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RELATED PARTY TRANSACTIONS | 9 Months Ended
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Sep. 30, 2022
RELATED PARTY TRANSACTIONS |
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 for the three and nine months ended September 30, 2022, and we have recorded consulting fees expense of $0 and $13,500 during the three and nine months ended September 30, 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 $9 thousand and $38 thousand for the three months ended September 30, 2022 and 2021, respectively, and expenses to this firm were $25 thousand and $151 thousand for the nine months ended September 30, 2022 and 2021, respectively. These expenses are included in product development expense in our unaudited condensed consolidated statements of operations. In January 2022, the Company hired a full-time Chief Technology Officer and no longer uses the services of Recruiter.com Mauritius. We were 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 renders certain related services to us. The Company has agreed to pay to Genesys (now called Opptly) a monthly license fee of $5,000 beginning September 29, 2019 and an annual fee of $1,995 for each recruiter being licensed under the License Agreement along with other fees that might be incurred. The Company has also agreed to pay Opptly monthly sales subscription fees beginning September 5, 2019 when Opptly assisted with closing a recruiting program. During the three months ended September 30, 2022 and 2021, we charged to operating expenses $0 and $25,121 for services provided by Opptly. During the nine months ended September 30, 2022 and 2021, we charged to operating expenses $19,825 and $112,149 for services provided by Opptly. As of August 6, 2021, we had paid off all remaining payables to Opptly due at that time and amended our agreement. We will continue with the License Agreement but have cancelled the sales subscription and services agreements. There could be other fees that will be owed as incurred, based on communication overages. The license agreement expired on March 31, 2022 and was not renewed. As of September 30, 2022 and December 31, 2021, the Company owes Genesys $0 and $22,810, respectively, in payables. 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 three and nine months ended September 30, 2022, and $35,519 and $106,842 for the three and nine months ended September 30, 2021, respectively. EOR costs related to customers processed by Icon Canada were $0 for the three and nine months ended September 30, 2022, and costs related to customers processed by Icon Canada was $33,212 and $99,904 for the three and nine months ended September 30, 2021, respectively. Currently, there is no intercompany agreement for those charges, and they are calculated on a best estimate basis. As of September 30, 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 three and nine months ended September 30, 2022, we charged to cost of revenue $0 related to services provided by Icon as our employer of record. During the three and nine months ended September 30, 2021, we charged to cost of revenue $119,147 and $452,250, respectively, related to services provided by Icon as our employer of record. During the three and nine months ended September 30, 2022, we charged to operating expenses $0 related to management fees, rent and other administrative expense. During the three and nine months ended September 30, 2021, we charged to operating expenses $0 and $132,253, respectively, related to management fees, rent and other administrative expense. During the three and nine months ended September 30, 2022 we charged to interest expense $0 related to finance charges on accounts payable owed to Icon. During the three and nine months ended September 30, 2021, we charged to interest expense $0 and $30,466, respectively, 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, 2021, 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 during the three months ended September 30, 2022 and 2021, respectively, and $0 and $970 during the nine months ended September 30, 2022 and 2021, respectively. We used a related party firm of the Company to pay certain recruiting services provided by employees of the firm during the three months ended March 31, 2021. During the three months ended March 31, 2021, we charged to cost of revenue $17,745 related to services provided, with no expense in the three months ended September 30, 2021 and with no expense in the three and nine months ended September 30, 2022 and no balance owed as of September 30, 2022.

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