Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See "Cautionary Note Regarding Forward-Looking Statements." Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors discussed elsewhere in this report.

Business

Next Technology Holding Inc. was incorporated in the State of Wyoming on March 28, 2019, under the name "WeTrade Group, Inc." and served as a holding company with substantially all operations conducted through subsidiaries in the PRC, engaging in the business of providing technical services and solutions to corporate and individual users. On March 18, 2024, the Company changed its name to Next Technology Holding Inc.. In the third quarter of 2024, the Company terminated all operations in the PRC to shift its software development services to overseas markets and commenced another business strategy of acquiring and holding bitcoin. We currently pursue two corporate strategies. One business strategy is to continue providing software development services, and the other strategy is to acquire and hold bitcoin.

Software development

We provide AI-enabled software development services to our customers, which include developing, designing, and implementing various SAAS software solutions for businesses of all types, including industrial and other businesses.

Our AI-enabled software development services are primarily provided in Hong Kong, Singapore, and other Asian markets under a SaaS+AI model focused on customized development projects. Its platforms integrate cloud computing, big data, and AI algorithms to support industries including retail, e-commerce, tourism, healthcare, and industrial sectors. Current customers include property management enterprises, cryptocurrency mining operators, and energy businesses. We are actively expanding into sectors, including new media, financial services, transportation, education, and healthcare.

We are a provider of an intelligent cloud collaboration platform and integrated SaaS solutions designed to enhance productivity, derive actionable insights, and automate complex processes for our customers.

Bitcoin Acquisition Strategy

Our bitcoin acquisition strategy generally involves acquiring bitcoin with our liquid assets that exceed working capital requirements, and from time to time, subject to market conditions, issuing debt or equity securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase bitcoin.

We view our bitcoin holdings as being held for trading and expect to continue to accumulate bitcoin. We have not set any specific target for the amount of bitcoin we seek to hold, and we will continue to monitor market conditions in determining whether to engage in additional financing to purchase additional bitcoin.

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.

Our Employees

As of the date hereof, we have 21 full-time employees. The following table sets forth the number of our employees by function:

Functional Area		Number of Employees
Sales			7
Technology			9
General and Administrative			5
Total			21

Our employees have not formed any employee union or association. We believe we maintain a good working relationship with our employees and have not experienced any difficulty in recruiting staff for our operations.

Results of Operations

Results of Operations for the Six-months Period Ended September 30, 2025 and 2024

The following tables provide a comparison of a summary of our results of operations for the nine months ended September 30, 2025 and 2024.

		For the period ended September 30, 2025				For the period ended September 30, 2024
Revenue:
Service revenue		$	1,788,205			$	-
Cost of Revenue			(981,356	)			-
Gross profit			806,849				-
Operating expenses
General and administrative expense			(1,194,795	)			(1,242,128	)
Selling expense			(276,068	)			-
Share-based compensation expense			(44,367,409	)			-
Total operating expenses			(45,838,272	)			(1,242,128	)
Loss from operations			(45,031,423	)			(1,242,128	)
Other income			430,398,332				17,899,568
Income before income tax			385,366,909				16,657,440
Income tax expense			(90,244,207	)			(2,666,078	)
Net income		$	295,122,702			$	13,991,362

Revenue from Operations

For the nine-month period ended September 30, 2025 and 2024, total revenue were $1,788,205 and $nil, respectively.

Between June 2025 and August 2025, the Company entered into three commercial customer agreements (each, a "Service Agreement") with customers in the hotel management, smart water-system management, and crypto mining industries. Under the Agreements, the Company agrees to provide AI-enabled monitoring and management systems, and relevant training and support services tailored to each customer's specific business needs, in exchange for service fees.

The Service Agreements provide for an aggregate committed contract value of approximately $12.59 million, consisting of recurring subscription and service fees to be paid by installments over the contract term. As of September 30, 2025, the Company has received approximately $5.09 million in service fees under the Service Agreements. In compliance with ASC 606, the Company recognized revenue of $1.79 million.

General and Administrative Expenses

For the nine-month period ended September 30, 2025 and 2024, general and administrative expenses were $1,194,795 and $1,242,128, respectively. The decrease of approximately $47,000, or 3.8% for the nine months ended September 30, 2025, compared to the same period in 2024, was primarily due to higher professional and legal fees incurred in the prior year period related to a specific legal matter that did not recur to the same extent in the current period. Excluding the impact of these non-recurring legal costs, general and administrative expenses remained relatively consistent year-over-year.

Selling Expense

For the nine-month period ended September 30, 2025 and 2024, selling expenses were $276,068 and nil, respectively. The increase in selling expenses was primarily attributable to the new contracts signed during the year, which totaled $12.59 million in contract value, with $5.09 million already collected in repayments.

Share-based Compensation Expense

For the nine months ended September 30, 2025 and 2024, we recognized total share-based compensation expense of US$44.37 million and nil, respectively.

On April 24, 2025, our board of directors approved the 2025 Equity Incentive Plan, which was subsequently approved by our shareholders at the annual meeting held on June 20, 2025. On July 3, 2025, we registered 80 million shares of common stock with the Securities and Exchange Commission for issuance under the 2025 Equity Incentive Plan. The registration statement became effective upon filing.

These shares are reserved for future issuance to our employees, directors, consultants, and other eligible service providers under the terms of the 2025 Equity Incentive Plan. As of September 30, 2025, we have granted awards representing 70 million shares of common stock under the 2025 Equity Incentive Plan.

On July 8, 2025, we granted 18,000,000 fully vested and immediately exercisable stock awards to certain advisors in recognition of their significant contributions to our acquisition of 5,000 BTC. Consistent with our accounting policy under ASC 718 for awards with no future service requirements, we recognized the total stock-based share-based compensation expense of $42,840,000 in full upon the grant date.

In July 2025, we purchased advisory services and granted 2,000,000 fully vested and immediately exercisable shares of common stock as compensation. In August 2025, we granted an additional 50,000,000 shares of common stock, which are subject to a four-year service-based vesting period. In accordance with ASC 718, we are recognizing the total share-based compensation expense over the respective service periods. For the nine months ended September 30, 2025, we recognized $1,527,409 of share-based compensation expense related to these awards.

All awards are subject to our Clawback Policy, which allows us to recover shares in cases of financial restatements or misconduct.

Other Income

For the nine-month period ended September 30, 2025 and 2024, other income was $430,398,332 and $17,899,568, respectively, which was mainly due to fair value gain from digital assets during the period.

Net Income

As a result of the factors described above, there was a net income of $295.1 million and $14.0 million for the period ended September 30, 2025 and 2024, respectively. The increase in net income is mainly due to fair value gain of $430.40 million from digital assets and gross profit increased of $0.81 million during the period, partly offset by (1) the increase of share-based compensation expense of $44.37 million, and (ii) the increase of income tax expense of $87.58 million.

Liquidity and Capital Resources

As of September 30, 2025, we had cash on hand of $12.4 million. To date, we have financed our operations primarily through net cash flow from operations and the financing ability of existing shareholders. We believe that our current levels of cash and digital assets from operations will be sufficient to meet our anticipated cash needs for our operations and expansion plans for at least the next 12 months.

Operating activities

For the nine-month period ended September 30, 2025 and 2024, the operating cash flow is $3.7 million and nil, respectively. We borrowed funds from former executives and third parties to cover daily operational expenses.

Financing activities

For the nine-month period ended September 30, 2025 and 2024, the financing cash flow is $8.03 million and nil, respectively.

On September 2, 2025, we entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain institutional investors. Pursuant to the Purchase Agreement, we completed a registered direct offering on September 3, 2025 and issued: (1) 25,313,256 shares of its common stock, no par value, at a purchase price of $0.15 per share; and (2) pre-funded warrants to purchase up to 34,686,744 shares of common stock at a purchase price of $0.149 per warrant. Net proceeds from the offering amounted to approximately $8,030,250 after deducting placement agent fees and other offering expenses. These proceeds are designated exclusively for working capital purposes.

Inflation

Inflation does not materially affect our business or the results of our operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies

We prepare our financial statements in accordance with generally accepted accounting principles of the United States ("GAAP"). GAAP represents a comprehensive set of accounting and disclosure rules and requirements. The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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. Our actual results could differ from those estimates. We use historical data to assist in the forecast of our future results. Deviations from our projections are addressed when our financials are reviewed on a monthly basis. This allows us to be proactive in our approach to managing our business. It also allows us to rely on proven data rather than having to make assumptions regarding our estimates.

Recent Accounting Pronouncements

We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the Company financial statements.