WeTrade Group(WETG) - 2025 Q3 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements This section defines forward-looking statements and advises against undue reliance due to inherent risks and uncertainties - Forward-looking statements are identified by terms such as "may," "will," "expect," "anticipate," "estimate," "hope," "plan," "believe," "predict," "envision," "intend," "will," "continue," "potential," "should," "confident," "could" and similar words and expressions[9] - Actual results could differ materially from those contained in forward-looking statements due to known and unknown risks, uncertainties, and other factors[9][10] - Key factors influencing future results include the company's ability to execute growth strategies, find favorable manufacturing partners, general economic conditions, and anticipated working capital needs[12] PART I – Financial Information Item 1. Financial Statements This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes Unaudited Condensed Consolidated Balance Sheets Total assets and stockholders' equity significantly increased, driven by digital assets, alongside rising current and deferred tax liabilities Condensed Consolidated Balance Sheet Highlights | Metric | As of Sep 30, 2025 (USD) | As of Dec 31, 2024 (Audited) (USD) | Change (USD) | Percentage Change (%) | | :-------------------------- | :------------------- | :--------------------------- | :------- | :------------------ | | Cash and cash equivalents | $12,357,568 | $668,387 | +$11,689,181 | +1748.8% | | Digital assets | $666,804,429 | $78,322,430 | +$588,481,999 | +751.4% | | Total current assets | $679,538,464 | $92,916,317 | +$586,622,147 | +631.3% | | Total assets | $679,538,464 | $92,916,317 | +$586,622,147 | +631.3% | | Total current liabilities | $5,953,164 | $3,053,752 | +$2,899,412 | +95.0% | | Deferred tax liabilities | $98,478,710 | $8,234,503 | +$90,244,207 | +1096.0% | | Total liabilities | $104,431,874 | $11,288,255 | +$93,143,619 | +825.1% | | Total Stockholders' Equity | $575,106,590 | $81,628,062 | +$493,478,528 | +604.5% | - On September 16, 2025, the Company effected a 200-for-1 reverse stock split, reducing outstanding shares from approximately 566,265,135 to 2,865,730[15] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Significant turnaround from net loss to net income, driven by fair value gains on digital assets and new service revenue, with increased share-based compensation Condensed Consolidated Statements of Operations Highlights | Metric | 3 Months Ended Sep 30, 2025 (USD) | 3 Months Ended Sep 30, 2024 (USD) | 9 Months Ended Sep 30, 2025 (USD) | 9 Months Ended Sep 30, 2024 (USD) | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Service revenue | $1,788,205 | $0 | $1,788,205 | $0 | | Gross Profit | $806,849 | $0 | $806,849 | $0 | | General and administrative expense | $(488,975) | $(566,983) | $(1,194,795) | $(1,242,128) | | Selling expense | $(276,068) | $0 | $(276,068) | $0 | | Share-based compensation expense | $(44,367,409) | $0 | $(44,367,409) | $0 | | Other income, net | $34,736,876 | $2,303,789 | $430,398,332 | $17,899,568 | | Income tax expenses | $(7,303,523) | $(364,730) | $(90,244,207) | $(2,666,078) | | Net (loss) income from continuing operation | $(16,892,250) | $1,372,076 | $295,122,702 | $13,991,362 | | Net (loss) income per share, basic and diluted from continuing operation (USD/Share) | $(6.86) | $39.33 | $171.85 | $517.80 | | Weighted-average shares outstanding, basic and diluted (Shares) | 2,461,018 | 34,882 | 1,717,348 | 27,021 | - The company dissolved its subsidiary, WeTrade Technology (Shanghai) Co., Ltd. in July 2024, which qualified as a discontinued operation[19] Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity Total stockholders' equity increased due to net income, share-based compensation, Bitcoin acquisition, and common share issuances, impacted by a reverse stock split Changes in Stockholders' Equity (9 Months Ended Sep 30, 2025) | Item | Amount (USD) | | :-------------------------------------------------- | :------------- | | Balance as of December 31, 2024 | $81,628,062 | | Stock issued for the acquisition of Bitcoin | $145,958,167 | | Net income for the period | $295,122,702 | | Share-based compensation to advisors | $44,367,409 | | Issuance of common shares and pre-funded warrants | $8,030,250 | | Common stock issuance from fractional share elimination | $0 | | Balance as of September 30, 2025 | $575,106,590 | - The company's common stock outstanding increased from 34,882 shares as of December 31, 2024, to 2,865,730 shares as of September 30, 2025, after accounting for a 200-for-1 reverse stock split on September 16, 2025[25][27] Unaudited Condensed Consolidated Statements of Cash Flows Positive cash flow from operating and financing activities led to a significant increase in cash, with substantial non-cash issuance for digital asset acquisition Condensed Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | 9 Months Ended Sep 30, 2025 (USD) | 9 Months Ended Sep 30, 2024 (USD) | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Net cash flows provided by operating activities | $3,658,931 | $0 | | Net cash flows provided by investing activities | $0 | $0 | | Net cash flows provided by financing activities | $8,030,250 | $0 | | Change in Cash and Cash Equivalents | $11,689,181 | $0 | | Cash and Cash Equivalents, End of the Period | $12,357,568 | $668,387 | Supplemental Disclosure of Non-Cash Financing Activities | Non-Cash Activity | 9 Months Ended Sep 30, 2025 (USD) | 9 Months Ended Sep 30, 2024 (USD) | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Issuance of common stock to acquire digital assets | $145,958,167 | $0 | | Advance payment for acquisition of digital assets | $12,125,500 | $0 | | Repayment of other payable through issuance of common stock | $0 | $1,380,000 | | Repayment of former executives through issuance of common stock | $0 | $594,140 | Notes to Unaudited Consolidated Financial Statements These notes provide comprehensive details supporting financial statements, covering business transformation, accounting policies, digital assets, and legal contingencies NOTE 1 – Nature of Business Next Technology Holding Inc. transitioned to AI-enabled software development and Bitcoin acquisition, terminating PRC operations in Q3 2024 - The Company changed its name to Next Technology Holding Inc. on March 18, 2024, and terminated all operations in the PRC in Q3 2024 to shift software development services to overseas markets and commence a Bitcoin acquisition strategy[32] - Current business strategies include providing AI-enabled software development services (SaaS+AI model) to customers in Hong Kong, Singapore, and other Asian countries, and acquiring and holding Bitcoin[32][33] Bitcoin Holdings Roll-Forward | Item | Balance on Dec 31, 2023 (USD) | Balance on Dec 31, 2024 (USD) | Balance on Sep 30, 2025 (USD) | | :-------------------------- | :---------------------- | :---------------------- | :---------------------- | | Digital asset original cost basis | $24,990,000 | $24,990,000 | $183,073,667 | | Fair value change in digital asset | $10,147,576 | $53,332,430 | $483,730,762 | | Digital asset fair value | $35,137,576 | $78,322,430 | $666,804,429 | | Number of bitcoin held (Shares) | 833 | 833 | 5,833 | NOTE 2 – Summary of Significant Accounting Policies Details accounting principles, including early adoption of ASU 2023-08 for crypto assets at fair value, five-step revenue recognition, and dividend policy - The Company elected early adoption of ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60), in the 2024 fiscal year. Crypto assets (digital assets) are measured at fair value, with unrealized gains and losses recognized as "other income" in net income[51][52] - Revenue from custom software development contracts is recognized over time using the cost-to-cost input method, as the customized work-in-process has no alternative use and the Company has an enforceable right to payment[60][61][62] - On August 8, 2025, the Company approved a dividend policy to distribute no less than 80% of annual profits to shareholders, payable in cash, stock, or other forms. However, no dividends were declared for the three and nine months ended September 30, 2025 and 2024[72] NOTE 3 – Cash and Cash Equivalents Cash and cash equivalents significantly increased, with a notable shift in holdings to bank deposits inside the USA Cash and Cash Equivalents Breakdown | Category | September 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------- | :----------------- | :---------------- | | Bank Deposits- Outside USA | $4,437,518 | $668,387 | | Bank Deposits- Inside USA | $7,920,050 | $0 | | Total | $12,357,568 | $668,387 | NOTE 4 – Digital Assets Digital asset holdings, primarily Bitcoin, substantially increased in value and quantity due to acquisitions and significant fair value gains, held for trading Digital Asset Holdings and Gains | Metric | September 30, 2025 (Shares) | December 31, 2024 (Shares) | | :-------------------------- | :----------------- | :---------------- | | Approximate number of bitcoins held | 5,833 | 833 | | Digital assets carrying value (USD) | $666,804,429 | $78,322,430 | | Fair value gain on digital assets (period/year) (USD) | $430,398,332 | $43,184,854 | - In March 2025, the Company acquired 5,000 BTC for a total consideration of $158,083,667, paid through the issuance of common stock and warrants[88][98][100] - The Company's strategy is to hold digital assets for trading, accumulating Bitcoin when prices are low and selling when prices are high[90] NOTE 5 – Prepayments Prepayments for digital assets were fully utilized, while a new category of 'Advance to suppliers' emerged Prepayments Breakdown | Category | September 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------- | :----------------- | :---------------- | | Prepayment for digital assets | $0 | $12,125,500 | | Advance to suppliers | $306,720 | $0 | | Total | $306,720 | $12,125,500 | NOTE 6 – Accounts Receivable, Net Accounts receivable, net, significantly decreased, reflecting improved collection or reduced outstanding balances from software development fees Accounts Receivable, Net | Metric | September 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------- | :----------------- | :---------------- | | Accounts Receivable | $69,747 | $1,800,000 | | Less: Allowance for credit loss | $0 | $0 | | Accounts Receivable, net | $69,747 | $1,800,000 | NOTE 7 – Investment Investment in an associate company was fully impaired by September 30, 2025, after acquiring a 20% stake in April 2024 Investment in Associate Company | Metric | September 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------- | :----------------- | :---------------- | | Investment in an associate company | $13,396,000 | $13,396,000 | | Impairment of the investment | $(13,396,000) | $(13,396,000) | | Net Investment | $0 | $0 | - In April 2024, 3,940,000 shares were issued for $13,396,000 to acquire 20% of an associate company[103] - The Company has fully provided for impairment losses on this long-term equity investment[104] NOTE 8 – Amount Due to Related Parties Amount due to related parties, specifically director fees payable, decreased, with amounts being interest-free and having no fixed repayment terms Amount Due to Related Parties | Category | September 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------- | :----------------- | :---------------- | | Director fee payable | $264,887 | $972,000 | - The amount due to related parties is interest-free and has no fixed terms of repayment[106] NOTE 9 – Other Payables Total other payables increased, primarily driven by a significant rise in short-term loans, while professional fees decreased Other Payables Breakdown | Category | September 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------- | :----------------- | :---------------- | | Professional fees and operating expenses | $168,007 | $460,985 | | Short term loans | $2,004,042 | $760,352 | | Payroll | $15,271 | $0 | | Total | $2,187,320 | $1,221,337 | - Short-term loans were borrowed from former executives and third parties to cover daily operational expenses, are unsecured, interest-free, and expected to be repaid in cash or common stock[107] NOTE 10 – Shareholders' Equity Significant changes in shareholders' equity include stock issuances for acquisitions and offerings, and a 200-for-1 reverse stock split - The number of issued and outstanding common shares increased from 34,882 as of December 31, 2024, to 2,865,730 as of September 30, 2025, after a 200-for-1 reverse stock split[108][117] - In March 2025, 135,171,078 shares and warrants for 294,117,647 shares were issued for the acquisition of 5,000 Bitcoin, with a total consideration of $158.08 million[114] - A registered direct offering completed on September 3, 2025, raised approximately $8,030,250 in net proceeds for working capital, through the issuance of common stock and pre-funded warrants[116] NOTE 11 – Revenue The company generated service revenue from AI-enabled software development, marking the commencement of revenue generation in this segment Service Revenue | Metric | 3 Months Ended Sep 30, 2025 (USD) | 3 Months Ended Sep 30, 2024 (USD) | 9 Months Ended Sep 30, 2025 (USD) | 9 Months Ended Sep 30, 2024 (USD) | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Service revenue | $1,788,205 | $0 | $1,788,205 | $0 | NOTE 12 – Share-based Compensation Expense Share-based compensation expense significantly increased due to fully vested stock awards granted to advisors for Bitcoin acquisition and other grants Share-based Compensation Expense | Period | Share-based Compensation Expense (USD) | | :-------------------------- | :------------------------------- | | 9 Months Ended Sep 30, 2025 | $44,370,000 | | 9 Months Ended Sep 30, 2024 | $0 | - The Company recognized $42,840,000 in share-based compensation expense for 18,000,000 fully vested stock awards granted to advisors for the 5,000 BTC acquisition on July 8, 2025[123] - An additional $1,527,409 in share-based compensation expense was recognized for 2,000,000 fully vested shares and 50,000,000 shares subject to a four-year service-based vesting period, granted in July and August 2025[124] NOTE 13 – Income Taxes Income tax expense significantly increased due to deferred tax liabilities from Bitcoin fair value gains, impacting the effective tax rate Income Tax Expenses | Period | US Income Tax Expense (USD) | Hongkong and BVI Income Tax Expense (USD) | Total Income Tax Expense (USD) | | :-------------------------- | :-------------------- | :---------------------------------- | :----------------------- | | 3 Months Ended Sep 30, 2025 | $7,303,523 | $0 | $7,303,523 | | 3 Months Ended Sep 30, 2024 | $364,730 | $0 | $364,730 | | 9 Months Ended Sep 30, 2025 | $90,244,207 | $0 | $90,244,207 | | 9 Months Ended Sep 30, 2024 | $2,666,078 | $0 | $2,666,078 | Effective Income Tax Rate Reconciliation | Item | 3 Months Ended Sep 30, 2025 (%) | 3 Months Ended Sep 30, 2024 (%) | 9 Months Ended Sep 30, 2025 (%) | 9 Months Ended Sep 30, 2024 (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | US Statutory income tax rates | 21.0% | 21.0% | 21.0% | 21.0% | | Share-based compensation expense | (97.2)% | 0% | 0% | 0% | | Changes in valuation allowance | 0% | 0% | 2.4% | (5.0)% | | Effective Income Tax Rate | (76.2)% | 21.0% | 23.4% | 16.0% | - Deferred tax liabilities primarily consist of $98,478,710 from the fair value gain of Bitcoin as of September 30, 2025, a significant increase from $8,234,503 at December 31, 2024[128] NOTE 14 – Segment Information The company operates as a single reportable segment, with the CEO allocating resources and assessing performance on a consolidated basis using Net Income - The Company operates as a single reportable segment, consistent with how the Chief Operating Decision Maker (CEO) allocates resources and assesses performance[129] - Net Income is the primary measure of segment performance, defined as revenue less cost of goods sold, operating expenses, other segment items, and income taxes[130] NOTE 15 – Basic and Diluted Net Income Per Share Basic and diluted net income per share changed significantly, reflecting increased net income and weighted-average shares outstanding, impacted by the reverse stock split Net Income Per Share (Basic and Diluted) | Metric | 3 Months Ended Sep 30, 2025 (USD) | 3 Months Ended Sep 30, 2024 (USD) | 9 Months Ended Sep 30, 2025 (USD) | 9 Months Ended Sep 30, 2024 (USD) | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net (loss) income | $(16,892,250) | $1,378,372 | $295,122,702 | $13,997,658 | | Weighted-average common shares outstanding - basic and diluted (Shares) | 2,461,018 | 34,882 | 1,717,348 | 27,021 | | (Loss) earnings per share, basic and diluted (USD/Share) | $(6.86) | $39.51 | $171.85 | $518.03 | NOTE 16 – Commitments and Contingencies The company is involved in ongoing legal proceedings, defending against unauthorized individuals attempting to interfere with operations and control - Since September 2023, unauthorized individuals (Zheng Dai and Pijun Liu) have repeatedly attempted to illegally interfere with the Company's operations through false documents and multiple lawsuits[135] - The Chancery Court of Wyoming issued a preliminary injunction on January 5, 2024, explicitly prohibiting these individuals from acting on behalf of the Company, including contacting regulatory authorities, issuing shares, or disseminating false statements[135] - The Company is actively defending against additional lawsuits, including claims for corporate records inspection and alleged loan contract disputes, and firmly believes the opposing party's claims lack factual or legal basis[136] NOTE 17 – Subsequent Events No other material events occurred after September 30, 2025, requiring disclosure in this report NOTE 18 – Discontinued Operations The company dissolved its PRC subsidiary in July 2024, which qualified as a discontinued operation, leading to retrospective adjustments - The Company dissolved its subsidiary, WeTrade Technology (Shanghai) Co., Ltd. in the PRC in July 2024, terminating all operations in the region[139] - This transaction qualified as a discontinued operation under ASC 205-20, leading to retrospective adjustments of prior year comparative consolidated financial statements[140] Disposal of Discontinued Operation | Item | July 18, 2024 (USD) | | :-------------------------------- | :------------ | | Total consideration, net of transaction costs | $0 | | Total net assets value of discontinued business | $(6,296) | | Disposal of discontinued operation | $6,296 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, strategic shift, performance drivers, liquidity, and critical accounting policies, highlighting digital asset impact Business The company transformed its business, focusing on AI-enabled software development services and acquiring/holding Bitcoin after terminating PRC operations - Next Technology Holding Inc. terminated all operations in the PRC in Q3 2024 to shift software development services to overseas markets and commenced a new business strategy of acquiring and holding Bitcoin[143] - The company provides AI-enabled software development services under a SaaS+AI model, focusing on customized projects for industries like retail, e-commerce, tourism, healthcare, and industrial sectors in Hong Kong, Singapore, and other Asian markets[144][145] - The Bitcoin acquisition strategy involves using liquid assets, issuing debt or equity, and potentially selling Bitcoin for treasury management or tax benefits, viewing Bitcoin as an opportunity for value appreciation and a long-term inflation hedge[148][149][150][151] Results of Operations Net income significantly increased, driven by fair value gains from digital assets and service revenue, partially offset by higher share-based compensation and income tax Results of Operations (9 Months Ended Sep 30) | Metric | 2025 (USD) | 2024 (USD) | Change (USD) | Percentage Change (%) | | :-------------------------- | :----------- | :----------- | :----------- | :------------------ | | Service revenue | $1,788,205 | $0 | +$1,788,205 | N/A | | Gross profit | $806,849 | $0 | +$806,849 | N/A | | General and administrative expense | $(1,194,795) | $(1,242,128) | +$47,333 | -3.8% | | Selling expense | $(276,068) | $0 | $(276,068) | N/A | | Share-based compensation expense | $(44,367,409) | $0 | $(44,367,409) | N/A | | Other income | $430,398,332 | $17,899,568 | +$412,498,764 | +2304.5% | | Income tax expense | $(90,244,207) | $(2,666,078) | $(87,578,129) | +3284.9% | | Net income | $295,122,702 | $13,991,362 | +$281,131,340 | +2009.3% | - The increase in selling expenses to $276,068 was primarily due to new commercial customer agreements totaling $12.59 million in contract value, with $5.09 million already collected[159] - The significant increase in net income was mainly due to the fair value gain from digital assets and gross profit from service revenue, partly offset by increased share-based compensation and income tax expenses[166][167] Liquidity and Capital Resources The company has sufficient cash and digital assets for anticipated needs, with positive cash flow from operating and financing activities - As of September 30, 2025, the company had $12.4 million in cash on hand[168] - Net cash flow from operating activities was $3.7 million for the nine months ended September 30, 2025, compared to nil in the prior year[169] - Net cash flow from financing activities was $8.03 million for the nine months ended September 30, 2025, primarily from a registered direct offering completed on September 3, 2025, designated for working capital[170][171] Critical Accounting Policies Financial statements adhere to U.S. GAAP, requiring management estimates and assumptions, with proactive monthly reviews to manage deviations - Financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions that affect reported amounts[174] - The company uses historical data for forecasting and conducts monthly reviews to proactively manage business and address deviations from projections[174] Recent Accounting Pronouncements The company reviewed recent accounting pronouncements and anticipates no material impact on its financial statements - The Company does not believe any recently issued, but not yet effective, accounting pronouncements will have a material impact on its financial statements[175] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a "smaller reporting company" under Regulation S-K, the company is exempt from providing detailed quantitative and qualitative disclosures about market risk - The Company is a "smaller reporting company" and is not required to provide detailed quantitative and qualitative disclosures about market risk[176] Item 4. Controls and Procedures Disclosure controls and procedures were ineffective due to material weaknesses, including limited resources and lack of segregation of duties, with remediation planned - As of September 30, 2025, the Company's management concluded that its disclosure controls and procedures were not effective[178][179] - Material weaknesses identified include limited internal resources, lack of multiple levels of transaction review, lack of a majority of outside directors on the board, management dominated by two individuals, ineffective internal audit functions, and lack of segregation of duties within accounting functions[179][180] - The company plans to implement procedures to assure segregation of conflicting duties and remediate identified significant deficiencies with proper funding[181] PART II – Other Information Item 1. Legal Proceedings Ongoing legal proceedings involve defending against unauthorized individuals attempting to interfere with operations, with a preliminary injunction issued against them - Since mid-September 2023, unauthorized individuals, including Zheng Dai and Pijun Liu, have falsely represented the Company and initiated multiple lawsuits to gain control[185] - The Chancery Court of Wyoming issued a preliminary injunction on January 5, 2024, specifically restraining Mr. Zheng Dai and his affiliates from acting on behalf of the Company, contacting regulatory authorities, or issuing shares[189][192] - The Company is actively defending against ongoing lawsuits, including a pending motion for summary judgment regarding corporate records inspection and a motion to dismiss claims for breach of alleged loan contracts[194][195][196][197] Item 1A. Risk Factors As a "smaller reporting company," the registrant is not required to provide specific disclosures about risk factors in this report - The Company is a "smaller reporting company" and is not required to provide detailed risk factor disclosures[199] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities and use of proceeds to report[200] Item 3. Defaults Upon Senior Securities No senior securities were issued and outstanding during the nine months ended September 30, 2025 - No senior securities were issued and outstanding during the nine months ended September 30, 2025[201] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the Company[202] Item 5. Other Information There is no other information to report under this item - No other information to report[203] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and the financial statements formatted in XBRL - Exhibits include certifications of Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1, 32.2) and financial statements formatted in XBRL (101)[203] Signatures Official Signatures This section contains the official signatures of the Chief Executive Officer, Wei Hong Liu, and Chief Financial Officer, Eve Chan, certifying the submission of the Form 10-Q report - The report is duly signed on behalf of NEXT TECHNOLOGY HOLDING INC. by Wei Hong Liu, Chief Executive Officer, and Eve Chan, Chief Financial Officer, dated October 8, 2025[206][207][208]