Recruiter.com(RCRT) - 2025 Q2 - Quarterly Report

Revenue Performance - Nixxy, Inc. reported revenue of $13.5 million for the three months ended June 30, 2025, a significant increase of $13.3 million or 10016% compared to $0.1 million for the same period in 2024[236]. - The increase in revenue was primarily driven by a $13.4 million rise in telecommunication services[236]. - Total revenue for the six-month period ended June 30, 2025, was $14.9 million, an increase of $14.5 million or 4079% compared to $0.4 million in the same period of 2024[245]. Cost and Expenses - Cost of revenue for the three-month period ended June 30, 2025, was $13.5 million, reflecting an increase of $13.5 million from $0 in the corresponding period in 2024[237]. - Operating expenses for the six-month period ended June 30, 2025, were $22.4 million, an increase of $20.0 million or 835% compared to $2.4 million in the same period of 2024[247]. - General and administrative expenses for the six-month period ended June 30, 2025, were $6.2 million, including $3.3 million of non-cash stock-based compensation, compared to $1.7 million in 2024[251]. - Cost of revenue for the six-month period ended June 30, 2025, was $14.6 million, compared to $3 thousand in the same period of 2024, representing an increase of $14.6 million[246]. - Sales and marketing expenses for the six-month period ended June 30, 2025, were $0.7 million, an increase of $0.6 million compared to $93 thousand in 2024[248]. - Non-cash amortization charge for the six-month period ended June 30, 2025, was $831 thousand, compared to $587 thousand in 2024[250]. Net Loss and Cash Flow - Net loss for the six-month period ended June 30, 2025, was $8.8 million, compared to a net loss of $1.8 million during the same period in 2024[253]. - Net cash used in operating activities for the six months ended June 30, 2025, was $3.0 million, compared to $1.2 million in the same period of 2024[260]. - As of June 30, 2025, the company had approximately $0.9 million in cash on hand, insufficient to meet working capital needs for the next 12 months[266]. Strategic Transformation - The Company is undergoing a strategic transformation, having sold its staffing business in 2023 and the Recruiter.com website in Q3 of 2024[219]. - Nixxy plans to spin out recruitment-related businesses to Atlantic Energy Solutions, which is being renamed CognoGroup, Inc.[219]. - The Company is focusing on finalizing strategic transactions and preparing for the spin-out of certain operating assets[227]. Leadership and Corporate Actions - The Company appointed Mike Schmidt as CEO on May 7, 2025, with a base salary of $10,000 per month and eligibility for 100,000 Restricted Stock Units[229]. - Nixxy entered into an Asset Purchase Agreement to acquire NexGenAI's technology stack and AI systems for $2.25 million, payable in restricted shares[230][231]. - The Company announced a registered direct offering for the sale of up to 846,667 shares at a price of $1.50 per share[230]. Revenue Recognition and Accounting Policies - Marketplace advertising revenues are recognized on a gross basis when advertising is placed and displayed, with payments typically due within 30 days of service completion[274]. - Consulting and Staffing Services revenues are recognized when services are rendered, with payments typically due within 90 days of service completion[275]. - Auralink recognizes revenue for SMS and VoiceIP transmission services at the point of delivery confirmation, acting as principal in these transactions[276]. - Contract liabilities arise when customers have paid for services but revenue recognition criteria have not yet been met[279]. - Goodwill is tested for impairment annually on December 31st or when indicators suggest fair value may be below carrying value[282]. - The company uses a discounted cash flow methodology to estimate fair value, requiring significant judgment on future cash flows and discount rates[285]. - Stock-based compensation is recognized based on fair values using the Black-Scholes option pricing model, with costs recognized over the vesting period[286]. Regulatory Updates - The FASB issued ASU 2023-07 to improve reportable segment disclosures, effective for annual periods beginning after December 15, 2023[288]. - ASU 2023-09 enhances income tax disclosures, effective January 1, 2025, allowing for prospective application[289]. - The company does not expect the adoption of new guidance on expense disaggregation disclosures to have a material impact on consolidated financial statements[290].