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STOCKHOLDERS’ EQUITY
 3 Months Ended
Mar. 31, 2025
Stockholders’ Equity  
STOCKHOLDERS’ EQUITY

NOTE 7 - STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.0001 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 86,000 shares of Series E preferred stock converted the entire balance into 28,667 shares of common stock. As of March 31, 2025, and December 31, 2024, the Company had 0 and 0 shares of Series E preferred stock issued and outstanding. 

 

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 $200,000 as the authorized capital increases without the simultaneous increase in the number of shares outstanding. In May 2020 following stockholder approval at a special meeting the Company effected a reincorporation from Delaware to Nevada and a simultaneous increase in our authorized common stock from 31,250,000 shares to 250,000,000 shares. As of December 31, 2019, we estimated that we owed approximately $6 million in penalties (prior to any waivers of penalties) to holders of preferred stock. Subsequent to December 31, 2019, we have received waivers from a substantial number of the preferred shareholders with respect to these penalties. We have agreed to issue to the holders of Series D Preferred Stock an aggregate of 106,134 additional shares of Series D Preferred Stock (valued at $1,929,516) as consideration for the waivers. We accrued this cost during the year ended December 31, 2019. Additionally, certain holders of Series E and Series F Preferred Stock have not waived the penalties. We accrued $308,893 as of December 31, 2019, related to these Series E and Series F Preferred holders. Due to our ongoing liquidity problems, we will be required to cease operations if faced with material payment requests from investors who did not agree to waive the penalties. The total accrued penalty amount of $2,238,314 was included in accrued expenses on the balance sheet during the year ended December 31, 2019. The $1,929,516 accrual was reclassified to equity during the three months ended March 31, 2020, as a result of our issuance of the 106,134 shares of Series D Preferred Stock. As of March 31, 2025, and December 31, 2024, the remaining balance of $308,798 is included in accrued expense on the consolidated balance sheets.

 

Common Stock

 

The Company is authorized to issue 200,000,000 shares of common stock, par value $0.0001 per share. As of March 31, 2025, and December 31, 2024, the Company had 18,259,795 and 15,086,476 shares of common stock outstanding, respectively.

 

Reverse Stock Split

 

On August 4, 2023, the Company approved a one-for-fifteen (1:15) reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). On August 22, 2023, the Company filed a Certificate of Change pursuant to Nevada Revised Statutes with the Nevada Secretary of State to affect a reverse stock split of the Common Stock, and the proportional decrease of the Company’s authorized shares of Common Stock at a ratio of one-for-fifteen (15). All share and per share data in the accompanying consolidated financial statements and footnotes and throughout this report has been retroactively adjusted to reflect the effects of the reverse stock split.

 

In September 2024, the Company amended its articles of incorporation to increase the authorized shares from 6,666,667 to 200,000,000, 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 $1,111,111 and August 30, 2022, originally in the amount of $1,305,556. Additionally, the Board of Directors authorized the retirement of partial amounts of that Promissory Note debt to pay the exercise price of their associated warrants, thereby retiring the warrants. The Company issued 286,001 shares of common stock in exchange for the conversion of $523,380 of outstanding debt.

 

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 $258,714.53 into 168,414 shares of the Company’s common stock, The share value based on the grant date was $273,673, and accordingly the Company recognized a loss on conversion of $14,959 during the three months ended March 31, 2024.

 

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 $1,111,111 and August 30, 2022, originally in the amount of $1,305,556. Additionally, the Board of Directors authorized the transfer of 213,186 warrant shares to the new noteholders. The new noteholders elected to exercise the shares at a $2.78 exercise price, for gross proceeds of $592,057, in return for 213,186 shares of the Company’s common stock.

 

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 19.99% 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 16.66% of the issued and outstanding shares of the Company common stock. On February 22, 2024, the effective date, a total of 1,961,755 common shares were issued and outstanding requiring the company to initiate an issuance of 392,155 shares valued at $647,055, based on the quoted trading price on the grant date, to GOLQ per the agreement.

 

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 755,407 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 $1.38 million.

 

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 2,087,912 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 $3,800,000.

  

Shares issued for services

 

On January 3, 2025, the Company agreed to grant 250,000 shares of fully vested common stock under the 2021 Plan to non-executive members of the Board which shall vest immediately, 50,000 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 15,000 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 $1,737,867. 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.

 

On March 19, 2025, the Company agreed to grant 195,000 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 $411,450. 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 $150,000 of common stock, valued at the 30-day Volume Weighted Average Price as of May 29, 2024. The Company issued 89,256 shares of common stock to the vendor and recognized a loss of $152,629 of settlement expense for the year ended December 2024 related to the agreement.