Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 07, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Recruiter.com Group, Inc. | |
Entity Central Index Key | 0001462223 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Current reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 5,131,508 | |
Entity Interactive Data Current | Yes | |
Entity File Number | 000-53641 | |
Entity Incorporation State Country Code | NV |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 1,731,099 | $ 306,252 |
Accounts receivable, net of allowance for doubtful accounts of $33,000 and $21,000, respectively | 583,364 | 864,415 |
Prepaid expenses and other current assets | 94,904 | 98,503 |
Investments - available for sale marketable securities | 9,017 | 44,766 |
Total current assets | 2,418,384 | 1,313,936 |
Property and equipment, net of accumulated depreciation of $1,251 and $673, respectively | 2,212 | 2,790 |
Right of use asset - related party | 177,331 | 214,020 |
Intangible assets, net | 1,114,209 | 1,432,554 |
Goodwill | 3,517,315 | 3,517,315 |
Total assets | 7,229,451 | 6,480,615 |
Current liabilities: | ||
Accounts payable | 316,812 | 621,389 |
Accounts payable - related parties | 932,514 | 825,791 |
Accrued expenses | 387,839 | 2,276,444 |
Accrued compensation | 405,950 | 276,213 |
Accrued interest | 13,550 | 985 |
Liability on sale of future revenues, net of discount of $69,832 and $135,641, respectively | 208,044 | 404,101 |
Advances on receivables | 68,156 | |
Deferred payroll taxes | 35,061 | |
Other liabilities | 14,493 | |
Loans payable - current portion | 27,335 | 25,934 |
Convertible notes payable, net of unamortized discount and costs of $2,804,049 and $0, respectively | 149,076 | |
Refundable deposit on preferred stock purchase | 285,000 | 285,000 |
Warrant derivative liability | 9,783,912 | 612,042 |
Lease liability - current portion - related party | 73,378 | 73,378 |
Deferred revenue | 86,689 | 145,474 |
Total current liabilities | 12,787,809 | 5,546,751 |
Lease liability - long term portion - related party | 103,953 | 140,642 |
Loans payable - long term portion | 461,650 | 77,866 |
Total liabilities | 13,353,412 | 5,765,259 |
Commitments and contingencies (Note 11) | ||
Stockholders' (Deficit) Equity: | ||
Preferred stock value | ||
Common stock, $0.0001 par value; 250,000,000 shares authorized; 5,009,508 and 3,619,658 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 501 | 362 |
Additional paid-in capital | 21,787,410 | 18,203,048 |
Accumulated deficit | (27,912,008) | (17,488,188) |
Total stockholders' (deficit) equity | (6,123,961) | 715,356 |
Total liabilities and stockholders' (deficit) equity | 7,229,451 | 6,480,615 |
Preferred Stock, Series D | ||
Stockholders' (Deficit) Equity: | ||
Preferred stock value | 55 | 46 |
Preferred Stock, Series E | ||
Stockholders' (Deficit) Equity: | ||
Preferred stock value | 74 | 74 |
Preferred Stock, Series F | ||
Stockholders' (Deficit) Equity: | ||
Preferred stock value | $ 7 | $ 14 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Allowance for doubtful accounts | $ 33,000 | $ 21,000 |
Net of accumulated depreciation | 1,251 | 673 |
Liability on sale of future revenues, net of discount | 69,832 | 135,641 |
Notes payable, net of unamortized discount | $ 2,804,049 | $ 0 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, undesignated shares authorized | 7,013,600 | 7,013,600 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 5,009,508 | 3,619,658 |
Common stock, shares outstanding | 5,009,508 | 3,619,658 |
Series D Preferred Stock | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 536,595 | 454,546 |
Preferred stock, shares outstanding | 536,595 | 454,546 |
Series E Preferred Stock | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 775,000 | 775,000 |
Preferred stock, shares issued | 731,845 | 734,986 |
Preferred stock, shares outstanding | 731,845 | 734,986 |
Series F Preferred Stock | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 200,000 | 200,000 |
Preferred stock, shares issued | 64,382 | 139,768 |
Preferred stock, shares outstanding | 64,382 | 139,768 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 1,853,414 | $ 1,972,481 | $ 4,166,537 | $ 2,135,783 |
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 | 435,172 | 510,559 | 997,099 | 673,861 |
Operating expenses: | ||||
Sales and marketing | 15,068 | 2,969 | 40,311 | 2,969 |
Product development | 57,401 | 44,934 | 140,494 | 94,788 |
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 | 1,858,004 | 2,701,335 | 4,274,456 | 3,171,017 |
Loss from operations | (1,422,832) | (2,190,776) | (3,277,357) | (2,497,156) |
Other income (expenses): | ||||
Interest expense | (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 | (339,088) | 17,627 | (904,176) | 17,627 |
Grant income | 7,262 | 7,262 | ||
Net recognized loss on marketable securities | 46 | (92,500) | (18,740) | (101,417) |
Total other income (expenses) | (6,518,383) | (89,213) | (7,146,463) | (165,155) |
Loss before income taxes | (7,941,215) | (2,279,989) | (10,423,820) | (2,662,311) |
Provision for income taxes | ||||
Net loss | (7,941,215) | (2,279,989) | (10,423,820) | (2,662,311) |
Net loss attributable to the noncontrolling interest | (30,716) | |||
Net loss attributable to the controlling interest before preferred stock dividends | (7,941,215) | (2,279,989) | (10,423,820) | (2,631,595) |
Preferred stock dividend | (140,410) | |||
Net loss attributable to Recruiter.com Group, Inc. shareholders | $ (7,941,215) | $ (2,279,989) | $ (10,423,820) | $ (2,772,005) |
Net loss per common share - basic and diluted | $ (1.64) | $ (1.27) | $ (2.31) | $ (3.05) |
Weighted average common shares - basic and diluted | 4,834,531 | 1,788,401 | 4,508,394 | 908,798 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Related party costs | $ 298,712 | $ 794,135 | $ 954,096 | $ 794,135 |
Shares based compensation expense | $ 709,230 | $ 1,481,322 | $ 1,650,202 | $ 1,568,027 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Changes in Stockholders’ (Deficit) Equity (Unaudited) - USD ($) | Preferred stock Series D | Preferred stock Series E | Preferred stock Series F | Common stock | Additional Paid in Capital | Accumulated Deficit | Noncontrolling Interest | Total |
Balance at Dec. 31, 2018 | $ 78 | $ 679,259 | $ (5,675,391) | $ 1,581,585 | $ (3,414,469) | |||
Balance, shares at Dec. 31, 2018 | 775,000 | |||||||
Recapitalization | $ 39 | $ 175 | 3,889,219 | (1,591,221) | 2,298,212 | |||
Recapitalization, shares | 389,036 | 1,747,879 | ||||||
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 | $ 20 | 8,599,980 | 8,600,000 | |||||
Series F Preferred stock issued for assets, shares | 200,000 | |||||||
Sale of Series D Preferred stock units, net of offering costs | $ 3 | 539,994 | 539,997 | |||||
Sale of Series D Preferred stock units, net of offering costs, shares | 31,625 | |||||||
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 | (351,606) | (30,716) | (382,322) | |||||
Balance at Mar. 31, 2019 | $ 42 | $ 78 | $ 20 | $ 175 | 13,723,173 | (6,026,997) | 7,696,491 | |
Balance, Shares at Mar. 31, 2019 | 420,661 | 775,000 | 200,000 | 1,747,879 | ||||
Balance at Dec. 31, 2018 | $ 78 | 679,259 | (5,675,391) | 1,581,585 | (3,414,469) | |||
Balance, shares at Dec. 31, 2018 | 775,000 | |||||||
Net loss | (2,662,311) | |||||||
Balance at Jun. 30, 2019 | $ 46 | $ 78 | $ 20 | $ 231 | 15,128,069 | (8,306,986) | 6,821,458 | |
Balance, Shares at Jun. 30, 2019 | 459,386 | 775,000 | 200,000 | 2,304,972 | ||||
Balance at Mar. 31, 2019 | $ 42 | $ 78 | $ 20 | $ 175 | 13,723,173 | (6,026,997) | 7,696,491 | |
Balance, shares at Mar. 31, 2019 | 420,661 | 775,000 | 200,000 | 1,747,879 | ||||
Stock based compensation | 728,822 | 728,822 | ||||||
Sale of Series D Preferred stock units, net of offering costs | $ 4 | 794,996 | 795,000 | |||||
Sale of Series D Preferred stock units, net of offering costs, shares | 43,725 | |||||||
Issuance of common shares upon conversion of Series D preferred stock | $ 6 | (6) | ||||||
Issuance of common shares upon conversion of Series D preferred stock, shares | (5,000) | 62,500 | ||||||
Issuance of common shares for deferred compensation | 50 | (50) | ||||||
Issuance of common shares for deferred compensation, shares | 494,593 | |||||||
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 | (2,279,989) | (2,279,989) | ||||||
Balance at Jun. 30, 2019 | $ 46 | $ 78 | $ 20 | $ 231 | 15,128,069 | (8,306,986) | 6,821,458 | |
Balance, Shares at Jun. 30, 2019 | 459,386 | 775,000 | 200,000 | 2,304,972 | ||||
Balance at Dec. 31, 2019 | $ 46 | $ 74 | $ 14 | $ 362 | 18,203,048 | (17,488,188) | 715,356 | |
Balance, shares at Dec. 31, 2019 | 454,546 | 734,986 | 139,768 | 3,619,658 | ||||
Stock based compensation | 870,722 | 870,722 | ||||||
Series D Preferred stock issued for accrued penalties | $ 11 | 1,929,505 | 1,929,516 | |||||
Series D Preferred stock issued for accrued penalties, shares | 106,134 | |||||||
Issuance of common shares upon conversion of Series D preferred stock | $ (1) | $ 16 | (15) | |||||
Issuance of common shares upon conversion of Series D preferred stock, shares | (12,900) | 161,250 | ||||||
Issuance of common shares upon conversion of Series E preferred stock | $ (3,141) | $ 4 | (4) | |||||
Issuance of common shares upon conversion of Series E preferred stock, shares | 39,260 | |||||||
Issuance of common shares upon conversion of Series F preferred stock | $ (6) | $ 80 | ||||||
Issuance of common shares upon conversion of Series F preferred stock, shares | (64,272) | 803,414 | ||||||
Net loss | (2,482,605) | (2,482,605) | ||||||
Balance at Mar. 31, 2020 | $ 56 | $ 74 | $ 8 | $ 462 | 21,003,182 | (19,970,793) | 1,032,989 | |
Balance, Shares at Mar. 31, 2020 | 547,780 | 731,845 | 75,496 | 4,623,582 | ||||
Balance at Dec. 31, 2019 | $ 46 | $ 74 | $ 14 | $ 362 | 18,203,048 | (17,488,188) | 715,356 | |
Balance, shares at Dec. 31, 2019 | 454,546 | 734,986 | 139,768 | 3,619,658 | ||||
Net loss | (10,423,820) | |||||||
Balance at Jun. 30, 2020 | $ 55 | $ 74 | $ 7 | $ 501 | 21,787,410 | (27,912,008) | (6,123,961) | |
Balance, Shares at Jun. 30, 2020 | 536,595 | 731,845 | 64,382 | 5,009,508 | ||||
Balance at Mar. 31, 2020 | $ 56 | $ 74 | $ 8 | $ 462 | 21,003,182 | (19,970,793) | 1,032,989 | |
Balance, shares at Mar. 31, 2020 | 547,780 | 731,845 | 75,496 | 4,623,582 | ||||
Stock based compensation | 665,230 | 665,230 | ||||||
Sale of Series D Preferred stock units, net of offering costs | 25,000 | 25,000 | ||||||
Sale of Series D Preferred stock units, net of offering costs, shares | 1,375 | |||||||
Reclassification of warrant derivative to liabilities related to Series D unit sales | (26,465) | (26,465) | ||||||
Issuance of shares for services | $ 9 | 120,491 | 120,500 | |||||
Issuance of shares for services, shares | 90,000 | |||||||
Issuance of common shares upon conversion of Series D preferred stock | $ (1) | $ 16 | (15) | |||||
Issuance of common shares upon conversion of Series D preferred stock, shares | (12,560) | 157,000 | ||||||
Issuance of common shares upon conversion of Series F preferred stock | $ (1) | $ 14 | (13) | |||||
Issuance of common shares upon conversion of Series F preferred stock, shares | (11,114) | 138,926 | ||||||
Net loss | (7,941,215) | (7,941,215) | ||||||
Balance at Jun. 30, 2020 | $ 55 | $ 74 | $ 7 | $ 501 | $ 21,787,410 | $ (27,912,008) | $ (6,123,961) | |
Balance, Shares at Jun. 30, 2020 | 536,595 | 731,845 | 64,382 | 5,009,508 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 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 | 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 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Recruiter.com Group, Inc., a Nevada corporation ("RGI"), is a holding company based in Houston, Texas. The Company has 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. Reincorporation On May 13, 2020, the Company effected a 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 Delaware corporation ("Recruiter.com Delaware"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Recruiter.com Group, Inc., a Nevada corporation and a wholly owned subsidiary of Recruiter.com Delaware ("Recruiter.com Nevada"), pursuant to which Recruiter.com Delaware merged with and into Recruiter.com Nevada, with Recruiter.com Nevada continuing as the surviving entity. Simultaneously with the reincorporation, 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. The reincorporation did not result in any change in the corporate name, business, management, fiscal year, accounting, location of the principal executive office, or assets or liabilities of the Company. Asset Purchase 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 operated through Recruiting Solutions. This transaction was treated as a business combination (see Note 13). Principles of Consolidation and Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of RGI and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. 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 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 RGI for the years ended December 31, 2019 and 2018, filed with the SEC on May 8, 2020. The December 31, 2019 balance sheet is derived from those statements. In the opinion of management, these unaudited interim financial statements as of and for the three and six months ended June 30, 2020 and 2019 include all adjustments (consisting of normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods presented). The results for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any future period. All references to June 30, 2020 and 2019 in these footnotes are unaudited. Use of Estimates The preparation of financial statements in conformity with 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. Cash and Cash Equivalents 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 June 30, 2020. Uninsured balances were approximately $1,136,000 and $0 as of June 30, 2020 and December 31, 2019. The Company had no cash equivalents during or at the end of either period. Revenue Recognition The Company recognizes revenue in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 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. Revenues are predominantly derived from the following activities: ● Consulting and Staffing. ● Recruiting Solutions. ● Career Solutions. ● Marketing Solutions. 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 fulfil any or all of the revenue segments. 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. Sales tax collected is recorded on a net basis and is excluded from revenue. Contract Assets 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. Contract Costs 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 June 30, 2020 or December 31, 2019. Contract Liabilities - Deferred Revenue 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: Six Months Ended 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 Three Months Ended 2020 2019 Consulting and staffing services $ 1,576,662 $ 1,605,894 Permanent placement fees 153,140 118,103 License and other 46,856 130,365 Career services 42,408 33,483 Marketing and publishing 34,348 84,636 Total revenue $ 1,853,414 $ 1,972,481 As of June 30, 2020 and December 31, 2019, deferred revenue amounted to $86,689 and $145,474 respectively. As of June 30, 2020, deferred revenues associated with placement services are $83,189 and we expect the recognition of such services to be $63,001 within the three months ended September 30, 2020 and $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 Revenue Costs of revenues consist of employee costs, third party staffing costs and other fees, outsourced recruiter fees and net margin revenue share. Accounts Receivable 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 $33,000 and $21,000 as of June 30, 2020 and December 31, 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. Concentration of Credit Risk and Significant Customers and Vendors As of 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 19%, 15% and 13%, for a total of 47%. For the six months ended June 30, 2020 three customers accounted for 10% of more of total revenue, at 35%, 15% and 14%, for a total of 64%. For the six months ended June 30, 2019 three customers accounted for 10% or more of total revenue, at 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 shareholders is an employee of this firm but exerts control over this firm (see Note 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. Advertising and Marketing Costs The Company expenses all advertising and marketing costs as incurred. Advertising and marketing costs were $15,068 and $2,969 for the three months ended June 30, 2020 and 2019, respectively. Advertising and marketing costs were $40,311 and $2,969 for the six months ended June 30, 2020 and 2019, respectively. Fair Value of Financial Instruments and Fair Value Measurements 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. Level 3 - Unobservable inputs for the asset or liability. 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 June 30, 2020: Fair Value at Fair Value Measurement Using 2020 Level 1 Level 2 Level 3 Available for sale marketable securities (Note 3) $ 9,017 $ 9,017 $ - $ - 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 six months ended June 30, 2020: 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 Goodwill In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): 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 performs its annual goodwill impairment assessment on December 31st of each year, or earlier if facts and circumstances indicate that an impairment may have occured. When evaluating the potential impairment of goodwill, management first assesses a 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 specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company's reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to the impairment testing methodology primarily using the income approach (discounted cash flow method). We compare the carrying value of the 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 recognized is recognized as the amount by which the carrying amount exceeds the fair value. When required, we arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of 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 estimates for future cash flows could produce different results. Stock-Based Compensation 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 best estimates, but these estimates involve inherent uncertainties and the application of management judgment. 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 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. Product Development 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. Earnings (Loss) Per Share 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 24,381,679 and 19,436,262 were excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2020 and 2019, respectively, because their effects would have been anti-dilutive. June 30, June 30, 2020 2019 Options 1,355,758 540,905 Stock awards 866,500 494,593 Warrants 3,653,443 470,939 Convertible notes 1,845,703 - Convertible preferred stock 16,660,275 17,929,825 24,381,679 19,436,262 Business Segments 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. Recently Issued Accounting Pronouncements There have not been any recent changes in accounting pronouncements and ASU issued by the FASB that are of significance or potential significance to the Company except as disclosed below. In December 2019, the FASB issued ASU 2019-12, " Simplifying the Accounting for Income Taxes |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2020 | |
Going Concern [Abstract] | |
GOING CONCERN | NOTE 2 — GOING CONCERN 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 report. This determination was based on the following factors: (i) the Company has a working capital deficit as of June 30, 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 fiscal year ending December 31, 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 report and for one year from the issuance of these unaudited condensed consolidated financial statements. The Company completed rounds of funding during 2019. Additionally, during 2020 the Company raised approximately $3 million in gross proceeds through the issuance of convertible debentures and 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 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. |
Investment in Available for Sal
Investment in Available for Sale Marketable Securities | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES | NOTE 3 — INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES 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 June 30, 2020 and December 31, 2019 was $629,720 and $708,541, respectively, and accumulated unrealized losses were $620,703 and $663,775 as of June 30, 2020 and December 31, 2019, respectively. The value of available for sale marketable securities was $9,017 as of June 30, 2020, based on 261,333 shares of common stock held in two entities with an average per share market price of approximately $0.04. Net recognized gains (losses) on equity investments were as follows: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Net realized gains (losses) on investment sold $ (401 ) $ - $ (2,543 ) $ - Net unrealized gains (losses) on investments still held 447 (92,500 ) (16,197 ) (101,417 ) Total $ 46 $ (92,500 ) $ (18,740 ) $ (101,417 ) The reconciliation of the investment in marketable securities is as follows for the six months ended June 30, 2020 and 2019: June 30, June 30, 2020 2019 Balance – December 31 $ 44,766 $ 33,917 Additions - 240,000 Proceeds on sales of securities (17,009 ) - Recognized losses (18,740 ) (101,417 ) Balance – June 30 $ 9,017 $ 172,500 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 4 — INTANGIBLE ASSETS Amortization expense of intangible assets was $159,173 and $318,346 for the three and six months ended June 30, 2020, respectively. Future amortization of intangible assets is expected to be approximately $318,000 for 2020, $637,000 for 2021 and $159,000 for 2022. |
Liability for Sale of Future Re
Liability for Sale of Future Revenues | 6 Months Ended |
Jun. 30, 2020 | |
Liability for Future Policy Benefit, after Reinsurance [Abstract] | |
LIABILITY FOR SALE OF FUTURE REVENUES | NOTE 5 — LIABILITY FOR SALE OF FUTURE REVENUES At June 30, 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. |
Receivables Financing Agreement
Receivables Financing Agreement | 6 Months Ended |
Jun. 30, 2020 | |
Receivables [Abstract] | |
RECEIVABLES FINANCING AGREEMENT | NOTE 6 — RECEIVABLES FINANCING AGREEMENT 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. |
Loans Payable
Loans Payable | 6 Months Ended |
Jun. 30, 2020 | |
Loans Payable [Abstract] | |
LOANS PAYABLE | NOTE 7 — LOANS PAYABLE Lines of Credit At June 30, 2020 and December 31, 2019 we are party to two lines of credit with outstanding balances of $0. Advances under each of these lines of credit mature within 12 months of the advances. Availability under the two lines was $91,300 at June 30, 2020; however, due to COVID -19 uncertainty (see Note 2), the availability under both lines has been suspended in 2020. Term Loans We have outstanding balances of $90,440 and $103,800 pursuant to two term loans as of June 30, 2020 and December 31, 2019, respectively, which mature in 2023. The loans have variable interest rates, with current rates at 6.0% and 7.76%, respectively. Current monthly payments under the loans are $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 June 30, 2020 and December 31, 2019 are summarized as follows: June 30, December 31, Term loans $ 90,440 $ 103,800 Less current portion (27,335 ) (25,934 ) Non-current portion $ 63,105 $ 77,866 Future principal payments under the term notes are as follows: Year Ending December 31, 2020 $ 13,386 2021 28,195 2022 30,133 2023 18,726 Total minimum principal payments $ 90,440 Our Chief Executive Officer, who is also a shareholder, has personally guaranteed the loans described above. Paycheck Protection Program Loan During April and May 2020 the Company, through its four subsidiaries, received an aggregate of $398,545 in loans 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. If not forgiven, the terms on the note provide for interest at 1% per year and 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. |
Convertible Notes Payable
Convertible Notes Payable | 6 Months Ended |
Jun. 30, 2020 | |
Notes to Financial Statements | |
CONVERTIBLE NOTES PAYABLE | NOTE 8 — CONVERTIBLE NOTES PAYABLE 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, 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 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 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 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 dilutive offerings. We have incurred a total of $1,299,677 of debt costs related to the 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 a total of $1,653,448 of debt discount related to the sale of the Debentures, including original issue discount of $328,125. We have also recorded a discount related to the fair value of the warrants issued with the debt 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 June 30, 2020, respectively. Unamortized debt costs were $1,576,036 at June 30, 2020. |
Stockholders' Equity (Deficit),
Stockholders' Equity (Deficit), Temporary Equity and Noncontrolling Interests | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY (DEFICIT), TEMPORARY EQUITY AND NONCONTROLLING INTERESTS | NOTE 9 — STOCKHOLDERS' EQUITY (DEFICIT), TEMPORARY EQUITY AND NONCONTROLLING INTERESTS Preferred Stock The Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.0001 per share. As of June 30, 2020 and December 31, 2019, the Company had 1,332,822 and 1,329,300 shares of preferred stock issued and outstanding, respectively. Series D Convertible Preferred Stock During 2020 we have issued to the holders of Series D Preferred Stock an aggregate of 106,134 additional shares of Series D Preferred Stock as consideration for waivers of penalties discussed below. 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. On June 9, 2020, the Company sold 1,375 Series D preferred stock units (the "Units") at a purchase price of $18.1818 per Unit, taking into account a 10% discount, each Unit consisting of one share of Series D Preferred Stock and a warrant to purchase 6.25 shares of common stock, subject to adjustment as provided for therein. The Series D Preferred Stock sold in the financing converts into a minimum of 17,188 shares of common stock. The Company received gross proceeds of $25,000 from the sale of the 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. In June 2020, the Company issued 157,000 shares of its common stock upon conversion of 12,560 shares of its Series D Preferred Stock. Series E Convertible Preferred Stock In January 2020, the Company issued 39,260 shares of its common stock upon conversion of 3,141 shares of Series E Preferred Stock. Series F Convertible 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 April 2020, the Company issued 138,926 shares of its common stock upon conversion of 11,114 shares of Series F Preferred Stock. Preferred Stock Penalties 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 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. Common Stock The Company is authorized to issue 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 June 30, 2020 and December 31, 2019 the Company had 5,009,508 and 3,619,658 shares of common stock outstanding, respectively. On February 1, 2019, the Company granted to Evan Sohn, its Executive Chairman and CEO, 43,423 shares of restricted common stock, which vested on February 1, 2020. We recognized compensation expense of $12,665 during the six months ended June 30, 2020. On May 14, 2019, the Company granted to Mr. Sohn 451,170 shares of restricted common stock, which vested on February 1, 2020. We recognized compensation expense of $318,473 during the six months ended June 30, 2020. On December 23, 2019 the Company granted to 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 the consultants continued service to the Company on each vesting date. The RSU award has been valued at $343,750 and compensation expense will be recorded over the respective vesting periods. We recognized compensation expense of $74,999 and $149,998 during the three and six months ended June 30, 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 January 2020, the Company issued 39,260 shares of its common stock upon conversion of 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. In April 2020, the Company issued 138,926 shares of its common stock upon conversion of 11,114 shares of Series F Preferred Stock. In June 2020, the Company issued 157,000 shares of its common stock upon conversion of 12,560 shares of its Series D Preferred Stock. On June 18, 2020 the Company awarded to Mr. Sohn 554,000 restricted stock units (the "RSUs") subject to and issuable upon the listing of the Company's common stock on 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 Mr. Sohn serving as an executive officer of 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 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. |
Stock Options and Warrants
Stock Options and Warrants | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK OPTIONS AND WARRANTS | NOTE 10 — STOCK OPTIONS AND WARRANTS Stock Options In May 2020, the number of 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 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 first portion vesting on May 31, 2020, subject to serving as the Chief Financial Officer of the Company on each applicable vesting date, provided that the options shall vest in full upon the listing of the Company's securities on NYSE American or the Nasdaq Capital Market. The award has been valued at $65,210 using the Black Sholes model and compensation expense will be recorded over the vesting period. We have recorded compensation expense of $21,737 related to the options during the three and 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 344%, (3) risk-free interest rate of 0.31%, (4) expected term of 5 years. On May 14, 2020 the Company granted to its current Chief Financial Officer 431,251 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 over a two-year period 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 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 $56,737 related to the options during the three and 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 344%, (3) risk-free interest rate of 0.31%, (4) expected term of 5 years. On May 14, 2020 the Company granted to a consultant 25,000 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 one year. The options will vest in full upon completion of a certain project, which is expected to occur in the third quarter of 2020. The award has been valued at $49,304 using the Black Sholes model and compensation expense will be recorded over the estimated vesting period. We have recorded compensation expense of $29,582 related to the options during the three and 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 250%, (3) risk-free interest rate of 0.15%, (4) expected term of 5 years. During the three and six months ended June 30, 2020, we recorded $451,957 and $916,542 of compensation expense, respectively, related to stock options granted in prior years. Warrants Recorded as Derivative Liabilities Series D Preferred Stock 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. Convertible Debenture Warrants and Placement Agent Warrants 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 $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 0.22%, an expected term of 2.93 – 3 years, an expected volatility of 252% - 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 six months ended June 30, 2020, the Company recorded other expense of $266,202 related to the change in the fair value of the derivative. The fair value of the embedded derivative was $5,865,256 as of June 30, 2020, determined using the Black Scholes model based on a risk-free interest rate of 0.18%, an expected term of 2.91 years, an expected volatility of 253% and a 0% dividend yield. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11 — COMMITMENTS AND CONTINGENCIES 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. Leases: 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 $7,307 per month and increase to $7,535 per month for the final 20 months of the lease. 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. We calculated the present value of the remaining lease payment stream using our incremental effective borrowing rate of 10%. We initially recorded a right to use asset and corresponding lease liability amounting to $269,054 on March 31, 2019. The right to use asset and the corresponding lease liability are being equally amortized on a straight-line basis over the remaining term of the lease. For the six months ended June 30, 2020, lease costs amounted to $74,286 which includes base lease costs of $43,155 and common area and other expenses of $31,131. All costs were expensed during the periods and included in general and administrative expenses on the accompanying consolidated statements of operations. Right-of-use asset ("ROU") is summarized below: June 30, Operating office lease $ 269,054 Less accumulated reduction (91,723 ) Balance of ROU asset at June 30, 2020 $ 177,331 Operating lease liability related to the ROU asset is summarized below: June 30, Total lease liability $ 269,054 Reduction of lease liability (91,723 ) Total 177,331 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-cancellable operating lease at June 30, 2020 are as follows: 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 COVID-19 Uncertainty: 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. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 — RELATED PARTY TRANSACTIONS During 2018 we entered into a marketing agreement with an entity controlled by a consultant (who is also a principal 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 June 30, 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 consultant with respect to introducing the Company to potential acquisition and partnership targets. The Company 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 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 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 $27,000 during the three and six months ended June 30, 2020, respectively. We have recorded consulting fees expense of $211,500 during the three and six months ended June 30, 2019. At June 30, 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 $57,401 and $44,934 for the three months ended June 30, 2020 and 2019, respectively. Payments to this firm were $118,380 and $94,788 for the six months ended June 30, 2020 and 2019, respectively. We are a party to that certain license agreement with Genesys. An executive officer of the Company is a significant equity holder and a member of the 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 six months ended June 30, 2019 we charged to operating expenses $12,693 for services provided by Genesys. As of June 30, 2020, the Company owes Genesys $73,321 in payables. 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 (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 $36,091 and $69,318 for the three and six months ended 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 $33,784 and $64,854 for the three and six months ended 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 June 30, 2020, the Company owes Icon $859,193 in payables and Icon Canada owes $7,435 (included in accounts receivable) to the Company. During the three and six months ended June 30, 2020, we charged to cost of revenue $264,928 and $889,242, respectively, related to services provided by Icon as our employer of record. During the three and six months ended 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 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. |
Business Combination
Business Combination | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION | NOTE 13 — BUSINESS COMBINATION Business Combination 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 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 six months ended June 30, 2019. June 30, 2019 Revenue $ 3,937,422 Net Loss $ (3,650,641 ) Loss per common share, basic and diluted $ (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. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14 — SUBSEQUENT EVENTS 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. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General Recruiter.com Group, Inc., a Nevada corporation ("RGI"), is a holding company based in Houston, Texas. The Company has 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. Reincorporation On May 13, 2020, the Company effected a 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 Delaware corporation ("Recruiter.com Delaware"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Recruiter.com Group, Inc., a Nevada corporation and a wholly owned subsidiary of Recruiter.com Delaware ("Recruiter.com Nevada"), pursuant to which Recruiter.com Delaware merged with and into Recruiter.com Nevada, with Recruiter.com Nevada continuing as the surviving entity. Simultaneously with the reincorporation, 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. The reincorporation did not result in any change in the corporate name, business, management, fiscal year, accounting, location of the principal executive office, or assets or liabilities of the Company. Asset Purchase 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 operated through Recruiting Solutions. This transaction was treated as a business combination (see Note 13). |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of RGI and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. 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 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 RGI for the years ended December 31, 2019 and 2018, filed with the SEC on May 8, 2020. The December 31, 2019 balance sheet is derived from those statements. In the opinion of management, these unaudited interim financial statements as of and for the three and six months ended June 30, 2020 and 2019 include all adjustments (consisting of normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods presented). The results for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any future period. All references to June 30, 2020 and 2019 in these footnotes are unaudited. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents 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 June 30, 2020. Uninsured balances were approximately $1,136,000 and $0 as of June 30, 2020 and December 31, 2019. The Company had no cash equivalents during or at the end of either period. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 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. Revenues are predominantly derived from the following activities: â—Ź Consulting and Staffing. â—Ź Recruiting Solutions. â—Ź Career Solutions. â—Ź Marketing Solutions. 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 fulfil any or all of the revenue segments. 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. Sales tax collected is recorded on a net basis and is excluded from revenue. Contract Assets 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. Contract Costs 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 June 30, 2020 or December 31, 2019. Contract Liabilities - Deferred Revenue 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: Six Months Ended 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 Three Months Ended 2020 2019 Consulting and staffing services $ 1,576,662 $ 1,605,894 Permanent placement fees 153,140 118,103 License and other 46,856 130,365 Career services 42,408 33,483 Marketing and publishing 34,348 84,636 Total revenue $ 1,853,414 $ 1,972,481 As of June 30, 2020 and December 31, 2019, deferred revenue amounted to $86,689 and $145,474 respectively. As of June 30, 2020, deferred revenues associated with placement services are $83,189 and we expect the recognition of such services to be $63,001 within the three months ended September 30, 2020 and $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 Revenue | Costs of Revenue Costs of revenues consist of employee costs, third party staffing costs and other fees, outsourced recruiter fees and net margin revenue share. |
Accounts Receivable | Accounts Receivable 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 $33,000 and $21,000 as of June 30, 2020 and December 31, 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. |
Concentration of Credit Risk and Significant Customers and Vendors | Concentration of Credit Risk and Significant Customers and Vendors As of 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 19%, 15% and 13%, for a total of 47%. For the six months ended June 30, 2020 three customers accounted for 10% of more of total revenue, at 35%, 15% and 14%, for a total of 64%. For the six months ended June 30, 2019 three customers accounted for 10% or more of total revenue, at 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 shareholders is an employee of this firm but exerts control over this firm (see Note 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. |
Advertising and Marketing Costs | Advertising and Marketing Costs The Company expenses all advertising and marketing costs as incurred. Advertising and marketing costs were $15,068 and $2,969 for the three months ended June 30, 2020 and 2019, respectively. Advertising and marketing costs were $40,311 and $2,969 for the six months ended June 30, 2020 and 2019, respectively. |
Fair Value of Financial Instruments and Fair Value Measurements | Fair Value of Financial Instruments and Fair Value Measurements 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. Level 3 - Unobservable inputs for the asset or liability. 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 June 30, 2020: Fair Value at Fair Value Measurement Using 2020 Level 1 Level 2 Level 3 Available for sale marketable securities (Note 3) $ 9,017 $ 9,017 $ - $ - 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 six months ended June 30, 2020: 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 |
Goodwill | Goodwill In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): 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 performs its annual goodwill impairment assessment on December 31st of each year, or earlier if facts and circumstances indicate that an impairment may have occured. When evaluating the potential impairment of goodwill, management first assesses a 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 specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company's reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to the impairment testing methodology primarily using the income approach (discounted cash flow method). We compare the carrying value of the 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 recognized is recognized as the amount by which the carrying amount exceeds the fair value. When required, we arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of 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 estimates for future cash flows could produce different results. |
Stock-Based Compensation | Stock-Based Compensation 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 best estimates, but these estimates involve inherent uncertainties and the application of management judgment. |
Derivative Instruments | 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 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. |
Product Development | Product Development 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. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share 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 24,381,679 and 19,436,262 were excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2020 and 2019, respectively, because their effects would have been anti-dilutive. June 30, June 30, 2020 2019 Options 1,355,758 540,905 Stock awards 866,500 494,593 Warrants 3,653,443 470,939 Convertible notes 1,845,703 - Convertible preferred stock 16,660,275 17,929,825 24,381,679 19,436,262 |
Business Segments | Business Segments 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. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements There have not been any recent changes in accounting pronouncements and ASU issued by the FASB that are of significance or potential significance to the Company except as disclosed below. In December 2019, the FASB issued ASU 2019-12, " Simplifying the Accounting for Income Taxes |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of revenues can be categorized into the following | Six Months Ended 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 Three Months Ended 2020 2019 Consulting and staffing services $ 1,576,662 $ 1,605,894 Permanent placement fees 153,140 118,103 License and other 46,856 130,365 Career services 42,408 33,483 Marketing and publishing 34,348 84,636 Total revenue $ 1,853,414 $ 1,972,481 |
Schedule of fair values of financial assets and liabilities | Fair Value at Fair Value Measurement Using 2020 Level 1 Level 2 Level 3 Available for sale marketable securities (Note 3) $ 9,017 $ 9,017 $ - $ - Warrant derivative liability (Note 10) $ 9,783,912 $ - $ - $ 9,783,912 |
Schedule of derivative liability measured at fair value on a recurring basis | 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 |
Schedule of earnings (loss) per share | June 30, June 30, 2020 2019 Options 1,355,758 540,905 Stock awards 866,500 494,593 Warrants 3,653,443 470,939 Convertible notes 1,845,703 - Convertible preferred stock 16,660,275 17,929,825 24,381,679 19,436,262 |
Investment in Available for S_2
Investment in Available for Sale Marketable Securities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of net recognized gains (losses) on equity investments | Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Net realized gains (losses) on investment sold $ (401 ) $ - $ (2,543 ) $ - Net unrealized gains (losses) on investments still held 447 (92,500 ) (16,197 ) (101,417 ) Total $ 46 $ (92,500 ) $ (18,740 ) $ (101,417 ) |
Schedule of reconciliation of the investment in marketable securities | June 30, June 30, 2020 2019 Balance – December 31 $ 44,766 $ 33,917 Additions - 240,000 Proceeds on sales of securities (17,009 ) - Recognized losses (18,740 ) (101,417 ) Balance – June 30 $ 9,017 $ 172,500 |
Loans Payable (Tables)
Loans Payable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Loans Payable [Abstract] | |
Schedule of loans payable | June 30, December 31, Term loans $ 90,440 $ 103,800 Less current portion (27,335 ) (25,934 ) Non-current portion $ 63,105 $ 77,866 |
Schedule of future principal payments under the term notes | Year Ending December 31, 2020 $ 13,386 2021 28,195 2022 30,133 2023 18,726 Total minimum principal payments $ 90,440 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of right-of-use asset | June 30, Operating office lease $ 269,054 Less accumulated reduction (91,723 ) Balance of ROU asset at June 30, 2020 $ 177,331 |
Schedule of operating lease liability | June 30, Total lease liability $ 269,054 Reduction of lease liability (91,723 ) Total 177,331 Less short term portion as of June 30, 2020 (73,378 ) Long term portion as of June 30, 2020 $ 103,953 |
Schedule of future base lease payments under the non-cancellable operating lease | 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 |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of supplemental unaudited pro forma combined information | June 30, 2019 Revenue $ 3,937,422 Net Loss $ (3,650,641 ) Loss per common share, basic and diluted $ (4.02 ) |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Total revenue | $ 1,853,414 | $ 1,972,481 | $ 4,166,537 | $ 2,135,783 |
Consulting and staffing services [Member] | ||||
Total revenue | 1,576,662 | 1,605,894 | 3,490,056 | 1,605,894 |
Permanent placement fees [Member] | ||||
Total revenue | 153,140 | 118,103 | 290,767 | 158,381 |
License and other [Member] | ||||
Total revenue | 46,856 | 130,365 | 231,831 | 130,365 |
Career services [Member] | ||||
Total revenue | 42,408 | 33,483 | 79,342 | 72,765 |
Marketing and publishing [Member] | ||||
Total revenue | $ 34,348 | $ 84,636 | $ 74,541 | $ 168,378 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies (Details 1) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Available for sale marketable securities (Note 3) | $ 9,017 | $ 44,766 | $ 172,500 | $ 33,917 |
Warrant derivative liability (Note 10) | 9,783,912 | $ 612,042 | ||
Level 1 [Member] | ||||
Available for sale marketable securities (Note 3) | 9,017 | |||
Warrant derivative liability (Note 10) | ||||
Level 2 [Member] | ||||
Available for sale marketable securities (Note 3) | ||||
Warrant derivative liability (Note 10) | ||||
Level 3 [Member] | ||||
Available for sale marketable securities (Note 3) | ||||
Warrant derivative liability (Note 10) | $ 9,783,912 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies (Details 2) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Reconciliation of derivative | |
Balance at beginning of period | $ 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 end of period | $ 9,783,912 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies (Details 3) - shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Common shares equivalents, outstanding | 24,381,679 | 19,436,262 |
Convertible preferred stock [Member] | ||
Common shares equivalents, outstanding | 16,660,275 | 17,929,825 |
Convertible notes [Member] | ||
Common shares equivalents, outstanding | 1,845,703 | |
Warrants [Member] | ||
Common shares equivalents, outstanding | 3,653,443 | 470,939 |
Options [Member] | ||
Common shares equivalents, outstanding | 1,355,758 | 540,905 |
Stock awards [Member] | ||
Common shares equivalents, outstanding | 866,500 | 494,593 |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies (Details Textual) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2020USD ($)Customersshares | Jun. 30, 2019USD ($)Customers | Mar. 31, 2019shares | Jun. 30, 2020USD ($)Customersshares | Jun. 30, 2019USD ($)Customersshares | Dec. 31, 2019USD ($)Customersshares | |
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Common shares equivalents | shares | 24,381,679 | 19,436,262 | ||||
Deferred revenue | $ 86,689 | $ 86,689 | $ 145,474 | |||
Deferred revenues placement services | 83,189 | |||||
Deferred revenue | 63,001 | |||||
Deferred revenue thereafter | 20,188 | |||||
Bad debt expense | $ 12,000 | |||||
Revenue from international sources, percentage | 2.00% | 5.00% | ||||
Advertising and marketing costs | $ 15,068 | $ 2,969 | $ 40,311 | $ 2,969 | ||
Common stock, shares authorized | shares | 250,000,000 | 250,000,000 | 250,000,000 | |||
Uninsured balances | $ 1,136,000 | $ 1,136,000 | $ 0 | |||
Minimum [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Common stock, shares authorized | shares | 250,000,000 | 250,000,000 | ||||
Maximum [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Common stock, shares authorized | shares | 31,250,000 | 31,250,000 | ||||
Marketing Services [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Deferred revenue recognition | $ 3,500 | |||||
Accounts Receivable [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Percentage of concentration credit risk | 55.00% | 47.00% | ||||
Description of concentration risk percentage | More than 10%. | More than 10%. | ||||
Number of customers | Customers | 2 | 2 | 3 | |||
Allowance for doubtful accounts | $ 33,000 | $ 33,000 | $ 21,000 | |||
Bad debt expense | $ 12,000 | $ 0 | $ 750 | $ 0 | ||
Accounts Receivable [Member] | Customer One [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Percentage of concentration credit risk | 42.00% | 19.00% | ||||
Accounts Receivable [Member] | Customer Two [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Percentage of concentration credit risk | 13.00% | 15.00% | ||||
Accounts Receivable [Member] | Customer Three [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Percentage of concentration credit risk | 13.00% | |||||
Sales Revenue, Net [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Percentage of concentration credit risk | 64.00% | 53.00% | ||||
Description of concentration risk percentage | 10% or more. | 10% or more | ||||
Number of customers | Customers | 3 | 3 | 3 | 3 | ||
Sales Revenue, Net [Member] | Customer One [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Percentage of concentration credit risk | 35.00% | 25.00% | ||||
Sales Revenue, Net [Member] | Customer Two [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Percentage of concentration credit risk | 15.00% | 18.00% | ||||
Sales Revenue, Net [Member] | Customer Three [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Percentage of concentration credit risk | 14.00% | 10.00% | ||||
Series F Preferred Stock [Member] | ||||||
Organization and Summary of Significant Accounting Policies (Textual) | ||||||
Number of preferred shares issued | shares | 200,000 | |||||
Number of shares issuable upon conversion | shares | 2,500,000 |
Going Concern (Details)
Going Concern (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Going Concern [Abstract] | |
Gross proceeds from convertible debentures and warrants | $ 3,000,000 |
Streamline certain expenses | 20.00% |
Investment in Available for S_3
Investment in Available for Sale Marketable Securities (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net realized gains (losses) on investment sold | $ (401) | $ (2,543) | ||
Net unrealized gains (losses) on investments still held | 447 | (92,500) | (16,197) | (101,417) |
Total | $ 46 | $ (92,500) | $ (18,740) | $ (101,417) |
Investment in Available for S_4
Investment in Available for Sale Marketable Securities (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Balance at beginning of period | $ 44,766 | $ 33,917 | ||
Additions | 240,000 | |||
Proceeds on sales of securities | (17,009) | |||
Recognized losses | $ 46 | $ (92,500) | (18,740) | (101,417) |
Balance at end of period | $ 9,017 | $ 172,500 | $ 9,017 | $ 172,500 |
Investment in Available for S_5
Investment in Available for Sale Marketable Securities (Details Textual) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Investment In Available For Sale Marketable Securities (Textual) | ||
Cost basis of securities held | $ 629,720 | $ 708,541 |
Accumulated unrealized losses | 620,703 | $ 663,775 |
Value of available for sale marketable securities | $ 9,017 | |
Number of shares owned in marketable securities | 261,333 | |
Market price | $ 0.04 |
Intangible Assets (Details)
Intangible Assets (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Intangible Assets (Textual) | ||
Amortization expense of intangible assets | $ 159,173 | $ 318,346 |
2020 | 318,000 | 318,000 |
2021 | 637,000 | 637,000 |
2023 | $ 159,000 | $ 159,000 |
Liability for Sale of Future _2
Liability for Sale of Future Revenues (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Liability For Sale Of Future Revenues (Textual) | ||
Amortized discount to interest expense | $ 33,833 | $ 65,809 |
Unamortized discount | $ 69,832 | $ 69,832 |
Receivables Financing Agreeme_2
Receivables Financing Agreement (Details) | 3 Months Ended |
Jun. 30, 2020USD ($) | |
Receivables Financing Agreement (Textual) | |
Bear interest rate per month | 1.50% |
Advances under agreement | $ 180,778 |
Advance repaid | 112,622 |
Remaining advances payable | $ 68,156 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Loans Payable | ||
Term loans | $ 90,440 | $ 103,800 |
Less current portion | (27,335) | (25,934) |
Non-current portion | $ 63,105 | $ 77,866 |
Loans Payable (Details 1)
Loans Payable (Details 1) | Jun. 30, 2020USD ($) |
Year Ending December 31, | |
2020 | $ 13,386 |
2021 | 28,195 |
2022 | 30,133 |
2023 | 18,726 |
Total minimum principal payments | $ 90,440 |
Loans Payable (Details Textual)
Loans Payable (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Loans Payable (Textual) | |||||
Line of credit | $ 0 | $ 0 | $ 0 | ||
Line of credit facility, description | Availability under the two lines was $91,300 at June 30, 2020 | ||||
Term loan, description | The loans have variable interest rates, with current rates at 6.0% and 7.76%, respectively. Current monthly payments under the loans are $1,691 and $1,008, respectively. | ||||
Term loans | $ 90,440 | $ 90,440 | $ 103,800 | ||
Maturity date | Mature in 2023. | ||||
Lines of credit maturity term | 12 months | 12 months | |||
SBA made payments | $ 7,262 | $ 7,262 | |||
Principal amount | $ 5,964 | 5,964 | |||
Interest expense | $ 1,298 | ||||
Note provide, description | The terms on the note provide for interest at 1% per year and 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. | ||||
Subsidiaries, received aggregate | $ 398,545 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
May 28, 2020 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Convertible Notes Payable (Textual) | ||||
Original issue discount | $ 328,125 | |||
Commission and fees | $ 366,500 | $ 366,500 | ||
Debenture default percentage | 130.00% | 130.00% | ||
Incurred debt costs | $ 1,299,677 | $ 1,299,677 | ||
Fair value of placement agent warrants at time of issue | 933,177 | 933,177 | ||
Amortization expense | 71,664 | 71,664 | ||
Unamortized debt costs | 1,228,013 | 1,228,013 | $ 1,576,036 | |
Debt discount | 1,653,448 | |||
Discount related to fair value of warrants | 1,325,323 | |||
Securities Purchase Agreement [Member] | ||||
Convertible Notes Payable (Textual) | ||||
Securities purchase agreement, description | (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, 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. | |||
Aggregate principal amount | $ 2,953,125 | |||
Original issue discount, percentage | 12.50% | |||
Common stock purchase warrants | 1,845,703 | |||
Proceeds from offering | $ 2,226,000 | |||
Commission and fees | 295,000 | |||
Legal fees aggregate amount | 100,000 | |||
Escrow agent fees | $ 4,000 | |||
Warrant exercisable per share | $ 2 | |||
Common stock purchase warrants | 369,141 | |||
Debentures maturity date | May 28, 2021 | |||
Debentures bears interest rate | 8.00% | |||
Debenture conversion, description | The Debentures are convertible into shares of 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. | |||
Amortization expense | $ 77,412 | $ 77,412 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit), Temporary Equity and Noncontrolling Interests (Details) - USD ($) | Jun. 18, 2020 | Jun. 09, 2020 | Jan. 15, 2020 | Jun. 30, 2020 | Apr. 30, 2020 | Feb. 29, 2020 | Jan. 31, 2020 | Dec. 23, 2019 | Jun. 30, 2020 | May 31, 2020 | Dec. 31, 2019 | May 14, 2019 | Feb. 01, 2019 |
Stockholders Equity Note [Line Items] | |||||||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | ||||||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||
Preferred stock, shares issued | |||||||||||||
Preferred stock, shares outstanding | |||||||||||||
Authorized common stock | 31,250,000 | 31,250,000 | 250,000,000 | 250,000,000 | |||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||
Common stock, shares authorized | 250,000,000 | 250,000,000 | 250,000,000 | ||||||||||
Common stock, shares issued | 5,009,508 | 5,009,508 | 3,619,658 | ||||||||||
Common stock, shares outstanding | 5,009,508 | 5,009,508 | 3,619,658 | ||||||||||
Recognized compensation expense | $ 318,473 | ||||||||||||
Mr. Sohn [Member] | |||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||
Restricted common stock, description | 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 Mr. Sohn serving as an executive officer of 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 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. | ||||||||||||
Restricted common stock shares | 554,000 | ||||||||||||
Series D Preferred Stock [Member] | |||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 | ||||||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||
Preferred stock, shares issued | 536,595 | 536,595 | 454,546 | ||||||||||
Preferred stock, shares outstanding | 536,595 | 536,595 | 454,546 | ||||||||||
Preferred Stock as consideration for waivers of penalties | 106,134 | ||||||||||||
Number of shares issued upon conversion | 161,250 | 157,000 | |||||||||||
Preferred shares converted | 12,560 | 12,560 | |||||||||||
Aggregate additional shares | 106,134 | ||||||||||||
Conversion of shares | 12,900 | ||||||||||||
Sale of stock sold, description | The Company sold 1,375 Series D preferred stock units (the "Units") at a purchase price of $18.1818 per Unit, taking into account a 10% discount, each Unit consisting of one share of Series D Preferred Stock and a warrant to purchase 6.25 shares of common stock, subject to adjustment as provided for therein. The Series D Preferred Stock sold in the financing converts into a minimum of 17,188 shares of common stock. The Company received gross proceeds of $25,000 from the sale of the 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. | ||||||||||||
Share of Series D Preferred Stock sold | 1,375 | ||||||||||||
Sale of preferred stock price per share | $ 18.1818 | ||||||||||||
Gross proceeds from sale of units | $ 25,000 | ||||||||||||
Series E Preferred Stock [Member] | |||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||
Preferred stock, shares authorized | 775,000 | 775,000 | 775,000 | ||||||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||
Preferred stock, shares issued | 731,845 | 731,845 | 734,986 | ||||||||||
Preferred stock, shares outstanding | 731,845 | 731,845 | 734,986 | ||||||||||
Included in accrued expenses | $ 308,893 | $ 308,893 | |||||||||||
Shares issued | 39,260 | ||||||||||||
Conversion of shares | 3,141 | ||||||||||||
Series F Preferred Stock [Member] | |||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||
Preferred stock, shares authorized | 200,000 | 200,000 | 200,000 | ||||||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||
Preferred stock, shares issued | 64,382 | 64,382 | 139,768 | ||||||||||
Preferred stock, shares outstanding | 64,382 | 64,382 | 139,768 | ||||||||||
Shares issued | 138,926 | 803,414 | 803,414 | ||||||||||
Preferred shares converted | 11,114 | 64,272 | 64,272 | ||||||||||
Included in accrued expenses | $ 308,893 | $ 308,893 | |||||||||||
Shares issued | 803,414 | ||||||||||||
Conversion of shares | 64,272 | ||||||||||||
Preferred Stock [Member] | |||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | ||||||||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||
Preferred stock, shares issued | 1,332,822 | 1,332,822 | 1,329,300 | ||||||||||
Preferred stock, shares outstanding | 1,332,822 | 1,332,822 | 1,329,300 | ||||||||||
Owed approximately penalties | $ 6,000,000 | ||||||||||||
Value of shares issued | 1,929,516 | ||||||||||||
Included in accrued expenses | $ 308,798 | $ 308,798 | $ 2,238,314 | ||||||||||
Common Stock [Member] | |||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||
Authorized common stock | 31,250,000 | ||||||||||||
Restricted common stock | $ 43,423 | ||||||||||||
Recognized compensation expense | $ 12,665 | ||||||||||||
Common stock, description | The Company issued 157,000 shares of its common stock upon conversion of 12,560 shares of its Series D Preferred Stock. | The Company issued 138,926 shares of its common stock upon conversion of 11,114 shares of Series F Preferred Stock. | The Company issued 161,250 shares of its common stock upon conversion of 12,900 shares of its Series D Preferred Stock. | The Company issued 39,260 shares of its common stock upon conversion of 3,141 shares of Series E Preferred Stock. | The Company granted to 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 the consultants continued service to the Company on each vesting date. The RSU award has been valued at $343,750 and compensation expense will be recorded over the respective vesting periods. We recognized compensation expense of $74,999 and $149,998 during the three and six months ended June 30, 2020, respectively. The shares have not been issued at June 30, 2020. | ||||||||
Restricted common stock, description | 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. | ||||||||||||
Restricted common stock shares | 30,000 | 451,170 | |||||||||||
Common Stock [Member] | |||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||
Common stock, description | The Company issued 803,414 shares of its common stock upon conversion of 64,272 shares of Series F Preferred Stock. | ||||||||||||
Restricted Common Stock [Member] | |||||||||||||
Stockholders Equity Note [Line Items] | |||||||||||||
Restricted common stock, description | 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 $1,250 for the cash portion was recorded at June 30, 2020. |
Stock Options and Warrants (Det
Stock Options and Warrants (Details) - USD ($) | May 14, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | May 31, 2020 | Dec. 31, 2019 |
Stock Options and Warrants (Textual) | |||||||
Warrant derivative liability | $ 9,783,912 | $ 9,783,912 | $ 612,042 | ||||
Initial derivative expense | 3,340,554 | $ 3,340,554 | |||||
Convertible Debenture Warrants and Placement Agent Warrants [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Risk free interest rate | 0.22% | ||||||
Dividend yield | 0.00% | ||||||
Fair value of warrants at inception | $ 4,665,877 | ||||||
Number of warrants issued, shares | 1,845,703 | ||||||
Expense for change in value of derivative | 266,202 | ||||||
Debt discount | 1,325,323 | $ 1,325,323 | |||||
Initial derivative expense | $ 3,340,554 | ||||||
Convertible Debenture Warrants and Placement Agent Warrants [Member] | Minimum [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Volatility factor | 252.00% | ||||||
Expected life years | 2 years 11 months 4 days | ||||||
Convertible Debenture Warrants and Placement Agent Warrants [Member] | Maximum [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Volatility factor | 341.00% | ||||||
Expected life years | 3 years | ||||||
Convertible Debenture Warrants and Placement Agent Warrants [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Risk free interest rate | 0.22% | ||||||
Dividend yield | 0.00% | ||||||
Fair value of warrants at inception | $ 933,177 | ||||||
Number of warrants issued, shares | 369,141 | ||||||
Debt discount | 933,177 | $ 933,177 | |||||
Convertible Debenture Warrants and Placement Agent Warrants [Member] | Minimum [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Volatility factor | 252.00% | ||||||
Expected life years | 2 years 11 months 4 days | ||||||
Convertible Debenture Warrants and Placement Agent Warrants [Member] | Maximum [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Volatility factor | 341.00% | ||||||
Expected life years | 3 years | ||||||
Convertible Debenture Warrants and Placement Agent Warrants [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Risk free interest rate | 0.18% | ||||||
Dividend yield | 0.00% | ||||||
Volatility factor | 253.00% | ||||||
Expected life years | 2 years 10 months 28 days | ||||||
Fair value of derivative liability | 5,865,256 | $ 5,865,256 | |||||
Expense for change in value of derivative | $ 266,202 | ||||||
Warrant [Member] | Series D Preferred Stock [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Risk free interest rate | 0.34% | ||||||
Dividend yield | 0.00% | ||||||
Volatility factor | 344.00% | ||||||
Expected life years | 5 years | ||||||
Fair value of warrants at inception | $ 26,465 | ||||||
Number of warrants issued, shares | 8,594 | ||||||
Financing cost | $ 2,642,175 | ||||||
Fair value of derivative liability | 3,918,656 | 3,918,656 | |||||
Expense for change in value of derivative | 72,886 | $ 637,974 | |||||
Warrant [Member] | Series D Preferred Stock [Member] | Minimum [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Risk free interest rate | 0.235% | ||||||
Volatility factor | 334.00% | ||||||
Expected life years | 3 years 9 months | ||||||
Exercise price | $ 1.60 | ||||||
Number of warrants issued, shares | 479,533 | ||||||
Warrant [Member] | Series D Preferred Stock [Member] | Maximum [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Risk free interest rate | 0.29% | ||||||
Volatility factor | 357.00% | ||||||
Expected life years | 4 years 11 months 12 days | ||||||
Exercise price | $ 4.80 | ||||||
Number of warrants issued, shares | 1,438,599 | ||||||
Warrant [Member] | Series D Preferred Stock [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Dividend yield | 0.00% | ||||||
Common Stock Options [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Compensation expense | 451,957 | $ 916,542 | |||||
Common Stock Options [Member] | 2017 Equity Incentive Plan [Member] | Chief Executive Officer [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Options granted to purchase common stock | 26,087 | ||||||
Value of the award at the time of grant | $ 65,210 | ||||||
Risk free interest rate | 0.31% | ||||||
Dividend yield | 0.00% | ||||||
Volatility factor | 344.00% | ||||||
Expected life years | 5 years | ||||||
Exercise price | $ 2.50 | ||||||
Options term | 5 years | ||||||
Compensation expense over vesting period | 21,737 | 21,737 | |||||
Common Stock Options [Member] | 2017 Equity Incentive Plan [Member] | Chief Executive Officer [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Options granted to purchase common stock | 431,251 | ||||||
Value of the award at the time of grant | $ 1,077,999 | ||||||
Risk free interest rate | 0.31% | ||||||
Dividend yield | 0.00% | ||||||
Volatility factor | 344.00% | ||||||
Expected life years | 5 years | ||||||
Exercise price | $ 2.50 | ||||||
Options term | 5 years | ||||||
Compensation expense over vesting period | 56,737 | 56,737 | |||||
Common Stock Options [Member] | 2017 Equity Incentive Plan [Member] | Chief Executive Officer [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Options granted to purchase common stock | 25,000 | ||||||
Value of the award at the time of grant | $ 49,304 | ||||||
Risk free interest rate | 0.15% | ||||||
Dividend yield | 0.00% | ||||||
Volatility factor | 250.00% | ||||||
Expected life years | 5 years | ||||||
Exercise price | $ 2.50 | ||||||
Options term | 5 years | ||||||
Compensation expense over vesting period | $ 29,582 | $ 29,582 | |||||
2017 Equity Incentive Plan [Member] | Common Stock Options [Member] | |||||||
Stock Options and Warrants (Textual) | |||||||
Number of shares authorized by the plan | 2,770,000 | 2,770,000 | 1,714,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating office lease | $ 269,054 | |
Less accumulated reduction | (91,723) | |
Balance of ROU asset at June 30, 2020 | $ 177,331 | $ 214,020 |
Commitments and Contingencies_3
Commitments and Contingencies (Details 1) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Total lease liability | $ 269,054 | |
Reduction of lease liability | (91,723) | |
Total | 177,331 | $ 214,020 |
Less short term portion as of June 30, 2020 | 73,378 | 73,378 |
Long term portion as of June 30, 2020 | $ 103,953 | $ 140,642 |
Commitments and Contingencies_4
Commitments and Contingencies (Details 2) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
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 minimum principal payments | $ 177,331 | $ 214,020 |
Commitments and Contingencies_5
Commitments and Contingencies (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies (Textual) | |||
Sublease expires date | Nov. 30, 2022 | ||
Borrowing rate | 10.00% | ||
Right of use asset | $ 269,054 | ||
Lease costs amount | $ 74,286 | ||
Base lease costs | 43,155 | ||
Other expenses | $ 31,131 | ||
Streamline certain expenses | 20.00% | ||
Minimum [Member] | |||
Commitments and Contingencies (Textual) | |||
Lease payments per month | $ 7,307 | ||
Maximum [Member] | |||
Commitments and Contingencies (Textual) | |||
Lease payments per month | $ 7,535 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 29, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Related Party Transactions (Textual) | |||||||
Description of consultant agreement | The Company 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 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 for introducing Genesys to the Company. This payment is included in the $10,000 monthly retainer payment. | ||||||
Consulting fees expense | $ 27,000 | $ 211,500 | |||||
Monthly fee expense | 13,500 | ||||||
Finder's fee accrued compensation | 132,000 | ||||||
Operating expenses | $ 1,858,004 | $ 2,701,335 | 4,274,456 | 3,171,017 | |||
Cost of revenue | 1,418,242 | 1,461,922 | 3,169,438 | 1,461,922 | |||
License agreement description | 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. | ||||||
Placement revenue | 7,020 | 13,430 | |||||
Related Party Transactions [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Payments to firm | 57,401 | 44,934 | $ 118,380 | 94,788 | |||
Marketing agreement, description | We entered into a marketing agreement with an entity controlled by a consultant (who is also a principal 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. | ||||||
Related party transaction, description | Revenue related to customers processed by Icon Canada is recognized on a gross basis the same as other revenues and was $36,091 and $69,318 for the three and six months ended 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 $33,784 and $64,854 for the three and six months ended 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 June 30, 2020, the Company owes Icon $859,193 in payables and Icon Canada owes $7,435 to the Company. During the three and six months ended June 30, 2020, we charged to cost of revenue $264,928 and $889,242, respectively, related to services provided by Icon as our employer of record. During the three and six months ended 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 of $52,813 related to management fees, rent and other administrative expense. | ||||||
Operating expenses | 48,453 | 12,693 | $ 130,268 | ||||
Genesys [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Consulting fees expense | 13,500 | 211,500 | 27,000 | 211,500 | |||
Payable amount owed | 73,321 | 73,321 | |||||
Operating expenses | $ 59,327 | $ 52,813 | $ 86,930 | $ 12,693 |
Business Combination (Details)
Business Combination (Details) | 6 Months Ended |
Jun. 30, 2019USD ($)$ / shares | |
Business Combinations [Abstract] | |
Revenue | $ 3,937,422 |
Net Loss | $ (3,650,641) |
Loss per common share, basic and diluted | $ / shares | $ (4.02) |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | 1 Months Ended |
Jul. 31, 2020USD ($)shares | |
Subsequent Event (Textual) | |
Issuance of shares of restricted common stock | 12,000 |
Shares issued upon conversion of preferred stock | 110,000 |
Number of preferred shares converted | 8,800 |
Bonus compensation amount | $ | $ 350,000 |
Options to purchase an additional shares | 250,000 |
Options shall vest, period | 2 years |
Executive employment agreement, description | 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. |