Nixxy, Inc.

Current report

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

Current report

This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in such statements.

Current report

During the year ended December 31, 2025, the Company continued to execute its strategic transformation into a communications and data infrastructure platform. The Company’s operating focus is centered on scaling its telecommunications revenue base, improving operating efficiency through automation and AI-enabled routing, and expanding into higher-value infrastructure and software-driven applications.

Current report

The Company’s telecommunications platform has experienced significant growth in traffic volumes and revenue run-rate, supported by expanded carrier relationships, improved routing performance, and increased operational scale. Based on internal management estimates and prior disclosures, the Company’s telecommunications business has reached an annualized revenue run-rate of approximately $150 million to $180 million as of late 2025, although such run-rate may not be indicative of future results.

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Revenue Growth and Communications Platform Scaling

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The Company’s revenue growth has been primarily driven by:

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Management believes that the Company’s communications platform represents a scalable and repeatable revenue engine, where incremental traffic can be added with limited proportional increases in operating overhead. Revenue is largely usage-based and may fluctuate based on traffic volumes, routing decisions, customer demand, and market pricing conditions.

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Margin Expansion and Traffic Mix Optimization

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A core component of the Company’s strategy is the improvement of unit economics through a combination of traffic mix optimization and operational automation.

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Key drivers of margin expansion include:

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Management believes that these initiatives support a disciplined margin expansion framework, although realized margins may vary depending on market conditions, pricing dynamics, and traffic composition.

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Operating Efficiency and Automation

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The Company has invested in AI-enabled systems designed to:

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These capabilities are intended to improve operating efficiency, reduce manual overhead, and enhance consistency across the Company’s telecommunications operations. As the platform scales, management expects automation to play an increasing role in supporting operational leverage; however, the timing and extent of such benefits remain dependent on execution and market conditions.

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Expansion into Infrastructure and Software

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In addition to its core telecommunications operations, the Company has made investments in infrastructure and software assets intended to support higher-value applications, including:

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These initiatives are intended to enable the Company to process communications and related data within controlled infrastructure environments and to support the development of software-based offerings over time.

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Leadnova.ai is currently in user acceptance testing, with a targeted commercial beta planned for 2026, subject to execution.

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Telco + Fintech Convergence Initiatives

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The Company is pursuing opportunities at the intersection of telecommunications and financial technology, leveraging its communications infrastructure to support transaction-enabled workflows.

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These initiatives include:

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The Company is developing these capabilities in part through strategic partnerships, including collaboration with PayToMe, which provides development resources and fintech platform capabilities.

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PayToMe.co is a Silicon Valley–based AI-native financial technology platform enabling embedded payments and cross-border transaction workflows across global markets.

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Management believes that integrating communications and transaction workflows may represent a significant long-term opportunity; however, these initiatives are in development, and their timing, adoption, and financial impact remain uncertain and subject to execution and regulatory considerations.

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Liquidity and Capital Strategy

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The Company continues to evaluate capital allocation strategies to support:

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Management expects that continued revenue growth and operational improvements may support progress toward improved cash flow performance; however, the Company may require additional capital to execute its growth strategy.

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Key Business Drivers and Outlook

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Management believes that the Company’s future performance will be influenced by:

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While management believes the Company is positioned to benefit from these trends, actual results may differ materially due to market conditions, competition, regulatory factors, and execution risks.

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Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

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Revenue was approximately $97.9 million for the year ended December 31, 2025 compared to $6 thousand for the year ended December 31, 2024.

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The significant increase in revenue was primarily attributable to the expansion of the Company’s telecommunications services business during 2025, including:

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Revenue reported in 2024 primarily reflected minimal contributions from remaining HR-tech related operations.

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Cost of revenue was approximately $97.9 million for the year ended December 31, 2025 compared to $3 thousand for the year ended December 31, 2024. 2025 represented direct costs associated with carrier termination fees, interconnection charges, network access, and telecommunications infrastructure supporting our wholesale voice and SMS operations.

Current report

Our wholesale telecommunications model is designed to support high-volume transaction processing across global carrier networks. As traffic volumes increase, we benefit from enhanced purchasing leverage, optimized routing strategies, and expanded carrier relationships, which support operating efficiencies and scalable infrastructure deployment. We continue to focus on improving network optimization, vendor diversification, and strategic carrier partnerships to enhance cost performance over time.

Current report

Operating expenses are approximately $11.8 million for the year ended December 31, 2025, compared to $13.0 million for the year ended December 31, 2024. The decrease of $1.2 million was primarily attributable to a $3.0 million reduction in impairment expense, partially offset by a $1.4 million increase in amortization of intangible assets.

Current report

Sales and marketing expense was approximately $0.6 million for the year ended December 31, 2025, compared to $0.7 million for the year ended December 31, 2024. The decrease was primarily attributable to reduced marketing expenditures as part of the Company’s cost management initiatives focused on improving operating margins.

Current report

Product development expense for the year ended December 31, 2025, increased to approximately $246 thousand, compared to $41 thousand for the year ended December 31, 2024. The increase was primarily attributable to higher hosting, data, technology, and design costs associated with the development and expansion of the Company’s telecommunications business.

Current report

Amortization of Intangibles Assets

Previous report

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) describes the matters that we consider to be important to understanding the results of our operations for each of the two years in the years ended December 31, 2024, and 2023, and our capital resources and liquidity as of December 31, 2024, and 2023. Our fiscal year begins on January 1 and ends on December 31. We analyze the results of our operations for the last two years, including the trends in the overall business followed by a discussion of our cash flows and liquidity, and contractual commitments. We then provide a review of the critical accounting judgments and estimates that we have made that we believe are most important to an understanding of our MD&A and our consolidated financial statements. We conclude our MD&A with information on recent accounting pronouncements which we adopted during the year, as well as those not yet adopted that are expected to have an impact on our financial accounting practices.

Previous report

The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto, all included elsewhere herein. The forward-looking statements in this section and other parts of this document involve risks and uncertainties including statements regarding our plans, objectives, goals, strategies, and financial performance. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of factors set forth under the caption “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995” below and as a result of certain factors, including but not limited to those set forth in “Part I - Item 1A. Risk Factors”. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements made by or on behalf of the Company.

Previous report

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.

Previous report

We have seven 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”). Additionally, the Company owns a controlling interest in Atlantic Energy Solutions, Inc., a Colorado company that is traded on the OTC Markets (OTC: AESO).

Previous report

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.

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Operating Businesses and Revenue

Previous report

We generate revenue or have generated from the following activities:

Previous report

The costs of our revenue primarily consist of employee costs, third-party staffing costs and other fees, outsourced recruiter fees and commissions based on a percentage of our gross margin.

Previous report

Revenues as presented on the consolidated statements of operations represent services rendered to customers less sales adjustments and allowances.

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Software subscription revenues are recognized over the term of the subscription for access to services and/or our web-based platform. Revenue is recognized monthly over the subscription term. Talent effectiveness subscription revenues are recognized over the term of the subscription when services are provided. Any payments received prior to the time passing to provide the subscription services are recorded as a deferred revenue liability. Revenue generated from the enhanced support package and On Demand support are recognized at the point-in-time when the service is provided. Revenue generated from placement fees that are related to the software subscription are recognized at the point-in-time when the 60 or 90-day guarantee expires.

Previous report

Recruiters On Demand services are billed to clients as either monthly subscriptions or time-based billings. Revenues for Recruiters On Demand are recognized on a gross basis when each monthly subscription service is completed. Talent Effectiveness consulting services are billed to clients upfront for a period of 12 months. Revenue is recognized on a gross basis monthly over the period the consulting services are provided.

Previous report

Full-time placement revenues are recognized on a gross basis when the guarantee period specified in each customer’s contract expires. No fees for direct hire placement services are charged to the employment candidates. Any payments received prior to the expiration of the guarantee period are recorded as a deferred revenue liability. Payments for recruitment services are typically due within 90 days of completion of services.

Previous report

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.

Previous report

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.

Previous report

Revenue share revenues represent a percentage of revenue we have earned in relation to client referrals we made to a third party. We record revenue in relation to revenue share on a net basis as an agent under this arrangement. We have concluded that net reporting is appropriate because we do not provide the underlying services and arrangements to meet the demands of the client that we referred to the third party. Revenue is recorded based on a net percentage of revenue that is shared between us and the third party and earned upon delivery of the services by the third party. The third party provides the underlying services in this arrangement.

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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.

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2024 Business Update

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In 2024, the Company concentrated on finalizing its strategic transactions critical to its evolution. The Company navigated through a significant restructuring of its balance sheet and executed a license agreement with GoLogiq, as well finalization of the Asset Purchase Agreement with Job Mobz. The strategic relationships with Job Mobz and GoLogiq are about expanding our capabilities and aligning our resources with our most promising opportunities. 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 prepared 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"). The Company is still evaluating the final structure and form of the planned spin-out transaction.

Previous report

Product development efforts included continued improvements to Mediabistro and its underlying job board technology. The Company also introduced an AI-powered predictive analytics capability for Mediabistro, to uncover job trends in the media industry and showcase these trends to hiring managers and job seekers.

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Since December 31, 2023, we:

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Since December 31, 2024, we:

Previous report

Our revenue for the year ended December 31, 2024, was $0.6 million compared to $3.2 million for the prior year, representing a decrease of $2.6 million or 81%. This decrease resulted primarily from a decrease in our Recruiters on Demand business of $1.9 million or 99.9%. Additionally, Software Subscriptions contributed no revenue in 2024, compared to $0.4 million in 2023. We had a decrease in our Marketplace Solutions, Consulting and staffing services, Full time placement fees, and Revenue share revenue of $69, $124, $20, and $100 thousand.

Previous report

Cost of revenue for the year ended December 31, 2024, was $3 thousand, compared to $2.7 million in the prior year. This decrease resulted primarily from a decrease in compensation expense in line with the decrease in revenue and a higher margin revenue stream in 2024. Cost of revenue in 2023 was primarily attributable to third party staffing costs and other fees related to the recruitment and staffing business acquired from Genesys, which after its purchase, serves as our Recruiting Solutions division, as well as costs for contract recruiters supporting the Recruiters on Demand business.

Previous report

We had total operating expenses of $15.5 million for the year ended December 31, 2024, compared to $10.9 million for the year ended December 31, 2023. This increase was primarily due to increases in sales and marketing expense of $465 thousand and general, goodwill impairment of $4.7 million, and administrative expense of $2.8 million. These increases are partially offset by decreases in product development expense of $365 thousand and amortization of intangibles of $250 thousand.

Previous report

Our sales and marketing expense for the year ended December 31, 2024, was $852 thousand compared to $0.4 million for the prior year, which is primarily due to company's campaign to increase awareness for company's brand and stock.

Previous report

Our product development expense for the year ended December 31, 2024, decreased to $0.1 million from $0.4 million for the prior year. This decrease was primarily attributable to a $358 thousand decrease in hosting and data expenses during the period.

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Amortization of Intangibles and Impairment Expense

Previous report

General and administrative expense for the year ended December 31, 2024, 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 year ended December 31, 2024, our general and administrative expenses were $8.9 million, including $5.6 million of non-cash stock-based compensation. In 2023, for the corresponding period, our general and administrative expenses were $6.1 million, including $1.5 million of non-cash stock-based compensation.

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Other Income (Expense)

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Other income (expense) for the year ended December 31, 2024, was expense of $7.6 million compared to income of $2 thousand in the corresponding 2023 period. The primary reason for the loss in 2024 was due to a loss on debt settlement of $8.5 million.

Previous report

For the year ended December 31, 2024, we had a net loss from continuing operations of $22.6 million compared to a net loss of $7.7 million during the corresponding year in 2023. For the year ended December 31, 2024, we had a net income from discontinued operations of $0 thousand compared to a net income of $1.1 million during the corresponding year in 2023.

Previous report

The following discussion and analysis include 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 of Recruiter, 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.

Previous report

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 analysing 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.

Previous report

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.

Previous report

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 our results 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.

Previous report

For the year ended December 31, 2024, net cash used in operating activities was $4.1 million, compared to net cash used in operating activities of $0.9 million for the corresponding period in 2023. For the year ended December 31, 2024, net loss was $22.6 million. Net loss includes non-cash items of depreciation and amortization expense of $1.1 million, bad debt recovery of $84 thousand, impairment expense of $4.0 million, loss on settlement of consulting agreement of $153 thousand, loss on settlement of debt settlement of $8.5 million, stock-based compensation expense of $5.6 million, goodwill and intangible assets impairment of $4,720,624, loss on fair value of marketable securities of $240 thousand, gain on sale of assets of $1.8 million, change in fair value of warrant liability of $13 thousand, and amortization of debt discount and debt costs of $177 thousand.

Previous report

For the year ended December 31, 2023, net cash used in operating activities was $0.9 million. The decrease in cash used in operating activities was attributable to the change in operating expenses outlined previously to support the changes in our business. For the year ended December 31, 2023, net loss was $6.7 million. Net loss includes non-cash items of depreciation and amortization expense of $1.3 million, bad debt expense (recovery) of ($143) thousand, equity-based compensation expense of $1.5 million, and amortization of debt discount and debt costs of $1.3 million. Changes in operating assets and liabilities include primarily the following: accounts receivable decreased by $1.9 million and prepaid expenses and other current assets decreased by $96 thousand. Accounts payable, accrued liabilities, deferred payroll taxes, other liabilities, and deferred revenue decreased in total by $84 thousand.

Previous report

For the year ended December 31, 2024, net cash provided by investing activities was $1.8 million and $0, respectively. The principal factor was proceeds from a sale of assets for $1.8 million.

Previous report

For the year ended December 31, 2024, net cash provided by financing activities was $3.9 million. The principal factor was issuance of common stock for $4.3 million which was partially offset by repayment of notes payable for $1.0 million.

Previous report

In 2023, net cash provided by financing activities was $1.0 million. The principal factors were $786 thousand from issuance of common stock net of equity issuance costs, $871 thousand from proceeds from a factoring agreement, and $315 thousand from proceeds from exercised warrants. The proceeds were partially offset by $80 thousand from purchased preferred shares, $668 thousand from repayments of loans, and $215 thousand from repayments of a factoring agreement.