	-
Debt costs deducted from convertible note proceeds	$	366,500		$	-
Preferred stock issued for accrued penalties	$	1,929,516		$	-
Preferred stock issued for asset acquisition	$	-		$	8,600,000
Non-cash adjustments to Redeemable Preferred Stock of subsidiary	$	-		$	2,059,764
Notes payable and accrued interest exchanged for preferred stock	$	-		$	116,380
Accounts payable paid through proceeds of preferred stock	$	-		$	100,000
Accrued compensation paid with common stock	$	-		$	56,250
Value of warrant issued with note	$	-		$	42,000
Accounts payable paid through proceeds of note	$	-		$	4,995
Warrant derivative liability at inception	$	5,625,519		$	1,750,646
Accrued compensation forgiven and credited to contributed capital	$	-		$	187,500
Marketable securities received as payment for Series D preferred stock	$	-		$	240,000
Notes and accrued interest foregiven	$	-		$	706,502

	Six Months Ended June 30,
	2020		2019
Consulting and staffing services	$	3,490,056	$	1,605,894
Permanent placement fees		290,767		158,381
License and other		231,831		130,365
Career services		79,342		72,765
Marketing and publishing		74,541		168,378
Total revenue	$	4,166,537	$	2,135,783

Balance at beginning of period	$	-
Additions to derivative instruments		1,750,646
Gain on change in fair value of derivative liability		(968,898	)
Balance at end of period	$	781,748

Balance at December 31, 2019	$	612,042
Additions to derivative instruments		5,625,519
Anti-dilution adjustments to derivative instruments		2,642,175
Loss on change in fair value of derivative liability		904,176
Balance at June 30, 2020	$	9,783,912

2019	$	21,234
2020		86,997
2021		89,736
2022		82,885
Total minimum non-cancelable operating lease payments		280,852
Less discount to fair value		(48,486	)
Total minimum principal payments	$	232,366

2020	$	43,842
2021		89,736
2022		82,885
Total minimum non-cancellable operating lease payments		216,463
Less discount to fair value		(39,132	)
Total fair value of lease payments	$	177,331

Accounts receivable	$	756,609
Intangible assets, including sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets		8,521,906
Accounts payable		(615,415	)
Deferred revenue		(63,100	)
	$	8,600,000

	Three Months Ended September 30,
	2019			2018
Interest expense	$	(10,165	)	$	(32,570	)
Change in fair value of derivative liability		951,271			-
Net recognized (loss) gain on marketable securities		(18,437	)		10,000
Total other income (expense)	$	922,669		$	(22,570	)

	Nine Months Ended September 30,
	2019			2018
Interest expense	$	(91,530	)	$	(104,208	)
Change in fair value of derivative liability		968,898			-
Recognized loss on marketable securities		(119,854	)		(60,125	)
Total other income (expense)	$	757,514		$	(164,333	)


	●	Recruiting Solutions. Facilitated by our Job Market software platform and artificial intelligence matching technologies, placement of specialized personnel at employers, generating success-based fees for candidate referrals for direct-hire.


	●	Marketing Solutions. Web portal monetization, lead generation, and digital publication advertising, structured for specialized B2B software companies to access niche industry audience, primarily of recruitment and HR audience.

Exhibit		Incorporated by Reference			Filed or Furnished
No.	Exhibit Description	Form	Date	Number	Herewith
2.1	Merger Agreement and Plan of Merger, dated March 31, 2019, by and among Truli Technologies, Inc., Truli Acquisition Co., Inc. and Recruiter.com, Inc.+	8-K	4/4/19	2.1
2.2	Asset Purchase Agreement, dated March 31, 2019, by and among Truli Technologies, Inc., Recruiter.com Recruiting Solutions LLC and Genesys Talent LLC+	8-K	4/4/19	2.2
3.1(a)	Certificate of Incorporation, as amended	10-K	6/29/18	3.1
3.1(b)	Certificate of Amendment to Certificate of Incorporation	8-K	5/14/19	3.1
3.1(c)	Certificate of Amendment to Certificate of Incorporation - reverse stock split	8-K	8/23/19	3.1
3.1(d)	Certificate of Designation of Series D Convertible Preferred Stock	8-K	3/29/19	3.1
3.1(e)	Certificate of Designation of Series E Convertible Preferred Stock	8-K	3/29/19	3.2
3.1(f)	Certificate of Designation of Series F Convertible Preferred Stock	8-K	3/29/19	3.3
3.1(g)	Amended and Restated Certificate of Designation of Series D Convertible Preferred Stock	8-K	4/4/19	3.1
3.1(h)	Amended and Restated Certificate of Designation of Series E Convertible Preferred Stock	8-K	4/4/19	3.2
3.1(i)	Amended and Restated Certificate of Designation of Series F Convertible Preferred Stock	8-K	4/4/19	3.3
3.1(j)	Certificate of Amendment to the Amended and Restated Certificate of Designation of Series D Convertible Preferred Stock	8-K	4/23/19	3.2
3.1(k)	Second Certificate of Amendment to the Amended and Restated Certificate of Designation of Series D Convertible Preferred Stock	8-K	6/4/19	3.1
3.2	Bylaws, as amended	8-K	2/8/19	3.2
10.1	Form of Amended Securities Purchase Agreement by and among the Company and the investors listed therein+	10-Q	8/19/19	10.1
31.1	Certification of Principal Executive Officer (302)				Filed
31.2	Certification of Principal Financial Officer (302)				Filed
32.1	Certification of Principal Executive and Principal Financial Officer (906)				Furnished*
101.INS	XBRL Instance Document				Filed
101.SCH	XBRL Taxonomy Extension Schema Document				Filed
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				Filed
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				Filed
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				Filed
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				Filed

Dated: ~~November 14, 2019~~August 13, 2020	RECRUITER.COM GROUP, INC.

	By:	/s/ ~~Miles Jennings~~Evan Sohn
		~~Miles Jennings~~Evan Sohn
		Chief Executive Officer (Principal Executive Officer)

	By:	/s/ ~~Robert Scherne~~Judy Krandel
		~~Robert Scherne~~Judy Krandel
		Chief Financial Officer (Principal Financial Officer)