NXNT 8-K/A
Nexscient, Inc. (NXNT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
AMENDMENT NO. 1 TO CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter) |
|
| |||
(State or other jurisdiction of incorporation) |
| (Commission File Number) |
| (IRS Employer Identification ID No.) |
(Address of principal executive offices)
(
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below).
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
EXPLANATORY NOTE
This Amendment No. 1 to Current Report on Form 8-K (this "Amendment") amends the Current Report on Form 8-K of Nexscient, Inc. (the "Company") filed with the Securities and Exchange Commission on April 1, 2026 (the "Original 8-K"). The Company is filing this Amendment solely to provide the pro forma financial information required by Item 9.01(b) of Form 8-K, which was not included in the Original 8-K. Except as set forth herein, this Amendment does not amend or update any other information set forth in the Original 8-K.
Item 2.01. Completion of Acquisition or Disposition of Assets
The disclosure provided in Item 8.01 of the Original 8-K is hereby incorporated by reference into this Item 2.01.
On April 1, 2026, the Company completed the acquisition (the "Closing") of 100% of the issued and outstanding equity interests of Crestview BPO Pte. Ltd. ("Crestview"), which owns 100% of Flipside Digital Content Company, Inc. ("Flipside AI"), pursuant to the Stock Purchase Agreement dated January 13, 2026, as amended on March 30, 2026 (the "Purchase Agreement"), by and among the Company, Arcadia Data Pte. Ltd. ("Arcadia"), Crestview, Flipside AI, and the selling shareholders named therein.
The aggregate consideration paid at Closing was $2,609,694, as adjusted by customary working capital and indebtedness adjustments, consisting of:
| · | $600,000 in cash; |
| · | A $450,000 seller convertible promissory note, recorded at its present value of $379,694, convertible into the Company's common stock ($0.001 par value per share) at a conversion price of $0.75 per share, with scheduled maturities over three years; and |
| · | 6,520,000 restricted shares of Nexscient common stock, valued at $1,630,000. |
In addition, the Company issued 326,000 restricted shares of Nexscient common stock, valued at $81,500, as a business broker fee in connection with the Acquisition. These shares were recorded as a transaction cost and are not included in the aggregate consideration described above.
Flipside AI is a production-grade data engineering company serving global automotive OEMs, Tier-1 suppliers, autonomous vehicle programs, robotics developers, and satellite intelligence platforms. Following the Closing, Flipside AI operates as a wholly owned subsidiary of Crestview, which is itself a wholly owned subsidiary of the Company. Anthony De Luna, the founder and Chief Executive Officer of Flipside AI, was appointed as a director and Chief Technology Officer of the Company concurrently with the Closing.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full agreement, a copy of which was previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2026, and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. |
| Description |
| Audited Financial Statements of Flipside Digital Content Company as of 2025 and 2024 | |
| Unaudited Pro Forma Combined Financial Information as of March 31, 2026 | |
104 |
| Cover Page Interactive Data File (embedded within the XBRL document) |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NEXSCIENT, INC. | ||
|
|
|
|
Date: August 20, 2026 | By: | /s/ Fred E. Tannous | |
|
| Fred E. Tannous |
|
|
| President & Chief Executive Officer |
|
| 3 |
EXHIBIT 99.1
FLIPSIDE DIGITAL CONTENT COMPANY INC.
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REPORT
December 31, 2025 and 2024
| 1 |
| Table of Contents |
To the Board of Directors and Stockholders
Flipside Digital Content Company, Inc.
Opinion
We have audited the accompanying financial statements of Flipside Digital Content Company, Inc. (a Philippine company, the “Company”), which comprise the balance sheets as of December 31, 2025 and 2024, and the related statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audits of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Auditor’s Responsibilities for the Audits of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards, we:
|
| · | Exercise professional judgment and maintain professional skepticism throughout the audit. |
|
|
|
|
|
| · | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
|
|
|
|
|
| · | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. |
|
|
|
|
|
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
|
|
|
|
|
| · | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits, significant audit findings, and certain internal control related matters that we identified during the audit.
/s/ dbbmckennon
Newport Beach, California
August 14, 2026
| 2 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
|
|
|
|
|
|
|
| ||
| ASSETS |
|
|
|
|
|
| ||
| Current assets: |
|
|
|
|
|
| ||
| Cash |
| $ | 48,916 |
|
| $ | 14,201 |
|
| Accounts receivable, net |
|
| 349,789 |
|
|
| 155,115 |
|
| Due from related parties |
|
| 810,233 |
|
|
| 898,664 |
|
| Prepaid expenses and other current assets |
|
| 22,622 |
|
|
| 1,719 |
|
| Total current assets |
|
| 1,231,560 |
|
|
| 1,069,699 |
|
| Property and equipment, net |
|
| 204,685 |
|
|
| 238,793 |
|
| Right of use asset |
|
| 246,656 |
|
|
| 354,408 |
|
| Other non-current assets |
|
| 69,220 |
|
|
| 109,687 |
|
| Total assets |
| $ | 1,752,121 |
|
| $ | 1,772,587 |
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses |
| $ | 119,875 |
|
| $ | 161,169 |
|
| Due to related party |
|
| - |
|
|
| 27,660 |
|
| Current portion of loans payable |
|
| 741,917 |
|
|
| 302,608 |
|
| Current portion of right of use liability |
|
| 129,868 |
|
|
| 234,774 |
|
| Total current liabilities |
|
| 991,660 |
|
|
| 726,211 |
|
| Right of use liability |
|
| 101,132 |
|
|
| 93,393 |
|
| Long-term loans payable |
|
| 65,004 |
|
|
| 105,460 |
|
| Retirement benefit obligation |
|
| 283,392 |
|
|
| 266,510 |
|
| Total liabilities |
|
| 1,441,188 |
|
|
| 1,191,574 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and contingencies (Note 12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders' equity: |
|
|
|
|
|
|
|
|
| Common stock |
|
| 215,054 |
|
|
| 215,054 |
|
| Retained earnings |
|
| 149,865 |
|
|
| 383,836 |
|
| Accumulated other comprehensive income |
|
| (53,986 | ) |
|
| (17,877 | ) |
| Total stockholders' equity |
|
| 310,933 |
|
|
| 581,013 |
|
| Total liabilities and stockholders' equity |
| $ | 1,752,121 |
|
| $ | 1,772,587 |
|
The accompanying notes are an integral part of these financial statements.
| 3 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
|
|
| Year Ended |
| |||||
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Net revenues |
| $ | 2,477,589 |
|
| $ | 2,488,820 |
|
| Cost of revenue |
|
| 1,641,242 |
|
|
| 1,439,971 |
|
| Gross income |
|
| 836,347 |
|
|
| 1,048,849 |
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
| 796,606 |
|
|
| 867,675 |
|
| Total operating expenses |
|
| 796,606 |
|
|
| 867,675 |
|
|
|
|
|
|
|
|
|
|
|
| Income from operations |
|
| 39,741 |
|
|
| 181,174 |
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
| Interest expense |
|
| (163,603 | ) |
|
| (89,745 | ) |
| Gain on property and equipment |
|
| 4,733 |
|
|
| - |
|
| Foreign exchange gain (loss) |
|
| (16,935 | ) |
|
| (20,682 | ) |
| Other income |
|
| 66 |
|
|
| 213 |
|
| Total other income (expense), net |
|
| (175,739 | ) |
|
| (110,214 | ) |
|
|
|
|
|
|
|
|
|
|
| (Loss) income before provision for income taxes |
|
| (135,998 | ) |
|
| 70,960 |
|
| Provision for income taxes |
|
| 38,779 |
|
|
| 51,962 |
|
| Net (loss) income |
|
| (174,777 | ) |
|
| 18,998 |
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
| Foreign currency translation adjustment |
|
| (36,109 | ) |
|
| 16,574 |
|
| Comprehensive (loss) income |
| $ | (210,886 | ) |
| $ | 35,572 |
|
The accompanying notes are an integral part of these financial statements.
| 4 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
| Other |
|
| Total |
| ||||||||
|
|
| Common Stock |
|
| Accumulated |
|
| Comprehensive |
|
| Stockholders’ |
| ||||||||
|
|
| Shares |
|
| Amount |
|
| Deficit |
|
| Income |
|
| Equity |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| Balance at December 31, 2023 |
|
| 10,000,000 |
|
| $ | 215,054 |
|
| $ | 364,838 |
|
| $ | (34,451 | ) |
| $ | 545,441 |
|
| Other comprehensive loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 16,574 |
|
|
| 16,574 |
|
| Net loss |
|
| - |
|
|
| - |
|
|
| 18,998 |
|
|
| - |
|
|
| 18,998 |
|
| Balance at December 31, 2024 |
|
| 10,000,000 |
|
|
| 215,054 |
|
|
| 383,836 |
|
|
| (17,877 | ) |
|
| 581,013 |
|
| Dividends declared |
|
| - |
|
|
| - |
|
|
| (59,194 | ) |
|
| - |
|
|
| (59,194 | ) |
| Other comprehensive loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (36,109 | ) |
|
| (36,109 | ) |
| Net loss |
|
| - |
|
|
| - |
|
|
| (174,777 | ) |
|
| - |
|
|
| (174,777 | ) |
| Balance at December 31, 2025 |
|
| 10,000,000 |
|
| $ | 215,054 |
|
| $ | 149,865 |
|
| $ | (53,986 | ) |
| $ | 310,933 |
|
The accompanying notes are an integral part of these financial statements.
| 5 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
|
|
| Year Ended |
| |||||
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Cash flows from operating activities: |
|
|
|
|
|
| ||
| Net income (loss) |
| $ | (174,777 | ) |
| $ | 18,998 |
|
| Adjustments to reconcile net income (loss) to net cash from operating activities: |
|
|
|
|
|
|
|
|
| Depreciation |
|
| 33,372 |
|
|
| 38,050 |
|
| Amortization of right of use asset |
|
| 104,330 |
|
|
| 84,336 |
|
| Bad debt expense |
|
| 16,108 |
|
|
| 13,776 |
|
| Gain on sale of property and equipment |
|
| (4,733 | ) |
|
| - |
|
| Reserve on input value added tax |
|
| - |
|
|
| 19,205 |
|
| Deferred income taxes |
|
| (2,908 | ) |
|
| (255 | ) |
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Accounts receivable, net |
|
| (217,712 | ) |
|
| 164,247 |
|
| Prepaid expenses and other assets |
|
| (21,397 | ) |
|
| (55,109 | ) |
| Other non-current assets |
|
| 14,120 |
|
|
| 23,236 |
|
| Accounts payable and accrued expenses |
|
| (39,562 | ) |
|
| 15,037 |
|
| Operating lease liabilities |
|
| (97,004 | ) |
|
| (73,378 | ) |
| Retirement benefit obligation |
|
| 21,637 |
|
|
| 20,621 |
|
| Net cash (used in) provided by operating activities |
|
| (368,526 | ) |
|
| 268,764 |
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| Sale of property and equipment |
|
| 10,092 |
|
|
| - |
|
| Purchase of property and equipment |
|
| (7,628 | ) |
|
| (44,055 | ) |
| Net collections from (advances to) officers |
|
| 47,813 |
|
|
| (781,782 | ) |
| Net cash provided by (used in ) investing activities |
|
| 50,277 |
|
|
| (825,837 | ) |
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| Proceeds from borrowings |
|
| 848,618 |
|
|
| 474,900 |
|
| Repayment of loans payable |
|
| (434,165 | ) |
|
| (103,104 | ) |
| Payment of dividends |
|
| (60,514 | ) |
|
| - |
|
| Net cash provided by financing activities |
|
| 353,939 |
|
|
| 371,796 |
|
| Net change in cash and cash equivalents |
|
| 35,690 |
|
|
| (185,277 | ) |
| Effect of exchange rate on cash |
|
| (975 | ) |
|
| 23,942 |
|
| Cash at beginning of year |
|
| 14,201 |
|
|
| 175,536 |
|
| Cash at end of year |
| $ | 48,916 |
|
| $ | 14,201 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
| Cash paid for income taxes |
| $ | 41,033 |
|
| $ | 79,814 |
|
| Cash paid for interest |
| $ | 158,888 |
|
| $ | 89,745 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
| Right of use asset and liability |
| $ | - |
|
| $ | 283,033 |
|
The accompanying notes are an integral part of these financial statements.
| 6 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Flipside Digital Content Company Inc. (the “Company”) is engaged in the business of providing data curation, annotation, and validation services for artificial intelligence (“AI”) systems, including 2D and 3D annotation, LiDAR and sensor fusion annotation, video and temporal annotation, Vision-Language-Action (“VLA”) captioning and reasoning, and data collection. The Company’s customers consist principally of AI companies operating in the autonomous driving, robotics, and geospatial sectors.
The Company is incorporated and domiciled in the Republic of the Philippines, where its principal place of business is located, and is registered with the Philippine Economic Zone Authority (“PEZA”)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the retirement benefit obligation and the useful lives of property and equipment. Actual results could differ from those estimates.
Functional and Presentation Currency
The functional currency of the Company is the Philippine Peso (“PHP”). The financial statements are presented in U.S. Dollars (“USD”), which is the Company’s presentation currency. Assets and liabilities are translated into USD at the exchange rates prevailing at the balance sheet date; revenues and expenses are translated at the weighted-average exchange rates for the period; and equity accounts are translated at historical rates. The resulting translation adjustments are recognized as a separate component of accumulated other comprehensive income within stockholders’ equity. Foreign currency transaction gains and losses arising on the settlement and remeasurement of monetary assets and liabilities denominated in currencies other than the functional currency are recognized in the statement of operations.
Cash
Cash consists of cash on hand and cash held in demand deposit accounts with financial institutions. The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2025 and 2024.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are stated at amounts due from customers, net of an allowance for expected credit losses. The Company adopted Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments – Credit Losses, and estimates expected credit losses on receivables based on historical loss experience, current conditions, and reasonable and supportable forecasts of future economic conditions. Receivables are written off when management determines collection is not probable.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally ten years for computer and related equipment, three to five years for office and transportation equipment, five years for furniture and fixtures, and the shorter of the estimated useful life or the lease term for leasehold improvements. Costs of maintenance and repairs that do not extend the useful life of the asset are charged to expense as incurred. Gains and losses on disposals are included in the statement of operations.
| 7 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Impairment of Long-Lived Assets
The Company reviews long-lived assets, including property and equipment and right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If indicators of impairment exist, recoverability is measured by comparing the carrying amount to the undiscounted future cash flows expected to be generated by the asset. An impairment loss is recognized to the extent the carrying amount exceeds the fair value of the asset. No impairment losses were recognized during the years ended December 31, 2025 and 2024.
Leases
The Company accounts for leases in accordance with ASC Topic 842, Leases. The Company determines whether an arrangement is a lease at inception. Right-of-use (“ROU”) assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the commencement date to determine the present value of lease payments. Operating lease cost is recognized on a straight-line basis over the lease term. The Company has elected the practical expedient not to separate lease and non-lease components for all classes of underlying assets, and not to recognize ROU assets and lease liabilities for short-term leases with a term of twelve months or less.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. Revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s revenues are principally derived from the provision of data curation, annotation, and validation services delivered to AI-company customers under full-time equivalent (“FTE”) hourly billing arrangements, project- or volume-based contracts, and long-term engagements. Revenue is generally recognized over time as the services are performed, as the customer simultaneously receives and consumes the benefits of the services rendered. The Company’s service contracts are denominated in U.S. Dollars and, to a lesser extent, Euros and British Pounds, while the substantial majority of the Company’s operating costs are incurred in Philippine Pesos.
Substantially all revenue was recognized over time as services were performed, and the Company had no material contract assets or contract liabilities as of December 31, 2025 and 2024.
Cost of Revenue
Cost of revenue primarily consists of costs directly attributable to providing the Company's services, including personnel-related costs and other direct operating expenses incurred in delivering services to customers.
Income Taxes
The Company accounts for income taxes under the asset and liability method in accordance with ASC Topic 740, Income Taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company recognizes the financial statement effect of an uncertain tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. As of December 31, 2025 and 2024, the Company had no material uncertain tax positions.
Retirement Benefits
The Company maintains an unfunded non-contributory defined benefit retirement plan covering substantially all of its regular employees, in accordance with the provisions of Republic Act No. 7641 of the Philippines. The Company accounts for the plan in accordance with ASC Topic 715, Compensation – Retirement Benefits. The year-over-year change in the obligation, reflecting changes in compensation, service, and the Company's attrition experience, is recognized as retirement expense in the period in which it occurs.
| 8 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash held with financial institutions and trade accounts receivable. The Company maintains cash balances with local banks in the Philippines and is exposed to credit risk to the extent that such balances exceed limits insured by the Philippine Deposit Insurance Corporation. Concentrations of credit risk with respect to trade receivables arise from the Company’s customer base, which is composed primarily of AI-company customers and reflects significant customer concentration. The Company monitors the creditworthiness of its customers and maintains an allowance for expected credit losses in accordance with ASC Topic 326. Refer to Note 12 for further information regarding concentrations of credit risk and major customers.
Recent Accounting Pronouncements
Management has evaluated recently issued accounting pronouncements and does not believe that any such pronouncements, whether adopted or pending adoption, will have a material impact on the Company’s financial position, results of operations, or cash flows.
3. GOING CONCERN
The accompanying financial statements have been prepared on the going concern basis of accounting.
In accordance with ASC 205-40, management has evaluated whether conditions and events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are available to be issued. Total borrowings of $806,921 include $741,917 that are classified as current, with no committed facility or written commitment to extend or renew. The amounts due from related parties of $810,233 are outstanding without stated repayment terms. The related party balance outstanding was subsequently restructured as part of the acquisition disclosed in Note 14. The Company incurred a net loss of $174,777 for the year ended December 31, 2025 and had negative cash flow. Effective April 1, 2026 the Company became an indirect wholly-owned subsidiary of Nexscient, Inc., whose historical financial statements include a going concern disclosure, indicating substantial doubt.
Management’s plans include applying operating cash flow to the servicing and repayment of the borrowings, pursuing their renewal or refinancing, adjusting the Company’s predominantly variable cost structure as volumes require, pursuing receipt of the remaining portion of the capital infusion committed by the Company’s parent group, and expanding the customer base. Certain of those plans depend on the agreement of parties other than the Company, and management has not, as of the date these financial statements are available to be issued, obtained the commitments that would allow it to determine that the plans are probable of mitigating the conditions described above.
Accordingly, these conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are available to be issued. The financial statements do not include any adjustments to the carrying amounts or classification of assets and liabilities that might result from the outcome of this uncertainty.
| 9 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
4. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Leasehold and improvement |
| $ | 53,406 |
|
| $ | 53,406 |
|
| Furniture and fixtures |
|
| 60,439 |
|
|
| 60,439 |
|
| Office equipment |
|
| 286,085 |
|
|
| 278,635 |
|
| Transportation equipment |
|
| 92,995 |
|
|
| 128,529 |
|
|
|
|
| 492,925 |
|
|
| 521,009 |
|
| Less: Accumulated depreciation |
|
| (288,240 | ) |
|
| (282,216 | ) |
| Property and equipment, net |
| $ | 204,685 |
|
| $ | 238,793 |
|
Depreciation expense was $33,372 and $38,050 for the years ended December 31, 2025 and 2024, respectively. During 2025, the Company sold transportation equipment with a net book value of $5,922, recognizing a gain on disposal of $4,733 included in other income.
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following:
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Trade payable |
| $ | 68,698 |
|
| $ | 80,452 |
|
| Accrued expenses |
|
| 6,301 |
|
|
| 35,975 |
|
| Accrued interest expense |
|
| 4,715 |
|
|
| - |
|
| Tax and government agency payable |
|
| 21,407 |
|
|
| 22,935 |
|
| Other |
|
| 18,754 |
|
|
| 21,807 |
|
| Accounts payable and accrued expenses |
| $ | 119,875 |
|
| $ | 161,169 |
|
| 10 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
6. LOANS PAYABLE
Loans payable consist of borrowings from local financial institutions and individual lenders, denominated principally in Philippine Pesos with certain facilities denominated in U.S. Dollars, bearing interest at prevailing market rates. The loans payable for the years ended December 31, 2025 and 2024 was as follows:
| Lender |
| Nature / Facility |
| Rate per annum |
|
| Maturity |
| December 31, 2025 |
|
| December 31, 2024 |
| |||
| Banks and Financing Companies |
|
|
|
|
|
|
|
|
|
|
| |||||
| China Banking Corp. |
| Term Loan |
|
| 9.0 | % |
| Jan-2026 |
|
| 44,650 |
|
|
| - |
|
| China Banking Corp. |
| Auto Loan (2023 Subaru Evoltis) |
|
| 10.8 | % |
| Mar-2026 |
|
| 1,518 |
|
|
| 19,022 |
|
| First Circle |
| Unsecured Business Loan – Nov 2025 |
|
| 22.9 | % |
| May-2026 |
|
| 160,375 |
|
|
| - |
|
| First Circle |
| Unsecured Business Loan – Aug 2025 |
|
| 21.9 | % |
| Aug-2027 |
|
| 65,004 |
|
|
| - |
|
| First Circle |
| Unsecured Business Loan – May 2025 |
|
| 15.5 | % |
| Apr-2026 |
|
| 17,784 |
|
|
| - |
|
| First Circle |
| Unsecured Business Loan – Dec 2024 |
|
| 15.5 | % |
| Nov-2025 |
|
| - |
|
|
| 70,834 |
|
| First Circle |
| Unsecured Business Loan – Oct 2024 |
|
| 15.7 | % |
| Sep-2025 |
|
| - |
|
|
| 30,108 |
|
| First Circle |
| Unsecured Business Loan – Jun 2024 |
|
| 15.5 | % |
| Jun-2025 |
|
| - |
|
|
| 23,085 |
|
| Esquire Financing Inc. |
| Unsecured Business Loan – Oct 2025 |
|
| 16.5 | % |
| Oct-2026 |
|
| 42,524 |
|
|
| - |
|
| Esquire Financing Inc. |
| Unsecured Business Loan – Apr 2025 |
|
| 16.5 | % |
| Apr-2026 |
|
| 8,505 |
|
|
| - |
|
| Esquire Financing Inc. |
| Unsecured Business Loan – Jan 2025 |
|
| 16.5 | % |
| Jan-2026 |
|
| 709 |
|
|
| - |
|
| Esquire Financing Inc. |
| Unsecured Business Loan – Oct 2024 |
|
| 16.5 | % |
| Nov-2025 |
|
| - |
|
|
| 30,253 |
|
| Pouch Finance |
| Business Loan – Dec 2024 |
|
| 14.0 | % |
| Nov-2025 |
|
| - |
|
|
| 17,288 |
|
| Individual and Related Party Lenders |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| Berwynson |
| Term Loan – Feb 2025 (USD-denominated) |
|
| 15.0 | % |
| Feb-2026 |
|
| 97,908 |
|
|
| - |
|
| Berwynson |
| Term Loan – Sep 2025 |
|
| 15.0 | % |
| Sep-2026 |
|
| 28,967 |
|
|
| - |
|
| Berwynson |
| Term Loan – Dec 2025 |
|
| 15.0 | % |
| Nov-2026 |
|
| 49,814 |
|
|
| - |
|
| Jaime Fanlo |
| Interest-Only Bullet Loan |
|
| 12.5 | % |
| Oct-2026 |
|
| 85,048 |
|
|
| - |
|
| Quesang |
| Interest-Only Bullet Loan – 1st loan |
|
| 16.0 | % |
| Feb-2026 |
|
| 42,524 |
|
|
| 43,219 |
|
| Quesang |
| Interest-Only Bullet Loan – 2nd loan |
|
| 16.0 | % |
| Mar-2026 |
|
| 42,524 |
|
|
| 43,219 |
|
| Michael De Jesus |
| Interest-Only Bullet Loan – 1st loan |
|
| 10.0 | % |
| Oct-2026 |
|
| 51,029 |
|
|
| 51,863 |
|
| Michael De Jesus |
| Interest-Only Bullet Loan – 2nd loan |
|
| 10.0 | % |
| Oct-2026 |
|
| 34,019 |
|
|
| 34,575 |
|
| Mercy Sangil |
| Term Loan – May 2025 |
|
| 10.0 | % |
| Mar-2026 |
|
| 34,019 |
|
|
| - |
|
| Mercy Sangil |
| Term Loan – May 2024 |
|
| 10.0 | % |
| May-2025 |
|
| - |
|
|
| 34,575 |
|
| Eduardo Roberto Jr. |
| Shareholder Loan (non-interest bearing) |
|
| 0.0 | % |
| On demand |
|
| - |
|
|
| 10,027 |
|
| Subtotal — Banks and Financing Companies |
|
| 341,069 |
|
|
| 190,590 |
| ||||||||
| Subtotal — Individual and Related Party Lenders |
|
| 465,852 |
|
|
| 217,478 |
| ||||||||
| Total Loans Payable |
|
| 806,921 |
|
|
| 408,068 |
| ||||||||
| Current portion |
|
| 741,917 |
|
|
| 302,608 |
| ||||||||
| Long-term portion |
| $ | 65,004 |
|
| $ | 105,460 |
| ||||||||
The following table presents scheduled maturities of all loans payable outstanding as of December 31, 2025:
| Year Ending December 31, |
| Amount |
| |
| 2026 |
| $ | 741,917 |
|
| 2027 |
|
| 65,004 |
|
| Total |
| $ | 806,921 |
|
The below financing transactions are described in the currency that apply to the underlying loan. The balance of the loans are included in the schedule above, and described in USD. The loans described below were used for working capital, other than as it relates to the auto loan.
Pouch Finance
An unsecured business loan with original principal of PHP 1,000,000 was drawn in December 2024. The loan was repayable in lump sum in January 2025 at a rate of 14% per annum.
A second unsecured loan was received in May 2025 for PHP 3,000,000 with a rate of 14% per annum. The loan was repayable in monthly instalments through November 2025. As of December 31, 2025, the loan was repaid in full.
| 11 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
First Circle
During the periods presented, the Company entered into various loans with First Circle Growth Finance Corp. (“First Circle”). The loans are unsecured, incur an upfront convenience fee equal to 1.99% of the principal amount, which is deducted from the proceeds at issuance, and are subject to 2% default interest per week, together with continuing interest.
During 2024, the Company entered into three loan agreements with aggregate original principal of approximately PHP 9,423,048. The loans are repayable in equal monthly installments over 12 months and mature between June 2025 and November 2025. The agreements provide for stated monthly interest rates ranging from 1.28% to 1.29% of the original principal amount, equivalent to total contractual interest of approximately 15.5% of the original principal over the 12-month term.
During 2025, the Company entered into three loan agreements with aggregate original principal of approximately PHP 18,414,441. The loans are repayable in monthly installments over periods ranging from 12 to 24 months and mature between May 2026 and August 2027. The agreements provide for stated monthly interest rates ranging from 1.29% to 1.91% of the original principal amount, equivalent to total contractual interest ranging from approximately 15.48% to 44.16% of the original principal over the respective loan terms.
Unamortized discount fees are inconsequential as of December 31, 2025 and 2024. As of December 31, 2025 and 2024, the balance of loans outstanding was $243,163 and $124,027, respectively. The 2024 balance comprised three tranches drawn in June, October and December 2024 on terms substantially similar to those described above (approximately 15.5% per annum), repaid in full during 2025.
China Banking Corporation — Term Loan
In January 2025, we entered into an unsecured promissory note for PHP 4,500,000, bearing interest at 9.0% per annum. The promissory note was repayable in lump sum April 15, 2025. The promissory note was renewed in April 2025 for a term of 288 days maturing January 28, 2026. Principal is repaid in monthly instalments.
China Banking Corp. — Auto Loan.
In 2023, the Company entered into a loan for the purchase of a vehicle totalling PHP 2,784,000. The loan is repayable monthly over three years with an interest rate of 10.8% per annum. The loan is secured by the vehicle, which had a net book value of $45,321 as of December 31, 2025.
Esquire Financing Inc.
In November 2024, the company entered into a loan for PHP 2,000,000 repayable in 24 semi-monthly instalments over a 12-month period, at a rate of 2.75% per month or an effective rate of approximately 33% per annum.
In January, April and October 2025, the company entered into three loans for an aggregate of PHP 5,500,000 repayable in instalments over a 12-month period, at a rate of 2.75% per month or an effective rate of approximately 33% per annum.
Eduardo Roberto Jr.
Advance from a director and stockholder of the Company, bearing interest at 15% per annum and repayable on demand (see Note 11). The balance of $10,027 outstanding at December 31, 2024 was fully repaid during fiscal year 2025.
Berwynson
In February, September, and December 2025, the Company entered into three unsecured loan agreements with Berwynson R. Salazar for aggregate loan amounts totalling $180,000, all of which have maturity dates of one year. Each loan may be prepaid without penalty, and overdue amounts bear a penalty of 1% per month. The loans automatically renew for another one-year term unless either party provides written notice of non-renewal within 30 days of maturity.
The first loan for $100,000 is repayable in two semi-annual payments of PHP 435,000 and the principal balance due at maturity in February 2026. The interest reflects a 15% simple interest. In the event of default, the Company’s Chief Executive Officer shall assume the loan personally and make payment in full, with interest thereon, within three months.
The second loan for $30,000 is repayable in quarterly interest payments of $1,125, or 15% simple interest, to be paid in PHP based on the rate specified in the agreement. The principal amount is due at maturity in September 2026, payable in USD.
The third loan for $50,000 is repayable in quarterly interest payments of $1,875, or 15% simple interest, to be paid in PHP based on the rate specified in the agreement. The principal amount is due at maturity in December 2026, payable in USD.
| 12 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Jaime Fanlo
During October 2025, the Company entered into an unsecured interest-only loan with a related party for an aggregate of PHP 5,000,000 at 12.5% per annum, interest payable monthly. Principal of the loan is due in a lump sum at maturity in October 2026. Mr. Fanlo is a member of the Company’s board of directors.
William Wayne Jaime,Quesang
During May 2024, the Company entered into two loans for aggregate principal of PHP of 5,000,000 at 16% per annum, with interest paid quarterly and principal due at maturity. The loans mature in May 2026.
Michael De Jesus
During October 2024, the Company entered into two unsecured interest-only loans for an aggregate of PHP 5,000,000 at 10% per annum, interest payable monthly. Principal of each loan were due in a lump sum at maturity in October 2025. The loans were subsequently extended to mature in October 2026.
Mercy Sangil
During May 2024, the Company entered into an unsecured loan with a related party, Mercy Sangil. Per the terms of the loan, the Company received PHP 1,800,000 and was required to pay the lender back within one year a total of PHP 2,000,000. The loan was repaid in full during 2025.
During May 2025, the Company entered into an unsecured loan with a related party. Per the terms of the loan, the Company received PHP 1,800,000 and was required to pay the lender back within one year a total of PHP 2,000,000.
Mercy Sangil, is a relative of the Company's Chief Executive Officer (see Note 11)
Interest expense recognized on loans payable totalled $153,318 and $83,307 for the years ended December 31, 2025 and 2024, respectively, and is included within interest expense in the statement of operations.
7. STOCKHOLDERS’ EQUITY
As of December 31, 2025 and 2024, the Company had 10,000,000 shares of common stock authorized, issued, and outstanding, with a par value of PHP 1.00 per share. Common stock recorded in the balance sheet amounted to $215,054 for both periods, representing the historical USD equivalent of paid-in capital.
During the year ended December 31, 2025, the Company’s Board of Directors declared and paid cash dividends totalling $59,194 to common stockholders. No dividends were declared during the year ended December 31, 2024. The dividends were declared and paid to the Company’s stockholders of record on the respective declaration dates.
As of December 31, 2025 and 2024, all of the Company’s issued and outstanding common stock was held by individual stockholders, and the dividends described above were declared and paid to those stockholders of record. On March 25, 2026, the individual stockholders sold 9,999,995 of the 10,000,000 issued and outstanding shares to Crestview BPO Pte. Ltd. (“Crestview”) under a Deed of Absolute Sale of Shares; the five remaining shares are held by individual nominees for the benefit of Crestview under separate Declarations of Trust, such that Crestview became the beneficial owner of all of the outstanding common stock. Refer to Note 14 for the subsequent acquisition of Crestview and the resulting change in control of the Company.
Accumulated other comprehensive income consists of foreign currency translation adjustments arising from the translation of the Company’s functional currency financial statements into the USD presentation currency.
8. LEASES
The Company leases office space under operating lease arrangements with the lease terms of approximately one to five years. The Company does not have any finance leases. Right-of-use (“ROU”) assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate to determine the present value of lease payments.
| 13 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Operating lease cost is recognized on a straight-line basis over the lease term. The Company has elected the practical expedient not to separate lease and non-lease components for all classes of underlying assets, and not to recognize ROU assets and lease liabilities for short-term leases (term of twelve months or less).
The following table summarizes the supplemental balance sheet information related to leases as of December 31, 2025 and 2024:
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Assets |
|
|
|
|
|
| ||
| Operating lease right-of-use assets |
| $ | 246,656 |
|
| $ | 354,408 |
|
|
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
|
|
| Current: Operating lease liabilities |
| $ | 129,868 |
|
| $ | 234,774 |
|
| Non-current: Operating lease liabilities |
|
| 101,132 |
|
|
| 93,393 |
|
| Total operating lease liabilities |
| $ | 231,000 |
|
| $ | 328,167 |
|
The components of lease cost recognized in the statements of operations for the years ended December 31, 2025 and 2024 were as follows:
|
|
| Year Ended |
| |||||
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Operating lease cost |
| $ | 104,330 |
|
| $ | 84,336 |
|
| Total lease cost |
| $ | 104,330 |
|
| $ | 84,336 |
|
Other information related to leases as of and for the years ended December 31, 2025 and 2024 was as follows:
|
|
| Year Ended |
| |||||
|
|
| December 31, |
| |||||
| Cash paid for amounts included in the measurement of lease liabilities: |
| 2025 |
|
| 2024 |
| ||
| Operating cash flows from operating leases |
| $ | 97,004 |
|
| $ | 73,378 |
|
| Right-of-use assets obtained in exchange for new operating lease liabilities |
| $ | - |
|
| $ | 283,033 |
|
The weighted-average remaining lease term was 2.16 years and 3.16 years as of December 31, 2025 and 2024, respectively, and the weighted-average discount rate used in measuring lease liabilities was 8.0% for both years.
| 14 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
The following table summarizes the maturity of undiscounted cash flows for operating lease liabilities as of December 31, 2025:
|
|
| Operating |
| |
| Year ending December 31, |
| Leases |
| |
| 2026 |
| $ | 115,194 |
|
| 2027 |
|
| 116,816 |
|
| 2028 |
|
| 18,766 |
|
| Total lease payments |
|
| 250,776 |
|
| Less: Imputed interest |
|
| (19,776 | ) |
| Total lease obligations |
|
| 231,000 |
|
| Less current lease obligations |
|
| (129,868 | ) |
| Long-term lease obligations |
| $ | 101,132 |
|
9. INCOME TAXES
The Company is subject to income tax in the Republic of the Philippines under the National Internal Revenue Code, as amended. The Company’s provision for income taxes consists primarily of current income tax expense based on taxable income for the period.
The provision for income taxes for the years ended December 31, 2025 and 2024 amounted to $38,779 and $51,962, respectively, comprising current income tax expense of $41,688 and $52,487 and a deferred income tax benefit of $2,909 and $525. The statutory income tax rate applicable to the Company is 25% under the Philippine corporate income tax regime, as amended by the CREATE Act. The Company is also subject to a minimum corporate income tax of 2% of gross income, which is payable when it exceeds the regular corporate income tax. The regular corporate income tax exceeded the minimum corporate income tax in both years, and accordingly the minimum tax was not applicable. The components of the Company’s income tax expense, and a reconciliation of income tax expense computed at the statutory rate to the effective income tax expense, are presented below.
The components of income tax expense are as follows:
|
|
| Year Ended |
| |||||
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Current tax expense |
| $ | 41,688 |
|
| $ | 52,487 |
|
| Deferred tax (benefit) expense |
|
| (2,909 | ) |
|
| (525 | ) |
| Income tax expense |
| $ | 38,779 |
|
| $ | 51,962 |
|
A reconciliation between the statutory income tax and the effective income tax follows:
|
|
| Years Ended |
| |||||||||||||
|
|
| December 31, |
| |||||||||||||
|
|
| 2025 |
|
| % |
|
| % |
|
| 2024 |
| ||||
| Statutory income tax rate / amount on pre-tax loss |
| $ | (34,000 | ) |
|
| 25.0 | % |
| $ | 17,740 |
|
|
| 25.0 | % |
| MCIT in excess of RCIT |
|
| - |
|
|
| 0.0 | % |
|
| - |
|
|
| 0.0 | % |
| Effect of US GAAP adjustments not recognised for tax purposes |
|
| 67,946 |
|
|
| -50.0 | % |
|
| 34,222 |
|
|
| 48.2 | % |
| Change in valuation allowance on deferred tax assets |
|
| 4,833 |
|
|
| -3.6 | % |
|
| - |
|
|
| 0.0 | % |
| Effective income tax |
| $ | 38,779 |
|
|
| -28.5 | % |
| $ | 51,962 |
|
|
| 73.2 | % |
| 15 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Deferred tax assets arise principally from temporary differences related to the allowance for credit losses and retirement benefit obligations, partially offset by a deferred tax liability relating to leases. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowance relates primarily to the deferred tax asset for the Company’s unfunded retirement benefit obligation, which becomes deductible for Philippine income tax purposes only when benefits are paid. Because those payments are expected to occur over an extended future period, Philippine tax law permits net operating losses to be carried forward for only three years, and the Company’s operating results have fluctuated between income and losses, management has concluded there is not sufficient positive evidence that taxable income will be available in the periods in which those deductions arise. Accordingly, a valuation allowance of $61,842 and $57,009 has been recognized as of December 31, 2025 and 2024, respectively, against the portion of net deferred tax assets that is not more likely than not to be realized. After the valuation allowance, the Company recognized a net deferred tax asset of $9,201 and $6,461 as of December 31, 2025 and 2024, respectively. The components of the Company’s deferred tax assets and liabilities are presented below.
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Deferred tax assets: |
|
|
|
|
|
| ||
| Allowance for doubtful accounts |
| $ | 4,109 |
|
| $ | 3,402 |
|
| Retirement benefit obligation |
|
| 70,848 |
|
|
| 66,628 |
|
| Net operating loss carryforward (NOLCO) |
|
| - |
|
|
| - |
|
| Deferred tax liabilities: |
|
|
|
|
|
|
|
|
| Lease - net (lease liability less right-of-use asset) |
|
| (3,914 | ) |
|
| (6,560 | ) |
| Net deferred tax asset before valuation allowance |
|
| 71,043 |
|
|
| 63,470 |
|
| Valuation allowance |
|
| (61,842 | ) |
|
| (57,009 | ) |
| Net deferred tax asset recognized |
| $ | 9,201 |
|
| $ | 6,461 |
|
The Company files income tax returns in the Philippines. Tax years remain open and subject to examination by the Philippine Bureau of Internal Revenue for periods generally not exceeding three years from the date of filing. There are no material income tax examinations currently in progress.
Cash paid for income taxes amounted to $41,033 and $79,814 for the years ended December 31, 2025 and 2024, respectively. Cash paid differs from the provision because only the current portion of income tax expense passes through income tax payable. Creditable withholding tax was nil as of December 31, 2025 and 2024.
10. EMPLOYEE BENEFITS
The Company provides its regular employees with statutory benefits required under Philippine law, including contributions to the Social Security System (“SSS”), Philippine Health Insurance Corporation (“PhilHealth”), and Home Development Mutual Fund (“Pag-IBIG”), together with 13th-month pay, vacation and sick leave, and health maintenance organization (“HMO”) coverage. The Company does not maintain a stock compensation or formal profit-sharing arrangement. Freelancers and contractors engaged by the Company are compensated on a task- or hourly-rate basis and are not eligible for employee benefits.
Employee benefit expense, which is allocated between cost of revenue and operating expenses based on employee function, consisted of the following:
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Beginning balance |
| $ | 266,510 |
|
| $ | 256,961 |
|
| Service cost |
|
| 16,882 |
|
|
| 9,549 |
|
| Ending balance |
| $ | 283,392 |
|
| $ | 266,510 |
|
The Company maintains a formal, unfunded, non-contributory defined benefit retirement plan covering substantially all of its regular employees, providing benefits at least equal to those required under Republic Act No. 7641 of the Philippines which entitles employees who retire at age 60 with at least five years of service to one-half month salary — equivalent to approximately 75% of monthly salary — for every year of credited service, and is supplemented by a Voluntary Early Retirement Option (VERO). The VERO allows for an early retirement benefit, under which employees are entitled to 75% of their monthly wage for every year of service, subject to vesting requirements. The obligation is measured using the projected unit credit method consistent with ASC 715-30. As the plan is unfunded, no plan assets exist and the full projected benefit obligation is recognized as a liability.
The retirement benefit obligation recognized in the balance sheet amounted to $283,392 and $266,510 as of December 31, 2025 and 2024, respectively. Net periodic retirement benefit cost recognized in the statements of operations amounted to $16,882 and $9,549 for the years ended December 31, 2025 and 2024, respectively.
| 16 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
The significant actuarial assumptions used in measuring the retirement benefit obligation were as follows: a discount rate of 6.41% and 6.09% at December 31, 2025 and 2024, respectively; an assumed rate of future compensation increase of 5.0% for both years; and a normal retirement age of 60 with a minimum of five years of credited service. The average remaining service life of covered employees was 26 years and 27 years at December 31, 2025 and 2024, respectively. No employee attrition or withdrawal decrement was applied in measuring the obligation; all covered employees are assumed to remain in service until normal retirement age, which the Company considers a conservative basis of measurement. The discount rate was determined by reference to the yields on Philippine government securities with terms approximating the estimated period over which benefits are expected to be paid. A one-percentage-point change in the discount rate or in the assumed rate of compensation increase would not have a material effect on the retirement benefit obligation recognized as of December 31, 2025.
Reconciliation of Benefit Obligation
|
|
| December 31, |
| |||||
|
|
| 2025 |
|
| 2024 |
| ||
| Beginning balance |
| $ | 266,510 |
|
| $ | 256,961 |
|
| Service cost |
|
| 16,882 |
|
|
| 9,549 |
|
| Ending balance |
| $ | 283,392 |
|
| $ | 266,510 |
|
11. RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Company enters into transactions with related parties, including affiliates under common control and key management personnel. Outstanding balances with related parties as of December 31, 2025 and 2024 were as follows:
Due from related parties amounted to $810,233 and $898,664 as of December 31, 2025 and 2024, respectively, and represented non-interest-bearing advances to the Company's Chief Executive Officer with no fixed repayment terms. Accordingly, amounts are due on demand. Subsequent to year end, the balance of the loan was formalized as part of the acquisition. The formalized loan calls for a two-year repayment period, paid quarterly, with an option to settle the payment in shares held by the Chief Executive Officer. Such shares are held in escrow pending the settlement of each payment. As of December 31, 2025, there was no discount for realizability due regular payments being made on the balance, and the fact that the loan was to be settled in full through the sale of the Company, for which the terms were not finalized as of December 31, 2025.
During the year ended December 31, 2025, the Company received net repayments from its Chief Executive Officer of $60,771, compared to net advances of $781,782 made to the Chief Executive Officer in the prior year. These amounts are reflected in the due from related parties balance described above.
Due to the Company's Chief Executive Officer amounted to $0 and $27,660 as of December 31, 2025 and 2024, respectively, representing unsecured, non-interest-bearing advances due on demand.
Loans payable to related parties. Included in loans payable (Note 6) are unsecured borrowings extended to the Company by the following related parties: William Wayne Jaime Eduardo R. Fanlo, a member of the Company’s board of directors; Mercy G. Sangil, a relative of the Company’s Chief Executive officer; and Eduardo Roberto Jr., a director and holder of 10.72% of the Company's outstanding common stock
12. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable.
The Company’s customer base is composed primarily of AI-company customers, and the Company has experienced significant concentrations of revenue and trade receivables among a limited number of customers.
| 17 |
| Table of Contents |
FLIPSIDE DIGITAL CONTENT COMPANY INC.
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
For the years ended December 31, 2025 and 2024, three and four customers, respectively, individually accounted for more than 10% of the Company's revenues, representing in the aggregate approximately 96% and 97% of total revenues. As of December 31, 2025 and 2024, three customers in each year individually accounted for more than 10% of trade accounts receivable, representing in the aggregate approximately 97% and 87% of accounts receivable, net, as reported in the balance sheets. The loss of one or more of these customers would have a negative impact on the Company’s operations.
The Company’s service contracts are denominated in U.S. Dollars and, to a lesser extent, Euros and British Pounds, while the substantial majority of the Company’s operating costs are incurred in Philippine Pesos. Accordingly, the Company is exposed to fluctuations in the exchange rates of these currencies against the Philippine Peso, which may affect the Company’s reported results of operations and cash flows.
13. COMMITMENTS AND CONTINGENCIES
The Company is a lessee under operating lease arrangements for office space. The future minimum lease payments under these arrangements are disclosed in Note 8.
In the ordinary course of business, the Company may be subject to legal proceedings, claims, and assessments. Management is not aware of any pending or threatened litigation that would have a material adverse effect on the Company’s financial position, results of operations, or cash flows as of December 31, 2025.
The Company is also subject to periodic examination by Philippine tax and regulatory authorities. Management believes that any liability that may result from the resolution of any open matters will not be material to the financial statements.
14. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through August 14, 2026 the date the financial statements were available to be issued.
On March 25, 2026, the Company’s individual stockholders sold their shares of common stock to Crestview BPO Pte. Ltd. (“Crestview”), and Crestview thereby became the parent of the Company. See Note 7.
On April 1, 2026, Nexscient, Inc. (“Nexscient”), a Delaware corporation, completed the acquisition of all of the issued and outstanding equity interests of Crestview pursuant to a Stock Purchase Agreement dated January 13, 2026. As a result of the transaction, the Company became an indirect wholly owned subsidiary of Nexscient, resulting in a change of control of the Company. The transaction did not affect the historical carrying amounts of the Company’s assets and liabilities, which continue to be reported on the Company’s historical cost basis in the accompanying financial statements. Other than as described above, the Company has determined that there are no subsequent events requiring recognition or disclosure in the accompanying financial statements
| 18 |
EXHIBIT 99.2
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information presents the unaudited pro forma combined balance sheet and statement of operations based upon the combined historical financial statements of Nexscient, Inc. (“Nexscient” or the “Company”) and Flipside Digital Content Company, Inc. (“Flipside AI”) after giving effect to the business combination and adjustments described in the accompanying notes.
The unaudited pro forma combined balance sheet of Nexscient and Flipside AI as of March 31, 2026 has been prepared to reflect the effects of the acquisition as if it occurred on March 31, 2026. The unaudited pro forma combined statements of operations for the three months ended March 31, 2026 and for the year ended December 31, 2025 combine the historical results and operations of Nexscient and Flipside AI, giving effect to the transaction as if it occurred on January 1, 2025.
The unaudited pro forma combined financial information should be read in conjunction with the audited and unaudited historical financial statements of Nexscient and Flipside AI and the notes thereto. Additional information about the basis of presentation of this information is provided in Note 2 below.
The unaudited pro forma combined financial information was prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma adjustments reflecting the transaction have been prepared in accordance with business combination accounting guidance as provided in Accounting Standards Codification Topic 805, Business Combinations and reflect the preliminary allocation of the purchase price to the acquired assets and liabilities based upon the preliminary estimate of fair values, using the assumptions set forth in the notes to the unaudited pro forma combined financial information.
The unaudited pro forma combined financial information is provided for informational purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the transaction had been completed as of the dates set forth above, nor is it indicative of the future results or financial position of the combined company. In connection with the pro forma financial information, Nexscient allocated the purchase price using its best estimates of fair value. Accordingly, the pro forma acquisition price adjustments are preliminary and subject to further adjustments as additional information becomes available and as additional analyses are performed. The unaudited pro forma combined financial information also does not give effect to the potential impact of current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the transaction or any integration costs.
Furthermore, the unaudited pro forma combined statements of operations do not include certain nonrecurring charges and the related tax effects which result directly from the transaction as described in the notes to the unaudited pro forma combined financial information.
| 1 |
NEXSCIENT, INC.
Unaudited Pro Forma Combined Balance Sheets
As of March 31, 2026
|
|
|
|
|
|
|
| Pro Forma |
|
|
|
| Combined |
| |||||
|
|
| Nexscient |
|
| Flipside |
|
| Adjustments |
|
| Notes |
| Pro Forma |
| ||||
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Cash |
| $ | 754,990 |
|
| $ | 25,146 |
|
| $ | (600,000 | ) |
| (a) |
| $ | 180,136 |
|
| Accounts receivable, net |
|
| - |
|
|
| 354,252 |
|
|
| - |
|
| (d) |
|
| 354,252 |
|
| Due from related parties |
|
| - |
|
|
| 785,023 |
|
|
| (430,027 | ) |
| (a) |
|
| 354,996 |
|
| Prepaid expenses and other current assets |
|
| 53,125 |
|
|
| 25,788 |
|
|
| - |
|
| (d) |
|
| 78,913 |
|
| Total current assets |
|
| 808,115 |
|
|
| 1,190,209 |
|
|
| (1,030,027 | ) |
|
|
|
| 968,297 |
|
| Goodwill |
|
| - |
|
|
| - |
|
|
| 2,583,253 |
|
| (a) |
|
| 2,583,253 |
|
| Intangible, net |
|
| - |
|
|
| - |
|
|
| 200,000 |
|
| (a) |
|
| 200,000 |
|
| Property and equipment, net |
|
| - |
|
|
| 204,685 |
|
|
| - |
|
|
|
|
| 204,685 |
|
| Software |
|
| 135,000 |
|
|
| - |
|
|
| - |
|
|
|
|
| 135,000 |
|
| Right of use asset |
|
| 32,624 |
|
|
| 213,125 |
|
|
| - |
|
| (d) |
|
| 245,749 |
|
| Other non-current assets |
|
| - |
|
|
| 63,101 |
|
|
| - |
|
| (d) |
|
| 63,101 |
|
| Total assets |
| $ | 975,739 |
|
| $ | 1,671,120 |
|
| $ | 1,753,226 |
|
|
|
| $ | 4,400,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses |
| $ | 32,720 |
|
| $ | 122,254 |
|
| $ | 3 |
|
| (d) |
| $ | 154,977 |
|
| Deferred wages payable |
|
| 196,500 |
|
|
| - |
|
|
| - |
|
|
|
|
| 196,500 |
|
| Accrued interest payable short term |
|
| 42,528 |
|
|
| - |
|
|
| - |
|
|
|
|
| 42,528 |
|
| Convertible debentures short term |
|
| 330,000 |
|
|
| - |
|
|
| - |
|
|
|
|
| 330,000 |
|
| Current portion of loans payable |
|
| - |
|
|
| 741,054 |
|
|
| - |
|
|
|
|
| 741,054 |
|
| Right of use liability current portion |
|
| 20,153 |
|
|
| 129,868 |
|
|
| - |
|
|
|
|
| 150,021 |
|
| Total current liabilities |
|
| 621,901 |
|
|
| 993,176 |
|
|
| 3 |
|
|
|
|
| 1,615,080 |
|
| Accrued interest payable |
|
| 14,696 |
|
|
| - |
|
|
| - |
|
|
|
|
| 14,696 |
|
| Convertible debentures |
|
| 200,000 |
|
|
| - |
|
|
| - |
|
|
|
|
| 200,000 |
|
| Seller convertible note |
|
| - |
|
|
| - |
|
|
| 379,694 |
|
| (a) |
|
| 379,694 |
|
| Right of use liability |
|
| 12,471 |
|
|
| 70,207 |
|
|
| - |
|
|
|
|
| 82,678 |
|
| Long term loans payable |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
| - |
|
| Retirement benefit obligation |
|
| - |
|
|
| 301,266 |
|
|
| - |
|
|
|
|
| 301,266 |
|
| Deferred tax liability |
|
| - |
|
|
| - |
|
|
| 50,000 |
|
| (a) |
|
| 50,000 |
|
| Total liabilities |
|
| 849,068 |
|
|
| 1,364,649 |
|
|
| 429,697 |
|
|
|
|
| 2,643,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders' Equity (Deficit): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
| - |
|
| Common stock |
|
| 24,663 |
|
|
| 215,054 |
|
|
| (208,208 | ) |
| (a), (b) & (e) |
|
| 31,509 |
|
| Additional paid-in capital |
|
| 2,106,769 |
|
|
| - |
|
|
| 1,704,654 |
|
| (a) & (e) |
|
| 3,811,423 |
|
| Accumulated deficit |
|
| (2,004,761 | ) |
|
| 159,949 |
|
|
| (241,449 | ) |
| (b) & (e) |
|
| (2,086,261 | ) |
| Accumulated other comprehensive income |
|
| - |
|
|
| (68,532 | ) |
|
| 68,532 |
|
| (b) |
|
| - |
|
| Total stockholders' Equity (Deficit) |
|
| 126,671 |
|
|
| 306,471 |
|
|
| 1,323,529 |
|
|
|
|
| 1,756,671 |
|
| Total liabilities and stockholders' Equity (Deficit) |
| $ | 975,739 |
|
| $ | 1,671,120 |
|
| $ | 1,753,226 |
|
|
|
| $ | 4,400,085 |
|
| 2 |
NEXSCIENT, INC.
Unaudited Pro Forma Combined Statements of Operations
Three Months Ended March 31, 2026
|
|
|
|
|
|
| Pro Forma |
|
|
|
| Combined |
| ||||||
|
|
| Nexscient |
|
| Flipside |
|
| Adjustments |
|
| Notes |
| Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenues |
| $ | - |
|
| $ | 693,951 |
|
| $ | - |
|
|
|
| $ | 693,951 |
|
| Cost of revenue |
|
| - |
|
|
| 453,287 |
|
|
| - |
|
|
|
|
| 453,287 |
|
| Gross profit |
|
| - |
|
|
| 240,664 |
|
|
| - |
|
|
|
|
| 240,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Research and development |
|
| 7,000 |
|
|
| - |
|
|
| - |
|
|
|
|
| 7,000 |
|
| General and administrative |
|
| 108,469 |
|
|
| 173,903 |
|
|
| 8,714 |
|
| (c) |
|
| 291,086 |
|
| Total operating expenses |
|
| 115,469 |
|
|
| 173,903 |
|
|
| 8,714 |
|
|
|
|
| 298,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Loss) income from operations |
|
| (115,469 | ) |
|
| 66,761 |
|
|
| (8,714 | ) |
|
|
|
| (57,422 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
| (11,762 | ) |
|
| (48,400 | ) |
|
| (8,543 | ) |
| (f) |
|
| (68,705 | ) |
| Foreign exchange gain (loss) |
|
| - |
|
|
| (5,787 | ) |
|
| - |
|
|
|
|
| (5,787 | ) |
| Total other income (expense), net |
|
| (11,762 | ) |
|
| (54,187 | ) |
|
| (8,543 | ) |
|
|
|
| (74,492 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for income taxes |
|
| - |
|
|
| 2,490 |
|
|
| - |
|
|
|
|
| 2,490 |
|
| Net (loss) income |
| $ | (127,231 | ) |
| $ | 10,084 |
|
| $ | (17,257 | ) |
|
|
| $ | (134,404 | ) |
| Weighted average common shares outstanding - Basic and Diluted |
|
| 22,404,885 |
|
|
|
|
|
|
| 6,846,000 |
|
|
|
|
| 29,250,885 |
|
| Net (loss) income per common share - basic and diluted |
| $ | (0.01 | ) |
| $ | - |
|
| $ | - |
|
|
|
| $ | (0.00 | ) |
| 3 |
NEXSCIENT, INC.
Unaudited Pro Forma Combined Statements of Operations
Year Ended December 31, 2025
|
|
|
|
|
|
|
|
| Pro Forma |
|
|
|
| Combined |
| ||||
|
|
| Nexscient |
|
| Flipside |
|
| Adjustments |
|
| Notes |
| Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Revenues |
| $ | - |
|
| $ | 2,477,589 |
|
| $ | - |
|
|
|
| $ | 2,477,589 |
|
| Cost of revenue |
|
| - |
|
|
| 1,641,242 |
|
|
| - |
|
|
|
|
| 1,641,242 |
|
| Gross profit |
|
| - |
|
|
| 836,347 |
|
|
| - |
|
|
|
|
| 836,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Research and development |
|
| 38,500 |
|
|
| - |
|
|
| - |
|
|
|
|
| 38,500 |
|
| General and administrative |
|
| 454,551 |
|
|
| 796,606 |
|
|
| 116,357 |
|
| (c) & (e) |
|
| 1,367,514 |
|
| Total operating expenses |
|
| 493,051 |
|
|
| 796,606 |
|
|
| 116,357 |
|
|
|
|
| 1,406,014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
| (493,051 | ) |
|
| 39,741 |
|
|
| (116,357 | ) |
|
|
|
| (569,667 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
| (65,732 | ) |
|
| (163,603 | ) |
|
| (34,172 | ) |
| (f) |
|
| (263,507 | ) |
| Foreign exchange gain (loss) |
|
| - |
|
|
| (16,935 | ) |
|
| - |
|
|
|
|
| (16,935 | ) |
| Other income |
|
| - |
|
|
| 4,799 |
|
|
| - |
|
|
|
|
| 4,799 |
|
| Total other income (expense), net |
|
| (65,732 | ) |
|
| (175,739 | ) |
|
| (34,172 | ) |
|
|
|
| (275,643 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for income taxes |
|
| - |
|
|
| 38,779 |
|
|
| - |
|
|
|
|
| 38,779 |
|
| Net loss |
| $ | (558,783 | ) |
| $ | (174,777 | ) |
| $ | (150,529 | ) |
|
|
| $ | (884,089 | ) |
| Weighted average common shares outstanding - Basic and Diluted |
|
| 21,230,232 |
|
|
| - |
|
|
| 6,846,000 |
|
|
|
|
| 28,076,232 |
|
| Net loss per common share - Basic and Diluted |
| $ | (0.03 | ) |
| $ | - |
|
| $ | - |
|
|
|
| $ | (0.03 | ) |
| 4 |
Nexscient, Inc.
Notes to Unaudited Pro Forma Financial Statements
1. Description of Transactions
As previously disclosed, on January 13, 2026, Nexscient, Inc. (the “Company”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Arcadia Data Pte. Ltd. (“Arcadia”), Crestview BPO Pte. Ltd. (“Crestview”), Flipside Digital Content Company, Inc. (“Flipside AI”), and the selling shareholders named therein, pursuant to which the Company agreed to acquire 100% of the issued and outstanding equity interests of Crestview, which will own 100% of Flipside AI following a pre-closing reorganization (the “Acquisition”). On March 30, 2026, the parties amended the Purchase Agreement to, among other things, (i) remove the cash escrow component of the aggregate consideration due at closing, (ii) update and clarify language related to indebtedness adjustments to the aggregate consideration due at closing, (iii) lower the Company’s threshold financing requirement, and (iv) amend the Drop Dead Date (as defined in the Purchase Agreement) to April 1, 2026.
On April 1, 2026, the Company completed the Acquisition pursuant to the Purchase Agreement (the “Closing”), and the Company acquired 100% of the issued and outstanding equity interests of Crestview, which owns 100% of Flipside AI, for aggregate consideration of $2,609,694, as adjusted by customary working capital and indebtedness adjustments, consisting of:
| · | $600,000 in cash; |
| · | $450,000 seller convertible promissory note, recorded at its present value of $379,694, convertible into the Company’s common stock, $0.001 par value per share (“Nexscient Common Stock”), at the conversion price of $0.75 per share, with scheduled maturities over three years; and |
| · | 6,520,000 restricted shares of Nexscient Common Stock, valued at $1,630,000. |
2. Basis of Presentation
The historical financial information has been adjusted to give pro forma effect to events that are (i) directly attributable to the transaction, (ii) factually supportable, and (iii) with respect to the unaudited pro forma combined balance sheets and unaudited pro forma combined statements of operations, expected to have a continuing impact on the combined results.
The transaction has been accounted for as a business combination, with Flipside AI as the accounting acquiree and Nexscient as the accounting acquirer.
3. Consideration Transferred
| Cash |
| $ | 600,000 |
|
| Seller convertible note, at present value |
|
| 379,694 |
|
| Common Shares (Restricted shares) |
|
| 1,630,000 |
|
| Purchase Consideration |
| $ | 2,609,694 |
|
The following table shows the preliminary allocation of the purchase price for Flipside AI to the acquired net identifiable assets and pro forma goodwill:
| Assets acquired |
| $ | 1,241,093 |
|
| Goodwill |
|
| 2,583,253 |
|
| Intangible |
|
| 200,000 |
|
| Liabilities assumed |
|
| (1,364,652 | ) |
| Deferred tax liability on intangibles (25%) |
|
| (50,000 | ) |
| Purchase Consideration |
| $ | 2,609,694 |
|
| 5 |
| a) | To record the acquisition of Flipside AI by Nexscient and the goodwill arising therefrom. The total purchase consideration of $2,609,694 comprises $600,000 in cash, a $450,000 seller convertible promissory note recorded at its present value of $379,694 using an imputed interest rate of 9%, and 6,520,000 restricted shares of Nexscient Common Stock valued at $1,630,000 based on a share price of $0.25 per share (of which $6,520 was recorded as common stock at the par value of $0.001 per share and $1,623,480 as additional paid-in capital). The net tangible liabilities assumed of $123,559 (assets acquired of $1,241,093 less liabilities assumed of $1,364,652) are recorded at their estimated fair values. In addition, identifiable intangible assets of $200,000 were recognized at their estimated fair values, together with a related deferred tax liability of $50,000, resulting in net identifiable assets acquired of $26,441. The excess of the total purchase consideration over such net identifiable assets is recorded as goodwill of $2,583,253. The acquired receivable from a related party (the De Luna Advance Payable Note) has been recorded at its acquisition-date fair value of $354,996, compared with a historical carrying amount of $785,023. The resulting difference of $430,027 is reflected in goodwill. |
|
|
|
| b) | To eliminate the historical stockholders’ equity (deficit) of Flipside AI, the accounting acquiree, of $306,471, comprising common stock of $215,054, accumulated earnings of $159,949, and accumulated other comprehensive loss of $(68,532). |
| c) | To record amortization expense on the identifiable intangible assets of $200,000 acquired in connection with the Acquisition, comprising $8,714 for the three months ended March 31, 2026 and $34,857 for the year ended December 31, 2025. The intangible assets comprise customer relationships of $90,000 amortized over seven years, a trade name of $60,000 amortized over five years, and a non-compete agreement of $50,000 amortized over five years. |
|
|
|
| d) | The Flipside AI column reflects the acquisition-date carrying amounts of the assets acquired and liabilities assumed as presented in Note 4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, translated into U.S. dollars at the closing rate of 60.678 Philippine pesos per U.S. dollar. The $3 adjustment to accounts payable and accrued expenses reflects rounding in that translation. |
|
|
|
| e) | To record the issuance of 326,000 restricted shares of Nexscient Common Stock as a business broker fee in connection with the Acquisition, valued at $81,500 based on a share price of $0.25 per share (of which $326 was recorded as common stock at the par value of $0.001 per share and $81,174 as additional paid-in capital). The fair value of these shares is recognized as a transaction cost within general and administrative expenses and is not included in the purchase consideration. |
|
|
|
| f) | To record accretion of the discount on the $450,000 seller convertible promissory note, which is recorded at a present value of $379,694 using an imputed interest rate of 9%, comprising $8,543 for the three months ended March 31, 2026 and $34,172 for the year ended December 31, 2025. |
| 6 |