WeTrade Group(WETG) - 2021 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the unaudited financial statements, management's analysis of operations, market risk disclosures, and controls and procedures for the period ended June 30, 2021 Financial Statements The unaudited financial statements for the period ended June 30, 2021, show significant growth in revenue and net income compared to the prior year, with total assets increasing to $15.7 million driven by higher receivables and prepayments Consolidated Balance Sheets As of June 30, 2021, total assets grew to $15.7 million from $13.5 million at year-end 2020, primarily due to increases in accounts receivable, note receivable, and prepayments, leading to a significant increase in total stockholders' equity to $11.5 million Balance Sheet Summary (as of June 30, 2021 vs. Dec 31, 2020) | Metric | June 30, 2021 ($) | Dec 31, 2020 ($) | | :--- | :--- | :--- | | Total Current Assets | 12,903,623 | 10,415,582 | | Total Assets | 15,725,732 | 13,542,707 | | Total Current Liabilities | 2,030,207 | 2,177,224 | | Total Liabilities | 4,217,568 | 4,648,822 | | Total Stockholders' Equity | 11,508,164 | 8,893,885 | Consolidated Statements of Operations The company reported substantial year-over-year growth for the six months ended June 30, 2021, with revenue reaching $6.66 million, a significant increase from $0.88 million in the prior-year period, and net income rising to $2.49 million from $0.57 million Six Months Ended June 30, 2021 vs 2020 | Metric | Six Months 2021 ($) | Six Months 2020 ($) | | :--- | :--- | :--- | | Total Service Revenue | 6,663,816 | 876,363 | | Gross Profit | 6,327,049 | 876,363 | | Profit from Operations | 2,670,403 | 578,665 | | Net Income | 2,494,114 | 566,233 | | EPS (basic and diluted) | 0.01 | 0.00 | Three Months Ended June 30, 2021 vs 2020 | Metric | Three Months 2021 ($) | Three Months 2020 ($) | | :--- | :--- | :--- | | Total Service Revenue | 3,882,893 | 855,293 | | Gross Profit | 3,692,434 | 855,293 | | Profit from Operations | 1,924,977 | 582,685 | | Net Income | 1,842,030 | 570,253 | | EPS (basic and diluted) | 0.01 | 0.00 | Consolidated Statements of Cash Flows For the six months ended June 30, 2021, the company experienced a net cash outflow of $1.43 million, reducing its cash balance to $3.21 million, primarily due to increases in receivables and prepayments despite a net income of $2.49 million Cash Flow Summary (Six Months Ended June 30, 2021 vs 2020) | Metric | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (962,389) | (1,199,684) | | Net Cash Used in Investing Activities | (170,265) | 0 | | Net Cash Provided by Financing Activities | 0 | 219,202 | | Change in Cash and Cash Equivalents | (1,430,139) | (1,041,102) | | Cash and Cash Equivalents, End of Period | 3,210,464 | 5,550,026 | Notes to Financial Statements The notes detail the company's business, accounting policies, and specifics of financial statement line items, including its 'YCloud' social e-commerce platform in China, revenue generation from service fees, and a significant short-term note receivable - The company's business involves providing technical services and solutions via its membership-based social e-commerce platform, 'YCloud', to micro-business online stores in China[19] - Revenue is generated from service fees, typically 3.5% of the total Gross Merchandise Volume (GMV) generated on the platform[58] - For the six months ended June 30, 2021, the company generated $6,663,816 in revenue from two customers[58] - The company has a short-term note receivable of RMB 30 million (approx. $4.65 million) from a third party, with an annual interest rate of 5%, maturing on November 4, 2021, with a balance of $3,665,808 as of June 30, 2021[70][73] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the significant revenue increase for the three and six-month periods ended June 30, 2021, to new customer acquisition, with corresponding rises in expenses due to increased payroll for new staff, and a decrease in cash position due to a new short-term loan and prepayments Results of Operations (Six Months Ended June 30) | Metric | 2021 ($) | 2020 ($) | | :--- | :--- | :--- | | Revenue | 6,663,816 | 876,363 | | Gross Profit | 6,327,049 | 876,363 | | General & Administrative Expenses | (3,656,646) | (297,698) | | Net Income | 2,494,114 | 566,233 | - The increase in revenue for the six months ended June 30, 2021, was mainly due to service revenue generated from new customers[91] - The increase in general and administrative expenses was mainly due to higher payroll expenses from new staff recruited for software development[92] - Cash on hand decreased to $3,210,464 as of June 30, 2021, mainly due to an additional short-term loan of approximately $1.37 million to a third party and prepayment of office furniture[99] Quantitative and Qualitative Disclosures about Market Risk As a 'smaller reporting company,' the company is not required to provide this information - As a 'smaller reporting company' as defined by Item 10(f)(1) of Regulation S-K, the company is not required to provide quantitative and qualitative disclosures about market risk[104] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2021, due to identified material weaknesses, despite believing the financial statements are materially correct - Management concluded that disclosure controls and procedures were not effective as of the period ending June 30, 2021[106] - Material weaknesses identified include: lack of an audit committee, lack of a majority of outside directors, management dominated by two individuals, lack of segregation of duties within accounting, and lack of multiple levels of review of accounting data[106][107] PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, other miscellaneous items, and a list of exhibits filed with the report Legal Proceedings The company was not subject to any legal proceedings during the three months ended June 30, 2021, and is not aware of any threatened or pending proceedings - The company was not subject to any legal proceedings during the quarter ended June 30, 2021[112] Risk Factors As a 'smaller reporting company,' the company is not required to provide this information - The company is a 'smaller reporting company' and is not required to provide information on risk factors in its Form 10-Q[113] Unregistered Sales of Equity Securities And Use Of Proceeds There were no recent sales of unregistered securities as of June 30, 2021, with a total of 305,451,498 outstanding shares - As of June 30, 2021, there were no recent sales of unregistered securities, and total outstanding shares were 305,451,498[113] Other Items (3, 4, 5) The company reported no defaults upon senior securities, no mine safety disclosures as it is not applicable, and no other information to disclose for the period - Item 3: No defaults upon senior securities were reported[114] - Item 4: Mine safety disclosures are not applicable[114] - Item 5: No other information was reported[114] Exhibits This section lists the exhibits filed with the report, including officer certifications (Sarbanes-Oxley Sections 302 and 906) and Inline XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002[115] - Inline XBRL documents are included as exhibits[115]