Nixxy, Inc 10-Q for FY2025 Q1
Nixxy, Inc. (NIXX)
About this 10-Q
Nixxy, Inc filed this 10-Q on May 20, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.4M
- up 527.7% from $222.56K a year earlier
- Net loss
- $4.54M
- compared with a net loss of $778.43K a year earlier
- Diluted EPS
- -$0.30
- compared with -$0.40 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended:
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission file number:
| (Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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| (Address of principal executive offices) | (Zip Code) |
Issuer’s telephone number (
___________________________
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
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The Stock Market LLC The Stock Market LLC |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
No
As of May 13, 2025, the number of shares of the registrant’s common stock outstanding was .
TABLE OF CONTENTS
| 2 |
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Nixxy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Investment in Marketable Securities | ||||||||
| Total current assets | ||||||||
| Property and equipment, net of accumulated depreciation of $ | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued compensation | ||||||||
| Accrued interest | ||||||||
| Other liabilities | ||||||||
| Contingent consideration | ||||||||
| Loans payable - current portion, net of discount | ||||||||
| Refundable deposit on preferred stock purchase | ||||||||
| Warrant liability | ||||||||
| Contract liability | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, Series D, $ par value; shares authorized; shares issued and outstanding as of March 31, 2025, and December 31, 2024, respectively | ||||||||
| Preferred stock, Series E, $ par value; shares authorized; shares issued and outstanding as of March 31, 2025, and December 31, 2024, respectively | ||||||||
| Preferred stock, Series F, $ par value; shares authorized; shares issued and outstanding as of March 31, 2025, and December 31, 2024, respectively | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding as of March 31, 2025, and December 31, 2024, respectively | ||||||||
| Common Stock to be issued, and shares as of March 31, 2025, and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Nixxy stockholders’ equity | ||||||||
| Noncontrolling interest | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.
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Nixxy, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Months ended March 31, 2025 and 2024
(Unaudited)
| Three Months | Three Months | |||||||
| Ended | Ended | |||||||
| March 31, | March 31, | |||||||
| 2025 | 2024 | |||||||
| REVENUE | ||||||||
| Revenue | $ | $ | ||||||
| OPERATING EXPENSES | ||||||||
| Cost of revenue (exclusive of amortization shown separately below) | ||||||||
| Sales and marketing | ||||||||
| Product development | ||||||||
| Amortization of intangibles | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSES) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Gain on assets sale | ||||||||
| Gain (loss) on change in fair value of marketable securities | ( | ) | ||||||
| Gain on debt extinguishment, net | ||||||||
| Other income | ||||||||
| Change in fair value of derivative liability | ||||||||
| Change in fair value of contingent consideration | ||||||||
| Change in fair value of warrant liability | ( | ) | ||||||
| Total other income, net | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| NET LOSS | ( | ) | ( | ) | ||||
| Net income attributable to noncontrolling interests | ( | ) | ||||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | ( | ) | $ | ( | ) | ||
| NET LOSS PER COMMON SHARE - BASIC AND DILUTED | $ | ) | $ | ) | ||||
| WEIGHTED AVERAGE COMMON SHARES - BASIC AND DILUTED | ||||||||
The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
Nixxy, Inc. and Subsidiaries
Condensed Consolidated Statement of Changes in Stockholders’ Equity
For The Three Months Ended March 31, 2025, and 2024
(Unaudited)
| Preferred Stock Series E | Common stock | Common stock to be issued | Additional Paid in | Accumulated | Equity Attributable to Noncontrolling | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Interests | Equity | |||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||||||
| Stock based compensation - Options | – | – | – | |||||||||||||||||||||||||||||||||||||
| Stock based compensation - Stock | – | – | ||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon settlement of debt | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Issuance of common stock for services | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Issuance of common stock for intangible assets | – | – | ||||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||||||
| Preferred Stock Series E | Common stock | Common stock to be issued | Additional Paid in | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock based compensation - Options | – | – | – | |||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | ||||||||||||||||||||||||||||||||||
| Conversion of Preferred stock, Series E to Common stock | ( | ) | ( | ) | – | |||||||||||||||||||||||||||||||
| Common stock issued in connection with purchase of intangible assets | – | – | ||||||||||||||||||||||||||||||||||
| Warrants issued in connection with purchase of intangible assets | – | – | – | |||||||||||||||||||||||||||||||||
| Issuance of common stock upon conversion of promissory note | – | – | ||||||||||||||||||||||||||||||||||
| Issuance of common stock upon conversion of promissory notes | – | – | ||||||||||||||||||||||||||||||||||
| Common stock issued upon exercise of warrants | – | – | ||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.
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Nixxy, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Three Months ended March 31, 2025 and 2024
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | March 31, | |||||||
| 2025 | 2024 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization expense | ||||||||
| Credit loss (recovery) expense | ( | ) | ||||||
| Gain on debt settlement | ( | ) | ||||||
| Equity based compensation expense | ||||||||
| Change in fair value of warrant liability | ( | ) | ||||||
| Change in fair value of contingent consideration | ( | ) | ||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| (Gain) or loss on change in fair value of marketable securities | ( | ) | ||||||
| Gain on assets sale | ( | ) | ||||||
| Amortization of debt discount and debt costs | ||||||||
| Changes in assets and liabilities: | ||||||||
| Decrease (increase) in accounts receivable | ( | ) | ||||||
| Increase in prepaid expenses and other current assets | ||||||||
| Increase (decrease) in accounts payable and accrued liabilities | ( | ) | ||||||
| (Decrease) increase in deferred revenue | ( | ) | ||||||
| Net cash (used) in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Purchase of intangible assets | ( | ) | ||||||
| Proceeds from sale of assets | ||||||||
| Net cash (used) in provided by investing activities | ( | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Payments of promissory notes | ( | ) | ||||||
| Repayments of notes | ( | ) | ||||||
| Gross proceeds from exercise of warrants | ||||||||
| Net cash used in financing activities | ( | ) | ||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid during the period for interest | $ | $ | ||||||
| Cash paid during the period for income taxes | $ | $ | ||||||
| Supplemental schedule of non-cash investing and financing activities: | ||||||||
| Issuance of common stock upon purchase of intangible assets | $ | $ | ||||||
| Contingent consideration recorded as intangible asset | $ | $ | ||||||
| Issuance of common stock issued upon conversion of promissory notes | $ | $ | ||||||
| Warrants issued in connection with purchase of intangible assets | $ | $ | ||||||
| Issuance of common stock issued upon conversion of note payable | $ | $ | ||||||
| Issuance of common stock from conversion of Preferred stock, Series E | $ | $ | ||||||
The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.
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Nixxy, Inc. and Subsidiaries
Notes to unaudited Condensed Consolidated Statements
March 31, 2025
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Nixxy, Inc., a Nevada corporation (the “Company”), is a holding company based in New York, New York. The Company has eight subsidiaries, Recruiter.com, Inc., Recruiter.com Recruiting Solutions LLC (“Recruiting Solutions”), Recruiter.com Consulting, LLC, VocaWorks, Inc. (“VocaWorks”), Recruiter.com Scouted Inc. (“Scouted”), Recruiter.com Upsider Inc. (“Upsider”), Recruiter.com OneWire Inc. (“OneWire”), and Auralink AI, Inc (“Auralink”).
On September 27, 2024, the Company filed with the Secretary of the State of Nevada a Certificate of Amendment to the Articles of Incorporation to change the legal name of the Company from Recruiter.com Group, Inc. to Nixxy, Inc. The Company and its subsidiaries as a consolidated group is hereinafter referred to as the “Company,” “we”, “us” or “our”.
On July 25, 2023, the Company acquired a
shell company, Atlantic Energy Solutions, Inc. (“AESO”), which is a dormant entity quoted on OTC Pink Markets under the symbol AESO, in
which the Company acquired a controlling and majority equity interest through purchasing
preferred convertible shares providing voting control of Atlantic Energy Solutions, Inc. for $
To prepare and effectuate the spin out of Atlantic Energy Solutions, Inc. (currently being renamed CognoGroup), on February 13, 2024, the Board of Directors of the Company authorized certain corporate actions, including the transfer of assets and liabilities between subsidiaries of the Company, the renaming of Recruiter.com Recruiting Solutions, LLC to CognoGroup, LLC, and the reorganization of Recruiter.com Recruiting Solutions, LLC to a subsidiary of Atlantic Energy Solutions, Inc. Additionally, the Board of Directors authorized that management may take such steps necessary to change the name of Recruiter.com Group, Inc. to reflect its purpose and a corresponding change to the Company’s stock symbol.
On February 23, 2024, the Company entered into a certain Technology License and Commercialization Agreement with GoLogiq, Inc. that supersedes and replaces in its entirety the GOLQ Agreement, as amended by the August 29, 2023, Amendment and the August 18, 2023 Amendment. Under the GOLQ Licensing Agreement, GOLQ granted the Company a worldwide, exclusive license (the “GOLQ License”) to the Company to develop its fintech technology (the “GOLQ Technology”) and sell products derived thereof, including its Createapp, Paylogiq, Gologiq, and Radix AI technology and products (the “Licensed Products”), for a term of 10 years, with automatic two (2) year renewals as further described therein (the “Term”). In exchange with such license, the Company issued to GOLQ such number of shares of Company common stock that represents 19.99% of the number of issued and outstanding shares of the Company common stock on the business day prior to the effective date or 392,155 shares (see Note 5). Following the issuance of the Shares, GOLQ owned 16.66% of the issued and outstanding shares of the Company common stock. In addition, the Company shall pay to GOLQ a royalty of eight percent (8%) of net sales of Licensed Products, as defined therein, during the Term. Further, GOLQ grants to the Company the option to purchase the GOLQ Technology and the Licensed Products for a purchase price of $400,000 for the duration of the Term, subject to shareholder approval if required under applicable laws and regulations at the time of notice of exercise.
On March 28, 2024, the Company and GOLQ entered into an Amendment to Technology License and Commercialization Agreement (the “Amendment”). Under the Amendment, the Company and GOLQ agreed to and added Section 3.3 to further detail technical assistance from GOLQ to the Company. In addition, Section 5.1 was amended such that the royalty was lowered from eight percent (8%) to five percent (5%) for which the Company granted to GOLQ a warrant to purchase two hundred ninety-two thousand (292,000) shares of Company Common Stock (the “Warrant”) for a price equal to $0.01 per share (the “Exercise Price”). The Warrant may be exercised at any time commencing upon the date that is six (6) months from the Effective Date and terminating at 5:00 P.M., EST, on the three (3) year anniversary of the Effective Date, unless the closing sale price for the common stock of the Company has closed at or above $5.00 for ten consecutive trading days. Further, the Amendment contains a blocker provision that limits shares issuable under the Warrant such that the shares beneficially owned by GOLQ does not exceed 9.99% of the total number of issued and outstanding shares of the Company’s Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). These GOLQ Warrants were valued at $480,358 and together with the common shares issued to GOLQ, discussed in Note 8, were treated as consideration for the licenses purchased from GOLQ (see Note 5).
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On August 16, 2023, the Company entered into
an Asset Purchase Agreement (the “Job Mobz Purchase Agreement”) with Job Mobz Inc., a California corporation (“Job
Mobz”). Upon the terms and subject to the conditions of the Job Mobz Purchase Agreement, the Company has agreed to sell and
assign its right, title, and interest in the domain name and the assets generally used to operate the business associated therewith
to Job Mobz for an aggregate purchase price of approximately $1,800,000, subject to certain adjustments. The Company entered into a
number of amendments to the August 16, 2023, Asset Purchase Agreement with Job Mobz, resulting in the extension of the closing date
to September 2, 2024. Furthermore, in 2024 the Company received a non-refundable payment of $
Although the approval of the Job Mobz Agreement and the transactions contemplated therein were not required to be approved by the shareholders of the Company pursuant to the Nevada Revised Statutes, the rules and regulation of Nasdaq or the Company’s bylaws, the Company previously agreed, pursuant to the terms of the Job Mobz Agreement to seek stockholder approval of the transactions contemplated thereby, and included such proposal in its Proxy Statement filed with the Commission on September 15, 2023, and amended on November 8, 2023, November 24, 2023, December 8, 2023, and December 11, 2023. On February 13, 2024, the Company obtained the consent of Job Mobz to proceed with the transactions contemplated by the Job Mobz Agreement without obtaining such shareholder approval. The transaction closed in September 2024, as noted above.
The Company helps businesses accelerate and streamline their recruiting and hiring processes by providing on-demand recruiting software and services. The Company leverages its expert network of recruiters to place recruiters on a project basis. During the first, second, and third quarters of 2024, the Company primarily focused on completing strategic transactions with Job Mobz and GoLogiq.
Through the Company’s Recruiting Solutions division, the Company also provides consulting, staffing, and full-time placement services to employers, leveraging our platform and rounding out our services. During 2024, the Company operated primarily in its Marketplace Solutions line of business, which consists primarily of job board and recruitment advertising activities through its Mediabistro website, located at https://www.mediabistro.com.
On February 20, 2025, the Company acquired
AI and software intellectual property from Savitr Tech OU. The intellectual property allows the Company to be in the
telecommunication space. The Company will be providing routing and delivery of voice and SMS texting services across international
borders. In exchange for the purchase of intellectual properties, the Company paid cash consideration of $
On March 3, 2025, AESO, and Wizco Group, Inc entered into an asset purchase agreement. As consideration for the Acquisition, AESO is obligated to issue 16,666,667 shares of its common stock, par value $0.0001 per share (“Common Stock”), to Wizco’s stockholders, subject to downside protection provisions as set forth in the agreement. Additionally, AESO is required to issue 10,000,000 shares of Common Stock to each of the two founders of Wizco pursuant to an advisory services agreement (See Note 5). The Common Stock to be issued as Advisory Fees will be subject to a structured vesting schedule, whereby 3,333,333 shares of Common Stock vest immediately upon issuance, and the remaining 6,666,667 shares of Common Stock will vest in four equal quarterly installments over the subsequent 12 months.
On March 28, 2025, the Company entered and closed
that certain Asset Purchase Agreement (the “Aqua APA” or the “Agreement”) with Aqua Software Technologies Inc.,
a private Canadian corporation (“Aqua Software Technologies”), pursuant to which Nixxy agreed to acquire certain assets related
to billing and AI systems, including associated intellectual property (the “Acquisition”). As consideration for the Acquisition,
Nixxy agreed to pay Aqua Software Technologies $
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Principles of Consolidation and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures contained in these condensed financial statements are adequate to make the information presented herein not misleading. These condensed financial statements should be read in conjunction with the financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC. In the opinion of management, the accompanying condensed financial statements contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2025, and the results of its operations and its cash flows for the three ended March 31, 2025 and 2024. The balance sheet as of December 31, 2024, is derived from the Company’s audited financial statements. The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2025.
The condensed consolidated financial statements include the accounts of Nixxy Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and outcomes may differ from management’s estimates and assumptions. Included in these estimates are assumptions used to estimate collection of accounts receivable, fair value of marketable securities, fair value of assets acquired in asset acquisitions and the estimated useful life of assets acquired, fair value of warrant liabilities, fair value of securities issued in asset acquisitions, fair value of intangible assets and goodwill, fair value of capitalized software, fair value of non-monetary transactions, deferred income tax asset valuation allowances, and valuation of stock-based compensation expense.
Cash and Cash Equivalents
The Company considers all short-term highly liquid investments with a remaining
maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents are maintained at financial
institutions, and, at times, balances may exceed federally insured limits. The Company has not experienced any losses related to these
balances as of March 31, 2025. As of March 31, 2025, and December 31, 2024, the Company had $
Revenue Recognition
The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. We generate revenue from the following activities:
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Auralink: In 2025, the Company, through its Auralink AI subsidiary, refocused operations on telecommunications by leveraging newly acquired intellectual property and technology from Savitr. Auralink operates a cloud-based communications platform that provides routing, billing, and management services for high-volume SMS and Voice-over-IP (VoiceIP) communications. The telecommunications portfolio includes voice and messaging interconnect services, operator software, and wholesale voice services, including Turnkey Outsourced Switching (TKOS). Auralink generates revenue from providing messaging and voice termination services, primarily under bilateral carrier agreements. These agreements govern both sending and receiving communications traffic and are based on contractual “Rate Decks” which define per-message or per-minute pricing by destination and time of delivery. |
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| Auralink generates revenue from the delivery of messaging and voice termination services. These services are provided under bilateral agreements with telecommunications partners, which establish pricing per destination and time of delivery through contractual rate decks. Depending on the specific route and agreement, Auralink may act as both a supplier (terminating traffic) and a customer (originating traffic). While traffic settlements under these agreements may occur on a net basis for operational efficiency, each component of traffic is governed by distinct pricing and service-level obligations. The Company exercises control over the delivery of these services and assumes the associated performance obligations, including routing decisions, delivery quality, and pricing. As such, and in accordance with ASC Topic 606, Revenue from Contracts with Customers, Auralink recognizes gross revenue for these services at the point in time when control is transferred to the customer, typically when a voice call is successfully terminated, or a message is delivered. |
| · |
Marketplace: Our “Marketplace” category comprises services for businesses and individuals that leverage our online presence. For businesses, this includes sponsorship of digital newsletters, online content promotion, social media distribution, banner advertising, and other branded electronic communications, such as in our quarterly digital publication on recruiting trends and issues. We earn revenue as we complete agreed upon marketing related deliverables and milestones using pricing and terms set by mutual agreement with the customer. In some cases, we earn a percent of revenue a business receives from attracting new clients by advertising on our online platform. Businesses can also pay us to post job openings on our proprietary job boards to promote open job positions they are trying to fill. In addition to its work with direct clients, we categorize all online advertising and affiliate marketing revenue as Marketplace. For individuals, Marketplace includes services to assist with career development and advancement, including a resume distribution service which involves promoting these job seekers’ profiles and resumes to assist with their procuring employment, and upskilling and training. Our resume distribution service allows a job seeker to upload his/her resume to our database, which we then distribute to our network of recruiters on the Platform. We earn revenue from a one-time flat fee for this service. We also offer a recruiter certification program which encompasses our recruitment related training content, which we make accessible through our online learning management system. Customers of the recruiter certification program use a self-managed system to navigate through a digital course of study. Upon completion of the program, we issue a certificate of completion and make available a digital badge to certify their achievement for display on their online recruiter profile on the Platform. Additionally, we partner with Careerdash, a high-quality training company, to provide Recruiter.com Academy, an immersive training experience for career changers. |
| · | Consulting and Staffing: Consists of providing consulting and staffing personnel services to employers to satisfy their demand for long- and short-term consulting and temporary employee needs. We generate revenue by first referring qualified personnel for the employer’s specific talent needs, then placing such personnel with the employer, but with our providers acting as the employer of record for us, and finally, billing the employer for the time and work of our placed personnel on an ongoing basis. Our process for finding candidates for consulting and staffing engagements largely mirrors our process for full-time placement hiring. This process includes employers informing us of open consulting and temporary staffing opportunities and projects, sourcing qualified candidates through the Platform and other similar means, and, finally, the employer selecting our candidates for placement after a process of review and selection. We bill these employer clients for our placed candidates’ ongoing work at an agreed-upon, time-based rate, typically on a weekly schedule of invoicing. |
Revenues as presented on the consolidated statements of operations represent services rendered to customers less sales adjustments and allowances.
Marketplace advertising revenues are recognized on a gross basis when the advertising is placed and displayed or when lead generation activities and online publications are completed, which is the point at which the performance obligations are satisfied. Payments for marketing and publishing are typically due within 30 days of completion of services. Job posting revenue is recognized at the end of the period the job is posted. Marketplace career services revenues are recognized on a gross basis upon distribution of resumes or completion of training courses, which is the point at which the performance obligations are satisfied. Payments for career services are typically due upon distribution or completion of services.
Consulting and Staffing Services revenues represent services rendered to customers less sales adjustments and allowances. Reimbursements, including those related to travel and out-of-pocket expenses, are also included in the net service revenues and equivalent amounts of reimbursable expenses are included in costs of revenue. We record substantially all revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of this line of revenues and expenses. We have concluded that gross reporting is appropriate because we have the task of identifying and hiring qualified employees, and our discretion to select the employees and establish their compensation and duties causes us to bear the risk for services that are not fully paid for by customers. Consulting and staffing revenues are recognized when the services are rendered by the temporary employees. We assume the risk of the acceptability of the employees to customers. Payments for consulting and staffing services are typically due within 90 days of completion of services.
| 10 |
Auralink’s primary performance obligations consist of SMS and VoiceIP transmission services. Each message or call is a distinct transaction, and revenue is recognized at the point in time when delivery is confirmed by the recipient carrier’s platform. These services are priced using dynamic Rate Decks, which vary by destination and time. The transaction price is allocated to each message or call based on its standalone selling price as reflected in the applicable Rate Deck. Auralink acts as principal in these transactions, as it controls the routing infrastructure, sets pricing, assumes delivery risk, and bears responsibility for service quality. Accordingly, revenue is recognized on a gross basis.
Contracts typically span one year and include early termination provisions. Settlements with counterparties are usually conducted on a net basis using reconciled call detail records.
Contract liabilities result from transactions in which we have been paid for services by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the contract liabilities are recognized.
Sales tax collected is recorded on a net basis and is excluded from revenue.
Contract Assets
The Company does not have any contract assets. All trade receivables on the Company’s consolidated balance sheet are from contracts with customers.
Contract Costs
Costs incurred to obtain a contract are capitalized
unless they are short term in nature. As a practical matter, costs to obtain a contract that are short term in nature are expensed as
incurred. The Company does
Contract Liabilities
The Company’s contract liabilities consist of advanced customer payments and deferred revenue. Deferred revenue results from transactions in which the Company has been paid for services by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the deferred revenues are recognized.
Revenue Disaggregation
For each of the years, revenues can be categorized into the following:
| Schedule of revenue disaggregation | ||||||||
Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Telecommunication services | $ | $ | ||||||
| Consulting and staffing services | ||||||||
| Marketplace Solutions | ||||||||
| Total revenue | $ | $ | ||||||
| 11 |
As of March 31, 2025, and December 31, 2024,
contract liabilities amounted to $
Expected Contract Liabilities Recognition Schedule
| Schedule of expected contract liabilities | ||||||||
Total Contract Liabilities | ||||||||
| March 31, | Recognize | |||||||
| 2025 | 2025 | |||||||
| Other | $ | $ | ||||||
| Marketplace Solutions | ||||||||
| Total | $ | $ | ||||||
Revenue from international sources was approximately
Cost of Revenue
Cost of revenue in 2024 consisted of employee costs, third party staffing costs and other fees, outsourced recruiter fees and commissions based on a percentage of Recruiting Solutions gross margin. In 2025 cost of revenue consisted entirely of Auralink related technology and supply costs.
Accounts Receivable
Credit is extended to customers based on an
evaluation of their financial condition and other factors. Management periodically assesses the Company’s accounts receivable
and, if necessary, establishes an allowance for estimated uncollectible amounts. Any required allowance is based on specific
analysis of past due accounts and also considers historical trends of write-offs. Past due status is based on how recently payments
have been received from customers. Accounts determined to be uncollectible are charged to operations when that determination is
made. The Company usually does not require collateral. We have recorded an allowance for doubtful accounts of $
Property and Equipment
Property and equipment are stated at cost, less
accumulated depreciation. Depreciation is recognized over an asset’s estimated useful life using the straight-line method beginning
on the date an asset is placed in service. The Company regularly evaluates the estimated remaining useful lives of the Company’s
property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation.
Maintenance and repairs are charged to expense as incurred. Depreciation expense for the three months ended March 31, 2025, and 2024 was
$
| 12 |
Concentration of Credit Risk and Significant Customers and Vendors
As of March 31, 2025, two customers
accounted for more than 10% of the accounts receivable balance, at
For the three months ended March 31, 2025, two
customers accounted for 10% or more of total revenue, at
We use a related party firm located overseas for software development and maintenance related to our website and the platform underlying our operations. One of our former employees and principal shareholders is an employee of this firm and exerts control over this firm (see Note 10).
We were a party to a license agreement with a related party firm (see Note 10).
We had used a related party firm to provide certain employer of record services (see Note 10).
Advertising and Marketing Costs
The Company expenses all advertising and marketing
costs as incurred. Advertising and marketing costs were $
Fair Value of Financial Instruments and Fair Value Measurements
The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a hierarchical framework for measuring fair value, and enhances fair value measurement disclosure.
ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value:
Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date.
Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - Unobservable inputs for the asset or liability.
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The Company’s investment in available for sale securities and warrant derivative liabilities are measured at fair value. The securities are measured based on current trading prices using Level 1 fair value inputs. The Company’s derivative instruments are valued using Level 3 fair value inputs. In fair valuing these instruments, the income valuation approach is applied, and the valuation inputs include the contingent payment arrangement terms, projected revenues and cash flows, rate of return, and probability assessments. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and loans payable represent fair value based upon their short-term nature.
| 13 |
A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The tables below summarize the fair values of our financial assets and liabilities as of March 31, 2025, and March 31, 2024:
| Schedule of fair value of assets and liabilities | ||||||||||||||||
Fair Value at March 31, | Fair Value Measurement Using | |||||||||||||||
| 2025 | Level 1 | Level 2 | Level 3 | |||||||||||||
| Marketable Securities | $ | $ | $ | $ | ||||||||||||
| Contingent Consideration | ||||||||||||||||
| Warrant Liability | $ | $ | $ | $ | ||||||||||||
Fair Value at December 31, | Fair Value Measurement Using | |||||||||||||||
| 2024 | Level 1 | Level 2 | Level 3 | |||||||||||||
| Marketable Securities | $ | $ | $ | $ | ||||||||||||
| Contingent Consideration | ||||||||||||||||
| Warrant Liability | $ | $ | $ | $ | ||||||||||||
For the Company’s warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balance for each category therein, and gains or losses recognized during the three months ended March 31, 2025:
| Schedule of warrant liabilities measured at fair value on a recurring basis | ||||
| Ending balance, December 31, 2024 | $ | |||
| Re-measurement adjustments: | ||||
| Change in fair value of warrant liability | ||||
| Ending balance, March 31, 2025 | $ |
For the Company’s contingent consideration measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balance for each category therein, and gains or losses recognized during the three months ended March 31, 2025:
| Ending balance, December 31, 2024 | $ | |||
| Contingent consideration in exchange for intangible assets (See Note 5): | ||||
| Change in fair value of contingent consideration: | ( | ) | ||
| Ending balance, March 31, 2025 | $ |
Significant unobservable inputs used in the fair value measurements of the Company’s derivative liabilities designated as Level 3 are as follows:
| Schedule of unobservable inputs used in the fair value measurements of the derivative liabilities | ||||||||
March 31, 2025 |
||||||||
| Warrant Liability | Contingent Consideration | |||||||
| Fair Value | $ | $ | ||||||
| Valuation technique | ||||||||
| Significant unobservable unit | ||||||||
December 31, 2024 |
||||||||
| Warrant Liability | Contingent Consideration | |||||||
| Fair Value | $ | $ | ||||||
| Valuation technique | N/A | |||||||
| Significant unobservable unit | N/A | |||||||
| 14 |
The fair values of contingent consideration were estimated using Monte Carlo pricing model with the following assumptions:
Assumptions used
| March 31, 2025 | |||
| Stock Price | |||
| Annual Volatility | |||
| Term (years) | |||
| Discount Rate |
| February 20, 2025 | |||
| Stock Price | |||
| Annual Volatility | |||
| Term (years) | |||
| Discount Rate |
Business Combinations
For all business combinations (whether partial, full or step acquisitions), the Company records 100% of all assets and liabilities of the acquired business, generally at their fair values with any excess of purchase price over the net assets recorded as goodwill.
Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value and accretion costs are recognized in earnings. The increases or decreases in the fair value of contingent consideration can result from changes in anticipated revenue levels and changes in assumed discount periods and rates.
Intangible Assets
Intangible assets consist primarily of the assets acquired from Genesys in the third quarter of 2019, including customer contracts and intellectual property, the assets acquired from Scouted and Upsider during the first quarter of 2021, the assets acquired from OneWire during the second quarter of 2021, the assets acquired from Parrut and Novo Group during the third quarter of 2021, the assets acquired from GoLogiq in February of 2024, and the assets acquired Aqua Software, Wizco, and Savitr in 2025. Amortization expense is recorded on the straight-line basis over the estimated economic lives.
Goodwill
Goodwill is comprised of the purchase price of business combinations in excess of the fair value assigned at acquisition to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized. The Company tests goodwill for impairment for its reporting units on an annual basis, or when events occur, or circumstances indicate the fair value of a reporting unit is below its carrying value.
The Company performs its annual goodwill impairment assessment on December 31st of each year or as impairment indicators dictate (see Note 5).
When evaluating the potential impairment of goodwill, management first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company’s reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to the quantitative impairment testing methodology.
Under the quantitative method we compare the carrying value of the reporting unit, including goodwill, with its fair value, as determined using an appropriate valuation method. If the carrying value of a reporting unit exceeds its fair value, then the amount of impairment to be recognized is recognized as the amount by which the carrying amount exceeds the fair value.
| 15 |
When required, we may arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of those anticipated cash flows. Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results.
Long-lived assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company estimates the future undiscounted net cash flows of the related asset or asset group over the remaining life of the asset in measuring whether the long-lived asset should be written down to fair value. Measurement of the amount of impairment would be based on generally accepted valuation methodologies, as deemed appropriate. If the carrying amount is greater than the undiscounted cash flows, the carrying amount of the asset is reduced to the asset’s fair value. An impairment loss is recognized immediately as an operating expense in the consolidated statements of operations. Reversal of previously recorded impairment losses are prohibited (see Note 5).
Marketable Securities
The Company has adopted Accounting Standards Update (“ASU”) 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The unrealized gain (loss) on the marketable securities during the three months ended March 31, 2025, has been included in a separate line item on the statement of operations, Gain (Loss) on change in fair value of Marketable Securities.
Software Costs
We capitalize certain software development costs incurred in connection with developing or obtaining software for internal use when both the preliminary project stage is completed, and it is probable that the software will be used as intended. Capitalization ceases after the software is operational; however, certain upgrades and enhancements may be capitalized if they add functionality. Capitalized software costs include only (i) external direct costs of materials and services utilized in developing or obtaining software, (ii) compensation and related benefits for employees who are directly associated with the software project and (iii) interest costs incurred while developing internal-use software.
Income Taxes
We utilize ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.
The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not to be sustained upon examination by taxing authorities, based on the technical merits of the position. Our practice is to recognize interest and/or penalties, if any, related to income tax matters in income tax expense.
| 16 |
We account for our stock-based compensation under ASC 718 “Compensation - Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the shorter of the service period or the vesting period of the stock-based compensation. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option pricing model. Determining the fair value of stock-based compensation at the grant date under this model requires judgment, including estimating volatility, employee stock option exercise behaviors and forfeiture rates. The assumptions used in calculating the fair value of stock-based compensation represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with various accounting standards.
ASC 480 “Distinguishing Liabilities From Equity” provides that instruments convertible predominantly at a fixed rate resulting in a fixed monetary amount due upon conversion with a variable quantity of shares (“stock settled debt”) be recorded as a liability at the fixed monetary amount.
ASC 815 “Derivatives and Hedging” generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”
ASC 815-40 provides that generally if an event is not within the entity’s control and could require net cash settlement, then the contract shall be classified as an asset or a liability.
Leases
In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: “Leases (Topic 842)” whereby lessees need to recognize almost all leases on their balance sheet as a right of use asset and a corresponding lease liability. The Company adopted this standard as of January 1, 2019, using the effective date method and applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected not to reassess the following: (i) whether any expired or existing contracts contain leases, and (ii) initial direct costs for any existing leases. For contracts entered into after the effective date, at the inception of a contract the Company will assess whether the contract is, or contains, a lease. The Company’s assessment will be based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. The Company has elected not to recognize right of use assets and lease liabilities for short term leases that have a term of 12 months or less.
| 17 |
Product Development
Product development costs are included in operating expenses on the consolidated statements of operations and consist of support, maintenance and upgrades of our website and IT platform and are charged to operations as incurred.
The Company follows ASC 260 “Earnings Per Share” for calculating the basic and diluted earnings (or loss) per share. Basic earnings (or loss) per share are computed by dividing earnings (or loss) available to common shareholders by the weighted-average number of common shares outstanding. Diluted earnings (or loss) per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares were dilutive. Common stock equivalents are excluded from the diluted earnings (or loss) per share computation if their effect is anti-dilutive. Common stock equivalents in amounts of and were excluded from the computation of diluted earnings per share for the three months ended March 31, 2025, and 2024, respectively, because their effects would have been anti-dilutive.
| Schedule of net loss used for anti-dilutive securities | ||||||||
Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net income attributable to noncontrolling interests | ( | ) | ||||||
| Net loss attributable to commons shareholders,numerator, basic computation | $ | ( | ) | $ | ( | ) | ||
| Schedule of antidilutive shares | ||||||||
| March 31, | March 31, | |||||||
| 2025 | 2024 | |||||||
| Options | ||||||||
| Warrants | ||||||||
| Convertible preferred stock | ||||||||
Business Segments
Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s chief operating decision maker (“CODM”) and relied upon when making decisions regarding resource allocation and assessing performance. When evaluating the Company’s financial performance, the CODM reviews total revenues, total expenses, and expenses by functional classification, using this information to make decisions on a company-wide basis.
The Company currently operates in two reportable segments pertaining to job placement, recruiting activities, and telecommunications. The CODM for the Company is the Chief Executive Officer (the “CEO”). The Company’s CEO reviews operating results on an aggregate basis and manages the Company’s operations as a whole for the purpose of evaluating financial performance and allocating resources. Accordingly, the Company has determined that it has two reportable segments based on business unit. The Company adopted ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.
Non-controlling Interests
Non-controlling interests (“NCI”) reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders in certain consolidated subsidiaries that are not 100% owned by the Company. Non-controlling interests are presented as separate components of stockholders’ equity on the Company’s unaudited condensed consolidated balance sheets to clearly distinguish between the Company’s interests and the economic interests of third parties in those entities. Net loss attributable to the Company, as reported in the unaudited condensed consolidated statements of operations, is presented net of the portion of net loss attributable to holders of non-controlling interests.
| 18 |
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date.
In December 2023, the FASB issued ASU 2023-09-Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which is intended to enhance the transparency and decision usefulness of income tax disclosures, primarily by amending disclosure requirements for the effective tax rate reconciliation and income taxes paid. ASU 2023-09 should be applied on a prospective basis, and retrospective application is permitted. ASU 2023-09 is effective January 1, 2025.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial statements.
NOTE 2 - GOING CONCERN
Management believes it may not have sufficient cash to fund its liabilities and operations for at least the next twelve months from the issuance of these condensed consolidated financial statements.
These unaudited condensed consolidated financial
statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business. The Company’s management has evaluated whether there is substantial doubt about
the Company’s ability to continue as a going concern and has determined that substantial doubt existed as of the date of the end
of the period covered by this report. This determination was based on the following factors: (i) the Company used cash of approximately
$ million
in operations during the three months ended March 31, 2025, and has a working capital deficit of approximately $
The Company expects but cannot guarantee that demand or our profit margins for marketplace solutions and telecommunication services will improve in 2025. These conditions will affect the company’s overall business and potentially the results of its revenue share and transactions with other third parties. Overall, management is focused on its strategic transactions and effectively positioning the Company for a pivot based on the GoLogiq license and planned spin-out to Atlantic Energy Solutions.
The Company may depend on raising additional debt or equity capital to stay operational. Economic conditions may make it more difficult for the Company to raise additional capital when needed. The terms of any financing, if the Company is able to complete one, will likely not be favorable to the Company.
| 19 |
NOTE 3 - PREPAID EXPENSES AND OTHER CURRENT ASSETS
The components of prepaid expenses and other current assets at March 31, 2025, and December 31, 2024, consisted of the following:
| Schedule of prepaid expenses and other current assets | ||||||||
March 31, 2025 | December 31, 2024 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Prepaid public relations and marketing | ||||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
NOTE 4 - INVESTMENT IN AVAILABLE FOR SALE MARKETABLE SECURITIES
The Company’s investments in
marketable equity securities are being held for an indefinite period and thus have been classified as available for sale. Cost basis
of securities held as of both March 31, 2025, and December 31, 2024, is $
The reconciliation of the investment in marketable securities is as follows for the three months ended March 31, 2025, and 2024:
| Schedule of investment in marketable securities | ||||||||
March 31, 2025 | March 31, 2024 | |||||||
| Beginning Balance – January 1 | $ | $ | ||||||
| Additions | ||||||||
| Recognized gain (losses) | ( | ) | ||||||
| Ending Balance – March 31 | $ | $ | ||||||
Net losses on equity investments were as follows:
| Schedule of net loss on equity investments | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cumulative realized losses on investment sold or assigned | $ | – | $ | – | ||||
| Net cumulative unrealized losses on investments still held | 408,443 | 108,512 | ||||||
| Total | $ | 408,443 | $ | 108,512 | ||||
NOTE 5 - GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Goodwill is derived from our 2019 business
combination as well as our five business combinations in the first three quarters of 2021. The aggregate goodwill recognized from
our five 2021 acquisitions was $
| 20 |
The Company performed an impairment test as
of the last day of year ended December 31, 2024 following the determination by management that a triggering event had occurred. As a
result of this impairment test, the Company concluded, based on the market approach valuation method, that the carrying amount of
its online recruitment business exceeded our estimated fair value of our enterprise and the Company recorded a non-cash goodwill
impairment charge of $
The changes in the carrying amount of goodwill for the periods ended March 31, 2025, and December 31, 2024, are as follows:
| Schedule of carrying amount of goodwill | ||||||||
March 31, 2025 | December 31, 2024 | |||||||
| Carrying value - January 1 | $ | $ | ||||||
| Impairment losses | ( | ) | ||||||
| Carrying value - end of year | $ | $ | ||||||
Intangible Assets
On February 23, 2024, the Company entered into a certain Technology License and Commercialization Agreement with GoLogiq, Inc. (the “GOLQ”) that supersedes and replaces in its entirety the GOLQ Agreement, as amended by the August 29, 2023, Amendment and the August 18, 2023, Amendment. Under the GOLQ Licensing Agreement, GOLQ grants the Company a worldwide, exclusive license to the Company to develop its fintech technology and sell products derived thereof, including its Createapp, Paylogiq, Gologiq, and Radix AI technology and products, for a term of 10 years, with automatic two-year renewals.
On March 7, 2024, the Company appointed the CEO and Director of GOLQ to be the new Chief Executive Officer and President. On December 21, 2024, he resigned from his position as member of the Board of Directors of Nixxy, Inc. His resignation was not due to any disagreement with the Company (See Note 10).
On March 28, 2024, the Company and GOLQ entered
into an Amendment to the Technology License and Commercialization Agreement to decrease the future royalty from eight percent to five
percent for which the Company agreed to grant GOLQ a warrant to purchase 292,000 shares of Company common stock for a price equal to
$0.01 per share. As a result of this transaction the company issued GOLQ
shares of the Company’s common stock valued at $
On February 20, 2025, the Company completed
the acquisition of telecommunications and AI-integrated billing systems from Savitr Tech OU. The acquisition included software and
related intellectual property. The purchase price consisted of $
| 21 |
As of March 31, 2025, the total cost basis in
the intangible asset purchased from Savitr is $
Based on guidance provided by ASC Topic 805, Business Combinations, the Company has recorded the asset purchase as an asset acquisition because the Company determined that substantially all of the fair value of the assets acquired was concentrated in a group of similar identifiable assets. The Company believes the “substantially all” criterion was met with respect to the acquired intellectual property (i.e., technology stack, patents, patent applications, and patent applications to be written). Accordingly, the Company accounted for the acquisition of the purchased net assets as an asset acquisition.
On March 3, 2025 (the “Closing Date”), the Company entered into an asset purchase agreement with Wizco Group, Inc., pursuant to which the Company purchased an AI-powered interview coaching platform (the “Ava” assets). Based on guidance provided by ASC Topic 805, Business Combinations, the Company has recorded the Ava asset purchase as an asset acquisition because the Company determined that substantially all of the fair value of the assets acquired was concentrated in a group of similar identifiable assets. The Company believes the “substantially all” criterion was met with respect to the acquired intellectual property (i.e., technology stack, patents, patent applications, and patent applications to be written). Accordingly, the Company accounted for the acquisition of the purchased net assets as an asset acquisition.
In exchange for the acquired assets, on
behalf of AESO, the Company paid the Wizco Group, Inc. (i)
shares of Atlantic Energy Solutions, Inc. (“AESO”) common stock, and
(ii) agreed to issue additional shares of AESO if the value of the stock consideration declines below a value of $250,000 after one
year of the Closing Date (based on the 30-day VWAP at the end of the one-year period). Based on the trading price of AESO’s
common stock on March 3, 2025, the fair value of the equity consideration transferred was determined to be $
In connection with the Ava acquisition, on behalf of its subsidiary AESO, the Company entered into a services agreement with the former owners of Ava for continued advisory services for one year. The Company determined these services are for the future benefit of the Company, and the services agreement is separate from the Ava acquisition. Compensation under the services agreement will be accounted for as stock-based compensation in accordance with ASC 718. Under the advisory agreement, the Company issued shares of AESO common stock, in the aggregate, vesting as follows 1) 6,666,666 vests immediately, 2) 13,333,334 vests quarterly over one year in equal installments. In the event the value of the vested stock given to each of the Advisors declines below a value of $150,000 after one year of the Closing Date (based on the 30-day VWAP at the end of the one-year period), the Company shall issue additional AESO shares to the former owners to make up the entire difference in value or shall have the option of providing an equivalent amount in cash.
As of March 31, 2025, the total cost basis of intangible asset purchased from Wizco is $250,000 with an accumulated amortization of $3,973 and a net carrying value of $246,027.
On March 28, 2025, the Company entered into and closed that certain Asset Purchase Agreement (the “Aqua APA” or the “Agreement”) with Aqua Software Technologies Inc., a private Canadian corporation (“Aqua Software Technologies”), pursuant to which Nixxy agreed to acquire certain assets related to billing and AI systems, including associated intellectual property (the “Acquisition”). Aqua Software Technologies specializes in telecommunications and software development, with a focus on billings systems, AI integration, wholesale long distance interconnections and sales. Pursuant to the APA, Nixxy acquired substantially all of Aqua Software Technologies’ assets related to billing and AI systems. The transaction has been accounted for as an asset acquisition in accordance with ASC 805-10-55, as the acquired assets did not constitute a business.
The purchase price consisted of $
As of March 31, 2025, the total cost basis of intangible asset purchased from Aqua is $3,900,000 with an accumulated amortization of $6,411 and a net carrying value of $3,893,589.
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Intangible assets are summarized as follows:
| Schedule of intangible assets | ||||||||
March
31, | December 31, | |||||||
| Customer contracts | $ | $ | ||||||
| Software acquired | ||||||||
| Licenses | ||||||||
| Internal use software developed | ||||||||
| Domains | ||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Total | ||||||||
| Less accumulated impairment | ( | ) | ( | ) | ||||
| Carrying value | $ | $ | ||||||
Amortization
expense of intangible assets was $
The Company performed its impairment test during
2022 using the market and income approach, and determined that the Company’s customer contracts, software acquired, internal use
software developed, and domains were impaired by $
NOTE 6 - LOANS PAYABLE AND FACTORING AGREEMENT
Promissory Notes Payable
We issued a promissory note for $
On March 27, 2024, the Company and Parrut signed
an agreement to convert the current outstanding principal, accrued interest, and penalties in aggregate of $
We issued a promissory note for $
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In October 2022, Novo Group entered into a Subordination Agreement (“Subordination Agreement”), pursuant to which Novo agreed to subordinate all its indebtedness and obligations we owe to Novo to all the indebtedness and obligations we owe to Montage Capital.
In February 2023, we entered into an
additional Amendment to the Promissory Note with Novo Group, Inc. (the “Novo Amendment”). The Novo Amendment further
modifies the Promissory Note issued to Novo on August 27, 2021 (the “Novo Note”) and amended on April 1, 2022, by
amending the payment schedule pursuant to which we would make payments of principal and interest to Novo. Novo agreed we would pay
interest only for the period starting November 1, 2022, though and including March 31, 2023, with payments of principal and interest
to resume starting April 1, 2023. We also replaced the existing payment schedule with a new payment schedule terminating on October
31, 2023. On November 1, 2023, we did not make payments due on the promissory note with Novo Group. As of March 31, 2025, and
December 31, 2024, the outstanding balance on the promissory note with Novo Group was $
On August 17, 2022, we issued promissory notes
for $1,111,111, in the aggregate (the “8/17/22 Notes”) We received proceeds of $960,000, net of debt issuance costs of $40,000
and an original issue discount of $111,111. The 8/17/22 Notes have a term of 12 months, bear interest at 6%, and was set to mature on
August 17, 2023. The 8/17/22 Notes were set to be paid off in full on August 17, 2023. As a part of these financings, we granted the
noteholders
On November 6, 2023, the Company received written notice (the “Default Notice”) from Cavalry Fund I LP that the Company was in default under that certain (i) the August 17 Note issued by the Company to Cavalry, and that certain (ii) the August 30 Note. As a result of the Identified Defaults, the Company would be in default under the following agreements for indebtedness: (i) Original Issue Discount Promissory Note, dated as of August 17, 2022, issued pursuant to the August 17 SPA by the Company to Porter Partners, L.P., (ii) Original Issue Discount Promissory Note, dated as of August 30, 2022, issued pursuant to the August 30 SPA by the Company to L1 Capital Global Opportunities Master Fund, (iii)Original Issue Discount Promissory Note, dated as of August 30, 2022, issued pursuant to the August 30 SPA by the Company to Firstfire Global Opportunities Fund LLC, and (iv) Original Issue Discount Promissory Note, dated as of August 30, 2022, issued pursuant to the August 30 SPA by the Company to Puritan Partner, LLC (collectively, the “Other August 2022 Notes”). An event of default under the Other August 2022 Notes would cause the default interest rate of 15% to apply as set forth in the Other August 2022 Notes and the holders of the Other August 2022 Notes would be permitted to elect to accelerate payment of amounts due, at the Mandatory Default Amount, as defined in the Other August 2022 Notes, under each of the holder’s respective Other August 2022 Note.
On February 9, 2024, Calvary Fund I LP entered
into an agreement to reassign the entire balance of the notes entered into on August 17, 2022, including principal, accrued interest,
and any penalties incurred to certain individuals and institutional noteholders. In addition,
On July 11, 2024 the Company and the holder
of the remaining amount of the 8/17/22 entered into certain Debt Settlement and Release Agreements whereas the party have agreed to
the complete conversion and waiver of any and all remaining amounts due under the 8/17/22 Note, whether principal, interest or
penalties, along with the waiver and release of any and all claims against the Company from the holder. In exchange for the complete
conversion, and waiver of rights, the Company has agreed to issue the noteholder an aggregate of
shares of common stock. During September of 2024, the 8/17/22 noteholders converted a total of $
| 24 |
As of March 31, 2025, and December 31, 2024, the
outstanding balance on the 8/17/22 Notes, net of the unamortized debt issuance costs and debt discounts of $
On August 30, 2022, The Company issued promissory
notes for $
On February 9, 2024, 8/30/22 Note Holders entered into an agreement to reassign the entire balance of the notes entered into on August 30, 2022, including principal, accrued interest, and any penalties incurred to certain individual and institutional investors (the “new noteholders”).
Also, On February 9, 2024, 8/30/22 Note Holders
entered into an agreement with the new noteholders whereas the assignees transferred
On February 12, 2024, the Company entered into
an agreement with the new noteholders whereas they agreed to waive a total of $
On July 11, 2024 the Company and the holders
of the remaining amount of the 8/30/22 Notes entered into certain Debt Settlement and Release Agreements whereas the parties have
agreed to the complete conversion and waiver of any and all remaining amounts due under the 8/30/22 Notes, whether principal,
interest or penalties, along with the waiver and release of any and all claims against the Company from the holders. In exchange for
the complete conversion, and waiver of rights, the Company has agreed to issue the noteholders an aggregate of
As of March 31, 2025, and December 31, 2024, the
outstanding balance on the 8/30/22 Notes, net of the unamortized debt issuance costs and debt discounts of $
As a result of the 8/17/22 Notes and 8/30/22 Notes
settlement transactions, the Company recognized a loss on extinguishment of debt for the amount of $
On October 19, 2022, the Company closed a Loan
and Security Agreement (the “Loan Agreement”), by and among the Company and Montage Capital II, L.P. (the “Lender”).
Pursuant to the Loan Agreement, the Lender will make advances (“Advances”) in the aggregate principal amount of $
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The Company agreed to pay the Lender a fee of
$
In addition, in connection with the Loan Agreement,
the Company issued
The Company accrues anniversary fees each year
on the
On February 2, 2023, the Company entered into a First Amendment to Loan and Security Agreement (the “Montage Amendment”), by and between the Company, its subsidiaries (Recruiter.com, Inc., Recruiter.com Recruiting Solutions, LLC, Recruiter.com Consulting, LLC, VocaWorks, Inc., Recruiter.com Scouted, Inc., Recruiter.com Upsider, Inc., and Recruiter.com - OneWire, Inc.), and Montage, effective as December 18, 2022. The Montage Amendment modifies that certain Loan and Security Agreement by and among the Company, its subsidiaries, and Montage to provide the Company with additional time to meet certain post-closing covenants.
On August 16, 2023, we entered into a Second Amendment to Loan and Security Agreement (the “Second Montage Amendment”), by and among the Company, its subsidiaries and Montage. The Second Montage Amendment modifies that certain Loan and Security Agreement by and among the Company, its subsidiaries, and Montage, as amended (the “Loan and Security Agreement”) to join Cogno. Group, Inc. as an additional borrower to the Loan and Security Agreement and amend and restate the definition of “Maturity Date” to the earlier of (i) the four-month anniversary of the initial closing of the Purchase Agreement or (ii) February 28, 2024. Additionally, the Montage Amendment provides for Montage’s consent to certain transactions that would have otherwise been prohibited under the Loan and Security Agreement, including the transaction contemplated by the Purchase Agreement with Job Mobz.
In addition, in connection with the Second Montage
Amendment, the Company issued warrants to purchase common stock of CognoGroup, Inc. (the “CognoGroup, Inc. Warrants”) to the
Lender. The number of shares shall be equal to 1.4% of the CognoGroup, Inc.’s outstanding capital stock on a fully diluted basis
at the exercise price of $ per share and with expiration date of October 19, 2032. On and after the earlier to occur of (i) October
19, 2026, (ii) any sale, license, or other disposition of all or substantially all of the assets of the CognoGroup, Inc., or any reorganization,
consolidation, or merger of the CognoGroup, Inc. where the holders of the CognoGroup, Inc.’s securities before the transaction beneficially
own less than 50% of the outstanding voting securities of the surviving entity after the transaction, (iii) a transaction in which any
“person” or “group” becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of the CognoGroup,
Inc. ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a
majority of the Board of Directors of the CognoGroup, Inc., who did not have such power before such transaction (“Change in Control”),
or (iv) the dissolution or liquidation of the CognoGroup, Inc (“Wind-Up”), CognoGroup, Inc. shall, at the request of Holder,
purchase all rights that Holder has under this CognoGroup, Inc. Warrants for a cash payment in the amount equal to $
| 26 |
On September 18, 2024, Montage entered into an
agreement to sell and assign its rights and obligations, including principal, accrued interest, and any penalties incurred to an individual
accredited investor (the “New Noteholder”) for a purchase price of $
On September 19, 2024, the Company and the New
Noteholder entered into a certain Debt Settlement and Release Agreement whereas the parties have agreed to the complete conversion and
waiver of any and all remaining amounts due under the Second Montage Amendment, whether principal, interest or penalties, along with the
waiver and release of any and all claims against the Company from the holders. In exchange for the complete conversion, and waiver of
rights, the Company has agreed to issue the noteholders an aggregate of
As of March 31, 2025, and December 31, 2024, the
outstanding balance on the Loan Agreement, net of the unamortized debt issuance costs and debt discounts of $
As a result of the Montage Note settlement transaction,
the Company recognized a loss on extinguishment of debt for the amount of $
As of March 31, 2025, and December 31, 2024,
the outstanding principal balance on the promissory notes payable totaled $
The status of the loans payable as of March 31, 2025, and December 31, 2024, are summarized as follows:
| Schedule of loans payable | ||||||||
March 31, 2025 | December 31, 2024 | |||||||
| Promissory notes | $ | $ | ||||||
| Less: Unamortized debt discount or debt issuance costs | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Non-current portion | $ | $ | ||||||
NOTE 7 - STOCKHOLDERS’ EQUITY
Preferred Stock
The Company is authorized to issue shares of preferred stock, par value $ per share.
Our Series E preferred stock is the only class of our preferred stock that was outstanding as of December 31, 2023. Series E preferred stock has a stated value of $20 per share, which is convertible at any time after issuance at the option of the holder, subject to a beneficial ownership limitation of 4.99% or if waived, 9.99%, into common stock based on the stated value per share divided by $4.00 per share, subject to adjustment in the event of stock splits, stock dividends or reverse splits. Holders of Series E Preferred Stock are entitled to vote together with holders of the common stock on an as-converted basis, subject to a beneficial ownership limitation of 4.99% or if waived, 9.99%. If at any time while any shares of Series E Preferred Stock remain outstanding and any triggering event contained in the Certificate of Designation for such series occurs, we shall pay, within three days, to each holder $210 per each $1,000 of the stated value of each such holder’s shares of Series E Preferred Stock.
On February 14, 2024, the sole shareholder of shares of Series E preferred stock converted the entire balance into shares of common stock. As of March 31, 2025, and December 31, 2024, the Company had and shares of Series E preferred stock issued and outstanding.
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Preferred Stock Penalties
On March 31, 2019, we entered into certain agreements
with investors pursuant to which we issued convertible preferred stock and warrants. Each of the series of preferred stock and warrants
required us to reserve shares of common stock in the amount equal to two times the common stock issuable upon conversion of the preferred
stock and exercise of the warrants. We did not comply in part due to our attempts to manage the Delaware tax which increases to a maximum
of $
Common Stock
The Company is authorized to issue shares of common stock, par value $ per share. As of March 31, 2025, and December 31, 2024, the Company had and shares of common stock outstanding, respectively.
Reverse Stock Split
On August 4, 2023, the Company approved a
In September 2024, the Company amended its articles of incorporation to increase the authorized shares from to , no change was made to par value.
Shares issued upon conversion of note payable
On February 13, 2024, the Board of Directors authorized
the conversion of promissory notes, along with their associated interest and penalties to equity, connected with the original issuance
of Promissory Notes issued August 17, 2022, originally in the amount of $
On March 27, 2024, the Company received a
notice to convert the outstanding principal of the Parrut Note together with accrued interest in total of $
| 28 |
Shares issued upon warrants exercised
On February 13, 2024, the Board of Directors authorized
the conversion of promissory notes, along with their associated interest and penalties to equity, connected with the original issuance
of Promissory Notes issued August 17, 2022, originally in the amount of $
Shares issued upon purchase of intangible assets
On February 23, 2024, the Company entered
into a certain Technology License and Commercialization Agreement with GoLogiq, Inc. that supersedes and replaces in its entirety
the GOLQ Agreement, as amended by the August 29 Amendment and the August 18 Amendment. Under the GOLQ Licensing Agreement, GOLQ
grants the Company a worldwide, exclusive license (the “GOLQ License”) to the Company to develop its fintech technology
(the “GOLQ Technology”) and sell products derived thereof, including its Createapp, Paylogiq, Gologiq, and Radix AI
technology and products (the “Licensed Products”), for a term of 10 years, with automatic two (2) year renewals as
further described therein (the “Term”). In exchange with such license, the Company will issue to GOLQ such number
of shares of Company common stock that represents %
of the number of issued and outstanding shares of the Company common stock on the business day prior to the effective date as
defined therein (the “Shares”). Following the issuance of the Shares, GOLQ will own
On February 19, 2025, the Company entered into
and closed an Asset Purchase Agreement (the “Savitr Tech APA”) with Savitr Tech OU (“Savitr”), a private telecommunications
and software development company incorporated in Estonia. Savitr specializes in billing systems, artificial intelligence (“AI”)
integration, and wholesale long-distance telecommunications. Under the terms of the agreement, the Company acquired substantially all
assets related to Savitr’s proprietary billing and AI-driven software platform, collectively referred to as the “Aura CpaaS
Software.” In exchange for the Aura CpaaS Software, the Company agreed to contingent equity consideration of 4.9% of the Company’s
issued and outstanding common shares upon achievement of a minimum of $250,000 in cumulative revenue generated by the Aura CpaaS Software,
and an additional 4.9% of common shares, issuable within 90 calendar days post-closing, if the Aura CpaaS Software achieve a sustained
monthly revenue run rate of at least $5.0 million (the “Revenue Milestone”). On March 31, 2025, the Company issued Savitr
a total of
shares of the Company’s common stock, valued at $1.82 per share, based on the closing price on the Nasdaq Capital Market as of
March 31, 2025, or approximately $
On March 28, 2025, the Company entered into and
closed that certain Asset Purchase Agreement (the “Aqua APA” or the “Agreement”) with Aqua Software Technologies
Inc., a private Canadian corporation (“Aqua Software Technologies”), pursuant to which Nixxy agreed to acquire certain assets
related to billing and AI systems, including associated intellectual property (the “Acquisition”). Aqua Software Technologies
specializes in telecommunications and software development, with a focus on billings systems, AI integration, wholesale long distance
interconnections and sales. Pursuant to the APA, Nixxy acquired substantially all of Aqua Software Technologies’ assets related
to billing and AI systems. On March 28, 2025, the Company issued shares of the Company’s common stock, valued at $1.82
per share, based on the closing price on the Nasdaq Capital Market as of March 28, 2025, to satisfy the total purchase price of $
Shares issued for services
On January 3, 2025, the Company agreed to grant shares of fully vested common stock under the 2021 Plan to non-executive members of the Board which shall vest immediately, restricted stock units from the Plan which shall vest monthly in equal increments over three years from the Effective Date of which 20,833 have vested during the three-months ended march 31, 2025, and shares to the chairman of the Board which shall vest immediately. The value of the fully vested shares granted was determined by the value of the stock on the quoted trading price of $6.08 and in aggregate of $. As of March 31, 2025, the Company had not issued any of the agreed upon shares. The Company expects to complete issuance of these shares during the second quarter of fiscal year 2025, pending final administrative processing.
| 29 |
On March 19, 2025, the Company agreed to grant shares of fully vested common stock under the 2024 Plan to employees and agents of the Company. The value of the fully vested shares granted was determined by the value of the stock on the quoted trading price of $2.11 and in aggregate of $. As of March 31, 2025, the Company had not issued any of the agreed upon shares. The Company expects to complete issuance of these shares during the second quarter of fiscal year 2025, pending final administrative processing.
Shares issued in connection with settlement of consulting agreement
On May 29, 2024, the Company entered into a settlement
agreement whereas the Company and vendor agreed to settle disputes arising from certain engagement letters signed December 5, 2022, and
June 1, 2023. In exchange for vendor’s settlement, the Company issued the equivalent of $ of common stock, valued at the
30-day Volume Weighted Average Price as of May 29, 2024. The Company issued shares of common stock to the vendor and recognized
a loss of $
2021 Equity Incentive Plan
In July 2021, our Board and shareholders authorized
the 2021 Equity Incentive Plan (the “2021 Plan”), covering
| · | incentive stock options (“ISOs”) | |
| · | non-qualified options (“NSOs”) | |
| · | awards of our restricted common stock | |
| · | stock appreciation rights (“SARs”) | |
| · | restricted stock units (“RSUs”) |
Any option granted under the 2021 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant and not less than $4.00 per share, but the exercise price of any ISO granted to an eligible employee owning more than 10% of our outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100,000. The exercise price of any NSO granted under the 2021 Plan is determined by the Board at the time of grant but must be at least equal to fair market value on the date of grant. The term of each plan option and the manner in which it may be exercised is determined by the Board or the Compensation Committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. The terms of any other type of award under the 2021 Plan are determined by the Board at the time of grant. Subject to the limitation on the aggregate number of shares issuable under the plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.
| 30 |
2024 Equity Incentive Plan
On July 11, 2024, our Board and Majority Shareholders approved and ratified the 2024 Equity Incentive Plan (the “2024 Plan”), covering a minimum of shares of common stock and up to of common stock, if all shares of shares of common stock issuable by the Company in the 2024 Exempt Offering, as described herein, are issued on or about the Effective Date. The purpose of the 2024 Plan is to advance the interests of the Company and our related corporations by enhancing the ability of the Company to attract and retain qualified employees, consultants, officers, and directors, by creating incentives and rewards for their contributions to the success of the Company and its related corporations. The 2024 Plan is administered by our Board or by the Compensation Committee. The following awards may be granted under the 2024 Plan:
| · | incentive stock options (“ISOs”) | |
| · | non-qualified options (“NSOs”) | |
| · | awards of our restricted common stock | |
| · | stock appreciation rights (“SARs”) | |
| · | restricted stock units (“RSUs”) |
Stock Options
There were stock options granted during the three months ended March 31, 2025.
During the three months ended March 31, 2025, and 2024, we recorded $ and $ of compensation expense, respectively, related to stock options.
A summary of the status of the Company’s stock options as of March 31, 2025, and changes during the period are presented below:
| Schedule of stock option activity | ||||||||||||||||
Options Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Life (In Years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2024 | $ | $ | ||||||||||||||
| Granted | – | – | ||||||||||||||
| Exercised | – | – | ||||||||||||||
| Expired or cancelled | ( | ) | – | |||||||||||||
| Outstanding at March 31, 2025 | $ | $ | ||||||||||||||
| Exercisable at March 31, 2025 | $ | $ | ||||||||||||||
As of March 31, 2025, there was approximately $ of total unrecognized compensation cost related to non-vested stock options which vest over time and is expected to be recognized over a period of four years, as follows: 2025, $; 2026, $; 2027, $; and thereafter $. The intrinsic value of options outstanding is $ at March 31, 2025 and the intrinsic value of options exercisable is $ at March 31, 2025.
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Warrants
2024 Warrant Grants
Warrants issued for intangible purchase
On March 28, 2024, the Company and GOLQ entered into an Amendment to Technology License and Commercialization Agreement (the “Amendment”). Under the Amendment, the Company and GOLQ agreed to and added Section 3.3 to further detail technical assistance from GOLQ to the Company. In addition, Section 5.1 was amended such that the royalty was lowered from eight percent (8%) to five percent (5%) for which the Company granted to GOLQ a warrant to purchase two hundred ninety-two thousand (292,000) shares of Company Common Stock (the “Warrant”) for a price equal to $0.01 per share (the “Exercise Price”). The Warrant may be exercised at any time commencing upon the date that is six (6) months from the Effective Date and terminating at 5:00 P.M. EST, on the three (3) year anniversary of the Effective Date, unless the closing sale price for the common stock of the Company has closed at or above $5.00 for ten consecutive trading days. Further, the Amendment contains a blocker provision that limits shares issuable under the Warrant such that the shares beneficially owned by GOLQ does not exceed 9.99% of the total number of issued and outstanding shares of the Company’s Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). These GOLQ Warrants were valued at $480,358 and together with the common shares issued to GOLQ, discussed in Note 7, were treated as consideration for the licenses purchased from GOLQ.
Warrants exercised
On February 9, 2024, the 8/30/2022 noteholders
entered into an agreement with the new noteholders (Note 6) whereas the assignees will purchase
On February 12, 2024, the noteholders elected
to exercise such warrants and paid the exercise price thereof through the cancellation of debt. The Parties agreed that the Exercise
Price of the Warrants shall be paid by and through reduction and cancellation of aggregate amounts due under the notes previously assigned
to them on February 9, 2024. A total of $
On February 9, 2024, Calvary Fund I L.P entered
into an agreement with the new noteholder (Note 6) whereas the assignees will purchase
On February 12, 2024, the noteholders elected
to exercise such warrants and paid the exercise price thereof through the cancellation of debt. The Parties agree that the Exercise Price
of the Warrants shall be paid by and through reduction and cancellation of aggregate amounts due under the notes previously assigned to
them on February 9, 2024. A total of $
Warrant activity for the three months ended March 31, 2025, is as follows:
| Schedule of warrants outstanding | ||||||||
| Weighted | ||||||||
| Average | ||||||||
| Exercise | ||||||||
| Warrants | Price per | |||||||
| Outstanding | Share | |||||||
| Outstanding at December 31, 2024 | $ | |||||||
| Issued | ||||||||
| Exercised | ||||||||
| Expired or cancelled | ||||||||
| Outstanding at March 31, 2025 | $ | |||||||
All warrants are exercisable at March 31, 2025. The weighted average remaining life of the warrants is years at March 31, 2025.
| 32 |
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is currently pursuing two related
collections matters against BKR Strategy Group. Since 2013, BKR Strategy Group has provided talent acquisition strategy and services
to top companies. Starting in the third quarter of 2021, BKR Strategy Group subcontracted Recruiter.com to perform on Demand recruiter
services on behalf of BKR Strategy Group’s clients. Although payments for services rendered were initially received in a timely
fashion, BKR Strategy Group’s balance grew throughout the third and fourth quarters of 2021. This led to BKR Strategy Group executing
a Promissory Note with a payment schedule for $
On June 21, 2022, the Supreme Court of the State
of New York, New York County ruled in favor of the Company that BKR Strategy Group owes the Company $
On September 6, 2023, the Company was served
with a civil lawsuit filed by Pipl, Inc. in the Superior Court of the State of Connecticut, Judicial District of New Britain. The lawsuit
alleges that the Company failed to pay for goods and/or services provided by Pipl, Inc. between January 3, 2021, and December 7, 2022,
with the claimed amount due exceeding $
On April 1, 2024, the Company became involved
in legal proceedings initiated by Creditors Adjustment Bureau, Inc. ("CAB"), as documented in the Superior Court of California,
County of Santa Clara, case number 24CV433086. CAB’s complaint, filed on March 13, 2024, alleges that the Company failed to fulfil payment
obligations under contracts with CAB’s assignor, totaling approximately $
November 20, 2024, Recruiter.com Inc. has been
named as a defendant in a lawsuit filed by HireTeammate, Inc. (d/b/a hireEZ) in the Supreme Court of New York. The lawsuit alleges that
The Company breached a contract by failing to pay for platform management services provided by hireEZ between December 12, 2022, and
January 31, 2023. The total amount claimed is $
Except for the aforementioned proceedings described above, as of the date of this filing, there are no material pending legal or governmental proceedings relating to our Company or properties to which we are a party, and, to our knowledge, there are no material proceedings to which any of our directors, executive officers, or affiliates are a party adverse to us or which have a material interest adverse to us.
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Contingencies
On February 20, 2025, the Company completed the acquisition of telecommunications and AI-integrated billing systems from Savitr Tech OU. The acquisition included software and related intellectual property. The purchase price consisted of $300,000 in cash and two tranches of equity consideration totaling up to 9.8% of the Company’s outstanding shares, contingent on revenue milestones. The Company shall issue to the Seller 4.9% of the Company’s total issued and outstanding common shares upon the achievement of a minimum of $250,000 in cumulative revenue generated. A further 4.9% of the Company’s total issued and outstanding common shares shall be issued to the Seller within ninety calendar days of the closing of the agreement (“the Closing”), contingent upon the systems achieving a minimum monthly revenue run rate of $5 million. If the Revenue Milestone is not achieved within ninety days of the Closing, the issuance shall be deferred for an additional ninety days, further, if the Revenue Milestone is not achieved within one hundred eighty days of Closing, the number of shares issuable shall be reduced proportionately based on the average monthly revenue run rate during the 180-day period.
NOTE 10 - RELATED PARTY TRANSACTIONS
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 until August 23, 2023, 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 $
On February 23, 2024, the Company entered into
a certain Technology License and Commercialization Agreement with GoLogiq, Inc. (the “GOLQ”) that supersedes and replaces
in its entirety the GOLQ Agreement, as amended by the August 29, 2023 Amendment and the August 18, 2023, Amendment. Under the GOLQ Licensing
Agreement, GOLQ grants the Company a worldwide, exclusive license to the Company to develop its fintech technology and sell products derived
thereof, including its Createapp, Paylogiq, Gologiq, and Radix AI technology and products, for a term of
On March 7, 2024, the Company appointed the CEO and Director of GOLQ to be the new Chief Executive Officer and President. On December 12, 2024, he resigned from his position as member of the Board of Directors of Nixxy, Inc. effective immediately and as Chief Executive Officer effective as of December 31, 2024. His resignation was not due to any disagreement with the Company.
On March 28, 2024, the Company and GOLQ entered
into an Amendment to Technology License and Commercialization Agreement to decrease the future royalty from eight percent to five percent
for which the Company agreed to grant GOLQ a warrant to purchase shares of Company common stock for a price equal to $ per
share. As a result of this transaction the company issued GOLQ shares of Company’s common stock valued at $
The Company has engaged a related party firm of
the Company, Logiq Inc, for marketing and advisory services related to new initiatives for the Data AI acquisitions, sourcing strategic
partnerships in Europe, Asia, and Africa, and digital marketing services. Expenses to this firm were $
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NOTE 11 – SEGMENT REPORTING
Beginning in the current quarter ended March 31, 2025, the Company has two reportable segments, which are aligned with its internal organizational structure and reviewed by the Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (CODM). In accordance with ASC 280, Segment Reporting, segments are defined based on the manner in which financial information is evaluated by the CODM for resource allocation and performance assessment.
The Company’s reportable segments are as follows:
Auralink — Provider of private telecommunications solutions and proprietary billing services.
Nixxy — Provider of marketplace advertising and software subscription services.
All material operating units within each segment have been aggregated as they share similar economic characteristics, customer types, nature of products and services, and processes for procurement and delivery. The Company evaluates segment performance based on segment operating loss, which includes gross profit less direct research and development, sales and marketing, and general and administrative expenses that are specifically attributable to each segment. Items below loss from operations, such as interest and taxes, and all balance sheet data are not allocated to segments, as they are not used by the CODM.
The tables below present segment information reconciled to total Company loss from operations, with segment operating loss including gross profit less direct research and development expenses and direct selling, general and administrative expenses to the extent specifically identified by segment:
| Schedule of segment information | ||||||||
| Three Months Ended March 31, 2025 | ||||||||
| Nixxy | Auralink | |||||||
| REVENUE | ||||||||
| Revenue | $ | $ | ||||||
| OPERATING EXPENSES | ||||||||
| Cost of revenue | ( | ) | ||||||
| Sales and marketing | ||||||||
| Product development | ||||||||
| Amortization of intangibles | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| LOSS FROM OPERATIONS | $ | ( | ) | $ | ( | ) | ||
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| Three Months Ended March 31, 2024 | ||||||||
| Nixxy | Auralink | |||||||
| REVENUE | ||||||||
| Revenue | $ | $ | ||||||
| OPERATING EXPENSES | ||||||||
| Cost of revenue (exclusive of amortization shown separately below) | ||||||||
| Sales and marketing | ||||||||
| Product development | ||||||||
| Amortization of intangibles | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| LOSS FROM OPERATIONS | $ | ( | ) | $ | ||||
Assets are not allocated to segments for internal reporting presentations. It is impracticable for us to separately identify the amount of amortization and depreciation by segment that is included in the measure of segment profit or loss.
Long-lived assets, excluding financial instruments and tax assets, were as follows:
| Schedule of segment assets | As of March 31, 2025 | |||||||
| Nixxy | Auralink | |||||||
| ASSETS | ||||||||
| Property and equipment, net | $ | $ | ||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Total assets | $ | $ | ||||||
NOTE 12 - SUBSEQUENT EVENTS
On April 4, 2025, the Board of Directors of the Company appointed Ashissh Raichura as a member of the Board. For consideration the Board granted 50,000 restricted stock units, under the Corporation’s 2021 Plan which shall vest immediately, and 50,000 restricted stock units from the Plan, which shall vest monthly in equal increments over three years from the effective date. The fair market value of the 50,000 shares vested immediately, on the date of issuance, was $1.70 per share for an aggregate value of $85,000.
On April 7, 2025, the Board of Directors of the Company approved a Management Consulting Agreement (the “Agreement”) with Quantum PR OU (the “Consultant”), a strategic advisory and communications consulting firm. The Agreement became effective on April 8, 2025, and has a term of twelve (12) months, unless earlier terminated in accordance with its terms. Pursuant to the Agreement, the Consultant will provide the Company with strategic advisory services, including general promotional activities within the business and investment community, as well as guidance on financing initiatives and international business development. In consideration for the consulting services, On April 29, 2025, the Company issued 504,000 shares of its common stock to the Consultant in consideration for the consulting services for twelve months. The fair market value of the shares on the date of issuance was $1.63 per share, for an aggregate value of $821,520.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 31, 2025.
For purposes of this Quarterly Report, “Nixxy,” “we,” “our,” “us,” or similar references refers to Nixxy, Inc. and its consolidated subsidiaries, unless the context requires otherwise.
Overview
Nixxy, Inc., a Nevada corporation (along with its subsidiaries, “we”, “the Company”, “us”, and “our”), is a holding company that, through its subsidiaries, operates recruitment and career-related software platforms. Historically, the Company offered additional recruitment-related services, including on-demand contract recruitment and staffing.
We have eight subsidiaries, Recruiter.com, Inc., Recruiter.com Recruiting Solutions LLC (“Recruiting Solutions”), VocaWorks, Inc. (“VocaWorks”), Recruiter.com Scouted Inc. (“Scouted”), Recruiter.com Upsider Inc. (“Upsider”), Recruiter.com OneWire Inc. (“OneWire”), and Recruiter.com Consulting, LLC (“Recruiter.com Consulting”), and Auralink AI, Inc. (“Auralink”). Additionally, the Company owns a controlling interest in Atlantic Energy Solutions, Inc., a Colorado company that is traded on the OTC Markets (OTC: AESO).
The Company is currently undergoing a strategic transformation, having sold its staffing business in 2023 and sold its Recruiter.com website in Q3 of 2024. The Company has announced plans to shift its focus, along with its license agreement with GoLogiq, and spin out the recruitment-related businesses to Atlantic Energy Solutions, which is currently undergoing a name change to CognoGroup, Inc. There can be no assurance that the Company will be able to complete its planned spin-out and strategic transformation.
Operating Businesses and Revenue
We generate revenue or have generated from the following activities:
| · | Auralink: In 2025, the Company, through its Auralink AI subsidiary, refocused operations on telecommunications by leveraging newly acquired intellectual property and technology from Savitr. Auralink operates a cloud-based communications platform that provides routing, billing, and management services for high-volume SMS and Voice-over-IP (VoiceIP) communications. The telecommunications portfolio includes voice and messaging interconnect services, operator software, and wholesale voice services, including Turnkey Outsourced Switching (TKOS). Auralink generates revenue from providing messaging and voice termination services, primarily under bilateral carrier agreements. These agreements govern both sending and receiving communications traffic and are based on contractual “Rate Decks” which define per-message or per-minute pricing by destination and time of delivery. |
| · | Auralink generates revenue from the delivery of messaging and voice termination services. These services are provided under bilateral agreements with telecommunications partners, which establish pricing per destination and time of delivery through contractual rate decks. Depending on the specific route and agreement, Auralink may act as both a supplier (terminating traffic) and a customer (originating traffic). While traffic settlements under these agreements may occur on a net basis for operational efficiency, each component of traffic is governed by distinct pricing and service-level obligations. The Company exercises control over the delivery of these services and assumes the associated performance obligations, including routing decisions, delivery quality, and pricing. As such, and in accordance with ASC Topic 606, Revenue from Contracts with Customers, Auralink recognizes gross revenue for these services at the point in time when control is transferred to the customer, typically when a voice call is successfully terminated, or a message is delivered. |
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|
· |
Marketplace: Our “Marketplace” category comprises services for businesses and individuals that leverage our online presence. For businesses, this includes sponsorship of digital newsletters, online content promotion, social media distribution, banner advertising, and other branded electronic communications, such as in our quarterly digital publication on recruiting trends and issues. We earn revenue as we complete agreed upon marketing related deliverables and milestones using pricing and terms set by mutual agreement with the customer. In some cases, we earn a percent of revenue a business receives from attracting new clients by advertising on our online platform. Businesses can also pay us to post job openings on our proprietary job boards to promote open job positions they are trying to fill. In addition to its work with direct clients, we categorize all online advertising and affiliate marketing revenue as Marketplace. For individuals, Marketplace includes services to assist with career development and advancement, including a resume distribution service which involves promoting these job seekers’ profiles and resumes to assist with their procuring employment, and upskilling and training. Our resume distribution service allows a job seeker to upload his/her resume to our database, which we then distribute to our network of recruiters on the Platform. We earn revenue from a one-time flat fee for this service. We also offer a recruiter certification program which encompasses our recruitment related training content, which we make accessible through our online learning management system. Customers of the recruiter certification program use a self-managed system to navigate through a digital course of study. Upon completion of the program, we issue a certificate of completion and make available a digital badge to certify their achievement for display on their online recruiter profile on the Platform. Additionally, we partner with Careerdash, a high-quality training company, to provide Recruiter.com Academy, an immersive training experience for career changers. |
| · | Consulting and Staffing: Consists of providing consulting and staffing personnel services to employers to satisfy their demand for long- and short-term consulting and temporary employee needs. We generate revenue by first referring qualified personnel for the employer’s specific talent needs, then placing such personnel with the employer, but with our providers acting as the employer of record for us, and finally, billing the employer for the time and work of our placed personnel on an ongoing basis. Our process for finding candidates for consulting and staffing engagements largely mirrors our process for full-time placement hiring. This process includes employers informing us of open consulting and temporary staffing opportunities and projects, sourcing qualified candidates through the Platform and other similar means, and, finally, the employer selecting our candidates for placement after a process of review and selection. We bill these employer clients for our placed candidates’ ongoing work at an agreed-upon, time-based rate, typically on a weekly schedule of invoicing. |
Revenues as presented on the consolidated statements of operations represent services rendered to customers less sales adjustments and allowances.
Marketplace advertising revenues are recognized on a gross basis when the advertising is placed and displayed or when lead generation activities and online publications are completed, which is the point at which the performance obligations are satisfied. Payments for marketing and publishing are typically due within 30 days of completion of services. Job posting revenue is recognized at the end of the period the job is posted. Marketplace career services revenues are recognized on a gross basis upon distribution of resumes or completion of training courses, which is the point at which the performance obligations are satisfied. Payments for career services are typically due upon distribution or completion of services.
Consulting and Staffing Services revenues represent services rendered to customers less sales adjustments and allowances. Reimbursements, including those related to travel and out-of-pocket expenses, are also included in the net service revenues and equivalent amounts of reimbursable expenses are included in costs of revenue. We record substantially all revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of this line of revenues and expenses. We have concluded that gross reporting is appropriate because we have the task of identifying and hiring qualified employees, and our discretion to select the employees and establish their compensation and duties causes us to bear the risk for services that are not fully paid for by customers. Consulting and staffing revenues are recognized when the services are rendered by the temporary employees. We assume the risk of the acceptability of the employees to customers. Payments for consulting and staffing services are typically due within 90 days of completion of services.
Auralink’s primary performance obligations consist of SMS and VoiceIP transmission services. Each message or call is a distinct transaction, and revenue is recognized at the point in time when delivery is confirmed by the recipient carrier’s platform. These services are priced using dynamic Rate Decks, which vary by destination and time. The transaction price is allocated to each message or call based on its standalone selling price as reflected in the applicable Rate Deck. Auralink acts as principal in these transactions, as it controls the routing infrastructure, sets pricing, assumes delivery risk, and bears responsibility for service quality. Accordingly, revenue is recognized on a gross basis.
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Contracts typically span one year and include early termination provisions. Settlements with counterparties are usually conducted on a net basis using reconciled call detail records.
Deferred revenue results from transactions in which we have been paid for services by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the deferred revenues are recognized.
Sales tax collected is recorded on a net basis and is excluded from revenue.
Quarter Overview
In the first quarter of 2025, the period ending March 31, 2025, the Company continued to concentrate on finalizing its strategic transactions critical to its evolution. The Company is in a period of profound change after significantly reducing its operating footprint to focus primarily on strategic financial matters. The Company also continued preparing for its planned spin-out transaction of certain operating assets to its Atlantic Energy Solutions subsidiary, which is currently being renamed CognoGroup, a Nevada Corporation (“CognoGroup”). CognoGroup is planned to hold the current recruitment-related technology assets, including Mediabistro, a job board for the media industry, as well as other assets and projects of the Company, such as its AI-enabled CandidatePitch software and RecruitingClasses.com.
Product development efforts were limited to continued improvements to Mediabistro and its underlying job board technology, as well as technical projects related to the expected sale of Recruiter.com.
Our key highlights for the three months ending March 31, 2025, include the following:
Key Highlights:
| · | On February 19, 2025, Nixxy Inc. (the “Company”) entered into and closed an Asset Purchase Agreement (the “Savitr Tech APA”) with Savitr Tech OU (“Savitr”), a private telecommunications and software development company incorporated in Estonia. Savitr specializes in billing systems, artificial intelligence (“AI”) integration, and wholesale long-distance telecommunications. Under the terms of the agreement, the Company acquired substantially all assets related to Savitr’s proprietary billing and AI-driven software platform, collectively referred to as the “Aura CpaaS Software.” The Aura CpaaS Software include source code, algorithms, trade secrets, customer interconnection capabilities, and all related intellectual property. The acquisition aligns with the Company’s strategic initiative to expand its AI-enabled billing infrastructure and enhance recurring revenue streams from telecom software solutions. |
| · | On February 24, 2025, Nixxy, Inc. (the “Company” or “Nixxy”) announced that it entered into a twelve-month contract with Mexedia SpA (“Mexedia”), an Italian technology and communications provider (the “Mexedia Agreement”). Under the Mexiedia Agreement, commencing on or before May 1, 2025, the Company will provide Mexedia SMS services over its newly integrated cloud-based platform that helps carriers and operators aggregate wholesale SMS messaging. The Company has engineered its port provisioning to scale dynamically and support up to $10,000,000 in revenue per month for twelve calendar months. The Mexedia Agreement will renew automatically thereafter, subject to either party’s right of termination upon proper notice. The Company will also be layering its enhanced AI platform for dynamic billing and quality and price-based routing, with the multitude of carriers it interconnects with. |
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| · | Effective March 3, 2025, the Company, through its majority-owned subsidiary, Atlantic Energy Solutions, Inc., a Colorado corporation (OTC: AESO) (“AESO”), entered into an Asset Purchase Agreement (the "APA") with Wizco Group, Inc. (“Wizco”), a Delaware corporation, pursuant to which AESO agreed to acquire certain software-related assets (the “Acquisition”).
Wizco is the developer of Ava, an AI-powered interview coaching platform, along with a suite of related assets, including business relationships, customer data, proprietary software, intellectual property, and other associated resources directly linked to Ava. Pursuant to the APA, AESO has acquired substantially all of Wizco’s assets related to its Ava software, including, but not limited to, intellectual property, commercial contracts, licenses, permits, and goodwill. Additionally, AESO assumed certain specified liabilities, limited to obligations directly associated with the transferred contracts as of the effective date of the Acquisition. |
| · | On March 28, 2025, the Company entered into and closed that certain Asset Purchase Agreement (the “Aqua APA” or the “Agreement”) with Aqua Software Technologies Inc., a private Canadian corporation (“Aqua Software Technologies”), pursuant to which Nixxy agreed to acquire certain assets related to billing and AI systems, including associated intellectual property (the “Acquisition”). Aqua Software Technologies specializes in telecommunications and software development, with a focus on billings systems, AI integration, wholesale long distance interconnections and sales. Pursuant to the APA, Nixxy acquired substantially all of Aqua Software Technologies’ assets related to billing and AI systems. |
Results of Operations
Three Months Ended March 31, 2025, Compared to Three Months Ended March 31, 2024:
Revenue
We had revenue of $1.4 million for the three-month period ended March 31, 2025, as compared to $0.2 million for the three-month period ended March 31, 2024, representing an increase of $1.2 million or 528%. The increase resulted primarily due to the increase in telecommunication services of $1.3 million.
Cost of Revenue
Cost of revenue was $1.3 million for the three-month period ended March 31, 2025, compared to $3 thousand for the corresponding three-month period in 2024, representing an increase of $1.3 million. This increase resulted primarily from the increase in revenue generating operations during the quarter.
Operating Expenses
We had total operating expenses of $6.2 million for the three-month period ended March 31, 2025, compared to $1.3 million for the corresponding three-month period in 2024, an increase of $4.9 million or 384%. This increase was due to increases in general and administrative, sales and marketing, and cost of revenue of $3.0 million, $0.6 million, and $1.3 million respectively, which were partially offset by a decrease in amortization of intangibles of $42 thousand.
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Sales and Marketing
Our sales and marketing expense for the three-month period ended March 31, 2025, was $0.7 million compared to $0.1 million for the corresponding three-month period in 2024, an increase of $0.6 million, which reflects the increase in revenue generating activities.
Product Development
Our product development expense for the three-months ended March 31, 2025, increased to $18 thousand from $12 thousand for the corresponding period in 2024 due to an increase in hosting and data expense.
Amortization of Intangibles
For the three-month period ended March 31, 2025, we incurred a non-cash amortization charge of $272 thousand as compared to $314 thousand for the corresponding period in 2024. The amortization expense in 2025 and 2024 relates to the intangible assets acquired from Genesys (now our Recruiting Solutions division), Scouted, Upsider, OneWire, Parrut Novo Group, GOLQ, Aqua Software, Wizco, and Savitr Tech.
General and Administrative
General and administrative expense for the three-month period ended March 31, 2025, includes compensation-related costs for our employees dedicated to general and administrative activities, legal fees, audit and tax fees, consultants and professional services, and general corporate expenses. For the three-month period ended March 31, 2025, our general and administrative expenses were $3.9 million, including $2.2 million of non-cash stock-based compensation. In 2024, for the corresponding period, our general and administrative expenses were $0.9 million, including $300 thousand of non-cash stock-based compensation.
Other Income (Expense)
Other income (expense) for the three-month period ended March 31, 2025, was income of $234 thousand compared to income of $275 thousand in the corresponding 2024 period.
Net Loss
For the three-months ended March 31, 2025, we had a net loss from continuing operations of $4.5 million compared to a net loss of $0.8 million during the corresponding three-month period in 2024.
Non-GAAP Financial Measures
The following discussion and analysis includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives, to net income, operating income, and cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of our historical operating results nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.
Our management uses and relies on EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measures in planning, forecasting and analyzing future periods. Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparison. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the described excluded items.
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We define Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table below. Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing the impact of items of a non-operational nature that affect comparability.
We have included a reconciliation of our non-GAAP financial measures to the most comparable financial measure calculated in accordance with GAAP. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between us and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under applicable SEC rules.
The following table presents a reconciliation of net loss to Adjusted EBITDA:
Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net Income (loss) | $ | (4,542,163 | ) | $ | (778,427 | ) | ||
| Interest expense and finance cost, net | 37,834 | 365,853 | ||||||
| Depreciation & amortization | 277,856 | 320,667 | ||||||
| EBITDA (loss) | (4,226,473 | ) | (91,907 | ) | ||||
| Credit loss (recovery) expense | 3,970 | (48,908 | ) | |||||
| Gain on Settlement of Payables | – | 178,749 | ||||||
| Stock-based compensation | 2,215,205 | 299,847 | ||||||
| Gain on debt extinguishment | – | (579,977 | ) | |||||
| Adjusted EBITDA (Loss) | $ | (2,007,298 | ) | $ | (420,945 | ) | ||
Liquidity and Capital Resources
For the three months ended March 31, 2025, net cash used in operating activities was $1.8 million, compared to net cash used in operating activities of $0.7 million for the corresponding three-month period in 2024. For the three months ended March 31, 2025, net loss was $4.6 million. Net loss includes non-cash items of depreciation and amortization expense of $278 thousand, bad debt expense of $4 thousand, stock based compensation expense of $2.2 million, loss on fair value of warrant liability of $8 thousand, gain on fair value of contingent consideration of $164 thousand, gain on fair value of derivative liability of $113 thousand, and gain on fair value of marketable securities of $2 thousand.
For the three months ended March 31, 2024, net cash used in operating activities was $0.7 million. For the three months ended March 31, 2024, net loss was $0.8 million. Net loss includes non-cash items of depreciation and amortization expense of $320 thousand, bad debt recovery (expense) of $49 thousand, equity-based compensation expense of $300 thousand, warrant modification expense of $64 thousand, amortization of debt discount and debt costs of $177 thousand, unrealized loss on marketable securities of $109 thousand, and a gain on extinguishment of debt of $580 thousand. Changes in operating assets and liabilities include primarily the following: accounts receivable decreased by $392 thousand, and prepaid expenses and other current assets decreased by $30 thousand. Accounts payable, accrued liabilities, deferred payroll taxes, other liabilities, and deferred revenue decreased in total by $427 thousand.
For the three months ended March 31, 2025, net cash used in investing activities was $0.4 million. The principal factor was purchase of intangible assets of $0.4 million. The Company received $0.1 million for the three months ended March 31, 2024 from the sale of assets.
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For the three months ended March 31, 2025, net cash provided by financing activities was $0.
Based on cash on hand as of March 31, 2025, of approximately $0.3 million, we do not have the capital resources to meet our working capital needs for the next 12 months.
Our condensed consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We incurred net losses and negative operating cash flows since inception. For the three months ended March 31, 2025, we recorded a net loss of $4.6 million. We have not yet established an ongoing source of revenue that is sufficient to cover our operating costs and allow us to continue as a going concern. Our ability to continue as a going concern is dependent on us obtaining adequate capital to fund operating losses until we become profitable.
Our historical operating results indicate substantial doubt exists related to our ability to continue as a going concern. We can give no assurances that any additional capital that we are able to obtain, if any, will be sufficient to meet our needs, or that any such financing will be obtainable on acceptable terms. If we are unable to obtain adequate capital, we could be forced to cease operations or substantially curtail our commercial activities. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities should we be unable to continue as a going concern.
To date, equity offerings have been our primary source of liquidity and we expect to fund future operations through additional securities offerings.
Off-Balance Sheet Arrangements
None.
Critical Accounting Estimates and Policies
Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and outcomes may differ from management’s estimates and assumptions. Critical accounting estimates are the fair value of intangible assets and goodwill, and valuation of stock based compensation expense.
Policy
Revenue Recognition
We recognize revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration we expect to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.
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Revenues as presented on the consolidated statements of operations represent services rendered to customers less sales adjustments and allowances.
Marketplace advertising revenues are recognized on a gross basis when the advertising is placed and displayed or when lead generation activities and online publications are completed, which is the point at which the performance obligations are satisfied. Payments for marketing and publishing are typically due within 30 days of completion of services. Job posting revenue is recognized at the end of the period the job is posted. Marketplace career services revenues are recognized on a gross basis upon distribution of resumes or completion of training courses, which is the point at which the performance obligations are satisfied. Payments for career services are typically due upon distribution or completion of services.
Consulting and Staffing Services revenues represent services rendered to customers less sales adjustments and allowances. Reimbursements, including those related to travel and out-of-pocket expenses, are also included in the net service revenues and equivalent amounts of reimbursable expenses are included in costs of revenue. We record substantially all revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of this line of revenues and expenses. We have concluded that gross reporting is appropriate because we have the task of identifying and hiring qualified employees, and our discretion to select the employees and establish their compensation and duties causes us to bear the risk for services that are not fully paid for by customers. Consulting and staffing revenues are recognized when the services are rendered by the temporary employees. We assume the risk of the acceptability of the employees to customers. Payments for consulting and staffing services are typically due within 90 days of completion of services.
Auralink’s primary performance obligations consist of SMS and VoiceIP transmission services. Each message or call is a distinct transaction, and revenue is recognized at the point in time when delivery is confirmed by the recipient carrier’s platform. These services are priced using dynamic Rate Decks, which vary by destination and time. The transaction price is allocated to each message or call based on its standalone selling price as reflected in the applicable Rate Deck. Auralink acts as principal in these transactions, as it controls the routing infrastructure, sets pricing, assumes delivery risk, and bears responsibility for service quality. Accordingly, revenue is recognized on a gross basis.
Contracts typically span one year and include early termination provisions. Settlements with counterparties are usually conducted on a net basis using reconciled call detail records.
Contract liabilities result from transactions in which we have been paid for services by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the contract liabilities are recognized.
Sales tax collected is recorded on a net basis and is excluded from revenue.
Goodwill
Goodwill is comprised of the purchase price of business combinations in excess of the fair value assigned at acquisition to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized. We test goodwill for impairment for its reporting units on an annual basis, or when events occur, or circumstances indicate the fair value of a reporting unit is below its carrying value.
We perform our annual goodwill impairment assessment on December 31st of each year or as impairment indicators dictate.
When evaluating the potential impairment of goodwill, management first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of our reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to the impairment testing methodology using an appropriate valuation method.
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We compare the carrying value of the reporting unit, including goodwill, with its fair value, as determined by its estimated discounted cash flows. If the carrying value of a reporting unit exceeds its fair value, then the amount of impairment to be recognized is recognized as the amount by which the carrying amount exceeds the fair value.
When required, we may arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of those anticipated cash flows. Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation-Stock Compensation (“ASC 718”), which requires all share-based payments be recognized in the consolidated financial statements based on their fair values. In accordance with ASC 718, the Company has elected to use the Black-Scholes option pricing model to determine the fair value of options granted and recognizes the compensation cost of share-based awards on a straight-line basis over the vesting period of the award.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date.
In November 2023, the FASB issued Accounting Standard Update (ASU) No. 2023-07, Segment Reporting (Topic 280)-Improvements to Reportable Segment Disclosures (ASU 2023-07), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 should be applied on a retrospective basis. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company has adopted the reportable segment disclosure requirements with no significant impact on its disclosures.
In December 2023, the FASB issued ASU 2023-09-Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which is intended to enhance the transparency and decision usefulness of income tax disclosures, primarily by amending disclosure requirements for the effective tax rate reconciliation and income taxes paid. ASU 2023-09 should be applied on a prospective basis, and retrospective application is permitted. ASU 2023-09 is effective January 1, 2025.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial statements.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
| (a) | Disclosure Controls and Procedures |
Our principal executive officer and principal financial officer, with the assistance of other members of our management, have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a - 15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on such evaluation, our principal executive officer and principal financial officer had concluded that our disclosure controls and procedures were not effective due to material weaknesses in internal controls over financial reporting as identified below.
| (b) | Management’s Report on Internal Control over Financial Reporting |
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management evaluated the effectiveness of our internal control over financial reporting as of the end of the period covered by this Quarterly Report. In making this assessment, our management used the criteria set forth by the Committee of Sponsor Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Based on that evaluation, as a result of the material weaknesses described below, management has concluded that our internal control over financial reporting was not effective as of March 31, 2025.
A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects our ability to initiate, authorize, record, process, or report external financial data reliably in accordance with GAAP such that there is more than a remote likelihood that a material misstatement of our annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified material weaknesses in our internal control over financial reporting. Specifically, (1) we lack a sufficient number of employees to properly segregate duties and provide adequate monitoring during the process leading to and including the preparation of the condensed consolidated financial statements, and (2) do not have the in-house technical expertise to identify and analyze complex or unusual transactions for proper accounting treatment. Accordingly, management’s assessment is that our internal controls over financial reporting were not effective as of March 31, 2025.
Changes in Internal Control over Financial Reporting
We have worked to establish all the checks and balances needed for all financial areas of our business. We hired a consultant in mid-2020 to establish best practices and help us document and implement these. This consultant is a CPA and has a significant background in running the accounting and budgeting process for public companies. We began adopting these best practices during the fourth quarter of 2020. We retained an outsourced firm with a panel of CPA consultants in 2021 to assist in building internal controls and preparing financial reports.
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PART II: OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
We are currently pursuing two related collections matters against BKR Strategy Group. Since 2013, BKR Strategy Group has provided talent acquisition strategy and services to top companies. Starting in the third quarter of 2021, BKR Strategy Group subcontracted Recruiter.com to perform on Demand recruiter services on behalf of BKR Strategy Group’s clients. Although payments for services rendered were initially received in a timely fashion, BKR Strategy Group’s balance grew throughout the third and fourth quarters of 2021. This led to BKR Strategy Group executing a Promissory Note with a payment schedule for $500,000 on November 30, 2021, with a personal guarantee from its business principal as part of the note. After failing to meet the payment schedule and after repeated attempts to collect the balance due, we retained the law firm of Berkovitch & Bouskila, PLLC and filed two lawsuits against BKR Strategy Group on February 18, 2022, the first, to collect on unpaid invoices and the second, to enforce the promissory note, for a total sum of $1,400,000. On March 24, 2022, BKR Strategy Group made a counterclaim against us for $500,000 on the grounds of alleged overbilling. Management denies the basis for the counterclaim and expects to vigorously defend itself from this counterclaim. Outside counsel for the company has advised that at this stage in the proceedings, it cannot offer an opinion as to the probable outcome. As it is not possible to estimate if a loss will be incurred, there has been no accrual.
On June 21, 2022, the Supreme Court of the State of New York, New York County ruled in favor of the Company that BKR Strategy Group owes the Company $500,000, plus interest at 12% since November 22, 2021, through the entry of judgement in the lawsuit related to the enforcement on the Promissory Note executed by BKR Strategy Group. Proceedings in the other lawsuit remain ongoing.
On or about September 6, 2023, Recruiter.com Group, Inc. (the "Company") was served with a civil lawsuit filed by Pipl, Inc. in the Superior Court of the State of Connecticut, Judicial District of New Britain. The lawsuit alleges that the Company failed to pay for goods and/or services provided by Pipl, Inc. between January 3, 2021, and December 7, 2022, with the claimed amount due exceeding $266,562.59 plus interest, costs, and attorneys’ fees. The Company retained counsel and filed a counterclaim for breach of contract, alleging that Pipl Inc. failed to adequately perform under the contract, as well as claims for breach of the implied duty of good faith and fair dealing and unjust enrichment. Given that discovery has not been completed, the Company is unable to predict the outcome of the case or estimate the possible loss or range of loss, if any, but continues to evaluate the case with counsel as more information becomes available.
On April 1, 2024, Recruiter.com Group, Inc. ("the Company") became involved in legal proceedings initiated by Creditors Adjustment Bureau, Inc. ("CAB"), as documented in the Superior Court of California, County of Santa Clara, case number 24CV433086. CAB’s complaint, filed on March 13, 2024, alleges that the Company failed to fulfill payment obligations under contracts with CAB’s assignor, totaling approximately $213,894.44. CAB seeks recovery of the owed amounts, interest, attorney fees, costs, and other damages deemed appropriate by the court. The Company has been defending itself vigorously, including filing a cross-complaint for indemnity against Onewire Holdings, LLC and NOVO Group, Inc. At this stage, the Company is unable to predict the outcome of the case or estimate the potential financial impact.
November 20, 2024, Recruiter.com Inc. has been named as a defendant in a lawsuit filed by HireTeammate, Inc. (d/b/a hireEZ) in the Supreme Court of New York. The lawsuit alleges that The Company breached a contract by failing to pay for platform management services provided by hireEZ between December 12, 2022, and January 31, 2023. The total amount claimed is $79,388.39, along with interest and legal costs. The complaint includes claims for breach of contract, account stated, and unjust enrichment. The Company is evaluating its legal options in response to the lawsuit.
Except for the aforementioned proceedings described above, as of the date of this filing, there are no material pending legal or governmental proceedings relating to our Company or properties to which we are a party, and, to our knowledge, there are no material proceedings to which any of our directors, executive officers, or affiliates are a party adverse to us or which have a material interest adverse to us.
ITEM 1A. - RISK FACTORS
Factors that could cause or contribute to differences in our future financial and operating results include those discussed in the risk factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, filed March 31, 2025. These risks are not the only risks that we face. Additional risks not presently known to us or that we do not currently consider significant may also have an adverse effect on us. If any of the risks actually occur, our business, results of operations, cash flows or financial condition could suffer.
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ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 - OTHER INFORMATION
During the quarter ended March 31, 2025, no director
or officer
ITEM 6 - EXHIBITS
The following exhibits are filed as part of this Quarterly Report:
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NIXXY, INC. | |||
| Dated: May 20, 2025 | By: | /s/ Mike Schmidt | |
| Mike Schmidt | |||
|
Chief Executive Officer (Principal Executive Officer) |
|||
| Dated: May 20, 2025 | By: | /s/ Adam Yang | |
| Adam Yang | |||
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
|||
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EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Mike Schmidt, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Nixxy, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 20, 2025 | |
| /s/ Mike Schmidt | |
| Mike Schmidt | |
|
Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Xuqiang (Adam) Yang, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Nixxy, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Adam Yang | |
| Xuqiang (Adam) Yang | |
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
|
| Date: May 20, 2025 |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THESARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Nixxy, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof, I, Mike Schmidt, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and | |
| 2. | The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Mike Schmidt | |
| Mike Schmidt | |
|
Chief Executive Officer (Principal Executive Officer) |
|
| Dated: May 20, 2025 |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THESARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Nixxy, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof, I, Adam Yang, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and | |
| 2. | The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Adam Yang | |
| Xuqiang (Adam) Yang | |
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
|
| Dated: May 20, 2025 |