PART I - FINANCIAL INFORMATION This section details the company's unaudited condensed consolidated financial information and related disclosures Cautionary Note Regarding Forward-Looking Statements Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from expectations4 - Key risks include significant reliance on top customers, substantial accounts receivable that may become uncollectible, and potential significant expenses or delays due to the dismissal of BF Borgers as auditor45 - The company faces potential fines and penalties from the Chinese government for not completing required filings and risks associated with adverse regulatory developments in Mainland China, including potential delisting under the Holding Foreign Companies Accountable Act57 Item 1. Financial Statements Unaudited condensed consolidated financial statements for the company and its subsidiaries, with detailed notes Condensed Consolidated Balance Sheets The condensed consolidated balance sheets show the company's financial position, highlighting changes in assets, liabilities, and equity Condensed Consolidated Balance Sheets (in USD) | ASSETS (in USD) | June 30, 2024 | December 31, 2023 | | :---------------------- | :------------ | :---------------- | | Cash | $98,374,302 | $98,040,554 | | Accounts receivable | $10,826,787 | $7,455,252 | | Inventories | $179,264 | $222,102 | | Prepaid expenses and other current assets | $3,856,718 | $1,063,627 | | TOTAL CURRENT ASSETS | $113,237,071 | $106,781,535 | | Property, plant and equipment, net | $12,672,986 | $12,859,863 | | TOTAL ASSETS | $125,910,057 | $119,641,398 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in USD) | June 30, 2024 | December 31, 2023 | | :-------------------------------------- | :------------ | :---------------- | | Accounts payable | $917,153 | $640,795 | | Due to a related party | $263,956 | - | | Income tax payable | $1,093,839 | - | | Accrued expenses and other current liabilities | $839,781 | $4,462,496 | | Convertible promissory notes payable | - | $1,239,126 | | TOTAL CURRENT LIABILITIES | $3,114,729 | $6,342,417 | | Common stock purchase warrants liability | $332,799 | $378,371 | | TOTAL LIABILITIES | $3,447,528 | $6,720,788 | | STOCKHOLDERS' EQUITY (in USD) | June 30, 2024 | December 31, 2023 | | :---------------------------- | :------------ | :---------------- | | Common stock | $11,932 | $9,733 | | Additional paid in capital | $52,501,680 | $43,514,125 | | Statutory reserve | $7,195,092 | $7,195,092 | | Retained earnings | $72,737,656 | $69,477,092 | | Accumulated other comprehensive loss | ($9,983,831) | ($7,275,432) | | TOTAL STOCKHOLDERS' EQUITY | $122,462,529 | $112,920,610 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $125,910,057 | $119,641,398 | - Total assets increased by approximately $6.27 million (5.2%) from December 31, 2023, to June 30, 2024, primarily driven by an increase in accounts receivable and prepaid expenses9 - Total current liabilities decreased significantly by approximately $3.23 million (50.9%) due to the repayment of convertible promissory notes and a decrease in accrued expenses and other current liabilities9 Condensed Consolidated Statements of Income and Comprehensive Income (Loss) This statement provides an overview of the company's financial performance, detailing revenues, costs, operating expenses, and net income Metric (in USD) | Metric (in USD) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $12,234,575 | $12,774,432 | $27,111,834 | $26,207,893 | | Cost of Revenues | ($7,373,757) | ($6,521,015) | ($18,913,058) | ($13,915,676) | | Gross Profit | $4,860,818 | $6,253,417 | $8,198,776 | $12,292,217 | | Total Operating Expenses | ($1,135,590) | ($158,651) | ($2,168,473) | ($1,896,997) | | Income From Operations | $3,725,228 | $6,094,766 | $6,030,303 | $10,395,220 | | Total Other Income (Expenses) | $75,797 | $134,312 | ($1,008,560) | $32,506 | | Income Before Income Tax Expense | $3,801,025 | $6,229,078 | $5,021,743 | $10,427,726 | | Income Tax Expense | ($1,099,331) | ($1,556,095) | ($1,761,179) | ($2,961,494) | | NET INCOME | $2,701,694 | $4,672,983 | $3,260,564 | $7,466,232 | | Comprehensive Income (Loss) | $1,923,288 | ($1,531,968) | $552,165 | $580,305 | | Basic EPS | $0.23 | $0.48 | $0.29 | $0.84 | | Diluted EPS | $0.23 | $0.48 | $0.29 | $0.84 | | Basic Weighted Average Shares Outstanding | 11,931,534 | 9,682,721 | 11,325,873 | 8,841,712 | | Diluted Weighted Average Shares Outstanding | 11,982,239 | 9,779,349 | 11,376,578 | 9,034,969 | - Net income for the three months ended June 30, 2024, decreased by 42.2% to $2.7 million from $4.7 million in the prior year period, primarily due to higher cost of revenues and operating expenses11 - For the six months ended June 30, 2024, net income decreased by 56.3% to $3.3 million from $7.5 million in the prior year period, largely impacted by a significant increase in cost of revenues and interest expenses11 Condensed Consolidated Statements of Changes in Stockholders' Equity This statement details changes in stockholders' equity, reflecting common stock issuances, net income, and currency adjustments Stockholders' Equity Item (in USD) | Stockholders' Equity Item (in USD) | Balance as of Dec 31, 2023 | Issuance of common stock from 2024 Public Offering | Exercise of warrants | Net income | Foreign currency translation adjustment | Balance as of June 30, 2024 | | :--------------------------------- | :------------------------- | :------------------------------------------------- | :------------------- | :--------- | :-------------------------------------- | :-------------------------- | | Common Stock (par value) | $9,733 | $2,160 | $39 | - | - | $11,932 | | Additional Paid-in Capital | $43,514,125 | $8,987,594 | ($39) | - |
Wetouch(WETH) - 2024 Q2 - Quarterly Report