Next Technology Holding Inc.(NXTT) - 2025 Q2 - Quarterly Report

PART I – Financial Information Financial Statements The company's financial position changed dramatically in the first six months of 2025, primarily due to its bitcoin acquisition strategy. Total assets surged to $633.3 million, driven by a significant increase in digital asset holdings to $632.1 million. This was financed through a massive issuance of common stock, which increased total stockholders' equity to $539.6 million. The company reported a net income of $312.0 million for the six-month period, almost entirely from a $395.7 million fair value gain on its digital assets, as it generated no revenue from its software development services. Cash flows from core activities were nil, with the cash balance remaining unchanged, highlighting that the bitcoin acquisition was a non-cash transaction involving equity issuance Unaudited Condensed Consolidated Balance Sheets As of June 30, 2025, the company's total assets increased significantly to $633.3 million from $92.9 million at year-end 2024. This growth was almost entirely due to the increase in digital assets, which rose to $632.1 million from $78.3 million. Total liabilities also increased to $93.7 million, primarily from a substantial rise in deferred tax liabilities. Consequently, total stockholders' equity grew to $539.6 million from $81.6 million, reflecting the large stock issuance for the bitcoin acquisition Condensed Consolidated Balance Sheet Highlights (in USD) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Digital assets | $632,067,553 | $78,322,430 | | Total current assets | $633,275,940 | $92,916,317 | | Total assets | $633,275,940 | $92,916,317 | | Liabilities & Equity | | | | Total current liabilities | $2,499,572 | $3,053,752 | | Deferred tax liabilities | $91,175,187 | $8,234,503 | | Total liabilities | $93,674,759 | $11,288,255 | | Total Stockholders' Equity | $539,601,181 | $81,628,062 | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) The company generated no revenue for the three and six months ended June 30, 2025. A significant fair value gain on digital assets resulted in 'Other income' of $395.7 million for the six-month period, driving a net income of $312.0 million, a substantial increase from $12.6 million in the same period of 2024. Basic and diluted EPS for the six months was $1.16, compared to $2.74 in the prior year, reflecting a massive increase in weighted-average shares outstanding Statement of Operations Summary (in USD) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total service revenue | $0 | $0 | | General and administrative expense | ($705,820) | ($675,144) | | Other income | $395,661,456 | $15,595,778 | | Net income from continuing operation | $312,014,952 | $12,619,286 | | Net comprehensive income per share, basic and diluted | $1.16 | $2.74 | | Weighted-average shares outstanding, basic and diluted | 267,870,110 | 4,609,505 | Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity For the six months ended June 30, 2025, stockholders' equity increased from $81.6 million to $539.6 million. This was driven by the issuance of 429.3 million shares, which added $146.0 million to additional paid-in capital, and a net income of $312.0 million, which increased retained earnings - For the six months ended June 30, 2025, the company issued 429,288,725 shares, increasing additional paid-in capital by $145,958,167[22] - Net income of $312,014,952 for the six-month period was added to retained earnings, contributing significantly to the growth in stockholders' equity[22] Unaudited Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, there was no cash flow from operating, investing, or financing activities. The company's cash and cash equivalents balance remained unchanged at $668,387. The most significant activity was non-cash: the issuance of common stock valued at $146.0 million to acquire digital assets - Net cash flows from operating, investing, and financing activities were all zero for the six months ended June 30, 2025[26] - A significant non-cash financing activity was the issuance of common stock valued at $145,958,167 to acquire digital assets[26] - The company's cash and cash equivalents balance remained constant at $668,387 from the beginning to the end of the period[26] Notes to Unaudited Consolidated Financial Statements The notes detail the company's dual strategy of software development and bitcoin acquisition. A key highlight is the acquisition of 5,000 BTC in March 2025, bringing total holdings to 5,833 BTC with a fair value of $632.1 million. This was achieved via a non-cash transaction involving the issuance of over 429 million shares and warrants. The company early adopted ASU 2023-08, allowing it to report its crypto assets at fair value. The notes also disclose ongoing legal proceedings related to a control dispute and the dissolution of its PRC subsidiary - The company pursues a dual strategy: providing software development services and acquiring/holding bitcoin[28] - In March 2025, the company acquired 5,000 BTC, bringing its total holdings to 5,833 BTC with a fair value of $632.1 million as of June 30, 2025[33][72] - The company early adopted accounting standard ASU 2023-08, measuring its crypto assets at fair value and recognizing unrealized gains and losses in net income[46][47] - On July 3, 2025, the company filed a Form S-8 to register 80 million shares under its 2025 Equity Incentive Plan and has since granted 20 million shares[116] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reiterates the company's dual strategy of software development and bitcoin acquisition. The analysis of operations for the first six months of 2025 shows no revenue, with a net income of $312.0 million driven entirely by a $395.7 million fair value gain on digital assets. General and administrative expenses saw a slight increase due to higher legal fees. The company's liquidity is limited, with a cash balance of $668,387 and reliance on borrowings from former executives and third parties to cover daily operational expenses - The company's business strategy focuses on two areas: AI-enabled software development services and a bitcoin acquisition and holding strategy[121] Results of Operations Comparison (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Service revenue | $0 | $0 | | Other income | $395,661,456 | $15,595,778 | | General and administrative expenses | ($705,820) | ($675,144) | | Net income | $312,014,952 | $12,619,286 | - The increase in net income for the six months ended June 30, 2025, was mainly due to the fair value gain from digital assets[132] - As of June 30, 2025, the company had cash of $668,387 and borrowed funds from former executives and third parties to cover daily operational expenses[133][134] Quantitative and Qualitative Disclosures about Market Risk The company is not required to provide information on this item because it qualifies as a "smaller reporting company" under Regulation S-K - As a "smaller reporting company," the registrant is not required to provide the information contained in this item[139] Controls and Procedures Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were not effective. This was due to identified material weaknesses, including a lack of a majority of outside directors for effective oversight, management domination by two individuals without compensating controls, inadequate internal audit functions, and a lack of segregation of duties in accounting - Management concluded that disclosure controls and procedures were not effective as of the period ended June 30, 2025[142] - Material weaknesses identified include: lack of a majority of outside directors, ineffective oversight, management domination by two individuals, lack of segregation of duties, and lack of multiple levels of review of accounting data[142][143] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[146] PART II – Other Information Legal Proceedings The company has been involved in legal disputes with certain individuals, Mr. Zheng Dai and Mr. Pijun Liu, who falsely claimed to represent the company. The company successfully obtained a temporary restraining order and a preliminary injunction against these individuals. A lawsuit they filed in Wyoming was dismissed with prejudice. A separate lawsuit filed by the same individuals seeking corporate records inspection is ongoing. Additionally, a lawsuit in New York regarding loan guarantees allegedly signed by the unauthorized individuals is pending - The company faced legal challenges from unauthorized persons (Mr. Zheng Dai, Mr. Pijun Liu) who falsely claimed control and filed fraudulent 8-K reports[148] - A Wyoming court granted a preliminary injunction restraining Mr. Zheng Dai and his affiliates from acting on behalf of the company, and their case was later dismissed with prejudice[152][153] - A separate lawsuit is pending in New York County Supreme Court regarding alleged loan guarantees signed by the unauthorized individuals, which the company is moving to dismiss[157][158][160] Risk Factors The company is not required to provide information on this item because it qualifies as a "smaller reporting company" under Regulation S-K - As a "smaller reporting company," the registrant is not required to provide the information contained in this item[161] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - None[162] Defaults Upon Senior Securities The company had no senior securities issued and outstanding during the six months ended June 30, 2025, and therefore no defaults to report - No senior securities were issued and outstanding during the six months ended June 30, 2025[163] Mine Safety Disclosures This item is not applicable to the company - Not applicable to our Company[164] Other Information There is no other information to report for the period - None[165] Exhibits This section lists the exhibits filed with the report, including certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, and the financial statements formatted in XBRL - The report includes CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906[165] - Financial statements are provided in XBRL format as Exhibit 101[165]