Nixxy, Inc 10-Q for FY2021 Q1

Nixxy, Inc. (NIXX)

10-Q 2021-05-14 For: 2021-03-31

Added on April 05, 2026

About this 10-Q

Nixxy, Inc filed this 10-Q on May 14, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.16M; up 36.8% from $2.31M a year earlier
Net loss: $6.28M; compared with a net loss of $2.48M a year earlier

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Nevada		26-3090646
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

100 Waugh Dr. Suite 300, Houston, Texas		77007
(Address of principal executive offices)		(Zip Code)

Title of Each Class		Trading Symbol(s)		Name of each exchange on which registered
None		N/A		N/A

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

		Page
		number
Part I - Financial Information
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020	1
	Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the three months ended March 31, 2021 and 2020	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

Part II - Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37

	March 31,	December 31,
	2021	2020
	(Unaudited)
Assets

Current assets:
Cash	$662,356	$99,906
Accounts receivable, net of allowance for doubtful accounts of $47,463 and $33,000, respectively	1,780,401	942,842
Accounts receivable - related parties	44,383	41,124
Prepaid expenses and other current assets	138,122	167,045
Investments - marketable securities	1,647	1,424

Total current assets	2,626,909	1,252,341

Property and equipment, net of accumulated depreciation of $2,116 and $1,828, respectively	1,347	1,635
Right of use asset - related party	122,297	140,642
Intangible assets, net	6,489,722	795,864
Goodwill	3,517,315	3,517,315

Total assets	$12,757,590	$5,707,797


Liabilities and Stockholders' Deficit

Current liabilities:
Accounts payable	$748,764	$616,421
Accounts payable - related parties	921,220	779,928
Accrued expenses	710,855	423,237
Accrued expenses - related party	9,656	8,000
Accrued compensation	886,002	617,067
Accrued compensation - related party	116,000	122,500
Accrued interest	101,946	60,404
Contingent consideration for acquisitions	1,974,377	-
Liability on sale of future revenues, net of discount of $0 and $2,719, respectively	-	8,185
Deferred payroll taxes	159,032	159,032
Other liabilities	14,493	14,493
Loans payable - current portion	28,609	28,249
Convertible notes payable, net of unamortized discount and costs of $2,864,099 and $1,205,699, respectively	2,795,010	1,905,826
Refundable deposit on preferred stock purchase	285,000	285,000
Warrant derivative liability	16,496,364	11,537,997
Lease liability - current portion - related party	73,378	73,378
Deferred revenue	139,382	51,537

Total current liabilities	25,460,088	16,691,254

Lease liability - long term portion - related party	48,919	67,264
Loans payable - long term portion	41,435	73,541

Total liabilities	25,550,442	16,832,059

Commitments and contingencies (Note 10)	-	-

Stockholders' 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 March 31, 2021 and December 31, 2020, respectively	-	-
Preferred stock, Series D, $0.0001 par value; 2,000,000 shares authorized; 444,587 and 527,795 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	46	54
Preferred stock, Series E, $0.0001 par value; 775,000 shares authorized; 731,845 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	74	74
Preferred stock, Series F, $0.0001 par value; 200,000 shares authorized; 46,847 and 64,382 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	5	7
Common stock, $0.0001 par value; 250,000,000 shares authorized; 7,275,185 and 5,504,008 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	727	550
Shares to be issued for acquisitions, 716,861 shares as of March 31, 2021	2,248,367	-
Additional paid-in capital	25,763,020	23,400,078
Accumulated deficit	(40,805,091)	(34,525,025)
Total stockholders' deficit	(12,792,852)	(11,124,262)

Total liabilities and stockholders' deficit	$12,757,590	$5,707,797

	Three Months Ended	Three Months Ended
	March 31, 2021	March 31, 2020

Revenue (including related party revenue of $970 and $6,410, respectively)	$3,164,545	$2,313,123
Cost of revenue (including related party costs of $205,261 and $655,384, respectively)	2,254,910	1,751,196

Gross profit	909,635	561,927

Operating expenses:
Sales and marketing	57,543	25,243
Product development (including related party expense of $57,988 and $60,979, respectively)	70,660	83,093
Amortization of intangibles	159,173	159,173
General and administrative (including share based compensation expense of $502,407 and $870,722, respectively, and related party expenses of $126,632 and $122,918, respectively)	2,545,905	2,148,943

Total operating expenses	2,833,281	2,416,452

Loss from operations	(1,923,646)	(1,854,525)

Other income (expenses):
Interest expense (including related party interest expense of $12,273 and $0, respectively)	(1,427,588)	(44,206)
Initial derivative expense	(3,585,983)	-
Change in fair value of derivative liability	628,621	(565,088)
Forgiveness of debt income	24,925	-
Grant income	3,382	-
Net recognized gain (loss) on marketable securities	223	(18,786)
Total other income (expenses)	(4,356,420)	(628,080)

Loss before income taxes	(6,280,066)	(2,482,605)
Provision for income taxes	-	-
Net loss	$(6,280,066)	$(2,482,605)

Net loss per common share – basic and diluted	$(0.96)	$(0.59)

Weighted average common shares – basic and diluted	6,537,308	4,182,256

									Common stock to be
	Preferred stock Series D		Preferred stock Series E		Preferred stock Series F		Common stock		Issued for Acquisitions		Additional Paid in	Accumulated	Total Stockholders'
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Capital	Deficit	Equity (Deficit)
Balance as of December 31, 2020	527,795	$54	731,845	$74	64,382	$7	5,504,008	$550	-	$-	$23,400,078	$(34,525,025)	$(11,124,262)
Stock based compensation	-	-	-	-	-	-	-	-	-	-	502,407	-	502,407
Issuance of common shares for Scouted acquisition	-	-	-	-	-	-	438,553	44	38,978	113,036	1,271,760	-	1,384,840
Issuance of common shares for Upsider acquisition	-	-	-	-	-	-	-	-	677,883	2,135,331	-	-	2,135,331
Issuance of common shares for accrued compensation	-	-	-	-	-	-	4,063	-	-	-	16,425	-	16,425
issuance of common shares upon conversion of debentures and accrued interest	-	-	-	-	-	-	178,712	18	-	-	199,385	-	199,403
Cancellation of Series D preferred stock	(8,755)	(1)	-	-	-	-	-	-	-	-	1	-	-
Reclassification of derivative liability upon cancellation of Series D warrants	-	-	-	-	-	-	-	-	-	-	373,070	-	373,070
Issuance of common shares upon conversion of Series D preferred stock	(74,453)	(7)	-	-	-	-	930,664	93	-	-	(86)	-	-
Issuance of common shares upon conversion of Series F preferred stock	-	-	-	-	(17,535)	(2)	219,185	22	-	-	(20)	-	-
Net loss three months ended March 31, 2021	-	-	-	-	-	-	-	-	-	-	-	(6,280,066)	(6,280,066)
Balance as of March 31, 2021	444,587	$46	731,845	$74	46,847	$5	7,275,185	$727	716,861	$2,248,367	$25,763,020	$(40,805,091)	$(12,792,852)

Balance as of December 31, 2019	454,546	$46	734,986	$74	139,768	$14	3,619,658	$362	-	$-	$18,203,048	$(17,488,188)	$715,356
Stock based compensation	-	-	-	-	-	-	-	-	-	-	870,722	-	870,722
Series D Preferred stock issued for accrued penalties	106,134	11	-	-	-	-	-	-	-	-	1,929,505	-	1,929,516
Issuance of common shares upon conversion of Series D preferred stock	(12,900)	(1)	-	-	-	-	161,250	16	-	-	(15)	-	-
Issuance of common shares upon conversion of Series E preferred stock	-	-	(3,141)	-	-	-	39,260	4	-	-	(4)	-	-
Issuance of common shares upon conversion of Series F preferred stock	-	-	-	-	(64,272)	(6)	803,414	80	-	-	(74)	-	-
Net loss three months ended March 31, 2020	-	-	-	-	-	-	-	-	-	-	-	(2,482,605)	(2,482,605)
Balance as of March 31, 2020	547,780	$56	731,845	$74	75,496	$8	4,623,582	$462	-	$-	$21,003,182	$(19,970,793)	$1,032,989

	Three Months Ended	Three Months Ended
	March 31, 2021	March 31, 2020

Cash Flows from Operating Activities
Net loss	$(6,280,066)	$(2,482,605)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expense	159,461	159,461
Bad debt expense	16,963	11,250
Gain on forgiveness of debt	(24,925)	-
Equity based compensation expense	502,407	870,722
Recognized loss (gain) on marketable securities	(223)	18,786
Loan principal paid directly through grant	(2,992)	-
Amortization of debt discount and debt costs	1,309,212	31,976
Initial derivative expense	3,585,983	-
Change in fair value of derivative liability	(628,621)	565,088
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(854,522)	9,749
Increase in accounts receivable - related parties	(3,259)	(5,942)
(Increase) decrease in prepaid expenses and other current assets	28,923	(19,954)
Increase in accounts payable and accrued liabilities	643,270	387,823
Increase in accounts payable and accrued liabilities - related parties	136,448	324,073
Increase in other liabilities	-	51,780
Increase (decrease) in deferred revenue	87,845	(15,434)
Net cash used in operating activities	(1,324,096)	(93,227)

Cash Flows from Investing Activities
Proceeds from sale of marketable securities	-	14,955
Cash paid for acquisitions, net of cash assumed	(249,983)	-
Net cash (used in) provided by investing activities	(249,983)	14,955

Cash Flows from Financing Activities
Proceeds from convertible notes, net	2,153,200	-
Payments of notes	(5,767)	(4,984)
Advances on receivables	-	180,778
Repayments of sale of future revenues	(10,904)	(127,241)
Deposit on purchase of preferred stock	-	25,000
Net cash provided by financing activities	2,136,529	73,553

Net increase (decrease) in cash	562,450	(4,719)
Cash, beginning of period	99,906	306,252

Cash, end of period	$662,356	$301,533

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$63,746	$38,721
Cash paid during the period for income taxes	$-	$-

Supplemental schedule of non-cash investing and financing activities:
Original issue discount deducted from convertible note proceeds	$342,554	$-
Debt costs deducted from convertible note proceeds	$334,800	$-
Contingent consideration for acquisitions	$1,974,377	$ -
Notes and accrued interest converted to common stock	$285,939	$-
Common stock issued/to be issued for asset acquisition	$3,520,171	$-
Notes payable and accrued interest exchanged for debentures	$252,430	$-
Accrued compensation paid with common stock	$16,425	$-
Warrant derivative liability extinguished	$373,070	$-
Liabilities assumed in acquisition	$108,500	$-
Warrant derivative liability at inception	$5,960,058	$-
Preferred stock issued for accrued penalties	$-	$1,929,516

	Three Months Ended March 31,
	2021	2020
Recruiters on Demand	$957,479	$184,975
Consulting and staffing services	2,072,446	1,913,394
Permanent placement fees	39,966	137,627
Marketplace Solutions	40,981	40,193
Career services	53,673	36,934
Total revenue	$3,164,545	$2,313,123

	Fair Value at March 31,	Fair Value Measurement Using
	2021	Level 1	Level 2	Level 3

Available for sale marketable securities (Note 3)	$1,647	$1,647	$-	$-
Warrant derivative liability (Note 9)	$16,496,364	$-	$-	$16,496,364

	Three Months Ended March 31,
	2021	2020
Balance at January 1	$11,537,997	$612,042
Additions to derivative instruments	5,960,058	-
Reclassifications to equity upon extinguishment	(373,070)	-
(Gain) loss on change in fair value of derivative liability	(628,621)	565,088
Balance at March 31	$16,496,364	$1,177,130

	March 31,2021	December 31,2020
Customer contracts	$233,107	$233,107
License	1,726,965	1,726,965
Intangible assets, including sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets acquired pursuant to 2021 business acquisitions (see Note 12)	5,853,031	-
	7,813,103	1,960,072
Less accumulated amortization	(1,323,381)	(1,164,208)
Carrying value	$6,489,722	$795,864

	March 31, 2021	December 31, 2020
Term loans	$70,044	$77,040
Less current portion	(28,609)	(28,249)
Non-current portion (excluding PPP loan discussed below)	$41,435	$48,791

Year Ending December 31,

2021	$21,196
2022	30,133
2023	18,715
Total minimum principal payments	$70,044

	March 31,2021
Operating office lease	$269,054
Less accumulated reduction	(146,757)
Balance of ROU asset at March 31, 2021	$122,297

	March 31,	March 31,
	2021	2020
Options	2,188,258	873,420
Stock awards	554,000	402,500
Warrants	5,796,843	470,939
Convertible notes	3,600,505	-
Convertible preferred stock	15,290,988	16,939,013
	27,430,594	18,685,872

	Three Months Ended
	March 31,
	2021	2020
Net realized gains (losses) on investment sold	$-	$(2,142)
Net unrealized gains (losses) on investments still held	223	(16,644)

Total	$223	$(18,786)

	March 31,2021
Total lease liability	$269,054
Reduction of lease liability	(146,757)
Total	122,297
Less short term portion as of March 31, 2021	(73,378)
Long term portion as of March 31, 2021	$48,919

2021	$67,815
2022	82,885
Total minimum non-cancellable operating lease payments	150,700
Less discount to fair value	(28,403)
Total fair value of lease payments	$122,297

Intangible assets, including sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets	$1,805,183
	$1,805,183

Intangible assets, including sales and client relationships, contracts, intellectual property, partnership and vendor agreements and certain other assets	$4,047,848
Accounts payable	(108,500)
	$3,939,348

		Incorporated by Reference			Filed or Furnished
Exhibit No.	Exhibit Description	Form	Date	Number	Herewith
4.1	Form of 12.5% Original Issue Discount Senior Subordinated Secured Convertible Debentures issued by the Company on January 5 and 20, 2021	10-K	3/9/21	4.7
4.2	Form of Warrant issued by the Company on January 5 and 20, 2021	10-K	3/9/21	4.8
10.1	Form of Securities Purchase Agreement entered into by and between the Company and purchasers on January 5 and 20, 2021+	10-K	3/9/21	10.12
10.2	Form of Security Agreement entered into by and between the Company and purchasers on January 5 and 20, 2021+	10-K	3/9/21	10.13
10.3	Amendment 1 to Director Agreement, dated January 13, 2021, by and between the Company and Deborah Leff*.	8-K	1/21/21	10.1
10.4	Directors Agreement, dated February 12, 2021, between Recruiter.com Group, Inc. and Steve Pemberton*	8-K	4/2/21	10.1
10.5	Asset Purchase Agreement, dated January 22, 2021, by and among Recruiter.com Group, Inc., Recruiter.com Scouted, Inc., RLJ Talent Consulting, Inc., and Jacqueline Loeb+				X
10.6	Asset Purchase Agreement and Plan of Reorganization, dated March 25, 2021, by and among Recruiter.com Group, Inc., Recruiter.com Upsider, Inc., Upsider, Inc, the selling shareholders named therein and Josh McBride.	8-K	3/31/21	10.1
10.7	Registration Rights Agreement, dated March 25, 2021, between Recruiter.com Group, Inc. and Upsider, Inc.	8-K	3/31/21	10.2
10.8	Asset Purchase Agreement, dated May 10, 2021, by and among Recruiter.com Group, Inc., Recruiter.com Onewire, Inc., OneWire Holdings, LLC, and Eric Stutzke				X
31.1	Certification of Principal Executive Officer (302)				X
31.2	Certification of Principal Financial Officer (302)				X
32.1	Certification of Principal Executive and Principal Financial Officer (906)				X**
101.INS	XBRL Instance Document				X
101.SCH	XBRL Taxonomy Extension Schema Document				X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				X

Dated: May 14, 2021	RECRUITER.COM GROUP, INC.

	By:	/s/ Evan Sohn
		Evan Sohn
		Chief Executive Officer(Principal Executive Officer)

	By:	/s/ Judy Krandel
		Judy Krandel
		Chief Financial Officer(Principal Financial Officer)

If to Scouted:	15 West 53rd Street Suite 30E New York, NY 10019 E-mail: Attention: Jacqueline Loeb
with a copy (which shall not constitute notice) to:	Paradigm Counsel LLP 2625 Middlefield Road, #800 Palo Alto, CA 94306 Attention: Andrew Zeif, Esq. Email:
If to Recruiter:	100 Waugh Drive, Suite 300 Houston, Texas 77007 Email: Attention: Evan Sohn

with a copy (which shall not constitute notice) to:	Nason, Yeager, Gerson, Harris & Fumero, P.A. 3001 PGA Boulevard, Suite 305 Palm Beach Gardens, Florida 33410 E-mail: Attention: Michael Harris, Esq.

Scouted Inc. By:____________________________ Name: Jacqueline Loeb Title: Chief Executive Officer		Recruiter.com Group, Inc. By:____________________________ Name: Evan Sohn Title: Chief Executive Officer
		Recruiter.com Scouted, Inc. By:_____________________________ Name: Evan Sohn Title: Chief Executive Officer

If to Onewire:	OneWire Holdings, LLC 404 5th Avenue, 3rd Floor New York, NY 10018 E-mail: Attention: _____________________
with a copy via email (which shall not constitute notice) to:	LOPRESTI, PLLC Attn: Anthony A. LoPresti, Esq. Email:
If to Recruiter:	100 Waugh Drive, Suite 300 Houston, Texas 77007 Email: Attention: Evan Sohn
with a copy (which shall not constitute notice) to:	Lucosky Brookman LLP 101 Wood Avenue South, Fifth Floor Iselin, NJ 08830 Email: Attn: Joseph M. Lucosky, Esq.

Onewire Inc. By:____________________________ Name: Eric Stutzke Title: Chief Executive Officer		Recruiter.com Group, Inc. By:____________________________ Name: Evan Sohn Title: Chief Executive Officer
		Recruiter.com - Onewire, Inc. By:_____________________________ Name: Evan Sohn Title: Chief Executive Officer

/s/ Evan Sohn
Evan Sohn
Chief Executive Officer
(Principal Executive Officer)

/s/ Judy Krandel
Judy Krandel
Chief Financial Officer
(Principal Financial Officer)