Summary Next Technology Holding Inc. shifts from Strong Sell to Hold as core business revenue emerges but execution remains unproven. NXTT’s aggressive dilution, including a 200-for-1 reverse split and subsequent 51x share increase, severely erodes per-share BTC NAV. Recent $157M raise was highly dilutive, with proceeds earmarked for working capital, not accretive Bitcoin purchases. Despite an over 50% discount to NAV, collapsing SaaS margins and compliance risks keep NXTT away from Buy territory. When I initiated coverage of Next Technology Holding Inc. ( NXTT ) last June, I had utmost skepticism for what I found about NXTT’s core operations , including the lack of a clear product offerings and no backstop business beyond the Bitcoin ( BTC-USD ) stash at the time. Little did I know that regulators will pick up on some of the same concerns which led to a hearing between Next Technology and regulators October last year. Next has shown signs of improvement in parts of its business. Revenue from its core business was $11.61 million for the full year FY25, compared to just $1.8 million in FY24. While gross margin declined to 15.1% from 59.4% in FY24, despite the higher revenue. This shows that while concern for a backstop business is now partially alleviated, execution still remains to be proven. The surge in Services Revenue is why I am coming off the initial Strong Sell I assigned in my initiating piece and turning softer, though still on the bearish side, because I believe NXTT still has plenty to prove beyond its Bitcoin-backed balance sheet. Back in August when I initiated coverage, the market was pricing NXTT at roughly a 40% premium to its BTC net asset value [NAV] at the time, and I argued that when the market began discounting the operational risks, that premium would evaporate quickly. A lot has happened since then, including the BTC price dip. NXTT also saw a 200-for-1 reverse stock split , a delisting threat from Nasdaq, and a $157 million registered direct offering that closed last month, among other events. In this piece, I'll focus on the developments that will shape the current fiscal year, what's holding NXTT from a Buy, and if NXTT will ever be re-rated to a Buy among the digital assets Treasury companies. Reverse Split, Nasdaq Compliance, and The Survival Tactic The reverse split is one of the material events since last coverage and a good starting point for what has transpired with NXTT. In September last year, NXTT effected a 200-for-1 reverse stock split, which reduced shares outstanding from around 551 million shares to just ~2.8 million. Next framed the action as a routine administrative action, but the timing suggests Next using the tactic of re-engineering the equity's optics to clean up their corporate profile ahead of the Nasdaq panel hearing. The hearing was linked to Next Technology facing a Nasdaq Staff Delisting Determination last year, based on Nasdaq's assessment that it lacked an underlying operating business and was effectively a public shell (I had earlier flagged this particular lack of evidence of a backstop business as claimed by the company in the last piece). Next management requested the hearing, made additional disclosures, and Nasdaq subsequently withdrew the determination and confirmed the listing would remain intact. That reversal decision was driven by specific disclosures including a comprehensive Saas customer contract disclosure. Next Technology touts itself as a dual-engine company, combining AI-enabled SaaS development with a Bitcoin treasury strategy. Its operating geography is primarily Hong Kong, Singapore, and broader Asia-Pacific markets. The Bitcoin treasury currently stands at ~5,833 BTC, and remains the dominant driver of the balance sheet. Revenue Appears, Barely Q3 last year was when Next proactively tried to prove a lot in terms of revenue visibility, to maintain compliance and listing. I'll be referencing that quarter often in this piece though it isn't the latest reported quarterly result. I'll also progress on to analyze the financial trend from Q3 FY25 to the latest results for Q1 FY26, released about two weeks ago. At the height of the Nasdaq delisting threat, an 8k filing by Next Technology (disclosing contracts signed between June and August last year) showed that NXTT entered into four commercial customer agreements with customers in the hotel business (where they would be developing and implementing Hotel Monitoring and Management Software), develop and deploy smart water-system management for clients, and provide cooling solutions for crypto mining farms (to develop liquid cooling systems for crypto mining), as well as providing AI-enabled monitoring and management systems across these sectors and related training services under a SaaS model with potential for recurring subscription fees. The Q3 FY25 10-Q confirmed $1.79 million in service revenue for Q3 FY25, while the 9-month revenue (January 1 to September end) was also $1.79 million, meaning the entire nine-month revenue figure was concentrated in a single quarter. Gross profit for Q3 was $806,849, which translates to around 45% margin. While that can be considered an encouraging step towards legitimacy, other metrics for that quarter still cast doubt on the reported revenue. Q3’s operating expense structure was in particular lopsided, with share-based compensation around $44.4 million in Q3 alone, resulting in a total operating loss of $44.3 million. While in contrast, the underlying SaaS business produced just under $807k in gross profit. Q3 FY25 income statement (Company filing) The revenue in Q3 also seems conveniently timed in light of the events surrounding the Nasdaq compliance process and hearing. The 200-for-1 split became effective on September 16, then the filing for the four secured contracts were disclosed on September 26, followed by the withdrawal of the Nasdaq delisting notice on September 29 . The fact that very shortly after Nasdaq had told the company it appeared to be a public shell in late August, the four commercial contracts were disclosed in an 8-k filing, I believe this should still raise investors' eyebrows. And whether revenue was secured purely for business reasons or partly as a listing survival tactic, cannot be definitely proved. But the timing makes the optics difficult to separate. Q1 FY26 income statement (Company filing) What makes it more questionable is how revenue has fallen again as of Q1 FY26. In the Q1 FY26 10-Q released just two weeks ago, revenue had fallen back to around $470k, and on that $470k cost of revenue were $387k. Which could imply that whatever commercial pivot Next is pursuing is deviating from the high margin SaaS enterprise contracts they disclosed in Q3 last year and is beginning to look low margin. Gross margin for Q1 FY26 compressed to 16.7%, unlike in Q3 when they saw a 45% gross margin. Q3 FY25 Q1 FY26 Context Services Revenue $1.79 Million $470k -73.7% drop in sales volume Gross Margin % 45.0% 16.7% -2,830 bps margin compression Cost of Revenue $983k $387k Implied higher overhead per sales dollar despite fewer sales Share Count Baseline ~2.8 Million 147.6 Million (FD) 51x dilution since stock split, at current fully diluted share count Dilution Restarts Last year’s reverse split consolidated ~551 million shares into around 2.8 million shares. Within six months, Next seems to be undoing almost all of the benefits of that split. Late last month (on March 27), NXTT closed a registered direct offering that raised ~$157 million in gross proceeds, issuing around 71.4 million shares of common stock at $1.10 per share and pre-funded warrants to purchase an additional ~71.4 million shares at $1.099 each, with just twenty institutional investors participating. After closing, shares outstanding now stand at ~76.3 million, and fully diluted including the pre-funded warrants, around 147.6 million. To put this in perspective, the reverse split left the company with ~2.8 million shares in mid-September last year. Six months later, fully diluted share count has now approached 147.6 million, which is around a 51x increase from the post-stock-split share count. While some permabulls (if there are any left for NXTT at all) may argue that the $157 million raise was a direct cash infusion therefore much cleaner than the warrant-for-Bitcoin structure that built NXTT’s original 5,000+ BTC position, and the $157 million gives enough drypowder to buy Bitcoin at dips and thus build the BTC per share value of NXTT, I’d still argue here that the pre-funded warrants that came with the direct offering locks in future dilution. And the fact that the offering was priced well below the BTC NAV per share at the time, means existing shareholders took a massive haircut. In Next’s filing announcing the raise, the company also did not hint at additional Bitcoin purchases with the funds raised. In the filing they disclosed that “The Company intends to use the net proceeds from the Offering for working capital purposes.” At the time of that offering late last month, Bitcoin was hovering around $72,500 spot price. Next’s 5,833 BTC stash at the time was worth around $422.9 million. Shares outstanding at the time was still around ~4.9 million shares (Next's Form 424B5 Prospectus Supplement filed before the offering shows this figure). This BTC NAV per share would be $422.9 million / 4.9 million shares, which is around $86. And at $86, the Bitcoin backing each NXTT share was nearly 80x higher than the $1.10 offering price, meaning the equity issuance was nowhere near accretive to the existing BTC NAV base. After that capital raise, against the updated 76.3 million shares outstanding, current BTC NAV per share is around $5 to $6. Against the fully diluted share count of 147.6 million shares, this brings BTC NAV to around $3 per share. NXTT currently trades around $1.5, at that price, it means the market now sees around 50% discount to its fully diluted BTC NAV. With the current setup where equity is being issued at discount to NAV, NXTT is in a dilutive loop and pivot to accretive BTC buys could prove harder than expected. To be accretive using NXTT stock issuance only, the company’s market cap must be higher than its BTC NAV. And given that Next’s AI/SaaS revenue fell off in the Q1 FY26 results released two weeks ago, I believe it is unlikely that the market will grant NXTT that premium price needed for that to happen in the near term. The positive shift in sentiment now hinges on Bitcoin reaching euphoric levels again and the environment last year where digital assets treasures were rated higher as investors scrambled for the next best Bitcoin proxy. A market environment like last year's could spark a premium to NAV for NXTT again; raises carried out at that level would finally be accretive. Or Next could pivot toward zero coupon convertible notes to fund their Bitcoin strategy like Strategy's ( MSTR ) does. Either way, I believe a sustained turnaround for Next’s AI/SaaS business is still needed for the type of credibility the market requires before assigning such a premium multiple to its Bitcoin treasury business. Takeaway In my view, this is the right time to revisit Bitcoin and other digital asset treasury businesses. As Bitcoin extends its pullback from October highs, the broader bear phase is beginning to ease. Bitcoin’s drawdown means stocks linked to the asset also sell off in tandem. Discounts to NAV are beginning to appear in digital asset treasury stocks, a shift from the premium environment that dominated most of last year. In NXTT’s case, the over 59% discount does not scream Buy, in my view, based on the current setup, and all the compliance pressure that surrounded the stock last year. NXTT is now trading around $1.5 and each dip pushes the stock closer to the $1 Nasdaq minimum bid threshold again. This creates the risk of future non-compliance with Nasdaq’s minimum listing requirements, and the possibility of another stock split cannot be ruled out here. The latest raise and subsequent dilution of NAV per share is also negative to investors. It increases total Bitcoin exposure but reduces per-share ownership, which is the core metric that matters in a treasury model. The pre-funded warrant structure effectively locks in further dilution, while the use of proceeds for working capital rather than additional Bitcoin reduces any near-term NAV support. Next has been an aggressive dilution machine. Shares jumped from ~6.97 million shares as of the end of FY24 to ~551 million sometime in FY25 before the reverse split. Since the reverse split shares have begun to build up again from ~2.8 million post-split to ~147.6 million fully diluted today. While I'm coming off my Strong Sell rating as the company has at least proved revenue and cleared the Nasdaq public shell company concern, the optics sorrounding that revenue declaration, the collapse in margin in Q1 FY26, and the other pressure points I have highlighted throughout this piece are some of the factors that I believe keeps NXTT at a Hold despite the discounts the stock currently has to its NAV.
