Annual report pursuant to Section 13 and 15(d)

Liquidity, Financial Condition and Management's Plans

v2.4.0.8
Liquidity, Financial Condition and Management's Plans
12 Months Ended
Dec. 31, 2013
Liquidity, Financial Condition and Management's Plans [Abstract]  
Liquidity, Financial Condition and Management's Plans
2. Liquidity, Financial Condition and Management's Plans
 
The Company funds its operations principally from cash on hand and accounts receivable collected.
 
The Company completed an initial public offering ("IPO") of its equity securities (Note 12) on March 8, 2013 and received $19,474,565 in proceeds, net of offering costs. The Company incurred approximately $1.3 million of IPO expenses through December 31, 2013 in its efforts to complete the IPO. Expenses incurred in connection with the IPO were accounted for as a reduction of the offering proceeds.
 
We had been dependent on Monster Worldwide, Inc. ("Monster Worldwide" or "Monster") for all of our recruitment revenue pursuant to an alliance agreement that expired on December 31, 2012. As more fully described in Note 13 below, we entered into a diversity recruitment partnership agreement with LinkedIn Corporation ("LinkedIn") on November 12, 2012, which became effective on January 1, 2013 and terminated on March 29, 2014. Pursuant to the agreement, LinkedIn may resell to its customers diversity-based job postings and recruitment and advertising on our websites. LinkedIn notified the Company of its decision to terminate its agreement with the Company effective March 29, 2014, and as a result, LinkedIn will no longer be a reseller of the Company's diversity recruitment products and services. As part of the termination notice, LinkedIn waived their right under the termination conditions of the contract preventing the Company from soliciting the 1,000 accounts on the LinkedIn protected list for a period of one year.

The non-renewal of our agreement with Monster Worldwide had a material impact on revenue and operating cash flow during the year ended December 31, 2013. With respect to job postings that Monster sold prior to the expiration of our agreement on December 31, 2012, we mutually agreed with Monster to maintain such postings on our websites until June 30, 2013. In addition, we agreed to continue to provide Monster with access to certain data until December 31, 2013. We have incurred and expect to continue to incur only de minimis additional labor and costs, and will not receive any additional payments from Monster Worldwide subsequent to the expiration of our agreement. Additionally, as of January 1, 2013, we have begun to sell our products and services directly to employers, except for those identified as restricted by LinkedIn.

The termination of our agreement with LinkedIn on March 29, 2014 will have a material impact on revenue and operating cash flow during the year ended December 31, 2014. In response to this and to help mitigate the impact of the loss of revenue, the Company is adjusting its business plan and focusing on its key areas of strength, including, but not limited to:
 
·
Our ability to sell directly and earn 100% of each sale;
 
·
Eliminate key account restrictions imposed on us during the effective time of the LinkedIn agreement;
 
·
Benefit from new enhanced OFCCP regulations enhancing demand for our products and services;
 
·
Benefit from the strength of our business foundation and management team; and
 
·
Pursue potential acquisition opportunities in the recruitment industry.
 
As of December 31, 2013, we have incurred various expenses associated with the evolution of our business. These costs include public company compliance expenses, sales and marketing expenses to access recruiting customers directly and investments in our recruiting platform to better serve our diverse job seekers.