Recruiter.com Announces First Quarter 2023 Financial Results

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NEW YORK, NY / ACCESSWIRE / May 15, 2023 / Recruiter.com Group, Inc. (NASDAQ:RCRT)(NASDAQ:RCRTW) (“Recruiter.com”), an on-demand recruiting platform, today announced financial results for its first quarter ended March 31, 2023.

Evan Sohn, CEO of Recruiter.com, commented on the quarter. “We are pleased to share that we have made significant progress in reducing net loss and improving cash management in our operating activities. Through strategic partnerships, we are actively reducing our operating burn and expect this to be demonstrated in our Q2 operating results. We have encountered some challenges in the past two quarters, including sequential declines in revenue due to a deteriorated economic environment. However, we remain resilient and committed to overcoming these obstacles.”

Mr. Sohn continued: “Our focus continues to be on improving our profitability. In line with our cost reduction initiatives, we launched new high-margin offerings, including our AI-enabled Candidate Pitch software, digital upskilling through Recruiting Classes, and a self-service platform, Recruiter Marketplace. By emphasizing these growth initiatives and remaining dedicated to our strategic goals, we are confident in our ability to navigate the current landscape and drive long-term success for our stakeholders.”

First Quarter 2023 Financial Highlights (Full Results in Tables Below)

Revenue for the first quarter totaled $3.3 million, a 52% decrease compared to revenue of $6.9 million in the first quarter of 2022, due primarily to a decrease in the Recruiters on Demand business.
Gross profit for the first quarter was $737 thousand, a 73% decrease compared to gross profit of $2.7 million in the first quarter of 2022, due to lower total revenue and a shift away from permanent placement.
Total operating expenses for the first quarter were $3.5 million, a 48% decrease compared to operating expenses of $6.8 million in the first quarter of 2022, due primarily to reductions in staff and the ongoing efficiencies gained from the integration of asset acquisitions.
Net loss for the first quarter was $3.3 million, a 21% improvement compared to a net loss of $4.2 million in the first quarter of 2022. The net loss in the first quarter of 2023 included interest expense and finance cost of $512 thousand, non-cash depreciation and amortization expense of $314 thousand, bad debt expense of $200 thousand, and equity-based compensation expense of $543 thousand.

About Recruiter.com Group, Inc.

Recruiter.com is an on-demand recruiting platform providing flexible talent acquisition solutions that scale from startups to the Fortune 100. With an on-tap network of thousands of recruiting professionals and recruitment marketing automation, Recruiter.com helps businesses solve today’s complex hiring challenges.

For investor information, visit https://investors.recruiter.com

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Cautionary Note Regarding Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “predict,” “forecast,” “believe,” “may,” “estimate,” “continue,” “anticipates,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements primarily on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include continued demand for professional hiring, the accuracy of the Recruiter Index® survey, the economic environment, the impact of the COVID-19 pandemic on the job market and the economy as virus levels are again rising in many states, and the Risk Factors contained within our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statements publicly, whether as a result of new information, future developments, or otherwise, except as may be required by law.

Company Contact:
Corporate Communications
[email protected]

-Tables Follow-

Recruiter.com
Condensed Consolidated Balance Sheets

	March 31,			December 31,
	2023			2022

ASSETS

Current assets:
Cash	$	238,235		$	946,804
Accounts receivable, net of allowance for doubtful accounts of $1,566,828 and $1,446,613, respectively		1,987,912			3,189,816
Prepaid expenses and other current assets		348,152			255,548

Total current assets		2,574,299			4,392,168

Property and equipment, net of accumulated depreciation of $23,463 and $17,210, respectively		55,082			61,340
Intangible assets, net		2,270,966			2,578,692
Goodwill		7,101,084			7,101,084

Total assets	$	12,001,431		$	14,133,284

Liabilities and Stockholders’ (Deficit)

Current liabilities:
Accounts payable	$	1,760,855		$	1,569,814
Accrued expenses		869,969			911,386
Accrued compensation		454,011			410,957
Accrued interest		114,040			81,576
Deferred payroll taxes		2,484			2,484
Other liabilities		50,677			17,333
Loans payable – current portion		3,946,815			3,700,855
Refundable deposit on preferred stock purchase		285,000			285,000
Warrant liability		600,000			600,000
Deferred revenue		271,291			215,219

Total current liabilities		8,355,142			7,794,624

Loans payable – long term portion		1,025,614			1,260,343

Total liabilities		9,380,756			9,054,967

Commitments and contingencies

Stockholders’ Equity (Deficit):
Preferred stock, 10,000,000 shares authorized, $0.0001 par value: undesignated: 7,013,600 shares authorized; no shares issued and outstanding as of December 31, 2021 and 2020, respectively		–			–
Preferred stock, Series D, $0.0001 par value; 2,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		–			–
Preferred stock, Series E, $0.0001 par value; 775,000 shares authorized; 86,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		9			9
Preferred stock, Series F, $0.0001 par value; 200,000 shares authorized; 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		–			–
Common stock, $0.0001 par value; 100,000,000 shares authorized; 14,851,146 and 16,277,764 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		1,722			1,629
Shares to be issued, 587,945 shares as of March 31, 2023 and December 31, 2022		59			59
Additional paid-in capital		75,693,838			74,332,161
Accumulated deficit		(73,074,953	)		(69,255,541	)
Total stockholders’ equity		2,620,675			5,078,317

Total liabilities and stockholders’ equity	$	12,001,431		$	14,133,284

Recruiter.com
Condensed Consolidated Statements of Operations
Unaudited

	Three months			Three Months
	Ended			Ended
	March 31, 2023			March 31, 2022

Revenue	$	3,292,739		$	6,868,653
Cost of revenue		2,555,425			4,178,071

Gross Profit		737,314			2,690,582

Operating expenses:
Sales and marketing		156,583			118,756
Product development (including related party expense of $9,186 and $16,771, respectively)		242,280			593,386
Amortization of intangibles		307,726			1,008,473
Impairment expense		–			–
General and administrative (including share-based compensation expense of $542,949 and $1,735,017, respectively, and related party expenses of $0 and $19,825, respectively)		2,834,125			5,095,704
Total operating expenses		3,540,714			6,816,319

Loss from Operations		(2,803,400	)		(4,125,737	)

Other income (expenses):
Interest expense		(514,156	)		(67,415	)
Other expense		1,787			10,814
Total other income (expenses)		(512,369	)		(56,601	)

Loss before income taxes		(3,315,769	)		(4,182,338	)
Provision for income taxes		–			–
Net Loss	$	(3,315,769	)	$	(4,182,338	)

Deemed dividends		(503,643	)		–
Net loss attributable to common shareholders	$	(3,819,412	)	$	(4,182,338	)

Net loss per common share – basic	$	(0.23	)	$	(0.28	)
Net loss per common share – diluted		(0.23	)		(0.28	)
Weighted average common shares – basic and diluted		16,795,738			14,760,254

Recruiter.com
Condensed Consolidated Statements Of Cash Flows

	Three months			Three months
	March 31			March 31
	2023			2022
Cash Flows From Operating Activities
Net loss	$	(3,315,769	)	$	(4,182,338	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		313,984			1,008,763
Bad debt expense		200,000			18,500
Equity based compensation expense		542,949			1,735,017
Warrant modification expense		–			152,244
Amortization of debt discount and debt costs		363,871			–
Factoring discount fee and interest		18,750			–
Change in fair value of earn-out liability		–			26,604
Changes in assets and liabilities:
Increase in accounts receivable		126,195			824,441
Decrease in accounts receivable – related parties		–			49,033
Increase in prepaid expenses and other current assets		(92,604	)		26,358
Increase in accounts payable and accrued liabilities		225,143			(724,810	)
Decrease in accounts payable and accrued liabilities – related parties		–			(124,337	)
Customer advances		33,344			–
(Decrease) increase in deferred revenue		56,071			(5,538	)
Net cash used in operating activities		(1,528,066	)		(1,196,063	)

Cash Flows From Investing Activities:
Capitalized software development costs		–			–
Proceeds from sale of internal-use software		–			–
Purchase of property and equipment		–			–
Net cash used in investing activities		–			–

Cash Flows From Financing Activities:
Payments of loans		(91,571	)		(479,505	)
Proceeds from factoring agreement		771,017			–
Repayments of factoring agreement		(175,127	)		–
Proceeds from exercise of warrants		315,178			–
Net cash provided by financing activities		819,497			(479,505	)

Net increase (decrease) in cash		(708,569	)		(1,675,568	)
Cash, beginning of period		946,804			2,584,062

Cash, end of period	$	238,235		$	908,494

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	98,867		$	60,018
Cash paid during the period for income taxes	$	–		$	–

Supplemental schedule of non-cash investing and financing activities:
Accounts receivable owed under factoring agreement collected directly by factor	$	875,709		$	–
Purchase price measurement period adjustment to goodwill and accounts receivable	$	–		$	35,644
Deemed dividends	$	503,643		$	–
Offering costs as a result of modification of warrants to induce exercise	$	10,400		$	–