Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 22, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | RECRUITER.COM GROUP, INC. | ||
Entity Central Index Key | 0001462223 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | true | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Entity Ex Transition Period | true | ||
Entity Common Stock Shares Outstanding | 17,210,085 | ||
Entity Public Float | $ 13,292,661 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 000-53641 | ||
Entity Incorporation State Country Code | NV | ||
Entity Tax Identification Number | 90-1505893 | ||
Entity Address Address Line 1 | 500 Seventh Avenue | ||
Entity Address City Or Town | New York | ||
Entity Address State Or Province | NY | ||
Entity Address Postal Zip Code | 10018 | ||
City Area Code | 855 | ||
Local Phone Number | 931-1500 | ||
Security 12b Title | Common Stock | ||
Trading Symbol | RCRT | ||
Security Exchange Name | NASDAQ | ||
Entity Interactive Data Current | Yes | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | SALBERG & COMPANY, P.A | ||
Auditor Location | Boca Raton, Florida | ||
Auditor Firm Id | 106 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 946,804 | $ 2,584,062 |
Accounts receivable, net of allowance for doubtful accounts of $1,446,613 and $934,219, respectively | 3,189,816 | 5,650,668 |
Accounts receivable - related parties | 0 | 49,033 |
Prepaid expenses and other current assets | 255,548 | 546,079 |
ASSETS | ||
Total current assets | 4,392,168 | 8,829,842 |
Property and equipment, net of accumulated depreciation of $17,210 and $2,982, respectively | 61,340 | 481 |
Intangible assets, net | 2,578,692 | 9,741,832 |
Goodwill | 7,101,084 | 7,718,842 |
Total assets | 14,133,284 | 26,290,997 |
Current liabilities: | ||
Accounts payable | 1,569,814 | 1,121,510 |
Accounts payable - related parties | 0 | 163,672 |
Accrued expenses | 911,386 | 1,285,339 |
Accrued compensation | 410,957 | 1,551,162 |
Accrued interest | 81,576 | 19,726 |
Contingent consideration for acquisitions | 0 | 578,591 |
Deferred payroll taxes | 2,484 | 81,728 |
Other liabilities | 17,333 | 17,333 |
Loans payable - current portion, net of discount | 3,700,855 | 1,712,387 |
Warrant liability for puttable warrants | 600,000 | 0 |
Refundable deposit on preferred stock purchase | 285,000 | 285,000 |
Deferred revenue | 215,219 | 746,449 |
Total current liabilities | 7,794,624 | 7,562,897 |
Loans payable - long term portion, net of discount | 1,260,343 | 2,637,875 |
Total liabilities | 9,054,967 | 10,200,772 |
Commitments and contingencies (Note 11) | 0 | 0 |
Stockholders' Equity: | ||
Common stock, $0.0001 par value; 100,000,000 shares authorized; 16,277,764 and 14,566,420 shares issued and outstanding as of December 31, 2022 and 2021, respectively | 1,629 | 1,457 |
Shares to be issued, 587,945 and 0 shares as of December 31, 2022 and 2021, respectively | 59 | 59 |
Additional paid-in capital | 74,332,161 | 66,948,340 |
Accumulated deficit | (69,255,541) | (50,859,640) |
Total stockholders' equity | 5,078,317 | 16,090,225 |
Total liabilities and stockholders' Equity | 14,133,284 | 26,290,997 |
Preferred stock, Series E, [Member] | ||
Stockholders' Equity: | ||
Preferred Stock, Value | 9 | 9 |
Preferred stock, Series D, [Member] | ||
Stockholders' Equity: | ||
Preferred Stock, Value | 0 | 0 |
Preferred stock, Series F, [Member] | ||
Stockholders' Equity: | ||
Preferred Stock, Value | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Allowance for doubtful accounts | $ 1,446,613 | $ 934,219 |
Net of accumulated depreciation | $ 17,210 | $ 2,982 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 16,277,764 | 14,566,420 |
Common stock, shares outstanding | 16,277,764 | 14,566,420 |
Shares to be issued | 587,945 | 0 |
Preferred stock, par value | $ 0.0001 | |
Preferred stock, shares authorized | 10,000,000 | |
Series E Preferred Stocks [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 775,000 | 775,000 |
Preferred stock, shares issued | 86,000 | 86,000 |
Preferred stock, shares outstanding | 86,000 | 86,000 |
Series F Preferred Stocks [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 200,000 | 200,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series D Preferred Stocks [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Consolidated Statements of Operations | ||
Revenue (including related party revenue of $0 and $107,812, respectively) | $ 25,372,274 | $ 22,184,112 |
Cost of revenue (including related party costs of $0 and $598,752, respectively) | 16,624,690 | 14,909,389 |
Gross Profit | 8,747,584 | 7,274,723 |
Operating expenses: | ||
Sales and marketing | 725,687 | 472,213 |
Product development (including related party expense of $36,181 and $162,102, respectively) | 1,358,675 | 1,152,433 |
Amortization of intangibles | 3,650,206 | 2,741,008 |
Impairment expense | 4,420,539 | 2,530,325 |
General and administrative (including share-based compensation expense of $4,106,040 and $5,400,975, respectively, and related party expenses of $19,825 and $132,253, respectively) | 15,324,941 | 17,323,695 |
Total operating expenses | 25,480,048 | 24,219,674 |
Loss from Operations | (16,732,464) | (16,944,951) |
Other income (expenses): | ||
Interest expense (including related party interest expense of $0 and $30,466, respectively) | (965,323) | (3,137,050) |
Initial derivative expense | 0 | (3,585,983) |
Change in fair value of derivative liability | 0 | 7,315,580 |
Gain on debt extinguishment | 1,205,195 | 24,925 |
Grant income | 0 | 3,382 |
Net recognized loss on marketable securities | 0 | (1,424) |
Other Income (expense) | 17,904 | (9,094) |
Total other income | 257,776 | 610,336 |
Loss before income taxes | (16,474,688) | (16,334,615) |
Provision for income taxes | 0 | 0 |
Net Loss | (16,474,688) | (16,334,615) |
Deemed dividends | 1,921,213 | 0 |
Net loss attributable to common shareholders | $ (18,395,901) | $ (16,334,615) |
Net loss per common share - basic and diluted | $ (1.22) | $ (1.90) |
Weighted average common shares - basic and diluted | 15,128,513 | 8,601,159 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Changes in Stockholders Equity - USD ($) | Total | Common Stock | Common stock to be issued | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Series D Preferred Stock | Series E Preferred Stock | Series F Preferred Stock |
Balance, shares at Dec. 31, 2020 | 2,201,604 | 527,795 | 731,845 | 64,382 | ||||
Balance, amount at Dec. 31, 2020 | $ (11,124,262) | $ 220 | $ 0 | $ 23,400,408 | $ (34,525,025) | $ 54 | $ 74 | $ 7 |
Stock based compensation | 5,119,118 | $ 0 | 0 | 5,119,118 | 0 | 0 | 0 | 0 |
Issuance of common shares for Scouted acquisition, shares | 224,163 | |||||||
Issuance of common shares for Scouted acquisition, amount | 1,625,184 | $ 24 | 0 | 1,625,160 | 0 | 0 | 0 | 0 |
Issuance of initial and earn-out shares for Upsider acquisition, shares | 592,543 | |||||||
Issuance of initial and earn-out shares for Upsider acquisition, amount | 3,460,334 | $ 59 | 0 | 3,460,275 | 0 | 0 | 0 | 0 |
Issuance of common shares for accrued compensation, shares | 1,625 | |||||||
Issuance of common shares for accrued compensation, amount | 16,425 | $ 0 | 0 | 16,425 | 0 | 0 | 0 | 0 |
issuance of common shares upon conversion of debentures and accrued interest, shares | 1,578,616 | |||||||
issuance of common shares upon conversion of debentures and accrued interest, amount | 4,557,718 | $ 158 | 0 | 4,557,560 | 0 | $ 0 | 0 | 0 |
Cancellation of Series D preferred stock, shares | (8,755) | |||||||
Cancellation of Series D preferred stock, amount | 0 | 0 | 0 | 1 | 0 | $ (1) | 0 | 0 |
Reclassification of derivative liability upon cancellation of Series D warrants | 10,182,476 | $ 0 | $ 0 | 10,182,476 | 0 | $ 0 | 0 | 0 |
Issuance of common shares and pre-funded warrants upon conversion of Series D preferred stock, shares | 2,007,256 | 587,945 | (519,040) | |||||
Issuance of common shares and pre-funded warrants upon conversion of Series D preferred stock, amount | 0 | $ 200 | $ 59 | (206) | 0 | $ (53) | 0 | $ 0 |
Issuance of common shares upon conversion of Series F preferred stock, shares | 321,911 | (64,382) | ||||||
Issuance of common shares upon conversion of Series F preferred stock, amount | 0 | $ 32 | 0 | (25) | 0 | 0 | 0 | $ (7) |
Issuance of shares for One Wire acquisition, shares | 155,327 | |||||||
Issuance of shares for One Wire acquisition, amount | 1,436,777 | $ 16 | 0 | 1,436,761 | 0 | 0 | 0 | 0 |
Issuance of shares for services, shares | 146,290 | |||||||
Issuance of shares for services, amount | 519,239 | $ 14 | 0 | 519,225 | 0 | 0 | 0 | 0 |
Issuance of common shares for accounts payable, shares | 32,941 | |||||||
Issuance of common shares for accounts payable, amount | 140,000 | $ 3 | 0 | 139,997 | 0 | 0 | 0 | 0 |
Proceeds from sale of common stock and warrants in offering, shares | 2,400,000 | |||||||
Proceeds from sale of common stock and warrants in offering, amount | 12,003,600 | $ 240 | 0 | 12,003,360 | 0 | 0 | 0 | 0 |
Offering costs | (1,651,889) | 0 | 0 | (1,651,889) | 0 | 0 | 0 | 0 |
Cost related to modification of warrants | 12,624 | 0 | 0 | 12,624 | 0 | 0 | 0 | 0 |
Deferred offering costs | (78,038) | $ 0 | 0 | (78,038) | 0 | 0 | 0 | 0 |
Common stock issued for the exchange of warrants, shares | 522,108 | |||||||
Common stock issued for the exchange of warrants, amount | 0 | $ 52 | 0 | (52) | 0 | 0 | $ 0 | 0 |
Issuance of common shares upon conversion of Series E preferred stock, shares | 3,229,225 | (645,845) | ||||||
Issuance of common shares upon conversion of Series E preferred stock, amount | 0 | $ 323 | 0 | (258) | 0 | 0 | $ (65) | 0 |
Issuance of common shares for Parrut acquisition, shares | 257,545 | |||||||
Issuance of common shares for Parrut acquisition, amount | 1,264,551 | $ 26 | 0 | 1,264,525 | 0 | 0 | 0 | 0 |
Issuance of common shares for Novo acquisition, shares | 508,711 | |||||||
Issuance of common shares for Novo acquisition, amount | 2,019,583 | $ 51 | 0 | 2,019,532 | 0 | 0 | 0 | 0 |
Proceeds from sale of common stock related to over allotment offering, shares | 360,000 | |||||||
Proceeds from sale of common stock related to over allotment offering, amount | 1,796,400 | $ 36 | 0 | 1,796,364 | 0 | 0 | 0 | 0 |
Earn-out agreement for Parrut acquisition | 1,125,000 | $ 0 | 0 | 1,125,000 | 0 | 0 | 0 | 0 |
RSUs issued for services, shares | 25,000 | |||||||
RSUs issued for services, amount | 0 | $ 3 | 0 | (3) | 0 | 0 | 0 | 0 |
Fractional shares issued from stock split, shares | 1,555 | |||||||
Fractional shares issued from stock split, amount | 0 | $ 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Net loss | (16,334,615) | $ 0 | $ 0 | 0 | (16,334,615) | 0 | $ 0 | 0 |
Balance, shares at Dec. 31, 2021 | 14,566,420 | 587,945 | 86,000 | |||||
Balance, amount at Dec. 31, 2021 | 16,090,225 | $ 1,457 | $ 59 | 66,948,340 | (50,859,640) | 0 | $ 9 | 0 |
Common stock issued for the exchange of warrants, shares | 112,726 | |||||||
Common stock issued for the exchange of warrants, amount | 152,244 | $ 11 | 0 | 152,233 | 0 | 0 | 0 | 0 |
Net loss | (16,474,688) | 0 | 0 | 0 | (16,474,688) | 0 | 0 | 0 |
Stock based compensation - Options and Warrants | 3,053,180 | 0 | 0 | 3,053,180 | 0 | 0 | 0 | 0 |
Stock based compensation - RSUs | 815,478 | $ 0 | 0 | 815,478 | 0 | 0 | 0 | 0 |
Common stock issued as restricted stock units, shares | 172,000 | |||||||
Common stock issued as restricted stock units, amount | 0 | $ 18 | 0 | (18) | 0 | 0 | 0 | 0 |
Issuance of warrants to purchase to common stock | 1,032,842 | 0 | 0 | 1,032,842 | 0 | 0 | 0 | 0 |
Anti-dilution adjustment to warrants | 0 | $ 0 | 0 | 1,921,213 | (1,921,213) | 0 | 0 | 0 |
Issuance of earn-out shares, shares | 1,374,678 | |||||||
Issuance of earn-out shares, amount | 0 | $ 138 | 0 | (138) | 0 | 0 | $ 0 | 0 |
Shares issued for acquisition, shares | 51,940 | |||||||
Shares issued for acquisition, amount | 409,036 | $ 5 | $ 0 | 409,031 | ||||
Balance, shares at Dec. 31, 2022 | 16,277,764 | 587,945 | 86,000 | |||||
Balance, amount at Dec. 31, 2022 | $ 5,078,317 | $ 1,629 | $ 59 | $ 74,332,161 | $ (69,255,541) | $ 0 | $ 9 | $ 0 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows From Operating Activities | ||
Net loss | $ (16,474,688) | $ (16,334,615) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expense | 3,663,953 | 2,742,162 |
Bad debt expense | 492,906 | 927,847 |
Gain on debt extinguishment | (1,205,195) | (24,925) |
Equity based compensation expense | 4,106,040 | 5,400,975 |
Recognized loss on marketable securities | 0 | 1,424 |
Loan principal paid directly through grant | 0 | (2,992) |
Amortization of debt discount and debt costs | 499,031 | 2,503,160 |
Warrant modification expense | 152,244 | 12,624 |
Initial derivative expense | 0 | 3,585,983 |
Impairment expense | 4,420,539 | 2,530,325 |
Change in fair value of derivative liability | 0 | (7,315,580) |
Factoring discount fee and interest | 179,303 | 0 |
Gain on sale of intangible assets | (250,000) | 0 |
Change in fair value of earn-out liability | 26,604 | 35,294 |
Changes in assets and liabilities: | ||
Increase in accounts receivable | (1,492,093) | (4,690,668) |
Decrease (increase) in accounts receivable - related parties | 49,033 | (7,909) |
Decrease (increase) in prepaid expenses and other current assets | 253,149 | (74,742) |
(Decrease) increase in accounts payable and accrued liabilities | (594,967) | 1,991,446 |
Decrease in accounts payable and accrued liabilities - related parties | (163,672) | (746,756) |
Decrease in deferred payroll taxes | (79,244) | (77,304) |
Increase in other liabilities | 0 | 2,840 |
(Decrease) increase in deferred revenue | (531,231) | 525,767 |
Net cash used in operating activities | (6,948,288) | (9,015,644) |
Cash Flows From Investing Activities: | ||
Capitalized software development costs | (1,325,491) | 0 |
Cash paid for acquisitions; net of cash acquired | 0 | (2,238,958) |
Proceeds from sale of intangible assets | 1,050,000 | 0 |
Purchase of property and equipment | (74,606) | 0 |
Net cash used in investing activities | (350,097) | (2,238,958) |
Cash Flows From Financing Activities: | ||
Proceeds from loans | 4,077,127 | 250,000 |
Proceeds from convertible notes | 0 | 2,153,200 |
Deferred offering costs | 0 | 78,038 |
Repayments of loans | (2,013,661) | (723,611) |
Repayments of sale of future revenues | 0 | (10,904) |
Proceeds from factoring agreement | 7,303,537 | 0 |
Repayments of factoring agreement | (3,705,876) | 0 |
Proceeds from common shares and warrants | 0 | 13,800,000 |
Offering Costs | 0 | (1,651,889) |
Net cash provided by financing activities | 5,661,127 | 13,738,758 |
Net increase (decrease) in cash | (1,637,258) | 2,484,156 |
Cash, beginning of year | 2,584,062 | 99,906 |
Cash, end of year | 946,804 | 2,584,062 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the year for interest | 256,648 | 240,980 |
Cash paid during the year for income taxes | 0 | 0 |
Supplemental schedule of non-cash investing and financing activities: | ||
Accounts receivable owed under factoring agreement collected directly by factor | 3,495,683 | 0 |
Purchase price measurement period adjustment to goodwill and accounts receivable | 35,644 | 0 |
Common shares issued to settle accrued liability | 409,036 | 0 |
Original issue discount deducted from convertible note proceeds | 0 | 342,554 |
Debt discount on warrants granted with notes | 1,632,842 | 0 |
Debt costs deducted from convertible note proceeds | 0 | 334,800 |
Notes and accrued interest converted to common stock | 0 | 4,557,718 |
Notes payable and accrued interest exchanged for debentures | 0 | 252,430 |
Accounts payable paid with common stock | 0 | 140,000 |
Accrued compensation paid with common stock | 0 | 16,425 |
Warrant derivative liability extinguished | 0 | 10,182,476 |
Write off of right-of-use asset and lease liability | 0 | 103,953 |
Deferred offering costs charged to additional paid-in capital | 0 | 78,038 |
Common stock issued/to be issued for asset acquisitions | 0 | 11,340,284 |
Earn-out liability consideration for acquisition | 0 | 543,297 |
Loans issued as consideration for acquisitions | 0 | 4,750,000 |
Shares issued for Upsider earn-out liability | 0 | 1,394,768 |
Warrant derivative liability at inception recorded as debt discount | 0 | 2,374,076 |
Prepayment of shares issued for services | $ 0 | $ 237,382 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE 1 - 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” or the “Company”), is a holding company based in New York, New York. The Company has seven material subsidiaries, Recruiter.com, Inc., Recruiter.com Recruiting Solutions LLC (“Recruiting Solutions”), Recruiter.com Consulting, LLC, VocaWorks, Inc. (“VocaWorks”), Recruiter.com Scouted Inc. (“Scouted”), Recruiter.com Upsider Inc. (“Upsider”) and Recruiter.com OneWire Inc. (“OneWire”). RGI and its subsidiaries as a consolidated group is hereinafter referred to as the “Company,” “we”, “us” or “our”. The Company operates an On Demand recruiting platform digitally transforming the $28.5 billion employment and recruiting agencies industry. The Company offers recruiting software and services through an online, AI-powered sourcing platform (the ″Platform”) and network of on-demand recruiters. Businesses from startups to the Fortune 100 use the Company to help address their critical talent needs and solve recruiting and hiring challenges. The Company’s website, www.Recruiter.com, provides access to its network of recruiters to employers seeking to hire talent and utilizes an innovative web platform, software with integrated AI-driven candidate to job matching, and video screening software to source qualified talent more easily and quickly. The Company helps businesses accelerate and streamline their recruiting and hiring processes by providing on-demand recruiting software and services. The Company leverages its expert network of recruiters to place recruiters on a project basis, aided by cutting-edge AI-based candidate sourcing and matching and video screening technologies. Through the Company’s Recruiting Solutions division, the Company also provides consulting, staffing, and full-time placement services to employers, leveraging our platform and rounding out our services. The Company’s mission is to help recruit the right talent faster and become the preferred solution for hiring specialized talent. Reincorporation and Reverse Stock Split We were originally incorporated on July 28, 2008 in the State of Oklahoma as SA Recovery Group, but, on March 17, 2015, we effected a merger whereby we became incorporated as a Delaware corporation. Then, effective March 31, 2019, we completed a merger with Recruiter.com, Inc. and thereafter changed our name to Recruiter.com Group, Inc. on May 9, 2019 and reincorporated in the state of Nevada on May 13, 2020. 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. On June 18, 2021 the Company filed an Amendment to the Articles of Incorporation to effectuate a reverse split of the Company’s issued and outstanding common stock at an exchange ratio of 1-for-2.5. The reverse stock split was effective as of June 18, 2021. Simultaneously with the reverse stock split, the Company reduced the authorized shares from 250,000,000 to 100,000,000. All share and per share data in the accompanying consolidated financial statements and footnotes has been retroactively adjusted to reflect the effects of the reverse stock split. Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of RGI and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. 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 marketable securities, fair value of assets acquired and liabilities assumed in asset acquisitions and the estimated useful life of assets acquired, fair value of contingent consideration in asset acquisitions and business combinations, fair value of derivative liabilities, fair value of securities issued for acquisitions and business combinations, fair value of assets acquired and liabilities assumed in business combinations, fair value of intangible assets and goodwill, fair value of capitalized software, fair value of non-monetary transactions, 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 December 31, 2022. At December 31, 2022 and December 31, 2021, the Company had $612,691 and $1,667,798 in excess of the FDIC limit, respectively. The Company had no cash equivalents during or at the end of either year. 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. We generate revenue from the following activities: • Software Subscriptions • Recruiters On Demand: • Full-time Placement: • Marketplace For individuals, Marketplace includes services to assist with career development and advancement, including a resume distribution service which involves promoting these job seekers’ profiles and resumes to assist with their procuring employment, and upskilling and training. Our resume distribution service allows a job seeker to upload his/her resume to our database, which we then distribute to our network of recruiters on the Platform. We earn revenue from a one-time flat fee for this service. We also offer a recruiter certification program which encompasses our recruitment related training content, which we make accessible through our online learning management system. Customers of the recruiter certification program use a self-managed system to navigate through a digital course of study. Upon completion of the program, we issue a certificate of completion and make available a digital badge to certify their achievement for display on their online recruiter profile on the Platform. Additionally, we partner with Careerdash, a high-quality training company, to provide Recruiter.com Academy, an immersive training experience for career changers. • Consulting and Staffing: 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 consolidated statements of operations represent services rendered to customers less sales adjustments and allowances. Software subscription revenues are recognized over the term of the subscription for access to services and/or our web-based platform. Revenue is recognized monthly over the subscription term. Talent effectiveness subscription revenues are recognized over the term of the subscription when services are provided. Any payments received prior to the time passing to provide the subscription services are recorded as a deferred revenue liability. Revenue generated from the enhanced support package and On Demand support are recognized at the point-in-time when the service is provided. Revenue generated from placement fees that are related to the software subscription are recognized at the point-in-time when the 60 or 90-day guarantee expires. Recruiters On Demand services are billed to clients as either monthly subscriptions or time-based billings. Revenues for Recruiters On Demand are recognized on a gross basis when each monthly subscription service is completed. Talent Effectiveness consulting services are billed to clients upfront for a period of months. Revenue is recognized on a gross basis monthly over the period the consulting services are provided. Full time placement revenues are recognized on a gross basis when the guarantee period specified in each customer’s contract expires. No fees for direct hire placement services are charged to the employment candidates. Any payments received prior to the expiration of the guarantee period are recorded as a deferred revenue liability. Payments for recruitment services are typically due within 90 days of completion of services. Marketplace Solutions 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. Marketplace advertising revenues are recognized on a gross basis when the advertising is placed and displayed or when lead generation activities and online publications are completed, which is the point at which the performance obligations are satisfied. Payments for marketing and publishing are typically due within 30 days of completion of services. Job posting revenue is recognized at the end of the period the job is posted. Marketplace career services revenues are recognized on a gross basis upon distribution of resumes or completion of training courses, which is the point at which the performance obligations are satisfied. Payments for career services are typically due upon distribution or completion of services. 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. 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. Deferred revenue results from transactions in which we have 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. All trade receivables on the Company’s consolidated 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 December 31, 2022 or 2021. 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. Revenue Disaggregation For each of the years, revenues can be categorized into the following: Years Ended December 31, 2022 2021 Recruiters On Demand $ 16,000,760 $ 11,393,396 Consulting and staffing services 4,821,777 7,569,253 Software Subscriptions 2,468,990 1,403,353 Full time placement fees 937,825 1,091,790 Marketplace Solutions 1,142,922 726,320 Total revenue $ 25,372,274 $ 22,184,112 As of December 31, 2022, and 2021, deferred revenue amounted to $215,219 and $746,449, respectively. During the year ended December 31, 2022, the Company recognized $746,449 of revenue that was deferred as of December 31, 2021. Deferred revenue as of December 31, 2022 is categorized and expected to be recognized as follows: Expected Deferred Revenue Recognition Schedule Total Deferred 12/31/2022 Recognize Q1 2023 Recognize Q2 2023 Recognize Q3 2023 Recognize Q4 2023 Recognize 2024 Recruiters On Demand $ 49,372 $ 49,372 $ - $ - $ - $ - Full time placement fees 12,000 12,000 - - - - Software Subscriptions 12,401 12,401 - - - - Marketplace 141,446 51,139 35,779 30,456 19,076 4,996 TOTAL $ 215,219 $ 124,912 $ 35,779 $ 30,456 $ 19,076 $ 4,996 Revenue from international sources was approximately 3.2% and 2.3% for the years ended December 31, 2022 and 2021, respectively. Cost of Revenue Cost of revenue consist of employee costs, third party staffing costs and other fees, outsourced recruiter fees and commissions based on a percentage of Recruiting Solutions gross margin. 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 $1,446,613 and $934,219 as of December 31, 2022 and 2021, respectively. Bad debt expense was $492,906 and $927,847 for the years ended December 31, 2022 and 2021, respectively. Property and Equipment Property and equipment is stated at cost, less accumulated depreciation. Depreciation is recognized over an asset’s estimated useful life using the straight-line method beginning on the date an asset is placed in service. The Company regularly evaluates the estimated remaining useful lives of the Company’s property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Maintenance and repairs are charged to expense as incurred. Depreciation expense for the years ended December 31, 2022 and 2021 was $13,747 and $1,154, respectively. Concentration of Credit Risk and Significant Customers and Vendors As of December 31, 2022, one customer accounted for more than 10% of the accounts receivable balance, at 28%. As of December 31, 2021, two customers accounted for more than 10% of the accounts receivable balance, at 14% and 12%, for a total of 26%. For the year ended December 31, 2022 one customer accounted for 10% or more of total revenue, at 14%. For the year ended December 31, 2021 one customer accounted for 10% or more of total revenue, at 12%. We use a related party firm located overseas for software development and maintenance related to our website and the platform underlying our operations. One of our employees and principal shareholders is an employee of this firm but exerts control over this firm (see Note 12). We were a party to a 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. We had used a related party firm to provide certain employer of record services (see Note 12). Advertising and Marketing Costs The Company expenses all advertising and marketing costs as incurred. Advertising and marketing costs were $725,687 and $472,213 for the years ended December 31, 2022 and 2021, respectively, and are included in sales and marketing on the consolidated statements of operations. 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’s contingent accrued earn-out business acquisition consideration liability is considered Level 3 fair value liability instruments requiring period fair value assessments. This contingent consideration liability was recorded at fair value on the acquisition date and are re-measured quarterly based on the then assessed fair value and adjusted if necessary. The increases or decreases in the fair value of contingent consideration can result from changes in anticipated revenue levels and changes in assumed discount periods and rates. As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3. As of December 31, 2022 and 2021, the earn-out liability account balance as reported in the balance sheets is $0 and $578,591, respectively. In April 2022, the earn-out liability was forgiven in full and recorded as a gain on debt extinguishment on the consolidated statement of operations. See Note 13 for more information. In fair valuing these instruments, the income valuation approach is applied, and the valuation inputs include the contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments. 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 Company did not have investment securities or warrant derivative liabilities as of December 31, 2022 and 2021. The tables below summarize the fair values of our financial assets and liabilities as of December 31, 2022 and 2021: Fair Value at December 31, Fair Value Measurement Using 2021 Level 1 Level 2 Level 3 Contingent consideration for acquisitions (Note 13) $ 578,591 $ - $ - $ 578,591 The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows for the years ended December 31, 2022 and 2021: Years Ended December 31, 2022 2021 Balance at January 1 $ - $ 11,537,997 Additions to derivative instruments - 5,960,059 Reclassifications to equity upon modification or cancellation of warrants - (10,182,476 ) (Gain) loss on change in fair value of derivative liability - (7,315,580 ) Balance, December 31 $ - $ - For the Company's earn-out liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balance for each category therein, and gains or losses recognized during the year ended December 31, 2022 and 2021: Beginning balance, December 31, 2020 $ - Acquisitions and Settlements: Novo Group Acquisition 543,297 Re-measurement adjustments: Change in fair value of earn-out liability 35,294 Ending balance, December 31, 2021 578,591 Re-measurement adjustments: Change in fair value of earn-out liability 26,604 Gain on debt extinguishment (605,195 ) Ending balance, December 31, 2022 $ - Significant unobservable inputs used in the earn-out fair value measurements of the Company's contingent consideration liabilities designated as Level 3 are as follows: December 31, 2021 Fair value $ 578,591 Valuation technique Discounted cash flow Significant unobservable input Projected revenue and probability of achievement Business Combinations For all business combinations (whether partial, full or step acquisitions), the Company records 100% of all assets and liabilities of the acquired business, generally at their fair values with any excess of purchase price over the net assets recorded as goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value and accretion costs are recognized in earnings. The increases or decreases in the fair value of contingent consideration can result from changes in anticipated revenue levels and changes in assumed discount periods and rates. Intangible Assets Intangible assets consist primarily of the assets acquired from Genesys in 2019, including customer contracts and intellectual property, acquired on September 30, 2019, the assets acquired from Scouted and Upsider during the first quarter of 2021 (see Note 13), the assets acquired from OneWire during the second quarter of 2021 (see Note 13), and the assets acquired from Parrut and Novo Group during the third quarter of 2021 (see Note 13). Amortization expense is recorded on the straight-line basis over the estimated economic lives. Goodwill 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 as impairment indicators dictate (see Note 5). When evaluating the potential impairment of goodwill, management first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for 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 quantitative impairment testing methodology. Under the quantitative method we compare the carrying value of the reporting unit, including goodwill, with its fair value, as determined using an appropriate valuation method. 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 may 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. Long-lived assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company estimates the future undiscounted net cash flows of the related asset or asset group over the remaining life of the asset in measuring whether the long-lived asset should be written down to fair value. Measurement of the amount of impairment would be based on generally accepted valuation methodologies, as deemed appropriate. If the carrying amount is greater than the undiscounted cash flows, the carrying amount of the asset is reduced to the asset’s fair value. An impairment loss is recognized immediately as an operating expense in the consolidated statements of operations. Reversal of previously recorded impairment losses are prohibited (see Note 5). Marketable Securities The Company has adopted Accounting Standards Update (“ASU”) 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The unrealized loss on the marketable securities during the year ended December 31, 2021 has been included in a separate line item on the statement of operations, Net Recognized Loss on Marketable Securities. Software Costs We capitalize certain software development costs incurred in connection with developing or obtaining software for internal use when both the preliminary project stage is completed, and it is probable that the software will be used as intended. Capitalization ceases after the software is operational; however, certain upgrades and enhancements may be capitalized if they add functionality. Capitalized software costs include only (i) external direct costs of materials and services utilized in developing or obtaining software, (ii) compensation and related benefits for employees who are directly associated with the software project and (iii) interest costs incurred while developing internal-use software. Income Taxes We utilize ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not to be sustained upon examination by taxing authorities, based on the technical merits of the position. Our practice is to recognize interest and/or penalties, if any, related to income tax matters in income tax expense. 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 invol |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2022 | |
GOING CONCERN | |
NOTE 2 - GOING CONCERN | NOTE 2 - GOING CONCERN Management believes it may not have sufficient cash to fund its liabilities and operations for at least the next twelve months from the issuance of these consolidated financial statements. These 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 used cash of approximately $6.9 million in operations in 2022; (ii) 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; (iii) the Company will require additional financing for the fiscal year ending December 31, 2023 to continue at its expected level of operations; and (iv) 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 consolidated financial statements. 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 became 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. The Company previously reduced certain billing rates to respond to the economic climate, however, those billing rates have returned to normal. Demand for recruiting solutions and our Platform improved in 2022 versus 2021. The COVID-19 pandemic has been characterized by rises and falls of case numbers due to unforeseen factors and variants of concern and consequently has had varying amounts of impact on the Company’s operations and financial prospects. The extent to which the COVID-19 pandemic will impact operations, ability to obtain financing or future financial results is uncertain at this time. The Company expects but cannot guarantee that demand for its recruiting solutions will improve in 2023, as certain clients re-open or accelerate their hiring initiatives, and new clients utilize its services. Overall, management is focused on effectively positioning the Company for a rebound in hiring which the Company believes will happen in 2023. Ultimately, the recovery may be delayed and the economic conditions may worsen, depending upon changes in the impact from the COVID-19 pandemic and general economic conditions. The Company continues to closely monitor the confidence of its recruiter users and customers, and their respective job requirement load through offline discussions and Recruiter Index survey. The Company also may depend on raising additional debt or equity capital to stay operational. The economic impact of COVID-19, should the COVID-19 pandemic worsen, may make it more difficult for the Company to raise additional capital when needed. The terms of any financing, if the Company is able to complete one, will likely not be favorable to the Company. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
NOTE 3 - PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 3 - PREPAID EXPENSES AND OTHER CURRENT ASSETS The components of prepaid expenses and other current assets at December 31, 2022 and 2021, consisted of the following: December 31, 2022 December 31, 2021 Prepaid expenses $ 40,860 $ 175,263 Prepaid advertisement 200,000 - Prepaid shares issued for services - 237,382 Employee advance 8,500 - Prepaid insurance 3,302 111,040 Other receivables 2,886 22,394 Prepaid expenses and other current assets $ 255,548 $ 546,079 |
INVESTMENT IN AVAILABLE FOR SAL
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES | |
NOTE 4 - INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES | NOTE 4 - INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES The Company’s investments in marketable equity securities are being held for an indefinite period and thus have been classified as available for sale. Cost basis of securities held as of both December 31, 2022 and 2021 was $42,720, and accumulated unrealized losses were $42,720 as of December 31, 2022 and 2021, respectively. The fair market value of available for sale marketable securities was $0 as of December 31, 2022 and 2021, based on 178,000 shares of common stock held in one entity with a per share market price of approximately $0.00. Net losses on equity investments were as follows: Years Ended December 31, 2022 2021 Net realized losses on investment sold or assigned $ - $ - Net unrealized losses on investments still held - (1,424 ) Total $ - $ (1,424 ) The reconciliation of the investment in marketable securities is as follows for the years ended December 31, 2022 and 2021: December 31, December 31, 2022 2021 Beginning Balance - December 31 $ - $ 1,424 Additions - - Proceeds on sales of securities - - Assignment of securities as compensation - - Recognized losses - (1,424 ) Ending Balance - December 31 $ - $ - |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
NOTE 5 - GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 5 - GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Goodwill is derived from our 2019 business combination as well as our five business combinations in the first three quarters of 2021 (See Note 13). The aggregate goodwill recognized from our five 2021 acquisitions was $6,731,852 while the remaining goodwill from the 2019 acquisition was $3,517,315 at December 31, 2020. The Company performed a goodwill impairment test during 2021 using market data and discounted cash flow analysis. Based on that test, we have determined that the carrying value of goodwill related to the 2019 acquisition of Genesys was further impaired in the amount of $2,530,325 during 2021. The company performed its annual goodwill impairment test during 2022 using market data and discounted cash flow analysis, and determined that goodwill was further impaired by $582,114. The changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021 are as follows: December 31, 2022 December 31, 2021 Carrying value - January 1 $ 7,718,842 $ 3,517,315 Goodwill acquired during the year - 6,731,852 7,718,842 10,249,167 Purchase price measurement period adjustments (35,644 ) - Impairment losses (582,114 ) (2,530,325 ) Carrying value - end of period $ 7,101,084 $ 7,718,842 Intangible Assets On March 31, 2019, the Company acquired Intangible assets totaling $1,910,072 from Genesys, including customer contracts and intellectual property which are being amortized over the three year useful life. 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. Mr. MacRae’s compensation package includes a $50,000 signing bonus and an annual base salary of $125,000. We have attributed the $50,000 signing bonus to the cost of the contracts acquired and amortized that cost over the estimated six-month economic life of the contracts. During 2021, we acquired certain intangible assets pursuant to our Scouted, Upsider, OneWire, Parrut, and Novo Group acquisitions described in Note 13. These intangible assets aggregate approximately $11.6 million and consist primarily of sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets. We completed the accounting and valuations of the assets acquired. Intangible assets are summarized as follows: December 31, 2022 December 31, 2021 Customer contracts $ 8,093,787 $ 8,093,787 Software acquired 3,785,434 3,785,434 License 1,726,965 1,726,965 Internal use software developed 325,491 - Domains 40,862 40,862 13,972,539 13,647,048 Less accumulated amortization (7,555,422 ) (3,905,216 ) Total 6,417,117 9,741,832 Less impairment (3,838,425 ) - Carrying value $ 2,578,692 $ 9,741,832 Amortization expense of intangible assets was $3,650,206 and $2,741,008 for the years ended December 31, 2022 and 2021, respectively, related to the intangible assets acquired in business combinations. Future amortization of intangible assets is expected to be approximately as follows: 2023, $1,237,047; 2024 $739,547; 2025, $455,683; 2026, $121,279; 2027, $2,738; and thereafter, $22,398. The Company began amortizing intangible assets from the Scouted, Upsider and OneWire acquisitions in the second quarter of 2021 and the Parrut and Novo Group acquisitions in the third quarter of 2021. The company performed its impairment test during 2022 using the market and income approach, and determined that the Company’s customer contracts, software acquired, internal use software developed, and domains were impaired by $3,838,425. On November 21, 2022, the Company entered into a Domain Name sale and Ownership Transfer Agreement with Chief Executive Group (“CEG”). Per the agreement, the Company agreed to sell and transfer to CEG all ownership rights in and to the domain name CFO-Job.com and its associated social media property (“Domain Assets’). In exchange for the Domain Assets, the Company received cash consideration of $50,000, and $200,000 worth of advertising from CEG. Half of the advertising consideration is to be used within one year of this agreement, and the remaining balance is to be used within two years of the agreement. During the year ended December 31, 2022, the Company recorded a gain on sale of intangible asset of $250,000 which is included in general and administrative expenses on the consolidated statements of operations. The Company additionally recorded a prepaid advertising expense within prepaid expenses and other current assets on the consolidated balance sheet. As of December 31, 2022, the Company has not received any advertising services from CEG. On December 5, 2022, The Company entered into an asset purchase agreement in which the Company sold to a third party Upsider’s candidate sourcing and engagement platform and all related intellectual property for $1,000,000 in cash consideration. The recorded value of the internal use software developed at the date of the sale was $1,000,000 resulting in no gain or loss on the sale. For a period of eighteen months from the date of the sale, the Company will have continued access to this platform. |
LIABILITY FOR SALE OF FUTURE RE
LIABILITY FOR SALE OF FUTURE REVENUES | 12 Months Ended |
Dec. 31, 2022 | |
LIABILITY FOR SALE OF FUTURE REVENUES | |
NOTE 6 - LIABILITY FOR SALE OF FUTURE REVENUES | NOTE 6 - LIABILITY FOR SALE OF FUTURE REVENUES During 2020 and 2019 we were party to two agreements related to the sale of future revenues. Both agreements were with the same party, had substantially the same terms, and were entered into in December 2019. Total repayments were $567,001. As a result, we recorded an initial discount of $142,491. Discounts related to the agreements were amortized to expense over the term of the agreements. One of the agreements was paid in full as of December 31, 2020. During the years ended December 31, 2022 and 2021, we amortized $0 and $2,719 of discount, respectively, to interest expense. Unamortized discount is $0 both at December 31, 2022 and 2021. The outstanding gross balance due before discounts pursuant to the agreements was $0 both at December 31, 2022 and 2021. During 2021 our remaining agreement related to the sale of future revenues was paid in full. |
LOANS PAYABLE AND FACTORING AGR
LOANS PAYABLE AND FACTORING AGREEMENT | 12 Months Ended |
Dec. 31, 2022 | |
LOANS PAYABLE AND FACTORING AGREEMENT | |
NOTE 7 - LOANS PAYABLE AND FACTORING AGREEMENT | NOTE 7 - LOANS PAYABLE AND FACTORING AGREEMENT Term Loans We have outstanding balances of $0 and $50,431 pursuant to two term loans as of December 31, 2022 and December 31, 2021, respectively. The loans originated in 2013 and 2018, respectively. The loans had variable interest rates, with rates at 6.0% and 7.76%, respectively. Monthly payments under the loans were $1,691 and $1,008, respectively. One of the term loans was a Small Business Administration (“SBA”) loan. As a result of the COVID-19 uncertainty, the SBA made payments on our behalf of $3,382 during 2021, which have been recorded as grant income in the consolidated financial statements. These payments were applied $2,992 to principal, and $390 to interest expense in 2021. Our Chief Operating Officer, who is also a shareholder, had personally guaranteed the loans described above. We paid off the outstanding balance of both loans in February 2022 and no longer have any obligation related to such notes. Paycheck Protection Program Loan During April and May 2020, the Company, through its four subsidiaries, received an aggregate of $398,545 in loans proceeds borrowed from a bank pursuant to the Paycheck Protection Program under the CARES Act guaranteed by the SBA, which we expected 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. We have applied for forgiveness for all loans. As of December 31, 2020, $373,795 of loans have been forgiven. We have classified the remaining balance of $24,750 as long term at December 31, 2020. We recorded forgiveness of debt income of $376,177 for the $373,795 of principal and $2,382 of related accrued interest forgiven in 2020. During 2021 our remaining loan pursuant to the Paycheck Protection Program under the CARES Act in the amount of $24,750 was forgiven. We recorded forgiveness of debt income of $24,925 for the $24,750 of principal and $175 of related accrued interest forgiven. Promissory Notes Payable We received $250,000 in proceeds from an institutional investor pursuant to a promissory note dated May 6, 2021. The note bears interest at 12% per year and matures on May 6, 2023. In April 2022, we paid off the total principal balance of the note and the accrued interest. We issued a promissory note for $1,750,000 pursuant to the Parrut acquisition agreement dated July 7, 2021 (See Note 13). The note had a term of 24 months, accrued interest at 6%, and originally matured on July 1, 2023. The note required monthly payments of $77,561. On October 19, 2022, Parrut agreed to subordinate their note to a promissory note issued to Montage Capital II, L.P. In return, we restructured the payment schedule for the Parrut note which now matures on August 31, 2023, and bears interest at 12%. At December 31, 2022, the outstanding balance on the promissory note with Parrut was $444,245. We issued a promissory note for $3,000,000 pursuant to the Novo Group acquisition agreement dated August 27, 2021 (See Note 13). The note originally had a term of 30 months, bears interest at 6%, and was scheduled to mature on February 1, 2024. The note requires monthly payments of $85,000 for the first 12 months, $110,000 for months 13 through 24, $155,000 for months 25 through 29, and $152,357 for month 30. In April 2022, we negotiated a reduction in this promissory note with Novo Group due to employee turnover that occurred following the acquisition. We entered into an agreement with Novo Group to reduce the outstanding principal balance by $600,000 and changed the maturity date to November 1, 2023. The reduction in the promissory note was accounted for as gain on debt extinguishment on the consolidated statement of operations. In October 2022, Novo Group entered into a Subordination Agreement (“Subordination Agreement”), pursuant to which Novo agreed to subordinate all its indebtedness and obligations we owe to Novo to all the indebtedness and obligations we owe to Montage Capital. At December 31, 2022, the outstanding balance on the promissory note with Novo Group was $1,292,360. In February 2023, we entered into an additional Amendment to the Promissory Note with Novo Group, Inc. (the “Novo Amendment”). The Novo Amendment further modifies the Promissory Note issued to Novo on August 27, 2021 (the “Novo Note”) and amended on April 1, 2022, by amending the payment schedule pursuant to which we would make payments of principal and interest to Novo. Novo agreed we would pay interest only for the period starting November 1, 2022 though and including March 31, 2023, with payments of principal and interest to resume starting April 1, 2023. We also replaced the existing payment schedule with a new payment schedule terminating on October 31, 2023. On August 17, 2022, we issued promissory notes for $1,111,111, in the aggregate (the “8/17/22 Notes”) We received proceeds of $960,000, net of debt issuance costs of $40,000 and an original issue discount of $111,111. The 8/17/22 Notes have a term of 12 months, bear interest at 6%, and mature on August 17, 2023. The 8/17/22 Notes are to be paid off in full on August 17, 2023. As a part of these financings, we granted the noteholders 694,445 warrants to purchase our common stock (See Note 10) (the “8/17/22 Warrants”). The 8/17/22 Warrants were valued at $463,737 and treated as a debt discount to be amortized over the life of the note. At December 31, 2022, the outstanding balance on the 8/17/22 Notes, net of the unamortized debt issuance costs and debt discounts of $384,280, was $726,831. On August 30, 2022, we issued promissory notes for $1,305,556, in the aggregate (the “8/30/22 Notes,” and together with the 8/17/22 Notes, the “August 2022 Notes”). We received proceeds of $1,175,000, net of an original issue discount of $130,556. The 8/30/22 Notes have a term of 12 months, bear interest at 6%, and mature on August 30, 2023. The 8/30/22 Notes are to be paid off in full on August 30, 2023. As a part of these financings, we granted the noteholders 815,972 warrants to purchase our common stock (See Note 10) (the “8/30/22 Warrants, and together with the 8/17/22 Warrants, the “August 2022 Warrants”). These 8/30/22 Warrants were valued at $569,106 and treated as a debt discount to be amortized over the life of the note. At December 31, 2022, the outstanding balance on the 8/30/22 Notes, net of the unamortized debt issuance costs and debt discounts of $466,441, was $839,115. On October 19, 2022, the “Company closed a Loan and Security Agreement (the “Loan Agreement”), by and among the Company and Montage Capital II, L.P. (the “Lender”). Pursuant to the Loan Agreement, the Lender will make advances (“Advances”) in the aggregate principal amount of $2,250,000, with the first Advance of $2,000,000 being provided on or around the Closing Date and the second Advance of $250,000 being available to the Company upon request prior to April 30, 2023. Interest will accrue on all Advances under the Loan Agreement at a per annum rate of 12.75%. In the event of a default under the terms of the Loan Agreement, the interest rate increases by 5 percentage points above the interest rate in effect immediately prior to a default. The entire outstanding principal balance of the Advances, all accrued and unpaid interest thereon, and all fees and other amounts outstanding thereunder will be immediately due and payable on the 42nd month anniversary of the Closing Date (the “Maturity Date”). In connection with the Loan Agreement, the Company granted and pledged to the Lender a continuing security interest in all presently existing and hereafter acquired or arising Collateral (as more specifically defined in the Loan Agreement) which includes all personal property of the Company and its subsidiaries. The Loan Agreement contains certain affirmative and negative covenants to which the Company is also subject. The Company agreed to pay the Lender a fee of $45,600, with $40,000 due upon the execution of the Loan Agreement and the balance due upon the funding of the second Advance. The Company is permitted to prepay any amounts due to the Lender; provided, however, that a Prepayment Fee (as more specifically defined in the Loan Agreement) shall be owed to the Lender depending on when the amounts are prepaid. In addition, in connection with the Loan Agreement, the Company issued 706,551 warrants to purchase common stock of the Company (the “Warrants”) to the Lender, with 622,803 Warrants issued and exercisable upon the Closing Date and the additional 83,708 Warrants becoming exercisable upon funding of the second Advance. The Warrants are exercisable for ten years from the Closing Date at an exercise price of $2.00 per share, subject to certain adjustments. Upon the earlier of the Maturity Date or a sale of the Company or other change in control, the Lender has the right to cause the Company to repurchase the Warrants for up to $703,125 ($600,000 if only the first Advance has been made and $703,125 if both Advances have been made). The Company is also obligated to pay the Lender a cash fee equal to 1.25% of the aggregate principal amount of the Advances that is outstanding on each anniversary of the Closing Date if (i) the average closing price of the Company’s common stock for the thirty (30) day period prior to such anniversary date is less than $2.00 or (ii) the closing price of the Company’s common stock for the date immediately prior to such anniversary date is less than $2.00. At December 31, 2022, the outstanding balance on the Loan Agreement, net of the unamortized debt issuance costs and debt discounts of $622,630, was $1,377,370. At December 31, 2022 and December 31, 2021, the outstanding principal balance on the promissory notes payable totaled $6,153,272 and $4,299,831, respectively. Factoring Arrangement We entered into a factoring agreement with CSNK Working Capital Finance Corp. d/b/a Bay View Funding, a subsidiary of Heritage Bank of Commerce (the “Buyer”), effective April 27, 2022 (the “Factoring Agreement”), for the purpose of factoring our trade accounts receivable with recourse. The proceeds of the factoring are used to fund our general working capital needs. The Company is accounting for this transaction as a secured borrowing under the Transfers and Servicing of Financial Assets guidance. The agreement is for a term of twelve months with an auto renewal clause for an additional twelve months unless terminated by the parties. The agreement is secured by substantially all assets of the Company. Pursuant to the Factoring Agreement, we sell certain trade accounts receivable to the Buyer. We are charged a finance fee, defined as a floating rate per annum on outstanding advances under the Factoring Agreement, equal to the prime rate plus 3.25% due on the first day of each month. We are also charged a factoring fee of 0.575% of the gross face value of any trade accounts receivables for the first 30 days from when the trade accounts receivable is purchased and 0.30% for each fifteen days afterward until the purchased receivable is paid in full or repurchased. We receive advances of up to 85% of the amount of eligible trade accounts receivable. Advances outstanding shall not exceed the lesser of $3,000,000 or an amount equal to the sum of all undisputed purchased trade accounts receivable multiplied by 85%, less any reserved funds. All collections of purchased receivables go directly to the Buyer controlled lockbox and Buyer shall apply these collections to the Company’s obligations. The Company will immediately turn over to Buyer any payment on a purchased receivable, or receivable assigned to Buyer under the Factoring Agreement, that comes into the Company’s possession. In the event the Company comes into possession of a remittance comprising payments of both a purchased receivable and receivable which has not been purchased by Buyer, the Company is required to hold the same in accordance with the provisions set forth above and immediately turn same over to Buyer. As stated previously, the Company factors the accounts receivable on a recourse basis. Therefore, if the Buyer cannot collect the factored accounts receivable from the customer, the Company must refund the advance amount remitted to us for any uncollected accounts receivable from the customer. Accordingly, the Company records the liability of potentially having to refund the advance amount as short-term debt when the factoring arrangement is utilized. As of December 31, 2022 and December 31, 2021, $545,216 and $0 of advances were outstanding under the factoring arrangement, respectively, and $263,939 and $0, was due from the factor resulting in a net $281,277 and $0 loan payable to the factor at December 31, 2022 and 2021, respectively. As consideration for Buyer forgoing other factoring transactions in the marketplace and for establishing the maximum credit of $3,000,000, the Company paid the Buyer a facility fee upon entering into the Factoring Agreement (the “Facility Fee”) in the amount of one half of one percent (0.50%) of the maximum credit, $15,000. An additional Facility Fee is charged for increases to the maximum credit, but only for the incremental increase. The Facility Fee was accounted for as a factoring fee expense, which is included as part of the interest expense along with all other factor fees. The cost of factoring for the year ended December 31, 2022 was $179,303, and is included in interest expense on the consolidated statements of operations. The status of the loans payable as of December 31, 2022 and December 31, 2021 is summarized as follows: December 31, 2022 December 31, 2021 Term loan(s) $ - $ 50,431 Promissory notes 6,153,272 4,299,831 Factoring arrangement 281,277 - Total loans payable 6,434,549 4,350,262 Less: Unamortized debt discount or debt issuance costs (1,473,351 ) - Less current portion (3,700,855 ) (1,712,387 ) Non-current portion $ 1,260,343 $ 2,637,875 The future principal payments of the loans payable are as follows: Year Ending December 31, 2023 $ 4,692,549 2024 516,000 2025 516,000 2026 516,000 2027 194,000 Total principal payments $ 6,434,549 |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
CONVERTIBLE NOTES PAYABLE | |
NOTE 8 - CONVERTIBLE NOTES PAYABLE | NOTE 8 - CONVERTIBLE NOTES PAYABLE 2020 Debentures 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) 738,282 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, 147,657 common stock purchase warrants exercisable at $5.00 per share. The number of placement agent warrants issued was reduced on July 2, 2021 to 36,364, and the exercise price was increased to $6.25 (see Note 10). On August 17, 2022 and August 30, 2022, we issued warrants with an exercise price of $2.00 (see Note 7). Consequently, the number of Warrants associated with the 2020 Debentures were increased from 739,787 to 1,300,093, and the exercise price was reduced from $5.00 to $2.00 (see Note 10) due to anti-dilution provisions in Warrants. The exercise price of the Warrants was then again reduced from $2.00 to $0.98 in connection with the issuance of stock to Parrut; however there was no further full ratchet adjustment to the quantity of warrants due to the maximum limit allowed (see Note 13). The Warrants are exercisable for three years from May 28, 2020 subject to certain adjustments. The Debentures matured on May 28, 2021, subject to a nine-month extension at the Company’s option which was taken and the Company incurred $253,767 of penalty for the extension which is included in interest expense on the consolidated statements of operations during the year ended December 31, 2021. 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 $4.00 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. On July 2, 2021, the 2020 Debentures were exchanged for common stock and warrants (See Note 10). 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. During 2020, notes aggregating $91,600, plus related accrued interest of $4,400, were converted into 24,000 shares of common stock. Unamortized debt costs and debt discount of $13,647 and $25,956, respectively, were charged against the value of the common stock issued upon conversion. 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 were being amortized over the life of the notes. 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 was being amortized over the life of the notes. On November 23, 2020, we issued a convertible promissory note in the amount of $250,000 to a current stockholder and noteholder, and received proceeds of $250,000. The note bears interest at 5% per year and matures on March 24, 2021. If we consummate a Qualified Offering on or before March 24, 2021 then the remaining outstanding and unpaid amount of this note will automatically be converted into shares of our common stock (or units of common stock and warrants to purchase common stock, if units are offered to the public in the Qualified Offering) at the Qualified Offering Price. “Qualified Offering” shall mean an offering of common stock (and other securities potentially) for an aggregate price of at least $5,000,000 resulting in the listing for trading of the common stock on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing). For the purposes of this note “Qualified Offering Price” shall mean the price per share (or unit, if units are offered in the Qualified Offering) at which the Qualified Offering is made. Under this note, an Event of Default would occur if: (i) a default for five (5) days in payment of principal or interest on this Note; (ii) failure by the Borrower to comply with any material provision of this Note; (iii) the Borrower, pursuant to or within the meaning of any Bankruptcy Law (as defined herein): (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian (as defined herein) of it or for all or substantially all of its property; (D) makes a general assignment for the benefit of its creditors; or (E) admits in writing that it is generally unable to pay its debts as the same become due; or (iv) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Borrower in an involuntary case; (B) appoints a Custodian of the Borrower for all or substantially all of its property; or (C) orders the liquidation of the Borrower, and the order or decree remains unstayed and in effect for sixty (60) days. “Bankruptcy Law” means Title 11, U.S. Code, or any similar Federal or state law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. If an Event of Default occurs and is continuing under the note, the lender, may declare all of note to be due and payable immediately. The lender under the note, shall have all rights available to it at law or in equity. The lender under the note may assess reasonable attorneys’ fees, paralegals’ fees and costs and expenses incurred or anticipated by the lender in collecting or enforcing payment hereof (whether such fees, costs or expenses are incurred in negotiations, all trial and appellate levels, administrative proceedings, bankruptcy proceedings or otherwise), and together with all other sums due by the Company under the note, all without any relief whatsoever from any valuation or appraisement laws, and payment thereof may be enforced and recovered in whole or in part at any time by one or more of the remedies provided to the lender at law, in equity, or under the note. In connection with the lender’s rights under the note upon an Event of Default, the lender need not provide, and the Company waives, any presentment, demand, protest or other notice of any kind, and the lender, may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it in equity or under applicable law. As of December 31, 2021, the Debentures are no longer in effect. On July 2, 2021, the Debentures were exchanged for common stock and warrants (See Notes 9 and 10). 2021 Debentures During January 2021, we entered into two Securities Purchase Agreements, effective January 5, 2021 and January 20, 2021 (the “2021 Purchase Agreements”), with twenty accredited investors (the “2021 Purchasers”). Pursuant to the 2021 Purchase Agreements, we agreed to sell to the 2021 Purchasers a total of (1) $2,799,000 in the aggregate principal amount of 12.5% Original Issue Discount Senior Subordinated Secured Convertible Debentures (the “2021 Debentures”), and (2) 699,750 common stock purchase warrants (the “2021 Warrants”), which represents 100% warrant coverage. On July 21, 2021, we increased the number of warrants to 701,164 from 669,750 due to anti-dilution provisions in the warrants. We received a total of $2,488,000 in gross proceeds from the offerings, after deducting the 12.5% original issue discount, before deducting offering expenses and commissions, including the placement agent’s commission of $241,270 (10% of the gross proceeds less $7,500 paid to its legal counsel) and fees related to the offering of the 2021 Debentures of $93,530. We also agreed to issue to the placement agent, as additional compensation, warrants exercisable in to 139,950 shares of our common stock, exercisable at $5.00342554 per share (the “PA Warrants”). The number of shares issuable under the PA Warrants was reduced on July 2, 2021 to 36,364, and the exercise price was increased to $6.25 (see Note 10). On August 17, 2022 and August 30, 2022, we issued warrants with an exercise price of $2.00 (see Note 7). Consequently, the number of 2021 Warrants associated with the 2021 Debentures were increased from 772,303 (which is the 701,164 discussed above plus the February 2021 warrants totaling 71,139 as discussed below) to 1,146,952, and the exercise price was reduced from $5.00 to $2.00 (see Note 10) due to anti-dilution provisions in the 2021 Warrants. The exercise price of the 2021 Warrants was then again reduced from $2.00 to $0.98 in connection with the issuance of stock to Parrut; however there was no further adjustment to the quantity of warrants due to the maximum limit allowed (see Note 13). The 2021 Warrants are exercisable for three years from the dates of the 2021 Purchase Agreements. subject to certain adjustments. The 2021 Debentures were scheduled to mature in January 2022 on the one-year anniversary, subject to a nine-month extension at our option. The 2021 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 2021 Debentures were convertible into shares of our common stock at any time following the date of issuance at the 2021 Purchasers’ option at a conversion price of $4.00 per share, subject to certain adjustments. The 2021 Debentures were subject to mandatory conversion in the event we closed an equity offering of at least $5,000,000 resulting in the listing of our common stock on a national securities exchange. The 2021 Debentures ranked senior to all of our existing and future indebtedness and that of our subsidiaries, except for approximately $95,000 of outstanding senior indebtedness. In addition, the 2021 Debentures ranked pari-passu with, and amounts owing thereunder would be paid concurrently with, payments owing pursuant to and in connection with the Debentures. We were entitled to prepay the 2021 Debentures at any time at a premium as provided for therein. On July 2, 2021, the 2021 Debentures were exchanged for common stock and warrants (See Notes 9 and 10, respectively) and the 2021 Debentures are no longer in effect. Our obligations under the 2021 Purchase Agreements and the 2021 Debentures were secured by a first priority lien on all of our assets and that of our subsidiaries pursuant to Security Agreements, dated January 5, 2021 and January 20, 2021 (the “2021 Security Agreements”) by and among us, our wholly owned subsidiaries, and the Purchasers, subject to certain existing senior liens. Our obligations under the 2021 Debentures were guaranteed by our subsidiaries. The 2021 Purchase Agreements contained customary representations, warranties and covenants, including, among other things and subject to certain exceptions, covenants that restricted our ability and that of our subsidiaries, without the prior written consent of the 2021 Debenture holders, to incur additional indebtedness, including further advances under a certain preexisting secured loan, and repay outstanding indebtedness, create or permit liens on assets, repurchase stock, pay dividends or enter into transactions with affiliates. The 2021 Debentures contained customary events of default, including, but not limited to, failure to observe covenants under the 2021 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 2021 Debenture would have immediately come due and payable at the election of each Purchaser, and all amounts due under the 2021 Debentures would bear interest at an increased rate. Pursuant to the 2021 Purchase Agreements, the 2021 Purchasers have certain participation rights in our future equity offerings or those of our subsidiaries after the closing, subject to customary exceptions. The 2021 Debentures and the 2021 Warrants also contain certain price protection provisions providing for adjustment of the number of shares of our common stock issuable upon conversion of the 2021 Debentures and/or exercise of the 2021 Warrants and the conversion or exercise price in case of future dilutive offerings (subject to a maximum quantity of warrants upon adjustment). In February 2021, the holder of a $250,000 November 2020 promissory note elected to convert the $250,000 note, plus accrued interest of $2,430, into $283,984 principal amount of 2021 Debentures (including 12.5% Original Issue Discount of $31,554) based on the same terms as those issued in January 2021 (described above), plus a 2021 Warrant exercisable into 70,996 shares of our common stock. On July 21, 2021, we increased the number of warrants to 71,139 from 70,996 due to anti-dilution provisions in the warrants. We have incurred a total of $1,254,779 of debt costs related to the issuance of the 2021 Debentures, including commissions, costs and fees of $334,800. We have also recorded a cost related to the fair value of the placement agent warrants of $919,979 (see Note 10). The costs which have been recorded as debt discounts are being amortized over the life of the notes. Amortization expense was $0 and $575,503 for the years ended December 31, 2022 and 2021, respectively. Unamortized debt costs of $679,276 were charged off against paid in capital upon the exchange of the notes for common stock in July 2021 (see Note 8) and were $0 both at December 31, 2022 and 2021. We have recorded a total of $1,796,651 of debt discount related to the sale of the 2021 Debentures and February 2021 note exchange, including original issue discount of $342,554 and a warrant discount of $1,454,097 at fair value for the warrants issued with the debt (see Note 10). The discount is being amortized over the life of the notes. Amortization expense was $808,985 and $0 for the years ended December 31, 2022 and 2021, respectively. Unamortized debt discount of $987,666 was charged off against paid in capital upon the exchange of the notes for common stock in July 2021 (see Note 9) and was $0 both at December 31, 2022 and 2021. On July 2, 2021, the 2021 Debentures were exchanged for common stock and warrants (See Notes 9 and 10) and the 2021 Debentures are no longer in effect. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS EQUITY | |
NOTE 9 - STOCKHOLDERS' EQUITY | NOTE 9 - STOCKHOLDERS’ EQUITY The Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.0001 per share. As of December 31, 2022 and 2021, the Company had 86,000 shares of Series E preferred stock issued and outstanding. Our Series E preferred stock is the only class of our preferred stock that is outstanding as of December 31, 2022 and December 31, 2021. Series E preferred stock has a stated value of $20 per share, which is convertible at any time after issuance at the option of the holder, subject to a beneficial ownership limitation of 4.99% or if waived, 9.99%, into common stock based on the stated value per share divided by $4.00 per share, subject to adjustment in the event of stock splits, stock dividends or reverse splits. Holders of Series E Preferred Stock are entitled to vote together with holders of the common stock on an as-converted basis, subject to a beneficial ownership limitation of 4.99% or if waived, 9.99%. If at any time while any shares of Series E Preferred Stock remain outstanding and any triggering event contained in the Certificate of Designation for such series occurs, we shall pay, within three days, to each holder $210 per each $1,000 of the stated value of each such holder’s shares of Series E Preferred Stock. Series D Convertible Preferred Stock In January 2021, the Company issued 45,390 shares of its common stock upon conversion of 9,078 shares of its Series D Preferred Stock. Pursuant to an agreement with the holder, 8,755 shares of Series D preferred stock and 133,341 Series D warrants were cancelled in January 2021. In February 2021, the Company issued 220,000 shares of its common stock upon conversion of 44,000 shares of its Series D Preferred Stock. In March 2021, the Company issued 106,875 shares of its common stock upon conversion of 21,375 shares of its Series D Preferred Stock. In April 2021, the Company issued 40,000 shares of its common stock upon conversion of 8,000 shares of its Series D Preferred Stock. In April 2021, the Company issued 50,000 shares of its common stock upon conversion of 10,000 shares of its Series D Preferred Stock. In April 2021, the Company issued 101,560 shares of its common stock upon conversion of 20,312 shares of its Series D Preferred Stock. In May 2021, the Company issued 150,000 shares of its common stock upon conversion of 30,000 shares of its Series D Preferred Stock. On July 2, 2021 the Company issued 1,293,430 shares of its common stock upon the conversion of 376,275 shares of its Series D preferred stock. There is no Series D Convertible Preferred Stock outstanding as of December 31, 2022 and 2021. Series E Convertible Preferred Stock On July 2, 2021, upon agreement with the Series E preferred stockholders, the Company issued 3,229,225 shares of its common stock upon the conversion of 645,845 shares of its Series E preferred stock. Series F Convertible Preferred Stock In February 2021, the Company issued 81,195 shares of its common stock upon conversion of 16,239 shares of its Series F Preferred Stock. In March 2021, the Company issued 6,479 shares of its common stock upon conversion of 1,296 shares of its Series F Preferred Stock. On July 2, 2021 the Company issued 234,237 shares of its common stock upon the conversion of 46,847 shares of its Series F preferred stock. There is no Series F Convertible Preferred Stock outstanding as of December 31, 2022 and 2021. 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 both December 31, 2022 and 2021, the remaining balance of $308,798 is included in accrued expense on the consolidated balance sheets. Common Stock The Company is authorized to issue 100,000,000 shares of common stock, par value $0.0001 per share. As of December 31, 2022, and 2021 the Company had 16,277,764 and 14,566,420 shares of common stock outstanding, respectively. Reverse Stock Split On June 18, 2021 the Company filed an Amendment to the Articles of Incorporation to effectuate a reverse split of the Company’s issued and outstanding common stock at an exchange ratio of 1-for-2.5. The reverse stock split was effective as of June 18, 2021. Simultaneously with the reverse stock split, the Company reduced the authorized common shares from 250,000,000 to 100,000,000. All share and per share data in the accompanying consolidated financial statements and footnotes has been retroactively adjusted to reflect the effects of the reverse stock split. Shares Issued For Cash On July 2, 2021 the Company issued 2,400,000 units at a price of $5.00 per unit consisting of 2,400,000 shares of common stock and 2,400,000 common stock warrants with an exercise price of $5.50 in an underwritten public offering. On July 8, 2021 the Company issued 360,000 units at a price of $5.00 per share consisting of 360,000 shares of common stock and 360,000 common stock warrants with an exercise price of $5.50 upon exercise of the underwriter’s over-allotment option as part of the underwritten public offering. The Company received gross proceeds of $13,800,000 from the underwritten public offering discussed above before deducting underwriting discounts and offering expenses. Shares issued upon exchange of common stock warrants On July 2, 2021 upon agreement with the Series D warrant holders, the Company issued 522,108 shares of common stock upon the exchange of 522,108 Series D warrants in conjunction with the July 2, 2021 offering. On January 6, 2022, upon agreement with a warrant holder, the Company issued 112,726 shares of common stock upon the exchange of 112,726 warrants. The shares were valued at approximately $473,000 based on the stock price, while the exchanged warrants had a Black-Scholes value of approximately $321,000, resulting in a loss on exchange and credit to equity of $152,244. Shares granted for services In March 2021, we issued to Mr. Sohn 1,625 shares of common stock as payment for $16,425 of compensation which had been accrued at December 31, 2020. In April 2021, we issued 20,000 shares to a vendor for services valued at $152,500 Restricted Stock Units On September 18, 2020 the Company awarded to Evan Sohn, our Executive Chairman and CEO, 221,600 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 $595,343 during each of the years ended December 31, 2022 and 2021. The shares began vesting on June 30, 2021, the quarter the Uplisting occurred. In August 2021, we granted 25,000 RSUs to a vendor for services valued at $101,250. The cost was recognized over the two month vesting period and included in stock-based compensation. Between November 17, 2021 and December 7, 2021, the Company granted 133,790 RSUs to vendors for services valuated at $393,739. 126,290 of which have been issued as of December 31, 2021. The cost is recognized between a one and twelve month period. We recognized compensation expense of $129,357 during the year ended December 31, 2021. During the three months ended March 31, 2022, 76,175 shares of common stock were issued to the Company’s CEO in connection with his employment agreement. On February 2, 2022, 7,500 RSUs vested and 7,500 were issued to a vendor for services related to a 2021 agreement. The Company expensed the remaining $27,000 in 2022 as the service period expired. During the year ended December 31, 2022, 95,825 RSUs were granted to vendors for services. 88,325 RSUs vested immediately and were issued as common stock to the vendor, and the remaining 7,500 were vested and issuable as of December 31, 2022. The 95,825 RSUs were valued at $193,140 and were expensed as of December 31, 2022 based on the service period in the contract. Total expense for RSUs for the years ended December 31, 2022 and 2021 was $1,052,865 and $825,951, respectively. Restricted stock grant activity for the two years ended December 31, 2022 is as follows: Stock Awards Outstanding at December 31, 2020 221,600 Granted 158,790 Vested (151,290 ) Vested and issuable (83,100 ) Forfeited or cancelled - Outstanding at December 31, 2021 146,000 Granted 95,825 Vested and issued (88,325 ) Vested and issuable (7,500 ) Forfeited or cancelled - Outstanding at December 31, 2022 146,000 Shares issued upon exchange of preferred stock In January 2021, the Company issued 45,390 shares of its common stock upon conversion of 9,078 shares of its Series D Preferred Stock. In February 2021, the Company issued 220,000 shares of its common stock upon conversion of 44,000 shares of its Series D Preferred Stock. In February 2021, the Company issued 81,195 shares of its common stock upon conversion of 16,239 shares of Series F Preferred Stock. In March 2021, the Company issued 106,876 shares of its common stock upon conversion of 21,375 shares of its Series D Preferred Stock. In March 2021, the Company issued 6,479 shares of its common stock upon conversion of 1,296 shares of Series F Preferred Stock. In April 2021, the Company issued 40,000 shares of its common stock upon conversion of 8,000 shares of its Series D Preferred Stock. In April 2021, the Company issued 50,000 shares of its common stock upon conversion of 10,000 shares of its Series D Preferred Stock. In April 2021, the Company issued 101,560 shares of its common stock upon conversion of 20,312 shares of its Series D Preferred Stock. In May 2021, the Company issued 150,000 shares of its common stock upon conversion of 30,000 shares of its Series D Preferred Stock. On July 2, 2021 the Company issued 1,293,430 shares of common stock upon the conversion of 376,275 shares of its Series D preferred stock. On July 2, 2021 the Company issued 3,229,225 shares of common stock upon the conversion of 645,845 shares of its Series E preferred stock. On July 2, 2021 the Company issued 234,237 shares of common stock upon the conversion of 46,847 shares of its Series F preferred stock. Shares issued upon exchange of common stock warrants On July 2, 2021 upon agreement with the Series D warrant holders, the Company issued 522,108 shares of common stock upon the exchange of 522,108 Series D warrants in conjunction with the July 2, 2021 offering. Shares issued upon conversion of convertible notes During the year ended December 31, 2021, the Company issued 89,172 shares of its common stock upon conversion of $354,387 of convertible notes payable and related accrued interest of $2,302 (See Note 8) On July 2, 2021 the Company issued 1,489,444 shares of common stock upon the conversion of $5,588,359 of convertible debentures outstanding, $115,593 of accrued interest through July 2, 2021 and a penalty amount of $253,767 on the convertible debentures issued in May/September 2020. The unamortized discount of $1,666,314 was charged to additional paid-in capital resulting in a net credit to equity of $4,291,102. Shares issued for Business Acquisitions In 2021, we issued a total of 224,163 issuable shares of common stock pursuant to the Scouted acquisition. In 2021, we issued 271,153 shares of common stock pursuant to the Upsider acquisition. In May 2021, we issued a total of 155,327 shares of common stock pursuant to the OneWire acquisition. In July 2021, we issued a total of 257,545 shares of common stock pursuant to the Parrut acquisition. In August 2021, we issued a total of 508,711 shares of common stock pursuant to the Novo Group acquisition. In September 2021, we issued a total of 321,390 shares of common stock pursuant to the earn-out provision of the Upsider acquisition. All transactions are more fully described in Note 13. In October 2022, we confirmed Parrut earned the maximum earnout of $1,350,000 and we issued 1,374,678 common shares to Parrut at a price of $0.98 per share, the 20-day volume weighted average price prior to completion of the earnout period. The earnout consideration was classified as equity at the acquisition date and therefore the issuance of the common stock resulted in an equity reclassification on the issuance date, and had no other effect on the consolidated financial statements. On October 14, 2022, we issued 51,940 shares valued at $409,036 to the original shareholders of Upsider held in escrow pursuant to the Asset Purchase Agreement dated March 25, 2021. |
STOCK OPTIONS AND WARRANTS
STOCK OPTIONS AND WARRANTS | 12 Months Ended |
Dec. 31, 2022 | |
STOCK OPTIONS AND WARRANTS | |
NOTE 10 - STOCK OPTIONS AND WARRANTS | NOTE 10 - STOCK OPTIONS AND WARRANTS Stock Option Plans 2014 Equity Incentive Plan The 2014 Equity Compensation Plan (“2014 Plan”) is administered by the Board and provides for the issuance of up to 2,554 shares of common stock. Under our 2014 Plan, we may grant stock options, restricted stock, stock appreciation rights, restricted stock units, performance units, performance shares and other stock-based awards. As of December 31, 2020 no awards are outstanding under the 2014 Plan. The Company does not anticipate granting any awards under the 2014 plan in the future. The 2014 plan was cancelled in 2021. 2017 Equity Incentive Plan In October 2017, our Board and shareholders authorized the 2017 Equity Incentive Plan (the “2017 Plan”), covering 190,000 shares of common stock. In December 2019, the number of shares authorized under the 2017 Plan was increased to 439,584 shares. The purpose of the 2017 Plan is to advance the interests of the Company and our related corporations by enhancing the ability of the Company to attract and retain qualified employees, consultants, officers, and directors, by creating incentives and rewards for their contributions to the success of the Company and its related corporations. The 2017 Plan is administered by our Board or by the Compensation Committee. The following awards may be granted under the 2017 Plan: ● incentive stock options (“ISOs”) ● non-qualified options (“NSOs”) ● awards of our restricted common stock ● stock appreciation rights (“SARs”) ● restricted stock units (“RSUs”) Any option granted under the 2017 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant and not less than $4.00 per share, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The exercise price of any NSO granted under the 2017 Plan is determined by the Board at the time of grant, but must be at least equal to fair market value on the date of grant. The term of each plan option and the manner in which it may be exercised is determined by the Board or the Compensation Committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. The terms of any other type of award under the 2017 Plan is determined by the Board at the time of grant. Subject to the limitation on the aggregate number of shares issuable under the plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person. In May 2020, the number of shares authorized for issuance under the Company’s 2017 Equity Incentive Plan was increased to 685,600 shares. In June 2020, the number of shares authorized for issuance under the Company’s 2017 Equity Incentive Plan was further increased to 1,108,000 shares. In December 2020, the number of shares authorized for issuance under the Company’s 2017 Equity Incentive Plan was further increased to 1,308,000 shares. 2021 Equity Incentive Plan In July 2021, our Board and shareholders authorized the 2021 Equity Incentive Plan (the “2021 Plan”), covering 2,700,000 shares of common stock. In January 2022, the number of shares authorized under the 2021 Plan was automatically increased to 3,427,946 shares pursuant to an escalation provision in the plan. The purpose of the 2021 Plan is to advance the interests of the Company and our related corporations by enhancing the ability of the Company to attract and retain qualified employees, consultants, officers, and directors, by creating incentives and rewards for their contributions to the success of the Company and its related corporations. The 2021 Plan is administered by our Board or by the Compensation Committee. The following awards may be granted under the 2021 Plan: ● incentive stock options (“ISOs”) ● non-qualified options (“NSOs”) ● awards of our restricted common stock ● stock appreciation rights (“SARs”) ● restricted stock units (“RSUs”) Any option granted under the 2021 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant and not less than $4.00 per share, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The exercise price of any NSO granted under the 2021 Plan is determined by the Board at the time of grant, but must be at least equal to fair market value on the date of grant. The term of each plan option and the manner in which it may be exercised is determined by the Board or the Compensation Committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. The terms of any other type of award under the 2021 Plan is determined by the Board at the time of grant. Subject to the limitation on the aggregate number of shares issuable under the plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person. Stock Options Granted On February 10, 2021 the Company granted to a director 20,000 options to purchase common stock, exercisable at $6.75 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over three years with the first portion vesting on May 10, 2021. The options have been valued at $134,986 using the Black Sholes model and compensation expense will be recorded over the vesting period. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 354%, (3) risk-free interest rate of 0.8%, (4) expected term of 5 years. On March 9, 2021 the Company granted to employees an aggregate of 159,000 options to purchase common stock, exercisable at $8.625 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over one year, with the first portion vesting on September 9, 2021. The options have been valued at $1,371,231 using the Black Sholes model and compensation expense will be recorded over the vesting period. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 346%, (3) risk-free interest rate of 0.8%, (4) expected term of 5 years. On March 24, 2021 the Company granted to a director 20,000 options to purchase common stock, exercisable at $8.125 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over three years, with the first portion vesting on September 24, 2021. The options have been valued at $162,491 using the Black Sholes model and compensation expense will be recorded over the vesting period. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 359%, (3) risk-free interest rate of 0.83%, (4) expected term of 5 years. On May 5, 2021 the Company granted to employees an aggregate of 11,800 options to purchase common stock, exercisable at $8.125 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over one year, with the first portion vesting on August 8, 2021. The options have been valued at $95,925 using the Black Sholes model and compensation expense will be recorded over the vesting period. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 350%, (3) risk-free interest rate of 0.8%, (4) expected term of 5 years. On May 5, 2021 the Company granted to employees an aggregate of 12,000 options to purchase common stock, exercisable at $8.125 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over two years, with the first portion vesting on August 8, 2021. The options have been valued at $97,551 using the Black Sholes model and compensation expense will be recorded over the vesting period. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 350%, (3) risk-free interest rate of 0.8%, (4) expected term of 5 years. On May 5, 2021 the Company granted to consultants an aggregate of 16,600 options to purchase common stock, exercisable at $8.125 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over one year, with the first portion vesting on August 8, 2021. The options have been valued at $134,946 using the Black Sholes model and compensation expense will be recorded over the vesting period. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 350%, (3) risk-free interest rate of 0.8%, (4) expected term of 5 years. On May 5, 2021 the Company granted to consultants an aggregate of 8,800 options to purchase common stock, exercisable at $8.125 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options vested immediately upon issuance. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 350%, (3) risk-free interest rate of 0.8%, (4) expected term of 5 years. On June 30, 2021 the Company granted to an employee 29,000 options to purchase common stock, exercisable at $4.50 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of one year. The options vested immediately upon issuance. The assumptions used in the Black Scholes model are as follows: (1) dividend yield of 0%; (2) expected volatility of 135%, (3) risk-free interest rate of 0.07%, (4) expected term of 1 year. On July 8, 2021 the Company granted to employees an aggregate of 110,000 options to purchase common stock, exercisable at $4.96 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over two years, with the first portion vesting on October 8, 2021. On August 26, 2021, the Company granted to an employee 25,050 options to purchase common stock, exercisable at $3.96 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over four years, with a one year cliff, with the first portion vesting on August 26, 2022. On August 31, 2021, the Company granted to a consultant 35,000 options to purchase common stock, exercisable at $4.05 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options vested 50% after 60 days and 50% after 180 days, with the first portion having vested on October 31, 2021. On August 31, 2021, the Company granted to an employee 10,000 options to purchase common stock, exercisable at $4.05 per share, under the terms of the 2017 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over two years, with the first portion vesting on November 30, 2021. On August 31, 2021, the Company granted to an employee 25,000 options to purchase common stock, exercisable at $4.05 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over four years, with a one year cliff, with the first portion vesting on August 31, 2022. On September 1, 2021, the Company granted to a consultant 300,000 options to purchase common stock, exercisable at $4.65 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options vested 25% at grant date on September 1, 2021 and 75% on March 1, 2023. On September 6, 2021, the Company granted to an employee 100,000 options to purchase common stock, exercisable at $4.65 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options were vested at grant date on September 6, 2022. On September 10, 2021, the Company granted to an employee 7,500 options to purchase common stock, exercisable at $3.96 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over two years, with the first portion vesting on December10, 2021. On September 10, 2021, the Company granted to employees 349,000 options to purchase common stock, exercisable at $3.96 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over two years, with a one year cliff, with the first portion vesting on September 10, 2022. On September 10, 2021, the Company granted to employees 274,500 options to purchase common stock, exercisable at $3.96 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on December 10, 2021. On September 13, 2021, the Company granted to employees 200,000 options to purchase common stock, exercisable at $4.59 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over two years, with a one year cliff, with the first portion vesting on September 10, 2022. On September 13, 2021, the Company granted to an employee 50,000 options to purchase common stock, exercisable at $3.97 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on December 13, 2021. On October 3, 2021, the Company granted to employees 90,000 options to purchase common stock, exercisable at $3.45 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over four years, with a one year cliff, with the first portion vesting on October 3, 2022. On October 3, 2021, the Company granted to employees 43,900 options to purchase common stock, exercisable at $3.45 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on January 3, 2022. On October 3, 2021, the Company granted to an employee 100,000 options to purchase common stock, exercisable at $3.45 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest monthly over two years, with an eighth of the options vesting immediately. On October 28, 2021, the Company granted to employees 72,500 options to purchase common stock, exercisable at $2.96 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over four years, with a one year cliff, with the first portion vesting on October 28, 2022. On November 23, 2021, the Company granted to an employee 7,500 options to purchase common stock, exercisable at $3.31 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on February 23, 2022. On December 3, 2021, the Company granted to employees 242,850 options to purchase common stock, exercisable at $2.86 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over four years, with a one year cliff, with the first portion vesting on October 28, 2022. On December 7, 2021, the Company granted to a consultant 35,000 options to purchase common stock, exercisable at $3.60 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options vested 50% at January 2, 2022 and 50% on February 2, 2022. On December 10, 2021, the Company granted to an employee 7,500 options to purchase common stock, exercisable at $3.96 per share, under the terms of the 2021 Equity Incentive Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on March 10, 2022. On January 6, 2022, the Company granted to a consultant a total of 20,000 options to purchase common stock, exercisable at $2.64 per share, under the terms of the 2021 Equity Incentive Plan (the “2021 Plan”). The options have a term of five years. The options vested 50% on March 3, 2022 and 50% on April 3, 2022. On January 10, 2022, the Company granted to a director a total of 15,000 options to purchase common stock, exercisable at $2.40 per share, under the terms of the 2021 Plan. The options have a term of five years. The options vest quarterly over a four-year period. On January 19, 2022, the Company granted to a director a total of 15,000 options to purchase common stock, exercisable at $2.40 per share, under the terms of the 2021 Plan. The options have a term of five years. The options vest quarterly over a four-year period. On January 20, 2022, the Company granted to directors a total of 60,000 options to purchase common stock, exercisable at $2.40 per share, under the terms of the 2021 Plan. The options have a term of five years. The options vest quarterly over a four-year period. On March 11, 2022, the Company granted to employees a total of 52,500 options to purchase common stock, exercisable between $2.87 and $2.95 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on June 11, 2022. On April 1, 2022, the Company granted an employee a total of 25,000 options to purchase common stock, exercisable at $2.47 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on July 1, 2022. On April 4, 2022, the Company granted to employees a total of 25,000 options to purchase common stock, exercisable at $2.12 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on July 4, 2022. On April 5, 2022, the Company granted an employee a total of 37,000 options to purchase common stock, exercisable at $2.12 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on July 1, 2022. On April 5, 2022, the Company granted to employees a total of 57,500 options to purchase common stock, exercisable at $2.12 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on July 5, 2022. On April 7, 2022, the Company granted to employees a total of 120,100 options to purchase common stock, exercisable at $2.03 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest quarterly over four years, with the first portion vesting on July 7, 2022. On April 28, 2022, the Company granted a consultant a total of 35,000 options to purchase common stock, exercisable at $1.60 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest monthly over two months, with the first portion vesting on May 28, 2022. On May 17, 2022, the Company granted a consultant a total of 5,000 options to purchase common stock, exercisable at $1.07 per share, under the terms of the 2021 Plan. The options have a term of five years. The options vested immediately. On May 17, 2022, the Company granted to employees a total of 22,500 options to purchase common stock, exercisable at $1.07 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest quarterly over four years with a one-year cliff, with the first portion vesting on May 17, 2023. On June 2, 2022, the Company granted a consultant a total of 25,461 options to purchase common stock, exercisable at $1.00 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest monthly over one year, with the first portion vesting on July 6, 2022. On June 27, 2022, the Company granted to employees a total of 37,500 options to purchase common stock, exercisable at $1.00 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest quarterly over four years with a one-year cliff, with the first portion vesting on June 27, 2023. On August 30, 2022, the Company granted to directors a total of 270,000 options to purchase common stock, exercisable at $1.31 per share, under the terms of the 2021 Plan. The options have a term of five years. The options vest immediately. On August 30, 2022, the Company granted to employees a total of 550,000 options to purchase common stock, exercisable at $1.31 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest months over two years. On September 22, 2022, the Company granted to employees a total of 80,000 options to purchase common stock, exercisable at $1.10 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest months over two years. On December 6, 2022, the Company granted to employees a total of 190,000 options to purchase common stock, exercisable at $0.47 per share, under the terms of the 2017 and 2021 Plans. The options have a term of five years. The options will vest quarterly over four years. On December 15, 2022, the Company granted to a vendor a total of 25,000 options to purchase common stock, exercisable at $0.37 per share, under the terms of the 2021 Plan. The options have a term of five years. The options will vest monthly over one year. The fair values of stock options granted during 2022 and 2021 were estimated using Black-Sholes option-pricing model with the following assumptions: 2022 2021 Risk-free interest rates 1.15%-4.12% 0.07%-1.33% Expected life (in years) 2.50 – 4.00 1.00 – 5.00 Expected volatility 132%-195% 136%-347% Dividend yield 0.00% 0.00% The Company recorded stock-based compensation expense on stock options of $3,041,815 and $4,257,434 in its consolidated statements of operations for the years ended December 31, 2022 and 2021, respectively, and such amounts were included as a component of general and administrative expense. A summary of the status of the Company’s stock options as of December 31, 2022 and 2021, and changes during the period are presented below: Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Life (In Years) Aggregate Intrinsic Value Outstanding at December 31, 2020 676,304 3.36 3.55 $ 603,819 Granted 2,364,500 4.44 Exercised - - Expired or cancelled (369,627 ) 4.83 Outstanding at December 31, 2021 2,671,177 4.32 4.16 $ 53,670 Granted 1,667,561 1.44 Exercised - - Expired or cancelled (633,617 ) 3.45 Outstanding at December 31, 2022 3,705,121 $ 3.05 2.80 $ - Exercisable at December 31, 2022 2,413,710 $ 3.59 2.71 $ - As of December 31, 2022, there was approximately $2,527,736 of total unrecognized compensation cost related to non-vested stock options which vest over time and is expected to be recognized over a period of four years, as follows: 2023, $1,366,691; 2024, $715,711; 2025, $402,210; and 2026, $43,124. The intrinsic value of options outstanding is $0 at December 31, 2022 and the intrinsic value of options exercisable is $0 at December 31, 2022. Warrants 2022 Warrant Grants Warrant exchange for Common Stock On January 6, 2022, the Company issued 112,726 shares of common stock upon the exchange of 112,726 warrants (See Note 9). Warrants issued with Debt Financing During August 2022, the Company granted 1,510,417 warrants as a part of various debt financings (See Note 7). These warrants had an exercise price per share of $2.00 and expire in five years. The exercise price of the warrants was then reduced from $2.00 to $0.98 in connection with the issuance of stock to Parrut on October 14, 2022 (see Note 13). The aggregate relative fair value of the warrants, which was allocated against the debt proceeds totaled $1,032,842 at the date of issuance based on the Black Scholes Merton pricing model using the following estimates: exercise price of $2.00, 3.04-3.27% risk free rate, 175.47% volatility and expected life of the warrants of 5 years. The relative fair value was reflected in additional paid-in capital and as a debt discount to be amortized over the term of the loans. In connection with the October 19, 2022 Loan Agreement, as discussed in Note 7, the Company will issue 706,551 warrants to purchase common stock of the Company (the “Warrants”) to the Lender, with 622,803 Warrants issued and exercisable upon the Closing Date and the additional 83,708 Warrants becoming exercisable upon funding of the second Advance. The Warrants are exercisable for ten years from the Closing Date at an exercise price of $2.00 per share, subject to certain adjustments. Upon the earlier of the Maturity Date or a sale of the Company or other change in control, the Lender has the right to cause the Company to repurchase the Warrants (“Puttable Warrant”) for up to $703,125 ($600,000 if only the first Advance has been made and $703,125 if both Advances have been made). The Company is also obligated to pay the Lender a cash fee equal to 1.25% of the aggregate principal amount of the Advances that is outstanding on each anniversary of the Closing Date if (i) the average closing price of the Company’s common stock for the thirty (30) day period prior to such anniversary date is less than $2.00 or (ii) the closing price of the Company’s common stock for the date immediately prior to such anniversary date is less than $2.00. The Company recorded the puttable warrant at its fair value, which is the cash surrender value the holder can put the warrant at. As such, on the issuance date, the Company recorded a $600,000 warrant liability for puttable warrants, offset by a debt discount to be amortized over the life of the loan. Upon the advance of the second advance tranche to the Company, it will record an additional debt discount and warrant liability in the amount of $103,125, the cash surrender value of the second tranche of warrants. Additionally, the Company accrues anniversary fees each year on the one-year anniversary of the issuance date, of 1.25% of the outstanding balance depending on the stock price. The accrued anniversary fees are payable on the date the buyout fee becomes due and payable. The Company will record an expense for the 1.25% cash fee ratably over the 12 months, with an offsetting credit to warrant liability. Warrant repricing As a result of the sale in August 2022 of notes and warrants as described above and in Note 7, the number and exercise price of the 2020 Warrants and the 2021 Warrants in connection with the 2020 and 2021 (see Note 9), debentures were adjusted due to anti-dilution provisions in such warrants. The exercise price was reduced to $2.00 from $5.00 and the number of warrants was increased from 1,512,090 to 2,447,045. We have recorded a deemed dividend for the change in value due to the anti-dilution adjustments and an increase to the carrying value of the warrants of $658,266 as a result of the trigger of the anti-dilution provisions. On October 19, 2022, as a result of the Parrut earnout shares issued as described in Note 9, we reduced the exercise price of the 2020 and 2021 Debenture Note holder warrants from $2.00 to $0.98 due to anti-dilution provisions in these warrants. We also increased the number of warrants issued with the August 17, 2022 and August 30, 2022 notes (See Note 7) from 1,510,417 to 3,020,834 and reduced the exercise price from $2.00 to $0.98 due to anti-dilution provisions in these warrants. We have recorded a deemed dividend for the change in value due to the anti-dilution adjustments and an increase to the carrying value of the warrants of $1,262,947 as a result of the trigger of the anti-dilution provisions. Warrants for services On December 8, 2022, the Company issued 30,000 five-year term warrants to a consultant with an exercise price of $1.00. 2021 Warrant Grants Placement Agent Warrants On January 5, 2021 and January 20, 2021, the Company issued 28,125 and 111,825 three year term common stock warrants respectively for a total of 139,950 warrants with an exercise price of $5.00. On July 2, 2021, the 139,950 warrants were reduced to 36,364 with an exercise price of $6.25. See "Convertible Debenture Warrants and Placement Agent Warrants” below. Note Holder Warrants On January 5, 2021, January 20, 2021 and February 3, 2021, the Company issued 140,625, 559,125, and 70,996 three year term common stock warrants respectively for a total of 770,746 warrants with an exercise price of $5.00. On July 2, 2021, the 770,746 warrants were increased to 772,303 with an exercise price of $5.00. See "Convertible Debenture Warrants and Placement Agent Warrants” below. Pre-Funded Warrants On July 2, 2021 the Company issued a pre-funded three year term warrant to purchase 587,945 shares of common stock to one previous Series D holder. The warrants have an exercise price of $0.01. The Company determined the pre-funded warrant qualified for equity accounting and is included in stockholders’ equity (deficit) as common stock to be issued at December 31, 2021. Warrants for underwritten public offering Effective July 2, 2021, we closed an upsized underwritten public offering of 2,400,000 units at a price to the public of $5.00 per unit, for gross proceeds of $12,000,000 before deducting underwriting discounts and offering expenses. Each unit consists of one share of common stock and one five year warrant to purchase one share of common stock at an exercise price of $5.50 per share. The common stock and warrants were immediately separable from the units and were issued separately. Underwriter Warrants Underwriters purchased 360,000 five year warrants with a $5.50 exercise price at a price of $0.01 per share and closed the sale of an additional 360,000 shares of common stock at a price of $4.99 per share less underwriting discounts and commissions, pursuant to the exercise of the underwriter's over-allotment option in connection with the underwritten public offering that closed on July 2, 2021. Representative Warrants On July 2, 2021 the Company issued 240,000 five year Representative warrants with an exercise price of $6.25 in conjunction with the underwritten public offering. Warrants upon conversion of Convertible Debentures On July 2, 2021, the Company issued 1,489,596 common stock warrants with an exercise price of $5.50 in conjunction with the conversion of all $5,588,359 of convertible debentures outstanding, $115,593 of accrued interest through July 2, 2021 and a penalty amount of $253,767 on the convertible debentures issued in May/September 2020 (as discussed previously in Note 9 under Common Stock). Warrants for Service On April 1, 2021, the Company issued 20,000 three year term warrants to a consultant with an exercise price of $5.00. Warrants Recorded as Derivative Liabilities Series D Preferred Stock Warrants As discussed below, the Company issued an aggregate 889,376 warrants in 2020 in connection with the sale of Series D preferred shares and convertible debentures, including placement agent fees. The Company identified embedded features in the warrants issued with Series D Preferred Stock in 2019 and 2020 wh |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
NOTE 11 - COMMITMENTS AND CONTINGENCIES | NOTE 11 - COMMITMENTS AND CONTINGENCIES With the exception of the below, the Company is not a party to any legal proceedings or claims at December 31, 2022. From time-to-time, we may be a party to, or otherwise involved in, legal proceedings arising in the normal course of business. The nature of our business ordinarily results in a certain amount of pending as well as threatened claims, litigation, investigations, regulatory and legal and administrative cases, matters and proceedings, all of which are considered incidental to the normal conduct of business. When we determine we determine that we have meritorious defenses to the claims asserted, we vigorously defend ourselves. We consider settlement of cases when, in management’s judgment, it is in the best interests of both the Company and its shareholders to do so. Recruiter.com Group, Inc. v. BKR Strategy Group. We are currently pursuing two related collections matters against BKR Strategy Group. Since 2013, BKR Strategy Group has provided talent acquisition strategy and services to top companies. Starting in the third quarter of 2021, BKR Strategy Group subcontracted Recruiter.com to perform On Demand recruiter services on behalf of BKR Strategy Group’s clients. Although payments for services rendered were initially received in a timely fashion, BKR Strategy Group’s balance grew throughout the third and fourth quarters of 2021. This led to BKR Strategy Group executing a Promissory Note with a payment schedule for $500,000 on November 30, 2021 with a personal guarantee from its business principal as part of the note. After failing to meet the payment schedule and after repeated attempts to collect the balance due, we retained the law firm of Berkovitch & Bouskila, PLLC and filed two lawsuits against BKR Strategy Group on February 18, 2022, the first, to collect on unpaid invoices and the second, to enforce the promissory note, for a total sum of $1,400,000. On March 24, 2022, BKR Strategy Group made a counterclaim against us for $500,000 on the grounds of alleged overbilling. Management denies the basis for the counterclaim and expects to vigorously defend itself from this counterclaim. Outside counsel for the company has advised that at this stage in the proceedings, it cannot offer an opinion as to the probable outcome. As it is not possible to estimate if a loss will be incurred, there has been no accrual. On June 21, 2022, the Supreme Court of the State of New York, New York County ruled in favor of the Company that BKR Strategy Group owes the Company $500,000, plus interest at 12% since November 22, 2021, through the entry of judgement in the lawsuit related to the enforcement on the Promissory Note executed by BKR Strategy Group. Proceedings in the other lawsuit remain ongoing. Investor Relations Claims related to investor relations arose during the third quarter of 2021 for which we had accrued $250,000. In October 2021, the Company made a total investor relations payment of $253,505 with two shareholders regarding claims that they were owed securities pursuant to existing agreements. The agreement was reached prior to any lawsuits being filed with a court. Service Agreement |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
NOTE 12 - RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS 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 $0 and $13,500 during the years ended December 31, 2022 and 2021, respectively. The term of the consulting agreement was completed in March 2021. In July 2021 we completed payments for all accrued compensation and future payments owed under the consulting agreement. No further payments will be owed under this consulting agreement. Under a technology services agreement entered into on January 17, 2020, we use a related party firm of the Company, Recruiter.com Mauritius, for software development and maintenance related to our website and Platform underlying our operations. This was an oral arrangement prior to January 17, 2020. The initial term of the Services Agreement is five years, whereupon it shall automatically renew for additional successive 12-month terms until terminated by either party by submitting a 90-day prior written notice of non-renewal. The firm was formed outside of the United States solely for the purpose of performing services for the Company and has no other clients. The consultant to the Company, who was our Chief Technology Officer until July 15, 2021, and thereafter our Chief Web Officer, is an employee of Recruiter.com Mauritius and exerts control over Recruiter.com Mauritius. Pursuant to the Services Agreement, the Company has agreed to pay Recruiter.com Mauritius fees in the amount equal to the actualized documented costs incurred by Recruiter.com Mauritius in rendering the services pursuant to the Services Agreement. Expenses to this firm were $36,181 and $162,102 for the years ended December 31, 2022 and 2021, respectively, and are included in product development expense in our consolidated statements of operations. We are a party to that certain license agreement with Genesys. An executive officer of Genesys is a significant equity holder and a member of our Board of directors. 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 (now called Opptly) 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 along with other fees that may be incurred. The Company has also agreed to pay Genesys monthly sales subscription fees beginning September 5, 2019 when Genesys assists with closing a recruiting program. During the years ended December 31, 2022 and 2021 we charged to operating expenses $19,825 and $117,389, respectively, for services provided by Genesys. As of December 31, 2022 and 2021, the Company owes Genesys $0 and $22,810, respectively, in payables. The license agreement expired on March 31, 2022 and was not renewed. In past periods Icon Information Consultants used to perform many 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 $0 for the year December 31, 2022, and $106,842 for the year December 31, 2021, respectively. EOR costs related to customers processed by Icon Canada was $0 and $99,904 for the years ended December 31, 2022 and 2021, respectively. Currently, there is no intercompany agreement for those charges, and they are calculated on a best estimate basis. As of December 31, 2022 and December 31, 2021, the Company owes Icon $0 and $163,672, respectively, in payables and Icon owes $0 and $49,033, respectively, to the Company. During the years ended December 31, 2022 and 2021, we charged to cost of revenue $0 and $498,848, respectively, related to services provided by Icon as our Employer of Record. During the years ended December 31, 2022 and 2021, we charged to operating expenses $0 and $132,253, respectively, related to management fees, rent and other administrative expense. During the years ended December 31, 2022 and 2021, we charged to interest expense $0 and $30,466, related to finance charges on accounts payable owed to Icon. In July 2021, we paid Icon $1,075,645 to satisfy all outstanding payables for all services including interest charges. In July 2021, we also ended all contractual relationships with Icon for back office and accounting services, as well as office space. As of December 31, 2022, Icon no longer provides EOR services. In January 2022, a payment of $118,534 was made by the Company to Icon to satisfy the remaining amount owed, net of the amount owed by Icon to the Company. We also recorded placement revenue from Icon of $0 and $970 during the years ended December 31, 2022 and 2021, respectively, of which $0 and $22,951, respectively, is included in accounts receivable at December 31, 2022 and 2021. We used a related party firm of the Company to pay certain recruiting services provided by employees of the firm during 2021. During 2021, we charged to cost of revenue $17,745 related to services provided. There is no balance owed as of December 31, 2022 and 2021. An employer of a director utilized the Company for services in fiscal 2022 in the amount of $6,000 |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS COMBINATIONS | |
NOTE 13 - BUSINESS COMBINATIONS | NOTE 13 - BUSINESS COMBINATIONS Business Combinations Scouted Asset Purchase Effective January 31, 2021, the Company, through a wholly owned subsidiary, acquired all of the assets of RLJ Talent Consulting, Inc., dba Scouted, a Delaware Corporation (“Scouted”) (the “Scouted Asset Purchase”). As consideration for the Scouted Asset Purchase, Scouted shareholders received a total of 224,163 shares of our restricted Common Stock (valued at $1,625,183 based on a $7.25 per share acquisition date price), of which 33,151 shares of stock were held in reserve and recorded as contingent consideration, a current liability in the accompanying financial statements, and an additional amount of $180,000 in cash consideration for a total purchase price of approximately $1.8 million. The 33,151 shares held in reserve were issued on December 13, 2021. The Scouted Asset Purchase was accounted for as a business acquisition. The assets acquired in the Scouted Asset Purchase consist primarily of sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets (the “Scouted Assets”). The Company has completed the purchase price allocation of the $1.8 million for the acquired intangible assets during the second quarter of 2021. The Company is utilizing the Scouted Assets to expand its video hiring solutions and curated talent solutions, through its Recruiting Solutions subsidiary. The acquisition is accounted for by the Company in accordance with the acquisition method of accounting pursuant to ASC 805 “Business Combinations” and pushdown accounting is applied to record the fair value of the assets acquired by the Company. Under this method, the purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired will be allocated to goodwill. The following is a summary of the estimated fair value of the assets acquired at the date of acquisition: Sales and client relationships and contracts $ 1,382,076 Intellectual property 98,721 Domains 18,000 Goodwill 306,386 Total Purchase Price $ 1,805,183 Pro Forma Information can be found under the One Wire Asset Purchase heading below. Upsider Asset Purchase Effective March 25, 2021, the Company, through a wholly owned subsidiary, entered into an Asset Purchase Agreement and Plan of Reorganization with Upsider, Inc., (“Upsider”), to acquire all the assets and certain liabilities of Upsider (the “Upsider Purchase”). As consideration for the Upsider Purchase, Upsider’s shareholders received net cash of $69,983 and a total of 323,094 shares of our common stock (the “Upsider Shares”) (valued at $2,544,362, based on a $7.88 per share acquisition date price), of which 51,940 of the Upsider Shares were held in reserve and were recorded as a current liability, contingent consideration in the accompanying financial statements. The shareholders of Upsider may also receive earn-out consideration in the form of the issuance of 321,390, shares of our Common Stock on September 1, 2021 based on the attainment of specific targets during the nine months following closing. The total purchase price is approximately $3.9 million. The assets acquired in the Upsider Purchase consist primarily of sales and client relationships, contracts, intellectual property, partnership and vendor agreements and a de minimis amount of other assets. We also assumed a small amount of liabilities in the form of net payables. The Company utilizes Upsider’s machine learning artificial intelligence to provide a more predictive and efficient recruiting tool that enhances our current technology. The acquisition is accounted for by the Company in accordance with the acquisition method of accounting pursuant to ASC 805 “Business Combinations” and pushdown accounting is applied to record the fair value of the assets acquired by the Company. Under this method, the purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired will be allocated to goodwill. The following is a summary of the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition: Sales and client relationships and contracts $ 3,130,773 Intellectual property 156,539 Domains 4,600 Goodwill 736,525 Accounts payable (89,089 ) Total Purchase Price $ 3,939,348 Pro Forma Information can be found under the One Wire Asset Purchase heading below. OneWire Asset Purchase Effective May 10, 2021, the Company, through a wholly owned subsidiary, entered into an Asset Purchase Agreement and Plan of Reorganization with OneWire Holdings, LLC, a Delaware limited liability company (“OneWire”), to acquire all the assets and several liabilities of OneWire (the “OneWire Purchase”). As consideration for the OneWire Purchase, OneWire’s shareholders received a total of 155,327 shares (the “Consideration Shares”) of common stock, valued at $1,255,000, based on a price per share of $8.0797, the volume-weighted average price of the common stock for the 30 day period immediately prior to the closing date), of which 31,066 of the Consideration Shares are subject to forfeiture as security against a post-closing working capital adjustment and a revenue true-up and pursuant to OneWire’s indemnity obligations. At the date of closing, the common stock was valued at $1,436,777, and there was a to be determined working capital adjustment to be paid in additional common shares recorded as a liability at a fair value of $45,751 for a total purchase price of $1,482,528. The assets acquired in the OneWire Purchase consist primarily of sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets. The Company has completed the purchase price allocation of the $1.5 million for the acquired intangible assets during the second quarter of 2021. OneWire’s expansive candidate database in financial services and candidate matching service amplify our reach to give employers and recruiters access to an even broader pool of specialized talent. The acquisition is accounted for by the Company in accordance with the acquisition method of accounting pursuant to ASC 805 “Business Combinations” and pushdown accounting is applied to record the fair value of the assets acquired by the Company. Under this method, the purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired will be allocated to goodwill. The following is a summary of the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition: Cash $ 54,868 Accounts receivable 165,285 Sales and client relationships and contracts 760,852 Intellectual property 121,700 Domains 10,152 Goodwill 369,671 Total Purchase Price $ 1,482,528 Pro Forma Information The results of operations of Scouted, Upsider and OneWire are included in the Company’s consolidated financial statements from the dates of acquisition. The following supplemental unaudited pro forma combined financial information assumes that the acquisition had occurred at the beginning of the twelve months ended December 31 2021: December 31, 2021 Revenue $ 22,751,140 Net Loss $ (18,163,543 ) Loss per common share, basic and diluted $ (2.11 ) 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. Parrut Asset Purchase Effective July 7, 2021, the Company entered into and closed on an Asset Purchase Agreement with Parrut, Inc. (“Parrut”), and certain individuals named therein. Parrut does business as Uncubed and we acquired the assets of the Technology Solutions Division of Uncubed. The purchased assets include assets related to Finalist, an online marketplace for sourcing and screening early-professional software and data candidates and assets related to Uncubed’s job board technology and candidate engagement platform which includes Mediabistro, a job board and professional community for media, content, and creative professionals (the “Parrut Purchase”). As consideration for the Parrut Purchase, the Company paid $500,000 in cash at closing, a $1,750,000 promissory note with an interest rate of 6% and an original maturity date of July 1, 2023, and granted to Parrut 257,545 shares of our Common Stock, valued at $1,264,551 based on the acquisition date share price. In addition, the terms of the Parrut Purchase include “earn-out” provisions under which the Company could become obligated to pay Parrut up to an additional $1,350,000 in the form of Common Stock (the “Parrut Earn-Out Consideration”). The Parrut Earn-Out Consideration was equal to 1.35 times our revenue derived or generated from the assets purchased in the Parrut Purchase achieved during the twelve-month period immediately following the closing date. In October 2022, we confirmed Parrut earned the maximum earnout of $1,350,000 and we issued 1,374,678 common shares to Parrut at a price of $0.98 per share, the 20-day volume weighted average price prior to completion of the earnout period. The Company also entered into a Registration Rights Agreement with Parrut (the “Registration Rights Agreement”). The Registration Rights Agreement provides that following the Nine-Month Anniversary (as defined in the Registration Rights Agreement), and for a period of five years thereafter, Parrut shall have the ability, on three occasions, to demand that Company shall file with the SEC a registration statement on Form S-1 or Form S-3, pursuant to the terms of the Registration Rights Agreement, to register the Consideration Shares. Additionally, pursuant to the Registration Rights Agreement, for a period of three years following the Nine-Month Anniversary, whenever the Company proposes to register the issuance or sale of any of its Common Stock or its own account or otherwise, and the registration form to be used may be used for the registration of the Consideration Shares. The acquisition is accounted for by the Company in accordance with the acquisition method of accounting pursuant to ASC 805 “Business Combinations” and pushdown accounting is applied to record the fair value of the assets acquired by the Company. Under this method, the purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired will be allocated to goodwill. The following is a summary of the estimated fair value of the assets acquired at the date of acquisition: Cash $ 10,702 Accounts receivable 17,720 Prepaid Assets 11,910 Intangible Assets 3,941,266 Goodwill 657,953 Total Purchase Price $ 4,639,551 Pro Forma Information The results of operations of Parrut will be included in the Company’s consolidated financial statements from the date of acquisition. The following supplemental unaudited pro forma combined financial information assumes that the acquisition had occurred at the beginning of the twelve months ended December 31, 2021: December 31, 2021 Revenue $ 23,017,512 Net Loss $ (17,093,361 ) Loss per common share, basic and diluted $ (1.99 ) 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. Novo Asset Purchase Effective August 27, 2021, the Company entered into and closed an Asset Purchase Agreement with the Novo Group, Inc. (the “Novo Group”), and certain individuals named therein. The Novo Group operates a recruitment services company for employers, providing talent, acquisition and other hiring solutions. The Company purchased substantially all of the assets of Novo Group (the “Novo Purchased Assets”). The Novo Purchased Assets include, among other assumed assets, certain contracts with Novo Group’s clients, permits owned, held and used by the Novo Group, intellectual property as well as tangible assets, and all of Novo Group’s accounts receivable (the “Novo Purchase”). Furthermore, the Company agreed to assume certain liabilities associated with the Novo Group business. The amount due at closing was approximately $7,117,425 (the “Base Purchase Price”), consisting of the following consideration: (i) $1,337,500 in cash, (ii) a $3,000,000 promissory note with an interest rate of 6%, that originally matured on February 1, 2024, (iii) working capital adjustments in the amount of approximately $217,045, which was paid as of September 30, 2021 and (iv) 508,711 restricted shares of common stock valued at $2,019,583 (based on the acquisition date share price), of which 127,178 of our restricted shares of Common Stock were placed in escrow to account for post-closing adjustments in respect to Novo Group’s revenue from the closing date to the end of the 2021 calendar year, as well as to partially secure the indemnification obligations of Novo Group’s former owners. The shares were released in 2022 from escrow. In addition to the Base Purchase Price, there is an earn-out that is tied to revenue of Novo Group from sales of its products and services over eight calendar quarters (the “Earn-Out Period”), with such Earn-Out Periods beginning on January 1, 2022 and ending on December 31, 2023. The Earn-Out Amount payable, if any, would equal to 5% of Novo Group’s revenue (“Earn-Out Amount”) for each applicable Earn-Out Period. The Company’s preliminary estimate at the acquisition date of the fair value of this consideration was $543,297. The acquisition is accounted for by the Company in accordance with the acquisition method of accounting pursuant to ASC 805 “Business Combinations” and pushdown accounting is applied to record the fair value of the assets acquired by the Company. Under this method, the purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Any excess of the amount paid over the estimated fair values of the identifiable net assets acquired will be allocated to goodwill. During 2022, a measurement period adjustment was recorded resulting in an increase in accounts receivable of $35,644 and corresponding reduction in goodwill. The following is a summary of the estimated fair value of the assets acquired at the date of acquisition: Accounts receivable $ 762,000 Prepaid Assets 55,000 Intangible Assets 2,062,296 Goodwill 4,661,317 Assumed Liabilities (423,188 ) Total Purchase Price $ 7,117,425 On April 1, 2022, we entered into that certain Novo Adjusted Agreement (the “Agreement”) with Novo Group and a representative of Novo that had the effect of amending the Novo Asset Purchase Agreement and the Novo Note. A legend was affixed to the Novo Note stating that the Novo Note was subject to the terms of the Agreement. Under the Novo Asset Purchase Agreement, we owed an original principal amount to Novo Group of $3,000,000. Under the terms of the Agreement, the original principal amount due to Novo Group was reduced by $600,000 from $3,000,000 to $2,400,000 due to the employee turnover that occurred following the acquisition. Pursuant to the Agreement, the post-closing working capital adjustment amount of $52,117 due from us was forgiven and no additional amount is or will become due from the us as final excess with respect to the final closing working capital. Pursuant to the Agreement, the Earn-Out provision of the Asset Purchase Agreement is of no further force and effect, and consequently no further Earn-Out Payment would be earned by Novo Group or paid by us. The parties further agreed to an updated amortization schedule attached to the Agreement as discussed below. The reduction in the amounts owed to Novo Group was accounted for as a gain on debt extinguishment on the consolidated statement of operations. The Novo Note will be paid monthly through November 1, 2023 in accordance with the updated amortization schedule attached to the Agreement. If we paid a separate lump sum pre-payment of $1,250,000 or more (“Pre-Payment”) on or before June 1, 2022, Novo Group would have, if we requested, allowed us to subordinate the indebtedness under the Novo Note to that of a senior lender so long as we continue monthly payments on the remaining note balance (including interest), in amounts no less than the amounts set forth in the amortization schedule. 76,277 escrow shares were released to Novo Group upon execution of the Agreement. The release of remaining escrow shares to each party is tied to the timing of the Pre-Payment. If we make the Pre-Payment on or before June 1, 2022, 25,000 escrow shares will be released to us and cancelled. If the full balance is paid off on or before August 1, 2022, 25,901 escrow shares will be released to us and cancelled. Conversely, if we do not make the Pre-Payment on or before June 1, 2022, 25,000 escrow shares will be released to Novo Group. If the full balance is not paid on or before the August 1, 2022 payoff date, 25,901 escrow shares will be released to Novo Group. In addition, if we do not pay off the Novo Note on or before December 31, 2022, we shall issue 25,000 shares of our common stock to Novo Group. These shares will be issued in 2023. The Pre-Payment was not made before June 1, 2022 and 25,000 escrow shares were released to Novo Group in June 2022. The full balance of the note was not made before August 1, 2022 and the remaining 25,901 escrow shares were released. In October 2022, Novo Group entered into a Subordination Agreement (“Subordination Agreement”), pursuant to which Novo agreed to subordinate all its indebtedness and obligations we owe to Novo to all the indebtedness and obligations we owe to Montage Capital. In February 2023, we entered into an Amendment to the Promissory Note with Novo Group, Inc. (the “Novo Amendment”). The Novo Amendment further modifies the Promissory Note issued to Novo on August 27, 2021 (the “Novo Note”) and amended on April 1, 2022, by amending the payment schedule pursuant to which we would make payments of principal and interest to Novo. Novo agreed we would pay interest only for the period starting November 1, 2022 though and including March 31, 2023, with payments of principal and interest to resume starting April 1, 2023. We also replaced the existing payment schedule with a new payment schedule terminating on October 31, 2023. Pro Forma Information The results of operations of Novo Group will be included in the Company’s consolidated financial statements from the date of acquisition. The following supplemental unaudited pro forma combined financial information assumes that the acquisition had occurred at the beginning of the twelve months ended December 31, 2021: December 31, 2021 Revenue $ 26,306,444 Net Loss $ (15,178,909 ) Loss per common share, basic and diluted $ (1.76 ) 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. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
NOTE 14 - INCOME TAXES | NOTE 14 - INCOME TAXES The Company has, subject to limitation, approximately $40.1 million of net operating loss carryforwards (“NOL”) at December 31, 2022, of which approximately $7.1 million will expire at various dates through 2037 and approximately $33.0 million can be carried forward indefinitely. We have provided a 100% valuation allowance for the deferred tax benefits resulting from the net operating loss carryover due to our lack of earnings history. In addressing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. The valuation allowance increased by approximately $3,919,000 and $3,272,000 for the years ended December 31, 2022 and 2021, respectively. Significant components of deferred tax assets and liabilities are as follows (in thousands): 2022 2021 Deferred tax assets (liabilities): Net operating loss carryover $ 8,723 $ 6,377 Intangibles amortization 375 350 Stock compensation 3,126 1,717 Capital losses 14 19 Bad debt allowance 376 221 Other (689 ) (942) Deferred revenue (23 ) 241 Total deferred tax assets, net 11,902 7,983 Less: valuation allowance (11,902 ) (7,983 ) Net deferred tax assets $ - $ - The above NOL carryforward may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL carryforward that can be utilized to offset future taxable income. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. The Company has not completed an IRC Section 382/383 analysis. If a change in ownership were to have occurred, NOL carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate. The actual tax benefit differs from the expected tax benefit for the years ended December 31, 2022 and 2021 (computed by applying the U.S. Federal Corporate tax rate of 21% to income before taxes) are as follows: 2022 2021 Statutory federal income tax rate (21.0 )% (21.0 )% State income taxes, net of federal benefits (0.11 )% (2.10 )% Non-deductible items 5.82 % 3.26 % True ups (8.50 )% (0.19 )% Change in valuation allowance 23.79 % 20.03 % Effective income tax rate - % - % The Company’s tax returns for the previous three years remain open for audit by the respective tax jurisdictions. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
NOTE 15 - SUBSEQUENT EVENTS | NOTE 15 - SUBSEQUENT EVENTS On January 30, 2023, due to the vesting of RSUs, 110,800 common shares were issued to Evan Sohn, CEO. On February 2, 2023, the Company entered into a Consent and Amendment No. 1 to Promissory Note with Novo and Montage effective November 1, 2022 (the “Novo Amendment”). The Novo Amendment modifies the Promissory Note issued to Novo on August 27, 2021 (the “Novo Note”) by amending the payment schedule pursuant to which the Company shall make payments of principal and interest to Novo, as further described in the Novo Amendment. On February 2, 2023, the Company entered into a First Amendment to Loan and Security Agreement (the “Montage Amendment”), by and between the Company, its subsidiaries and Montage, effective as December 18, 2022. The Montage Amendment modifies that certain Loan and Security Agreement by and among the Company, its subsidiaries, and Montage to provide the Company with additional time to meet certain post-closing covenants. On February 3, 2023, the Company entered into amendments (the “Warrant Amendments”) to Common Stock Purchase Warrants issued on August 17, 2022 (the “Warrants”) to each of Cavalry Fund I LP, Firstfire Global Opportunities Fund LLC, and Porter Partners, L.P. (the “Warrantholders”). The Warrant Amendments modify the time period until the Warrant holders are permitted to exercise the Warrants by means of a “cashless exercise.” In addition, the Warrant Amendments lower the exercise price of the Warrants to $0.38 per warrant share, as further described in the Warrant Amendments. As a result of the lowered exercise price of the Warrants, the exercise price of warrants issued by the Company on May 28, 2020, January 5, 2021, January 20, 2021, August 17, 2022, and August 30, 2022, will be automatically lowered to $0.38 per warrant share. In February 2023, we issued 821,520 common shares to investors who exercised warrants with a strike price of $0.38 for proceeds of $312,178. In March 2023, we announced a strategic partnership with Job Mobz to transition certain Recruiters on Demand clients and staff to Job Mobz in exchange for an ongoing revenue stream. The revenue stream will be derived from a fixed percentage of sales on the book of business and a revenue share on referred business. |
ORGANIZATION AND SUMMARY OF S_2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
General | Recruiter.com Group, Inc., a Nevada corporation (“RGI” or the “Company”), is a holding company based in New York, New York. The Company has seven material subsidiaries, Recruiter.com, Inc., Recruiter.com Recruiting Solutions LLC (“Recruiting Solutions”), Recruiter.com Consulting, LLC, VocaWorks, Inc. (“VocaWorks”), Recruiter.com Scouted Inc. (“Scouted”), Recruiter.com Upsider Inc. (“Upsider”) and Recruiter.com OneWire Inc. (“OneWire”). RGI and its subsidiaries as a consolidated group is hereinafter referred to as the “Company,” “we”, “us” or “our”. The Company operates an On Demand recruiting platform digitally transforming the $28.5 billion employment and recruiting agencies industry. The Company offers recruiting software and services through an online, AI-powered sourcing platform (the ″Platform”) and network of on-demand recruiters. Businesses from startups to the Fortune 100 use the Company to help address their critical talent needs and solve recruiting and hiring challenges. The Company’s website, www.Recruiter.com, provides access to its network of recruiters to employers seeking to hire talent and utilizes an innovative web platform, software with integrated AI-driven candidate to job matching, and video screening software to source qualified talent more easily and quickly. The Company helps businesses accelerate and streamline their recruiting and hiring processes by providing on-demand recruiting software and services. The Company leverages its expert network of recruiters to place recruiters on a project basis, aided by cutting-edge AI-based candidate sourcing and matching and video screening technologies. Through the Company’s Recruiting Solutions division, the Company also provides consulting, staffing, and full-time placement services to employers, leveraging our platform and rounding out our services. The Company’s mission is to help recruit the right talent faster and become the preferred solution for hiring specialized talent. |
Reincorporation And Reverse Stock Split | We were originally incorporated on July 28, 2008 in the State of Oklahoma as SA Recovery Group, but, on March 17, 2015, we effected a merger whereby we became incorporated as a Delaware corporation. Then, effective March 31, 2019, we completed a merger with Recruiter.com, Inc. and thereafter changed our name to Recruiter.com Group, Inc. on May 9, 2019 and reincorporated in the state of Nevada on May 13, 2020. 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. On June 18, 2021 the Company filed an Amendment to the Articles of Incorporation to effectuate a reverse split of the Company’s issued and outstanding common stock at an exchange ratio of 1-for-2.5. The reverse stock split was effective as of June 18, 2021. Simultaneously with the reverse stock split, the Company reduced the authorized shares from 250,000,000 to 100,000,000. All share and per share data in the accompanying consolidated financial statements and footnotes has been retroactively adjusted to reflect the effects of the reverse stock split. |
Principles Of Consolidation And Basis Of Presentation | The consolidated financial statements include the accounts of RGI and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
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 marketable securities, fair value of assets acquired and liabilities assumed in asset acquisitions and the estimated useful life of assets acquired, fair value of contingent consideration in asset acquisitions and business combinations, fair value of derivative liabilities, fair value of securities issued for acquisitions and business combinations, fair value of assets acquired and liabilities assumed in business combinations, fair value of intangible assets and goodwill, fair value of capitalized software, fair value of non-monetary transactions, 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 December 31, 2022. At December 31, 2022 and December 31, 2021, the Company had $612,691 and $1,667,798 in excess of the FDIC limit, respectively. The Company had no cash equivalents during or at the end of either year. |
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. We generate revenue from the following activities: • Software Subscriptions • Recruiters On Demand: • Full-time Placement: • Marketplace For individuals, Marketplace includes services to assist with career development and advancement, including a resume distribution service which involves promoting these job seekers’ profiles and resumes to assist with their procuring employment, and upskilling and training. Our resume distribution service allows a job seeker to upload his/her resume to our database, which we then distribute to our network of recruiters on the Platform. We earn revenue from a one-time flat fee for this service. We also offer a recruiter certification program which encompasses our recruitment related training content, which we make accessible through our online learning management system. Customers of the recruiter certification program use a self-managed system to navigate through a digital course of study. Upon completion of the program, we issue a certificate of completion and make available a digital badge to certify their achievement for display on their online recruiter profile on the Platform. Additionally, we partner with Careerdash, a high-quality training company, to provide Recruiter.com Academy, an immersive training experience for career changers. • Consulting and Staffing: 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 consolidated statements of operations represent services rendered to customers less sales adjustments and allowances. Software subscription revenues are recognized over the term of the subscription for access to services and/or our web-based platform. Revenue is recognized monthly over the subscription term. Talent effectiveness subscription revenues are recognized over the term of the subscription when services are provided. Any payments received prior to the time passing to provide the subscription services are recorded as a deferred revenue liability. Revenue generated from the enhanced support package and On Demand support are recognized at the point-in-time when the service is provided. Revenue generated from placement fees that are related to the software subscription are recognized at the point-in-time when the 60 or 90-day guarantee expires. Recruiters On Demand services are billed to clients as either monthly subscriptions or time-based billings. Revenues for Recruiters On Demand are recognized on a gross basis when each monthly subscription service is completed. Talent Effectiveness consulting services are billed to clients upfront for a period of months. Revenue is recognized on a gross basis monthly over the period the consulting services are provided. Full time placement revenues are recognized on a gross basis when the guarantee period specified in each customer’s contract expires. No fees for direct hire placement services are charged to the employment candidates. Any payments received prior to the expiration of the guarantee period are recorded as a deferred revenue liability. Payments for recruitment services are typically due within 90 days of completion of services. Marketplace Solutions 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. Marketplace advertising revenues are recognized on a gross basis when the advertising is placed and displayed or when lead generation activities and online publications are completed, which is the point at which the performance obligations are satisfied. Payments for marketing and publishing are typically due within 30 days of completion of services. Job posting revenue is recognized at the end of the period the job is posted. Marketplace career services revenues are recognized on a gross basis upon distribution of resumes or completion of training courses, which is the point at which the performance obligations are satisfied. Payments for career services are typically due upon distribution or completion of services. 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. 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. Deferred revenue results from transactions in which we have 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. All trade receivables on the Company’s consolidated 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 December 31, 2022 or 2021. 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. Revenue Disaggregation For each of the years, revenues can be categorized into the following: Years Ended December 31, 2022 2021 Recruiters On Demand $ 16,000,760 $ 11,393,396 Consulting and staffing services 4,821,777 7,569,253 Software Subscriptions 2,468,990 1,403,353 Full time placement fees 937,825 1,091,790 Marketplace Solutions 1,142,922 726,320 Total revenue $ 25,372,274 $ 22,184,112 As of December 31, 2022, and 2021, deferred revenue amounted to $215,219 and $746,449, respectively. During the year ended December 31, 2022, the Company recognized $746,449 of revenue that was deferred as of December 31, 2021. Deferred revenue as of December 31, 2022 is categorized and expected to be recognized as follows: Expected Deferred Revenue Recognition Schedule Total Deferred 12/31/2022 Recognize Q1 2023 Recognize Q2 2023 Recognize Q3 2023 Recognize Q4 2023 Recognize 2024 Recruiters On Demand $ 49,372 $ 49,372 $ - $ - $ - $ - Full time placement fees 12,000 12,000 - - - - Software Subscriptions 12,401 12,401 - - - - Marketplace 141,446 51,139 35,779 30,456 19,076 4,996 TOTAL $ 215,219 $ 124,912 $ 35,779 $ 30,456 $ 19,076 $ 4,996 Revenue from international sources was approximately 3.2% and 2.3% for the years ended December 31, 2022 and 2021, respectively. |
Cost Of Revenue | Cost of revenue consist of employee costs, third party staffing costs and other fees, outsourced recruiter fees and commissions based on a percentage of Recruiting Solutions gross margin. |
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 $1,446,613 and $934,219 as of December 31, 2022 and 2021, respectively. Bad debt expense was $492,906 and $927,847 for the years ended December 31, 2022 and 2021, respectively. |
Property And Equipment | Property and equipment is stated at cost, less accumulated depreciation. Depreciation is recognized over an asset’s estimated useful life using the straight-line method beginning on the date an asset is placed in service. The Company regularly evaluates the estimated remaining useful lives of the Company’s property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Maintenance and repairs are charged to expense as incurred. Depreciation expense for the years ended December 31, 2022 and 2021 was $13,747 and $1,154, respectively. |
Concentration Of Credit Risk And Significant Customers And Vendors | As of December 31, 2022, one customer accounted for more than 10% of the accounts receivable balance, at 28%. As of December 31, 2021, two customers accounted for more than 10% of the accounts receivable balance, at 14% and 12%, for a total of 26%. For the year ended December 31, 2022 one customer accounted for 10% or more of total revenue, at 14%. For the year ended December 31, 2021 one customer accounted for 10% or more of total revenue, at 12%. We use a related party firm located overseas for software development and maintenance related to our website and the platform underlying our operations. One of our employees and principal shareholders is an employee of this firm but exerts control over this firm (see Note 12). We were a party to a 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. We had used a related party firm to provide certain employer of record services (see Note 12). |
Advertising And Marketing Costs | The Company expenses all advertising and marketing costs as incurred. Advertising and marketing costs were $725,687 and $472,213 for the years ended December 31, 2022 and 2021, respectively, and are included in sales and marketing on the consolidated statements of operations. |
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’s contingent accrued earn-out business acquisition consideration liability is considered Level 3 fair value liability instruments requiring period fair value assessments. This contingent consideration liability was recorded at fair value on the acquisition date and are re-measured quarterly based on the then assessed fair value and adjusted if necessary. The increases or decreases in the fair value of contingent consideration can result from changes in anticipated revenue levels and changes in assumed discount periods and rates. As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3. As of December 31, 2022 and 2021, the earn-out liability account balance as reported in the balance sheets is $0 and $578,591, respectively. In April 2022, the earn-out liability was forgiven in full and recorded as a gain on debt extinguishment on the consolidated statement of operations. See Note 13 for more information. In fair valuing these instruments, the income valuation approach is applied, and the valuation inputs include the contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments. 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 Company did not have investment securities or warrant derivative liabilities as of December 31, 2022 and 2021. The tables below summarize the fair values of our financial assets and liabilities as of December 31, 2022 and 2021: Fair Value at December 31, Fair Value Measurement Using 2021 Level 1 Level 2 Level 3 Contingent consideration for acquisitions (Note 13) $ 578,591 $ - $ - $ 578,591 The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows for the years ended December 31, 2022 and 2021: Years Ended December 31, 2022 2021 Balance at January 1 $ - $ 11,537,997 Additions to derivative instruments - 5,960,059 Reclassifications to equity upon modification or cancellation of warrants - (10,182,476 ) (Gain) loss on change in fair value of derivative liability - (7,315,580 ) Balance, December 31 $ - $ - For the Company's earn-out liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balance for each category therein, and gains or losses recognized during the year ended December 31, 2022 and 2021: Beginning balance, December 31, 2020 $ - Acquisitions and Settlements: Novo Group Acquisition 543,297 Re-measurement adjustments: Change in fair value of earn-out liability 35,294 Ending balance, December 31, 2021 578,591 Re-measurement adjustments: Change in fair value of earn-out liability 26,604 Gain on debt extinguishment (605,195 ) Ending balance, December 31, 2022 $ - Significant unobservable inputs used in the earn-out fair value measurements of the Company's contingent consideration liabilities designated as Level 3 are as follows: December 31, 2021 Fair value $ 578,591 Valuation technique Discounted cash flow Significant unobservable input Projected revenue and probability of achievement |
Business Combinations | For all business combinations (whether partial, full or step acquisitions), the Company records 100% of all assets and liabilities of the acquired business, generally at their fair values with any excess of purchase price over the net assets recorded as goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value and accretion costs are recognized in earnings. The increases or decreases in the fair value of contingent consideration can result from changes in anticipated revenue levels and changes in assumed discount periods and rates. |
Intangible Assets | Intangible assets consist primarily of the assets acquired from Genesys in 2019, including customer contracts and intellectual property, acquired on September 30, 2019, the assets acquired from Scouted and Upsider during the first quarter of 2021 (see Note 13), the assets acquired from OneWire during the second quarter of 2021 (see Note 13), and the assets acquired from Parrut and Novo Group during the third quarter of 2021 (see Note 13). Amortization expense is recorded on the straight-line basis over the estimated economic lives. |
Goodwill | 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 as impairment indicators dictate (see Note 5). When evaluating the potential impairment of goodwill, management first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for 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 quantitative impairment testing methodology. Under the quantitative method we compare the carrying value of the reporting unit, including goodwill, with its fair value, as determined using an appropriate valuation method. 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 may 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. |
Long-lived Assets | Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company estimates the future undiscounted net cash flows of the related asset or asset group over the remaining life of the asset in measuring whether the long-lived asset should be written down to fair value. Measurement of the amount of impairment would be based on generally accepted valuation methodologies, as deemed appropriate. If the carrying amount is greater than the undiscounted cash flows, the carrying amount of the asset is reduced to the asset’s fair value. An impairment loss is recognized immediately as an operating expense in the consolidated statements of operations. Reversal of previously recorded impairment losses are prohibited (see Note 5). |
Marketable Securities | The Company has adopted Accounting Standards Update (“ASU”) 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The unrealized loss on the marketable securities during the year ended December 31, 2021 has been included in a separate line item on the statement of operations, Net Recognized Loss on Marketable Securities. |
Software Costs | We capitalize certain software development costs incurred in connection with developing or obtaining software for internal use when both the preliminary project stage is completed, and it is probable that the software will be used as intended. Capitalization ceases after the software is operational; however, certain upgrades and enhancements may be capitalized if they add functionality. Capitalized software costs include only (i) external direct costs of materials and services utilized in developing or obtaining software, (ii) compensation and related benefits for employees who are directly associated with the software project and (iii) interest costs incurred while developing internal-use software. |
Income Taxes | We utilize ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not to be sustained upon examination by taxing authorities, based on the technical merits of the position. Our practice is to recognize interest and/or penalties, if any, related to income tax matters in income tax expense. |
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. |
Convertible Instruments | The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with various accounting standards. ASC 480 “Distinguishing Liabilities From Equity” provides that instruments convertible predominantly at a fixed rate resulting in a fixed monetary amount due upon conversion with a variable quantity of shares (“stock settled debt”) be recorded as a liability at the fixed monetary amount. ASC 815 “Derivatives and Hedging” generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.” ASC 815-40 provides that generally if an event is not within the entity’s control and could require net cash settlement, then the contract shall be classified as an asset or a liability. |
Derivative Instruments | In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. This ASU removes certain separation models in ASC 470-20 for convertible instruments, and, as a result, embedded conversion features that do not require bifurcation under ASC 815 are no longer subject to separation into an equity classified component. Consequently, a convertible debt instrument, shall be accounted for as a single liability measured at its amortized cost. The Company adopted ASU 2020-06 on January 1, 2021 using the modified retrospective transition method. The Company’s derivative financial instruments consisted of derivatives related to the warrants issued with the sale of our convertible notes in 2020 and 2021 (see Note 8) and the warrants issued with the sale of our Series D Preferred Stock in 2020 and 2019 (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. Upon the determination that an instrument is no longer subject to derivative accounting, the fair value of the derivative instrument at the date of such determination will be reclassified to paid-in capital. The entirety of our derivative financial instruments was eliminated in July 2021 upon conversion of certain outstanding warrants to common stock and agreement by investors to modify certain warrants to eliminate the feature creating the derivative liability in the remaining outstanding warrants (see Note 10). |
Leases | In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: “Leases (Topic 842)” whereby lessees need to recognize almost all leases on their balance sheet as a right of use asset and a corresponding lease liability. The Company adopted this standard as of January 1, 2019 using the effective date method and applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected not to reassess the following: (i) whether any expired or existing contracts contain leases, and (ii) initial direct costs for any existing leases. For contracts entered into after the effective date, at the inception of a contract the Company will assess whether the contract is, or contains, a lease. The Company’s assessment will be based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. The Company has elected not to recognize right of use assets and lease liabilities for short term leases that have a term of 12 months or less. |
Product Development | Product development costs are included in operating expenses on the consolidated statements of operations 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. For the year ended December 31, 2022, the Company recorded a deemed dividend of $1,921,213 as a result of a triggered down-round feature in the Company’s warrants, and as a result, the amount was reflected as a reduction to the income available to common stockholders in the basic EPS calculation. 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 15,578,997 and 10,012,635 were excluded from the computation of diluted earnings per share for the years ended December 31, 2022 and 2021, respectively, because their effects would have been anti-dilutive. Years Ended December 31, 2022 2021 Net loss $ (16,474,688 ) $ (16,334,615 ) Deemed dividend (1,921,213 ) - Net loss, numerator, basic computation $ (18,395,901 ) $ (16,334,615 ) December 31, December 31, 2022 2021 Options 3,705,121 2,671,177 Stock awards 152,925 229,100 Warrants 11,290,951 6,682,358 Convertible notes - - Convertible preferred stock 430,000 430,000 15,578,997 10,012,635 |
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 June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which significantly changes how entities will measure credit losses for most financial assets, including accounts receivable. ASU No. 2016-13 will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. On November 15, 2019, the FASB delayed the effective date of Topic 326 for certain small public companies and other private companies until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities. The Company is currently evaluating the new guidance and has not yet determined whether the adoption of the new standard will have a material impact on its consolidated financial statements or the method of adoption. In May 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force)”. The ASU addresses how an issuer should account for modifications or an exchange of freestanding written call options classified as equity that is not within the scope of another Topic. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The adoption of ASU 2021-04 did not have a material impact on the Company’s consolidated financial statements. In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This ASU requires contract assets and contract liabilities (e.g. deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers”. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. Historically, such amounts were recognized by the acquirer at fair value in purchase accounting. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The Company is currently evaluating the impact the adoption of this ASU would have on the Company’s consolidated financial statements. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The guidance was issued as improvements to ASU No. 2016-13 described above. The vintage disclosure changes require an entity to disclose current-period gross write-offs by year of origination for financing receivables. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The amendments should be applied prospectively. Early adoption of the amendments is permitted, including adoption in an interim period. The amendments will impact our disclosures but will not otherwise impact the consolidated financial statements. The Company is currently evaluating the new guidance. |
ORGANIZATION AND SUMMARY OF S_3
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule Of Revenues | Years Ended December 31, 2022 2021 Recruiters On Demand $ 16,000,760 $ 11,393,396 Consulting and staffing services 4,821,777 7,569,253 Software Subscriptions 2,468,990 1,403,353 Full time placement fees 937,825 1,091,790 Marketplace Solutions 1,142,922 726,320 Total revenue $ 25,372,274 $ 22,184,112 |
Expected Deferred Revenue Recognition Schedule | Total Deferred 12/31/2022 Recognize Q1 2023 Recognize Q2 2023 Recognize Q3 2023 Recognize Q4 2023 Recognize 2024 Recruiters On Demand $ 49,372 $ 49,372 $ - $ - $ - $ - Full time placement fees 12,000 12,000 - - - - Software Subscriptions 12,401 12,401 - - - - Marketplace 141,446 51,139 35,779 30,456 19,076 4,996 TOTAL $ 215,219 $ 124,912 $ 35,779 $ 30,456 $ 19,076 $ 4,996 |
Schedule Of Fair Values Of Financial Assets And Liabilities | Fair Value at December 31, Fair Value Measurement Using 2021 Level 1 Level 2 Level 3 Contingent consideration for acquisitions (Note 13) $ 578,591 $ - $ - $ 578,591 |
Schedule Of Derivative Liability Measured At Fair Value On A Recurring Basis | Beginning balance, December 31, 2020 $ - Acquisitions and Settlements: Novo Group Acquisition 543,297 Re-measurement adjustments: Change in fair value of earn-out liability 35,294 Ending balance, December 31, 2021 578,591 Re-measurement adjustments: Change in fair value of earn-out liability 26,604 Gain on debt extinguishment (605,195 ) Ending balance, December 31, 2022 $ - |
Schedule Fair Value Measurements Schedule | December 31, 2021 Fair value $ 578,591 Valuation technique Discounted cash flow Significant unobservable input Projected revenue and probability of achievement |
Schedule Derivative Liability Measured At Fair Value On A Recurring Basis | Years Ended December 31, 2022 2021 Balance at January 1 $ - $ 11,537,997 Additions to derivative instruments - 5,960,059 Reclassifications to equity upon modification or cancellation of warrants - (10,182,476 ) (Gain) loss on change in fair value of derivative liability - (7,315,580 ) Balance, December 31 $ - $ - |
Schedule Of Anti-dilutive Earnings Per Share | Years Ended December 31, 2022 2021 Net loss $ (16,474,688 ) $ (16,334,615 ) Deemed dividend (1,921,213 ) - Net loss, numerator, basic computation $ (18,395,901 ) $ (16,334,615 ) December 31, December 31, 2022 2021 Options 3,705,121 2,671,177 Stock awards 152,925 229,100 Warrants 11,290,951 6,682,358 Convertible notes - - Convertible preferred stock 430,000 430,000 15,578,997 10,012,635 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
Components Of Prepaid Expenses And Other Current Assets | December 31, 2022 December 31, 2021 Prepaid expenses $ 40,860 $ 175,263 Prepaid advertisement 200,000 - Prepaid shares issued for services - 237,382 Employee advance 8,500 - Prepaid insurance 3,302 111,040 Other receivables 2,886 22,394 Prepaid expenses and other current assets $ 255,548 $ 546,079 |
INVESTMENT IN AVAILABLE FOR S_2
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES | |
Schedule Of Net Recognized Gains (losses) On Equity Investments | Years Ended December 31, 2022 2021 Net realized losses on investment sold or assigned $ - $ - Net unrealized losses on investments still held - (1,424 ) Total $ - $ (1,424 ) |
Schedule Of Reconciliation Of The Investment In Marketable Securities | December 31, December 31, 2022 2021 Beginning Balance - December 31 $ - $ 1,424 Additions - - Proceeds on sales of securities - - Assignment of securities as compensation - - Recognized losses - (1,424 ) Ending Balance - December 31 $ - $ - |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule Of Carrying Amount Of Goodwill | December 31, 2022 December 31, 2021 Carrying value - January 1 $ 7,718,842 $ 3,517,315 Goodwill acquired during the year - 6,731,852 7,718,842 10,249,167 Purchase price measurement period adjustments (35,644 ) - Impairment losses (582,114 ) (2,530,325 ) Carrying value - end of period $ 7,101,084 $ 7,718,842 |
Schedule Of Intangible Assets | December 31, 2022 December 31, 2021 Customer contracts $ 8,093,787 $ 8,093,787 Software acquired 3,785,434 3,785,434 License 1,726,965 1,726,965 Internal use software developed 325,491 - Domains 40,862 40,862 13,972,539 13,647,048 Less accumulated amortization (7,555,422 ) (3,905,216 ) Total 6,417,117 9,741,832 Less impairment (3,838,425 ) - Carrying value $ 2,578,692 $ 9,741,832 |
LOANS PAYABLE AND FACTORING A_2
LOANS PAYABLE AND FACTORING AGREEMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LOANS PAYABLE AND FACTORING AGREEMENT | |
Schedule Of future principal payments | Year Ending December 31, 2023 $ 4,692,549 2024 516,000 2025 516,000 2026 516,000 2027 194,000 Total principal payments $ 6,434,549 |
Schedule Of Loans Payable | December 31, 2022 December 31, 2021 Term loan(s) $ - $ 50,431 Promissory notes 6,153,272 4,299,831 Factoring arrangement 281,277 - Total loans payable 6,434,549 4,350,262 Less: Unamortized debt discount or debt issuance costs (1,473,351 ) - Less current portion (3,700,855 ) (1,712,387 ) Non-current portion $ 1,260,343 $ 2,637,875 |
STOCKHOLDERS EQUITY (Tables)
STOCKHOLDERS EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS EQUITY | |
Schedule Of Restricted Stock Grant Activity | Stock Awards Outstanding at December 31, 2020 221,600 Granted 158,790 Vested (151,290 ) Vested and issuable (83,100 ) Forfeited or cancelled - Outstanding at December 31, 2021 146,000 Granted 95,825 Vested and issued (88,325 ) Vested and issuable (7,500 ) Forfeited or cancelled - Outstanding at December 31, 2022 146,000 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCK OPTIONS AND WARRANTS | |
Schedule Of Fair Value Of Stock Options Granted | 2022 2021 Risk-free interest rates 1.15%-4.12% 0.07%-1.33% Expected life (in years) 2.50 – 4.00 1.00 – 5.00 Expected volatility 132%-195% 136%-347% Dividend yield 0.00% 0.00% |
Schedule Of Stock Option Activity | Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Life (In Years) Aggregate Intrinsic Value Outstanding at December 31, 2020 676,304 3.36 3.55 $ 603,819 Granted 2,364,500 4.44 Exercised - - Expired or cancelled (369,627 ) 4.83 Outstanding at December 31, 2021 2,671,177 4.32 4.16 $ 53,670 Granted 1,667,561 1.44 Exercised - - Expired or cancelled (633,617 ) 3.45 Outstanding at December 31, 2022 3,705,121 $ 3.05 2.80 $ - Exercisable at December 31, 2022 2,413,710 $ 3.59 2.71 $ - |
Schedule Of Warrants Outstanding | Warrants Outstanding Weighted Average Exercise Price Per Share Outstanding at December 31, 2020 1,461,378 $ 4.60 Issued 6,008,237 4.46 Cancelled pursuant to modification (265,148 ) 1.92 Exercised (522,108) 4.00 Outstanding at December 31, 2021 6,682,359 4.32 Issued 2,163,220 1.99 Exchanged to common stock (112,726 ) 5.00 Increase due to trigger of anti-dilution provisions 2,558,098 0.98 Exercised - - Expired or cancelled - - Outstanding at December 31, 2022 11,290,951 $ 2.84 |
Schedule Of Fair Value Of Warrant Options Granted | December 31, 2022 Risk-free interest rates 3.04%-3.71% Expected life (in years) 5 Expected volatility 173%-175% Dividend yield 0.00% |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Scouted Asset Purchase [Member] | |
Schedule Of Estimated Fair Value Of Assets Acquired And Liabilities Assumed | Sales and client relationships and contracts $ 1,382,076 Intellectual property 98,721 Domains 18,000 Goodwill 306,386 Total Purchase Price $ 1,805,183 |
Upsider Asset Purchase [Member] | |
Schedule Of Estimated Fair Value Of Assets Acquired And Liabilities Assumed | Sales and client relationships and contracts $ 3,130,773 Intellectual property 156,539 Domains 4,600 Goodwill 736,525 Accounts payable (89,089 ) Total Purchase Price $ 3,939,348 |
OneWire Asset Purchase [Member] | |
Schedule Of Estimated Fair Value Of Assets Acquired And Liabilities Assumed | Cash $ 54,868 Accounts receivable 165,285 Sales and client relationships and contracts 760,852 Intellectual property 121,700 Domains 10,152 Goodwill 369,671 Total Purchase Price $ 1,482,528 |
Schedule Of company consolidated financial statements | December 31, 2021 Revenue $ 22,751,140 Net Loss $ (18,163,543 ) Loss per common share, basic and diluted $ (2.11 ) |
Parrut Asset Purchase [Member] | |
Schedule Of Estimated Fair Value Of Assets Acquired And Liabilities Assumed | Cash $ 10,702 Accounts receivable 17,720 Prepaid Assets 11,910 Intangible Assets 3,941,266 Goodwill 657,953 Total Purchase Price $ 4,639,551 |
Schedule Of company consolidated financial statements | December 31, 2021 Revenue $ 23,017,512 Net Loss $ (17,093,361 ) Loss per common share, basic and diluted $ (1.99 ) |
Novo Asset Purchase [Member] | |
Schedule Of Estimated Fair Value Of Assets Acquired And Liabilities Assumed | Accounts receivable $ 762,000 Prepaid Assets 55,000 Intangible Assets 2,062,296 Goodwill 4,661,317 Assumed Liabilities (423,188 ) Total Purchase Price $ 7,117,425 |
Schedule Of company consolidated financial statements | December 31, 2021 Revenue $ 26,306,444 Net Loss $ (15,178,909 ) Loss per common share, basic and diluted $ (1.76 ) |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of deferred tax assets and liabilities | 2022 2021 Deferred tax assets (liabilities): Net operating loss carryover $ 8,723 $ 6,377 Intangibles amortization 375 350 Stock compensation 3,126 1,717 Capital losses 14 19 Bad debt allowance 376 221 Other (689 ) (942) Deferred revenue (23 ) 241 Total deferred tax assets, net 11,902 7,983 Less: valuation allowance (11,902 ) (7,983 ) Net deferred tax assets $ - $ - |
Schedule of actual tax benefit | 2022 2021 Statutory federal income tax rate (21.0 )% (21.0 )% State income taxes, net of federal benefits (0.11 )% (2.10 )% Non-deductible items 5.82 % 3.26 % True ups (8.50 )% (0.19 )% Change in valuation allowance 23.79 % 20.03 % Effective income tax rate - % - % |
ORGANIZATION AND SUMMARY OF S_4
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue | $ 25,372,274 | $ 22,184,112 |
Recruiters on Demand [Member] | ||
Revenue | 16,000,760 | 11,393,396 |
Consulting and staffing services [Member] | ||
Revenue | 4,821,777 | 7,569,253 |
Full time placement fees [Member] | ||
Revenue | 937,825 | 1,091,790 |
Software Subscriptions [Member] | ||
Revenue | 2,468,990 | 1,403,353 |
Marketplace Solutions [Member] | ||
Revenue | $ 1,142,922 | $ 726,320 |
ORGANIZATION AND SUMMARY OF S_5
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Jun. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Deferred revenue | $ 124,912 | $ 35,779 | $ 30,456 | $ 4,996 | $ 19,076 | $ 215,219 |
Marketplace Solutions [Member] | ||||||
Deferred revenue | 51,139 | 35,779 | 30,456 | 4,996 | 19,076 | 141,446 |
Recruiters on Demand [Member] | ||||||
Deferred revenue | 49,372 | 0 | 0 | 0 | 0 | 49,372 |
Full-time placement [Member] | ||||||
Deferred revenue | 12,000 | $ 0 | $ 0 | 0 | 0 | 12,000 |
Software Subscriptions [Member] | ||||||
Deferred revenue | $ 12,401 | $ 0 | $ 0 | $ 12,401 |
ORGANIZATION AND SUMMARY OF S_6
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Contingent Consideration For Acquisitions | $ 0 | $ 578,591 |
Level 1 [Member] | ||
Contingent Consideration For Acquisitions | 0 | 0 |
Level 2 [Member] | ||
Contingent Consideration For Acquisitions | 0 | 0 |
Level 3 [Member] | ||
Contingent Consideration For Acquisitions | $ 0 | $ 578,591 |
ORGANIZATION AND SUMMARY OF S_7
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Balance At Beginning Of Period | $ 0 | |
Acquisitions And Settlements: Novo Group Acquisition | 543,297 | |
Change in fair value of earn-out liability | $ (26,604) | (35,294) |
Balance At Beginning Of Period83 | $ 578,591 | |
Gain on debt extinguishment | $ (605,195) |
ORGANIZATION AND SUMMARY OF S_8
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Fair Value | $ 578,591 |
Valuation Technique | Discounted cash flow |
Significant Unobservable Input | Projected revenue and probability of achievement |
ORGANIZATION AND SUMMARY OF S_9
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Balance At Beginning Of Period | $ 0 | $ 11,537,997 |
Additions To Derivative Instruments | 0 | 5,960,059 |
Reclassification To Equity Upon Modification Or Cancellation Of Warrants | 0 | (10,182,476) |
(Gain) loss on change in fair value of derivative liability | 0 | (7,315,580) |
Balance At End Of Period | $ 0 | $ 0 |
ORGANIZATION AND SUMMARY OF _10
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 6) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Net income (loss) | $ (16,474,688) | $ (16,334,615) |
Deemed dividend | (1,921,213) | 0 |
Net income (loss), numerator, basic computation | $ (18,395,901) | $ (16,334,615) |
ORGANIZATION AND SUMMARY OF _11
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 7) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Common Shares Equivalents, Outstanding | 15,578,997 | 10,012,635 |
Convertible Preferred Stock [Member] | ||
Common Shares Equivalents, Outstanding | 430,000 | 430,000 |
Options [Member] | ||
Common Shares Equivalents, Outstanding | 3,705,121 | 2,671,177 |
Warrants [Member] | ||
Common Shares Equivalents, Outstanding | 11,290,951 | 6,682,358 |
Stock awards [Member] | ||
Common Shares Equivalents, Outstanding | 152,925 | 229,100 |
ORGANIZATION AND SUMMARY OF _12
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2022 | Dec. 31, 2021 | Jun. 18, 2021 | Jun. 17, 2021 | May 13, 2020 | May 12, 2020 | |
Deemed dividend | $ (1,921,213) | $ 0 | ||||
Description of company operation | The Company operates an On Demand recruiting platform digitally transforming the $28.5 billion employment and recruiting agencies industry. | |||||
International Sources Revenue | 3.20% | 2.30% | ||||
Fdic Limit | $ 612,691 | $ 1,667,798 | ||||
Recognized of deferred revenue | 746,449 | |||||
Deferred Revenues | 215,219 | 746,449 | ||||
Allowance For Doubtful Accounts | 1,446,613 | 934,219 | ||||
Bad Debt Expense | 492,906 | 927,847 | ||||
Depreciation Expense | 13,747 | 1,154 | ||||
Advertising And Marketing Costs | 725,687 | 472,213 | ||||
Earn-out Liability | $ 0 | $ 578,591 | ||||
Antidilutive Securities | 15,578,997 | 10,012,635 | ||||
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 | 100,000,000 | 250,000,000 | 250,000,000 | 31,250,000 |
Accounts Receivable | ||||||
Concentration Risk | 26% | |||||
Accounts Receivable | Customer One | ||||||
Concentration Risk | 10% | 14% | ||||
Accounts Receivable | Customer Two | ||||||
Concentration Risk | 10% | |||||
Total Revenue | Customer One | ||||||
Concentration Risk | 10% | 10% | ||||
Total Revenue | Customer More | ||||||
Concentration Risk | 14% | 12% | ||||
Total Revenue 1 | Customer One | ||||||
Concentration Risk | 28% | |||||
Reverse stock split [Member] | ||||||
Common Stock, Shares Authorized | 250,000,000 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Liquidity [Member] | |
Cash used in operations during period | $ 6.9 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||
Prepaid Expenses | $ 40,860 | $ 175,263 |
Prepaid advertisement | 200,000 | 0 |
Prepaid Shares Issued For Services | 0 | 237,382 |
Employee advance | 8,500 | 0 |
Prepaid Insurance | 3,302 | 111,040 |
Other Receivables | 2,886 | 22,394 |
Prepaid Expenses And Other Current Assets | $ 255,548 | $ 546,079 |
INVESTMENT IN AVAILABLE FOR S_3
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES | ||
Net Realized Gains (losses) On Investment Sold | $ 0 | $ 0 |
Net Unrealized loss On Investments Still Held | 0 | (1,424) |
Total | $ 0 | $ (1,424) |
INVESTMENT IN AVAILABLE FOR S_4
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES | ||
Beginning Balance | $ 0 | $ 1,424 |
Additions | 0 | 0 |
Proceeds On Sales Of Securities | 0 | 0 |
Recognized Gain (loss) | 0 | (1,424) |
Ending Balance | $ 0 | $ 0 |
INVESTMENT IN AVAILABLE FOR S_5
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES | ||
Cost Basis Of Securities Held | $ 42,720 | $ 42,720 |
Accumulated Unrealized Losses | $ 42,720 | $ 42,720 |
Number Of Shares Owned In Marketable Securities (in Shares) | 0 | 178,000 |
Market Price Per Share (in Dollars Per Share) | $ 0 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Carrying Value, Beginning Balance | $ 7,718,842 | $ 3,517,315 |
Goodwill Acquired During The Year | 0 | 6,731,852 |
Goodwill | 7,718,842 | 10,249,167 |
Purchase Price Measurement Period Adjustment | (35,644) | 0 |
Impairment Losses | (582,114) | (2,530,325) |
Carrying Value, Ending Balance | $ 7,101,084 | $ 7,718,842 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Intangible Assets Gross | $ 13,972,539 | $ 13,647,048 |
Less Accumulated Amortization | 7,555,422 | (3,905,216) |
Less impairment | (3,838,425) | 0 |
Total | 6,417,117 | 9,741,832 |
Carrying Value | 2,578,692 | 9,741,832 |
Acquired Software | ||
Intangible Assets Gross | 3,785,434 | 3,785,434 |
Internal use software developed | ||
Intangible Assets Gross | 325,491 | 0 |
Customer Contracts | ||
Intangible Assets Gross | 8,093,787 | 8,093,787 |
License | ||
Intangible Assets Gross | 1,726,965 | 1,726,965 |
Domains | ||
Intangible Assets Gross | $ 40,862 | $ 40,862 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 05, 2022 | Dec. 31, 2020 | Mar. 31, 2019 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |||||
Future Amortization Of Intangible Assets - 2027 (remainder Of Year) | $ 2,738 | ||||
Future Amortization Of Intangible Assets - 2019 (remainder Of Year) | $ 1,910,072 | ||||
Impairment of software | 3,838,425 | ||||
Advertising consideration | 50,000 | $ 200,000 | |||
Intellectual property | $ 1,000,000 | ||||
Gain on sale of intangible asset | 250,000 | $ 1,000,000 | |||
Future Amortization Of Intangible Assets - 2023 | 1,237,047 | ||||
Compensation cost | 50,000 | ||||
Salary | 125,000 | ||||
Bonus per month | 11,600,000 | ||||
Future Amortization Of Intangible Assets - 2024 | 739,547 | ||||
Future Amortization Of Intangible Assets - 2025 | 455,683 | ||||
Future Amortization Of Intangible Assets - 2026 | 121,279 | ||||
Future Amortization Of Intangible Assets - Thereafter | 22,398 | ||||
Recognized Identifiable Assets Acquired Goodwill | 6,731,852 | $ 3,517,315 | |||
Amortization Expense Of Intangible Assets | 3,650,206 | 2,741,008 | |||
Impairment Expense | $ 582,114 | $ 2,530,325 |
LIABILITY FOR SALE OF FUTURE _2
LIABILITY FOR SALE OF FUTURE REVENUES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
LIABILITY FOR SALE OF FUTURE REVENUES | ||
Total Repayments | $ 567,001 | |
Initial Discount | 142,491 | |
Amortized Discount To Interest Expense | 0 | $ 2,719 |
Unamortized Discount To Interest Expense | 0 | 0 |
Unamortized Discount Outstanding Amount | $ 0 | $ 0 |
LOANS PAYABLE AND FACTORING A_3
LOANS PAYABLE AND FACTORING AGREEMENT (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
LOANS PAYABLE AND FACTORING AGREEMENT | ||
Term loan(s) | $ 0 | $ 50,431 |
Promissory Notes Payable | 6,153,272 | 4,299,831 |
Factoring arrangemen | 281,277 | 0 |
Total Loans Payable | 6,434,549 | 4,350,262 |
Less: Unamortized debt discount or debt issuance costs | (1,473,351) | 0 |
Less Current Portion | (3,700,855) | (1,712,387) |
Non-current Portion | $ 1,260,343 | $ 2,637,875 |
LOANS PAYABLE AND FACTORING A_4
LOANS PAYABLE AND FACTORING AGREEMENT (Details 1) - Notes Payable [Member] | Dec. 31, 2022 USD ($) |
2023 | $ 4,692,549 |
2024 | 516,000 |
2025 | 516,000 |
2026 | 516,000 |
2027 | 194,000 |
Total principal payments | $ 6,434,549 |
LOANS PAYABLE AND FACTORING A_5
LOANS PAYABLE AND FACTORING AGREEMENT (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 12 Months Ended | |||||
Oct. 19, 2022 | Apr. 30, 2022 | Apr. 27, 2022 | May 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 08, 2021 | |
Factoring cost | $ 179,303 | |||||||
Unamortised debt issuance cost and debt discount | (1,473,351) | $ 0 | ||||||
Interest expenses | $ 965,323 | 3,137,050 | ||||||
Warrant exercise price | $ 5.00342554 | $ 5 | ||||||
CSNK Working Capital Finance Corp [Member] | ||||||||
Description of prime rates | prime rate plus 3.25% due on the first day of each month. We are also charged a factoring fee of 0.575% of the gross face value of any trade accounts receivables for the first 30 days from when the trade accounts receivable is purchased and 0.30% for each fifteen days afterward until the purchased receivable is paid in full or repurchased. | |||||||
Description of factoring arrangement | the Company paid the Buyer a facility fee upon entering into the Factoring Agreement (the “Facility Fee”) in the amount of one half of one percent (0.50%) of the maximum credit, $15,000. An additional Facility Fee is charged for increases to the maximum credit, but only for the incremental increase | |||||||
Description of reserve funds | advances of up to 85% of the amount of eligible trade accounts receivable. Advances outstanding shall not exceed the lesser of $3,000,000 or an amount equal to the sum of all undisputed purchased trade accounts receivable multiplied by 85%, less any reserved funds | |||||||
Paycheck Protection Program [Member] | ||||||||
Loan proceeds borrowed from bank | $ 398,545 | |||||||
Interest Rate | 1% | |||||||
Forgiven Amount | $ 373,795 | |||||||
Loan Remaining Amount | 24,750 | |||||||
Forgiveness Of Debt Income | 24,925 | 376,177 | ||||||
Forgiven Principal Amount | 24,750 | 373,795 | ||||||
Related Accrued Interest Forgiven | 175 | $ 2,382 | ||||||
Loan And Security Agreement [Member] | ||||||||
Outstanding balance of promissory note | $ 6,153,272 | 4,299,831 | ||||||
Unamortised debt issuance cost and debt discount | 622,630 | 1,377,370 | ||||||
Interest Rate | 12.75% | |||||||
Forgiven Principal Amount | $ 2,250,000 | |||||||
Forgiven amount first call | 2,000,000 | |||||||
Forgiven amount second call | 250,000 | |||||||
Lender fee | 45,600 | |||||||
Loan agreement amount due | $ 40,000 | |||||||
Warrant exercise price | $ 2 | |||||||
Issue of warrants to purchase | 706,551 | |||||||
Warrant exercisable | 83,708 | |||||||
Issue of warrants | 622,803 | |||||||
Warrant repurchase amount | $ 703,125 | |||||||
August 27, 2021 [Member] | Novo Group acquisition [Member] | ||||||||
Proceeds From An Institutional Investor | $ 3,000,000 | |||||||
Maturity Date Of Debt | Nov. 01, 2023 | Feb. 01, 2024 | ||||||
Interest Rate | 6% | |||||||
Monthly Payments First 12 Months | 85,000 | |||||||
Monthly Payments For Months 13 Through 24 | 110,000 | |||||||
Monthly Payments For Months 25 Through 29 | 155,000 | |||||||
Monthly Payments For Months 30 | 152,357 | |||||||
Principal Balance Reduced, Amount | $ 600,000 | |||||||
May 6, 2021 [Member] | Paycheck Protection Program [Member] | ||||||||
Proceeds From An Institutional Investor | $ 250,000 | |||||||
Maturity Date Of Debt | May 06, 2023 | |||||||
Interest Rate | 12% | |||||||
July 7, 2021 [Member] | Parrut acquisition agreement dated [Member] | ||||||||
Proceeds From An Institutional Investor | $ 1,750,000 | |||||||
Maturity Date Of Debt | Jul. 01, 2023 | |||||||
Interest Rate | 6% | |||||||
Monthly Payments | 77,561 | |||||||
Outstanding balance of promissory note | $ 444,245 | |||||||
August 17, 2022 [Member] | ||||||||
Maturity Date Of Debt | Aug. 17, 2023 | |||||||
Outstanding balance of promissory note | $ 726,831 | |||||||
Promissory note issued | 111,111 | |||||||
Proceeds from promissory note | 960,000 | |||||||
Issuance cost | 40,000 | |||||||
Original issue discount | 1,111,111 | |||||||
Warrants granted value | 463,737 | |||||||
Unamortised debt issuance cost and debt discount | $ 384,280 | |||||||
August 30, 2022 [Member] | ||||||||
Maturity Date Of Debt | Aug. 30, 2023 | |||||||
Outstanding balance of promissory note | $ 839,115 | |||||||
Promissory note issued | 1,305,556 | |||||||
Proceeds from promissory note | 1,175,000 | |||||||
Original issue discount | $ 130,556 | |||||||
Warrants granted | 815,972 | |||||||
Warrants granted value | $ 569,106 | |||||||
Unamortised debt issuance cost and debt discount | 466,441 | |||||||
Term Loan 2 | ||||||||
Term Loan Outstanding Balance | $ 0 | $ 50,431 | ||||||
Vairable Interest Rate | 6% | 7.76% | ||||||
Monthly Payments Under Loans | $ 1,691 | $ 1,008 | ||||||
Term Loan One [Member] | ||||||||
Grant income | 3,382 | |||||||
Payments | 2,992 | |||||||
Interest expenses | 390 | |||||||
Factoring Arrangement Member | ||||||||
Term Loan Outstanding Balance | 545,216 | 0 | ||||||
Loan payable | 281,277 | 0 | ||||||
Amounts due from the factor | $ 263,939 | $ 0 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||||||
Jul. 02, 2021 | May 28, 2021 | Aug. 17, 2022 | Jul. 21, 2021 | Feb. 28, 2021 | Jan. 31, 2021 | Dec. 31, 2020 | May 28, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 13, 2021 | Jul. 31, 2021 | Jul. 08, 2021 | Nov. 23, 2020 | |
Strike price Minimum | $ 0.98 | |||||||||||||
Strike price Maximum | 2 | |||||||||||||
Warrant Exercisable Per Share (in Dollars Per Share) | $ 5.00342554 | $ 5 | ||||||||||||
Original Issue Discount | $ 0 | $ 342,554 | ||||||||||||
Debt discount | 499,031 | 2,503,160 | ||||||||||||
November 2020 Convertible Promissory Note | ||||||||||||||
Accrued Interest | $ 2,430 | |||||||||||||
Original Issue Discount Rate | 12.50% | |||||||||||||
Convertible Promissory Notes, Outstanding | $ 250,000 | |||||||||||||
Note Converted Into New Debenture | 250,000 | |||||||||||||
Conversion Of Convertible Notes, Debentures Issued, Amount | 283,984 | |||||||||||||
2020 Debentures | Securities Purchase Agreement | ||||||||||||||
Unamortized Debt Cost | $ 1,299,677 | |||||||||||||
Amortization Of Debt Cost | 25,956 | |||||||||||||
Proceeds From Offering | $ 2,226,000 | |||||||||||||
Original Issue Discount | 328,125 | |||||||||||||
Debt discount | 13,647 | |||||||||||||
Conversion Price | $ 4 | |||||||||||||
Fair Value Of Placement Agent Warrants At Time Of Issue | 933,177 | |||||||||||||
Debt Instrument Increase decrease description | the number of Warrants associated with the 2020 Debentures were increased from 739,787 to 1,300,093, and the exercise price was reduced from $5.00 to $2.00 (see Note 10) due to anti-dilution provisions in Warrants | |||||||||||||
Increased number of warrant | 71,139 | |||||||||||||
Number of anti-dilution of warrants | 70,996 | |||||||||||||
Accrued Interest | 4,400 | |||||||||||||
Original Issue Discount Rate | 12.50% | |||||||||||||
Common Stock Purchase Warrants (in Shares) | 738,282 | |||||||||||||
Original Issue Discount Deducted | $ 328,125 | |||||||||||||
Aggregate Principal Amount | $ 91,600 | $ 5,000,000 | ||||||||||||
Notes converted into shares of common stock | 24,000 | |||||||||||||
Penalty incurred included in interest expense | $ 253,767 | |||||||||||||
Debentures Issued, Amount | 2,953,125 | |||||||||||||
Placement agent's commission and fees | $ 295,000 | |||||||||||||
Warrants Coverage Percentage | 100% | |||||||||||||
Commissions Costs And Fees | $ 366,500 | |||||||||||||
Legal Fees Aggregate Amount | $ 100,000 | |||||||||||||
Escrow agent fees | $ 4,000 | |||||||||||||
Debentures Bears Interest Rate | 8% | |||||||||||||
Debenture Mandatory Conversion, Description | 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 | |||||||||||||
Warrant Issued Reduced | 36,364 | |||||||||||||
Excercise Price Increase | $ 6.25 | |||||||||||||
Additional Compensation Shares | 147,657 | |||||||||||||
Amount Due Under Event Of Default, Percentage | 130% | |||||||||||||
Debt Discount Related To The Sale Of The Debentures | $ 1,653,448 | |||||||||||||
Restricted Stock | ||||||||||||||
Unamortized Debt Cost | $ 679,276 | |||||||||||||
Amortization Of Debt Cost | 0 | 575,503 | ||||||||||||
Fair Value Of Placement Agent Warrants At Time Of Issue | 919,979 | |||||||||||||
2021 Debentures | February 2021 Note Exchange | ||||||||||||||
Amortization Of Debt Cost | 808,985 | 0 | ||||||||||||
Original Issue Discount | 342,554 | |||||||||||||
Debt Discount Related To The Sale Of The Debentures | 1,796,651 | |||||||||||||
Unamortized Debt Discount | 1,254,779 | 0 | $ 0 | $ 987,666 | ||||||||||
Discount Related To Fair Value Of Warrants | $ 1,454,097 | |||||||||||||
2021 Debentures | Securities Purchase Agreement | ||||||||||||||
Proceeds From Offering | $ 2,488,000 | |||||||||||||
Conversion Price | $ 4 | |||||||||||||
Commissions Cost and Fees | $ 241,270 | |||||||||||||
Debt Instrument Increase decrease description | issued warrants with an exercise price of $2.00 (see Note 7). Consequently, the number of 2021 Warrants associated with the 2021 Debentures were increased from 772,303 (which is the 701,164 discussed above plus the February 2021 warrants totaling 71,139 as discussed below) to 1,146,952, and the exercise price was reduced from $5.00 to $2.00 (see Note 10) due to anti-dilution provisions in the 2021 Warrants. The exercise price of the 2021 Warrants was then again reduced from $2.00 to $0.98 | |||||||||||||
Increased number of warrant | 669,750 | |||||||||||||
Number of anti-dilution of warrants | 701,164 | |||||||||||||
Original Issue Discount Rate | 12.50% | |||||||||||||
Common Stock Purchase Warrants (in Shares) | 699,750 | |||||||||||||
Debentures Issued, Amount | $ 2,799,000 | |||||||||||||
Warrants Coverage Percentage | 100% | |||||||||||||
Legal Fees Aggregate Amount | $ 7,500 | |||||||||||||
Warrant Issued Reduced | 36,364 | |||||||||||||
Excercise Price Increase | $ 6.25 | |||||||||||||
Additional Compensation Shares | 139,950 | |||||||||||||
Amount Due Under Event Of Default, Percentage | 130% | |||||||||||||
Debentures Maturity Date | January 2022 | |||||||||||||
Debentures Issuance Costs | $ 93,530 | |||||||||||||
Debentures Mandatory Conversion - Equity Offering | $ 5,000,000 | |||||||||||||
2021 Debentures | February 2021 Promissory Note | ||||||||||||||
Commissions Cost and Fees | 334,800 | |||||||||||||
Original Issue Discount Rate | 12.50% | |||||||||||||
Common Stock Purchase Warrants (in Shares) | 70,996 | |||||||||||||
Original Issue Discount Deducted | $ 31,554 | |||||||||||||
Note Converted Into New Debenture | $ 250,000 | |||||||||||||
2021 Debentures | Senior Subordinated Secured Convertible Debentures | ||||||||||||||
Original Issue Discount Rate | 12.50% | |||||||||||||
Outstanding Seinor Indebtedness | $ 95,000 | |||||||||||||
2020 Debentures | Senior Subordinated Secured Convertible Debentures | ||||||||||||||
Outstanding Seinor Indebtedness | $ 508,000 |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) - Restricted Stock - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Outstanding Rsu Beginning Balance | 146,000 | 221,600 |
Granted | 95,825 | 158,790 |
Vested | (151,290) | |
Vested And Issued | (88,325) | 0 |
Vested And Issuable | (7,500) | (83,100) |
Outstanding Rsu Ending Balance | 146,000 | 146,000 |
STOCKHOLDERS DEFICIT (Details N
STOCKHOLDERS DEFICIT (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||
Oct. 14, 2022 | Feb. 02, 2022 | Jan. 06, 2022 | Jul. 08, 2021 | Sep. 18, 2020 | Jun. 18, 2020 | Oct. 31, 2022 | Nov. 17, 2021 | Aug. 31, 2021 | Jul. 02, 2021 | May 31, 2021 | Apr. 30, 2021 | Mar. 31, 2021 | Feb. 28, 2021 | Jan. 31, 2021 | Jul. 31, 2020 | Feb. 29, 2020 | Jan. 31, 2020 | Feb. 29, 2020 | Mar. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 31, 2021 | Jun. 18, 2021 | Jun. 17, 2021 | Dec. 31, 2020 | May 13, 2020 | May 12, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | |
Units, issued | 360,000 | 508,711 | 155,327 | 271,153 | 321,390 | 224,163 | 257,545 | |||||||||||||||||||||||
Preferred stock, shares authorized | 10,000,000 | |||||||||||||||||||||||||||||
Common Share Issued | 6,479 | 89,172 | ||||||||||||||||||||||||||||
Preferred stock, par value | $ 0.0001 | |||||||||||||||||||||||||||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | 250,000,000 | 250,000,000 | 31,250,000 | ||||||||||||||||||||||||
Common Stock Share Outstanding | 16,277,764 | |||||||||||||||||||||||||||||
Reverse Stock Split | 1-for-2.5 | |||||||||||||||||||||||||||||
Conversion Of Stock, Shares Converted | 8,000 | 21,375 | 354,387 | |||||||||||||||||||||||||||
Stock Issued For Services, Amount | $ 519,239 | |||||||||||||||||||||||||||||
Total Restricted Stock Units Expense | $ 1,052,865 | $ 825,951 | ||||||||||||||||||||||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||||||||||||||||||||||||||||
Common stock shares issued | 16,277,764 | 14,566,420 | ||||||||||||||||||||||||||||
Proceed from underwritten public offering amount | $ 13,800,000 | |||||||||||||||||||||||||||||
Accrued interest | $ 115,593 | $ 2,302 | ||||||||||||||||||||||||||||
Unamortized discount | 1,666,314 | |||||||||||||||||||||||||||||
Penalty amount | 253,767 | |||||||||||||||||||||||||||||
Additional paid in capital | $ 4,291,102 | |||||||||||||||||||||||||||||
Warrants, exercise price | $ 5 | $ 5.00342554 | ||||||||||||||||||||||||||||
Share-based compensation expenses | $ 4,106,040 | $ 5,400,975 | ||||||||||||||||||||||||||||
Parrut [Member] | ||||||||||||||||||||||||||||||
Earned the maximum earnout | $ 1,350,000 | |||||||||||||||||||||||||||||
Issued common shares | 51,940 | 1,374,678 | ||||||||||||||||||||||||||||
Price per share | $ 0.98 | |||||||||||||||||||||||||||||
Issued shares valued | $ 409,036 | |||||||||||||||||||||||||||||
Vendor | ||||||||||||||||||||||||||||||
Stock Issued For Services, Shares | 7,500 | 20,000 | ||||||||||||||||||||||||||||
Stock Issued For Services, Amount | $ 152,500 | $ 27,000 | ||||||||||||||||||||||||||||
Restricted Stock Units | ||||||||||||||||||||||||||||||
Granted | 221,600 | 221,600 | 133,790 | 126,290 | ||||||||||||||||||||||||||
Vested, fair value | $ 1,662,000 | $ 1,662,000 | $ 393,739 | |||||||||||||||||||||||||||
Share-based compensation expenses | 129,357 | $ 595,343 | ||||||||||||||||||||||||||||
Prepayment for future services | $ 237,382 | |||||||||||||||||||||||||||||
Restricted Stock Units | Vendor | ||||||||||||||||||||||||||||||
Vested In Period, Shares | 25,000 | 88,325 | ||||||||||||||||||||||||||||
Stock Issued For Services, Shares | 95,825 | |||||||||||||||||||||||||||||
Stock Issued For Services, Amount | $ 101,250 | $ 193,140 | ||||||||||||||||||||||||||||
Vested And Issuable, Shares | 7,500 | |||||||||||||||||||||||||||||
Valued in period, shares | 95,825 | |||||||||||||||||||||||||||||
Vested And Issuable | 7,500 | |||||||||||||||||||||||||||||
Mr. Sohn | Restricted Stock Units | ||||||||||||||||||||||||||||||
Vesting Period | two-year | |||||||||||||||||||||||||||||
Preferred stock, Series E, [Member] | ||||||||||||||||||||||||||||||
Preferred Stock, Shares Outstanding | 86,000 | 86,000 | ||||||||||||||||||||||||||||
Preferred Stock, Shares issued | 86,000 | 86,000 | ||||||||||||||||||||||||||||
Series E Convertible Preferred Stock | ||||||||||||||||||||||||||||||
Common Share Issued | 3,229,225 | |||||||||||||||||||||||||||||
Preferred stock, par value | $ 20 | |||||||||||||||||||||||||||||
Conversion Of Stock, Shares Converted | 645,845 | |||||||||||||||||||||||||||||
Beneficial ownership limitation | 4.99% | 4.99% | ||||||||||||||||||||||||||||
Ownership limitation | 9.99% | 9.99% | ||||||||||||||||||||||||||||
Share price | $ 4 | |||||||||||||||||||||||||||||
Description of trigerring event under COD | If at any time while any shares of Series E Preferred Stock remain outstanding and any triggering event contained in the Certificate of Designation for such series occurs, we shall pay, within three days, to each holder $210 per each $1,000 of the stated value of each such holder’s shares of Series E Preferred Stock | |||||||||||||||||||||||||||||
Series F Convertible Preferred Stock | ||||||||||||||||||||||||||||||
Common Share Issued | 234,237 | 50,000 | 6,479 | 81,195 | 45,390 | |||||||||||||||||||||||||
Conversion Of Stock, Shares Converted | 46,847 | 1,296 | 16,239 | |||||||||||||||||||||||||||
Series F Convertible Preferred Stock | Common Stock [Member] | ||||||||||||||||||||||||||||||
Common Share Issued | 234,237 | |||||||||||||||||||||||||||||
Conversion Of Stock, Shares Converted | 1,296 | |||||||||||||||||||||||||||||
Series D Warrants | ||||||||||||||||||||||||||||||
Common Share Issued | 50,000 | |||||||||||||||||||||||||||||
Conversion Of Stock, Shares Converted | 645,845 | 10,000 | ||||||||||||||||||||||||||||
Warrants cancelled during period | 133,341 | |||||||||||||||||||||||||||||
Conversion of stock, shares converted1 | 10,000 | |||||||||||||||||||||||||||||
Conversion of stock, shares issued2 | 101,560 | |||||||||||||||||||||||||||||
Conversion of stock, shares converted2 | 20,312 | |||||||||||||||||||||||||||||
Series D Preferred Stock Units | ||||||||||||||||||||||||||||||
Common Share Issued | 522,108 | |||||||||||||||||||||||||||||
Conversion Of Stock, Shares Converted | 522,108 | |||||||||||||||||||||||||||||
Common stock shares issued | 1,489,444 | 14,566,420 | ||||||||||||||||||||||||||||
Series D Preferred Stock Units | Common Stock [Member] | ||||||||||||||||||||||||||||||
Common Share Issued | 1,293,430 | 150,000 | 101,560 | |||||||||||||||||||||||||||
Conversion Of Stock, Shares Converted | 376,275 | 30,000 | 20,312 | |||||||||||||||||||||||||||
Series D Convertible Preferred Stock | ||||||||||||||||||||||||||||||
Common Share Issued | 522,108 | 150,000 | 40,000 | 106,875 | 220,000 | 45,390 | 44,000 | |||||||||||||||||||||||
Conversion Of Stock, Shares Converted | 522,108 | 9,078 | ||||||||||||||||||||||||||||
Series D Convertible Preferred Stock | Common Stock [Member] | ||||||||||||||||||||||||||||||
Common Share Issued | 40,000 | |||||||||||||||||||||||||||||
Units | Common Stock [Member] | ||||||||||||||||||||||||||||||
Issued common shares | 360,000 | 2,400,000 | ||||||||||||||||||||||||||||
Conversion Of Stock, Shares Converted | 46,847 | |||||||||||||||||||||||||||||
Units | Common Stock Warrants | ||||||||||||||||||||||||||||||
Warrants, issued | 360,000 | 2,400,000 | ||||||||||||||||||||||||||||
Exercise price | $ 5.50 | $ 5.50 | ||||||||||||||||||||||||||||
Common Stock | Mr. Sohn | ||||||||||||||||||||||||||||||
Issued common shares | 1,625 | 1,625 | ||||||||||||||||||||||||||||
Accrued compensation expenses | $ 16,425 | |||||||||||||||||||||||||||||
Preferred Stock Penalties [Member] | ||||||||||||||||||||||||||||||
Additional shares of Series D Preferred Stock issued amount | $ 1,929,516 | |||||||||||||||||||||||||||||
Additional shares of Series D Preferred Stock issued | 106,134 | |||||||||||||||||||||||||||||
Accrued related to Series E and Series F Preferred holders | $ 308,893 | |||||||||||||||||||||||||||||
Accrued penalty amount | $ 308,798 | 2,238,314 | ||||||||||||||||||||||||||||
Accrual reclassified to equity | 106,134 | |||||||||||||||||||||||||||||
Authorized capital amount increases | $ 200,000 | |||||||||||||||||||||||||||||
Penalties to holders of preferred stock | $ 6,000,000 | |||||||||||||||||||||||||||||
Warrants [Member] | ||||||||||||||||||||||||||||||
Common Share Issued | 112,726 | 3,229,225 | 106,876 | 220,000 | 81,195 | |||||||||||||||||||||||||
Conversion Of Stock Share Issued Value | $ 473,000 | |||||||||||||||||||||||||||||
Conversion Of Stock, Shares Converted | 112,726 | 376,275 | 30,000 | 8,000 | 21,375 | 9,078 | 16,239 | 44,000 | ||||||||||||||||||||||
Conversion Of Stock Converted Value | $ 321,000 | |||||||||||||||||||||||||||||
Loss On Exchange Of Stock | $ 152,244 | |||||||||||||||||||||||||||||
Shares cancelled during period | 8,755 |
STOCK OPTIONS AND WARRANTS (Det
STOCK OPTIONS AND WARRANTS (Details) | 1 Months Ended | 12 Months Ended | ||||||||||
May 10, 2021 | May 08, 2021 | May 06, 2021 | May 05, 2021 | Mar. 09, 2021 | Feb. 10, 2021 | Jun. 30, 2021 | Mar. 24, 2021 | Oct. 02, 2020 | Jul. 07, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Dividend Yield | 0% | 0% | ||||||||||
Risk-free Interest Rates | 0.80% | 0.80% | 0.80% | 0.80% | 0.80% | 0.80% | 0.07% | 0.83% | 110% | 10% | ||
Expected Life (in Years) | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 1 year | 5 years | 3 years 5 months 4 days | |||
Expected Volatility | 350% | 350% | 350% | 350% | 346% | 354% | 135% | 359% | ||||
Maximum [Member] | ||||||||||||
Risk-free Interest Rates | 4.12% | 1.33% | ||||||||||
Expected Life (in Years) | 4 years | 5 years | ||||||||||
Expected Volatility | 195% | 347% | ||||||||||
Minimum [Member] | ||||||||||||
Risk-free Interest Rates | 1.15% | 0.07% | ||||||||||
Expected Life (in Years) | 2 years 6 months | 1 year | ||||||||||
Expected Volatility | 132% | 136% |
STOCK OPTIONS AND WARRANTS (D_2
STOCK OPTIONS AND WARRANTS (Details 1) - Stock options - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Option Outstanding Beginning Balance (in Shares) | 2,671,177 | 676,304 |
Options Outstanding Granted (in Shares) | 1,667,561 | 2,364,500 |
Options Outstanding Expired Or Cancelled | $ (633,617) | $ (369,627) |
Option Outstanding Ending Balance (in Shares) | 3,705,121 | 2,671,177 |
Exercisable at December 31, 2022 | 2,413,710 | |
Weighted Average Exercise Price Outstanding Beginning Balance | $ 4.32 | $ 3.36 |
Weighted Average Exercise Price Granted | 1.44 | 4.44 |
Weighted Average Exercise Price Expired Or Cancelled | 3.45 | 4.83 |
Weighted Average Exercise Price Outstanding Ending Balance | 3.05 | 4.32 |
Weighted Average Exercise Price, Exercisable | $ 3.59 | $ 2.71 |
Weighted Average Remaining Life (in Years), Beginning year | 2 years 8 months 16 days | 3 years 6 months 18 days |
Weighted Average Remaining Life (in Years), Ending year | 2 years 9 months 18 days | 4 years 1 month 28 days |
Weighted Average Remaining Life (in Years), Exercisable | 2 years 8 months 15 days | |
Aggregate Intrinsic Value, Beginning Balance | $ 53,670 | $ 603,819 |
Aggregate Intrinsic Value, Ending Balance | $ 0 | $ 53,670 |
STOCK OPTIONS AND WARRANTS (D_3
STOCK OPTIONS AND WARRANTS (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
STOCK OPTIONS AND WARRANTS | ||
Warrants Outstanding, Beginning balance | 6,682,359 | 1,461,378 |
Warrants Outstanding, Issued | 2,163,220 | 6,008,237 |
Warrants Outstanding, Cancelled pursuant to modification | (265,148) | |
Warrants Outstanding, Reissued pursuant to modification | (522,108) | |
Exchanged to common stock | (112,726) | |
Increase due to trigger of anti-dilution provisions | 2,558,098 | |
Warrants Outstanding, Exercised | 0 | 0 |
Warrants Outstanding, Expired or cancelled | 0 | |
Warrants Outstanding, Ending balance | 11,290,951 | 6,682,359 |
Weighted Average Price Per Share, Beginning balance | $ 4.32 | $ 4.60 |
Weighted Average Price Per Share, Issued | 1.99 | 4.46 |
Weighted Average Price Per Share, Exchanged to common stock | 5 | |
Weighted Average Price Per Share, Increase due to trigger of anti-dilution provisions | 0.98 | |
Weighted Average Price Per Share, Cancelled pursuant to modification | 1.92 | |
Weighted Average Price Per Share, Reissued pursuant to modification | 4 | |
Weighted Average Price Per Share, Expired or cancelled | 4 | |
Weighted Average Price Per Share, Exercised | 0 | 0 |
Weighted Average Price Per Share, Ending balance | $ 2.84 | $ 4.32 |
STOCK OPTIONS AND WARRANTS (D_4
STOCK OPTIONS AND WARRANTS (Details 3) | 12 Months Ended |
Dec. 31, 2022 | |
Expected life (in years) | 5 years |
Dividend yield | 0% |
Maximum [Member] | |
Risk-free interest rates | 3.71% |
Expected volatility | 175% |
Minimum [Member] | |
Risk-free interest rates | 3.04% |
Expected volatility | 173% |
STOCK OPTIONS AND WARRANTS (D_5
STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 15, 2022 | Dec. 08, 2022 | Dec. 06, 2022 | Jun. 02, 2022 | Apr. 07, 2022 | Apr. 06, 2022 | Apr. 05, 2022 | Apr. 04, 2022 | Apr. 02, 2022 | Mar. 11, 2022 | Jan. 10, 2022 | Jan. 06, 2022 | Dec. 10, 2021 | Dec. 07, 2021 | Dec. 03, 2021 | Oct. 08, 2021 | Oct. 05, 2021 | Oct. 03, 2021 | Sep. 13, 2021 | Sep. 12, 2021 | Sep. 10, 2021 | Sep. 08, 2021 | Sep. 06, 2021 | Sep. 02, 2021 | Jul. 08, 2021 | Jul. 02, 2021 | May 10, 2021 | May 08, 2021 | May 06, 2021 | May 05, 2021 | Mar. 09, 2021 | Feb. 10, 2021 | Jan. 05, 2021 | Oct. 19, 2022 | Sep. 22, 2022 | Aug. 31, 2022 | Aug. 30, 2022 | Jun. 27, 2022 | May 18, 2022 | May 17, 2022 | Apr. 28, 2022 | Jan. 20, 2022 | Jan. 19, 2022 | Nov. 23, 2021 | Oct. 28, 2021 | Sep. 15, 2021 | Aug. 31, 2021 | Aug. 29, 2021 | Aug. 27, 2021 | Aug. 26, 2021 | Jun. 30, 2021 | Mar. 24, 2021 | Oct. 02, 2020 | Jul. 07, 2020 | Oct. 31, 2017 | Dec. 31, 2022 | Dec. 31, 2021 | Aug. 01, 2021 | Jul. 31, 2021 | Jun. 18, 2021 | Jun. 17, 2021 | Apr. 01, 2021 | May 31, 2020 | May 13, 2020 | May 12, 2020 | |
Units, issued | 360,000 | 2,400,000 | 2,700,000 | 3,427,946 | 190,000 | 1,108,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of warrants | from 1,510,417 to 3,020,834 and reduced the exercise price from $2.00 to $0.98 due to anti-dilution provisions in these warrants | The exercise price was reduced to $2.00 from $5.00 and the number of warrants was increased from 1,512,090 to 2,447,045. We have recorded a deemed dividend for the change in value due to the anti-dilution adjustments and an increase to the carrying value of the warrants of $658,266 as a result of the trigger of the anti-dilution provisions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Price per unit | $ 5 | $ 5 | $ 5 | $ 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other expense | $ 211,614 | $ 1,275,479 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other income | $ 1,886,212 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series D warrants were exchanged shares | 522,108 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liability | $ 2,404,182 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants for Service issued shares | 30,000 | 20,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants for Service exercise price | $ 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of placement agent warrants issued reduced | 72,728 | 287,606 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other expense related to the change in the fair value of the derivative | $ 676,177 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other income related to the change in the fair value of the derivative | 5,429,368 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liability classified | $ 7,405,224 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants, exercise price | $ 5 | $ 5.00342554 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share issued | 16,277,764 | 14,566,420 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Representative Warrants | 240,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Representative Warrants price | $ 6.25 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants upon conversion of Convertible Debentures | On July 2, 2021, the Company issued 1,489,596 common stock warrants with an exercise price of $5.50 in conjunction with the conversion of all $5,588,359 of convertible debentures outstanding, $115,593 of accrued interest through July 2, 2021 and a penalty amount of $253,767 on the convertible debentures issued in May/September 2020 (as discussed previously in Note 9 under Common Stock) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Placement Agent Warrants description | On January 5, 2021 and January 20, 2021, the Company issued 28,125 and 111,825 three year term common stock warrants respectively for a total of 139,950 warrants with an exercise price of $5.00. On July 2, 2021, the 139,950 warrants were reduced to 36,364 with an exercise price of $6.25. See "Convertible Debenture Warrants and Placement Agent Warrants” below | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Underwriter Warrants | 360,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note Holder Warrants description | On January 5, 2021, January 20, 2021 and February 3, 2021, the Company issued 140,625, 559,125, and 70,996 three year term common stock warrants respectively for a total of 770,746 warrants with an exercise price of $5.00. On July 2, 2021, the 770,746 warrants were increased to 772,303 with an exercise price of $5.00. See "Convertible Debenture Warrants and Placement Agent Warrants” below. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intrinsic value of options outstanding | $ 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intrinsic value of options exercisable | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 3,041,815 | $ 4,257,434 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-vested stock options 2023 | 1,366,691 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-vested stock options periods 2024 | 715,711 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-vested stock options periods 2025 | 402,210 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-vested stock options periods 2026 | 43,124 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total unrecognized compensation cost | $ 2,527,736 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend yield | 0% | 0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Initial derivative expense | $ 3,585,983 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount | $ 499,031 | $ 2,503,160 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Options granted to purchase common stock (in Shares) | 25,000 | 190,000 | 25,461 | 120,100 | 57,500 | 37,000 | 25,000 | 25,000 | 52,500 | 15,000 | 20,000 | 7,500 | 35,000 | 242,850 | 100,000 | 43,900 | 90,000 | 200,000 | 274,500 | 349,000 | 7,500 | 100,000 | 300,000 | 110,000 | 8,800 | 16,600 | 12,000 | 11,800 | 159,000 | 20,000 | 80,000 | 550,000 | 270,000 | 37,500 | 22,500 | 5,000 | 35,000 | 60,000 | 15,000 | 7,500 | 72,500 | 50,000 | 25,000 | 10,000 | 35,000 | 25,050 | 29,000 | 20,000 | |||||||||||||||||
Exercise price (in Dollars per share) | $ 0.37 | $ 1 | $ 0.47 | $ 1 | $ 2.03 | $ 2.12 | $ 2.12 | $ 2.12 | $ 2.47 | $ 2.87 | $ 2.40 | $ 2.64 | $ 3.96 | $ 3.60 | $ 2.86 | $ 3.45 | $ 3.45 | $ 3.45 | $ 4.59 | $ 3.96 | $ 3.96 | $ 3.96 | $ 4.65 | $ 4.65 | $ 4.96 | $ 8.125 | $ 8.125 | $ 8.125 | $ 8.125 | $ 8.625 | $ 6.75 | $ 1.10 | $ 1.31 | $ 1.31 | $ 1 | $ 1.07 | $ 1.07 | $ 1.60 | $ 2.40 | $ 2.40 | $ 3.31 | $ 2.96 | $ 3.97 | $ 4.05 | $ 4.05 | $ 4.05 | $ 3.96 | $ 4.50 | $ 8.125 | $ 5.50 | $ 4.99 | ||||||||||||||
Options term | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 1 year | 5 years | |||||||||||||||||
Award grant date value (in Dollars) | $ 1,371,231 | $ 134,986 | $ 162,491 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation expense over vesting period (in Dollars) | $ 71,538 | $ 134,946 | $ 97,551 | $ 95,925 | $ 342,808 | $ 11,249 | $ 65,315 | $ 13,541 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Volatility factor | 350% | 350% | 350% | 350% | 346% | 354% | 135% | 359% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk free interest rate | 0.80% | 0.80% | 0.80% | 0.80% | 0.80% | 0.80% | 0.07% | 0.83% | 110% | 10% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
weighted average remaining life | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years | 1 year | 5 years | 3 years 5 months 4 days | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend yield | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of vesting options | The options will vest monthly over one year | The options will vest quarterly over four years | The options will vest monthly over one year, with the first portion vesting on July 6, 2022 | The options will vest quarterly over four years, with the first portion vesting on July 7, 2022 | The options will vest quarterly over four years, with the first portion vesting on July 5, 2022 | The options will vest quarterly over four years, with the first portion vesting on July 1, 2022 | The options will vest quarterly over four years, with the first portion vesting on July 4, 2022 | The options will vest quarterly over four years, with the first portion vesting on July 1, 2022 | The options will vest quarterly over four years, with the first portion vesting on June 11, 2022 | The options vest quarterly over a four-year period | The options vested 50% on March 3, 2022 and 50% on April 3, 2022 | The options will vest quarterly over four years, with the first portion vesting on March 10, 2022. | The options vested 50% at January 2, 2022 and 50% on February 2, 2022. | The options will vest quarterly over four years, with a one year cliff, with the first portion vesting on October 28, 2022. | The options will vest monthly over two years, with an eighth of the options vesting immediately. | The options will vest quarterly over four years, with the first portion vesting on January 3, 2022. | The options will vest quarterly over four years, with a one year cliff, with the first portion vesting on October 3, 2022 | The options will vest quarterly over two years, with a one year cliff, with the first portion vesting on September 10, 2022 | The options will vest quarterly over four years, with the first portion vesting on December 10, 2021 | The options will vest quarterly over two years, with a one year cliff, with the first portion vesting on September 10, 2022 | The options will vest quarterly over two years, with the first portion vesting on December10, 2021 | The options were vested at grant date on September 6, 2022 | The options vested 25% at grant date on September 1, 2021 and 75% on March 1, 2023 | The options will vest quarterly over two years, with the first portion vesting on October 8, 2021 | The options will vest months over two years | The options will vest months over two years | The options vest immediately | The options will vest quarterly over four years with a one-year cliff, with the first portion vesting on June 27, 2023 | The options will vest quarterly over four years with a one-year cliff, with the first portion vesting on May 17, 2023 | The options vested immediately | The options will vest monthly over two months, with the first portion vesting on May 28, 2022 | The options vest quarterly over a four-year period | The options vest quarterly over a four-year period | The options will vest quarterly over four years, with the first portion vesting on February 23, 2022. | The options will vest quarterly over four years, with a one year cliff, with the first portion vesting on October 28, 2022. | The options will vest quarterly over four years, with the first portion vesting on December 13, 2021 | The options will vest quarterly over four years, with a one year cliff, with the first portion vesting on August 31, 2022 | The options will vest quarterly over two years, with the first portion vesting on November 30, 2021 | The options vested 50% after 60 days and 50% after 180 days, with the first portion having vested on October 31, 2021 | The options will vest quarterly over four years, with a one year cliff, with the first portion vesting on August 26, 2022 | |||||||||||||||||||||||||
Compensation expense (in Dollars) | $ 71,538 | $ 22,491 | $ 8,129 | $ 15,988 | $ 428,510 | $ 17,549 | $ 14,669 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of derivative | $ 6,874,533 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Initial derivative expense | $ 0 | $ 3,585,983 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock shares issuable upon exercise of warrants or rights | 587,945 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | 250,000,000 | 250,000,000 | 31,250,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series D Preferred Stock Warrants [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend yield | 0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Volatility factor | 344% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk free interest rate | 0.34% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
weighted average remaining life | 5 years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value adjustment of warrants | $ 2,642,175 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of warrants before anti-dilution adjustments | 191,814 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of warrants after anti-dilution adjustments | 575,440 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants, cancelled | 133,341 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of derivative liability | $ 373,070 | $ 26,465 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued during period | 889,376 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of warrants | 3,438 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants exercise price before anti-dilution ajustments | $ 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants exercise price after anti-dilution ajustments | $ 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 Equity Incentive Plan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock, shares authorized | 439,584 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option granted, description | Any option granted under the 2017 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant and not less than $4.00 per share, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Terms of grants, description | The term of each plan option and the manner in which it may be exercised is determined by the Board or the Compensation Committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of shares authorized by the plan (in Shares) | 1,308,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 Equity Incentive Plan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of common stock available for issuance | 2,554 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stocks Option [Member] | 2017 Equity Incentive Plan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock, shares authorized | 685,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debenture Warrant [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected life (in years), Minimum | 2 years 11 months 4 days | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected life (in years) | 3 years | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend yield | 0% | 0% | 0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected volatility, Maximum | 216% | 341% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected volatility, Minimum | 215% | 252% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk-free interest rates, Minimum | 0.17% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk free interest rate | 0.22% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of warrants | 770,746 | 738,282 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value | $ 5,040,080 | $ 4,665,877 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount | $ 1,454,097 | 1,325,323 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Initial derivative expense | $ 3,340,554 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Private Placement [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected life (in years), Minimum | 2 years 11 months 5 days | 2 years 11 months 4 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected life (in years), Maximum | 3 years | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend yield | 0% | 0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected volatility, Maximum | 216% | 341% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected volatility, Minimum | 215% | 252% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk-free interest rates, Minimum | 0.17% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk free interest rate | 0.22% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of warrants | 139,950 | 147,657 | 36,364 | 139,950 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value | $ 919,979 | $ 933,177 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt cost | 919,979 | $ 933,177 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-Funded Warrants [Warrants] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants, exercise price | $ 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrnats liability | $ 600,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock shares issuable upon exercise of warrants or rights | 587,945 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants [Warrants] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants, exercise price | $ 2 | $ 5 | $ 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share issued | 112,726 | 706,551 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants Granted | 112,726 | 1,510,417 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt proceeds | $ 1,032,842 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excercise reduce price | $ 0.98 | $ 2 | $ 0.98 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carriying value of warrants | $ 1,262,947 | $ 658,266 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued | 622,803 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Warrants exercisable | 83,708 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of warrants | $ 703,125 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected life (in years), Minimum | 2 years 11 months 5 days | 2 years 11 months 4 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected life (in years), Maximum | 5 years | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected volatility, Maximum | 3.27% | 341% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expected volatility, Minimum | 3.04% | 252% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrnats liability | $ 600,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash fee | 1.25% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount | $ 103,125 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Penalty expense | 12 years | 12 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk-free interest rates, Minimum | 175.47% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other expense related to the change in the fair value of the derivative | $ 1,275,479 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend yield | 0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Volatility factor | 228% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk free interest rate | 0.15% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
weighted average remaining life | 2 years 4 months 24 days | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of derivative | $ 6,874,533 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||
Jun. 21, 2022 | Mar. 24, 2022 | Feb. 18, 2022 | Mar. 31, 2020 | Sep. 30, 2019 | Dec. 31, 2022 | Nov. 30, 2021 | Oct. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2019 | |
Complainant amount of promissory note | $ 500,000 | |||||||||
Interest rate on complainant amount of promissory note | 12% | |||||||||
Investor Relations Payment | $ 253,505 | |||||||||
Recognized revenue | $ 161,904 | |||||||||
Litigation Accrued | $ 250,000 | |||||||||
Promissory Note | $ 500,000 | |||||||||
Sublease Expires, Description | The sublease originally was set to expire in November 2022 | |||||||||
Covid-19, Description | The extent to which the COVID-19 pandemic will impact operations, ability to obtain financing or future financial results is uncertain at this time | |||||||||
Leases [Member] | ||||||||||
Effective borrowing rate | 10% | |||||||||
Corresponding lease liability | $ 269,054 | |||||||||
BKR Strategy Group | ||||||||||
Promissory Note | $ 1,400,000 | |||||||||
Counterclaim Against Overbilling | $ 500,000 | |||||||||
Maximum [Member] | ||||||||||
Lease Payments Per Month | $ 7,535 | |||||||||
Minimum [Member] | ||||||||||
Lease Payments Per Month | $ 7,307 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jan. 31, 2022 | Jun. 29, 2019 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2019 | Jul. 31, 2021 | |
Account receivable | $ 0 | $ 22,951 | ||||
Revenue From Icon | 0 | 970 | ||||
Cost Of Revenue for service provided | 17,745 | |||||
Consulting Fees Expense | 13,500 | |||||
Recognized Other Revenues | 0 | 106,842 | ||||
Employer Of Record Services Costs | 99,904 | |||||
Owes Icon Cost | 0 | 163,672 | ||||
Payment Of Icon | 0 | 49,033 | ||||
License Agreement Description | 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 | |||||
Operating Expenses | 25,480,048 | 24,219,674 | ||||
Interest Expense | 965,323 | 3,137,050 | ||||
Cost Of Revenue | 16,624,690 | 14,909,389 | ||||
Services Agreement [Member] | ||||||
Expenses | $ 36,181 | 162,102 | ||||
Related Party Transactions [Member] | ||||||
License Agreement Description | This was an oral arrangement prior to January 17, 2020. The initial term of the Services Agreement is five years, whereupon it shall automatically renew for additional successive 12-month terms until terminated by either party by submitting a 90-day prior written notice of non-renewal | |||||
Icon Information Consultants [Member] | ||||||
Outstanding Amount Payables | $ 1,075,645 | |||||
Remaining Amount Payment | $ 118,534 | |||||
Genesys [Member] | ||||||
Monthly License Fee | $ 5,000 | |||||
Operating Expenses | $ 19,825 | 117,389 | ||||
Recruiter Annual Fee | $ 1,995 | |||||
Payment Of License Agreement Fees | 0 | 22,810 | ||||
Director [Member] | ||||||
Utilized the Company for services | 6,000 | |||||
Service Provided by Icon | ||||||
Cost Of Revenue | 0 | 498,848 | ||||
Finance Charges [Member] | ||||||
Interest Expense | 0 | 30,466 | ||||
Operating Expenses | ||||||
Operating Expenses | $ 0 | $ 132,253 |
BUSINESS COMBINATION (Details)
BUSINESS COMBINATION (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill | $ 7,101,084 | $ 7,718,842 | $ 3,517,315 |
Scouted Asset Purchase [Member] | |||
Sales And Client Relationships And Contracts | 1,382,076 | ||
Intellectual Property | 98,721 | ||
Domains | 18,000 | ||
Goodwill | 306,386 | ||
Total Purchase Price | $ 1,805,183 |
BUSINESS COMBINATION (Details 1
BUSINESS COMBINATION (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill | $ 7,101,084 | $ 7,718,842 | $ 3,517,315 |
Upsider Asset Purchase [Member] | |||
Sales And Client Relationships And Contracts | 3,130,773 | ||
Intellectual Property | 156,539 | ||
Domains | 4,600 | ||
Goodwill | 736,525 | ||
Accounts Payable | (89,089) | ||
Total Purchase Price | $ 3,939,348 |
BUSINESS COMBINATION (Details 2
BUSINESS COMBINATION (Details 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue | $ 25,372,274 | $ 22,184,112 | |
Goodwill | 7,101,084 | 7,718,842 | $ 3,517,315 |
Net Loss | (16,474,688) | (16,334,615) | |
Parrut [Member] | |||
Revenue | 22,751,140 | ||
Net Loss | $ (18,163,543) | ||
Loss per common share, basic and diluted | $ (2.11) | ||
One Wire Asset Purchase [Member] | |||
Cash | 54,868 | ||
Accounts Receivable | 165,285 | ||
Sales And Client Relationships And Contracts | 760,852 | ||
Intellectual Property | 121,700 | ||
Domains | 10,152 | ||
Goodwill | 369,671 | ||
Total Purchase Price | $ 1,482,528 |
BUSINESS COMBINATION (Details 3
BUSINESS COMBINATION (Details 3) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill | $ 7,101,084 | $ 7,718,842 | $ 3,517,315 |
Revenue | 25,372,274 | 22,184,112 | |
Net Loss | (16,474,688) | (16,334,615) | |
Parrut [Member] | |||
Revenue | $ 22,751,140 | ||
Loss per common share, basic and diluted | $ (2.11) | ||
Net Loss | $ (18,163,543) | ||
Parrut Asset Purchase [Member] | |||
Cash | 10,702 | ||
Accounts Receivable | 17,720 | ||
Prepaid Assets | 11,910 | ||
Intangible Assets | 3,941,266 | ||
Goodwill | 657,953 | ||
Total Purchase Price | $ 4,639,551 | ||
Parrut Asset Purchase [Member] | Parrut [Member] | |||
Revenue | $ 23,017,512 | ||
Loss per common share, basic and diluted | $ (1.99) | ||
Net Loss | $ (17,093,361) |
BUSINESS COMBINATION (Details 4
BUSINESS COMBINATION (Details 4) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill | $ 7,101,084 | $ 7,718,842 | $ 3,517,315 |
Revenue | 25,372,274 | 22,184,112 | |
Net Loss | (16,474,688) | (16,334,615) | |
Parrut [Member] | |||
Revenue | 22,751,140 | ||
Net Loss | $ (18,163,543) | ||
Loss per common share, basic and diluted | $ (2.11) | ||
Novo Asset Purchase [Member] | |||
Accounts Receivable | 762,000 | ||
Prepaid Assets | 55,000 | ||
Intangible Assets | 2,062,296 | ||
Goodwill | 4,661,317 | ||
Assumed Liabilities | (423,188) | ||
Total Purchase Price | $ 7,117,425 | ||
Novo Asset Purchase [Member] | Parrut [Member] | |||
Revenue | $ 26,306,444 | ||
Net Loss | $ (15,178,909) | ||
Loss per common share, basic and diluted | $ (1.76) |
BUSINESS COMBINATION (Details N
BUSINESS COMBINATION (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||||||
Apr. 02, 2022 | Jul. 07, 2021 | May 10, 2021 | Oct. 19, 2022 | Aug. 27, 2021 | Mar. 31, 2021 | Mar. 25, 2021 | Jan. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2022 | Jun. 01, 2022 | Apr. 01, 2022 | Dec. 13, 2021 | |
Common Share Issued | 6,479 | 89,172 | ||||||||||||
Cash Consideration | $ 0 | |||||||||||||
Increase in accounts receivable | $ 1,492,093 | $ 4,690,668 | ||||||||||||
Novo Agreement [Member] | ||||||||||||||
Principal Amount Owed | $ 3,000,000 | |||||||||||||
Principal Amount Owed Reduce | $ 600,000 | |||||||||||||
Pricnipal Amount Owed Reduced Value | $ 2,400,000 | |||||||||||||
Debt Forgiven | $ 52,117 | |||||||||||||
Separate Lump Sum Pre-payment | $ 1,250,000 | |||||||||||||
Escrow Shares Issued | 76,277 | |||||||||||||
Prepayment Term Description | If we make the Pre-Payment on or before June 1, 2022, 25,000 escrow shares will be released to us and cancelled. If the full balance is paid off on or before August 1, 2022, 25,901 escrow shares will be released to us and cancelled. Conversely, if we do not make the Pre-Payment on or before June 1, 2022, 25,000 escrow shares will be released to Novo Group. If the full balance is not paid on or before the August 1, 2022 payoff date, 25,901 escrow shares will be released to Novo Group. In addition, if we do not pay off the Novo Note on or before December 31, 2022, we shall issue 25,000 shares of our common stock to Novo Group. These shares will be issued in 2023. | |||||||||||||
Escrow shares released | 25,000 | |||||||||||||
Escrow shares balance | 25,901 | |||||||||||||
Upsider Asset Purchase [Member] | ||||||||||||||
Restricted Common Stock | 323,094 | |||||||||||||
Number Of Reserve Shares | 51,940 | |||||||||||||
Restricted Stock Par Value | $ 7.88 | |||||||||||||
Total Purchase Price | $ 390,000 | |||||||||||||
Net Cash | 69,983 | |||||||||||||
Restricted Stock Expense | $ 2,544,362 | |||||||||||||
Issuance Of Earn-out Shares | 321,390 | |||||||||||||
Parrut Asset Purchase [Member] | ||||||||||||||
Per Share Price | $ 0.98 | |||||||||||||
Common Share Issued | 1,374,678 | |||||||||||||
Consisting Cash | $ 500,000 | |||||||||||||
Promissory Note | $ 1,750,000 | |||||||||||||
Interest Rate | 6% | |||||||||||||
Maturity Date | Jul. 01, 2023 | |||||||||||||
Common Stock Shares | 257,545 | |||||||||||||
Closing Common Stock Value | $ 1,264,551 | |||||||||||||
Earn-out Consideration | $ 1,350,000 | |||||||||||||
Novo Asset Purchase [Member] | ||||||||||||||
Contingent Consideration, Description | $1,337,500 in cash, (ii) a $3,000,000 promissory note with an interest rate of 6%, that originally matured on February 1, 2024, (iii) working capital adjustments in the amount of approximately $217,045, which was paid as of September 30, 2021 and (iv) 508,711 restricted shares of common stock valued at $2,019,583 (based on the acquisition date share price), of which 127,178 of our restricted shares of Common Stock were placed in escrow to account for post-closing adjustments in respect to Novo Group’s revenue from the closing date to the end of the 2021 calendar year, as well as to partially secure the indemnification obligations of Novo Group’s former owners | |||||||||||||
Contingent Consideration | $ 543,297 | |||||||||||||
Base Purchase Price | $ 7,117,425 | |||||||||||||
Increase in accounts receivable | $ 35,644 | |||||||||||||
Scouted Asset Purchase [Member] | ||||||||||||||
Restricted Common Stock | 224,163 | |||||||||||||
Number Of Reserve Shares | 33,151 | |||||||||||||
Restricted Stock Par Value | $ 7.25 | |||||||||||||
Cash Consideration | $ 180,000 | |||||||||||||
Total Purchase Price | 180,000 | |||||||||||||
Shares Held In Reserve | 33,151 | |||||||||||||
Restricted Stock Expense | 1,625,183 | |||||||||||||
Acquired Intangible Assets | $ 180,000 | |||||||||||||
One Wire Asset Purchase [Member] | ||||||||||||||
Number Of Reserve Shares | 31,066 | |||||||||||||
Shareholders Consideration Shares | 155,327 | |||||||||||||
Shareholders Consideration Value | $ 1,255,000 | |||||||||||||
Shareholders Consideration Price Per Share | $ 8.0797 | |||||||||||||
Fair Value Of Additional Common Stock Shares | $ 45,751 | |||||||||||||
Common Stock Value At The Acquisition Date | 1,436,777 | |||||||||||||
Purchase Price Allocation | 150,000 | |||||||||||||
Total Purchase Price | $ 1,482,528 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets (liabilities): | ||
Net operating loss carryover | $ 8,723 | $ 6,377 |
Intangibles amortization | 375 | 350 |
Stock compensation | 3,126 | 1,717 |
Capital losses | 14 | 19 |
Bad debt allowance | 376 | 221 |
Other | (689) | (942) |
Deferred revenue | (23) | (241) |
Total deferred tax assets, net | 11,902 | 7,983 |
Less: valuation allowance | (11,902) | (7,983) |
Net deferred tax assets | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Statutory federal income tax rate | (21.00%) | (21.00%) |
State income taxes, net of federal benefits | (0.11%) | (2.10%) |
Non-deductible items | 5.82% | 3.26% |
True ups | (8.50%) | (0.19%) |
Change in valuation allowance | 23.79% | 20.03% |
Effective income tax rate | 0% | 0% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Net operating loss carryforwards | $ 40,100,000 | $ 7,100,000 |
Deferred tax carried forward | $ 33,000,000 | |
Valuation allowance, percentage | 100% | |
Valuation allowance | $ 3,919,000 | $ 3,272,000 |
Income tax, description | In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. The Company has not completed an IRC Section 382/383 analysis. | |
Corporate tax rate | 21% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($) | 1 Months Ended | ||
Feb. 03, 2023 | Feb. 28, 2023 | Jan. 01, 2023 | |
Description of reduce in exercise Price | the Warrant Amendments lower the exercise price of the Warrants to $0.38 per warrant share, as further described in the Warrant Amendments. As a result of the lowered exercise price of the Warrants, the exercise price of warrants issued by the Company on May 28, 2020, January 5, 2021, January 20, 2021, August 17, 2022, and August 30, 2022, will be automatically lowered to $0.38 per warrant share. | ||
Common stock shares value | $ 110,800 | ||
Investors [Member] | |||
Issued common shares | 821,520 | ||
Exercised warrants with strike price | $ 0.38 | ||
Proceed exercised warrants with strike price | $ 312,178 |