Next Technology Holding Inc 10-Q for FY2021 Q2
Next Technology Holding Inc. (NXTT)
About this 10-Q
Next Technology Holding Inc filed this 10-Q on August 16, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).
Headline figures
Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $3.88M
- up 354.0% from $855.29K a year earlier
- Net income
- $1.84M
- up 223.0% from net income of $570.25K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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| For the quarterly period ended: June 30, 2021 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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| For the transition period from ____________ to _____________ |
(Exact name of small business issuer as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Tax. I.D. No.) |
(Address of Principal Executive Offices)
(
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller Reporting Company | |
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 16, 2021, there were
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Table of Contents |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). These forward-looking statements are generally located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” but may be found in other locations as well. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements.
We identify forward-looking statements by use of 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, although some forward-looking statements may be expressed differently. You should be aware that our actual results could differ materially from those contained in the forward-looking statements.
Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this report. These factors include, among others:
| ● | our ability to execute on our growth strategies; |
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| ● | our ability to find manufacturing partners on favorable terms; |
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| ● | declines in general economic conditions in the markets where we may compete; |
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| ● | our anticipated needs for working capital; and |
Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis.
Forward-looking statements speak only as of the date of this report or the date of any document incorporated by reference in this report. Except to the extent required by applicable law or regulation, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
WETRADE GROUP INC
BALANCE SHEETS
(All amounts shown in U.S. Dollars) |
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ASSETS |
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Current Assets: |
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Cash and Cash Equivalents |
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Accounts Receivables |
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Note receivable |
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Other receivables |
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Prepayments |
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Total current assets |
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Non current Assets: |
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Property and equipment, net |
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Right of use assets |
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Intangible asset, net |
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Rental deposit |
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Total non-current assets |
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Total Assets: |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities: |
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Account payables |
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Accrued expenses |
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Tax payables |
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Amount due to related parties |
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Lease liabilities, current |
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Other payables |
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Total Current Liabilities |
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Lease liabilities, non current |
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Total Liabilities |
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Stockholders’ Equity: |
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Common Stock; $ |
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Additional Paid in Capital |
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Accumulated other comprehensive income |
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Retained Earning |
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Total Stockholders’ Equity |
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Total Liabilities and Stockholders’ Equity |
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The accompanying notes are an integral part of these unaudited financial statements.
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| Table of Contents |
WETRADE GROUP INC
STATEMENTS OF OPERATIONS
Unaudited
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| For the Three Months Ended June 30, 2020 |
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Revenue: |
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Service revenue, related party |
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Service revenue |
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Total service revenue |
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Cost of revenue |
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Gross Profit |
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Operating expenses |
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General and administrative expense |
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Total operating expenses |
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Profit from operations |
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Other revenue |
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Profit before provision for income taxes |
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Income tax provision |
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Net income |
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Comprehensive income |
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Net income |
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Other comprehensive income |
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Foreign currency translation adjustment |
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Total comprehensive income |
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Earning per share, basic and diluted |
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Weighted-average shares outstanding, basic and diluted* |
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*Share and per share amounts have been retroactively adjusted to reflect the increased number of shares resulting from a 1:3 stock split.
The accompanying notes are an integral part of these unaudited financial statements.
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| Table of Contents |
WETRADE GROUP INC
STATEMENTS OF CASH FLOWS
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Cash Flows from Operating Activities: |
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Net Income |
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Adjustment to reconcile net income to cash flows from operating activities: |
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Amortization of intangible asset |
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Changes in Operating Assets and Liabilities: |
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Accounts receivables |
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Note receivable |
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Other receivables |
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Prepayments |
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Amount due to related parties |
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Intangible assets |
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Accounts payables |
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Accrued expenses |
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Right of use assets |
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Lease liabilities |
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Other payables |
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Net Cash Used in Operating Activities: |
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Cash flow from investing activity: |
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Office equipment |
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Net cash provided by investing activity: |
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Cash flow from financing activities: |
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Share issued for cash |
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Net cash provided by financing activities: |
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Effect of exchange rate changes on cash |
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Change in Cash and Cash Equivalents: |
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Cash and Cash Equivalents, Beginning of Period |
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Cash and Cash Equivalents, End of Period |
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Supplemental Cash Flow Information: |
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Cash paid for interest |
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Cash paid for taxes |
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The accompanying notes are an integral part of these unaudited financial statements.
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| Table of Contents |
WETRADE GROUP INC AND SUBSIDIARY
Statement of Changes in Stockholders’ Equity (Deficit)
Period Ended June 30, 2021 and 2020
Three months ended June 30, 2021 (Unaudited)
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| Additional Paid in |
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| Total Shareholder Equity |
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| Amount |
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| Deficit) |
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| income (loss) |
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Balance as of March 31, 2021 |
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Foreign currency translation adjustment |
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Net income for the period |
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Balance as of June 30, 2021 |
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Six months ended June 30, 2021 (Unaudited)
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| Additional Paid in |
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| Accumulated Other comprehensive |
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| Total Shareholder Equity |
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| Deficit) |
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Balance as of December 31, 2020 |
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Foreign currency translation adjustment |
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Net income for the period |
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Balance as of June 30, 2021 |
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Three months ended June 30, 2020 (Unaudited)
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| Additional Paid in |
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| Retained Earnings (Accumulated |
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| Accumulated Other comprehensive |
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| Total Shareholder Equity |
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| Shares* |
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| Amount |
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| Capital |
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| Deficit) |
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| income (loss) |
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Balance as of March 31, 2020 |
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Foreign currency translation adjustment |
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Net income for the period |
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Balance as of June 30, 2020 |
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Six months ended June 30, 2020 (Unaudited)
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| Additional Paid in |
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| Accumulated Other comprehensive |
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| Total Shareholder Equity |
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| Amount |
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| Deficit) |
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Balance as of December 31, 2019 |
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Stock issued during the period |
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Foreign currency translation adjustment |
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Net income for the period |
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Balance as of June 30, 2020 |
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*Share and per share amounts have been retroactively adjusted to reflect the increased number of shares resulting from a 1:3 stock split.
The accompanying notes are an integral part of these unaudited financial statements.
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| Table of Contents |
Wetrade Group Inc
Notes to Financial Statements
For the Six Months Ended June 30, 2021
(Unaudited)
NOTE 1 – NATURE OF BUSINESS
Organization
WeTrade Group, Inc. was incorporated in the State of Wyoming on March 28, 2019 and is in the business of providing technical services and solutions via its membership-based social e-commerce platform. We are committed to providing an international cloud-based intelligence system and independently developed a micro-business cloud intelligence system called the “YCloud.” Our goal is to provide technical and auto-billing management services to micro-business online stores in China through big data analytics, machine learning mechanisms, social network recommendations, and multi-channel data analysis.
In January 2020, we appointed a third party software company to develop an auto-billing management system (“WeTrade System”), the early stage of the YCloud system, at the cost of RMB 400,000 (or approximately USD $
Currently, YCloud serves the micro business industry. We expect to expand the application of YCloud to tourism, hospitality, livestreaming and short video, medical beauty and traditional retail industries.
Our Business
We believe that YCloud the first global micro-business cloud intelligent internationalization system. It conducts multi-channel data analysis through the learning of big data and social recommendation relationships. It also provides users with independent research and development of community AI fission and management systems and supply chain systems. It focuses on solving the problem of new maintenance, supply chain CPS integration output, and enrich the functional needs of users. YCloud has four main functions and competitive advantages as follows
Multiple integrated payment methods and payment analytics: the YCloud system provides micro-business owners with multiple payment methods such as Alipay, WeChat, and UnionPay. The total order amount is directly entered into the platform to collect funds in separate accounts. Using YCloud’s technology support, the micro-business owners offer multiple channels of payments to their customers, including Alipay, WeChat, and UnionPay. Meanwhile, YCloud assigns a bar code to merchandises that purchasers can then scan to pay, allowing purchasers to make payments both online and offline. This proprietary payment technology allows our customers to reduce labor costs and error rates, thus significantly improving data analysis.
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| Table of Contents |
Team management: the YCloud system utilizes user marketing relationship tracking and CPS commission revenue management tools.
AI fission and management: using intelligent robots to analyze user behavior, data sharing, purchase history, and other data, the YCloud system provides tailored recommendations and displays. For example, the YCloud system connects users’ behavior across multiple apps and platforms and makes automatic recommendations based on the analysis.
Supply chain system integration: the YCloud system applies cross-platform resource integration technology. The integration allows the multi-channel output of high-quality products creates a seamless connection between suppliers and customers. The YCloud provides a complete supply chain system integrating supply, sales, finance, and service.
The following diagram sets forth the structure of the Company as of the date of this Current Report:
Our business and corporate address in the United States is 1621 Central Ave, Cheyenne, WY 82001 Our telephone number is +852-67966335 and our registered agent for service of process is Wyoming Registered Agent, 1621 Central Ave, Cheyenne, WY 82001. Our fiscal year end is December 31. Our Chinese business and corporate address is No 1 Gaobei South Coast, Yi An Men 111 Block 37, Chao Yang District, Beijing City, People Republic of China, Tel. +8610-85788631. The Chinese address is where our management is located.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation of financial statements
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.
The condensed consolidated financial statements of the Company as of and for the six months ended June 30, 2021 and 2020 are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) that have been made are necessary to fairly present the financial position of the Company as of June 30, 2021, the results of its operations for the period ended June 30, 2021 and 2020, and its cash flows for the period ended June 30, 2021 and 2020. Operating results for the quarterly periods presented are not necessarily indicative of the results to be expected for a full fiscal year. Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. The balance sheet as of December 31, 2020 has been derived from the Company’s audited financial statements included in the Form 10-K for the year ended December 31, 2020.
| 6 |
| Table of Contents |
The statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the financial statements and other information included in the Company’s Annual Report on Form 10-K as filed with the SEC for the fiscal year ended December 31, 2020.
As of June 30, 2021, the details of the consolidating subsidiaries are as follows:
|
| Place of |
| Attributable |
| |
Name of Company |
| incorporation |
| equity interest % |
| |
Utour Pte Ltd |
|
|
| % | ||
|
|
|
|
|
|
|
WeTrade Information Technology Limited (“WITL”) |
|
|
| % | ||
|
|
|
|
|
|
|
Yueshang Information Technology (Beijing) Co., Ltd. (“YITB”) |
|
|
| % | ||
Yueshang Group Network (Hunan) Co., Limited (“Yueshang Hunan”) |
|
|
| % | ||
Yueshang Technology Group (Hainan Special Economic Zone) Co. Limited (“Yueshang Hainan”) |
|
|
| % | ||
WeTrade Digital (Beijing) Technology Co Limited (FKA: XiaoShang Technology Beijing Co Limited) |
|
|
| % | ||
Nature of Operations
WeTrade Group Inc. (the “Company” or or “We’ or “Us”) is a Wyoming corporation incorporated on March 28, 2019. The Company is an investment holding company that formed as a Wyoming corporation to use as a vehicle for raising equity outside the US.
| Place of | Nature of |
| |||
Name of Company |
| incorporation | operation |
| ||
Utour Pte Ltd | Singapore |
| Investment holding company |
| ||
|
| |||||
WeTrade Information Technology Limited (“WITL”) |
| Hong Kong |
| Investment holding company |
| |
|
| |||||
Yueshang Information Technology (Beijing) Co., Ltd. (“YITB”) |
| P.R.C. |
| Providing of social e-commerce services, technical system support and services |
| |
Yueshang Group Network (Hunan) Co., Limited (“Yueshang Hunan”) |
| P.R.C |
| Providing of social e-commerce services, technical system support and services |
| |
Yueshang Technology Group (Hainan Special Economic Zone) Co. Limited (“Yueshang Hainan”) |
| P.R.C |
| Providing of social e-commerce services, technical system support and services |
| |
WeTrade Digital (Beijing) Technology Co Limited (FKA: XiaoShang Technology Beijing Co Limited) |
| P.R.C |
| Providing of social e-commerce services, technical system support and services |
| |
| 7 |
| Table of Contents |
COVID-19 outbreak
In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, workforces, customers, and created significant volatility and disruption of financial markets. It has also disrupted the normal operations of many businesses, including ours. This outbreak could decrease spending, adversely affect demand for our services and harm our business and results of operations. It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business or results of operations at this time.
Revenue recognition
The Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased with a maturity period of three months or less to be cash or cash equivalents. The carrying amounts reported in the accompanying unaudited condensed consolidated balance sheets for cash and cash equivalents approximate their fair value. All of the Company’s cash that is held in bank accounts in Singapore and PRC is not protected by Federal Deposit Insurance Corporation (“FDIC”) insurance or any other similar insurance in the PRC, or Singapore.
Foreign Currency
The Company’s principal country of operations is the PRC. The accompanying consolidated financial statements are presented in US$. The functional currency of the Company is US$, and the functional currency of the Company’s subsidiaries is RMB. The consolidated financial statements are translated into US$ from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The resulting translation adjustments are recorded as a component of shareholders’ equity included in other comprehensive income. Gains and losses from foreign currency transactions are included in profit or loss. There were no gains and losses from foreign currency transactions from the inception to June 30, 2021.
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
RMB: US$ exchange rate |
|
|
|
|
|
| ||
The balance sheet amounts, with the exception of equity, June 30, 2021 and December 31, 2020 were translated at
| 8 |
| Table of Contents |
Use of Estimate
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.
Concentration of Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. Cash on hand amounted to $
Accounts receivable
Accounts receivable are presented net of allowance for doubtful accounts. The Group uses specific identification in providing for bad debts when facts and circumstances indicate that collection is doubtful and based on factors listed in the following paragraph. If the financial conditions of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowance may be required.
The Company maintains an allowance for doubtful accounts which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for doubtful accounts on general basis taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the customers as well as the age of the individual receivables balance. Additionally, the Company makes specific bad debt provisions based on any specific knowledge the Company has acquired that might indicate that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability.
Intangible Asset
Intangible asset is software development cost incurred by company, it will be amortized on a
Property and Equipment, net
Property and equipment are stated at cost less accumulated depreciation and any recorded impairment. The estimated useful lives of computer and office equipment is
Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets.
Leases
The Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.
Operating leases are included in operating lease right-of-use (“ROU”) assets and short-term and long-term lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our consolidated balance sheets.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, we use the industry incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
| 9 |
| Table of Contents |
Under ASC 840, leases were classified as either capital or operating, and the classification significantly impacted the effect the contract had on the company’s financial statements. Capital lease classification resulted in a liability that was recorded on a company’s balance sheet, whereas operating leases did not impact the balance sheet. After the new adoption, $
ASU 2016-02 requires that public companies use a secured incremental browning rate for the present value of lease payments when the rate implicit in the contract is not readily determinable. We determine a secured rate on a quarterly basis and update the weighted average discount rate accordingly. Lease terms and discount rate follow:
Lease cost |
| In USD |
| |
Operating lease cost (included in general and admin in company’s statement of operations) |
| $ |
| |
|
|
|
|
|
Other information |
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities for the six months ended 6/30/2021 |
|
|
| |
Weighted average remaining lease term-operating leases (in years) |
|
|
| |
Average discount rate - operating leases |
|
| % | |
|
|
|
|
|
The supplemental balance sheet information related to leases for the period is as follows: |
|
|
|
|
Operating leases |
|
|
|
|
Long -term right-of-use assets |
|
|
| |
Total right-of-use assets |
| $ |
| |
|
|
|
|
|
Short-term operating lease liabilities |
|
|
| |
Long-term operating lease liabilities |
|
|
| |
Total operating lease liabilities |
| $ |
| |
|
|
|
|
|
Maturities of the Company’s lease liabilities are as follows: |
|
|
|
|
|
|
|
|
|
Year ending June 30, |
|
|
|
|
2021 |
|
|
| |
2022 |
|
|
| |
2023 |
|
|
| |
2024 |
|
|
| |
2025 |
|
|
| |
Total lease payments |
|
|
| |
Less: Imputed interest/present value discount |
|
| ( | ) |
Present value of lease liabilities |
| $ |
| |
| 10 |
| Table of Contents |
Income Tax
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 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
The Company has a subsidiary in Singapore and PRC. The Company is subject to tax in Singapore and PRC jurisdictions. As a result of its future business activities, the Company will be required to file tax returns that are subject to examination by the Inland Revenue Authority of Singapore and Tax Department of PRC.
Profit Per Share
Basic net income per share of common stock attributable to common stockholders is calculated by dividing net income attributable to common stockholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards, warrants, options, or convertible debt using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income (loss) per share of common stock attributable to common stockholders when their effect is dilutive.
Potential dilutive securities are excluded from the calculation of diluted EPS in profit periods as their effect would be anti-dilutive.
As of June 30, 2021, there were no potentially dilutive shares.
|
| For the period June 30, 2021 |
|
| For the period June 30, 2020 |
| ||
Statement of Operations Summary Information: |
|
|
|
|
|
| ||
Net Profit |
| $ |
|
| $ |
| ||
Weighted-average common shares outstanding - basic and diluted |
|
|
|
|
|
| ||
Net loss per share, basic and diluted |
| $ |
|
| $ |
| ||
Fair Value
The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.
| 11 |
| Table of Contents |
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability. The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
NOTE 4 – REVENUE
In the business of providing technical services and solutions via a social e-commerce platform, we are committed to providing an international cloud-based intelligence system and independently developed the “YCloud” system. We aim to provide technical and auto-billing management services to micro-business online stores in China through big data analytics, machine learning mechanisms, social network recommendations, and multi-channel data analysis.
We derive our revenue from service fees charged for transactions conducted through YCloud.
As of and for the six months period ended June 30, 2021, we generated revenues from two customers amounting $
NOTE 5 – CASH AT BANK
As of June 30, 2021, the Company held cash in bank in the amount of $
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Bank Deposits-China |
| $ |
|
| $ |
| ||
Bank Deposits-Singapore |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
| 12 |
| Table of Contents |
NOTE 6 – INTANGIBLE ASSET
Intangible asset is software development cost incurred by company, it will be amortized on a
June 30, 2021 |
|
|
| |||||||||||||
|
| Gross Carrying Amount |
|
| Accumulated Amortization |
|
| Net Carrying Amount |
|
| Weighted Average Useful Life (Years) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Software development |
| $ |
|
| $ | ( | ) |
| $ |
|
|
|
| |||
Foreign currency translation adjustment |
|
| - |
|
|
| - |
|
|
| ( | ) |
|
|
|
|
Intangible assets, net |
| $ |
|
| $ | ( | ) |
| $ |
|
|
|
|
| ||
Amortization expense for intangible assets was $
Expected future intangible asset amortization as of June 30, 2021 was as follows:
Fiscal years: |
|
|
| |
Remaining 2021 |
| $ |
| |
2022 |
|
|
| |
2023 |
|
|
| |
Thereafter |
|
|
| |
NOTE 7 – PROPERTY AND EQUIPMENT
As of June 30, 2021, property and equipment consist of the following:
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Computer and office equipment |
| $ |
|
| $ |
| ||
Depreciation expenses were nil for the period ended June 30, 2021 and December 31, 2020 respectively as the computer and office equipment were acquired on June 29, 2021.
NOTE 8 – ACCOUNT RECEIVABLES
As of June 30, 2021, account receivables consist of the following:
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Services fee receivable |
| $ |
|
| $ |
| ||
|
| $ |
|
| $ |
| ||
Account receivables is related to the services fee receivable from third party customers.
| 13 |
| Table of Contents |
NOTE 9 – PREPAYMENTS
As of June 30, 2021, prepayments consist of the following:
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Office furniture |
| $ |
|
| $ |
| ||
Block chain software and annual fee |
|
|
|
|
|
| ||
Software licenses fee and others |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
NOTE 10 – NOTE RECEIVABLES
As of June 30, 2021, Note receivables consist of the following:
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Note receivables |
| $ |
|
| $ |
| ||
|
| $ |
|
| $ |
| ||
Note receivable is related to the short-term loan of RMB 30 million (approximately of US$
The accrued interest and principal amount of the loan for the period ended June 30, 2021 and December 31, 2020 are as follow:
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Principal |
| $ |
|
| $ |
| ||
Accrued interest |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
NOTE 11 – OTHER RECEIVABLES
As of June 30, 2021, other receivables consist of rental deposit, property management fee deposit, prepaid trademark system set up fees and staff reserve fund as follow:
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Prepaid trademark and system set up fee |
| $ |
|
| $ |
| ||
Staff reserve fund |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
| 14 |
| Table of Contents |
NOTE 12 – RENTAL DEPOSIT
As of June 30, 2021, rental deposit of $
NOTE 13 – AMOUNT DUE TO DIRECTOR
As of June 30, 2021, amount due to related parties consist of the following:
|
| As of June 30, 2021 |
|
| As of December 31, 2020 |
| ||
|
|
|
|
|
|
| ||
Related parties payable |
| $ |
|
| $ |
| ||
Related party loan |
|
|
|
|
|
| ||
Director fee payable |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
The related party balance of $
As of June 30, 2021, there were $
NOTE 14 – ACCRUED EXPENSES
Accrued expenses of $
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Accrued payroll |
| $ |
|
| $ |
| ||
|
| $ |
|
| $ |
| ||
NOTE 15 – TAX PAYABLES
As of June 30, 2021, tax payable of $
NOTE 16 – OTHER PAYABLES
Other payables of $
| 15 |
| Table of Contents |
NOTE 17 – SHAREHOLDERS’ EQUITY (DEFICIT)
The company has an unlimited number of ordinary shares authorized, and has issued
On March 29, 2019, the company has issued
In February 2020, there are
On September 15, 2020, the Wyoming Secretary of State approved the Company’s certificate of amendment to amend its Articles of Incorporation to effectuate a
On September 21, 2020, there are
| 16 |
| Table of Contents |
ITEM 2. 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.
Overview
WeTrade Group, Inc. was incorporated in the State of Wyoming on March 28, 2019 and is in the business of providing technical services and solutions via its membership-based social e-commerce platform. We are committed to providing an international cloud-based intelligence system and independently developed a micro-business cloud intelligence system called the “YCloud.” Our goal is to provide technical and auto-billing management services to micro-business online stores in China through big data analytics, machine learning mechanisms, social network recommendations, and multi-channel data analysis.
We provide technology services to both individual and corporate users. Through Yueshang Beijing, we provide “YCloud” service to our customer, Zhuozhou Weijiafu Information Technology Limited, or Weijiafu, a PRC technology company, which provide “YCloud” services to individual and corporate micro-business owners. The market individual micro-business owners represents a potential of 330 million users by the year of 2023. YCloud serves corporate users in multiple industries, including Yuetao Group, Zhiding, Lvyue, Yuebei, Yuedian, Coke GO, and Zhongyanshangyue. We conduct business operations in mainland China and have established trial operations in Hong Kong, the Philippines, and Singapore. We expect to utilize the YCloud system to establish a global strategic cooperation with various social media platforms. Plan to negotiate with Kakao Talk, Line, Whatsapp, Ohho, and Bluechat. Additionally, we have formed long-term technical collaborations with Yuetao App, Daren App, Yuebei App, Zhiding App, Yuedian App, and Lvyue App through Weijiafu.
In January 2020, we appointed a third-party software company to develop an auto-billing management system (“WeTrade System”), the early stage of the YCloud system, at the cost of RMB 400,000 (or approximately USD $62,000) to provide online payment services for micro-business owners in the PRC. The main functions of the YCloud system is to manage users’ marketing relationships, CPS commission profit management, multi-channel data statistics, AI fission and management, and improved supply chain systems.
Currently, YCloud serves the micro business industry. We expect to expand the application of YCloud to tourism, hospitality, livestreaming and short video, medical beauty and traditional retail industries.
| 17 |
| Table of Contents |
Results of Operations
The following tables provide a comparison of a summary of our results of operations for the three and six months period ended June 30, 2021 and 2020.
Results of Operations for the six months period Ended June 30, 2021 and 2020
|
| For the period June 30, 2021 |
|
| From the period June 30, 2020 |
| ||
Revenue: |
|
|
|
|
|
| ||
Service revenue- related party |
| $ | - |
|
| $ | 876,363 |
|
Service revenue- non related party |
| 6,663,816 |
|
|
| - |
| |
|
|
|
|
|
|
|
|
|
Cost of Sales |
|
| (336,767 | ) |
|
| - |
|
Gross Profit |
| $ | 6,327,049 |
|
| $ | 876,363 |
|
Operating Expenses: |
|
|
|
|
|
|
|
|
General and Administrative |
|
| (3,656,646 | ) |
|
| (297,698 | ) |
Operations Profit |
| $ | 2,670,403 |
|
| $ | 578,786 |
|
Other revenue |
|
| 198,599 |
|
|
| - |
|
Net Profit before income tax |
| $ | 2,869,002 |
|
| $ | 578,786 |
|
Income tax expense |
|
| (374,888 | ) |
|
| (12,553 | ) |
Net income |
| $ | 2,494,114 |
|
| $ | 566,233 |
|
Revenue from Operations
For the six-month period ended June 30, 2021 and 2020, total revenue were $6,663,816 and $876,363 from service revenue from customers and related party respectively, the increase was mainly due to the service revenue generated from new customers during the period.
Cost of revenue
For the six-month period ended June 30, 2021 and 2020, cost of revenue were $336,767 and nil respectively, the increase is in line with the increase in revenue during the period. Cost of revenue is mainly consists of staff payroll, PRC central provident fund (“CPF”) and other staff benefits, the increase is mainly due to more staffs were recruited during the period.
General and Administrative Expenses
For the six months period ended June 30, 2021 and 2020, general and administrative expenses were $3,656,646 and $578,786 respectively, the increase is mainly due to increase in the payroll expenses as a result of new staffs were recruited for software development during the period as compared to no such software development in prior period.
Other revenue
For the six months period ended June 30, 2021 and 2020, other revenue were $198,599 and nil respectively, the increase is mainly due to tax refund of RMB 540,000 (approximately of US$83,000) and accrued interest of note receivables of $115,212 during the period.
Net Income
As a result of the factors described above, there was a net profit of $2,494,114 and $566,233 for the six months period ended June 30, 2021 and 2020, the increase mainly due to revenue generated from auto-billing management system from new customers.
| 18 |
| Table of Contents |
Results of Operations for the three months period Ended June 30, 2021 and 2020
|
| For the period June 30, 2021 |
|
| From the period June 30, 2020 |
| ||
Revenue: |
|
|
|
|
|
| ||
Service revenue- related party |
| $ | - |
|
| $ | 855,293 |
|
Service revenue- non related party |
| 3,882,893 |
|
|
| - |
| |
|
|
|
|
|
|
|
|
|
Cost of Sales |
|
| (190,459 | ) |
|
| - |
|
Gross Profit |
| $ | 3,692,434 |
|
| $ | 855,293 |
|
Operating Expenses: |
|
|
|
|
|
|
|
|
General and Administrative |
|
| (1,767,457 | ) |
|
| (272,608 | ) |
Operations Profit |
| $ | 1,924,977 |
|
| $ | 582,685 |
|
Other revenue |
|
| 115,084 |
|
|
| 121 |
|
Net Profit before income tax |
| $ | 2,040,061 |
|
| $ | 582,806 |
|
Income tax expense |
|
| (198,031 | ) |
|
| (12,553 | ) |
Net income |
| $ | 1,842,030 |
|
| $ | 570,253 |
|
Revenue from Operations
For the three-month period ended June 30, 2021 and 2020, total revenue were $3,882,893 and $855,293 from service revenue from customers and related party respectively, the increase was mainly due to the service revenue generated from new customers during the period.
Cost of revenue
For the three-month period ended June 30, 2021 and 2020, cost of revenue were $190,459 and nil respectively, the increase is in line with the increase in revenue during the period. Cost of revenue is mainly consists of staff payroll, PRC central provident fund (“CPF”) and other staff benefits, the increase is mainly due to more staffs were recruited during the period.
General and Administrative Expenses
For the three-months period ended June 30, 2021 and 2020, general and administrative expenses were $1,767,457 and $272,608 respectively, the increase is mainly due to increase in the payroll expenses as a result of new staffs were recruited for software development during the period as compared to no such software development in prior period.
Other revenue
For the three-months period ended June 30, 2021 and 2020, other revenue were $115,084 and $121 respectively, the increase is mainly due to tax refund from PRC entities and accrued interest of note receivables during the period.
Net Income
As a result of the factors described above, there was a net profit of $1,842,030 and $570,253 for the three months period ended June 30, 2021 and 2020, the increase mainly due to revenue generated from auto-billing management system from new customers.
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Liquidity and Capital Resources
As of June 30, 2021, we had cash on hand of $3,210,464. The decrease is mainly due to additional short term loan of approximate $1.37 million (RMB 9 million) to third party and prepayment of office furniture during the period.
Operating activities
Our continuing operating activities used cash of ($962,389) and ($1,199,684) for the period ended June 30, 2021 and 2020, this is due to additional short term loan of $1.37 million (RMB 9 million) and prepayment of office furniture to third party during the period.
Investing activities
Cash provided in our investing activities was $170,265 and nil for the period ended June 30, 2021 and 2020, this is due to additional of new computer and equipment during the period.
Financing activities
Cash provided in our financing activities was nil and $219,202 for the period ended June 30, 2021 and 2020, this is due to no share issued for cash during the period as compare to share issue of $219,202 in prior period.
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.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a “smaller reporting company” as defined by Item 10(f)(1) of Regulation S-K, and as such are not required to provide the information contained in this item pursuant to Item 305 of Regulation S-K.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures.
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
With respect to the period ending June 30, 2021, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.
Based upon our evaluation regarding the period ending June 30, 2021, the Company’s management, including its Principal Executive Officer, has concluded that its disclosure controls and procedures were not effective due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. Material weaknesses noted are lack of an audit committee, lack of a majority of outside directors on the board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and management is dominated by two individuals, without adequate compensating controls. However, management believes the financial statements and other information presented herewith are materially correct.
Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework - Guidance for Smaller Public Companies (the COSO criteria). Based on our assessment, management identified material weaknesses related to: (i) our internal audit functions; (ii) a lack of segregation of duties within accounting functions; and the lack of multiple levels of review of our accounting data. Based on this evaluation, our management concluded that as of June 30, 2021, we did not maintain effective internal control over financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with any policies and procedures may deteriorate. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. To the extent possible, we will implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals. With proper funding we plan on remediating the significant deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.
A material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight Board Auditing Standard No. 5) or combination of control deficiencies, that results in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We were not subject to any legal proceedings during the three months ended June 30, 2021, nor to the best of our knowledge and belief are any threatened or pending.
ITEM 1A. RISK FACTORS
We are a “smaller reporting company” as defined by Item 10(f)(1) of Regulation S-K, and as such are not required to provide the information contained in this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
As of June 30, 2021, there are no recent sales of unregistered securities and the Company total outstanding shares is 305,451,498 shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No senior securities were issued and outstanding during the three months ended June 30, 2021.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our Company.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
Exhibit No. |
| Description |
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101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document. |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB |
| Inline XBRL Taxonomy Extension Labels Linkbase Document. |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WETRADE GROUP INC |
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Dated August 16, 2021 | By: | /s/ Pijun, Liu |
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| Pijun, Liu |
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| Chief Executive Officer |
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| /s/ Kean Tat, Che |
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| Kean Tat, Che |
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| Chief Financial Officer |
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