WeTrade Group(WETG) - 2025 Q2 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements This section provides a standard disclosure regarding forward-looking statements, warning of inherent risks and uncertainties that could cause actual results to differ from projections Forward-Looking Statements Disclosure This section provides a standard disclosure regarding forward-looking statements, warning of inherent risks and uncertainties that could cause actual results to differ from projections - Forward-looking statements are identified by specific terms such as 'may,' 'will,' 'expect,' and 'anticipate'[8] - Actual results may differ materially from forward-looking statements due to known and unknown risks and uncertainties[8][9] - The company does not undertake to update forward-looking statements unless legally required[10] PART I – Financial Information This part presents the company's unaudited condensed consolidated financial statements and related disclosures Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, equity changes, and cash flows, with detailed notes Unaudited Condensed Consolidated Balance Sheets This section presents the company's unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 | ASSETS | Amount ($) | | :--- | :--- | | Current assets: | | | Cash and cash equivalents | $668,387 | | Digital assets | $632,067,553 | | Accounts receivable, net | $540,000 | | Prepayments | $- | | Total current assets | $633,275,940 | | Total assets | $633,275,940 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | Current liabilities: | | | Accounts payable | $- | | Amount due to related parties | $278,666 | | Income tax payable | $130,415 | | Other payable | $2,090,491 | | Total current liabilities | $2,499,572 | | Non-current liabilities: | | | Deferred tax liabilities | $91,175,187 | | Total non-current liabilities | $91,175,187 | | Total liabilities | $93,674,759 | | Stockholders' Equity: | | | Common stock | $217,676,957 | | Retained earnings | $321,924,224 | | Total Stockholders' Equity | $539,601,181 | | Total Liabilities and Stockholders' Equity | $633,275,940 | Key Balance Sheet Changes (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 ($) | December 31, 2024 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Digital assets | $632,067,553 | $78,322,430 | +$553,745,123 | | Total assets | $633,275,940 | $92,916,317 | +$540,359,623 | | Total liabilities | $93,674,759 | $11,288,255 | +$82,386,504 | | Total Stockholders' Equity | $539,601,181 | $81,628,062 | +$457,973,119 | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) This section presents the unaudited condensed consolidated statements of operations and comprehensive income (loss) for the periods ended June 30, 2025 and 2024 Consolidated Statements of Operations and Comprehensive Income (Loss) | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 (Restated) ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 (Restated) ($) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $— | $— | $— | $— | | Gross Profit | $— | $— | $— | $— | | Operating expenses | $(255,962) | $(344,999) | $(705,820) | $(675,144) | | Other income (loss) | $150,350,300 | $(8,423,621) | $395,661,456 | $15,595,778 | | Income (loss) before income taxes | $150,094,338 | $(8,768,620) | $394,955,636 | $14,920,634 | | Income tax (expenses) benefits | $(31,519,811) | $1,841,411 | $(82,940,684) | $(2,301,348) | | Net income (loss) from continuing operation | $118,574,527 | $(6,927,209) | $312,014,952 | $12,619,286 | | Net comprehensive income (loss) per share, basic and diluted from continuing operation | $0.27 | $(0.99) | $1.16 | $2.74 | | Weighted-average shares outstanding, basic and diluted | 436,265,135 | 6,976,410 | 267,870,110 | 4,609,505 | - The company reported no service revenue for the three and six months ended June 30, 2025 and 2024[16] - Net income from continuing operations significantly increased to $312,014,952 for the six months ended June 30, 2025, primarily driven by other income[16] Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity This section presents the unaudited condensed consolidated statement of changes in stockholders' equity for the six months ended June 30, 2025 Changes in Stockholders' Equity (Six Months Ended June 30, 2025) | Item | Shares | Common Stock Amount ($) | Additional Paid in Capital ($) | Retained Earnings ($) | Total Shareholder Equity ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance as of December 31, 2024 | 6,976,410 | $— | $71,718,790 | $9,909,272 | $81,628,062 | | Stock issued during the period | 429,288,725 | $— | $145,958,167 | $— | $145,958,167 | | Net income for the period | — | $— | $— | $312,014,952 | $312,014,952 | | Balance as of June 30, 2025 | 436,265,135 | $— | $217,676,957 | $321,924,224 | $539,601,181 | - Total outstanding common shares increased significantly from 6,976,410 as of December 31, 2024, to 436,265,135 as of June 30, 2025, primarily due to stock issuances[22] Unaudited Condensed Consolidated Statements of Cash Flows This section presents the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows (Six Months Ended June 30) | Item | 2025 ($) | 2024 (Restated) ($) | | :--- | :--- | :--- | | Net income from continuing operation | $312,014,952 | $12,619,286 | | Fair value gain on digital asset | $(395,661,456) | $(15,595,778) | | Deferred tax expenses | $82,940,684 | $2,301,348 | | Net cash flows provided by operating activities | $— | $— | | Net cash flows provided by investing activities | $— | $— | | Net cash flows provided by financing activities | $— | $— | | Cash and Cash Equivalents, End of Year | $668,387 | $668,387 | | Issuance of common stock to acquire digital assets (Non-cash) | $145,958,167 | $— | - The company reported no net cash flows from operating, investing, or financing activities for the six months ended June 30, 2025 and 2024[26] - A significant non-cash financing activity involved the issuance of $145,958,167 in common stock to acquire digital assets in the first half of 2025[26] Notes to Unaudited Consolidated Financial Statements This section provides detailed notes explaining the company's business, accounting policies, and specific financial line items NOTE 1 – NATURE OF BUSINESS This note describes the company's dual corporate strategies: AI-enabled software development services and Bitcoin acquisition and holding - Next Technology Holding Inc. pursues two corporate strategies: AI-enabled software development services and acquiring and holding Bitcoin[28] - The company views its Bitcoin holdings as held for trading, aiming to accumulate when prices are low and sell when high, and may use Bitcoin for various corporate purposes[31][32] Bitcoin Holdings Roll-Forward (June 30, 2025) | Item | Digital asset original cost basis ($) | Fair value change in digital asset ($) | Digital asset fair value ($) | Number of Bitcoin held | | :--- | :--- | :--- | :--- | :--- | | Balance on December 31, 2024 | $24,990,000 | $53,332,430 | $78,322,430 | 833 | | Digital asset purchase | $158,083,667 | $- | $158,083,667 | 5,000 | | Fair value gain on digital asset | $- | $395,661,456 | $395,661,456 | - | | Balance on June 30, 2025 | $183,073,667 | $448,993,886 | $632,067,553 | 5,833 | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the significant accounting policies used in preparing the financial statements, including consolidation and digital asset valuation - Financial statements are prepared in accordance with U.S. GAAP, consolidating the company and its subsidiaries with inter-company transactions eliminated[34][37] - Digital assets are classified as Level 1 in the fair value hierarchy, valued using unadjusted quoted prices in active markets[40][41] - The company early adopted ASU 2023-08 in fiscal year 2024, measuring digital assets at fair value with unrealized gains and losses recognized as 'other income'[46][47] NOTE 3 – CASH AND CASH EQUIVALENTS This note details the company's cash and cash equivalents, primarily held in Hong Kong bank accounts Cash and Cash Equivalents | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Bank Deposits- Outside USA | $668,387 | $668,387 | - All company cash is held in Hong Kong bank accounts and is not protected by FDIC insurance or the Hong Kong Deposit Protection Scheme[45] NOTE 4 – DIGITAL ASSETS This note provides details on the company's digital asset holdings, including purchases and fair value gains Digital Assets Holdings | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Opening balance | $78,322,430 | $35,137,576 | | Purchase of BTC | $158,083,667 | $- | | Fair value gain on digital assets | $395,661,456 | $43,184,854 | | Ending balance | $632,067,553 | $78,322,430 | - In March 2025, the company acquired 5,000 BTC for $158,083,667, paid through the issuance of common shares and warrants[72][81][83] - The company recognized a fair value gain of $395,661,456 on digital assets for the six months ended June 30, 2025, recorded under 'Other Income'[72] NOTE 5 – PREPAYMENTS This note details the company's prepayments, specifically for digital asset acquisitions Prepayments | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Prepayment for digital assets | $- | $12,125,500 | - The $12.1 million prepayment for digital assets as of December 31, 2024, was applied towards the 5,000 BTC acquisition by June 30, 2025[77][84] NOTE 6 – ACCOUNTS RECEIVABLE, NET This note provides information on the company's accounts receivable, net of any allowance for credit loss Accounts Receivable, Net | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Accounts Receivable | $540,000 | $1,800,000 | | Less: Allowance for credit loss | $- | $- | | Accounts Receivable, net | $540,000 | $1,800,000 | - Accounts receivable decreased from $1,800,000 as of December 31, 2024, to $540,000 as of June 30, 2025, with no allowance for credit loss[85] NOTE 7 – INVESTMENT This note details the company's investment in an associate company, which has been fully impaired Investment in Associate Company | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Investment in an associate company | $13,396,000 | $13,396,000 | | Impairment of the investment | $(13,396,000) | $(13,396,000) | | Net Investment | $- | $- | - The company acquired a 20% stake in an associate company in April 2024 for $13,396,000, which has been fully impaired[86][87] NOTE 8 – AMOUNT DUE TO RELATED PARTIES This note outlines amounts due to related parties, specifically director fees payable Amount Due to Related Parties | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Director fee payable | $278,666 | $972,000 | - Director fee payable decreased from $972,000 as of December 31, 2024, to $278,666 as of June 30, 2025, with no interest or fixed repayment terms[88][89] NOTE 9 – OTHER PAYABLES This note details the company's other payables, including professional fees, operating expenses, and short-term loans Other Payables | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Professional fees and operating expenses | $389,879 | $460,985 | | Short term loans | $1,700,612 | $760,352 | | Total | $2,090,491 | $1,221,337 | - Total other payables increased from $1,221,337 as of December 31, 2024, to $2,090,491 as of June 30, 2025, primarily due to increased short-term loans[90] NOTE 10 – SHAREHOLDERS' EQUITY This note provides information on changes in the company's shareholders' equity, including common stock issuances Common Stock Outstanding | Date | Shares Issued and Outstanding | | :--- | :--- | | June 30, 2025 | 436,265,135 | | December 31, 2024 | 6,976,410 | - In March 2025, 135,171,078 shares and warrants for 294,117,647 shares were issued for 5,000 Bitcoin acquisition, increasing total outstanding shares to 436,265,135[103] - In April 2024, $1,974,140 of outstanding liabilities were converted into 411,280 shares of common stock[102] NOTE 11 – REVENUE This note describes the company's revenue sources and reports no revenue from SAAS business for the periods presented - The company's primary revenue is derived from providing AI-enabled software development services[104] - No revenue was generated from SAAS business for the three and six months ended June 30, 2025 and 2024[105] NOTE 12 – INCOME TAXES This note outlines the applicable income tax rates and the components of income tax expense or benefit Income Tax Rates and Components | Item | US Statutory Income Tax Rate (%) | Hong Kong Profits Tax Rate (%) | BVI Subsidiary Income Tax Rate (%) | | :--- | :--- | :--- | :--- | | Rate | 21.0% | 16.5% | Nil | Income Tax Expense (Benefit) | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Current income tax expense | $- | $- | $- | $- | | Deferred income tax expense (benefit) | $31,519,811 | $(1,841,411) | $82,940,684 | $2,301,348 | | Total | $31,519,811 | $(1,841,411) | $82,940,684 | $2,301,348 | NOTE 13- SEGMENT INFORMATION This note clarifies that the company operates as a single reportable segment, with Net Income as the primary performance measure - The company operates as a single reportable segment, with the CEO serving as the Chief Operating Decision Maker (CODM)[109] - Net Income is the primary measure of segment performance used by the CODM to monitor results and allocate resources[110] NOTE 14 – BASIC AND DILUTED NET INCOME PER SHARE This note presents the basic and diluted net income per share calculations for the periods presented Basic and Diluted Net Income Per Share | Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $118,574,527 | $(6,927,209) | $312,014,952 | $12,619,286 | | Weighted-average common shares outstanding | 436,265,135 | 6,976,410 | 267,870,110 | 4,609,505 | | Earnings (loss) per share, basic and diluted | $0.27 | $(0.99) | $1.16 | $2.74 | - There were no potentially dilutive shares as of June 30, 2025, and December 31, 2024[114] NOTE 15 – COMMITMENTS AND CONTINGENCIES This note states that the company had no significant capital commitments, guarantees, or contingencies - The company had no significant capital or other commitments, guarantees, or contingencies as of June 30, 2025, and December 31, 2024[115] NOTE 16 – SUBSEQUENT EVENTS This note discloses subsequent events, including the filing of a Form S-8 for an equity incentive plan - On July 3, 2025, the company filed a Form S-8 to register 80 million common stocks under the 2025 Equity Incentive Plan, with 20 million shares already granted[116] NOTE 17 – DISCONTINUED OPERATIONS This note describes the termination of the company's PRC operations and the dissolution of its subsidiary - The company's board approved the termination of all PRC operations on June 21, 2024, leading to the dissolution of its subsidiary in July 2024[118] - Net income from discontinued operations was nil for the three and six months ended June 30, 2024[118] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial performance, reiterating its dual strategy of AI software development and Bitcoin acquisition, highlighting increased net income from digital asset gains - The company's business strategy involves providing AI-enabled software development services and acquiring and holding Bitcoin, viewing Bitcoin holdings as held for trading[121][122][123][124] Results of Operations (Six Months Ended June 30) | Item | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Revenue | $— | $— | | Other income | $395,661,456 | $15,595,778 | | General and administrative expenses | $(705,820) | $(675,144) | | Net income | $312,014,952 | $12,619,286 | - Net income for the six months ended June 30, 2025, was $312,014,952, a substantial increase from $12,619,286 in 2024, primarily due to fair value gains from digital assets[131][132] - General and administrative expenses increased to $705,820 for the six months ended June 30, 2025, mainly due to higher litigation-related legal fees[130] - As of June 30, 2025, cash on hand was $668,387, with no change during the period, and operating cash flow was nil for both periods[133][134] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a 'smaller reporting company,' the registrant is exempt from providing quantitative and qualitative disclosures about market risk - The company is a 'smaller reporting company' and is not required to provide quantitative and qualitative disclosures about market risk[139] Item 4. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were ineffective as of June 30, 2025, due to material weaknesses including limited resources and lack of segregation of duties, with remediation planned - Disclosure controls and procedures were not effective as of June 30, 2025, due to limited internal resources and lack of multiple levels of transaction review[142] - Material weaknesses include lack of outside directors, management domination, ineffective internal audit, lack of segregation of duties, and insufficient review of accounting data[142][143] - Management believes the financial statements and other information presented are materially correct despite identified weaknesses[142] - The company plans to remediate significant deficiencies and implement segregation of duties with proper funding[144] - There were no material changes in internal control over financial reporting during the most recently completed fiscal quarter[146] PART II – Other Information This part provides disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, and other relevant information Item 1. Legal Proceedings This section details ongoing legal disputes involving unauthorized individuals attempting to assert control, including a preliminary injunction, dismissed lawsuit, and pending new legal actions - Since mid-September 2023, Mr. Zheng Dai, Mr. Pijun Liu, and affiliates have falsely claimed to represent the company, leading to legal disputes[148] - On January 5, 2024, the Chancery Court issued a preliminary injunction restraining Mr. Zheng Dai and affiliates from acting on behalf of the company or changing board composition[151][152][154] - The Chancery Court dismissed the plaintiffs' case on April 8, 2024, but new lawsuits for corporate records inspection and alleged loan repayments remain pending[153][155][157][160] - On April 9, 2025, the WY District Court denied a motion for preliminary injunction to enjoin future share issuances by the company[159] Item 1A. Risk Factors As a 'smaller reporting company,' the registrant is exempt from providing disclosures about risk factors - The company is a 'smaller reporting company' and is not required to provide risk factor disclosures[161] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds were reported[162] Item 3. Defaults Upon Senior Securities The company reported that no senior securities were issued and outstanding during the six months ended June 30, 2025 - No senior securities were issued and outstanding during the six months ended June 30, 2025[163] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the company[164] Item 5. Other information The company reported no other information to disclose under this item - No other information was reported under this item[165] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL formatted financial statements - Exhibits include certifications of the Principal Executive Officer (31.1) and Principal Financial Officer (31.2), and XBRL formatted financial statements (101, 104)[165] Signatures This section contains the required signatures of the company's authorized officers, certifying the submission of the quarterly report Report Signatures This section contains the required signatures of the company's authorized officers, certifying the submission of the quarterly report - The report was signed on August 8, 2025, by Wei Hong Liu, Chief Executive Officer, and Eve Chan, Chief Financial Officer[168]