10-Q: Nixxy Reports Soaring Telecom Revenue Amid AI Expansion

Sentiment:

Quarterly Report 13 November 2025 5:25 PM

Nixxy, Inc. announced a dramatic increase in telecommunications revenue and strategic AI acquisitions, despite ongoing net losses and a significant cash burn, raising going concern doubts.

Capital raiseThe company secured a $2.0 million revolving growth facility in September 2025, with a fixed $2.00/share conversion feature.Proceeds from the sale of common stock in offerings amounted to $1,840,500 for the nine months ended September 30, 2025.Management explicitly states that the company will require additional financing for the fiscal year ending December 31, 2025, to continue at its expected level of operations.

Worse than expectedDespite a massive increase in revenue, the company continues to report significant net losses and an increased cash burn from operating activities.The company explicitly states that substantial doubt exists about its ability to continue as a going concern, indicating a critical liquidity issue.The working capital deficit of $4.1 million highlights a precarious short-term financial position.Adjusted EBITDA (Loss) worsened to $(5.7) million for the nine months ended September 30, 2025, from $(124,596) in the prior year, suggesting deteriorating operational profitability before non-cash items and debt extinguishment.

Summary

Revenue for the nine months ended September 30, 2025, surged to $46.8 million, a 9416% increase from $0.5 million in the prior year, primarily driven by telecommunication services.
Net loss attributable to Nixxy, Inc. for the nine months ended September 30, 2025, improved to $(10.9) million from $(15.1) million in the same period of 2024.
Net loss per common share (basic and diluted) significantly improved to $(0.58) for the nine months ended September 30, 2025, compared to $(4.59) in the prior year.
The company completed several strategic acquisitions in 2025, including AI and software intellectual property from Savitr Tech OU, an AI-powered interview coaching platform from Wizco Group, billing and AI systems from Aqua Software Technologies, generative AI systems from NexGenAI Holding Group, and EDGE data center technologies from Everythink Innovation Limited.
Cash and cash equivalents decreased significantly to $122,496 as of September 30, 2025, from $2,532,990 at December 31, 2024.
Net cash used in operating activities increased to $(4.1) million for the nine months ended September 30, 2025, from $(1.7) million in the prior year.
A working capital deficit of approximately $4.1 million was reported as of September 30, 2025.
The company converted $1,198,617 of outstanding principal and $298,269 of accrued interest from the Novo Note into 748,433 shares of common stock.
A $2.0 million revolving growth facility was secured in September 2025, with a fixed $2.00/share conversion feature.
Management has identified substantial doubt about the company's ability to continue as a going concern for at least the next twelve months due to insufficient cash and ongoing operating losses.

Sentiment

Score: 3

Explanation: While revenue growth is exceptionally strong due to the strategic pivot, the company's severe liquidity issues, increased cash burn, and explicit going concern warning overshadow these positives. The ongoing net losses and material weaknesses in internal controls further contribute to a negative outlook, despite efforts in strategic acquisitions and debt conversion.

Positives

Revenue for the nine months ended September 30, 2025, increased by 9416% to $46.8 million, primarily from telecommunication services.
Net loss attributable to Nixxy, Inc. decreased to $(10.9) million for the nine months ended September 30, 2025, from $(15.1) million in the prior year.
Net loss per common share (basic and diluted) improved significantly to $(0.58) from $(4.59) year-over-year.
Successful strategic acquisitions of AI and telecommunications intellectual property and assets from Savitr Tech OU, Wizco Group, Aqua Software Technologies, NexGenAI Holding Group, and Everythink Innovation Limited.
The Savitr Tech OU acquisition generated $1.3 million in telecommunication revenue in March 2025 and surpassed a $5.0 million monthly revenue milestone by May 2025.
Conversion of the Novo Note eliminated $1,198,617 in principal and $298,269 in accrued interest, reducing debt.
Secured a $2.0 million revolving growth facility in September 2025, structured at a premium to market ($2.00/share conversion feature).
September revenue is expected to exceed $14 million, indicating continued strong commercial momentum in the telecom segment.

Negatives

The company reported a net loss from continuing operations of $(2.2) million for the three months and $(11.0) million for the nine months ended September 30, 2025.
Cash and cash equivalents significantly decreased to $122,496 as of September 30, 2025, from $2,532,990 at December 31, 2024.
Net cash used in operating activities increased to $(4.1) million for the nine months ended September 30, 2025, from $(1.7) million in the prior year, indicating increased cash burn.
A working capital deficit of approximately $4.1 million was reported as of September 30, 2025.
Management has determined that substantial doubt exists about the company's ability to continue as a going concern for at least the next twelve months.
Material weaknesses in internal control over financial reporting persist, including limited accounting personnel, insufficient segregation of duties, and gaps in technical accounting expertise.
The company faces multiple legal proceedings and lawsuits alleging unpaid invoices and breach of contract, totaling over $550,000 in claimed amounts, plus interest and fees.

Risks

Substantial doubt exists about the company's ability to continue as a going concern due to insufficient cash to fund liabilities and operations for the next twelve months.
The company will require additional financing for the fiscal year ending December 31, 2025, and there is no assurance that such capital will be obtainable on acceptable terms.
Failure to obtain needed capital could force the company to delay, scale back, or eliminate development activities or cease operations.
Ongoing legal proceedings and lawsuits, including claims from Pipl, Inc., Creditors Adjustment Bureau, Inc., HireTeammate, Inc., and arbitration by Regal Nutra, LLC and Dauntless Media, LLC, could result in significant financial losses.
Material weaknesses in internal control over financial reporting, such as limited accounting personnel and insufficient segregation of duties, could adversely affect the company's ability to record, process, summarize, and report financial information reliably.
The company's strategic transformation and planned spin-out of recruitment-related businesses to CognoGroup may not be completed as planned.
The company's investment in marketable securities (Futuris, FTRS) is subject to market volatility and limited trading volume, affecting liquidity and execution at quoted prices.

Future Outlook

The company expects to improve demand and profit margins for marketplace solutions and telecommunication services in 2025. Management is focused on strategic transactions, executing its telecommunications business, expanding its artificial intelligence business, and effectuating the spin-out of certain assets to CognoGroup. The Leadnova platform entered User Acceptance Testing in Q4, with a commercial launch targeted for early 2026. September revenue is expected to exceed $14 million, underscoring a durable ramp toward margin expansion and breakeven as NIXXY CORE scales.

Management Comments

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.
Management is focused on its strategic transactions and effectively positioning the Company to execute on its telecommunications business, explore opportunities to expand its artificial intelligence business, and to effectuate the spinout of certain assets to CognoGroup.
Management believes these actions represent substantial progress toward remediation and is actively monitoring the effectiveness of the updated controls regarding internal control over financial reporting.

Industry Context

Nixxy's strategic shift from recruitment to telecommunications and AI aligns with broader industry trends emphasizing digital transformation, AI integration, and high-volume communication services. The acquisition of EDGE data center technologies positions the company to capitalize on the growing demand for Cloud AI, Spatial Computing, and Visual Computing infrastructure, which are critical for advanced AI applications and DeFi financial services. The focus on telecommunications, particularly SMS and Voice-over-IP, taps into a fundamental and expanding digital communication market. This pivot allows Nixxy to leverage its acquired AI capabilities to enhance operational efficiency and potentially gain a competitive edge in these high-growth sectors, moving away from the more saturated and competitive recruitment market.

Comparison to Industry Standards

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Executive Officer and President	GOLQ CEO and Director (unnamed in filing)	Mike Schmidt	2024-12-31	Resignation of previous CEO, followed by appointment of Mike Schmidt (current CEO).
Board of Directors Member	GOLQ CEO and Director (unnamed in filing)	NA	2024-12-12	Resignation, not due to any disagreement with the Company.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Internal Control Weaknesses	Identified material weaknesses in internal control over financial reporting, including limited accounting personnel resulting in insufficient segregation of duties and gaps in technical accounting expertise for complex transactions.	Ongoing as of 2025-09-30	Reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information reliably.
Remediation Actions	Engaged an experienced consultant to support SEC reporting and GAAP compliance, strengthened internal review procedures and monthly closing processes, and improved segregation of duties and workflow documentation.	Initiated during Q2 2025	Represent substantial progress toward remediation, but material weaknesses are considered ongoing as of this reporting date.

Legal Proceedings

The company is pursuing a collections matter against BKR Strategy Group related to unpaid invoices and a $500,000 promissory note, with the Supreme Court of New York ruling in favor of the company for $500,000 plus 12% interest.
A civil lawsuit was filed by Pipl, Inc. for alleged unpaid goods and/or services totaling over $266,562.59, plus interest, costs, and attorneys' fees; the company has filed a counterclaim.
Legal proceedings initiated by Creditors Adjustment Bureau, Inc. allege failure to fulfill payment obligations totaling approximately $213,899.94, plus interest, attorney fees, and costs.
Recruiter.com Inc. has been named as a defendant in a lawsuit by HireTeammate, Inc. for alleged breach of contract and unpaid platform management services totaling $79,388.39, along with interest and legal costs.
Regal Nutra, LLC and Dauntless Media, LLC initiated arbitration against Nixxy, Inc. alleging breach of contract and fraud; Nixxy has filed a formal objection to jurisdiction.

Related Party Transactions

Recruiter.com Mauritius, a related party firm, provides software development and maintenance services for the company's website and platform. Expenses to this firm were $0 for the three and nine months ended September 30, 2025, compared to $9,243 and $28,181 for the corresponding periods in 2024.
GoLogiq, Inc. is a related party with whom the company has a Technology License and Commercialization Agreement. The CEO and Director of GOLQ was formerly Nixxy's CEO and President.
Logiq Inc, a related party firm, provides marketing and advisory services. Expenses to this firm were $0 for the three months ended September 30, 2025 and 2024, and $150,666 for the nine months ended September 30, 2025, compared to $0 in 2024.

Stakeholder Impact

Shareholders face significant risk due to the going concern warning and potential need for further dilutive capital raises.
Employees and agents may experience uncertainty given the company's financial challenges and strategic transformation.
Customers in the telecommunications and AI sectors may benefit from new technologies and expanded services, but the company's financial instability could pose long-term service risks.
Creditors are exposed to risk given the company's working capital deficit and ongoing legal disputes over unpaid amounts.
Acquired entities and their former owners (e.g., Savitr, NexGenAI, Everythink) are now stakeholders, with their consideration tied to Nixxy's common stock and future performance.

Next Steps

Continue to focus on strategic transactions and effectively positioning the Company to execute on its telecommunications business.
Explore opportunities to expand its artificial intelligence business.
Effectuate the planned spin-out of certain operating assets (recruitment-related businesses like Mediabistro, CandidatePitch, RecruitingClasses.com) to CognoGroup.
Monitor the effectiveness of remediation measures for internal control over financial reporting.
Commercial launch of the Leadnova platform targeted for early 2026.
Seek additional debt or equity capital to fund operations and address the going concern issue.

Key Dates

Date	Description
2023-07-25	Acquired a controlling interest in Atlantic Energy Solutions, Inc. (AESO), a shell company, for $80,000, accounted for as a recapitalization.
2023-08-16	Entered into an Asset Purchase Agreement with Job Mobz Inc. to sell domain name and associated assets for approximately $1,800,000.
2023-09-06	Served with a civil lawsuit by Pipl, Inc. for alleged unpaid goods/services totaling over $266,562.59.
2023-11-01	Defaulted on the promissory note with Novo Group.
2023-11-06	Received default notice from Cavalry Fund I LP regarding August 17 and August 30, 2022, notes.
2024-02-09	Calvary Fund I LP reassigned August 17, 2022, notes and 104,274 warrants to new noteholders.
2024-02-09	August 30, 2022, noteholders reassigned notes and 108,912 warrants to new noteholders.
2024-02-12	New noteholders converted $523,380 of outstanding principal from August 17, 2022, notes into 286,001 common shares.
2024-02-12	New noteholders exercised warrants, repaying $289,882 of debt.
2024-02-12	New noteholders waived $224,332 of debt from August 30, 2022, notes.
2024-02-13	Board of Directors authorized corporate actions for the spin-out of CognoGroup (formerly AESO).
2024-02-23	Entered into a Technology License and Commercialization Agreement with GoLogiq, Inc., superseding previous agreements.
2024-03-07	CEO and Director of GOLQ appointed as new Chief Executive Officer and President of Nixxy.
2024-03-27	Signed agreement with Parrut to convert $258,714 of outstanding principal, accrued interest, and penalties into 168,414 common shares.
2024-03-28	Entered into an Amendment to Technology License and Commercialization Agreement with GOLQ, lowering royalty to 5% and granting a warrant to purchase 292,000 common shares.
2024-04-01	Became involved in legal proceedings initiated by Creditors Adjustment Bureau, Inc. for approximately $213,899.94.
2024-04-09	Received $150,000 as the second non-refundable payment from Job Mobz.
2024-07-11	Entered into Debt Settlement and Release Agreements with holders of remaining August 2022 Notes, converting and waiving all amounts due in exchange for common stock.
2024-07-29	Received $150,000 as the third non-refundable payment from Job Mobz.
2024-08-16	Entered into Second Amendment to Loan and Security Agreement with Montage Capital II, L.P., joining Cogno. Group, Inc. as an additional borrower.
2024-09-16	Received the fourth and final payment of $1,393,430 from Job Mobz, closing the transaction.
2024-09-18	Montage Capital II, L.P. sold and assigned its rights and obligations to a new noteholder for $720,000.
2024-09-19	Entered into Debt Settlement and Release Agreement with the new Montage noteholder, converting and waiving all remaining amounts due in exchange for 720,000 common shares.
2024-09-27	Filed Certificate of Amendment to change legal name from Recruiter.com Group, Inc. to Nixxy, Inc.
2024-11-20	Recruiter.com Inc. named as defendant in lawsuit by HireTeammate, Inc. for $79,388.39.
2024-12-12	GOLQ CEO and Director resigned from Nixxy, Inc. Board of Directors.
2024-12-31	GOLQ CEO and Director resigned as Chief Executive Officer of Nixxy, Inc.
2025-01-03	Granted 250,000 fully vested common shares, 50,000 restricted stock units, and 15,000 shares to non-executive board members and chairman.
2025-02-19	Entered into and closed Asset Purchase Agreement with Savitr Tech OU for telecommunications and AI-integrated billing systems.
2025-03-03	Entered into an asset purchase agreement with Wizco Group, Inc. to acquire AI-powered interview coaching platform (Ava assets).
2025-03-19	Agreed to grant 195,000 fully vested common shares under the 2024 Plan to employees and agents.
2025-03-28	Entered into and closed Asset Purchase Agreement with Aqua Software Technologies Inc. for billing and AI systems.
2025-03-31	Issued 755,407 common shares to Savitr Tech OU as the first tranche of equity consideration.
2025-04-23	Entered into securities purchase agreements with an investor to sell 13,333 common shares for $20,000.
2025-04-29	Issued 500,004 common shares to Quantum PR OU for strategic advisory services.
2025-05-23	Issued 37,770 common shares to a consultant as a finders fee for the Savitr relationship.
2025-06-03	Entered into and closed Asset Purchase Agreement with NexGenAI Holding Group, Inc. for software development and generative AI systems.
2025-06-03	Entered into securities purchase agreements with an investor to sell 267,000 common shares for $400,500.
2025-06-04	Entered into securities purchase agreements with nine investors to sell 846,667 common shares for $1,270,000.
2025-06-05	Issued 403,747 common shares to NexGenAI Holding Group, Inc. as the first installment of purchase price.
2025-06-09	Entered into securities purchase agreements with nine investors to sell 100,000 common shares for $150,000.
2025-07-08	Issued 13,333 previously owed shares to a shareholder.
2025-07-17	Issued 100,000 previously owed shares to a shareholder.
2025-08-12	Entered into and closed Asset Purchase Agreement with Everythink Innovation Limited for EDGE data center technologies and AI software development assets.
2025-08-12	Issued 2,000,000 common shares to Everythink Innovation Limited as equity consideration.
2025-08-12	Entered into a Debt Conversion Agreement with Novo Note debt holders, converting all outstanding debt into common stock.
2025-09-05	Issued 304,848 common shares to NexGenAI Holding Group, Inc. as the second installment of purchase price.
2025-09-10	Issued 940,926 common shares to Savitr Tech OU, satisfying remaining equity issuance obligations.
2025-09-16	Issued 50,000 common shares to a former consultant as part of a settlement agreement.
2025-09-26	Evan Sohn adopted a Rule 10b5-1 trading arrangement covering 13,190 shares.
2025-09-30	End of the quarterly reporting period.
2025-11-13	Date the financial statements were available to be issued and filing date of the 10-Q.

Recommendation

strong sell

Despite impressive revenue growth in the telecommunications segment and strategic acquisitions in AI, Nixxy, Inc. faces severe liquidity challenges, explicitly stating 'substantial doubt' about its ability to continue as a going concern. The company's cash balance is critically low, and it continues to burn cash from operations. While net loss per share improved, the overall financial health is precarious, with a significant working capital deficit and ongoing material weaknesses in internal controls. The need for additional financing in the near term, coupled with multiple legal proceedings, presents substantial risks of further dilution and operational instability. A seasoned investor would prioritize the fundamental going concern risk and the company's inability to generate positive cash flow from operations, making it a strong sell despite the top-line growth.

Keywords

Telecommunications, AI, Artificial Intelligence, Fintech, EDGE Data Centers, Cloud AI Computing, SMS, Voice-over-IP, Acquisitions, SEC Filing, 10-Q, Nixxy, Auralink, Savitr Tech OU, NexGenAI, Everythink Innovation

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