Webuy (WBUY) - 2023 Q4 - Annual Report

Part I Key Information This chapter outlines the company's basic information and elaborates on significant risk factors related to its business, securities, and operating countries, including market competition, growth management, operating history, data security, payment processing, license compliance, emerging growth company status, PFIC classification, controlling shareholder influence, foreign private issuer status, legal enforcement, financing needs, economic conditions, and pandemic impact Risk Factors - As an emerging growth company, the company can utilize certain simplified disclosure and governance requirements, which may reduce the attractiveness of its ordinary shares to investors[599][600][601] - The company may be classified as a Passive Foreign Investment Company (PFIC), which would result in significant adverse U.S. federal income tax consequences for U.S. investors[684][685][686] - Chairman Bin Xue indirectly controls approximately 69.36% of the outstanding ordinary shares through GBUY GLOBAL LTD and WEBUY TALENT LTD, exerting substantial influence that may lead to interests misaligned with minority shareholders[34][733][734] - The company recorded negative operating cash flows of $7,135,623, $4,117,551, and $3,994,972 in fiscal years 2023, 2022, and 2021 respectively, and anticipates continued losses, raising substantial doubt about its ability to continue as a going concern[540][170][498] Information on the Company This chapter details the company's history, business overview, organizational structure, and property, plant, and equipment, noting its incorporation in the Cayman Islands on August 29, 2022, operation of a community e-commerce model in Southeast Asia (focusing on groceries and travel), and introduction of an O2O franchise model in October 2023, with subsidiaries primarily in Singapore and Indonesia, leasing various office and warehouse spaces History and Development of the Company - The company was incorporated in the Cayman Islands on August 29, 2022, and acquired 100% equity interest in New Retail International Pte Ltd. through a share exchange agreement, making it a wholly-owned subsidiary[45][562][560] Business Overview - The company's core business model is community e-commerce, organizing users with common interests into community groups via social media platforms (e.g., Facebook, Instagram, WeChat, WhatsApp, Line, TikTok, YouTube), driven by community leaders to achieve efficient user acquisition and reduced logistics costs[14][50][755] - The company launched travel services in May 2022 and officially introduced an O2O (online-to-offline) franchise model in October 2023, aiming to integrate digital capabilities with physical interactions to enhance consumer experience[15][16][47] Organizational structure Subsidiaries List (as of the date of this annual report) | Subsidiaries | Place of Incorporation | Incorporation Date | Percentage Ownership | Parent Company | |:---|:---|:---|:---|:---| | New Retail International Pte. Ltd. | Singapore | November 23, 2018 | 100% | WEBUY GLOBAL LTD | | The Shopaholic Bear Ltd. | Singapore | April 6, 2021 | 100% | New Retail International Pte. Ltd. | | Bear & Bear Pte. Ltd. | Singapore | November 2, 2021 | 100% | New Retail International Pte. Ltd. | | PT Webuy Social Indonesia | Indonesia | May 5, 2020 | 95% | New Retail International Pte. Ltd. | | Webuy Travel Pte. Ltd. | Singapore | November 15, 2022 | 100% | New Retail International Pte. Ltd. | | PT Buah Kita Retail | Indonesia | October 23, 2023 | 100% | PT Webuy Social Indonesia | | PT Webuy Travel Indonesia | Indonesia | October 23, 2023 | 100% | PT Webuy Social Indonesia | | Webuy Advisory Pte. Ltd. | Singapore | February 2, 2024 | 100% | New Retail International Pte. Ltd. | Property, Plant and Equipment Unresolved Staff Comments The company currently has no unresolved staff comments - The company has no unresolved staff comments[10] Operating and Financial Review and Prospects This chapter discusses and analyzes the company's financial condition and operating results, highlighting a significant reduction in net loss in 2023 due to revenue growth and cost control, driven by its community e-commerce model focused on groceries and travel, expanding through O2O and franchise systems, with management addressing going concern issues through cash flow improvement and future financing Overview Operating Results - The company's net loss in 2023 was approximately $5.16 million, a reduction from $6.70 million in 2022, primarily attributed to revenue growth and operating expense control measures[138][276] - The company consistently incurred operating losses and negative operating cash flows in 2023, 2022, and 2021, raising substantial doubt about its ability to continue as a going concern as of December 31, 2023[170][498][566] Key Financial Data (2021-2023) | Indicator (USD) | 2023 | 2022 | 2021 | |:---|:---|:---|:---| | Revenue | 61,686,170 | 44,560,418 | 22,295,682 | | Cost of sales | (56,543,663) | (40,808,849) | (19,792,424) | | Gross profit | 5,142,507 | 3,751,569 | 2,503,258 | | Operating loss | (5,153,306) | (7,370,064) | (8,207,388) | | Net loss | (5,162,454) | (6,701,203) | (8,167,154) | | Net cash outflow from operating activities | (7,160,538) | (4,117,551) | (3,994,972) | | Net cash outflow from investing activities | (4,588,659) | (1,139,058) | (615,768) | | Net cash inflow from financing activities | 15,529,005 | 5,351,984 | 968,940 | | Cash and cash equivalents at year-end | 5,393,848 | 1,554,464 | 1,539,348 | Liquidity and Capital Resources Research and Development, Patent and Licenses, etc. Trend Information Critical Accounting Estimates Directors, Senior Management and Employees This chapter provides detailed information on the company's directors and senior management, including their age, positions, and backgrounds, outlining the five-member board, audit, compensation, and nominating committees, executive and director compensation, and the company's adherence to Cayman Islands home country practices as a foreign private issuer, with 218 full-time employees as of December 31, 2023, detailed by function Directors and Management Executive and Director Information (as of the date of this annual report) | Name | Age | Position(s) | |:---|:---|:---| | Bin Xue | 42 | Chief Executive Officer, Chairman of the Board and Director | | Ai Lian Phang | 41 | Chief Financial Officer | | Lei Liu | 42 | Chief Technology Officer | | Michelle Ting Ting Tan | 30 | Chief Operating Officer, Director | | William Tat-Nin Chang | 68 | Independent Director, Chair of Nominating and Compensation Committee | | Fangqin Lin | 54 | Independent Director, Chair of Audit Committee | | Lizhi Qiao | 41 | Independent Director | - The company's board comprises five directors, a majority of whom are independent, with independent audit, compensation, and nominating committees[220][223][219][224] Compensation Executive Compensation (2022-2023) | Name and Principal Position | Fiscal Year or Period | Salary ($) | Bonus ($) | Stock Awards ($) | All Other Compensation ($) | Total ($) | |:---|:---|:---|:---|:---|:---|:---| | Bin Xue, CEO | 2023 | 67,032 | - | - | - | 67,032 | | | 2022 | 63,964 | - | - | - | 63,964 | | Ai Lian Phang, CFO | 2023 | 73,738 | | - | 804 | 74,167 | | | 2022 | 69,620 | - | - | - | 69,620 | | Lei Liu, CTO | 2023 | 51,123 | - | - | - | 51,123 | | | 2022 | 55,435 | - | - | - | 55,435 | Board practices Employees Employee Count (as of December 31, 2023) | Function | Employees | |:---|:---| | Management | 12 | | Accounts and Finance | 23 | | Customer Management and Administration | 103 | | Information Technology | 2 | | Warehouse Labor | 37 | | Others | 41 | | Total | 218 | Share ownership Major Shareholders and Related Party Transactions This chapter references major shareholder information from "Item 6.E. Share Ownership" and discloses related party transaction amounts with directors, noting that as of December 31, 2023, the company owed directors $25,929, primarily for business advances Major Shareholders Related Party Transactions Amounts Payable to Directors (2021-2023) | Indicator (USD) | 2023 | 2022 | 2021 | |:---|:---|:---|:---| | Balance at beginning of year (January 1) | 25,336 | 68,786 | 7,783 | | Advances for operating and administrative expenses | — | 13,724 | 1,671,801 | | Payments to directors | 25,929 | (25,009) | (1,610,798) | | Related party payables written off due to disposal of subsidiary | — | (32,165) | — | | Exchange differences | 593 | — | — | | Balance at end of year (December 31) | 25,929 | 25,336 | 68,786 | Interests of Experts and Counsel Financial Information This chapter directs readers to the consolidated financial statements in "Item 18. Financial Statements," states the company is not currently involved in significant legal or administrative proceedings, does not intend to pay cash dividends in the foreseeable future, and has experienced no significant changes since the most recent audited consolidated financial statements Consolidated Statements and Other Financial Information - The company is not currently involved in any significant legal or administrative proceedings and is unaware of any events that could lead to such proceedings[264][265] - The company does not intend to pay cash dividends in the foreseeable future, retaining any earnings to support business operations and development[266][724] Significant Changes - The company has not experienced any significant changes since the date of the most recent audited consolidated financial statements[268] The Offer and Listing This chapter states that the company's Class A ordinary shares are listed on the Nasdaq Capital Market under the ticker "WBUY," and the company received a Nasdaq notice on January 26, 2024, regarding non-compliance with the minimum $1.00 bid price requirement, needing to regain compliance by July 24, 2024 Offer and listing details Plan of distribution Markets - The company's Class A ordinary shares are listed on the Nasdaq Capital Market under the ticker symbol "WBUY"[288] - On January 26, 2024, the company received a Nasdaq notice for non-compliance with the minimum $1.00 bid price requirement, needing to regain compliance by July 24, 2024[271] Selling shareholders Dilution Expenses of the issue Additional Information This chapter details the company's articles of association, dividend policy, voting rights, share transfers, liquidation, director duties, and related party transactions, highlighting advantages as a Cayman Islands exempted company in corporate law and taxation, and discussing Singapore and U.S. federal income tax implications for the company and its shareholders, including potential PFIC classification risks Share capital Memorandum and articles of association - The company's articles of association require a simple majority for ordinary resolutions and no less than two-thirds for special resolutions, covering important matters like name changes, article amendments, capital reduction, and company liquidation[300] - As a Cayman Islands exempted company, the company can follow home country practices in corporate governance, benefiting from no annual shareholder returns, no public member register, and no mandatory annual general meetings[319][320][241] Material contracts Exchange controls Taxation - The Cayman Islands currently imposes no profit, income, gains, or value-added tax on individuals or companies, nor estate or inheritance tax; Singapore employs a single-tier corporate tax system where dividends are tax-exempt for shareholders; U.S. federal income tax may classify the company as a Passive Foreign Investment Company (PFIC), leading to adverse tax consequences for U.S. shareholders[360][364][365][398][401] Dividends and paying agents Statement by experts Documents on display Subsidiary Information Annual Report to Security Holders Quantitative and Qualitative Disclosures About Market Risk This chapter discloses the company's market risks, primarily interest rate, credit, liquidity, and foreign exchange risks, managed through credit approval, limits, and monitoring, and controlled via financial analysis and monitoring, with financial performance affected by currency fluctuations due to operations in multiple markets - The company faces interest rate risk, with short-term bank loan rates typically fixed but subject to change upon renewal[410][418] - The company manages credit risk through credit approval, limits, and monitoring procedures, identifying credit risk collectively by industry, geography, and customer type[419][854] - The company faces liquidity risk, controlled through financial position analysis and monitoring, seeking short-term financing from financial institutions and related parties when necessary[412][420] - Operating in multiple markets, the company's financial performance is affected by currency exchange rate fluctuations, with primary revenue denominated in local Southeast Asian currencies and expenses in local currencies and Singapore Dollars[420][855] Description of Securities Other than Equity Securities This chapter states that the company currently has no non-equity securities such as debt securities, warrants and rights, other securities, or American Depositary Shares (ADS) - The company currently has no debt securities, warrants and rights, other securities, or American Depositary Shares (ADS)[421][422][423][424] Part II Defaults, Dividend Arrearages and Delinquencies The company states there are no material defaults, dividend arrearages, or delinquencies in the payment of principal, interest, or any installment - The company has no material defaults, dividend arrearages, or delinquencies in the payment of principal, interest, or any installment[427] Material Modifications to the Rights of Securities Holders and Use of Proceeds This chapter clarifies no material modifications to security holders' rights, detailing that the company received approximately $13.7 million in gross proceeds and $13.5 million in net proceeds from its initial public offering, with $10.21 million already used for working capital and corporate purposes, and remaining funds to be used as disclosed in the prospectus Material Modifications to the Rights of Security Holders - No material modifications have occurred to the rights of the company's security holders[428] Use of Proceeds - The company's initial public offering, completed on April 5, 2023, involved the issuance of 3,800,000 ordinary shares at $4.00 per share, yielding approximately $13.7 million in gross proceeds and $13.5 million in net proceeds after underwriting discounts and fees[429] - As of the date of this annual report, the company has utilized $10.21 million of the net proceeds from the initial public offering for working capital and corporate purposes, with remaining funds planned for use as disclosed in the prospectus[430] Controls and Procedures This chapter outlines management's responsibility and assessment of disclosure controls and internal control over financial reporting, with the CEO and Chief Accounting Officer deeming disclosure controls effective as of December 31, 2023, and no material weaknesses identified in internal control over financial reporting, nor any significant changes during the reporting period - As of December 31, 2023, the company's Chief Executive Officer and Chief Accounting Officer assessed the disclosure controls and procedures as effective[433] - Management assessed that as of December 31, 2023, there were no control deficiencies in the company's internal control over financial reporting that constituted a material weakness[435] - No significant changes occurred in the company's internal control over financial reporting during the reporting period ended December 31, 2023[437] Reserved This section is reserved and contains no specific content Audit Committee Financial Expert The company's board has determined that Ms. Fangqin Lin qualifies as an "audit committee financial expert" under Nasdaq Capital Market standards, and all audit committee members meet independence requirements - The company's board of directors has determined that Ms. Fangqin Lin qualifies as an "audit committee financial expert" under Nasdaq Capital Market standards[438] - All members of the audit committee meet the independence requirements under Nasdaq Capital Market standards[438] Code of Ethics The company has adopted a code of business conduct and ethics applicable to all directors, officers, employees, and consultants, included as an exhibit to this annual report - The company has adopted a code of business conduct and ethics applicable to all directors, officers, employees, and consultants[439] Principal Accountant Fees and Services OneStop Assurance PAC was appointed as the company's independent registered public accounting firm for the fiscal years ended December 31, 2023, 2022, and 2021, with disclosed audit fees but no audit-related, tax, or other service fees paid, and all services approved by the company's audit committee - OneStop Assurance PAC was appointed as the company's independent registered public accounting firm for the fiscal years ended December 31, 2023, 2022, and 2021[440] Audit Fees (2021-2023) | Fiscal Year | Audit Fees (USD) | |:---|:---| | 2023 | 220,000 | | 2022 | 150,000 | | 2021 | 260,000 | - The company paid no audit-related, tax, or any other service fees to OneStop Assurance PAC in fiscal year 2023[442][469][470] - All services provided by OneStop Assurance PAC were approved by the company and its audit committee[471] Exemptions from the Listing Standards for Audit Committees This section states that the company has no exemptions from the listing standards for audit committees - The company has no exemptions from the listing standards for audit committees[472] Purchases of Equity Securities by the Issuer and Affiliated Purchasers The company states that neither it nor any affiliated purchasers bought any class of equity securities registered under Section 12 of the Exchange Act during the fiscal year ended December 31, 2023 - Neither the company nor any affiliated purchasers bought any class of equity securities registered under Section 12 of the Exchange Act during the fiscal year ended December 31, 2023[473] Change in Registrant's Certifying Accountant This section states that there has been no change in the company's certifying accountant - There has been no change in the company's certifying accountant[474] Corporate Governance As a Nasdaq Capital Market listed company, the company is subject to Nasdaq corporate governance listing standards but, as a foreign private issuer, may follow Cayman Islands home country practices, and currently intends to continue adhering to Nasdaq corporate governance rules applicable to foreign private issuers - As a foreign private issuer, the company may elect to follow Cayman Islands home country corporate governance practices instead of Nasdaq corporate governance standards[474][445] - The company currently follows and intends to continue following Nasdaq corporate governance rules applicable to foreign private issuers[247] Mine Safety Disclosure This section states that the company has no mine safety disclosures - The company has no mine safety disclosures[475] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This section states that the company has no disclosures regarding foreign jurisdictions that prevent inspections - The company has no disclosures regarding foreign jurisdictions that prevent inspections[477] Insider Trading Policies The company's board has adopted an insider trading policy, included as an exhibit to this annual report, governing the purchase, sale, and other dispositions of company securities by directors, officers, and employees - The company's board of directors has adopted an insider trading policy governing the purchase, sale, and other dispositions of company securities by directors, officers, and employees[478][248] Cybersecurity The company's board oversees cybersecurity strategy and risk management to ensure financial reporting integrity and operational resilience against cyber threats, with an IT Committee streamlining risk assessment, identification, and management, and the COO reporting annually to the board, while the IT department continuously monitors cybersecurity posture and integrates considerations into the enterprise risk management framework - The company's board of directors is responsible for overseeing cybersecurity strategy and risk management, ensuring the integrity of financial reporting and operational resilience against cyber threats[479] - Cybersecurity risk management processes are streamlined through an IT Committee comprising the CEO, COO, and CFO, with the COO reporting risk assessment results annually to the board[480] - The IT department continuously monitors the cybersecurity posture, identifies risks, implements defensive measures, and communicates potential threats or incidents to executive management and the board in a timely manner[481] Part III Financial Statements This chapter directs readers to the financial statements in "Item 18. Financial Statements" - Financial statements are referenced in "Item 18"[486] Financial Statements This chapter states that the company's consolidated financial statements are included at the end of this annual report, starting from page F-1 - The company's consolidated financial statements are included at the end of this annual report, commencing from page F-1[487] Exhibits This chapter lists all exhibits to this annual report, including the articles of association, description of securities, employment agreements, director appointment letters, community leader contracts, vendor sales contracts, share exchange agreement, list of subsidiaries, code of business conduct and ethics, insider trading policy, executive certifications, and compensation clawback policy - Exhibits include the articles of association, description of securities, employment agreements, director appointment letters, community leader contracts, vendor sales contracts, share exchange agreement, list of subsidiaries, code of business conduct and ethics, insider trading policy, executive certifications, and compensation clawback policy[488] FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm OneStop Assurance PAC issued an unqualified opinion on the company's consolidated financial statements for the fiscal years ended December 31, 2023, and 2022, deeming them fairly presented in all material respects in accordance with U.S. GAAP, but noted substantial doubt about the company's going concern ability due to recurring operating losses, negative operating cash flows, and accumulated deficit - OneStop Assurance PAC issued an unqualified opinion on the company's consolidated financial statements for the fiscal years ended December 31, 2023, and 2022[497] - Substantial doubt exists about the company's ability to continue as a going concern due to recurring operating losses, negative operating cash flows, and an accumulated deficit[498] Consolidated Balance Sheets As of December 31, 2023, the company reported total assets of $30,233,191, total liabilities of $24,577,464, and shareholders' equity of $5,655,727, showing significant increases in total assets and shareholders' equity, alongside a rise in total liabilities, compared to 2022 Consolidated Balance Sheets Summary (as of December 31) | Indicator (USD) | 2023 | 2022 | |:---|:---|:---| | Assets | | | | Cash and cash equivalents | 5,393,848 | 1,554,464 | | Accounts receivable | 10,112,638 | 2,568,183 | | Inventories | 769,584 | 1,127,133 | | Prepaid expenses and other assets | 6,032,074 | 1,337,419 | | Note receivable | 3,075,000 | — | | Due from related parties | 11,807 | 4,119 | | Total current assets | 25,394,951 | 6,591,318 | | Leasehold improvements and equipment, net | 896,539 | 423,633 | | Right of use assets – operating lease | 2,690,521 | 42,712 | | Intangible assets | 1,251,180 | 932,999 | | Total assets | 30,233,191 | 7,990,662 | | Liabilities and Shareholders' (Deficit) Equity | | | | Accounts payable | 11,058,508 | 5,464,617 | | Deferred revenue | 1,859,990 | 1,007,494 | | Other current liabilities | 6,110,738 | 1,728,792 | | Due to related parties | 25,929 | 25,336 | | Loans payable – current | 512,435 | 1,611,069 | | Convertible notes payable | 1,901,600 | 412,400 | | Operating lease liability – current | 708,953 | 32,347 | | Total current liabilities | 22,178,153 | 10,282,055 | | Loans payable – non-current | 204,758 | 473,758 | | Operating lease liability – non-current | 2,194,553 | 10,598 | | Total liabilities | 24,577,464 | 10,766,411 | | Shareholders' (Deficit) Equity | | | | Ordinary shares | 20 | 18 | | Additional paid-in capital | 29,287,795 | 15,678,812 | | Accumulated deficit | (23,484,274) | (18,337,830) | | Accumulated other comprehensive loss | (93,154) | (75,641) | | Total shareholders' (deficit) equity attributable to Webuy Global Ltd shareholders | 5,710,387 | (2,734,641) | | Deficit attributable to non-controlling interests | (54,660) | (41,108) | | Total shareholders' (deficit) equity | 5,655,727 | (2,775,749) | | Total liabilities and shareholders' equity | 30,233,191 | 7,990,662 | Consolidated Statement of Operations and Comprehensive Loss The company achieved revenues of $61,686,170 in fiscal year 2023, a 38.4% increase from $44,560,418 in fiscal year 2022, and despite revenue growth, recorded a net loss of $5,162,454, which narrowed from $6,701,203 in fiscal year 2022, with gross profit increasing from $3,751,569 in 2022 to $5,142,507 in 2023 Consolidated Statement of Operations and Comprehensive Loss Summary (as of December 31) | Indicator (USD) | 2023 | 2022 | 2021 | |:---|:---|:---|:---| | Revenue | 61,686,170 | 44,560,418 | 22,295,682 | | Cost of sales | (56,543,663) | (40,808,849) | (19,792,424) | | Gross profit | 5,142,507 | 3,751,569 | 2,503,258 | | Selling and distribution expenses | (2,562,980) | (4,124,601) | (4,314,001) | | General and administrative expenses | (7,732,833) | (5,730,142) | (4,423,191) | | Share-based compensation expense | — | (1,266,890) | (1,973,454) | | Operating loss | (5,153,306) | (7,370,064) | (8,207,388) | | Other (expense) income, net | (9,148) | 668,861 | 40,234 | | Net loss | (5,162,454) | (6,701,203) | (8,167,154) | | Net loss attributable to Webuy Global Ltd shareholders | (5,146,444) | (6,660,946) | (8,039,904) | | Basic and diluted loss per share | (0.11) | (0.16) | (0.21) | - Total revenue increased by 38.4% year-over-year to $61.69 million in 2023, driven by growth in Indonesia grocery sales and increased demand for travel packages in Singapore[279][281][282] - Selling and distribution expenses decreased by 37.86% year-over-year to $2.56 million in 2023, primarily due to reduced marketing and promotion costs and lower sales commissions and order fulfillment fees from decreased transaction volume[22][23] - General and administrative expenses increased by 35.0% year-over-year to $7.73 million in 2023, mainly due to higher staff costs from Indonesia business expansion, increased intangible asset amortization, and depreciation from new leased properties in Singapore[24] Consolidated Statement of Changes in Shareholders' Equity (Deficit) As of December 31, 2023, the company's shareholders' equity shifted from a deficit of $2,775,749 on December 31, 2022, to a positive $5,655,727, primarily due to a substantial increase in additional paid-in capital from the initial public offering (IPO), despite a continued accumulated deficit Consolidated Statement of Changes in Shareholders' Equity (Deficit) Summary (as of December 31) | Indicator (USD) | 2023 | 2022 | 2021 | |:---|:---|:---|:---| | Ordinary shares | 20 | 18 | 15 | | Additional paid-in capital | 29,287,795 | 15,678,812 | 10,441,123 | | Accumulated deficit | (23,484,274) | (18,337,830) | (11,676,884) | | Accumulated other comprehensive loss | (93,154) | (75,641) | 36,112 | | Total shareholders' (deficit) equity attributable to Webuy Global Ltd shareholders | 5,710,387 | (2,734,641) | (1,199,634) | | Deficit attributable to non-controlling interests | (54,660) | (41,108) | (49,979) | | Total shareholders' (deficit) equity | 5,655,727 | (2,775,749) | (1,249,613) | - Additional paid-in capital increased by $13,608,985 in 2023, primarily from the initial public offering (IPO)[550] - Net loss of $5,146,444 in 2023 led to a further increase in the accumulated deficit[551] Consolidated Statement of Cash Flows In 2023, the company experienced a net cash outflow of $7,160,538 from operating activities and $4,588,659 from investing activities, but a net cash inflow of $15,529,005 from financing activities, primarily due to IPO proceeds, significantly increasing cash and cash equivalents to $5,393,848 at year-end Consolidated Statement of Cash Flows Summary (as of December 31) | Indicator (USD) | 2023 | 2022 | 2021 | |:---|:---|:---|:---| | Net cash outflow from operating activities | (7,160,538) | (4,117,551) | (3,994,972) | | Net cash outflow from investing activities | (4,588,659) | (1,139,058) | (615,768) | | Net cash inflow from financing activities | 15,529,005 | 5,351,984 | 968,940 | | Effect of exchange rate changes | 59,576 | (80,259) | (74,893) | | Net change in cash and cash equivalents | 3,839,384 | 15,116 | (3,716,693) | | Cash and cash equivalents at beginning of year | 1,554,464 | 1,539,348 | 5,256,041 | | Cash and cash equivalents at end of year | 5,393,848 | 1,554,464 | 1,539,348 | - Net cash outflow from operating activities was $7.16 million in 2023, primarily due to net loss, increased accounts receivable, and increased prepaid expenses and other assets, partially offset by increased accounts payable and deferred revenue[140][557] - Net cash outflow from investing activities was $4.59 million in 2023, mainly for the purchase of leasehold improvements and equipment, intangible assets, and a $3.0 million note receivable[177][557] - Net cash inflow from financing activities was $15.53 million in 2023, primarily from $15.54 million in IPO proceeds and $1.49 million from convertible notes, partially offset by $1.50 million in loan repayments[179][557] Note 1. Organization, Description of Business and Going Concern This section details the company's formation, reorganization, corporate structure, and going concern ability, incorporated in the Cayman Islands on August 29, 2022, through the acquisition of New Retail International Pte Ltd. via share exchange, operating as an emerging Southeast Asian community e-commerce retailer focused on groceries and travel, with management addressing ongoing losses and negative operating cash flows through cash flow improvement and future financing - The company was incorporated in the Cayman Islands on August 29, 2022, and acquired 100% equity interest in New Retail International Pte Ltd. through a share exchange agreement, making it a wholly-owned subsidiary[560][562] - The company operates as an emerging Southeast Asian community e-commerce retailer, focusing on groceries and travel, with its business model being a deeper extension of community e-commerce[561] - As of December 31, 2023, recurring operating losses, negative operating cash flows, and an accumulated deficit raise substantial doubt about the company's ability to continue as a going concern; management plans to address this through improved cash flows and future financing activities[566][567] Company and its Subsidiaries Structure (as of December 31, 2023) | Name | Incorporation Date | Percentage of effective ownership | Place of Incorporation | Fiscal Year | Principal Activities | |:---|:---|:---|:---|:---|:---| | Webuy Global Ltd | August 29, 2022 | — | Cayman Islands | December 31 | Investment holding | | New Retail International Pte Ltd | November 23, 2018 | 100% | Singapore | December 31 | Community-oriented ecommerce platform | | PT Webuy Social Indonesia | May 5, 2020 | 95% | Indonesia | December 31 | Community-oriented ecommerce platform | | The Shopaholic Bear Pte Ltd | April 6, 2021 | 100% | Singapore | December 31 | Community-oriented ecommerce platform | | Bear Bear Pte Ltd | November 2, 2021 | 100% | Singapore | December 31 | Dormant | | Webuy Travel Pte. Ltd. | November 15, 2022 | 100% | Singapore | December 31 | Sale of packaged-tour | | PT Webuy Travel Indonesia | October 23, 2023 | 70% | Indonesia | December 31 | Sale of packaged-tour | | PT Buah Kita Retail | October 23, 2023 | 100% | Indonesia | December 31 | Offline Retail business for "Buah Kita" brand | | Webuy Advisory Pte Ltd | February 2, 2024 | 100% | Singapore | December 31 | Management consultancy services | Note 2. Summary of Significant Accounting Policies This section outlines the significant accounting policies adopted by the company for preparing consolidated financial statements under U.S. GAAP, including consolidation basis, use of estimates, cash and cash equivalents, foreign currency translation, accounts receivable, share-based compensation, inventories, intangible assets, leasehold improvements and equipment, impairment of assets, leases, accounts payable and other current liabilities, convertible notes, SAFE notes, fair value measurement, revenue recognition (product sales and travel packages), and recent accounting pronouncements updates (e.g., ASC 326) - The company prepares its consolidated financial statements in accordance with U.S. GAAP, retrospectively consolidating all presented periods as if the current corporate structure existed from inception[568][563] - The company recognizes revenue from customer contracts using a five-step model, with both product sales and travel package revenue recognized when control is transferred to the customer[641][642][647] - The company adopted ASU 2016-13 (Financial Instruments—Credit Losses) on January 1, 2023, which requires financial assets measured at amortized cost to be presented at the net amount expected to be collected[705][707] Revenue by Product/Service Type (USD) | Product/Service Type | 2023 | Percentage of Total Revenue | 2022 | Percentage of Total Revenue | 2021 | Percentage of Total Revenue | |:---|:---|:---|:---|:---|:---|:---| | Food and beverage | $ 25,716,683 | 42% | $ 14,024,908 | 32% | $ 11,352,854 | 51% | | Fresh produce | 19,375,772 | 31% | 21,254,818 | 48% | 8,800,647 | 39% | | Lifestyle and other personal care items | 1,932,630 | 3% | 2,846,407 | 6% | 2,142,181 | 10% | | Packaged-tour | 14,661,085 | 24% | 6,434,285 | 14% | — | —% | | Total | $ 61,686,170 | 100% | $ 44,560,418 | 100% | $ 22,295,682 | 100% | Revenue by Geographical Area (USD) | Product/Service Type | 2023 | Percentage of Total Revenue | 2022 | Percentage of Total Revenue | 2021 | Percentage of Total Revenue | |:---|:---|:---|:---|:---|:---|:---| | Singapore | $ 25,254,134 | 41% | $ 24,786,700 | 55% | $ 18,208,294 | 82% | | Indonesia | 36,432,036 | 59% | 19,541,277 | 44% | 3,647,873 | 16% | | Malaysia | — | —% | 232,441 | 1% | 439,515 | 2% | | Total | $ 61,686,170 | 100% | $ 44,560,418 | 100% | $ 22,295,682 | 100% | Note 3. Accounts receivable As of December 31, 2023, the company's net accounts receivable totaled $10,112,638, a significant increase from $2,568,183 in 2022, with a provision for expected credit losses of $520,555 recorded in 2023 Accounts Receivable Composition (as of December 31) | Indicator (USD) | 2023 | 2022 | |:---|:---|:---| | Trade accounts receivable | 10,631,787 | 2,568,183 | | Provision for expected credit losses | (520,555) | - | | Exchange differences | 1,406 | - | | Total accounts receivable | 10,112,638 | 2,568,183 | - The company recorded a provision for expected credit losses of $520,555 in 2023, with no provision recorded in 2022 and 2021[574] Note 4. Prepaid expenses and other assets As of December 31, 2023, the company's total prepaid expenses and other assets amounted to $6,032,074, a significant increase from $1,337,419 in 2022, primarily comprising prepayments, advances to suppliers, deposits, and other receivables Prepaid Expenses and Other Assets Composition (as of December 31) | Indicator (USD) | 2023 | 2022 | |:---|:---|:---| | Prepayments | 1,247,942 | 418,642 | | Advances to suppliers | 2,349,615 | 3,731 | | Deposits | 1,107,788 | 123,012 | | Other receivables | 1,326,729 | 792,034 | | Total | 6,032,074 | 1,337,419 | - Deposits in 2023 include a $500,000 deposit paid to an acquisition target for due diligence[868] Note 5. Note receivable On November 9, 2023, the company issued an unsecured promissory note of $3,000,000 to a third party with a 3% monthly interest rate, which was fully collected in January 2024 - On November 9, 2023, the company issued an unsecured promissory note of $3,000,000 to a third party with a 3% monthly interest rate, which was fully collected in January 2024[867] Note 6. Leasehold improvements and Equipment As of December 31, 2023, the company's net leasehold improvements and equipment totaled $896,539, an increase from $423,633 in 2022, with depreciation expense amounting to $742,030 in 2023 Leasehold Improvements and Equipment Composition (as of December 31) | Indicator (USD) | 2023 | 2022 | |:---|:---|:---| | Motor vehicles | 465,111 | 458,318 | | Office equipment | 26,462 | 10,892 | | Furniture and fixtures | 17,826 | 5,439 | | Computers | 43,949 | 42,225 | | Warehouse equipment | 111,397 | 97,314 | | Machinery and equipment | 2,699 | — | | Leasehold improvements | 671,539 | 78,675 | | Total cost | 1,338,983 | 692,863 | | Accumulated depreciation | (442,444) | (269,230) | | Leasehold improvements and equipment, net | 896,539 | 423,633 | - Depreciation expense for leasehold improvements and equipment was $742,030, $123,289, and $90,345 for 2023, 2022, and 2021, respectively[890] - As of December 31, 2023, motor vehicles with a net book value of $281,875 were held under finance lease arrangements[802] Note 7. Right of use assets and operating lease liability As of December 31, 2023, the company's operating lease right-of-use assets totaled $2,690,521, and total operating lease liabilities were $2,903,506, following a new five-year lease agreement signed on February 28, 2023, for a four-story office and warehouse facility in Singapore with total rent of approximately $3.9 million Right of Use Assets and Operating Lease Liability Summary (as of December 31) | Indicator (USD) | 2023 | 2022 | |:---|:---|:---| | Leased buildings | 3,648,367 | 483,401 | | Accumulated amortization | (957,846) | (440,689) | | Right of use assets, net | 2,690,521 | 42,712 | | Operating lease liability | | | | Total operating lease payments | 3,259,734 | | | Less: Imputed interest | (356,228) | | | Present value of operating lease liability | 2,903,506 | | | Operating lease liability – current | 708,953 | 32,347 | | Operating lease liability – non-current | 2,194,553 | 10,598 | - The company entered into a new five-year lease agreement on February 28, 2023, for a four-story office and warehouse facility in Singapore, with total rent of approximately $3.9 million[803] - The weighted average discount rates for operating leases were 6.0% and 5.0% as of December 31, 2023, and 2022, respectively[871] Note 8. Intangible assets As of December 31, 2023, the company's net intangible assets totaled $1,251,180, an increase from $932,999 in 2022, primarily comprising software and application development, with amortization expense of $591,321 in 2023 Intangible Assets Composition (as of December 31) | Indicator (USD) | 2023 | 2022 | |:---|:---|:---| | Software | 73,494 | 72,421 | | Application development | 2,199,748 | 1,275,669 | | Total cost | 2,273,242 | 1,348,090 | | Accumulated amortization | (1,022,062) | (415,091) | | Intangible assets, net | 1,251,180 | 932,999 | - Amortization expense for intangible assets was $591,321, $314,023, and $87,723 for 2023, 2022, and 2021, respectively, recognized in general and administrative expenses[872] - The estimated useful lives for intangible assets are 3 years for application development and 2 years for software[625] Note 9. Other current liabilities As of December 31, 2023, the company's total other current liabilities amounted to $6,110,738, a significant increase from $1,728,792 in 2022, primarily consisting of accrued expenses, customer advances, and other payables Other Current Liabilities Composition (as of December 31) | Indicator (USD) | 2023 | 2022 | |:---|:---|:---| | Accrued expenses | 674,949 | 474,033 | | Customer advances | 3,434,075 | 188,069 | | Other payables | 2,001,714 | 1,066,690 | | Total | 6,110,738 | 1,728,792 | - Customer advances primarily refer to prepayments made by customers before goods delivery[895] - Other payables primarily include outstanding amounts owed to non-trade suppliers and value-added tax payable[809] Note 10. Loans payable As of December 31, 2023, the company's total loans payable were $717,193, with a current portion of $512,435 and a non-current portion of $204,758, including finance leases, term loans, and short-term loans, and the company paid $241,890 in interest expense in 2023 Loans Payable Composition (as of December 31) | Indicator (USD) | 2023 | 2022 | |:---|:---|:---| | Finance lease – motor vehicles | 248,768 | 286,329 | | Term loan I | 154,195 | 594,070 | | Term loan II | 147,697 | 1,028,645 | | Short-term loan | 166,533 | 175,783 | | Total | 717,193 | 2,084,827 | | Less: Current portion | (512,435) | (1,611,069) | | Long-term loans payable | 204,758 | 473,758 | - The company paid loan interest expenses of $241,890, $237,505, and $25,992 for 2023, 2022, and 2021, respectively[830] - On December 12, 2022, the company entered into a $200,000 unsecured short-term loan to pay a China vendor, which has been extended multiple times, with the latest maturity date being May 31, 2024[811] Note 11. Related Party Transactions As of December 31, 2023, the company had $5,169 due from Webuy Talent Ltd. and $25,929 due to CEO and Chairman Bin Xue, both unsecured, interest-free, and payable on demand for business advances or reimbursed expenses - As of December 31, 2023, the company had $5,169 due from Webuy Talent Ltd. and $25,929 due to CEO and Chairman Bin Xue[898][814] - These amounts are unsecured, interest-free, and payable on demand for business advances or reimbursed expenses[898][814] - Following the disposal of Webuy Sdn Bhd on July 27, 2022, the company wrote off $32,165 in related party payables to a director of Webuy Sdn Bhd[879] Note 12. Convertible Notes Payables As of December 31, 2023, the company's total convertible notes payable amounted to $1,901,600, with $1,489,200 in new convertible notes issued in 2023, while $2,920,800 in convertible notes were converted into ordinary shares in 2022, and in November 2023, noteholders agreed to waive conversion rights for cash settlement within six months from October 19, 2023 - As of December 31, 2023, the carrying value of the company's convertible notes payable was $1,901,600[901] - In 2023, the company issued convertible notes totaling $1,489,200[901] - In 2022, convertible notes totaling $2,920,800 were converted into 1,040,000 ordinary shares (adjusted for share split)[815][836] - On November 27, 2023, noteholders agreed to waive their conversion rights in favor of cash settlement at a 10% annual interest rate, payable within six months from October 19, 2023[816] Note 13. SAFE Notes Payable In 2022, the company issued SAFE notes totaling $750,000, which were converted into 533,000 ordinary shares (adjusted for share split) on August 29, 2022 - In 2022, the company issued SAFE notes totaling $750,000, which were converted into 533,000 ordinary shares (adjusted for share split) on August 29, 2022[902][905] Note 14. Equity This section details changes in the company's share capital structure, including a 1-for-2,600 forward stock split on May 2, 2023, and an increase in authorized ordinary shares, with 52,381,600 ordinary shares issued and outstanding as of December 31, 2023, also disclosing restricted stock unit grants and share-based compensation expenses - The company effected a 1-for-2,600 forward stock split on May 2, 2023, reducing the par value per share from $0.001 to $0.000000385[881] - As of December 31, 2023, the company had 260,000,000,000 authorized ordinary shares and 52,381,600 ordinary shares issued and outstanding[883][885] - On January 1, 2021, the company granted 1,642 restricted stock units totaling $3,240,344, vesting over 20 months, with share-based compensation expenses of $0, $1,266,890, and $1,973,454 recorded in 2023, 2022, and 2021, respectively[907] Note 15. Income tax This section outlines the company's income tax policies in its operating locations, including the Cayman Islands, Singapore, Indonesia, and China, noting no income tax in the Cayman Islands, corporate tax rates of 17% in Singapore, 22% in Indonesia, and 25% in China, and no deferred tax assets recognized due to the inability to utilize tax loss carryforwards against future profits - The company is not subject to income or capital gains tax in the Cayman Islands, and no withholding tax is imposed on dividend payments[908] Corporate Income Tax Rates by Jurisdiction | Jurisdiction | 2023 Tax Rate | 2022 Tax Rate | 2021 Tax Rate | |:---|:---|:---|:---| | Singapore | 17% | 17% | 17% | | Indonesia | 22% | 22% | 22% | | Malaysia | 24% | 24% | 24% | | China | 25% | 25% | 25% | - The company has not recognized deferred tax assets because, under Singapore income tax law, its tax loss carryforwards cannot be utilized to offset future profits due to a change in ownership of New Retail[864][851] Note 16. Government Grants The company recognized government grants of $50,537, $159,000, and $59,000 in 2023, 2022, and 2021, respectively, recorded as other income when conditions are met and funds received Government Grant Amounts (USD) | Fiscal Year | Government Grant Amount | |:---|:---| | 2023 | 50,537 | | 2022 | 159,000 | | 2021 | 59,000 | - These government grants are recognized as other income when the company meets the conditions and receives the funds[829] Note 17. Concentrations and Risks This section discloses the company's credit and foreign exchange risks, with credit risk concentrated in accounts receivable and managed through credit assessment and monitoring, while foreign exchange risk arises from operations in multiple markets with revenues and expenses denominated in different currencies, impacting financial performance due to exchange rate fluctuations - Credit risk is primarily concentrated in accounts receivable, managed through credit approval, limits, and monitoring procedures, without requiring collateral[831][854] - Operating in multiple markets, the company's revenue is denominated in local Southeast Asian currencies, and expenses are paid in local currencies, causing financial performance to be affected by exchange rate fluctuations[855] Suppliers Accounting for 10% or More of Accounts Payable (as of December 31) | Company | 2023 (USD) | % accounts payable | 2022 (USD) | % accounts payable | |:---|:---|:---|:---|:---| | Company A | 2,170,312 | 19.6% | — | —% | | Company B | 1,222,103 | 11.1% | — | — | | Company C | — | — | 573,451 | 10.5% | | Total | 3,392,415 | 30.7% | 573,451 | 10.5% | Customers Accounting for 10% or More of Accounts Receivable (as of December 31) | Company | 2023 (USD) | % accounts receivable | 2022 (USD) | % accounts receivable | |:---|:---|:---|:---|:---| | Company A | 1,337,859 | 13.2% | 679,226 | 26.4% | | Company B | — | —% | 586,103 | 22.8% | | Company C | — | —% | 307,672 | 12.0% | | Total | 1,337,859 | 13.2% | 1,573,001 | 61.2% | Note 18. Commitments and Contingencies The company may face loss contingencies such as legal proceedings and claims in the ordinary course of business, but management believes there are no material pending or threatened legal or administrative proceedings as of December 31, 2023, and the date of this report - The company may face loss contingencies, such as legal proceedings and claims, in the ordinary course of business[856] - Management believes that as of December 31, 2023, and the date of this report, there are no material pending or threatened legal or administrative proceedings against the company[856] Note 19. Subsequent Events This section discloses significant post-reporting period events, including the re-designation and re-classification of ordinary shares into Class A and Class B ordinary shares approved by shareholders on March 8, 2024, the issuance of a $2,500,000 unsecured promissory note to a third party on January 5, 2024, with a 3% monthly interest rate, and the incorporation of Webuy Advisory Pte. Ltd. on February 2, 2024 - On March 8, 2024, shareholders approved the re-designation and re-classification of the company's ordinary shares into Class A and Class B ordinary shares, with 21,395,400 ordinary shares held by Bin Xue, GBUY GLOBAL LTD, and WEBUY TALENT LTD re-designated as Class B ordinary shares, each carrying ten (10) votes[95][844][857] - On January 5, 2024, the company issued an unsecured promissory note of $2,500,000 to a third party with a 3% monthly interest rate, maturing in one month[858] - The company incorporated Webuy Advisory Pte. Ltd. on February 2, 2024[859]