WeTrade Group(WETG) - 2022 Q1 - Quarterly Report

PART I Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2022, including balance sheets, operations, cash flows, and equity, with notes on business and a subsequent share cancellation Condensed Consolidated Balance Sheets As of March 31, 2022, total assets increased slightly to $20.06 million, driven by a substantial rise in cash and cash equivalents to $7.57 million from $0.62 million, while total liabilities remained stable Condensed Consolidated Balance Sheet (Unaudited) | Account | March 31, 2022 (USD) | December 31, 2021 (USD) | | :--- | :--- | :--- | | Current Assets | | | | Cash and cash equivalents | 7,568,537 | 616,593 | | Accounts receivables | 958,797 | 5,627,463 | | Account receivable- related party | 36,083 | 3,603,402 | | Total Assets | 20,063,610 | 19,470,524 | | Total Liabilities | 4,938,843 | 4,941,202 | | Total Stockholders' Equity | 15,124,767 | 14,529,322 | Condensed Consolidated Statements of Operations For Q1 2022, total service revenue decreased to $2.24 million from $2.78 million year-over-year, resulting in lower gross profit of $1.45 million and net income of $560,855 Condensed Consolidated Statements of Operations (Unaudited) | Account | Three Months Ended March 31, 2022 (USD) | Three Months Ended March 31, 2021 (USD) | | :--- | :--- | :--- | | Total service revenue | 2,236,853 | 2,780,923 | | Cost of revenue | (789,188) | (146,308) | | Gross profit | 1,447,665 | 2,634,615 | | General and Administrative | 805,268 | 1,889,190 | | Operations profit | 642,397 | 745,425 | | Net income | 560,855 | 652,084 | | Basic and diluted net income per share | 0.00 | 0.00 | Condensed Statements of Cash Flows Net cash provided by operating activities significantly improved to $7.42 million in Q1 2022, primarily due to accounts receivable collection, while $0.72 million was used in investing activities Condensed Statements of Cash Flows (Unaudited) | Account | For the Period March 31, 2022 (USD) | For the Period March 31, 2021 (USD) | | :--- | :--- | :--- | | Net cash flows provided by/(used in) operating activities | 7,420,490 | (560,646) | | Net cash used in investing activities | (723,420) | - | | Net cash flows provided by/(used in) financing activities | 259,840 | (1,408,683) | | Change in cash and cash equivalents | 6,951,944 | (1,967,663) | | Cash and cash equivalents, end of period | 7,568,537 | 2,672,940 | Notes to Condensed Consolidated Financial Statements These notes detail the company's 'YCloud' social e-commerce platform business, revenue model based on GMV, new customer agreements, and a significant subsequent event involving the cancellation of 120.4 million common shares - The company's business is providing technical services and solutions via its social e-commerce platform, 'YCloud', to micro-business online stores in China[19] - In Q1 2022, the company entered into YCloud system service agreements with three new customers: Beijing Yidong Linglong Cultural Media Co., Ltd., Beijing Maitu International Travel Agency Co., Ltd, and Beijing Youth Travel Service Co., Ltd[22][23] - Revenue is derived from system service fees of 2%-3.5% of the total Gross Merchandise Volume (GMV) generated on the YCloud platform[66] Gross Merchandise Volume (GMV) | Period | March 31, 2022 (USD) | March 31, 2021 (USD) | | :--- | :--- | :--- | | Non-related parties | 62,943,846 | 80,402,192 | | Related party | 4,800,846 | - | | Total GMV | 67,744,692 | 80,402,192 | - Subsequent Event: On April 13, 2022, the company cancelled 120,418,995 shares of Common Stock, reducing the total outstanding shares from 305,451,498 to 185,032,503 as of May 23, 2022[100] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2022 financial results, noting a revenue decrease to $2.24 million due to lower GMV from COVID-19 lockdowns, a decline in net income, and improved liquidity driven by $8.2 million in accounts receivable collection - The decrease in revenue for Q1 2022 was mainly due to a decrease in Gross Merchandise Volume (GMV) in the Ycloud system as a result of Covid-19 lockdowns in certain main cities in PRC since March 2022, partially mitigated by the addition of 3 new customers[108] - General and administrative expenses decreased significantly to $805,268 from $1,889,190 in the prior-year period, mainly due to a reduction in advertising, exhibition, and legal expenses[111] - Cash on hand increased to $7,568,537, primarily due to the collection of approximately $8.2 million in accounts receivables from customers and a related party during the period[114] - Net cash from operating activities increased by approximately $7.9 million year-over-year, mainly due to the collection of accounts receivables[115] Quantitative and Qualitative Disclosures about Market Risk The company is classified as a 'smaller reporting company' and is therefore not required to provide the quantitative and qualitative disclosures about market risk - As a 'smaller reporting company' as defined by Regulation S-K, the company is not required to provide the information for this item[120] Controls and Procedures Management evaluated the company's disclosure controls and procedures and concluded they were not effective as of March 31, 2022, due to identified material weaknesses - Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2022[122] - Material weaknesses were identified, including: lack of an audit committee, lack of a majority of outside directors on the board, and management being dominated by two individuals without adequate compensating controls[122] - Additional weaknesses noted were a lack of segregation of duties within accounting functions and the lack of multiple levels of review of accounting data[123] PART II – Other Information Legal Proceedings The company reports that there are no legal proceedings - None[126] Risk Factors As a 'smaller reporting company,' the company is not required to provide risk factor disclosures in its 10-Q report - The company is a 'smaller reporting company' and as such is not required to provide the information contained in this item[126] Unregistered Sales of Equity Securities And Use Of Proceeds The company reports no unregistered sales of equity securities or use of proceeds during the period - None[126] Defaults Upon Senior Securities The company had no senior securities issued and outstanding during Q1 2022, thus no defaults to report - No senior securities were issued and outstanding during the three months ended March 31, 2022[127] Mine Safety Disclosures This item is not applicable to the company's business operations - Not applicable to our Company[128] Other Information This section discloses a significant corporate action: the cancellation of 120,418,995 common shares in April 2022, reducing total outstanding shares to 185,032,503 - On April 13, 2022, the Company cancelled 120,418,995 shares of Common Stock, decreasing the outstanding shares from 305,451,498 to 185,032,503[128] Exhibits This section lists the exhibits filed with the 10-Q report, including certifications from the CEO and CFO and financial statements in XBRL format - The report includes certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 and financial statements formatted in XBRL[129]