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

Addressing the shortcomings of most existing condition-based monitoring products on the market today, Nexscient is taking a unique approach by developing a remote, continuous monitoring solution as a subscription-based service -- one that not only will offer all of the benefits of condition-based monitoring diagnostic system through vibration and acoustic analysis, but also will offer those benefits with (i) no upfront capital expense of equipment and software purchases; (ii) no need to update and maintain and update purchased diagnostic equipment and software, (iii) no requirement for specialized training of maintenance personnel; and (iv) no need for licensing, maintaining, and updating software. From a financial perspective, our solution is more affordable because it does not require upfront investment and shifts what would be a capital expenditure to an operating expense for the customer. For the Company, our business model provides a pathway to profitability through recurring stream of revenues that can be realized through a growing base of subscribers and subscriptions.

During the fiscal year ended June 30, 2024 and for the period March 14, 2023 (inception) to June 30, 2023, we incurred total operating expenses of $937,952 and $93,766, respectively, an increase of $843,826, or 900%. Operating expenses consisted of the following:

During the fiscal year ended June 30, 2024 and for the period March 14, 2023 (inception) to June 30, 2023, we reported research and development fees of $205,286 and $3,141, respectively, an increase of $202,145, or 6,436%, primarily due to an increase in labor and outside development costs incurred in connection with the development of our platform. Of this total, for the fiscal year ended June 30, 2024 and the period March 14, 2023 (inception) to June 30, 2023, $75,000 and $0, respectively, was accounted as a non-cash expense related to the issuance of shares paid to consultants in lieu of cash for services rendered related to the software development.

On April 30, 2024, we completed our initial public offering (“IPO”) and sold 229,332 shares of its common stock at a price to the public of $0.75 per share for proceeds of $172,000. The Company uses the proceeds received from the IPO for general corporate purposes and working capital.

For the year ended June 30, 2024, net cash provided by financing activities was $518,797. During the fiscal year ended 2024, we received net proceeds of $519,297 related to our private placement and IPO and repaid a $500 advance.

For the period March 14, 2023 (inception) to June 30, 2023, net cash provided by financing activities was $218,840, resulting from proceeds of a private placement offering.

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We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Nexscient, Inc. is an emerging-growth company that’s building a global collaborative network of AI-enabled Intelligent Enterprise Solutions (“IES”) and technologies through internal development, synergistic acquisitions, and capital investments in companies involved in machine learning, and artificial intelligence technologies. We plan to deliver an innovative solution for process automation in various industry sectors that helps improve business processes, decrease equipment maintenance costs, and improve overall efficiencies. We intend to develop Nexscient IES as a holistic solution that delivers insight, intelligence, and innovation to the business enterprise. The platform is currently in development. As part of our growth strategy, we also seek to acquire and integrate synergistic AI and machine learning companies and technologies into our collaborative network, further expanding our service offerings while enhancing shareholder value. Our objective is to build an ecosystem of intelligent enterprise AI applications, technologies, and business process solutions that deliver actionable insights for businesses seeking to improve their operations, realize market differentiation, and attain industry relevance. With Nexscient IES, businesses can predict and lead through digital realization, business process agility, and insight and innovation. We intend to provide a comprehensive platform by integrating disparate technologies into a digital-ready ecosystem. Within our ecosystem, there will be a foundation of intelligent business applications connected to new and existing business operations, processes, and technologies.

Revenues

We are in our development stage and have not generated revenues for the three months ended March 31, 2026 and 2025.

Operating Expenses

For the three months ended March 31, 2026, we incurred operating expenses of $115,469. Of the total, $7,000 was attributed to research and development activities related to the Company’s SaaS platform, while the balance of these expenses incurred was related to general and administrative expenses, which include legal and accounting, travel and lodging, and general operating costs. When compared to operating expenses of $108,094 incurred during the same period ended March 31, 2025, we note an increase of $7,375, or 7%, due to an increase in administrative expenses due to acquisition related activities.

Net Loss

For the three months ended March 31, 2026, we incurred a net loss of $127,231, compared to $134,851 for the same three-month period ended March 31, 2025, primarily as a result of a net decrease of $7,620, or 6%, in total expenses as described above, including interest expense on the convertible debentures and reduced interest expense related to the officer loan payoff.

Revenues

We are in our development stage and have not generated revenues for the nine months ended March 31, 2026 and 2025.

Operating Expenses

For the nine months ended March 31, 2026, we incurred total operating expenses of $407,867, of which $28,000 was attributed to research and development activities related to the Company’s SaaS platform, and the balance of $379,867 was related to general and administrative expenses, which include legal and accounting, travel and lodging, and general operating costs. During the same period ended March 31, 2025, we incurred operating expenses of $389,141, of which $79,864 were attributed to research and development, and the balance of $309,277 was related to general and administrative expenses.

Comparing operating expenses for the same periods from 2025 to 2026, we note an increase of $18,726, or 5%, in total operating expenses, which resulted from of a decrease of $51,864, or 65%, in research and development expenses, and an increase of $70,590, or 23%, in general and administrative expenses, respectively.

Net Loss

For the nine months ended March 31, 2026, we incurred a net loss of $443,699, compared to $422,239 for the nine months ended March 31, 2025, primarily as a result of a net increase of $21,460, or 5%, in total expenses as described above, including interest expense on the convertible debentures.

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. As of March 31, 2026, the Company had $754,990 cash on hand, an accumulated net loss of $2,004,761, and no revenue to cover its operating costs. Our reduced cash burn rate is approximately $27,500 per month. Presently, our operations are being funded by capital previously raised and we believe our currently available capital resources, net of the $600,000 cash requirement for the acquisition, are sufficient to sustain our operations for a maximum of six months. The Company intends to fund future operations from cash flows from its subsidiary operations and through private placement offerings of its common stock, private financing arrangements, and other public offerings.

The ability of the Company to realize its business plan is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these requirements, management intends to raise additional funds through private placement and public offerings. Until such time that the Company implements its growth strategy, we expect to continue to generate operating losses in the foreseeable future, mostly due to corporate overhead, research and development, and costs of being a public company.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Cash Flow from Operating Activities

For the nine months ended March 31, 2026, net cash used in the Company’s operating activities was $155,480, primarily used to fund development costs and general and administrative expenses. For the same nine-month period ended March 31, 2025, net cash used in operating activities totaled $366,928, representing a decrease of $211,448, or 58%, compared to the same period last year, primarily due to increase in deferred wages payable.

Cash Flow from Investing Activities

For the nine months ended March 31, 2026, net cash used in investing activities totaled $0, compared to $47,500 from the same period last year, since the Company did not record any cash transactions from investing activities during the year.

Cash Flow from Financing Activities

For the nine months ended March 31, 2026, net cash provided by financing activities was $810,000, as a result of proceeds received from the sale of our common stock and issuance of convertible debentures. During the nine months ended March 31, 2025, net cash provided from financing activities totaled $360,000, attributed to proceeds received from an officer loan and the issuance of convertible debentures.

Future Financings

We will continue to rely on equity sales of our common shares and debt proceeds in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Expected Purchase or Sale of Significant Equipment

We do not anticipate the purchase or sale of any significant equipment, as such items are not required by us at this time or in the next twelve months.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to the United States of America (“US GAAP”) and have been consistently applied in the preparation of the financial statements.

Stock-Based Compensation

Stock-based compensation is accounted for in accordance with ASC Topic 718-10 “Compensation-Stock Compensation” (“ASC 718-10”). The Company measures all equity-based awards granted to employees, independent contractors and advisors based on the fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award.

The Company classifies equity-based compensation expense in its statement of operations in the same manner in which the award recipient’s payroll or contractor costs are classified or in which the award recipient’s service payments are classified.