Financial Performance - Total revenues decreased from US$1,180,912 for the six months ended June 30, 2023 to US$1,061,080 for the same period in 2024, a decline of 10.1%[5] - Net income for the six months ended June 30, 2024 was US$450,159, down from US$464,580 in the same period of 2023, a decrease of 3.1%[5] - The company reported a gross profit of US$855,218 for the six months ended June 30, 2024, compared to US$913,485 for the same period in 2023, a decrease of 6.4%[5] - The company recorded total income tax expense of US$88,734 for the six months ended June 30, 2024, compared to US$82,254 in 2023[127] - Gross profit margin decreased to 68.1% in 2024 from 77.4% in 2023, with customized software solutions maintaining a high margin of 87.0%[122] Assets and Liabilities - Total assets increased from US$3,297,495 as of December 31, 2023 to US$4,129,528 as of June 30, 2024, representing a growth of 25.2%[3] - Total shareholders' equity increased from US$1,996,894 as of December 31, 2023 to US$2,449,366 as of June 30, 2024, reflecting a growth of 22.7%[3] - As of June 30, 2024, the Company had total assets of $662,975 and total liabilities of $796,421, resulting in a shareholders' deficit of $133,446[151] - The total non-current assets decreased from $680,091 as of December 31, 2023, to $662,975 as of June 30, 2024[151] Cash and Cash Equivalents - Cash and cash equivalents decreased from US$12,783 as of December 31, 2023 to US$8,199 as of June 30, 2024, a decline of 35.8%[3] - The company maintains no cash equivalents as of December 31, 2023, and June 30, 2024[28] - The company has sufficient cash on demand to meet operational expenses for twelve months, supported by financial backing from its Controlling Shareholder and financial institutions[140] Revenue Streams - The company’s subscription services revenue grew from US$123,373 in the first half of 2023 to US$247,990 in the first half of 2024, an increase of 100.5%[5] - Revenue from subscription services is recognized on a monthly basis as clients consume the benefits of the services[73] - Customized software solutions revenue increased slightly to US$803,830, representing 75.8% of total revenues in 2024, up from 68.0% in 2023[121] - Subscription services revenue grew significantly to US$247,990, accounting for 23.4% of total revenues in 2024, compared to 10.4% in 2023[121] Expenses and Costs - Operating expenses decreased from US$360,244 in the first half of 2023 to US$323,122 in the first half of 2024, a reduction of 10.3%[5] - The cost of revenues increased to US$338,122 in 2024, up from US$267,427 in 2023, with a notable rise in subscription services costs to US$225,188, which is 66.6% of total costs[121] - Total accrued staff costs surged from US$30,822 to US$81,331, marking a significant increase of 163%[108] Credit and Risk Management - As of June 30, 2024, the allowance for expected credit losses increased to $18,546 from $13,864 as of December 31, 2023[29] - The allowance for expected credit losses rose from US$13,864 to US$18,546, indicating a 34% increase[101] - Customer concentration risk increased, with five customers accounting for 20.2%, 18.9%, 16.2%, 14.5%, and 12.4% of total revenues in 2024[135] - The company has no significant credit risk associated with cash held in reputable financial institutions in Hong Kong, with a cash balance of US$8,199 as of June 30, 2024[133] Initial Public Offering (IPO) - The Initial Public Offering (IPO) was declared effective on September 30, 2024, with the Company offering 1,100,000 ordinary shares at $4.00 per share, generating gross proceeds of $4,400,000[17] - The Company raised net proceeds of $2,628,588 from the offering of 1,100,000 ordinary shares at $4.00 per share on October 3, 2024[145] - An additional gross proceeds of $660,000 were received from the exercise of the Over-allotment Option for 165,000 ordinary shares on October 15, 2024[146] Legal and Regulatory Matters - The Company is involved in ongoing legal proceedings but does not expect any material adverse effects on its financial position[143] - The Company completed a Group Reorganization on August 30, 2023, resulting in Power Smart holding 89% of equity interest, while other shareholders hold 4.5%, 3.5%, and 3.0% respectively[16] Future Outlook - The ERP software system is expected to generate positive future cash flows over an estimated useful life of ten years[36] - The Company intends to meet cash requirements for the next 12 months through operations and financial support from its controlling shareholder and financial institutions[98]
Wellchange Holdings Company Limited(WCT) - 2024 Q3 - Quarterly Report