Company Quick10K Filing
W&E Source
Price0.00 EPS-0
Shares82 P/E-0
MCap0 P/FCF-0
Net Debt-0 EBIT-0
TEV-0 TEV/EBIT0
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-02-16
10-Q 2020-09-30 Filed 2020-11-16
10-K 2020-06-30 Filed 2020-09-28
10-Q 2020-03-31 Filed 2020-05-15
10-Q 2019-12-31 Filed 2020-02-13
10-Q 2019-09-30 Filed 2019-11-14
10-K 2019-06-30 Filed 2019-09-27
10-Q 2019-03-31 Filed 2019-05-13
10-Q 2018-12-31 Filed 2019-02-13
10-Q 2018-11-14 Filed 2018-11-14
10-K 2018-06-30 Filed 2018-09-27
10-Q 2018-03-31 Filed 2018-05-09
10-Q 2017-12-31 Filed 2018-02-14
10-Q 2017-09-30 Filed 2017-11-09
10-K 2017-06-30 Filed 2017-09-28
10-Q 2017-03-31 Filed 2017-04-28
10-Q 2016-12-31 Filed 2017-02-10
10-Q 2016-09-30 Filed 2016-11-10
10-K 2016-06-30 Filed 2016-09-28
10-Q 2016-03-31 Filed 2016-05-13
10-Q 2015-12-31 Filed 2016-02-09
10-Q 2015-09-30 Filed 2015-11-04
10-K 2015-06-30 Filed 2015-09-28
10-Q 2015-03-31 Filed 2015-05-14
10-Q 2014-12-31 Filed 2015-02-17
10-Q 2014-09-30 Filed 2014-11-14
10-K 2014-06-30 Filed 2014-09-30
10-Q 2014-03-31 Filed 2014-05-12
10-Q 2013-12-31 Filed 2014-02-14
10-Q 2013-09-30 Filed 2013-11-14
10-K 2013-06-30 Filed 2013-11-01
10-Q 2013-03-31 Filed 2013-05-15
10-Q 2012-12-31 Filed 2013-02-14
10-Q 2012-09-30 Filed 2012-11-19
10-K 2012-06-30 Filed 2012-10-11
10-Q 2012-03-31 Filed 2012-05-14
10-Q 2011-12-31 Filed 2012-02-10
10-Q 2011-09-30 Filed 2011-11-14
10-K 2011-06-30 Filed 2011-10-13
10-Q 2011-03-31 Filed 2011-05-16
10-Q 2010-12-31 Filed 2011-02-18
10-Q 2010-09-30 Filed 2010-11-22
10-K 2010-06-30 Filed 2010-10-04
10-Q 2009-12-31 Filed 2010-02-12

WESC 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1 - Organization, Nature of Operations and Basis of Presentation
Note 2 - Summary of Significant Accounting Policies
Note 3 - Going Concern
Note 4 - Prepayment
Note 5 - Accounts Payable and Accrued Liabilities
Note 6 - Related Parties
Note 7 - Commitment and Contingencies
Note 8 - Common Stock
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 exhibit31-1.htm
EX-32.1 exhibit32-1.htm

W&E Source Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
41941030195818450667054-50398-1678502012201420172020
Assets, Equity
9425-9287-27999-46711-65423-841352012201420172020
Rev, G Profit, Net Income
37414026557815701648454-60108-1686702012201420172020
Ops, Inv, Fin

10-Q 1 form10q.htm FORM 10-Q W&E Source Corp.: Form 10-Q - Filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020 or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 000-52276

W&E Source Corp.
(Exact name of registrant as specified in its charter)

Delaware

98-0471083

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

113 Barksdale Professional Center, Newark, DE 19711
(Address of principal executive offices) (Zip Code)

(302) 722-6266
(Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]

Accelerated filer [  ]

Non-accelerated filer [  ]

Smaller reporting company [X]

  Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [  ]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [  ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 130,085,501 shares of common stock issued and outstanding as of February 15, 2021.


TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION  
ITEM 1. FINANCIAL STATEMENTS 1
Condensed Consolidated Balance Sheets 2
Condensed Consolidated Statements of Income and Comprehensive Income 3
Condensed Consolidated Statements of Cash Flows 4
Condensed Consolidated Statements of Changes in Shareholder's Deficit 5
Notes to Interim Consolidated Financial Statements 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 15
ITEM 4. CONTROLS AND PROCEDURES 15
PART II - OTHER INFORMATION  
ITEM 1. LEGAL PROCEEDINGS 16
ITEM 1A. RISK FACTORS 16
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 16
ITEM 4. MINE SAFETY DISCLOSURES 16
ITEM 5. OTHER INFORMATION 16
ITEM 6. EXHIBITS 17
SIGNATURES 18


PART I-FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

 


W&E Source Corp. and Subsidiaries

Condensed Consolidated Balance Sheets
As of December 31, 2020 and June 30, 2020

    December 31, 2020      June 30, 2020  
Assets   (Unaudited)        
Current Assets            
Cash $ 8,543   $ 3,508  
Other receivables   41     38  
Total current assets   8,584     3,546  
             
Non-Current Assets            
    Prepayments/Deposits   11,769     11,016  
        Total non-current assets   11,769     11,016  
             
TOTAL ASSETS $ 20,353   $ 14,562  
             
Liabilities and Shareholders' Equity (Deficit)            
Current liabilities            
Accounts payable and accrued liabilities $ 12,238   $ 15,351  
Advances for share issuance from related party   -     165,446  
Advances from related parties and related party payables   551     32,683  
    Total current liabilities   12,789     213,480  
             
TOTAL LIABILITIES   12,789     213,480  
             
Shareholders' deficit            
Common stock, $0.0001 par value, 500,000,000 shares authorized,
130,085,501 and 82,489,391 shares issued and outstanding as of December 31, 2020 and June 30, 2020, respectively
  13,009     8,249  
Additional paid-in capital   1,217,045     1,059,931  
Accumulated deficit   (1,226,623 )   (1,283,018 )
Accumulated other comprehensive income   4,133     15,920  
Total shareholders' deficit   7,564     (198,918 )
             
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 20,353   $ 14,562  

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

2


W&E Source Corp. and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income
For the Three and Six Months Ended December 31, 2020 and 2019
(Unaudited)

    Three Months 2020     Three Months 2019     Six Months 2020     Six Months 2019  
                         
Net revenues $ -   $ 380   $ -   $ 493  
    Gross profit   -     380     -     493  
                         
Operating expenses                        
    General and administrative expenses   (13,770 )   (10,970 )   (24,968 )   (22,348 )
        Total operating expenses   (13,770 )   (10,970 )   (24,968 )   (22,348 )
                         
Operating Loss   (13,770 )   (10,590 )   (24,968 )   (21,855 )
                         
Other Income (expense)                        
                         
    Interest expenses   (1,160 )   -     (14,326 )   -  
    Gain on debt settlement   90,433     -     90,433     -  
    Foreign currency exchange gain (loss)   7,360     5,005     5,256     (6,129 )
        Total other income (expense) $ 96,633     5,005   $ 81,363   $ (6,129 )
                         
Net income (loss)   82,863     (5,585 )   56,395     (27,984 )
                         
Other comprehensive income                        
                         
    Cumulative foreign currency translation adjustment   15,521     (3,065 )   11,786     (224 )
                         
    Comprehensive loss $ 98,384     (8,650 ) $ 68,181   $ (28,208 )
                         
Weighted average number of shares outstanding -
basic and diluted
  91,381,000     82,489,391     86,911,000     82,489,391  
                         
Loss per share - basic and diluted $ 0.00     ($0.00 ) $ 0.00     ($0.00 )


W&E Source Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows
For the Six Months Ended December 31, 2020 and 2019
(Unaudited)

    December 31, 2020     December 31, 2019  
Cash Flow from Operating Activities            
Net income (loss) $ 56,395   $ (27,984 )
Adjustments to reconcile net loss to net cash used in operating activities:            
Foreign currency exchange loss   -     8,374  
Gain on debt settlement   (90,433 )      
             
Imputed interest to related party   14,326     -  
Change in operating assets and liabilities:            
Decrease in prepaid expenses and deposits   (756 )   (114 )
Decrease in accounts payable and accrued  liabilities   (3,113 )   (10,500 )
Increase in advance for share issuance from related party   26,998     2,921  
Net cash provided in (used in) operating activities   3,417     (27,303 )
             
Cash Flows from Financing Activities            
Proceeds from related party   13,405     29,815  
Net cash provided by financing activities   13,405     29,815  
             
Cumulative translation adjustment   (11,787 )   (2,121 )
             
Net increase (decrease) in cash   5,035     391  
             
Cash, beginning of period   3,508     2,508  
             
Cash, end of period $ 8,543   $ 2,899  
             
Supplemental cash flows information            
    Interest paid $ -   $ -  
    Income tax paid $ -   $ -  
             
Non cash investing and financing activities            
  Share issuance for  debt settlement $ 237,981   $ -  

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

4


W&E Source Corp. and Subsidiaries

Condensed Consolidated Statements of Changes in Shareholders’ Deficit

As of December 31, 2020 and Year Ended June 30, 2020

(Unaudited)

                      Accumulated           Total  
                Additional     other           Shareholders'  
          Common Stock     Paid-in     Comprehensive     Accumulated     Equity  
    Shares     Amount     Capital     Income     Deficit     (Deficit)  
          $     $     $     $     $  
Opening Balance at June 30, 2019   82,489,391     8,249     1,059,931     11,390     (1,227,859 )   (148,289 )
  Foreign currency translation adjustment   -     -     -     2,841     -     2,841  
  Net Loss   -     -     -     -     (22,399 )   (22,399 )
Balance at September 30, 2019 (Unaudited)   82,489,391     8,249     1,059,931     14,231     (1,250,258 )   (167,847 )
  Foreign currency translation adjustment   -     -     -     (3,065 )   -     (3,065 )
  Net Loss   -     -     -     -     (5,585 )   (5,585 )
Balance at December 31, 2019 (Unaudited)   82,489,391     8,249     1,059,931     11,166     (1,255,843 )   (176,497 )
                                     
Opening Balance at June 30, 2020   82,489,391     8,249     1,059,931     15,920     (1,283,018 )   (198,918 )
  Imputed Interest   -     -     13,091     -     -     13,091  
  Foreign currency translation adjustment   -     -     -     (3,735 )   -     (3,735 )
  Net Loss   -     -     -     -     (26,468 )   (26,468 )
Balance at September 30, 2020   82,489,391     8,249     1,073,022     12,185     (1,309,486 )   (216,030 )
(Unaudited)                                    
  Imputed Interest   -     -     1,235     -     -     1,235  
  Share issuance by debts settlement   47,596,110     4,760     142,788     -     -     147,548  
  Foreign currency translation adjustment   -     -     -     (8,052 )   -     (8,052 )
  Net income   -     -     -     -     82,863     82,863  
Balance at December 31, 2020 (Unaudited)   130,085,501     13,009     1,217,045     4,133     (1,226,623 )   7,564  

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.



W&E Source Corp.

(Formerly News of China, Inc.)

Notes to Interim Consolidated Financial Statements

For the Periods Ended December 31, 2020 and June 30, 2020 

Note 1 - Organization, Nature of Operations and Basis of Presentation

W&E Source Corp. ("the Company") was incorporated in the State of Delaware on October 11, 2005 and is based in Montréal, Québec, Canada. The Company is providing air ticket reservations, hotel reservations and other travel related services.

On August 25, 2011, the Company incorporated a company called Airchn Travel Global, Inc. ("ATGI") in the State of Washington, USA. ATGI is a wholly owned subsidiary of the Company. ATGI focuses on a business segment of travel businesses which includes air ticket reservations, hotel reservations and other travel services.

On October 4, 2011, the Company incorporated a company called Airchn Travel (Canada) Inc. ("ATCI") in the Province of British Columbia, Canada. ATCI is a wholly owned subsidiary of ATGI. ATCI has a similar business segment as ATGI.

In January 2012, the Company changed its name from News of China, Inc. to W&E Source Corp. and increased its authorized shares to 500,000,000 shares. As a result of the name change, the Company's listing symbol on OTC Markets was also changed to WESC.

During the quarter ended March 31, 2012, the Company incorporated a company named Airchn Travel (Beijing) Inc. ("ATBI") in Beijing, China. ATBI is also a wholly owned subsidiary of ATGI. ATBI has a similar business segment as ATGI.

On December 15, 2012, Airchn Travel (Beijing) Inc., a wholly owned subsidiary of W&E Source Corp. (the "Company"), entered into the Share Purchase Agreement (the "Agreement") with Mr. Wu Hao (the "Seller"), a majority shareholder of Chengdu Baopiao Internet Co., Ltd. ("Baopiao"), to acquire part of his ownership in Baopiao which equals 51% of all issued and outstanding stock of Baopiao (the "Shares").

The Company will pay for the aggregate purchase price of RMB 2,550,000 for the Shares in cash and by assuming the Seller's debt to Baopiao in the amount of RMB1,800,000 (approximately US $289,000) (the "Debt"). According to the terms of the Agreement, the Company will assume the Debt upon execution of the Agreement and pay the Seller the remaining RMB750,000 of the purchase price within 20 days from the execution of the Agreement. Also at execution, the Company will pay Baopiao RMB200, 000 as repayment of the Debt and satisfy the remaining Debt of RMB 1,600,000 within 20 days from the execution of the Agreement.

Also pursuant to the Agreement, the Seller will provide guaranties that other than the information including financial statements provided to the Company, Baopiao does not have any other debts, and no third party has any rights or liens on the assets of Baopiao. The Seller and Baopiao will also indemnify the Company against any damages, liabilities, losses and expenses which the Company may sustain or suffer due to any breach of the guaranties made by the Seller or Baopiao.

Baopiao has obtained the necessary shareholder approval for the transfer of the Shares and will register the transfer of the Shares with the applicable State Administration for Industry and Commerce within three days from the date of the Agreement.

In connection with the Agreement, the Company also entered into an agreement with the Seller and Baopiao that as an incentive for the management team of Baopiao, the Company will reserve up to 26 million shares of its common stock for issuance to the Baopiao employees upon achievement of certain milestones over the next three years.

The Share Purchase Agreement with Mr. Wu Hao was not completed in January, 2013 and both the Company and Mr. Wu Hao agreed to terminate the agreement entered on December 15, 2012.


Note 2 - Summary of Significant Accounting Policies

a. Basis of presentation.

The accompanying interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X as promulgated by the Securities and Exchange Commission (the "SEC"). In the opinion of management, the financial statements include all adjustments of a normal recurring nature necessary for a fair statement of the results for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted as permitted by the rules and regulations of the United States Securities and Exchange Commission ("SEC"), although the Company believes that the disclosures contained in this report are adequate to make the information presented not misleading. The unaudited consolidated balance sheet information as of December 31, 2020 was derived from the consolidated audited financial statements included in the Company's Annual Report on Form 10-K for the year ended June 30, 2020. These unaudited consolidated financial statements should be read in conjunction with the annual consolidated audited financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 2020, and other reports filed with the SEC. Operating results for the three months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the full year ended June 30, 2021.

b. Foreign currency translation.

ATCI's and ATBI's functional currency for operations is the Canadian dollar and Chinese yuan. However, the Company's reporting currency is the U.S. dollar. Therefore, the consolidated financial statements for all periods presented have been translated into the U.S. dollar using the current rate method. Under this method, the income statement and the cash flows for each period have been translated into U.S. dollars using the average rate of the reporting period, and assets and liabilities have been translated using the exchange rate at the end of the period. All resulting exchange differences are reported in the cumulative translation adjustment account as a separate component of shareholders' equity.

c.  Principles of consolidation.

The consolidated statements include the accounts of the Company and its wholly owned subsidiaries, ATGI, ATCI and ATBI. All inter-company transactions and balances were eliminated.

d. Use of Estimates.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expense during the period. Actual results could differ from those estimates.

e.  Loss per share.

Basic loss per share ("EPS") is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. EPS excludes all potential dilutive shares of common stock if their effect is anti-dilutive. There were no dilutive securities at December 31, 2020 and June 30, 2020.

f.  Revenue recognition.

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. Revenue, which primarily consists of commission fees from air ticketing and hotel booking operations, is recognized as tickets and hotels are booked and non-cancellable, and is recorded on a net basis (that is, the amount billed to a customer less the amount paid to a supplier) as the Company acts as an agent in these transactions. Effective January 1, 2018, the Company adopted the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts. The implementation of ASC 606 did not have a material impact on the Company's consolidated financial statements. ASC 606 create a five-step model that requires entities to exercise judgement when considering the terms of contract, which includes (1) identifying the contracts or agreement with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligation, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company's revenue consists of revenue from providing travel consulting and travel arrangement advisory services ("service revenue"), and service revenue from travel schedule arrangements and advisory.


g. Cash and cash equivalents.

The Company includes in cash and cash equivalents all short-term, highly liquid investments that mature within three months or less of their acquisition date. Cash equivalents consist principally of investments in interest-bearing demand deposit accounts and liquidity funds with financial institutions and are stated at cost, which approximates fair value. As of December 31, 2020 and June 30, 2020, we have no cash equivalents.

h. Equipment.

Equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the asset. The estimated useful lives of our property and equipment are generally three years. As of December 31, 2020, there is no property or equipment.

i. Income taxes.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, the Company recognizes future tax benefits, such as carryforwards, to the extent that realization of such benefits is more likely than not and that a valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. The Company's net operating losses carryforwards are subject to Section 382 limitation.

j. Recently issued accounting pronouncements.

The Company does not expect that any recently issued accounting pronouncement will have a significant impact on the consolidated results of operations, financial position, or cash flows of the Company.

    Recently Issued Accounting Pronouncements

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for public business entities for fiscal years beginning after 15 December 2017, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after 15 December 2018, and interim periods within fiscal years beginning after 15 December 2019. Early adoption is permitted. Entities will have to apply the guidance retrospectively, but if it is impracticable to do so for an issue, the amendments related to that issue would be applied prospectively. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements, if any.

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, to clarify on how to apply certain aspects of the new lease accounting standard. The amendments in this update, among other things, better articulates the requirement for a lessee's reassessment of lease classification as of the effective date of a modification, clarifies that a change to an index or rate for variable lease payments does not constitute a resolution of a contingency that would result in the remeasurement of lease payments, and requires entities that apply Topic 842 retrospectively to each reporting period and do not adopt the practical expedients to write off any prior unamortized initial direct costs that do not meet the definition under Topic 842 to equity. The amendments in this update have the same effective date and transition requirements as the new lease standard summarized above. The Company has evaluated the impact of adoption of Topic 842 on the Company's consolidated financial position and results of operations as stated above. There would be no impact of the adoption of this guidance on its consolidated financial statements for the year ended as of June 30, 2020.


In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, "Simplifying the Accounting for Income Taxes". The pronouncement simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, "Income Taxes". The pronouncement also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 will be effective for us beginning in the first quarter of fiscal 2021, with early adoption permitted. We are still evaluating the impact this guidance will have on our consolidated financial statements.

Note 3 - Going Concern

As reflected in the accompanying consolidated financial statements, the Company had accumulated deficits of $1,226,623 and $1,283,018 for the years ended December 31, 2020 and June 30, 2020 and net income of $56,395 and net losses of $27,984, respectively, for the six months ended December 31, 2020 and 2019. The Company currently has business activities to generate funds for its own operations, however, has not yet achieved profitable operations. These factors raise substantial doubt about our ability to continue as a going concern. The Company's ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management believes that the current actions to obtain additional funding from independent investors or from the management and to implement its strategic plans should allow the Company to continue as a going concern. There are no assurances that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.

Note 4 - Prepayment

As of December 31, 2020, the Company prepaid a security deposit of $11,769 (Cnd$15,000) (June 30, 2020 - $11,016) to Consumer Protection British Columbia Province for the guarantee of service quality.

Note 5 - Accounts Payable and Accrued Liabilities

Accounts Payable and Accrued Liabilities of $12,238 as of December 31, 2020 consists of payment of $3,465 in legal fees, $6,950 in audit and accounting fees and $1,323 in filing fees. (June 30, 2020 - $15,351).

Note 6 - Related Parties

Mrs. Hong Ba serves as the Chief Executive Officer and Director of the Company. Mr. Feng Li, the husband of Mrs. Hong Ba, is the owner of the Canada Airchn Financial Inc. ("CAFI"). The shareholders make advances to the Company from time to time for the Company's operations. These advances are due on demand and non-interest bearing.

During the six months ended December 31, 2020, the CEO of the Company advanced $322 (June 30, 2020 - $140) to the Company for operating expenditure.

On December 14, 2020, the CEO of the Company assigned the debt owed to her by the Company to a transferee who entered into a debt cancellation agreement to convert the debt of $10,584 into 2,116,804 common shares of the Company at a price of $0.005 per share.

During the period ended December 31, 2020, a company owned by Feng Li, the husband of Mrs. Hong Ba, our CEO, charged the Company $3,655 (Cnd$4,800) (2020 - $3,668) in rent and the debt of $33,402 (2020 - $23,562) owed to such company was assigned to a transferee who entered into a debt cancellation agreement to convert the debt into 6,680,448 common shares of the Company at a price of $0.005 per share

As of the period ended December 31, 2020, Li Feng, the husband of Mrs. Hong Ba, our CEO, advanced $1,550 (December 31, 2020 - $1,100) to the Company for operating expenditures. On December 14, 2020, Mr. Li assigned the debt owed to him by the Company to a transferee who entered into a debt cancellation agreement to convert the debt into 310,000 common shares of the Company at a price of $0.005 per share.

As of December 31, 2020, the Company has received advances for future share issuance of $192,444 (June 30, 2020 - $149,304) and an advance of $211 (June 30, 2020 - $209) for operating expenditure from a related party who is an over 10% shareholder of the Company and the Company expensed $14,326 (June 30, 2020 - Nil) in imputed interest on the accumulated amount of advances for future share issuance. On December 14, 2020, such related party assigned the debt owed to him by the Company to a transferee who entered into a debt cancellation agreement to convert the debt into 38,488,858 common shares of the Company at a price of $0.005 per share.


Note 7 - Commitment and Contingencies

The Company leases an office space in Canada for a term under month by month operating lease agreement. Monthly rent is $616 (Cdn$800).

2020  Cdn $9,600

2021  Cdn $9,600

2022  Cdn $9,600

2023    Cdn $9,600

2024   Cdn $9,600

The lease agreement for the Beijing office was terminated effective from October 1, 2013.

For each of the six months ended December 31, 2020 and 2019, the Company recorded a rent expense of $3,655 (Cdn$4,800) and $3,668 (Cdn$4,800), respectively.

Note 8 - Common Stock

On January 23, 2012, the Company entered into a subscription agreement with the significant shareholder Hong Ba, for the sale of 22,000,000 common shares for $630,000 from cash received and expense paid on behalf by Hong Ba. Subsequent to the sale, Hong Ba owns 22,000,000 common shares which represent 45.9% of the issued and outstanding shares of the Company.

The Share Purchase Agreement with Mr. Wu Hao was not completed in January 2013, and both the Company and Mr. Wu Hao agreed to terminate the agreement entered on December 15, 2012. On October 26, 2014, the Company issued 15,538,300 common shares of the Company to settle the debts payable of $155,383 to related parties at $0.01 per share.

The Company is authorized to issue 500,000,000 shares of common stock with par value of $0.0001. As of December 31, 2020 and June 30, 2020, 130,085,501 and 82,489,391 shares of common stock were issued and outstanding, respectively. 

On October 26, 2014, the Company issued 15,538,300 common shares of the Company to settle the debts payable of $155,383 to related parties at $0.01 per share.

On August 5, 2016, the Company entered into Debt Conversion Agreements (the "Agreements") with each of Lin Li and Youzhe Li, who were each creditors to the Company with total outstanding balances of $25,920 (the "Lin Li Loan") and $78,861 (the "Youzhe Li Loan" and, together with the Lin Li Loan, the "Loans"), respectively. Pursuant to the Agreements the Company agreed to issue an aggregate total of 19,051,091 shares of its common stock, $0.0001 par value per share (the "Shares"), at the conversion rate of $0.0055 per share as full payment for the Loans. Upon issuance and delivery of the Shares, the Loans were fully paid and the Company no longer had any obligations to the individuals under the Loans. Lin Li is the sister of Mr. Feng Li, who is the husband of Hong Ba, the Company's director, CEO and CFO.

On August 5, 2016, the Company issued 14,338,364 common shares of the Company to such a related party in cancellation of the debt of $78,861 owed to such party at such time. 

On December 14, 2020, the Company entered into Debt Cancellation Agreement (the "Debt Cancellation Agreement") with certain creditors to the Company with a total outstanding aggregate balance of US$237,980.55 (the "Debts"). Pursuant to the Debt Cancellation Agreement the Company agreed to issue an aggregate total of 47,596,110 shares of its common stock, $0.0001 par value per share (the "Shares"), at the conversion rate of US$0.005 per share as full payment for the Debts. Upon issuance and delivery of the Shares, the Debts were fully paid and the Company no longer had any obligations to the creditors under the Debts.

As the filing date of these financial statements, there are 130,085,501 shares issued and outstanding.


ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

This report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

In this quarterly report, unless otherwise specified, all references to "common shares" refer to the common shares of our capital stock.

As used in this quarterly report, the terms "we", "us", "our", "W&E Source Corp.", "the Company" means W&E Source Corp., unless otherwise indicated.

Corporate Overview

The Company has identified the global tourism market as its first investment target. As it currently exists, the tourism industry is fragmented into various geographic regions. We believe that approaching this industry from a global perspective is an emerging market with tremendous growth potential. We plan to set up and/or acquire offices in various regions of the world and through them, develop the local tourism industry and expand our local tourism market. Ultimately, we plan to unify and manage our regional offices and to market our global services through the internet.

We have set up three subsidiaries, Airchn Travel Global, Inc. in Seattle, Washington ("ATGI") and Airchn Travel (Canada) Inc., in Vancouver, British Columbia in Canada ("ATCI") and Airchn Travel (Beijing) Inc. in Beijing, China ("ATBI"). Our Beijing office has been closed as of December 31, 2020 due to lack of business and to reduce operating costs.

We are engaged in services such as airline and cruise ticketing, customized and packaged tours, travel blogs, travel magazines, sales of travel related merchandise, group hotel reservations, business travel arrangements, conference travel arrangements, car rental and admission ticket sale for local tourist attractions.

We will continue to explore other business growth opportunities, regardless of industry, in order to diversify our business operations and investments.

On January 17, 2012, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of Delaware to change its name from News of China, Inc. to W&E Source Corp. In connection the name change, our listing symbol also changed from "NWCH" to "WESC." In addition, the Company also increased its total authorized shares to 500,000,000 to anticipate future financing through the issuance of our equity or convertible debt to finance our business.

COVID-19

In December 2019, a novel strain of coronavirus, COVID-19, was first detected in Wuhan, China, and has since spread to other regions, including Europe and North America. On March 11, 2020, the World Health Organization declared that the rapidly spreading COVID-19 outbreak was a global pandemic ("COVID-19 pandemic"). In response to the pandemic, many governments around the world have implemented, and continue to implement, a variety of measures to reduce the spread of COVID-19, including travel restrictions and bans, instructions to residents to practice social distancing, quarantine advisories, shelter-in-place orders and required closures of non-essential businesses. These government mandates have forced many of the companies on whom our business relies, including hotels and other accommodation providers and airlines, to seek government support in order to continue operating, to curtail drastically their service offerings or to cease operations entirely. Further, these measures have materially adversely affected, and may further adversely affect, consumer sentiment and discretionary spending patterns, economies and financial markets, and our customers. The COVID-19 pandemic and the resulting economic conditions and government orders have resulted in a material decrease in consumer spending and an unprecedented decline in travel activities and consumer demand for related services. Our financial results and prospects are almost entirely dependent on the sale of such travel-related services. Our results for the quarter ended December 31, 2020 have been significantly and negatively impacted, with a material decline in gross travel bookings and total revenues as compared to the corresponding period in 2019.  We expect to continue to see severely reduced new travel reservation bookings as compared to 2019 levels for the foreseeable future, which will have a materially adverse impact on our business, financial condition, results of operations and cash flows. Due to the uncertain and rapidly evolving nature of current conditions around the world, we are unable to predict accurately the impact that the COVID-19 pandemic will have on our business going forward. With the continued spread of COVID-19 in the United States and various other countries, we expect the pandemic and its effects to continue to have a significant adverse impact on our business for the duration of the pandemic, during any resurgences of the pandemic and during the subsequent economic recovery, which could be an extended period of time.


Results of Operations

The following summary of our results of operations should be read in conjunction with our unaudited financial statements for the quarters ended December 31, 2020 and 2019 contained in this Report.

Six Months Ended December 31, 2020 and 2019:

    Six Months Ended     Six Months Ended  
    December 31,     December 31,  
    2020     2019  
Revenues $ -   $ 493  
Expenses            
      General and administrative expenses   (24,968 )   (22,348 )
      Interest expenses   (14,326 )   -  
      Gain on debt settlement   90,433     -  
      Foreign currency exchange gain (loss)   5,256     (6,129 )
Net income (loss) $ 56,395   $ (27,984 )

Revenues

We have generated total revenues of $Nil from operations during the six months ended December 31, 2020 as compared to $493 for the same period in 2019, an decrease of $493 or 100%. The decrease was mainly due to the decrease in our travel business arrangement income caused by the covid-19 pandemic globally in the period ended December 30, 2020.

General and administrative expenses

General and administrative expenses for the six months ended December 31, 2020 increased by $2,620 or 10%, compared with the same period in 2019 primarily because of increased operating cost in professional expenses due to share issuance.

Net loss

We had net income of $56,395 and net losses of $27,984 for the six months ended December 31, 2020 and 2019, respectively, an increase of income of $56,395 or 100%, and had an accumulated deficit of $1,226,623 since the inception of our business as at December 31, 2020. The increase in net income is mainly attributable to an increase in gain on debt settlement and an increase in foreign exchange gain although no sales revenue and an increase of general and administrative expenses and imputed interest expenses accrued on advanced share issuance.


Three Months Ended December 31, 2020 and 2019:

             
    Three Months Ended     Three Months Ended  
    December 31,     December 31,  
    2020     2019  
Revenues $ -   $ 380  
Expenses            
      General and administrative expenses    (13,770 )   (10,970 )
      Interest expenses   (1,160 )   -  
      Gain on debt settlement   90,433     -  
      Foreign currency exchange gain (loss)   7,360     5,005  
Net income (loss) $ 82,863   $ (5,585 )

Revenues

We have generated total revenues of $Nil from operations during the three months ended December 31, 2020 as compared to $380 for the same period in 2019, a decrease of $380 or 100%. The decrease was mainly due to the decrease in our travel business arrangement income caused by the covid-19 pandemic globally in the period ended December 30, 2020.

General and administrative expenses

General and administrative expenses for the three months ended December 31, 2020 increased by $2,800 or 20%, compared with the same period in 2019 primarily because of increased operating cost in share issuance expenses.

Net loss

We had net income of $82,863 and net losses of $5,585 for the three months ended December 31, 2020 and 2019, respectively, an increase of $82,863 or 100%, and had an accumulated deficit of $1,226,623 since the inception of our business as at December 31, 2020. The increase in net income is mainly attributable to an increase in gain on debt settlement and an increase in foreign exchange gain although no sales revenue and an increase of general and administrative expenses and imputed interest expenses accrued on advanced share issuance.

Liquidity and Capital Resources

Our financial condition at the end of December 31, 2020 and June 30, 2020 are summarized as follows:

Working Capital

    December 31,
2020
    June 30,
2020
 
Current Assets $ 8,584   $ 3,546  
Current Liabilities   (12,789 )   (213,480 )
Working Capital $ (4,205 ) $ (209,934 )

Our working capital deficit decreased from the previous year and current assets were still insufficient to cover liabilities; the deficit magnitude decreased by $205,729 due to debt settlements by share issuance.

Cash Flows

    December 31,
2020
    December 31,
2019
 
Cash provided by (used in) operating activities $ 3,417   $ (27,303 )
Cash provided by financing activities   13,405     29,815  
Cumulative translation adjustment   (11,787 )   (2,121 )
Net increase (decrease) in cash $ 5,035   $ 391  


Cash Used in Operating Activities

For the six months ended December 31, 2020, our cash provided by (used in) operating activities decreased by $31,912 or 116% to $3,417, compared with $(27,303) for the six months in the prior year. The decrease is mainly due to debts settlement by share issuance compared with the six months in the prior year.

Cash Used in Investing Activities

For the three months ended December 31, 2020 and 2019, we have no cash investing activities as compared from the same period last year.

Cash Provided by Financing Activities

For the six months ended December 31, 2020, the Company received $13,405 from financing activities in the form of cash advances for future share issuances from a related party compared with $29,815 in the same period in 2019.

Cash Requirements

Over the next 12-months, we anticipate that we will incur the following operating expenses:

Expense   Amount  
General and administrative $ 5,000  
Professional fees   50,000  
Foreign currency exchange loss   5,000  
Total $ 60,000  

Our CEO, Hong Ba, has committed to providing our working capital requirements for the next 12 months.

Management believes that the Company will be able to raise sufficient capital to meet our working capital requirements for the next 12 month period.  Management is currently seeking financing opportunities to meet our estimated funding requirements for the next 12 months primarily through private placements of our equity securities.

There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon the continued financial support from our shareholders, our ability to obtain necessary equity financing to continue operations, and achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

Recent Events

On December 14, 2020, the Company entered into Debt Cancellation Agreement (the "Debt Cancellation Agreement") with each of Maotang Bai, Yongsheng Liang, Qinrong Gao and Shanxi Ai Chen Technology Ltd., who were each creditors to the Company with a total outstanding aggregate balance of US$237,981 (the "Debts"). Pursuant to the Debt Cancellation Agreement the Company agreed to issue an aggregate total of 47,596,110 shares of its common stock, $0.0001 par value per share (the "Shares"), at the conversion rate of US$0.005 per share as full payment for the Debts. Upon issuance and delivery of the Shares, the Debts were fully paid and the Company no longer had any obligations to the creditors under the Debts. The foregoing description of the Debt Cancellation Agreement is qualified in its entirety by reference to the full text of the Debt Cancellation Agreement, which is filed as Exhibit 10.1 to this Quarterly Report, and is incorporated herein by reference.

Transactions with related persons

Mrs. Hong Ba serves as the Chief Executive Officer and Director of the Company. Mr. Feng Li, the husband of Mrs. Hong Ba, is the owner of the Canada Airchn Financial Inc. ("CAFI"). The shareholders make advances to the Company from time to time for the Company's operations. These advances are due on demand and non-interest bearing.

As of the three and six months ended December 31, 2020, the CEO of the Company advanced $322 (June 30, 2020 - $140) to the Company for operating expenditure.


On December 14, 2020, the CEO of the Company assigned the debt owed to her by the Company to a transferee who entered into a debt cancellation agreement to convert the debt of $10,584 into 2,116,804 common shares of the Company at a price of $0.005 per share.

During the period ended December 31, 2020, a company owned by Feng Li, the husband of Mrs. Hong Ba, our CEO, charged the Company $3,655 (Cnd$4,800) (2020 - $3,668) in rent and the debt of $33,402 (2020 - $23,562) owed to such company was assigned to a transferee who entered into a debt cancellation agreement to convert the debt into 6,680,448 common shares of the Company at a price of $0.005 per share

As of the period ended December 31, 2020, Li Feng, the husband of Mrs. Hong Ba, our CEO, advanced $1,550 (December 31, 2020 - $1,100) to the Company for operating expenditures. On December 14, 2020, Mr. Li assigned the debt owed to him by the Company to a transferee who entered into a debt cancellation agreement to convert the debt into 310,000 common shares of the Company at a price of $0.005 per share.

As of December 31, 2020, the Company has received advances for future share issuance of $192,444 (June 30, 2020 - $149,304) and an advance of $211 (June 30, 2020 - $209) for operating expenditure from a related party who is an over 10% shareholder of the Company and the Company expensed $14,326 (June 30, 2020 - Nil) in imputed interest on the accumulated amount of advances for future share issuance. On December 14, 2020, such related party assigned the debt owed to him by the Company to a transferee who entered into a debt cancellation agreement to convert the debt into 38,488,858 common shares of the Company at a price of $0.005 per share.

Off Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Recently Issued Accounting Standards

We continue to assess the effects of recently issued accounting standards. The impact of all recently adopted and issued accounting standards has been disclosed in the Footnotes to the financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain "disclosure controls and procedures", as that term is defined in Rule 13a-15(e), promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal accounting officer to allow timely decisions regarding required disclosure.

As required by paragraph (b) of Rules 13a-15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and principal financial officer, evaluated our company's disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our management concluded that as of the end of the period covered by this quarterly report on Form 10-Q, our disclosure controls and procedures were not effective due to the material weaknesses described in Management's annual report on internal control over financial reporting contained in our Annual Report on Form 10-K for the year ended June 30, 2020.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

As of the date of this filing, there have been no material changes from the risk factors disclosed in Part I, Item 1A (Risk Factors) contained in our Annual Report on Form 10-K for the year ended June 30, 2020. We operate in a changing environment that involves numerous known and unknown risks and uncertainties that could materially affect out operations.  The risks, uncertainties and other factors set forth in our Annual Report on Form 10-K for the year ended June 30, 2020 may cause our actual results, performances and achievements to be materially different from those expressed or implied by our forward-looking statements.  If any of these risks or events occurs, our business, financial condition or results of operations may be adversely affected.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None not previously reported.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.


ITEM 6. EXHIBITS

(3)

Articles of Incorporation and By-laws

3.1

Articles of Incorporation

3.2

Certificate of Amendment of Certificate of Incorporation

3.3

By-Laws


(10)

Material Contracts

10.1

Debt Cancellation Agreement between the Company and certain Creditors dated December 14, 2020

(31)

Section 302 Certification

31.1*

Certification Statement of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(32)

Section 906 Certification

32.1*

Certification Statement of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*

Interactive Data Files

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

*filed herewith


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

W&E Source Corp.

/s/ Hong Ba
Hong Ba
CEO and CFO
Principal Executive Officer, Principal Financial Officer 

Date: February 16, 2021