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Subsequent Events | 3 Months Ended
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Mar. 31, 2020
Subsequent Events [Abstract] |
SUBSEQUENT EVENTS | NOTE 13 — SUBSEQUENT EVENTS Reincorporation On May 13, 2020, the Company effected a reincorporation from the State of Delaware to the State of Nevada. Following the approval by the Company's stockholders at a special meeting held on May 8, 2020, Recruiter.com Group, Inc., a Delaware corporation ("Recruiter.com Delaware"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Recruiter.com Group, Inc., a Nevada corporation and a wholly owned subsidiary of Recruiter.com Delaware ("Recruiter.com Nevada"), pursuant to which Recruiter.com Delaware merged with and into Recruiter.com Nevada, with Recruiter.com Nevada continuing as the surviving entity. Simultaneously with the reincorporation, the number of shares of common stock the Company is authorized to issue was increased from 31,250,000 shares to 250,000,000 shares. The reincorporation did not result in any change in the corporate name, business, management, fiscal year, accounting, location of the principal executive office, or assets or liabilities of the Company. Common Stock In April 2020, the Company issued a total of 90,000 shares of restricted common stock to consultants pursuant to previously executed consulting agreements. The Company has issued 138,926 shares of common stock upon the conversion of 11,114 shares of Series F Preferred Stock. Paycheck Protection Program Loans Subsequent to March 31, 2020, we have received $398,545 in loans borrowed from a bank pursuant to the Paycheck Protection Program under the CARES Act guaranteed by the SBA, which we expect to be forgiven in part or in full, subject to our compliance with the conditions of the Paycheck Protection Program. Stock Options In May 2020, the Company engaged a consultant to serve as the Company's Chief Financial Officer, effective upon filing of the Quarterly Report on Form 10-Q for the three months ended March 31, 2020. In connection with the appointment, the Company granted to the consultant 26,087 five-year non-qualified options to purchase common stock at an exercise price of $2.50 per share (the "Initial Term Options"), vesting in six equal monthly installments on the last calendar day of each calendar month, with the first portion vesting on May 31, 2020, subject to serving as the Chief Financial Officer of the Company on each applicable vesting date. The vesting of the Initial Term Options is subject to acceleration upon the listing of the Company's securities on NYSE American or the Nasdaq Capital Market, or any successor of the foregoing. Additionally, the Company issued to the consultant 431,251 five-year non-qualified options to purchase common stock at an exercise price of $2.50 per share (the "Uplist Options"), vesting over a two-year period in equal quarterly installments on the last day of each calendar quarter, with the first portion vesting on the last day of the calendar quarter during which the Company's securities begin trading on NYSE American or the Nasdaq Capital Market, subject to serving as the Chief Financial Officer of the Company on each applicable vesting date. In May 2020, the Company granted to a consultant 25,000 one-year non-qualified stock options exercisable at $2.50 per share, vesting in full upon confirmation of a pending project. Amendments to the Recruiter.com Group, Inc. 2017 Equity Incentive Plan In May 2020, the number of shares authorized for issuance under the Company's 2017 Equity Incentive Plan was increased to 1,714,000 shares. In June 2020, the number of shares authorized for issuance under the Company's 2017 Equity Incentive Plan was further increased to 2,770,000 shares. Convertible Debentures and Warrants In May and June 2020, the Company entered into a Securities Purchase Agreement, effective May 28, 2020 (the "Purchase Agreement") with several accredited investors (the "Purchasers"). Four of the investors had previously invested in the Company's preferred stock. Pursuant to the Purchase Agreement, the Company sold to the Purchasers a total of (i) $2,953,125 in the aggregate principal amount of 12.5% Original Issue Discount Senior Subordinated Secured Convertible Debentures (the "Debentures"), and (ii) 1,845,703 common stock purchase warrants (the "Warrants"), which represents 100% warrant coverage. The Company received a total of $2,625,000 in gross proceeds from the offering, taking into account the 12.5% original issue discount, before deducting offering expenses and commissions, including the placement agent's commission and fees of $295,000 and reimbursement of the placement agent's and lead investor's legal fees and the Company's legal fees in the aggregate amount of $100,000. The Company also agreed to issue to the placement agent, as additional compensation, 369,141 common stock purchase warrants exercisable at $2.00 per share. The Debentures mature on May 28, 2021, subject to a six-month extension at the Company's option. The Debentures bear interest at 8% per annum payable quarterly, subject to an increase in case of an event of default as provided for therein. The Debentures are convertible into shares of Common Stock at any time following the date of issuance at the Purchasers' option at a conversion price of $1.60 per share, subject to certain adjustments. The Debentures are subject to mandatory conversion in the event the Company closes an equity offering of at least $5,000,000 resulting in the listing of the Company's common stock on a national securities exchange. The Debentures rank senior to all existing and future indebtedness of the Company and its subsidiaries, except for approximately $508,000 of outstanding senior indebtedness. The Company may prepay the Debentures at any time at a premium as provided for therein. The Warrants are exercisable for three years from May 28, 2020 at an exercise price of $2.00 per share, subject to certain adjustments. The Company's obligations under the Purchase Agreement and the Debentures are secured by a first priority lien on all of the assets of the Company and its subsidiaries pursuant to a Security Agreement, effective May 28, 2020 (the "Security Agreement") by and among the Company, its wholly-owned subsidiaries, and the Purchasers, subject to certain existing senior liens. The Company's obligations under the Debentures are guaranteed by the Company's subsidiaries. The Purchase Agreement contains customary representations, warranties and covenants of the Company, including, among other things and subject to certain exceptions, covenants that restrict the ability of the Company and its subsidiaries, without the prior written consent of the Debenture holders, to incur additional indebtedness, including further advances under a certain preexisting secured loan, and repay outstanding indebtedness, create or permit liens on assets, repurchase stock, pay dividends or enter into transactions with affiliates. The Debentures contain customary events of default, including, but not limited to, failure to observe covenants under the Debentures, defaults on other specified indebtedness, loss of admission to trading on OTCQB or another applicable trading market, and occurrence of certain change of control events. Upon the occurrence of an event of default, an amount equal to 130% of the principal, accrued but unpaid interest, and other amounts owing under each Debenture will immediately come due and payable at the election of each Purchaser, and all amounts due under the Debentures will bear interest at an increased rate. 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. Series D Preferred Stock On June 9, 2020, the Company sold in a private placement 1,375 units (the "Units") at a purchase price of $18.1818 per Unit, taking into account a 10% discount, each Unit consisting of (i) one share of Series D Preferred Stock, and (ii) a Warrant to purchase seven shares of common stock, subject to adjustment as provided for therein. The Series D Preferred Stock sold in the financing convert into a minimum of 17,188 shares of common stock. The Company received gross proceeds of $25,000 from the sale of the Units. The Warrants are exercisable for five years from the issuance date at an exercise price of $4.8 per share, subject to adjustment as provided for therein. Adjustment of the Exercise Price and Number of Series D Warrants As a result of the issuance of the common stock purchase warrants in connection with the offering of Debentures in May and June 2020 described above, 480,564 Series D warrants then outstanding had their exercise price reduced to $1.60 per share, with a corresponding increase in the number of shares of common stock issuable upon exercise of such warrants to 1,441,692.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
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