10-Q 1 wtg_10q.htm FORM 10-Q wtg_10q.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

 

 

For the quarterly period ended: March 31, 2022

 

 

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

 

 

 

For the transition period from ____________ to _____________

 

WETRADE GROUP INC

(Exact name of small business issuer as specified in its charter)

 

Wyoming

 

 

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Tax. I.D. No.)

 

No 1 Gaobei South Coast, Yi An Men 111 Block 37, Chao Yang District,

Beijing City, People Republic of China

(Address of Principal Executive Offices)

 

(86) 18350283270

(Registrant’s Telephone Number, Including Area Code)

 

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 ☒ 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 ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition 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

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 ☒

 

As of May 23, 2022, there were 185,032,503 shares of common stock outstanding.

 

 

 

  

TABLE OF CONTENTS

 

Cautionary Note Regarding Forward-Looking Statements

 

 

i

 

 

 

 

 

 

 

PART I - Financial Information

 

 

 

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

1

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

17

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

 

20

 

Item 4.

Controls and Procedures

 

 

20

 

 

 

 

 

 

 

PART II – Other Information

 

 

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

 

21

 

Item 1A.

Risk Factors

 

 

21

 

Item 2.

Unregistered Sales of Equity Securities And Use Of Proceeds

 

 

21

 

Item 3.

Defaults Upon Senior Securities

 

 

21

 

Item 4.

Mine Safety Disclosures

 

 

21

 

Item 5.

Other information

 

 

21

 

Item 6.

Exhibits

 

 

22

 

 

 

 

 

 

 

Signatures

 

 

23

 

 

 

Table of Contents

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). These forward-looking statements are generally located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” but may be found in other locations as well. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements.

 

We identify forward-looking statements by use of terms such as “may,” “will,” “expect,” “anticipate,” “estimate,” “hope,” “plan,” “believe,” “predict,” “envision,” “intend,” “will,” “continue,” “potential,” “should,” “confident,” “could” and similar words and expressions, although some forward-looking statements may be expressed differently. You should be aware that our actual results could differ materially from those contained in the forward-looking statements.

 

Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this report. These factors include, among others:

 

 

our ability to execute on our growth strategies;

 

 

 

 

our ability to find manufacturing partners on favorable terms;

 

 

 

 

declines in general economic conditions in the markets where we may compete;

 

 

 

 

our anticipated needs for working capital; and

 

Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis.

 

Forward-looking statements speak only as of the date of this report or the date of any document incorporated by reference in this report. Except to the extent required by applicable law or regulation, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

 

 
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PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

WETRADE GROUP INC

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

(All amounts shown in U.S. Dollars)

 

March 31,

2022

 

 

December 31,

2021

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

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

 

Note receivable

 

 

3,669,872

 

 

 

3,798,130

 

Other receivables

 

 

136,590

 

 

 

30,147

 

Prepayments

 

 

4,088,448

 

 

 

2,760,658

 

Total current assets

 

 

16,458,327

 

 

 

16,436,393

 

Non current assets:

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,106,927

 

 

 

395,353

 

Right of use assets

 

 

2,189,390

 

 

 

2,328,950

 

Intangible asset, net

 

 

36,255

 

 

 

37,765

 

Rental deposit

 

 

272,711

 

 

 

272,063

 

Total non-current assets

 

 

3,605,283

 

 

 

3,034,131

 

 

 

 

 

 

 

 

 

 

Total assets:

 

 

20,063,610

 

 

 

19,470,524

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Account payables

 

 

44,418

 

 

 

7,710

 

Account payables- related parties

 

 

189,688

 

 

 

54,436

 

Accrued expenses

 

 

98,639

 

 

 

217,073

 

Tax payables

 

 

843,288

 

 

 

711,841

 

Amount due to related parties

 

 

1,009,298

 

 

 

1,105,532

 

Lease liabilities, current

 

 

616,698

 

 

 

596,098

 

Other payables

 

 

367,670

 

 

 

306,270

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

3,169,699

 

 

 

2,998,960

 

 

 

 

 

 

 

 

 

 

Lease liabilities, non-current

 

 

1,769,144

 

 

 

1,942,242

 

Total liabilities

 

 

4,938,843

 

 

 

4,941,202

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock; $0.00 per share par value; 305,451,498 issued and outstanding at March 31, 2022 and 305,451,498 issued and outstanding at December 31, 2021 respectively

 

 

-

 

 

 

-

 

Additional paid in capital

 

 

6,197,520

 

 

 

6,197,520

 

Accumulated other comprehensive income

 

 

933,087

 

 

 

898,497

 

Retained earning

 

 

7,994,160

 

 

 

7,433,305

 

Total Stockholders’ equity

 

 

15,124,767

 

 

 

14,529,322

 

 

 

 

 

 

 

 

 

 

Total Liabilities and stockholders’ equity

 

$20,063,610

 

 

$19,470,524

 

 

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

 

 
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WETRADE GROUP INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months

ended

March 31

2022

 

 

Three Months

ended

March 31

 2021

 

Revenue:

 

 

 

 

 

 

Service revenue, related party

 

$158,518

 

 

$-

 

Service revenue

 

 

2,078,335

 

 

 

2,780,923

 

Total service revenue

 

 

2,236,853

 

 

 

2,780,923

 

Cost of revenue

 

 

(789,188 )

 

 

(146,308 )

Gross profit

 

 

1,447,665

 

 

 

2,634,615

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and Administrative

 

 

805,268

 

 

 

1,889,190

 

Operations profit

 

 

642,397

 

 

 

745,425

 

Other revenue

 

 

48,283

 

 

 

83,515

 

Net Profit before income tax

 

 

690,680

 

 

 

828,940

 

Income tax expense

 

 

129,825

 

 

 

176,856

 

Net income attributable to non controlling interest

 

 

560,855

 

 

 

652,084

 

Other comprehensive income

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

34,590

 

 

 

(51,933 )

Total comprehensive income

 

$595,445

 

 

$600,151

 

 

 

 

 

 

 

 

 

 

Basic and diluted net income per share:

 

$0.00

 

 

$0.00

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding; basic and diluted*

 

 

305,451,498

 

 

 

305,451,498

 

 

*Share and per share amounts have been retroactively adjusted to reflect the increased number of shares resulting from a 1:3 stock split.

 

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

 

 
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WETRADE GROUP INC

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

For the

Period

 

 

From the

 period

 

 

 

March 31,

2022

 

 

March 31,

2021

 

 

 

(unaudited)

 

 

(unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

 

560,855

 

 

 

652,084

 

Amortization of intangible asset

 

 

1,618

 

 

 

3,084

 

Depreciation

 

 

12,793

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivables

 

 

4,684,770

 

 

 

(284,056)

Account receivable- related party

 

 

3,577,964

 

 

 

-

 

Other receivables

 

 

(106,434)

 

 

(615)

Prepayments

 

 

(1,232,000)

 

 

(1,272,083)

Accounts payables

 

 

(107,343)

 

 

668,159

 

Accrued expenses

 

 

(148,822)

 

 

254,206

 

Right of use assets

 

 

145,188

 

 

 

133,224

 

Lease liabilities

 

 

(158,632)

 

 

(135,835)

Tax payables

 

 

129,826

 

 

 

(578,814)

Other payables

 

 

60,707

 

 

 

-

 

Net cash flows provided by/ (used in) operating activities:

 

 

7,420,490

 

 

 

(560,646)

 

 

 

 

 

 

 

 

 

Cash flow from investing activities:

 

 

 

 

 

 

 

 

Leasehold improvements

 

 

(723,420)

 

 

-

 

Net cash used in investing activities:

 

 

(723,420)

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash flow from financing activities:

 

 

 

 

 

 

 

 

Proceeds from/ (repayment) of note receivable

 

 

137,008

 

 

 

(1,444,683)

Proceeds from related parties loan

 

 

122,832

 

 

 

36,000

 

Net cash flows provided by/ (used in) financing activities:

 

 

259,840

 

 

 

(1,408,683)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

(4,966

 

 

1,666

 

 

 

 

 

 

 

 

 

 

Change in cash and cash equivalents:

 

 

6,951,944

 

 

 

(1,967,663)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

 

616,593

 

 

 

4,640,603

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

 

7,568,537

 

 

 

2,672,940

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

 

 

 

 

 

-

 

Cash paid for taxes

 

 

 

 

 

553,195

 

 

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

 

 
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WETRADE GROUP INC AND SUBSIDIARY

Condensed Consolidated Statement of Changes in Stockholders’ Equity (unaudited)

Period Ended March 31, 2022 and 2021

 

Three months ended March 31, 2022

 

 

 

Common Stock

 

 

Additional

Paid in

 

 

Share to be

 

 

Retained

Earnings

 

 

Accumulated

Other comprehensive

 

 

Total

Shareholder

Equity

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

issued

 

 

 

 

income

 

 

 

Balance as of December 31, 2021

 

 

305,451,498

 

 

$-

 

 

$6,197,520

 

 

$-

 

 

$7,433,305

 

 

$898,497

 

 

$14,529,322

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

34,590

 

 

 

34,590

 

Net income for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

560,855

 

 

 

-

 

 

 

560,855

 

Balance as of March 31, 2022

 

 

305,451,498

 

 

$-

 

 

$6,197,520

 

 

$-

 

 

$7,994,160

 

 

$933,087

 

 

$15,124,767

 

 

Three months ended March 31, 2021

 

 

 

Common Stock

 

 

Additional

Paid in

 

 

Share to be

 

 

Retained

Earnings

 

 

Accumulated

Other comprehensive

 

 

Total

Shareholder

Equity

 

 

 

Shares*

 

 

Amount

 

 

Capital

 

 

 issued

 

 

 

 

income

 

 

 

Balance as of December 31, 2020

 

 

305,451,498

 

 

$-

 

 

$6,057,520

 

 

$-

 

 

$2,257,630

 

 

$578,735

 

 

$8,893,885

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(51,933 )

 

 

(51,933 )

Net income for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

$652,084

 

 

 

-

 

 

$652,084

 

Balance as of March 31, 2021

 

 

305,451,498

 

 

$-

 

 

$6,057,520

 

 

$-

 

 

$2,909,714

 

 

 

526,802

 

 

$9,494,036

 

 

*Share and per share amounts have been retroactively adjusted to reflect the increased number of shares resulting from a 1:3 stock split.

 

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

 

 
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Wetrade Group Inc

Notes to Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2022

(Unaudited)

 

NOTE 1 – NATURE OF BUSINESS

 

Organization

 

WeTrade Group, Inc was incorporated in the State of Wyoming on March 28, 2019 and is in the business of providing technical services and solutions via its social e-commerce platform. We are committed to providing an international cloud-based intelligence system and independently developed a micro-business cloud intelligence system called the “YCloud.” Our goal is to provide technical and auto-billing management services to micro-business online stores in China through big data analytics, machine learning mechanisms, social network recommendations, and multi-channel data analysis.

 

We provide technology services to both individual and corporate users. We provide access to “YCloud” to our customers, which are Zhuozhou Weijiafu Information Technology Limited (“Weijiafu”), a PRC technology company, which then provide “YCloud” services to individual and corporate micro-business owners, Changtongfu Technology (Hainan) Co Limited (“Changtongfu”), a PRC technology company, which then provide “YCloud” services to individual and corporate business owners in the hotel and travel industries.

 

The market individual micro-business owners represents a potential of 330 million users by the year of 2023. (Source: iResrarch. http://xueqiu.com/8455183447/172404679?sharetime=2,2/22/2021). YCloud serves corporate users in multiple industries, including Yuetao Group, Zhiding, Lvyue, Yuebei, Yuedian, Coke GO, and Zhongyanshangyue. We conduct business operations in mainland China and have established trial operations in Hong Kong. We expect to utilize the YCloud system to establish a global strategic cooperation with various social media platforms. 

 

The main functions of the YCloud system are to manage users’ marketing relationships, CPS commission profit management, multi-channel data statistics, AI fission and management, and improved supply chain systems.

 

Currently, YCloud serves the micro business industry. We expect to expand the application of YCloud to tourism, hospitality, livestreaming and short video, medical beauty and traditional retail industries. 

 

Recent Business Developments

 

In first Quarter 2022, the Company has entered YCloud system service agreements with three new customers as follows:

 

Beijing Yidong Linglong Cultural Media Co., Ltd. (“Beijing Yidong”), a PRC media and internet company that provides comprehensive high-quality digital contents, cultural and arts exchange activities for users.

 

Beijing Maitu International Travel Agency Co., Ltd (“Maitu International”), a PRC company that has been engaged in outbound tourism business since May 2008. Maitu is also a leading tourism company in South Korea, Japan and China.

 

Beijing Youth Travel Service Co., Ltd (“Beijing Youth Travel”) is an international travel agency approved by the National Tourism Administration and subordinate to the Beijing Municipal Tourism Administration. Beijing Youth Travel is a cross-regional comprehensive tourism enterprise group with more than 70 chain stores, and it integrates services in outbound tourism, inbound tourism, domestic tourism, tourism fleet, taxi, real estate, catering, consulting services, advertising, culture and entertainment.

 

 
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Our Business

 

We have utilized digitalization, electronic management, electronic data exchange, big data analysis, AI fission technology, revenue management and other technologies to build a strong coordination effect. We believe that our cloud technology enables us to develop a highly functional platform for micro-business users in China. We have optimized our product using the tools and platforms best suited to serve our customers and developed YCloud.

 

We believe that YCloud is the first global micro-business cloud intelligent internationalization system. It conducts multi-channel data analysis through the learning of big data and social recommendation relationships. It also provides users with AI fission and management systems and supply chain systems in order to reach a wider range of user groups. YCloud has four main functions and competitive advantages as follows:

 

Multiple integrated payment methods and payment analytics: the YCloud system provides micro-businesses and hotel owners with multiple payment methods such as Alipay, WeChat, and UnionPay. The total order amount is directly entered into the platform to collect funds in separate accounts. Using YCloud’s technology support, the micro-business owners offer multiple channels of payments to their customers, including Alipay, WeChat, and UnionPay. Meanwhile, YCloud assigns a bar code to merchandises that purchasers can then scan to pay, allowing purchasers to make payments both online and offline. This proprietary payment technology allows our customers to reduce labor costs and error rates, thus significantly improving data analysis.

 

 

·

Single-scenario payment function: although micro-business owners are provided with a multi-method payment function for their consumers through the YCloud system, micro-business owners only have a single sales channel to display. The revenue of each sale is divided by commissions, and the cost is allocated to suppliers and the handling fee to the YCloud system. The remaining balance goes to micro-business owners.

 

 

 

 

·

Multi-scenario payment function: micro-business owners have multiple sales channels to display and numerous channels to perform revenue sharing and profit consolidation functions. After various products are sold through different channels, the cost will be allocated to suppliers and the handling fee to the YCloud system. The remaining balance will be combined and goes to micro-business owners.

 

During the year 2020, due to the impact of the COVID-19 outbreak, many companies, including businesses traditionally operating offline, from a wide range of industries, such as tourism, catering, entertainment or retail, have opted for a micro-business model to build sales channels through online social platforms and expand business opportunities. As a result of the COVID-19 outbreak, consumer demand shifted, which forced business owners to expand to new markets and be present on multiple social platforms. Through continuous research on the micro-business industry, and its understanding of the relationship between people and social relationships on social platforms, YCloud develops new technology designed to meet the ever changing demand of micro-business owners across all industries

 

Team management: the YCloud system utilizes user marketing relationship tracking and CPS commission revenue management tools.

 

AI fission and management: using intelligent robots to analyze user behavior, data sharing, purchase history, and other data, the YCloud system provides tailored recommendations and displays. For example, the YCloud system connects users’ behavior across multiple apps and platforms and makes automatic recommendations based on its analysis.

 

Supply chain system integration: the YCloud system applies cross-platform resource integration technology. The integration allows the multi-channel output of high-quality products and creates a seamless connection between suppliers and customers. The YCloud provides a complete supply chain system integrating supply, sales, finance, and service.

 

The following diagram sets forth the structure of the Company as of the date of this Current Report:

 

 

Our business and corporate address in the United States is 1621 Central Ave, Cheyenne, WY 82001 Our telephone number is +86-13795206876 and our registered agent for service of process is Wyoming Registered Agent, 1621 Central Ave, Cheyenne, WY 82001. Our fiscal year end is December 31. Our Chinese business and corporate address is No. 18, Kechuang 10th Street, Beijing Economic and Technological Development Zone, Beijing, People Republic of China. The Chinese address is where our management is located.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of preparation of financial statements

 

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

 

The condensed consolidated financial statements of the Company as of and for the three months ended March 31, 2022 and 2021 are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) that have been made are necessary to fairly present the financial position of the Company as of March 31, 2022, the results of its operations for the three months ended March 31, 2022 and 2021, and its cash flows for the three months ended March 31, 2022 and 2021. Operating results for the quarterly periods presented are not necessarily indicative of the results to be expected for a full fiscal year. Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. The balance sheet as of December 31, 2021 has been derived from the Company’s audited financial statements included in the Form 10-K for the year ended December 31, 2021.

wtg_10qimg1.jpg

 

 

 

 

 
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The statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the financial statements and other information included in the Company’s Annual Report on Form 10-K as filed with the SEC for the fiscal year ended December 31, 2021.

 

As of March 31, 2022, the details of the consolidating subsidiaries are as follows:

 

 

 

Place of

 

Attributable

 

Name of Company

 

incorporation

 

equity

 interest %

 

Utour Pte Ltd

 

Singapore

 

 

100%

 

 

 

 

 

 

 

WeTrade Information Technology Limited (“WITL”)

 

Hong Kong

 

 

100%

 

 

 

 

 

 

 

Yueshang Information Technology (Beijing) Co., Ltd. (“YITB”)

 

P.R.C.

 

 

100%

Yueshang Group Network (Hunan) Co., Limited (“Yueshang Hunan”)

 

P.R.C

 

 

100%

Yueshang Technology Group (Hainan Special Economic Zone) Co. Limited (“Yueshang Hainan”)

 

P.R.C

 

 

100%

WeTrade Digital (Beijing) Technology Co Limited

(f/k/a XiaoShang Technology Beijing Co Limited)

 

P.R.C

 

 

100%

Tibet Xiaoshang Technology Group Limited

 

P.R.C

 

 

100%

 

Nature of Operations

 

WeTrade Group Inc. (the “Company” or “We’ or “Us”) is a Wyoming corporation incorporated on March 28, 2019. The Company is an investment holding company that formed as a Wyoming corporation to use as a vehicle for raising equity outside the US.

 

As of March 31, 2022, the nature operation of its subsidiaries are as follows:

 

 

 

Place of

 

Nature of

 

Name of Company

 

incorporation

 

operation

 

Utour Pte Ltd

 

Singapore

 

Investment holding company

 

 

 

 

 

 

 

WeTrade Information Technology Limited (“WITL”)

 

Hong Kong

 

Investment holding company

 

 

 

 

 

 

 

Yueshang Information Technology (Beijing) Co., Ltd. (“YITB”)

 

P.R.C.

 

Providing of social e-commerce services, technical system support and services

 

Yueshang Group Network (Hunan) Co., Limited (“Yueshang Hunan”)

 

P.R.C

 

Providing of social e-commerce services, technical system support and services

 

Yueshang Technology Group (Hainan Special Economic Zone) Co. Limited (“Yueshang Hainan”)

 

P.R.C

 

Providing of social e-commerce services, technical system support and services

 

WeTrade Digital (Beijing) Technology Co Limited

(FKA: XiaoShang Technology Beijing Co Limited)

 

P.R.C

 

Providing of social e-commerce services, technical system support and services

 

Tibet Xiaoshang Technology Group Limited

 

P.R.C

 

Providing of social e-commerce services, technical system support and services.

 

 

 
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COVID-19 outbreak

 

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, workforces, customers, and created significant volatility and disruption of financial markets. It has also disrupted the normal operations of many businesses, including ours. This outbreak could decrease spending, adversely affect demand for our services and harm our business and results of operations. It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business or results of operations at this time.

 

Revenue recognition

 

The Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements 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 obligations, 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.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid debt instruments purchased with a maturity period of three months or less to be cash or cash equivalents. The carrying amounts reported in the accompanying unaudited condensed consolidated balance sheets for cash and cash equivalents approximate their fair value. All of the Company’s cash that is held in bank accounts in Singapore and PRC is not protected by Federal Deposit Insurance Corporation (“FDIC”) insurance or any other similar insurance in the PRC, or Singapore.

 

Foreign Currency

 

The Company’s principal country of operations is the PRC. The accompanying consolidated financial statements are presented in US$. The functional currency of the Company is US$, and the functional currency of the Company’s subsidiaries is RMB. The consolidated financial statements are translated into US$ from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The resulting translation adjustments are recorded as a component of shareholders’ equity included in other comprehensive income. Gains and losses from foreign currency transactions are included in profit or loss. There were no gains and losses from foreign currency transactions from the inception to March 31, 2022.

 

 

 

March 31,

2022 

 

 

 December 31,

2021

 

RMB: US$ exchange rate

 

 

6.34

 

 

 

6.36

 

 

The balance sheet amounts, with the exception of equity, March 31, 2022 and December 31, 2021 were translated at 6.34 RMB and 6.36 RMB to $1.00, respectively. The equity accounts were stated at their historical rates. The average translation rates applied to statements of operations and comprehensive income accounts for the period ended March 31, 2022 and year ended December 31, 2021 were 6.34 RMB and 6.44 RMB to $1.00, respectively. Cash flows were also translated at average translation rates for the year and, therefore, amounts reported on the statement of cash flows would not necessarily agree with changes in the corresponding balances on the consolidated balance sheet. The transactions dominated in SGD are immaterial.

 

 
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Use of Estimate

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.

 

Property and equipment

 

Property and equipment are stated at the historical cost, less accumulated depreciation. Depreciation on property and equipment is provided using the straight-line method over the estimated useful lives of the assets for both financial and income tax reporting purposes as follows:

 

Office equipment

 

3 years

Leasehold improvements

 

5 years

 

Upon sale or disposal of an asset, the historical cost and related accumulated depreciation or amortization of such asset were removed from their respective accounts and any gain or loss is recorded in the statements of income.

 

The Company reviews the carrying value of property, plant, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment, no impairment expenses for property, plant, and equipment were recorded in operating expenses during the three months ended March 31, 2022 and 2021.

 

Concentration of Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. Cash on hand amounted to $7,568,537 as of March 31, 2022.

 

Accounts receivable

 

Accounts receivables are presented net of allowance for doubtful accounts. The Company uses specific identification in providing for bad debts when facts and circumstances indicate that collection is doubtful and based on factors listed in the following paragraph. If the financial conditions of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowance may be required.

 

The Company maintains an allowance for doubtful accounts which reflects its best estimate of amounts that potentially will not be collected. The Company determines the allowance for doubtful accounts on general basis taking into consideration various factors including but not limited to historical collection experience and credit-worthiness of the customers as well as the age of the individual receivables balance. Additionally, the Company makes specific bad debt provisions based on any specific knowledge the Company has acquired that might indicate that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability.

 

Intangible Asset

 

Intangible asset is software development cost incurred by the Company, it will be amortized on a straight line basis over the estimated useful life of 5 years.

 

Leases

 

The Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.

 

Operating leases are included in operating lease right-of-use (“ROU”) assets and short-term and long-term lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our consolidated balance sheets.

 

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, we use the industry incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

 

 
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Table of Contents

 

 

Under ASC 840, leases were classified as either capital or operating, and the classification significantly impacted the effect the contract had on the company’s financial statements. Capital lease classification resulted in a liability that was recorded on a company’s balance sheet, whereas operating leases did not impact the balance sheet. After the new adoption, $2,189,390 of operating lease right-of-use asset and $2,385,842 of operating lease liabilities were reflected on the Company’s March 31, 2022 financial statements.

 

ASU 2016-02 requires that public companies use a secured incremental browning rate for the present value of lease payments when the rate implicit in the contract is not readily determinable. We determine a secured rate on a quarterly basis and update the weighted average discount rate accordingly. Lease terms and discount rate follow:

 

Lease cost

 

In USD

 

Operating lease cost (included in general and admin in company’s statement of operations)

 

$705,407

 

 

 

 

 

 

Other information

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities for the quarter ended 3/31/2022

 

 

730,112

 

Weighted average remaining lease term-operating leases (in years)

 

 

3.42

 

Average discount rate - operating leases

 

 

5%

 

 

 

 

 

The supplemental balance sheet information related to leases for the period is as follows:

 

 

 

 

Operating leases

 

 

 

 

Long -term right-of-use assets

 

 

2,189,390

 

Total right-of-use assets

 

$2,189,390

 

 

 

 

 

 

Short-term operating lease liabilities

 

 

616,698

 

Long-term operating lease liabilities

 

 

1,769,144

 

Total operating lease liabilities

 

$2,385,842

 

 

 

 

 

 

Maturities of the Company’s lease liabilities are as follows:

 

 

 

 

 

 

 

 

 

Year ending March 31,

 

 

 

 

2023

 

 

722,656

 

2024

 

 

767,393

 

2025

 

 

813,323

 

2026

 

 

301,828

 

Total lease payments

 

 

2,605,200

 

Less: Imputed interest/present value discount

 

 

(219,358 )

Present value of lease liabilities

 

$2,385,842

 

 

 
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Table of Contents

 

 

Income Tax

 

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

The Company has a subsidiary in Singapore and PRC. The Company is subject to tax in Singapore and PRC jurisdictions. As a result of its future business activities, the Company will be required to file tax returns that are subject to examination by the Inland Revenue Authority of Singapore and Tax Department of PRC.

 

Profit Per Share

 

Basic net income per share of common stock attributable to common stockholders is calculated by dividing net income attributable to common stockholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards, warrants, options, or convertible debt using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income (loss) per share of common stock attributable to common stockholders when their effect is dilutive.

 

Potential dilutive securities are excluded from the calculation of diluted EPS in profit periods as their effect would be anti-dilutive.

 

As of March 31, 2022, there were no potentially dilutive shares.

 

 

 

For the

 period

March 31,

2022

 

 

 For the

 period

March 31,

2021

 

Statement of Operations Summary Information:

 

 

 

 

 

 

Net Profit

 

$560,855

 

 

 

652,084

 

Weighted-average common shares outstanding - basic and diluted

 

 

305,451,498

 

 

 

305,451,498

 

Net profit per share, basic and diluted

 

$0.00

 

 

 

0.00

 

 

Fair Value

 

The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

 

 

 
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The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

 

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

 

Level 3 inputs are unobservable inputs for the asset or liability. The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.

 

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS 

 

Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

NOTE 4 – REVENUE

 

In the business of providing an international cloud-based intelligence system, namely “YCloud” system. We aim to provide technical and auto-billing management system services to micro-business online stores in China through big data analytics, machine learning mechanisms, social network recommendations, and multi-channel data analysis. Weijiafu and Changtongfu are our customers to take charge of the Ycloud users’ profiles. Meanwhile, all YCloud users’ information is retained within YCloud system.

 

We derive our revenue from system service fees charged for transactions conducted through YCloud. We receive 2%-3.5% of the total Gross Merchandise Volume generated in the platform as a system service fee from YCloud users through service agreement with our customers (such as Weijiafu, Changtongfu, Beijing Yidong, Maitu International and Beijing Youth ), depending on the type of service and industry. Gross Merchandise Volume, or GMV, is a term used in online retailing to indicate a total sales monetary-value for merchandise sold through a particular marketplace over a certain time frame. We generally receive the system service fee from customers within the first ten days of each calendar month. With effect from October 2021, YCloud system service fee will be settled within the first ten days of each quarter due to high volume of transaction amounts conducted through YCloud from end users. As of reporting date, all the service fee receivable has been fully settled and received.

 

The system services fees are collected from five customers of YCloud system based on the GMV as follow:

 

Gross Merchandise Volume (“GMV”)

 

March 31,

2022

 

 

March 31,

2021

 

 

 

US$

 

 

 US$

 

Non-related parties:

 

 

 

 

 

 

Customer I

 

 

33,884,182

 

 

 

80,402,192

 

Customer II

 

 

9,987,583

 

 

 

-

 

Customer III

 

 

7,823,158

 

 

 

-

 

Customer IV

 

 

11,248,923

 

 

 

-

 

 

 

 

62,943,846

 

 

 

80,402,192

 

Related party:

 

 

 

 

 

 

 

 

Customer V

 

 

4,800,846

 

 

 

-

 

Total GMV:

 

 

67,744,692

 

 

 

80,402,192

 

 

As of and for the period ended March 31, 2022, we generated revenues from five customers amounting $2,236,853.

 

NOTE 5 – CASH AT BANK

 

As of March 31, 2022, the Company held cash in bank in the amount of $7,568,537, which consist of the following: 

 

 

 

March 31,

2022 

 

 

 December 31,

2021

 

Bank Deposits-China

 

$7,535,349

 

 

 

303,065

 

Bank Deposits-Singapore

 

 

33,188

 

 

 

313,528

 

 

 

 

7,568,537

 

 

 

616,593

 

 

 
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Table of Contents

 

NOTE 6 – INTANGIBLE ASSET

 

Intangible asset is software development cost incurred by company, it will be amortized on a straight line basis over the estimated useful life of 5 years as follow:

 

March 31, 2022

 

 

Gross Carrying Amount

 

 

Accumulated Amortization 

 

 

Net Carrying Amount

 

 

Weighted Average

 Useful Life (Years)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

Software development

 

$

57,143

 

 

$

(26,794

)

 

$

30,349

 

 

 

5

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

5,906

 

 

 

 

 

Intangible assets, net

 

$

57,143

 

 

$

(26,794

)

 

$

36,255

 

 

 

 

 

 

Amortization expense for intangible assets was $1,618 for the three months period ended March 31, 2022.

 

Expected future intangible asset amortization as of March 31, 2022 was as follows:

 

Fiscal years:

 

 

 

Remaining 2022

 

$23,558

 

2023

 

 

12,697

 

 

NOTE 7 – PROPERTY AND EQUIPMENT

 

As of March 31, 2022, property and equipment consists of the following:

 

March 31, 2022

 

 

Gross Carrying Amount

 

 

Accumulated Depreciation

 

 

Net Carrying Amount

 

 

Weighted Average Useful Life (Years)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

 

 

 

 

 

 

 

Office equipment

 

$150,915

 

 

$(35,837 )

 

$115,078

 

 

 

3

 

Leasehold improvement

 

 

991,848

 

 

 

-

 

 

 

991,849

 

 

 

5

 

Property and equipment, net

 

$1,142,763

 

 

$(35,837 )

 

$1,106,927

 

 

 

 

 

 

Depreciation expenses of office equipment were $12,793 and nil for the period ended March 31, 2022 and year 2021 respectively as the computer and office equipment were acquired on June 29, 2021.

 

Amortization expenses of leasehold improvement is $nil for the year ended March 31, 2022 as the new office renovation will be completed in April 2022.

 

NOTE 8 – ACCOUNT RECEIVABLES

 

As of March 31, 2022, account receivables is related to the services fee receivables from customers as follow:

 

 

 

March 31,

2022

 

 

December 31,

2021

 

Account receivables

 

$958,797

 

 

$5,627,463

 

Account receivables- related parties

 

 

36,083

 

 

 

3,603,402

 

 

 

$994,880

 

 

$9,230,865

 

 

We generally receive the system service fee from customers within the first ten days of each calendar month. With effect from October 2021, YCloud system service fee will be settled within the first ten days of each quarter due to high volume of transaction amounts conducted through YCloud from end users.

 

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of accounts receivable. The Company does not require collateral for accounts receivables. The Company maintains an allowance for its doubtful accounts receivable due to estimated credit losses. The Company records the allowance against bad debt expense through the consolidated statements of operations, included in general and administrative expense, up to the amount of revenues recognized to date. Receivables are written off and charged against the recorded allowance when the Company has exhausted collection efforts without success. As of March 31, 2022, account receivable from five main customers are amounted to $994,880 (December 31, 2021: $9,230,865) and which is 45% (December 31, 2021: 64%) of total revenue. As of reporting date, all the services fee receivables has been fully settled from 5 main customers.

 

 
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Table of Contents

 

NOTE 9 – PREPAYMENTS

 

As of March 31, 2022, prepayments consist of the following:

 

 

 

March 31,

2022

 

 

December 31,

2021

 

Office furniture and renovation

 

$1,124,480

 

 

$1,895,591

 

Office rental

 

 

28,658

 

 

 

173,611

 

Ycloud system marketing and promotion service

 

 

2,319,258

 

 

 

-

 

Block chain software and others

 

 

616,052

 

 

 

691,456

 

 

 

$4,088,448

 

 

$2,760,658

 

 

As of March 31, 2022, there is a prepayment of approximate $1.1 million in relation of purchasing new office furniture as a result of new office renovation during the year, the renovation is expected to complete in April 2022. 

 

As of March 31, 2022, there is a prepayment of approximate $2.3 million and approximate $60,000 in relation of marketing & promotion services and block chain software development under YCloud system, which is expect to complete in February 2023 and June 2022 respectively.

 

NOTE 10 – NOTE RECEIVABLES

 

As of March 31, 2022, Note receivables consist of the following: 

 

 

 

March 31,

2022 

 

 

 December 31,

2021

 

Note receivables

 

$3,699,872

 

 

 

3,798,130

 

 

 

 

3,699,872

 

 

 

3,798,130

 

 

Note receivable is related to the short-term loan of RMB 23 million to a third party with annual interest of 5%, which will be matured on November 4, 2022.

 

NOTE 11 – OTHER RECEIVABLES

 

As of March 31, 2022, other receivables consist of advances to staff for petty cash and staff loans as follow:

 

 

 

March 31,

2022 

 

 

 December 31,

2021

 

Advance to staff for petty cash

 

$36,590

 

 

 

19,302

 

Staff loan

 

 

100,000

 

 

 

10,845

 

 

 

 

136,590

 

 

 

30,147

 

 

 
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Table of Contents

 

NOTE 12 – RENTAL DEPOSIT

 

As of March 31, 2022 and December 31, 2021, rental deposit of $272,711 and $272,063 is the office lease deposit with the tenancy period of 5 years.

 

NOTE 13 – AMOUNT DUE TO RELATED PARTIES

 

 

 

As of

March 31,

2022

 

 

As of

December 31,

2021

 

 

 

 

 

 

 

 

Related parties payable

 

$541,298

 

 

$745,532

 

Director fee payable

 

 

468,000

 

 

 

360,000

 

 

 

$1,009,298

 

 

$1,105,532

 

 

The related party balance of $541,298 represented advances and professional expenses paid on behalf by Director, which consists of $300,063 advance from Dai Zheng, $42,000 advance from Li Zhuo, $10,000 from Che Kean Tat and $189,235 office rental advance from Liu Pijun through Zhiding Network Technology (Beijing) Co Limited (“ZNTB”). It is unsecured, interest-free with no fixed payment term and imputed interest is consider to be immaterial.

 

As of March 31, 2022, the director fee payable of $468,000 represented the accrued of director fees from the appointment date to March 31, 2022.

 

NOTE 14 – RELATED PARTY TRANSACTIONS

 

The following is the list of the related parties to which the Company has transactions with:

 

 

(a)

Beijing Zhidingwang Investment Management Limited Partnership (“BZIM”), the entity in which the Group’s CEO, Liu PiJun beneficially own 56% equity interest.

 

(b)

Zhiding Network Technology (Beijing) Co Limited (“ZNTB”), the entity in which the Group’s CEO, Liu Pijun beneficially own 78% equity interest and Group’s Director, Li Daxue beneficially own 3% equity interest.

 

(c)

Beijing Xingke Datong Technology Co Ltd (“BXDT”), the entity in which the supervisor of a subsidiary company, Deng Liangpeng beneficially own 80% equity interest.

 

(d)

Huoerguo Zhufeng Technology Co Ltd (“HZTC”), the entity in which the supervisor of a subsidiary company, Sun Tong beneficially own 46% equity interest.

 

(e)

Global Joy Trip (HK) Limited (“Global Joy HK”), the entity in which the Group’s Chairman, Daizheng and Group’s CEO, Liu Pijun are the director, the company has been dissolved in Jan 2021.

 

Related parties transactions consisted of the following as of the dates indicated.

 

Name of related party

 

Nature of transaction

 

For the

period ended

March 31,

2022

 

 

For the

year ended

December 31,

2021

 

BZIM

 

No transaction during the year

 

NA

 

 

NA

 

ZNTB

 

Office rental paid on behalf of the Group

 

$

-

 

 

 

189,235

 

BXDT

 

System service fee

 

$

618,119

 

 

 

485,190

 

HZTC

 

System service fee

 

$

-

 

 

 

739,016

 

 

 
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NOTE 15 – ACCRUED EXPENSES

 

Accrued expenses of $98,639 consists of the accrued payroll, Central Provident Fund and social welfare as follow:

 

 

 

March 31,

2022

 

 

December 31,

2021

 

Accrued payroll

 

$98,639

 

 

$217,073

 

 

 

$98,639

 

 

$217,073

 

 

NOTE 16 – TAX PAYABLES

 

As of March 31, 2022, tax payable of $843,288 (December 31, 2021: $711,841) is consist of PRC corporate income tax rate ranged from 9% to 25%, Value-added Tax of 6% and PRC Urban construction tax and levies.

 

of 25%, Value-added Tax of 6% and PRC Urban construction tax and levies.

 

NOTE 17 – OTHER PAYABLES

 

Other payables of $367,670 consists of the payables of securities account set up fee and related documentation expenses as follow:

 

 

 

March 31,

2022

 

 

December 31,

2021

 

Security account set up fee-Staff

 

$367,670

 

 

$306,270

 

 

NOTE 18 – SHAREHOLDERS’ EQUITY

 

The company has an unlimited number of ordinary shares authorized, and has issued 305,451,498 shares with no par value as of March 31, 2022.

 

On March 29, 2019, the company has issued 100,000,000 shares with no par value to thirty-three founders. On September 3, 2019, the company has issued a total 74,000 shares at $3 each to 5 non-US shareholders. The total outstanding shares has increased to 100,074,000 shares as at December 31, 2019.

 

In February, 2020, there are 1,666,666 shares issued at $3 per share to 2 new shareholders. On July 10, 2020, the company has issued another 26,000 shares at $3 per share to 2 new shareholders and the total outstanding shares has increased to 101,766,666 shares.

 

On September 15, 2020, the Wyoming Secretary of State approved the Company’s certificate of amendment to amend its Articles of Incorporation to effectuate a 3 for 1 forward stock split. The total issued and outstanding shares of the Company’s common stock has been increased from 101,766,666 to 305,299,998 shares, with the par value unchanged at zero.

 

On September 21, 2020, there are 151,500 shares issued at $5 per share to 303 new shareholders, the Company’s common stock issued has been increased to 305,451,498 shares as of December 31, 2020. 

 

NOTE 19- SUBSEQUENT EVENT

 

On April 13, 2022, the Company and 15 Shareholders entered into that certain Share Exchange Agreement (the “Share Exchange Agreement”), pursuant to which Company and the 15 Shareholders have cancelled 120,418,995 shares of Common Stock (“Cancellation Shares”). Upon completion of the transaction, the outstanding shares of the Company’s Common Stock has been decreased from 305,451,498 shares to 185,032,503 shares as of May 23, 2022. 

 

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

 

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors discussed elsewhere in this report.

 

Overview

 

WeTrade Group, Inc was incorporated in the State of Wyoming on March 28, 2019 and is in the business of providing technical services and solutions via its social e-commerce platform. We are committed to providing an international cloud-based intelligence system and independently developed a micro-business cloud intelligence system called the “YCloud.” Our goal is to provide technical and auto-billing management services to micro-business online stores in China through big data analytics, machine learning mechanisms, social network recommendations, and multi-channel data analysis.

 

We provide technology services to both individual and corporate users. which then provide “YCloud” services to individual and corporate micro-business owners in the hotel, hospitality, livestreaming and travel industries.

 

The market individual micro-business owners represents a potential of 330 million users by the year of 2023. (Source: iResrarch. http://xueqiu.com/8455183447/172404679?sharetime=2,2/22/2021). YCloud serves corporate users in multiple industries, including Yuetao Group, Zhiding, Lvyue, Yuebei, Yuedian, Coke GO, and Zhongyanshangyue. We conduct business operations in mainland China and have established trial operations in Hong Kong. We expect to utilize the YCloud system to establish a global strategic cooperation with various social media platforms. 

 

The main functions of the YCloud system are to manage users’ marketing relationships, CPS commission profit management, multi-channel data statistics, AI fission and management, and improved supply chain systems.

 

Currently, YCloud serves the micro business industry. We will further expand the application of YCloud to tourism, hospitality, livestreaming and short video, medical beauty and traditional retail industries. 

 

Recent Business Developments

 

In first Quarter 2022, the Company has entered YCloud system service agreements with three new customers as follows:

 

Beijing Yidong Linglong Cultural Media Co., Ltd. (“Beijing Yidong”), a PRC media and internet company that provides comprehensive high-quality digital contents, cultural and arts exchange activities for users.

 

Beijing Maitu International Travel Agency Co., Ltd (“Maitu International”), a PRC company that has been engaged in outbound tourism business since May 2008. Maitu is also a leading tourism company in South Korea, Japan and China.

 

Beijing Youth Travel Service Co., Ltd (“Beijing Youth Travel”) is an international travel agency approved by the National Tourism Administration and subordinate to the Beijing Municipal Tourism Administration. Beijing Youth Travel is a cross-regional comprehensive tourism enterprise group with more than 70 chain stores, and it integrates services in outbound tourism, inbound tourism, domestic tourism, tourism fleet, taxi, real estate, catering, consulting services, advertising, culture and entertainment.

 

 
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Results of Operations

 

The following tables provide a comparison of a summary of our results of operations for the three months period ended March 31, 2022 and 2021.

 

Results of Operations for the Three months period Ended March 31, 2022 and 2021

 

 

 

For the

period

March 31,

2022

 

 

 From the period

March 31,

2021

 

Revenue:

 

 

 

 

 

 

Service revenue- related party

 

$158,518

 

 

$-

 

Service revenue- non related party

 

 

2,078,335

 

 

 

2,780,923

 

 

 

 

2,236,853

 

 

 

2,780,923

 

Cost of Sales

 

 

(789,188)

 

 

(146,308 )

Gross Profit

 

 

1,447,665

 

 

 

2,634,615

 

Operating Expenses:

 

 

 

 

 

 

 

 

General and Administrative

 

 

805,268

 

 

 

1,889,190

 

Operations Profit

 

 

642,397

 

 

 

745,425

 

Other revenue

 

 

48,283

 

 

 

83,515

 

Net Profit before income tax

 

 

690,680

 

 

 

828,940

 

Income tax expense

 

 

(129,825 )

 

 

(176,856 )

Net income

 

 

560,855

 

 

 

652,084

 

 

Revenue from Operations

For the three-month period ended March 31, 2022 and 2021, total revenue was $2,236,853 and $2,780,923 respectively, the decrease was mainly due to the decrease in Gross Merchandise Volume (“GMV”) in Ycloud system as a result of Covid-19 lockdown in certain main cities in PRC since March 2022. However, the decrease is mitigated by the addition of 3 new customers during the period. Service revenue from third party were $2,078,335 (2021: $2,780,923) and service revenue from related party were $158,518 (2021: $nil) for the period March 31, 2022. The system services fees are collected from five customers of YCloud system based on the GMV as follow:

 

Gross Merchandise Volume (“GMV”)

 

2022

 

 

2021

 

 

Service fee

 

 

 

US$

 

 

 US$

 

 

%

 

Non-related parties:

 

 

 

 

 

 

 

 

 

Customer I

 

 

33,884,182

 

 

 

80,402,192

 

 

 

3%

Customer II

 

 

9,987,583

 

 

 

-

 

 

3%-4%

 

Customer III

 

 

7,823,158

 

 

 

-

 

 

3%-4%

 

Customer IV

 

 

11,248,923

 

 

 

-

 

 

3%-4%

 

 

 

 

62,943,846

 

 

 

80,402,192

 

 

 

 

 

Related party:

 

 

 

 

 

 

 

 

 

 

 

 

Customer V

 

 

4,800,846

 

 

 

-

 

 

 

3%

Total GMV:

 

 

67,744,692

 

 

 

80,402,192

 

 

 

 

 

 

Cost of revenue

Cost of revenue is mainly consisting of staff payroll, PRC central provident fund (“CPF”), staff benefits and YCloud system related expenses, the increase is mainly due to more staffs were recruited during the period. The increase is mainly due to more technical staffs cost were incurred for the system developments for the new customer and more YCloud system related expenses were incurred during the period. 

 

General and Administrative Expenses

For the three months period ended March 31, 2022 and 2021, general and administrative expenses were $805,268 and $1,889,190 respectively, the decrease is mainly due to no advertising and exhibition expenses of approximate $0.63 million were incurred in March 31, 2022 as compare to the prior period as a result of Covid-19 lockdown in PRC during the period. Furthermore, there are no legal due diligence expenses, travelling and other administrative expenses of approximate $0.25 million incurred in March 31,2022 as compare to the prior period.

 

Net Income

As a result of the factors described above, there was a net income of $560,855 and net income of $652,084 for the period ended March 31, 2022 and 2021, respectively, the decrease is mainly due to decrease in Gross Merchandise Volume (“GMV”) in YCloud system and services are collected from YCloud users based on GMV during the period as a result of Covid-19 lockdown in certain cities in PRC. However, the decrease of GMV are mitigated by the addition of three new customers during the period.

 

 
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Liquidity and Capital Resources

 

As of March 31, 2022, we had cash on hand of $7,568,537 as compared to $2,672,940 in prior period. The increase is mainly due to account receivables of approximate US$8.2 million collected from customers and related party during the period. However, the increase is mitigated by the prepayment of approximate US$2.3 million for the YCloud marketing and promotion services during the period

 

Operating activities

As of March 31, 2022, our continuing cash flow operating activities is $7,420,490 for the period ended March 31, 2022 as compared to the cash flow used in operating activities of $560,646 in prior period, which was increased by approximately of $7.9 million. The increase was mainly due to reclassification of account receivables of approximate US$8.2 million collected from customers and reclassification of note receivable and related party payables to financing activities during the period.

 

Investing activities

As of March 31, 2022, cash used in investing activities is $723,420 for the period ended March 31, 2022 as compared to the $nil in prior period. The increase was mainly due to addition of leasehold improvement of approximate of $0.72 million during the period.

 

Financing activities

Cash provided by our financing activities was 259,840 for the three months period ended March 31, 2022 as compared to cash used in financing activities of 1,408,683. This is due to loan to third party of approximate US$1.4 million in prior period and however there is no such loan during the period.

 

Inflation

 

Inflation does not materially affect our business or the results of our operations.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

Critical Accounting Policies

 

We prepare our financial statements in accordance with generally accepted accounting principles of the United States (“GAAP”). GAAP represents a comprehensive set of accounting and disclosure rules and requirements. The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Our actual results could differ from those estimates. We use historical data to assist in the forecast of our future results. Deviations from our projections are addressed when our financials are reviewed on a monthly basis. This allows us to be proactive in our approach to managing our business. It also allows us to rely on proven data rather than having to make assumptions regarding our estimates.

 

Recent Accounting Pronouncements

 

We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the Company financial statements.

 

 
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a “smaller reporting company” as defined by Item 10(f)(1) of Regulation S-K, and as such are not required to provide the information contained in this item pursuant to Item 305 of Regulation S-K.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures.

 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

 

With respect to the period ended March 31, 2022, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.

 

Based upon our evaluation regarding the period ended March 31, 2022, the Company’s management, including its Principal Executive Officer, has concluded that its disclosure controls and procedures were not effective due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. Material weaknesses noted are lack of an audit committee, lack of a majority of outside directors on the board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and management is dominated by two individuals, without adequate compensating controls. However, management believes the financial statements and other information presented herewith are materially correct.

 

Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework - Guidance for Smaller Public Companies (the COSO criteria). Based on our assessment, management identified material weaknesses related to: (i) our internal audit functions; (ii) a lack of segregation of duties within accounting functions; and the lack of multiple levels of review of our accounting data. Based on this evaluation, our management concluded that as of March 31, 2022, we did not maintain effective internal control over financial reporting.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with any policies and procedures may deteriorate. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. To the extent possible, we will implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals. With proper funding we plan on remediating the significant deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.

 

A material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight Board Auditing Standard No. 5) or combination of control deficiencies, that results in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
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PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

We are a “smaller reporting company” as defined by Item 10(f)(1) of Regulation S-K, and as such are not required to provide the information contained in this item.

 

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

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

No senior securities were issued and outstanding during the three months ended March 31, 2022.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable to our Company.

 

ITEM 5. OTHER INFORMATION

 

On April 13, 2022, the Company and 15 Shareholders entered into that certain Share Exchange Agreement (the “Share Exchange Agreement”), pursuant to which Company and the 15 Shareholders have cancelled 120,418,995 shares of Common Stock (“Cancellation Shares”). Upon completion of the transaction, the outstanding shares of the Company’s Common Stock has been decreased from 305,451,498 shares to 185,032,503 shares. 

 

 
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ITEM 6. EXHIBITS

 

Exhibit No.

 

Description

31.1

 

Certification of Principal Executive Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith

31.2

 

Certification of Principal Financial Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith

32.1

 

Certification of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith

32.2

 

Certification of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith

101

 

Financial statements from the quarterly report on Form 10-Q of Wetrade Group Inc for the fiscal quarter ended March 31, 2022, formatted in XBRL: (i) the Balance Sheet; (ii) the Statement of Income; (iii) the Statement of Cash Flows; and (iv) the Notes to the Financial Statements Filed herewith

 

 
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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.

 

 

WETRADE GROUP INC

 

 

 

 

 

Dated May 23, 2022

By:

/s/ Pijun, Liu

 

 

 

Pijun, Liu

 

 

 

Chief Executive Officer

 

 

 

 

/s/ Kean Tat, Che

 

 

 

Kean Tat, Che

 

 

 

Chief Financial Officer

 

 

 
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