WETG Wetrade Group Inc. - 10-K

ITEM 7. 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 annual 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 annual report .

Overview

Next Technology Holding Inc was incorporated in the State of Wyoming on March 28, 2019. 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 potential customers in USA, Hong Kong, Singapore, Malaysia, Japan and other Asian markets, which included developing, designing and implementing various SaaS software solutions for business of all types, including industrials and other businesses.

The analytics market is highly competitive and subject to rapidly changing technology and market conditions. Our ability to compete successfully depends on a number of factors within and outside of our control. Some of these factors include software quality, performance and reliability; the quality of our service and support teams; marketing and prospecting effectiveness; the ability to incorporate artificial intelligence and other technically advanced features; and our ability to differentiate our products. Failure to perform in these or other areas may reduce the demand for our offerings and materially adversely affect our revenue from both existing and prospective customers.

Bitcoin Acquisition Strategy

We hold substantially all of our Bitcoin in custody accounts at Japanese based, institutional-grade custodians that have demonstrated records of regulatory compliance and information security. 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.

Bitcoin Industry and Market

Bitcoin is a digital asset that is issued by and transmitted through an open-source protocol, known as the Bitcoin protocol, collectively maintained by a peer-to-peer network of decentralized user nodes. This network hosts a public transaction ledger, known as the Bitcoin blockchain, on which Bitcoin holdings and all validated transactions that have ever taken place on the Bitcoin network are recorded. Balances of Bitcoin are stored in individual “wallet” functions, which associate network public addresses with one or more “private keys” that control the transfer of Bitcoin. The Bitcoin blockchain can be updated without any single entity owning or operating the network.

Creation of New Bitcoin and Limits on Supply

New Bitcoin is created and allocated by the Bitcoin protocol through a “mining” process that rewards users that validate transactions in the Bitcoin blockchain. Validated transactions are added in “blocks” approximately every 10 minutes. The mining process serves to validate transactions and secure the Bitcoin network. Mining is a competitive and costly operation that requires a large amount of computational power to solve complex mathematical algorithms. This expenditure of computing power is known as “proof of work.” To incentivize miners to incur the costs of mining Bitcoin, the Bitcoin protocol rewards miners that successfully validate a block of transactions with newly generated Bitcoin.

The Bitcoin protocol limits the total number of Bitcoin that can be generated over time to 21 million. The current reward for miners that successfully validate a block of transactions is 3.125 Bitcoin per mined block. Based on current mining rates, we anticipate the reward will decrease by half to 1.5625 Bitcoin per mined block sometime in 2028. This decrease in mining reward is referred to as a Bitcoin halving, and it occurs after every 210,000 blocks are mined, which has historically occurred approximately every four years.

Modifications to the Bitcoin Protocol

Bitcoin is an open-source network that has no central authority, so no one person can unilaterally make changes to the software that runs the network. However, there is a core group of developers that maintain the code for the Bitcoin protocol, and they can propose changes to the source code and release periodic updates and other changes. Unlike most software that has a central entity that can push updates to users, Bitcoin is a peer-to-peer network in which individual network participants, called nodes, decide whether to upgrade the software and accept the new changes. As a practical matter, a modification becomes part of the Bitcoin protocol only if the proposed changes are accepted by participants collectively having the most processing power, known as hash rate, on the network. If a certain percentage of the nodes reject the changes, then a “fork” takes place and participants can choose the version of the software they want to run.

Bitcoin Industry Participants

The primary Bitcoin industry participants are miners, investors and traders, digital asset exchanges and service providers, including custodians, brokers, payment processors, wallet providers and financial institutions.

Miners. Miners range from Bitcoin enthusiasts to professional mining operations that design and build dedicated mining machines and data centers, including mining pools, which are groups of miners that act cohesively and combine their processing power to mine Bitcoin blocks.

Investors and Traders. Bitcoin investors and traders include individuals and institutional investors who, directly or indirectly, purchase, hold, and sell Bitcoin or Bitcoin-based derivatives. On January 10, 2024, the Securities and Exchange Commission (“SEC”) issued an order approving several applications for the listing and trading of shares of spot Bitcoin exchange-traded products (“ETPs”) on U.S. national securities exchanges. While the SEC had previously approved exchange-traded funds where the underlying assets were Bitcoin futures contracts, this order represents the first time the SEC has approved the listing and trading of ETPs that acquire, hold and sell Bitcoin directly. ETPs can be bought and sold on a stock exchange like traditional stocks, and provide investors with another means of gaining economic exposure to Bitcoin through traditional brokerage accounts.

Digital Asset Exchanges. Digital asset exchanges provide trading venues for purchases and sales of Bitcoin in exchange for fiat or other digital assets. Bitcoin can be exchanged for fiat currencies, such as the U.S. dollar, at rates of exchange determined by market forces on Bitcoin trading platforms, which are not regulated in the same manner as traditional securities exchanges. In addition to these platforms, over-the-counter markets and derivatives markets for Bitcoin also exist. The value of Bitcoin within the market is determined, in part, by the supply of and demand for Bitcoin in the global Bitcoin market, market expectations for the adoption of Bitcoin as a store of value, the number of merchants that accept Bitcoin as a form of payment, and the volume of peer-to-peer transactions, among other factors. For a discussion of risks associated with digital asset exchanges, see “Item 1A. Risk Factors—Risks Related to Our Bitcoin Acquisition Strategy and Holdings—Due to the unregulated nature and lack of transparency surrounding the operations of many Bitcoin trading venues, Bitcoin trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in Bitcoin trading venues and adversely affect the value of our Bitcoin.”

Service providers. Service providers offer a multitude of services to other participants in the Bitcoin industry, including custodial and trade execution services, commercial and retail payment processing, loans secured by Bitcoin collateral, and financial advisory services. If adoption of the Bitcoin network continues to materially increase, we anticipate that service providers may expand the currently available range of services and that additional parties will enter the service sector for the Bitcoin network.

Change of Officer and Director

On December 10, 2025, Mr. Lichen Dong tendered his resignation as a Chairman of the Board, the Nominating Committee, Compensation Committee and Audit Committee of the Company, effective December 10, 2025, which were previously disclosed in a Current Report on Form 8-K filed on December 12, 2025.

As of the end of 2025:

1. Mr. Jianbo Sun is the temporary Chairman of the Board after Mr Lichen Dong resigned on December 10, 2025.

2. The Audit Committee of the Company is composed of all three independent directors (Tian Yang, Jianbo Sun, and Qi Wang) as members, and Tian Yang is the Chair of the Audit Committee. Mr. Lichen Dong resigned as a member of our Board and any committee thereof, effective December 10, 2025.

3. The Nominating Committee of the Company is composed of all three independent directors (Tian Yang, Jianbo Sun, and Qi Wang) as members, and Qi Wang is the Chair of the Nominating Committee. Mr. Lichen Dong resigned as a member of our Board and any committee thereof, effective December 10, 2025.

4. The Compensation Committee of the Company is composed of all three independent directors (Tian Yang, Jianbo Sun, and Qi Wang) as members, and Jianbo Sun is the Chair of the Compensation Committee. Mr. Lichen Dong resigned as a member of our Board and any committee thereof, effective December 10, 2025.

Each of Tian Yang, Jianbo Sun, and Qi Wang qualifies as an independent director under rules of The Nasdaq Stock Market, and does not have a family relationship with any director or executive officer of the Company, and has not been involved in any transaction with the Company during the past two years that would require disclosure under Item 404(a) of Regulation S-K.

On March 9, 2026, we held our annual meeting of stockholders (the “Annual Meeting”). At the Annual Meeting, the stockholders of us elected Wenbo Li, Guang Cui, Gwanggeun Jo, and Hsiu Wu (collectively, the “Directors”) to serve on the Board of Directors (the “Board”) of us until our next annual meeting of stockholders and until their respective successors have been duly elected and qualified, or until their earlier resignation or removal. Each of the Directors is an independent director as defined under Nasdaq listing standards and SEC rules.

Result of Operations

The following tables provide a comparison of a summary of our results of operations for the fiscal years ended December 31, 2025 and 2024.

For the Years Ended December 31, 2025 and 2024

For the years ended

December 31,

Change

Change

Service revenue

Cost of revenue

Gross Profit

Operating expenses

General and administrative expenses

Selling and marketing expenses

Research and development expenses

Total operating expenses

Loss from operations

Impairment of long-term investment

Other income

Income before income tax expenses

Income tax expenses

Net income from continuing operation

In July 2024, we dissolved our subsidiary, WeTrade Technology (Shanghai) Co., Ltd. in the PRC, which qualified as a discontinuing operation under ASC 205-20. We retrospectively adjusted the above comparative statements of change in stockholders’ equity for the year ended December 31, 2024.

On September 16, 2025, we effected a 200-for-1 reverse stock split of its common stock, resulting in the consolidation of every two hundred issued and outstanding shares into one share. The reverse stock split reduced the number of outstanding shares from approximately 566,265,135 to approximately 2,862,556.

Revenue from Operations

Revenue is primarily derived from AI software development services and SaaS software solutions provided to industrial and other business customers.

For the years ended December 31, 2025 and 2024, we generated total revenue of $11.61million and $1.80 million, respectively. The significant increase in revenue for the year ended December 31, 2025 compared to 2024 was primarily driven by the execution of four commercial customer agreements during 2025 with customers operating in the hotel management, smart water-system management, and cryptocurrency mining industries.

Under these agreements, we provide AI-enabled monitoring and management systems built on our proprietary technology platform, along with related customization, implementation, training, and ongoing support services tailored to each customer’s specific operational requirements. These arrangements generally include recurring subscription and service fees payable in installments over the contract term.

The aggregate committed contract value of these four agreements is approximately $12.59 million. Revenue under these contracts is recognized over time as we perform services and deliver customized solutions. As a result, revenue growth in 2025 reflects both new contract execution and progress made toward completion of performance obligations during the year.

Cost of revenue

Cost of revenue primarily consists of personnel-related expenses, including salaries, benefits, and share-based compensation for employees involved in system development and implementation, as well as costs associated with outsourced development personnel and third-party vendors. These expenses also include other direct system development and delivery costs.

For the fiscal year ended December 31, 2025, cost of revenue was $9.86 million, compared to $0.73 million for the fiscal year ended December 31, 2024. The notable rise of $9.13 million was mainly driven by increased utilization of external vendors and outsourced development resources, as well as higher personnel expenses resulting from an increase in headcount to support revenue growth.

Gross Profit

Our gross profit increased by $0.69 million, or 64.2%, from $1.07 million for the year ended December 31, 2024 to $1.76 million for the year ended December 31, 2025. The gross margin decreased from 59.4% for the year ended December 31,2024 to 15.1% for the year ended December 31, 2025. The decrease in gross margin was primarily due to a shift in our project mix toward more complex and resource-intensive engagements during the year. Several key projects required accelerated delivery schedules and specialized technical capabilities that were not available internally within the required timeframe. As a result, we engaged certain third-party vendors with the necessary expertise, which increased our cost of revenue. These incremental costs were specific to the projects undertaken during the year and are not expected to represent a structural change in our long-term cost profile.

Selling and Marketing Expenses

Selling and marketing expenses primarily include: (i) advertising and promotion expenses, (ii) compensation and benefits for sales personnel, and (iii) travel and other routine office expense. All expenses are recognized in the period in which the related services occur or the benefits are received.

For the fiscal year ended December 31, 2025, selling and marketing expenses was $0.75 million, compared to nil for the fiscal year ended December 31, 2024. The increase was primarily attributable to:(i) higher payroll and bonus expenses, as we recorded performance-based bonuses for sales management personnel in line with the significant increase in sales revenue and cash collections during the year; and (ii) increased advertising and promotional expenses, reflecting expanded marketing activities to support revenue growth and customer acquisition.

We believe that the increase in selling and marketing expenses is consistent with our business expansion and revenue growth strategy. The performance-based compensation structure aligns sales incentives with operating results and cash recovery, supporting sustainable growth.

Research and Development Expenses

Research and development expenses primarily consist of: (i) fees for outsourced software development services, (ii) research activities in new technology domains, and (iii) personnel-related costs for employees, including salaries, bonus, and share-based compensation.

For the fiscal year ended December 31, 2025, research and development expenses was $14.48 million, compared to nil for the fiscal year ended December 31, 2024. The notable increase of $14.48 million is primarily attributed to: (i) share-based compensation expenses of $12.89 million, reflecting equity incentives granted to attract and retain key technical personnel; and (ii) Professional service fees of $1.57 million, mainly related to outsourced software development and technical consulting services.

The significant increase in R&D expenses reflects our strategic commitment to expanding its research capabilities and investing in new technology domains. We believe that these investments are critical to enhancing product innovation, strengthening long-term competitiveness, and supporting sustainable growth. While such expenditures increased operating expenses in the current period, they are expected to generate long-term value by accelerating technology development and market expansion.

General and Administrative Expenses

General and administrative expenses also consisted of (i) salary, welfare and share-based compensation for general and administrative personnel, (ii) office expense, and (iii) professional service fees and others.

For the fiscal year ended December 31, 2025, general and administrative expenses was $66.72 million, compared to $1.09 million for the fiscal year ended December 31, 2024. The significant increase was primarily attributable to:

a substantial increase in share-based compensation expenses, resulting from the grant of equity awards to certain individuals who made significant contributions to the Company’s survival, strategic transformation, and long-term development. The recognition of these equity awards led to a material increase in non-cash compensation expenses during the fiscal year ended December 31, 2025; and;

Higher professional service fees, as we engaged professionals to support key strategic initiatives and corporate development activities, including strategic advisory, legal, and consulting services.

We believe that these expenditures were necessary to strengthen our governance structure, enhance capital market readiness, and support its long-term strategic objectives. While such expenses materially increased operating costs for the year ended December 31, 2025, they reflect the Company’s continued investment in organizational capability and capital formation efforts.

Impairment of long-term investment

In April 2024, there were 3,940,000 shares issued with the total amount of $13.40 million for the acquisition of 20% of an associate company.

We have conducted an impairment test on this long-term equity investment in accordance with ASC820 and has fully provided for impairment losses for the year ended December 31, 2024.

Other income, net

For the fiscal year ended December 31, 2025 and 2024, other income were $279.75 million and $43.19 million, respectively. The significant increase in other income for the year ended December 31, 2025 was primarily attributable to the appreciation in the fair value of our Bitcoin holdings, which resulted in higher unrealized gains recognized during the period. Fluctuations in Bitcoin market prices materially affect our reported results of operations, and we expect such volatility to continue to impact our financial performance in future periods.

Income tax expenses

For the fiscal years ended December 31, 2025 and 2024, we recorded income tax expenses of $56.38 million and $8.23 million, respectively. The increase in income tax expenses was primarily due to the significant increase in our taxable income, mainly driven by higher other income recognized from Bitcoin value appreciation in 2025. Our income tax expenses may continue to fluctuate in future periods depending on changes in our profitability, the fair value movements of digital assets, and applicable tax regulations.

Net income from continuing operation

As a result of the factors described above, for the fiscal years ended December 31, 2025 and 2024, there was a net income from continuing operation of $143.16 million and $21.54 million, respectively. The increase is mainly due to gain in fair value in digital assets and offset by increase in income tax expenses and impairment loss of long-term investment.

The following chart provides a summary of our balance sheets as of December 31, 2025 and 2024, respectively. It should be read in conjunction with the financial statements, and notes thereto.

Balance Sheets Analysis

December 31,

December 31,

Cash and cash equivalents

Digital assets

Accounts receivable, net

Prepayments and prepaid expenses

Total assets

Accounts payable

Amount due to related parties

Income tax payable

Accrued expense and other payables

Deferred tax liabilities

Total liabilities

Total stockholders’ equity

In July 2024, we dissolved its subsidiary, WeTrade Technology (Shanghai) Co., Ltd. in the PRC, which qualified as a discontinued operation under ASC 205-20. We retrospectively adjusted the above comparative consolidated balance sheets in prior year.

On September 16, 2025, we effected a 200-for-1 reverse stock split of its common stock, resulting in the consolidation of every two hundred issued and outstanding shares into one share. The reverse stock split reduced the number of outstanding shares from approximately 566,265,135 to approximately 2,862,556.

As of December 31, 2025, we had total assets of $524.13 million, which mainly consisted of $5.62 million in cash and cash equivalents, $516.15 million in digital assets, and $2.35 million in accounts receivable, net and prepayments and prepaid expenses; we had total liabilities of $68.55 million which consisted of $0.75 million in accounts payable, $0.66 million in amount due to related parties, $0.13 million in income tax payable, $2.39 million in accrued expense and other payables and $64.62 million in deferred tax liabilities; we had total stockholders’ equity of $455.58 million.

As of December 31, 2024, we had total assets of $92.92 million, which mainly consisted of $0.67 million in cash, $78.32 million in digital assets, and $13.93 million in other receivables and prepayments and prepaid expenses; we had total liabilities of $11.29 million which consisted of $0.73 million in accounts payable, $0.97 million in amount due to related parties, $0.13 million in income tax payable, $1.22 million in accrued expense and other payables and $8.24 million in deferred tax liabilities; we had total stockholders’ equity of $81.63 million.

Liquidity and Capital Resources

Our primary sources of liquidity have been through the operation of our business and financing activities, which have historically been sufficient to meet our working capital, our business needs, as well as our capital expenditure requirements. As of December 31, 2025, we had cash and cash equivalents of $5.62 million. As of and for the year ended December 31, 2025, we had a positive working capital of $520.20 million, net cash used in operating activities of $3.07 million, and a net income of $143.16 million.

We believe that our existing cash and cash equivalents, cash flow we expect to generate from future operating activities, net proceeds we expect to receive from the issuance of ordinary shares, capital allocation strategy, will be sufficient to meet our anticipated working capital requirements, and capital expenditures in the ordinary course of business for the next 12 months.

We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities for investments, acquisitions, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain additional credit facilities. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

Cash Flows Analysis

The following table sets forth a summary of our cash flows for the years indicated:

For the years ended

December 31,

Net cash flows used in continued operating activities:

Net cash flows used in discontinued operating activities:

Net cash flows used in operating activities:

Net cash flow used in continued investing activities:

Net cash flow used in discontinued investing activities:

Net cash flows used in investing activities:

Net cash provided by continued financing activities

Net cash provided by discontinued financing activities:

Net cash provided by financing activities:

Effect of exchange rate changes on cash

Change in Cash and Cash Equivalents:

Cash and Cash Equivalents, Beginning of Year

Cash and Cash Equivalents, End of Year

In July 2024, we dissolved its subsidiary, WeTrade Technology (Shanghai) Co., Ltd. in the PRC, which qualified as a discontinued operation under ASC 205-20. We retrospectively adjusted the above comparative consolidated cash flows in prior year.

Operating activities

For the year ended December 31, 2025, net cash flows used in continuing operating activities amounted to $3.07 million. This resulted from net income from continuing operations of $143.16 million, adjusted for non-cash and working capital items. Positive adjustments to operating cash flows included $76.80 million of share-based compensation, $56.38 million of deferred tax expense, and a $0.88 million decrease in liabilities. These were partially offset by a $279.75 million non-cash fair value gain on digital assets and a $0.55 million increase in assets.

Net cash flows used in continued operating activities was nil in 2024, primarily due to net income from continuing operation of $21.54 million, adjusted for (i) fair value gain on digital asset of $43.18 million, (ii) impairment of long-term investment of $13.40 million, (iii) deferred tax expense of $8.23 million, and (iv) an increase in assets of $0.8 million and an decrease in liabilities of $0.81 million.

Investing activities

Our continuing cash flow used in investing activities was nil for the fiscal year ended December 31, 2025.

Our continuing cash flow used in investing activities was nil for the fiscal year ended December 31, 2024.

Financing activities

Cash generated from financing activities was $8,030,250 for the year ended December 31, 2025.

Cash generated from financing activities was nil for the year ended December 31, 2024.

Capital Expenditures

There were no capital expenditures during the fiscal years ended December 31, 2025 and 2024. However, future capital expenditures will be made to support the expected growth of the business.

Commitments

As of December 31, 2025 and 2024, we did not have any commitments.

Capital commitments

As of December 31, 2025 and 2024, we did not have any capital commitments.

Inflation

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

Post-Balance Sheet Events

On March 9, 2026, we held our annual meeting of stockholders (the “Annual Meeting”). At the Annual Meeting, the stockholders of us elected Wenbo Li, Guang Cui, Gwanggeun Jo, and Hsiu Wu (collectively, the “Directors”) to serve on the Board of Directors (the “Board”) of us until our next annual meeting of stockholders and until their respective successors have been duly elected and qualified, or until their earlier resignation or removal. Each of the Directors is an independent director as defined under Nasdaq listing standards and SEC rules.

On March 25, 2026, the Company entered into a registered direct offering agreement with twenty investors, pursuant to which the Company agreed to issue and sell 71,381,818 shares of its common stock at a purchase price of USD 1.10 per share. In addition, the Company agreed to issue to the investors up to 71,381,818 pre-funded warrants, each at a purchase price of USD 1.099. The total gross proceeds from the offering approximately was US$157 million. The transaction was completed on March 26, 2026.

As of March 31, 2026, there were 76,264,374 shares of common stock outstanding.

Critical Accounting Policies

We prepare our financial statements in accordance with generally accepted accounting principles of the United States (“U.S. 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 financial statements 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.

Revenue recognition

We apply ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), for all periods presented. Under ASC 606, revenue is recognized when we transfer promised services to a customer in an amount that reflects the consideration to which we expect to be entitled in exchange for those services.

ASC 606 requires us to apply a five-step model to recognize revenue: (i) identify the contract with a customer; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue as the performance obligations are satisfied.

We report all of our revenues on a gross basis. This determination is based on our assessment that it is the principal in our revenue arrangements. We control delivery of customized development services through its proprietary platform, is primarily responsible for fulfillment, sets pricing, and bears credit risk.

We provide development, design, and implementation services built on its proprietary pre-existing technology platform. The platform license and related development activities are highly interdependent and are accounted for as a single performance obligation. Revenue is recognized over time because the services create a customized asset with no alternative use and we have an enforceable right to payment for performance completed to date. Progress is measured using the cost-to-cost input method (actual costs incurred relative to total estimated costs). Contracts do not contain return or refund provisions. We provide assurance-type warranties only; related costs are recorded in cost of revenue and have not been material historically.

We provide stand-alone maintenance and support that is separately priced and contracted and constitutes a distinct performance obligation. These services are billed monthly in arrears, and revenue is recognized ratably over the monthly service period as the services are provided. Amounts billed in arrears are recorded as accounts receivable when the service is provided. Advance billings, when applicable, are recorded as contract liabilities, which are not significant given our usual billing practices.

Accounts receivable represent unconditional rights to consideration for services provided in accordance with contractual billing schedules, which are typically monthly in arrears. Contract liabilities primarily relate to any advance billings and are not significant.

For the years ended December 31, 2025 and 2024, all revenue recognized over time amounted to $11,614,772 and $1,800,000, respectively. For the years ended December 31, 2025 and 2024, all revenue from software development services amounted to $11,614,772 and $1,800,000, respectively.

Use of Estimate

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgement estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates used in preparing the financial statements are reasonable and prudent; however, actual results could differ from these estimates. Significant accounting estimates include revenue recognition, the allowance for expected credit losses, recognition and measurement of share-based compensation, deferred tax liabilities, deferred tax assets and valuation allowance.

Accounts receivable

Accounts receivable represents those receivables derived in the ordinary course of business, net of an allowance for any potentially uncollectible amounts. We make estimates of expected credit and collectability trends for the allowance for credit losses based upon our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions that may vary by geography, customer-type, or industry sub-vertical, and other factors that may affect its ability to collect from customers. Expected credit losses are recorded as general and administrative expenses on our consolidated statements of comprehensive income.

Although we have historically not experienced significant credit losses, we may experience increasing credit loss risks from accounts receivable in future periods if our customers are adversely affected by economic pressures or uncertainty associated with local or global economic recessions, or other customer-specific factors, and actual experience in the future may differ from our past experiences or current assessment.

As of December 31, 2025 and 2024, accounts receivable from customers amounted to $354,772 and $1,800,000, respectively, there is no allowance provided as the receivables has been settled in March 2026.

Share-based compensation

We grant our common stocks to eligible employees and non-employees. We account for share-based awards issued to employees in accordance with ASC Topic 718 Compensation – Stock Compensation.

Employees’ share-based awards and non-employees’ share-based awards are measured at the grant date fair value of the awards and recognized as expenses: a) immediately at grant date if no vesting conditions are required; or b) using graded vesting method, net of estimated forfeitures, over the requisite service period, which is the vesting period.

We recognize the estimated compensation cost of RSUs and common stocks based on the fair value of common stocks on the date of the grant. We recognize the compensation cost, net of estimated forfeitures, over a vesting term for service-based RSUs.

We also recognize the compensation cost of performance-based share awards, net of estimated forfeitures, if it is probable that the performance condition will be achieved at the end of each reporting period. Forfeitures are estimated at the time of grant and revised in the subsequent periods if actual forfeitures differ from those estimates.

Deferred income tax assets and deferred income tax liabilities

Income taxes are determined in accordance with the provisions of ASC Topic 740, “ Income Taxes ” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not that the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

Our Company in Wyoming is subject to U.S. federal income tax at 21% and a state income tax rate of nil. We have considered U.S. withholding tax implications in our deferred tax liability calculations for unremitted earnings of U.S. subsidiaries. A deferred tax liability has been recognized for the withholding tax that would be due upon distribution of earnings to foreign shareholders. For the periods presented, no additional capital gain tax provision is required as there is no plan to dispose of the investment in foreign subsidiaries.

We have a subsidiary in Hong Kong and BVI. The Hong Kong subsidiary is subject to tax in Hong Kong, and the BVI subsidiary is generally not subject to income tax under BVI laws. As a result of our future business activities, we will be required to file tax returns that are subject to examination by the Inland Revenue Authority of Hong Kong.

Recent Accounting Pronouncements

A list of recent relevant accounting pronouncements is included in Note 2 “Summary of Principal Accounting Policies” of our financial statements.