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

This overall strategy also contemplates that we may (i) periodically sell Bitcoin for general corporate purposes, including to generate cash for treasury management or in connection with strategies that generate tax benefits in accordance with applicable law, (ii) enter into additional capital raising transactions that are collateralized by our Bitcoin holdings, and (iii) consider pursuing additional strategies to create income streams or otherwise generate funds using our Bitcoin holdings.

We believe that, due to its limited supply, Bitcoin offers the opportunity for appreciation in value if its adoption increases and has the potential to serve as a hedge against inflation in the long term.

On January 31, 2024, approved by the Board of Directors, the Nominating Committee and the Compensation Committee, Mr. Liu Wei Hong was appointed as the chief executive officer of the Company, effective January 31, 2024.

On August 12, 2024, Mr. Lim Kian Wee tendered his resignation as a director of the Company and Chair of the Audit Committee, effective August 12, 2024. On the same day, approved by the Board of Directors, the Nominating Committee and the Compensation Committee, Mr. Tian Yang was appointed as the director of the Company and Chair of the Audit Committee, effective August 12, 2024.

On October 21, 2024, Mr. Ken Tsang tendered her resignation as a Chief Financial officer of the Company, effective October 21, 2024. On the same day, approved by the Board of Directors, the Nominating Committee and the Compensation Committee, Ms. Eve Chan was appointed as the Chief Financial Officer of the Company, effective October 21, 2024.

Mr. Lichen Dong is the Chairman of the Board.

Cost of revenue mainly consists of staff payroll, system development costs and outsourcing staff cost for system development, which is in line with the increase in revenue during the period.

For the fiscal year ended December 31, 2024 and 2023, other income were US$43.19 million and US$4.39 million, respectively. The increase in other income is due to Bitcoin value appreciation of US$43.18 million and US$10.15 million for the years ended December 31, 2024 and 2023, which offset by waiver of related company loan of US$5.81 million during the year of 2023.

For the fiscal year ended December 31, 2024 and 2023, the Company recorded income tax expense of US$8.23 million and US$0.13 million in 2024 and 2023, respectively.

You should carefully consider the risks described below before making an investment decision. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

If any of the following risks occur, our business, financial condition, or results of operations could be materially adversely affected. In such case, the market price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Software Development Business

We face intense competition in the AI-enabled software development market, which could adversely affect our business and results of operations.

The market for AI-enabled software development services is highly competitive, rapidly evolving and characterized by frequent technological changes. We compete with a wide range of companies, including established software providers, emerging technology companies, and in-house development teams at potential customers. We believe that the pace of innovation will continue to accelerate. Our ability to compete effectively depends on a number of factors, many of which are outside our control, including:

If we are unable to anticipate or respond effectively to technological change, evolving industry standards, or customer preferences, or if our competitors are more successful in developing and marketing competing products and services, demand for our offerings could decline. Increased competition could result in pricing pressures, reduced margins, loss of market share, or diminished brand recognition, any of which could materially and adversely affect our business, financial condition and results of operations.

Our AI-enabled software development products, as well as applications, features, and functionality that we may introduce in the future, may not be widely accepted by our customers, may receive negative attention or may require us to compensate or reimburse third parties, any of which may lower our margins and harm our business. We may not have visibility into our financial position and results of operations.

Our ability to engage, retain, and increase our base of customers and to increase our revenue will depend on our ability to successfully create new applications, features, and functionality, both independently and together with third parties. We may introduce new and unproven applications, including technologies with which we have little or no prior development or operating experience. These new applications and updates may fail to engage, retain, and increase our base of customers or may suffer from lag in adoption. New applications may initially suffer from performance and quality issues that may negatively impact our ability to market and sell such applications to new and existing customers. The short- and long-term impact of any major change to our AI-integrated SaaS applications, or the introduction of new applications, is particularly difficult to predict. If new or enhanced applications fail to engage, retain, and increase our base of customers, we may fail to generate sufficient revenue, operating margin, or other value to justify our investments in such applications, any of which may harm our business.

In addition, we may be required to compensate or reimburse third parties in connection with certain sales of our software as part of our partner relationships. New applications, features and functionality that we introduce in the future or new partner relationships may increase the amount of compensation or reimbursement we pay to third parties. Any future requirement or increase in the rate that we compensate or reimburse third parties would lower our profit margins and harm our business.

Our software may contain undetected errors, bugs, or security vulnerabilities, which could adversely affect its performance and result in reduced demand, loss of revenue, or potential claims against us.

Despite testing by us and our customers, our software has in the past contained, and may in the future contain, errors, bugs, or security vulnerabilities. Such issues may not be identified until after deployment or release and could result in system failures, reduced functionality, or other performance issues. These problems could lead to loss of customers, reputational harm, delays in market acceptance, and additional costs to remediate such issues, any of which could have a material adverse effect on our business, financial condition, and results of operations.

In addition, our customer agreements typically include provisions intended to limit our exposure to liability, including for product defects, security incidents, or service disruptions. However, such limitations of liability may not be enforceable in all jurisdictions, and we may be subject to claims or litigation arising from such issues. Any successful claim could have a material adverse effect on our business, financial condition, and results of operations.

We may be subject to greater than anticipated tax liabilities.

We are subject to income and non-income taxes in various domestic and foreign jurisdictions. Our future tax liabilities could be adversely affected by a number of factors, including changes in the mix of earnings among jurisdictions with differing statutory tax rates, changes in the valuation of our deferred tax assets and liabilities, changes in the amount of unrecognized tax benefits, and changes in applicable tax laws, regulations, or interpretations thereof.

In addition, to the extent we hold digital assets such as Bitcoin, the tax treatment of such assets remains uncertain and may be subject to change. If we were to dispose of any digital assets at a value greater than their tax basis, we could incur material tax liabilities on any resulting gains. Furthermore, evolving tax regulations and guidance relating to digital assets could result in increased tax compliance obligations or unexpected tax exposures. Any of the foregoing could have a material adverse effect on our business, financial condition, and results of operations.

Interruption or failure of our own technology systems or those provided by third-party service providers whom we rely upon, whether arising from geopolitical tensions or business competition, could adversely affect our business, financial condition and results of operations.

We currently serve our customers and end users in Hong Kong, Malaysia, Japan, and Singapore. Our ability to provide AI-enabled software development products and services depends on the continuing operation of our technological systems or those provided by third-party service providers, such as cloud service providers. Any damage to or failure of such systems could interrupt our services. Service interruptions could reduce our revenue and profit and damage our brand if our systems are perceived to be unreliable. Our systems are vulnerable to damage or interruption as a result of terrorist attacks, wars, earthquakes, floods, fires, power loss, telecommunications failures, undetected errors or “bugs” in our software, malware, computer viruses, interruptions in access to our platform through the use of “denial of service” or similar attacks, hacking or other attempts to harm our systems, and similar events. Some of our systems are not fully redundant, and our disaster recovery planning does not account for all possible scenarios. If we cannot continue to retain third-party services on acceptable terms, our services may be interrupted. If we experience frequent or persistent system failures on our platform, whether due to interruptions and failures of our own technology and or those provided by third-party service providers that we rely upon, our reputation and brand could be severely harmed.

The global landscape of cloud services is subject to the influence of geopolitical factors, including international trade disputes, sanctions, and national security concerns, which could impact the availability, reliability, and cost of cloud infrastructure services. Additionally, the competitive dynamics in the cloud services market and potential commercial conflicts of interest could lead to changes in service terms, pricing, availability or even termination of service agreements, particularly if our providers engage in business activities similar to ours and become direct competitors. Any limitation on the capacity of our cloud infrastructure, or any interruption caused by geopolitical events, trade restrictions, or competitive actions in the cloud market, could impede our ability to onboard new customers or expand the usage among existing customers, host our products, or serve our customers effectively.

In the event that our service agreements relating to our data centers or cloud infrastructure are terminated, or there is a lapse of service, elimination of services or features that we utilize, interruption of internet service provider connectivity or damage to such facilities, we could experience interruptions in access to our platform, as well as significant delays and additional expense in arranging or creating new facilities and services or rebuilding our platform for deployment on a different data center provider or cloud infrastructure service provider, which could adversely affect our business, financial condition and results of operations.

Any actual or perceived security or privacy breach could interrupt our operations, harm our brand and adversely affect our reputation, brand, business, financial condition and results of operations.

Our business may involve the collection, storage, processing and transmission of our users’ personal data and other sensitive data. An increasing number of organizations including large online and off-line merchants and businesses, other large Internet companies, financial institutions and government institutions have disclosed breaches of their information security systems, some of which have involved sophisticated and highly targeted attacks. Because techniques used to obtain unauthorized access to or to sabotage information systems change frequently and may not be known until launched against us, we may be unable to anticipate or prevent these attacks. In addition, users of our software products could have vulnerabilities on their own mobile devices that are entirely unrelated to our systems but could mistakenly attribute their own vulnerabilities to us. Further, breaches experienced by other companies may also be leveraged against us. For example, credential stuffing attacks are becoming increasingly common and sophisticated actors can mask their attacks, making them increasingly difficult to identify and prevent. Certain efforts may be state-sponsored or supported by significant financial and technological resources, making them even more difficult to detect.

Although we intend to develop, contract or purchase systems and processes that are designed to protect our users’ data, prevent data loss and prevent other security breaches, these security measures cannot guarantee security. Our information technology and infrastructure may be vulnerable to cyberattacks or security breaches, and third parties may be able to access our users’ personal information and limited payment card data that are accessible through those systems. Employee error, malfeasance or other errors in the storage, use or transmission of personal information could result in an actual or perceived privacy or security breach or other security incident. Although we have policies restricting the access to the personal information we store, our employees have been accused in the past of violating these policies and we may be subject to these types of accusations in the future.

Any actual or perceived breach of privacy or security could interrupt our operations, result in our software being unavailable, resulting in loss or improper disclosure of data, result in fraudulent transfer of funds, harm our reputation and brand, damage our relationships with third-party partners, result in significant legal, regulatory and financial exposure and adversely affect our business, financial condition and results of operations. Any breach of privacy or security impacting any entities with which we share or disclose data (could have similar effects. Further, any cyberattacks, or security and privacy breaches directed at our competitors could reduce confidence in the industry as a whole and, as a result, reduce confidence in us.

Additionally, defending against claims or litigation based on any security breach or incident, regardless of their merit, could be costly and divert management’s attention. We cannot guarantee that we will be able to successfully defending any of such lawsuits which could have an adverse effect on our reputation, brand, business, financial condition and results of operations.

Any failure to offer high-quality user support may harm our relationships with users and could adversely affect our reputation, brand, business, financial condition and results of operations.

Our ability to attract and retain qualified users is dependent in part on the ease and reliability of our offerings, including our ability to provide high-quality support. Users on our software depend on our support organization to resolve any issues relating to our offerings issues with reporting a problem. Our ability to provide effective and timely support is largely dependent on our ability to attract and retain service providers who are qualified to support users and sufficiently knowledgeable regarding our offerings.

Our business depends on our ability to retain newly acquired customers, and the termination or reduction of their contracts could materially and adversely affect our results of operations.

As part of our recent expansion efforts, we have entered into contracts with new customers that we expect will contribute to our future revenue in our software development business. These customers may, however, reduce their use of our offerings or terminate their contracts before or upon expiration. Such outcomes could occur for a variety of reasons, including dissatisfaction with our services, changes in their business priorities, budgetary constraints, competitive offerings, or broader market or economic conditions. Any early termination, non-renewal, or reduction in engagement by these customers could significantly reduce our anticipated revenue and hinder our ability to achieve business growth.

Our customer contracts generally do not obligate customers to renew, extend or expand their arrangements with us once the initial terms expire. If one or more of our customers elect not to renew their contracts with us, or if our customers renew their contracts for shorter time periods, or if our customers reduce the scope of services they obtain from us, or if our customers otherwise seek to renegotiate the terms of their existing arrangements on terms less favorable to us, our business, financial condition and results of operations could be adversely affected.

If we are unable to hire, retain, train, and motivate qualified personnel and senior management and deploy our personnel and resources to meet customer demand around the world, our business could suffer.

Our ability to compete in the highly competitive market for AI-enabled software industry depends upon our ability to attract, motivate, and retain qualified personnel. Some of our executive officers and key personnel are at-will employees and may terminate their employment relationship with us at any time. The loss of the services of our key personnel and any of our other executive officers, and our inability to find suitable replacements, could result in a decline in sales, delays in product development, and harm to our business and operations.

At times, we have experienced, and we may continue to experience, difficulty in hiring and retaining personnel with appropriate qualifications, and we may not be able to fill positions in a timely manner or at all. Potential candidates may not perceive our compensation package, including our equity awards, as favorably as personnel hired prior to our listing. In addition, our recruiting personnel, methodology, and approach may need to be altered to address a changing candidate pool and profile. We may not be able to identify or implement such changes in a timely manner. In addition, we may incur significant costs to attract and recruit skilled personnel, and we may lose new personnel to our competitors or other technology companies before we realize the benefit of our investment in recruiting and training them. As we move into new geographies, we will need to attract and recruit skilled personnel in those geographic areas, but it may be challenging for us to compete with traditional local employers in these regions for talent. If we fail to attract new personnel or fail to retain and motivate our current personnel who can meet our growing technical, operational, and managerial requirements on a timely basis or at all, our business may be harmed.

Our success depends on our ability to effectively source and staff people with the right mix of skills and experience to perform services for our customers, including our ability to transition personnel to new assignments on a timely basis. If we are unable to effectively utilize our personnel on a timely basis to fulfill the needs of our customers, our business could suffer.

We face intense competition for qualified personnel, especially software engineers and data scientists, in Hong Kong and Singapore markets, where a large portion of our personnel are based. We incur costs related to attracting, relocating, and retaining qualified personnel in these highly competitive markets. Further, many of the companies with which we compete for qualified personnel have greater resources than we have. If we fail to attract new personnel or to retain our current personnel, our business and operations could be harmed.

We seek to retain and motivate existing personnel through our compensation practices, company culture, and career development opportunities. We may need to invest significant amounts of cash and equity for new and existing employees, and we may never realize returns on these investments. If the perceived value of our equity awards declines, or if the mix of equity and cash compensation that we offer is less attractive than that of our competitors, it may adversely affect our ability to recruit and retain highly skilled personnel. Any of these factors could harm our business, financial condition, and results of operations.

We could suffer disruptions, outages, defects, and other performance and quality problems with our software or with the internet infrastructure on which it relies.

Our business depends on the reliable performance and availability of our software. We have experienced, and may in the future experience, disruptions, outages, defects, and other performance and quality issues affecting our software and supporting systems. These issues may arise from a variety of factors, including the introduction of new features or updates, vulnerabilities or defects in proprietary or third-party software, human error or misconduct, capacity constraints, design limitations, natural disasters, or cybersecurity incidents such as denial-of-service attacks.

Any such disruptions, outages, defects, or other performance and quality issues with our software or supporting infrastructure could result in reduced customer usage, increased costs (including potential service credits or remediation expenses), damage to our reputation, and loss of customers, any of which could have a material adverse effect on our business, financial condition, and results of operations.

As we expand our software development product offerings, we may become subject to additional laws and regulations, and any actual or perceived failure by us to comply with such laws and regulations or manage the increased costs associated with such laws and regulations could adversely affect our business, financial condition and results of operations.

As we continue to expand our software development product offerings and user base, we may become subject to additional laws and regulations, which may differ or conflict from one jurisdiction to another. Many of these laws and regulations were adopted prior to the advent of our industry and related technologies and, as a result, do not contemplate or address the unique issues faced by our industry.

Despite our efforts to comply with applicable laws, regulations and other obligations relating to our software development product offerings, it is possible that our practices or product could be inconsistent with, or fail or be alleged to fail to meet all requirements of such laws, regulations or obligations. Our failure, or the failure by our third-party providers or partners, to comply with applicable laws or regulations or any other obligations relating to our software development product offerings, could harm our reputation and brand or result in fines or proceedings by governmental agencies or private claims and litigation, any of which could adversely affect our business, financial condition and results of operations.

Risks Relating to Our Bitcoin Acquisition Strategy

Our bitcoin acquisition strategy may expose us to various risks associated with bitcoin

Our bitcoin acquisition strategy may expose us to various risks associated with bitcoin, including the following:

Bitcoin is a highly volatile asset

Bitcoin is a highly volatile asset that has traded below $63,000 per bitcoin and above $126,300 per bitcoin on Coinbase in the 12 months preceding the date of this quarterly report. The trading price of bitcoin was significantly lower during prior periods, and such decline may occur again in the future.

Bitcoin does not pay interest or dividends

Bitcoin does not pay interest or other returns and we can only generate cash from our bitcoin holdings if we sell our bitcoin or implement strategies to create income streams or otherwise generate cash by using our bitcoin holdings. Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our bitcoin holdings, and any such strategies may subject us to additional risks.

The price of bitcoin may be influenced by regulatory, commercial, and technical factors that are highly uncertain

Bitcoin and other digital assets are relatively novel and are subject to various risks and uncertainties that may adversely impact their price. The application of securities laws and other regulations to such assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may create new regulations or interpret laws in a manner that adversely affects the price of bitcoin.

Our bitcoin holdings could significantly impact our financial results and the market price of our Common Stock

Our bitcoin holdings may significantly affect our financial results and if we continue to increase our overall holdings of bitcoin in the future, they may have an even greater impact on our financial results and the market price of our Common Stock. See “Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our bitcoin holdings.”

Our bitcoin acquisition strategy has not been tested

This bitcoin acquisition strategy has not been tested. Although we believe bitcoin, due to its limited supply, has the potential to serve as a hedge against inflation in the long term, the short-term price of bitcoin declined in recent periods during which the inflation rate increased. Some investors and other market participants may disagree with our bitcoin acquisition strategy or actions we undertake to implement it. If bitcoin prices were to decrease or our bitcoin acquisition strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our Common Stock would be materially adversely impacted.

We will be subject to counterparty risks, including in particular risks relating to our custodians

Although we have implemented various measures that are designed to mitigate our counterparty risks, including by storing substantially all of the bitcoin we own and may own in custody accounts at Japanese based, institutional-grade custodians and negotiating contractual arrangements intended to establish that our property interest in custodially-held bitcoin is not subject to claims of our custodians’ creditors, applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts. If our custodially-held bitcoin were nevertheless considered to be the property of our custodians’ estates in the event that any such custodians were to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodians, inhibiting our ability to exercise ownership rights with respect to such bitcoin and this may ultimately result in the loss of the value related to some or all of such bitcoin. Even if we are able to prevent our bitcoin from being considered the property of a custodian’s bankruptcy estate as part of an insolvency proceeding, it is possible that we would still be delayed or may otherwise experience difficulty in accessing our bitcoin held by the affected custodian during the pendency of the insolvency proceedings. Any such outcome could have a material adverse effect on our financial condition and the market price of our Common Stock.

The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of bitcoin

A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry, including the filings for bankruptcy protection by Three Arrows Capital, Celsius Network, Voyager Digital, FTX Trading and Genesis Global Capital, the closure or liquidation of certain financial institutions that provided lending and other services to the digital assets industry, including Signature Bank and Silvergate Bank, SEC prior enforcement actions against Coinbase, Inc. and Binance Holdings Ltd., the placement of Prime Trust, LLC into receivership following a cease-and- desist order issued by Nevada’s Department of Business and Industry, and the filing and subsequent settlement of a civil fraud lawsuit by the New York Attorney General against Genesis Global Capital, its parent company Digital Currency Group, Inc., and former partner Gemini Trust Company, have highlighted the counterparty risks applicable to owning and transacting in digital assets. Any similar bankruptcies, closures, liquidations and other events may result in any loss or misappropriation of our intended bitcoin holdings, or adversely impact our access to our bitcoin holdings. Or, any such bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry may negatively impact the adoption rate, price, and use of bitcoin, limit the availability to us of financing collateralized by bitcoin, or create or expose additional counterparty risks.

Changes in the accounting treatment of our bitcoin holdings could have significant accounting impacts, including increasing the volatility of our results

The following tables provide a comparison of a summary of our results of operations for the three months ended March 31, 2026 and 2025.