8-K: Recruiter.com Secures Exclusive License for GoLogiq's Fintech Technology Amidst Delisting Concerns

Recruiter.com Group, Inc. has entered into a technology license agreement with GoLogiq, Inc., granting them exclusive rights to develop and sell GoLogiq's fintech products, while also facing potential delisting from Nasdaq.

Summary

• Recruiter.com Group, Inc. (RCRT) has entered into a Technology License and Commercialization Agreement with GoLogiq, Inc. (GOLQ), replacing a previous stock purchase agreement.
• Under the agreement, RCRT gains a 10-year exclusive worldwide license to develop and sell GOLQ's fintech technology, including products like Createapp, Paylogiq, Gologiq, and Radix AI.
• RCRT will issue shares to GOLQ representing 19.99% of RCRT's outstanding shares, resulting in GOLQ owning 16.66% of RCRT after the issuance.
• RCRT will also pay GOLQ an 8% royalty on net sales of the licensed products.
• RCRT has the option to purchase the GOLQ technology for $400,000 during the term of the agreement, subject to shareholder approval if required.
• RCRT received a delisting notice from Nasdaq due to not meeting the minimum $2.5 million stockholders' equity requirement and not holding an annual shareholder meeting.
• RCRT believes it was technically in compliance with the equity standard on the date of the delisting determination, but Nasdaq was concerned about continued losses.
• The GOLQ license is expected to add approximately $3.5 million in assets to RCRT's balance sheet, potentially helping them meet Nasdaq's listing requirements.
• RCRT plans to file a proxy statement for the election of directors and to ratify the appointment of Salberg & Company, P.A. as their independent auditor.

Sentiment

Score: 4

Explanation: The document contains both positive and negative elements. The technology license is a positive development, but the delisting notice and financial concerns are significant negatives. The overall sentiment is cautiously negative.

Positives

• The exclusive license provides Recruiter.com with access to valuable fintech technology.
• The addition of $3.5 million in assets to the balance sheet could help Recruiter.com regain compliance with Nasdaq listing requirements.
• The licensing agreement replaces a previous stock purchase agreement, simplifying the transaction.
• The company has an option to purchase the technology for a fixed price of $400,000.

Negatives

• Recruiter.com received a delisting notice from Nasdaq due to not meeting the minimum stockholders' equity requirement.
• The company also failed to hold an annual shareholder meeting, which is another reason for delisting.
• Nasdaq was concerned about continued losses and the potential further reduction of shareholders' equity.
• The company is facing a hearing with Nasdaq to review the delisting decision.

Risks

• There is a risk of delisting from Nasdaq if Recruiter.com cannot regain compliance with listing requirements.
• The company's continued losses could further reduce shareholders' equity.
• The success of the licensed technology is not guaranteed and may not generate sufficient revenue to offset costs.
• The company may need to seek shareholder approval to exercise the option to purchase the technology.

Future Outlook

The company expects the acquisition of the GOLQ license to add approximately $3.5 million in assets to the company's balance sheet, which should substantially exceed the level required by Nasdaq, enabling the company to comply with Nasdaq's continuing listing requirements for the foreseeable future.

Management Comments

• Company management believes the Company was technically in compliance with the shareholders equity standard, having $2.5 million in shareholders equity on the date of Nasdaqs delisting determination.
• Company management believes that the acquisition of the GOLQ License should add approximately $3.5 million in assets to the Companys balance sheet, and as a result, shareholders equity should substantially exceed the level required by Nasdaq.

Industry Context

This agreement reflects a trend of companies seeking to expand their technology offerings through licensing agreements. The fintech sector is highly competitive, and companies are looking for ways to quickly integrate new technologies to gain a competitive edge. The delisting notice highlights the challenges faced by smaller companies in maintaining compliance with exchange listing requirements.

Comparison to Industry Standards

• The licensing agreement is similar to other technology licensing deals in the software and fintech industries, where companies often license intellectual property to expand their product offerings.
• The 8% royalty rate is within the typical range for technology licensing agreements, although the specific rate can vary based on the technology and market conditions.
• The $400,000 option to purchase the technology is a relatively low price, suggesting that the technology may be early stage or that the licensor is prioritizing the royalty stream.
• The delisting notice is a significant concern, as many companies in the same market segment are able to maintain their listing on major exchanges. For example, companies like Upwork and Fiverr, which operate in the broader talent marketplace, have maintained their Nasdaq listings.

Stakeholder Impact

• Shareholders face the risk of delisting and potential loss of investment if the company cannot regain compliance with Nasdaq listing requirements.
• Employees may be affected by the company's financial challenges and potential delisting.
• Customers may be impacted by the company's ability to continue operations and provide services.
• Suppliers and creditors may be concerned about the company's financial stability.

Next Steps

• Recruiter.com plans to file a proxy statement for the election of directors and to ratify the appointment of Salberg & Company, P.A. as their independent auditor.
• Recruiter.com will attend a hearing with Nasdaq on April 18, 2024, to review the delisting decision.
• Recruiter.com will need to successfully commercialize the licensed technology to generate revenue and improve its financial position.

Key Dates

Keywords

technology license, fintech, delisting, Nasdaq, GoLogiq, Recruiter.com, shareholder equity, royalty, intellectual property, commercialization