WeTrade Group(WETG) - 2023 Q4 - Annual Report

Bitcoin Acquisition and Strategy - The company acquired bitcoin worth $24,990,000, resulting in a market value of $35,206,901 and a digital asset gain of $10,216,901 as of December 31, 2023[13]. - The company holds a total of 833 bitcoins, maintaining this number since the previous year[13]. - The company plans to continue accumulating bitcoin as long-term holdings without setting a specific target for the amount[11]. - The company may periodically sell bitcoin for corporate purposes, including treasury management and tax benefits[12]. - The bitcoin acquisition strategy involves using liquid assets exceeding working capital requirements and may include issuing debt or equity securities[51]. - The total supply of bitcoin is capped at 21 million, with the current mining reward at 6.25 bitcoin per block, expected to halve to 3.125 bitcoin in April 2024[54]. - On January 10, 2024, the SEC approved the listing and trading of shares of spot bitcoin exchange-traded products (ETPs) on U.S. national securities exchanges, marking a significant regulatory milestone for direct bitcoin investment[57]. - The Bitcoin market's value is influenced by supply and demand dynamics, market expectations for bitcoin adoption, and the number of merchants accepting bitcoin as payment[58]. Regulatory Environment - Regulatory changes in Hong Kong and potential impacts from PRC laws could affect the company's operations and ability to offer securities[24]. - The company is not currently required to obtain regulatory approvals from PRC authorities for its operations in Hong Kong[24]. - The company faces risks associated with operating in Hong Kong, including scrutiny and potential changes in PRC policies that could impact profitability[27]. - The company is aware of the evolving regulatory landscape in China, which may affect its business operations and foreign investments[25]. - The SEC has initiated targeted reviews of filings for companies with significant China-based operations, which may impact their market activities[28]. - The U.S. regulatory landscape for digital assets is evolving, with multiple agencies examining the operations of digital asset networks and exchanges[31]. - The CFTC considers certain digital assets, including bitcoin, as commodities, which subjects them to market manipulation and fraud oversight[33]. - The SEC does not classify bitcoin as a security under federal securities laws, but this is not an official policy statement[34]. - The PCAOB has secured complete access to inspect public accounting firms in mainland China and Hong Kong, which may affect companies' compliance under the HFCAA[39]. Financial and Tax Compliance - NEXT TECHNOLOGY HOLDING INC. relies on dividends from its Hong Kong and PRC subsidiaries to fund cash requirements, but no dividends have been distributed as of the report date[42][43]. - The company intends to retain all available funds for business operations and expansion, with no anticipated dividends in the foreseeable future[44]. - The current Value-added Tax (VAT) rate applicable to the company is 6%, with a previous adjustment from 17% to 16% and then to 13% for certain sales[96]. - The withholding tax on dividends for non-PRC resident investors is generally 10%, which can be reduced to 5% under certain conditions for Hong Kong resident enterprises[99]. - The company is eligible for tax refunds under certain favorable government policies starting from 2021[96]. - The Enterprise Income Tax rate for resident enterprises in China is 25% on income obtained both in and outside the PRC[93]. - Non-resident enterprises with no institutions in the PRC are subject to a reduced Enterprise Income Tax rate of 10% on income obtained in the PRC[93]. - Wholly foreign-owned enterprises in China can only distribute dividends from accumulated after-tax profits, with a mandatory allocation of 10% to the statutory common reserve fund[91]. - Profits tax is imposed at rates of 8.25% on assessable profits up to HKD 2,000,000 and 16.5% on profits over HKD 2,000,000 for corporations[111]. - Hong Kong stamp duty is charged at an ad valorem rate of 0.1% on the higher of the consideration or market value of shares, totaling 0.2% for typical transactions[111]. - A fixed duty of HKD 5 is payable on any instrument of transfer of Hong Kong shares[111]. - Penalties for unpaid stamp duty can be up to ten times the duty payable[111]. - No capital gains tax is imposed in Hong Kong on the sale of shares[110]. - Trading gains from the sale of shares by certain taxpayers may be subject to profits tax unless proven to be long-term investments[111]. - Employers must notify the Commissioner of Inland Revenue within three months of commencing employment of individuals likely to be chargeable to tax[110]. - Employers must also notify the Commissioner one month before ceasing employment of such individuals[110]. Employment and Insurance - The company has 8 full-time employees, with 3 in operations, 2 in technology, 1 in general administration, and 2 in the financial department[65]. - The company provides employee benefits in compliance with Hong Kong law, including pension, medical, and unemployment insurance[66]. - The company maintains certain insurance policies, including social security insurance, but does not have business interruption or product liability insurance[67]. - The company has entered into written employment contracts with all employees, ensuring compliance with PRC labor laws[102]. Legal Matters - A derivative lawsuit was filed against the company on September 28, 2023, seeking control, which was dismissed without prejudice on October 18, 2023[70]. - On November 7, 2023, a temporary restraining order was issued against unauthorized individuals claiming control over the company[71]. Compliance with Laws - The company is in compliance with the Cyber Security Law of the PRC, which mandates measures for network security and personal data protection[82]. - The company’s corporate structure is not subject to the M&A Rules, but there are uncertainties regarding the interpretation of these rules in overseas offerings[78]. - The Foreign Investment Law of the PRC, effective January 1, 2020, ensures fair competition and protection of intellectual property rights for foreign investment enterprises[84]. - Companies in PRC must comply with social insurance regulations, providing basic pension, medical, unemployment, maternity, and occupational injury insurance[103]. - The company has received a business registration certificate in Hong Kong and is in compliance with local business registration regulations[109]. - The company is in compliance with the regulations regarding Hong Kong taxation[112]. - The company is classified as a "smaller reporting company" and is not required to provide certain market risk disclosures[162].