NIXX 10-K & 10-Q changes, risk factors and insider trading

We have incurred net losses in each fiscal year since inception, including net losses of approximately $15.0 million for the year ended December 31, 2025, and $22.6 million for the year ended December 31, 2024. As of December 31, 2025, we had an accumulated deficit of approximately $113.8 million. We expect to continue to incur substantial expenditures to develop and market our services and could continue to incur losses and negative operating cash flow for the foreseeable future. We may never achieve profitability or positive cash flow in the future, and even if we do, we may not be able to continue being profitable. Any failure to achieve and maintain profitability would continue to have an adverse effect on our stockholders’ deficit and working capital and could result in a decline in our stock price or cause us to cease operations. Our independent registered public accounting firm has previously expressed substantial doubt about our ability to continue as a going concern. If we cannot achieve sustained profitability or obtain additional financing, we may be required to curtail operations.

We will need to raise additional funds in the near future in order to execute our business plan and these funds may not be available to us when we need them. If we cannot raise additional funds when we need them, our business, prospects, financial condition and operating results could be negatively affected.

We require additional capital in the future in order to fund our growth strategy or to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances. Our telecommunications operations require working capital to support carrier deposits, traffic volume, and settlement cycles. We may also determine to raise equity or debt financing for other reasons. For example, in order to further enhance business relationships with current or potential customers or partners, we may issue equity or equity-linked securities to such current or potential customers or partners.

We may not be able to timely secure additional debt or equity financing on favorable terms, or at all. If we raise additional funds through the issuance of equity or convertible debt or other equity-linked securities, our existing shareholders could experience significant dilution. In addition, any debt financing obtained by us in the future, whether in the form of a credit facility or otherwise, could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In addition, because our decision to issue debt or equity in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts.

If we fail to meet the continued listing standards of NASDAQ, our common stock may be delisted, which could have a material adverse effect on the liquidity and market price of our common stock and expose the Company to litigation.

On February 20, 2026, we received a letter from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that our consolidated closing bid price has been below $1.00 per share for 30 consecutive business days and that, therefore, we are not in compliance with Nasdaq Listing Rule 5550(a)(2), which is the minimum bid price requirement for continued listing on The Nasdaq Capital Market (the “Nasdaq Rule”). The notice does not result in the immediate delisting of our common stock from The Nasdaq Capital Market. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we have automatically been afforded a 180-calendar day grace period to regain compliance. The continued listing standard will be met if the consolidated closing bid price of our common stock is at least $1.00 per share for a minimum of ten consecutive business days during the 180-calendar day grace period. If we are not in compliance by such date, we may be afforded a second 180-calendar day period to regain compliance. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the minimum bid price requirement. In addition, we would be required to notify Nasdaq of its intention to cure the minimum bid price deficiency during the second compliance period by effecting a reverse stock split, if necessary.

If we do not regain compliance within the allotted 180-day compliance period and is not eligible for a second 180-day compliance period, our common stock would be subject to delisting unless it requested a hearing before an independent Nasdaq Hearings Panel. A request for a hearing would stay any suspension or delisting action pending the hearing and any additional extension period granted by the Nasdaq Hearings Panel.

If our common stock were to be delisted from Nasdaq, the liquidity of our common stock would be adversely affected, and the market price of our common stock could decrease. There is no assurance that we will maintain its compliance with the Nasdaq Rule in the future.

Our telecommunications line of business is highly sensitive to declining prices, which may adversely affect our revenues and margins.

The telecommunications industry is characterized by intense price competition, which has resulted in declines in both our average per-minute price realizations and our average per-minute termination costs.

A reduction in our prices to compete with any other offers in the market will not always guarantee an increase in traffic, which may result in a reduction of revenue. If these trends in pricing continue or accelerate, it could have a material adverse effect on the revenues generated by our telecommunications businesses and/or our gross margins. The continued growth of Over-The-Top calling and messaging services, such as WhatsApp, have adversely affected the use of traditional phone communications. We expect this IP-based service, which offers voice communications for free to continue to increase, which may result in increased substitution on our service offerings.

Additionally, our cost of revenue is significant and margins may fluctuate. Wholesale telecommunications is a low-margin industry subject to rapid pricing changes. Increases in carrier costs or pricing compression could materially impact profitability.

All of our product lines are subject to significant competition from existing and future competitors, market conditions and technological change, or a combination of them, and our sales revenues and gross margins may suffer protracted and serious declines with the result that we would likely incur protracted losses. Further, the barriers to entry in several of our lines of business are not so significant that we may be facing competition from others who see significant opportunities to enter the market and undercut our prices with products that possess superior technological attributes at prices that offer our customers a better value. In this instance, we could incur protracted and significant losses and people who acquire our common stock would suffer losses thereby.

From time to time, we may need to reduce our prices in response to competitive and customer pressures and to maintain our market share. Competition and customer pressures may also restrict our ability to increase prices in response to commodity and other input cost increases. Our results of operations will suffer if profit margins decrease, as a result of a reduction in prices, increased input costs or other factors, and if we are unable to increase sales volumes to offset those profit margin decreases. We may also need to increase spending on marketing, advertising and new product innovation to protect existing market share or increase market share. The success of our investments is subject to risks, including uncertainties about trade and consumer acceptance. As a result, our increased expenditures may not maintain or enhance market share and could result in lower profitability.

Our operating results may fluctuate, which could have a negative impact on our ability to grow our client base, establish sustainable revenues and succeed overall.

Our results of operations may fluctuate as a result of a number of factors, some of which are beyond our control including but not limited to:

As a result of these factors, we may not succeed in our business, and we could go out of business.

The termination of our carrier agreements or our inability to enter into new carrier agreements in the future could materially and adversely affect our ability to compete, which could reduce our revenues and profits.

We rely upon our carrier agreements to provide our telecommunications services to our customers. These carrier agreements are, in most cases for finite terms and, therefore, there can be no guarantee that these agreements will be renewed at all or on favorable terms to us. Our revenue depends on relationships with telecommunications carriers and interconnection agreements. We rely on third-party carriers to originate and terminate traffic. Loss, modification, or unfavorable renegotiation of these agreements could materially reduce revenue. Our ability to compete would be adversely affected if our carrier agreements were terminated or we were unable to enter into carrier agreements in the future to provide our telecommunications services to our customers, which could result in a reduction of our revenues and profits.

Our customers could experience financial difficulties, which could adversely affect our revenues and profitability if we experience difficulties in collecting our receivables.

As a provider of international long-distance services, we depend upon sales of transmission and termination of traffic to other long-distance providers and the collection of receivables from these customers. The wholesale telecommunications market continues to feature many smaller, less financially stable companies. If weakness in the telecommunications industry or the global economy reduces our ability to collect our accounts receivable from our major customers our profitability may be substantially reduced. This concentration of revenue increases our exposure to non-payments and we may experience significant write-offs if any of our large customers fail to pay their outstanding balances, which could adversely affect our revenues and profitability.

We may fail to successfully integrate our acquisitions or otherwise be unable to benefit from pursuing acquisitions.

We intend to make acquisitions of complementary (including competitive) businesses, products and technologies. However, any future acquisitions may result in material transaction costs, increased interest and amortization expenses related to goodwill and other intangible assets, increased depreciation expenses and increased operating expenses, any of which could have an adverse effect on our operating results and financial position. Acquisitions will require integration of acquired assets and management into our operations to realize economies of scale and control costs. Acquisitions may involve other risks, including diversion of management attention that would otherwise be available for ongoing internal development of our business and risks inherent in entering markets in which we have no or limited prior experience. In connection with future acquisitions, we may make potentially dilutive issuances of equity securities. In addition, consummation of acquisitions may subject us to unanticipated business uncertainties, contingent liabilities or legal matters relating to those acquired businesses for which the sellers of the acquired businesses may not fully indemnify us. There can be no assurance that our business will grow through acquisitions, as anticipated.

We believe there are meaningful opportunities to grow through acquisitions and joint ventures across all product and service categories and we expect to continue a strategy of selectively identifying and acquiring businesses with complementary products and services. We may be unable to identify, negotiate, and complete suitable acquisition opportunities on reasonable terms. There can be no assurance that any business acquired by us will be successfully integrated with our operations or prove to be profitable to us. We may incur future liabilities related to acquisitions. Should any of the following problems, or others, occur as a result of our acquisition strategy, the impact could be material:

We may seek business combination opportunities in industries or sectors that are outside of our management’s area of expertise.

We will consider a business combination outside of our management’s area of expertise if a business combination candidate is presented to us and we determine that such candidate offers an attractive opportunity for us. Although management intends to endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all the significant risks, or that we will accurately determine the actual value of a prospective operating entity to acquire. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s ability to evaluate and make decisions on behalf of us may be limited, or we may make material expenditures on additional personnel or consultants to assist management in our operations. Investors should be aware that the information contained herein regarding the areas of our management’s expertise will not necessarily be relevant to an understanding of the business that we ultimately elect to acquire. As a result, our management may not be able to adequately ascertain or assess all the significant risks or strategic opportunities that may arise. Accordingly, any of our shareholders following a business combination could suffer a reduction in the value of their shares, and any resulting loss will likely not be recoverable.

Companies operating the telecommunications industry are subject to significant federal and state regulation, including the FCC and in some instances, by state and local agencies. Adverse regulations and rulings by the courts, the FCC or states relating to broadband and wireless deployment, could impede our ability to manage our networks and recover costs and lessen incentives to invest in our networks. The continuing growth of IP-based services, especially when accessed by wireless devices, has created or potentially could create conflicting regulation between the FCC and various state and local authorities, which may involve lengthy litigation to resolve and may result in outcomes unfavorable to us. In addition, increased public focus on a variety of issues related to our operations, such as privacy issues, government requests or orders for customer data, and concerns about global climate change, have led to proposals or new legislation at state, federal and foreign government levels to change or increase regulation on our operations, which could result in additional costs of compliance or litigation. Enactment of new privacy laws and regulations could, among other things, adversely affect our ability to collect data and offer targeted advertisements or result in additional costs of compliance or litigation.

We may attempt to complete a business combination with a private target company about which little information is available, and such target entity may not generate revenue as expected or otherwise be compatible with us as expected.

In pursuing our search for a business to acquire, we will likely seek to complete a business combination with a privately held company. Very little public information generally exists about private companies, and the only information available to us prior to making a decision may be from documents and information provided directly to us by the target company in connection with the transaction. Such documents or information or the conclusions we draw therefrom could prove to be inaccurate or misleading. As such, we may be required to make our decision on whether to pursue a potential business combination based on limited, incomplete, or faulty information, which may result in our subsequent operations generating less revenue than expected, which could materially harm our financial condition and results of operations.

Any business we acquire will likely lack diversity of operations or geographical reach, and in such case we will be subject to risks associated with dependence on a single industry or region.

Our search for a business will likely be focused on entities with a single or limited business activity and/or that operate in a limited geographic area. While larger companies have the ability to manage their risk by diversifying their operations among different industries and regions, smaller companies such as ours and the entities we anticipate reviewing for a potential business combination generally lack diversification, in terms of both the nature and geographic scope of their business. As a result, we will likely be impacted more acutely by risks affecting the industry or the region in which we operate than we would if our business were more diversified. In addition to general economic risks, we could be exposed to natural disasters, civil unrest, technological advances, and other uncontrollable developments that will threaten our viability if and to the extent our future operations are limited to a single industry or region. If we do not diversify our operations, our financial condition and results of operations will be at risk.

Our AI systems may not perform as intended.

AI-driven routing and analytics tools may produce inaccurate results, leading to billing errors, network inefficiencies, or contractual disputes. Rapid technological change could render our systems obsolete. Telecommunications and AI technologies evolve rapidly. Failure to adapt to new standards or protocols could reduce competitiveness. Increased regulation of artificial intelligence may increase compliance costs. Emerging AI regulations may impose additional operational and reporting requirements.

Natural disasters, terrorist acts, acts of war, pandemics, cyber-attacks or other breaches of network or information technology security may cause equipment failures or disrupt our operations.

Our inability to operate our telecommunications networks because of the events listed above, even for a limited period, may result in loss of revenue, significant expenses, which could have a material adverse effect on our results of operations and financial condition. Network disruptions, service outages, or routing failures could materially harm our business. Our services depend on uninterrupted operation of telecommunications infrastructure. System failures, cyberattacks, or routing errors may result in lost revenue and reputational damage.

We could be harmed by network disruptions, security breaches, or other significant disruptions or failures of our IT infrastructure and related systems. To be successful, we need to continue to have available a high capacity, reliable and secure network for our and our customers’ use. As any other company, we face the risk of a security breach, whether through cyber-attacks, malware, computer viruses, sabotage, or other significant disruption of our IT infrastructure and related systems. There is a risk of a security breach or disruption of the systems we operate, including possible unauthorized access to our proprietary or classified information. We are also subject to breaches of our network resulting in unauthorized utilization of our services, which subject us to the costs of providing those services, which are likely not recoverable. The secure maintenance and transmission of our information is a critical element of our operations. Our information technology and other systems that maintain and transmit customer information may be compromised by a malicious third-party penetration of our network security, or impacted by advertent or inadvertent actions or inactions by our employees, or those of a third-party service provider or business partner. As a result, our or our customers’ information may be lost, disclosed, accessed or taken without the customers’ consent, or our services may be used without payment.

Although we make significant efforts to maintain the security and integrity of these types of information and systems, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions. We may be unable to anticipate all potential types of attacks or intrusions or to implement adequate security barriers or other preventative measures. Certain of our business units have been the subject of attempted and successful cyber-attacks in the past. We have researched the situations and do not believe any material internal or customer information has been compromised.

If we are unable to successfully manage growth, our operations could be adversely affected.

Our progress is expected to require the full utilization of our management, financial and other resources, which to date has occurred with limited working capital. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage sales personnel. There can be no absolute assurance that management will be able to manage growth effectively.

If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our products. Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers.

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.

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

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.

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.

Revenue Growth and Communications Platform Scaling

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

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.

Margin Expansion and Traffic Mix Optimization

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

Key drivers of margin expansion include:

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.

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

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.

Expansion into Infrastructure and Software

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

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.

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

Telco + Fintech Convergence Initiatives

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

These initiatives include:

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

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

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.

Liquidity and Capital Strategy

The Company continues to evaluate capital allocation strategies to support:

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.

Key Business Drivers and Outlook

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

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.

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

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

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

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

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.

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.

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.

Other Income (Expense)

Other income (expense) for the three-month period ended June 30, 2026, was an expense of $680 thousand compared to expense of $1.4 million in the corresponding period ended June 30, 2025. This decrease is attributable to the decrease in loss change in fair value of contingent consideration of $1.3 million, partially offset by the increase in loss on change on fair value of marketable securities of $627 thousand.

Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025:

Revenue

Revenue was approximately $45.2 million for the six month period ended June 30, 2026, as compared to $14.6 million for the six month period ended June 30, 2025, representing an increase of $30.6 million or 209%. The increase resulted primarily due to the expansion of the Company's telecommunication services business.

Cost of Revenue

Cost of revenue was $45.1 million for the six month period ended June 30, 2026, compared to $14.6 million for the corresponding six month period in 2025, representing an increase of $30.5 million or 209%. This increase resulted primarily from the increase in revenue generating operations from the expansion to the telecommunication services business.

Operating Expenses

Operating expenses, excluding cost of revenue described above, were approximately $2.9 million for the six month period ended June 30, 2026, compared to $6.1 million for the corresponding six month period in 2025, a decrease of $3.1 million or 52%. This decrease was due to a decrease in general and administrative expenses of $3.5 million, largely related to a decrease in stock compensation expense.

Sales and Marketing

Sales and marketing expense was approximately $127 thousand for the six month period ended June 30, 2026, compared to $558 thousand for the corresponding six month period in 2025, a decrease of $431 thousand. The decrease was primarily attributable to reducing marketing expenditures as part of the Company’s cost management initiatives in the prior quarter.

Product Development

Product development expense for the six months ended June 30, 2026, decreased to $4 thousand from $34 thousand for the corresponding period in 2025 due to a large focus on product development in the prior period.

Amortization of Intangibles

For the six month period ended June 30, 2026, the Company incurred a non-cash amortization charge of $1.4 million as compared to $601 thousand for the corresponding period in 2025. The increase in amortization expense was primarily attributable to intangible assets acquired in connection with the Company’s 2025 telecommunications-related acquisitions.

General and Administrative

General and administrative expenses consist primarily of compensation-related costs for personnel performing corporate, finance, and administrative functions, as well as legal, audit, tax, consulting, and other professional fees and general corporate expenses.

For the six month period ended June 30, 2026, general and administrative expenses were $1.4 million, including $245 thousand of non-cash stock-based compensation. In 2025, for the corresponding period, general and administrative expenses were $4.9 million, including $2.6 million of non-cash stock-based compensation. Non-cash stock-based compensation increases GAAP general and administrative expenses and, consequently, operating loss, but it does not reduce cash flows. As a result, while operating loss may appear higher, actual cash outflows for general and administrative activities are lower than the GAAP expense.

Other Income (Expense)

Other income (expense) for the six month period ended June 30, 2026, was income of $1.1 million compared to expense of $1.3 million in the corresponding 2025 period. This increase is attributable to the decrease in loss change in fair value of contingent consideration of $1.3 million, partially offset by the increase in Gain on change on fair value of marketable securities of $1.1 million.

Net Income (Loss)

For the six months ended June 30, 2026, the Company had a net loss from continuing operations of $1.8 million compared to a net loss from continuing operations of $7.3 million during the corresponding six month period in 2025.