Next Technology Holding Inc. 10-K

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the Nasdaq Capital Market under the symbol “WETG”. The following table sets forth, for the periods indicated since then, the high and low closing prices of our common stock on the Nasdaq Capital Market as reported by Yahoo Finance. High bid Low bid Fiscal Year 2023 June 30, 2023 (from June 9, 2023, post-reverse stock split) $ 23.16 $ 6.75 March 31, 2023 $ 0.79 $ 0.25 Fiscal Year 2022 December 31, 2022 $ 1.77 $ 0.23 September 30, 2022 (from July 19, 2022) $ 50.50 $ 0.71 The last reported sales price for our shares of common stock on the Nasdaq Capital Market as of June 30, 2023 was $9.29 per share. As of June 30, 2023, we had approximately 400 shareholders of record for our common stock. Transfer Agent The transfer agent for our common stock is Globex Transfer LLC. The transfer agent’s telephone number and address is (813) 344-4490 and 780 Deltona Blvd, Deltona, FL 32725. Holders As of the close of business on December 31, 2022, there were approximately 396 holders of record of our common stock. Dividends We have not declared any cash dividends on our common stock during our two most recent fiscal years. In the near future, we intend to retain any earnings to finance the development and expansion of our business. We do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. The declaration and payment of cash dividends by us are subject to the discretion of the Board. Any future determination to pay cash dividends will depend on our results of operations, financial condition, capital requirements, contractual restrictions and other factors deemed relevant at the time by the board of Directors. We are not currently subject to any contractual arrangements that restrict our ability to pay cash dividends. Securities Authorized for Issuance Under Equity Compensation Plans As of December 31, 2022, there are no compensation plans under which our equity securities are authorized for issuance. Recent Sales of Unregistered Securities As of December 31, 2022, there were no recent sales of unregistered securities. Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not, nor did anyone on our behalf or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) of the Exchange Act, repurchase any outstanding shares of our common stock during any month of our fiscal year ended December 31, 2022. ITEM 5A. SELECTED FINANCIAL DATA 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 301 of Regulation S-K. ITEM 6. 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 annual 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 annual 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. 20 Table of Contents We provide technology services to both individual and corporate users. Through Yueshang Information Technology (Beijing) Limited, or Yueshang Beijing, we provide access to “YCloud” to our two 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 and Changtongfu Technology (Hainan) Co Limited (“Changtongfu”), a PRC technology company, which provide “YCloud” services to individual and corporate business owners in the hotel and travel industries. The market individual micro-business owners represent 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. Change of Officer and Director On August 12, 2022, Mr. Zhuo Li tendered his resignation as a director and the Chief Operation Officer, effective August 12, 2022. On August 12, 2022, approved by the Board of Directors, the Nominating Committee and the Compensation Committee, Ms. Grace Li was appointed as a director of the Company, effective August 12, 2022. On October 13, 2022, the Board of Directors, Nominating Committee and Compensation Committee approved the appointment of Mr. Hanfeng Li as the Vice President of Wetrade Group Inc. (the “Company”), effective October 13, 2022. On November 29, 2022, Mr. Kean Tat Che tendered his resignation as a director and the Chief Financial officer, and Mr. Hung Fai Choi tendered his resignation as a director of the Company, effective November 29, 2022. On the same day, approved by the Board of Directors, the Nominating Committee and the Compensation Committee, Ms. Annie Huang was appointed as the Chief Financial Officer of the Company, effective November 29, 2022. On December 21, 2022, Mr. Zheng Dai tendered his resignation as chairman of the board, and Mr. Pijun Liu tendered his resignation as the chief executive officer and a director, effective December 21, 2022. On the same day, approved by the Board of Directors, the Nominating Committee and the Compensation Committee, Mr. Hechun Wei was appointed as the Chief Executive Officer of the Company, and Mr. Biming Guo was appointed as the chairman of the board of the Company, effective December 21, 2022. Result of Operations The following tables provide a comparison of a summary of our results of operations for the fiscal years ended December 31, 2022 and 2021. Results of Operations for the fiscal years ended December 31, 2022 and 2021 For the year ended December 31, 2022 For the year ended December 31, 2021 Revenue: Service revenue, non-related party $ 10,803,232 $ 9,734,966 Service revenue, related party 868,103 4,646,329 11,671,335 14,381,295 Cost of Revenue (9,695,290 ) (2,681,939 ) Gross Profit 1,976,045 11,699,356 Operating Expenses: General and Administrative (11,843,048 ) (5,705,063 ) Operations Profit (9,867,003 ) 5,994,293 Other income 636,934 303,665 Income before income tax (9,230,069 ) 6,297,958 Income tax income/ (expenses) 82,654 (1,122,283 ) Net (Loss)/ Income $ (9,147,415 ) $ 5,175,675 Revenue from Operations For the fiscal year ended December 31, 2022 and 2021, total revenue was $11,671,335 and $14,381,295, respectively. The decrease was mainly due to the decrease in Gross Merchandise Volume (“GMV”) in Ycloud system under the outbreak of the coronavirus disease during the year. Service revenue from third party were $10,803,232 (2021: $9,734,966) and service revenue from related party were $868,103 (2021: $4,646,329) for the year ended December 31, 2022. The system services fees are collected through from end users of YCloud system based on the GMV as follow: Gross Merchandise Volume (“GMV”) 2022 2021 US$ US$ Non-related party 327,183,593 292,177,817 Related party 26,291,122 139,359,179 Total: 353,474,715 431,536,996 Cost of revenue Cost of revenue is mainly consists of staff payroll, PRC central provident fund (“CPF”) and other staff benefits, the increase is mainly due to more technical development service costs were incurred for the system development during the year. General and Administrative Expenses For the fiscal year ended December 31, 2022 and 2021, general and administrative expenses were $11,843,048 and 5,705,063, respectively. The increase is mainly due to increase is mainly due to professional fee, fund raising costs, financial PR and underwriting fees were incurred for the Nasdaq up-listing during the year. Net Income/ (loss) As a result of the factors described above, there was a net loss of $9,147,415 and net income of $5,175,675 for the fiscal year ended December 31, 2022 and 2021, respectively, the increase in loss is mainly due to decrease in revenue and more expenses were incurred for system development and professional fee incurred for Nasdaq up-listing during the year. Liquidity and Capital Resources 21 Table of Contents The following chart provides a summary of our balance sheets for the fiscal years ended December 31, 2022 and 2021, it should be read in conjunction with the financial statements, and notes thereto. 2022 2021 Cash and Cash equivalents $ 20,025,495 $ 616,593 Receivables 7,377,801 9,230,865 Loan receivable 1,614,841 3,798,130 Other receivables, deposit and prepayments 15,366,488 3,062,868 Property and equipment, net 992,445 395,353 Amortised expenses, net 828,983 Intangible asset 23,188 37,765 Right of use assets - 2,328,950 Total assets $ 46,229,241 $ 19,470,524 Account payable and accrued expenses 723,648 279,219 Tax payable 128,979 711,841 Lease liability - 2,538,340 Amount due to related parties 1,291,296 1,105,532 Other liabilities 2,365,808 306,270 Total liabilities $ 4,509,731 $ 4,941,202 Total stockholders’ equity $ 41,719,510 14,529,322 As of December 31, 2022, we had total assets of $46,229,241, which mainly consisted of $20,025,495 in cash, $8,992,642 in receivables and loan receivables, $1,821,428 in amortised expenses, property and equipment, and $15,366,488 in other receivables, deposit and prepayments; we had total liabilities of $4,509,731 which consisted of $723,648 in accounts payables & accrued expenses, $1,291,296 in amount due to related parties and $2,365,808 in other liabilities; we had total stockholders’ equity of $41,719,510. Operating activities Our continuing cash flow used in operating activities is $17,608,419 for the fiscal years ended December 31, 2022 as compare to the cash flow provided by operating activities of $3,753,384 in prior year, which was increased by approximately of $14.1 million. The increase were mainly due to prepayment of WT Pay System and payment of professional fees in relation to the Nasdaq up-listing. Investing activities Our continuing cash flow provided by investing activities is $493,954 for the fiscal years ended December 31, 2022 as compare to the cash flow used in investing activities of $1,028,322 in prior year. The increase was mainly due to loan repayment receipts of $2.1 million and which were partially offset by the addition of property and equipment of $1.5 million during the year. Financing activities Cash provided by our financing activities was $37,720,440 for the year ended December 31, 2022 as compare to the net cash provided by financing activities of $689,031, which was increased by approximately of $37.1 million. The increase is mainly due to 10,000,000 share issuance with the net proceeds from sales of common stock in the amount of $37,534,676 during the year. Inflation Inflation does not materially affect our business or the results of our operations. 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. 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. 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. Accounts receivable Accounts receivable are presented net of allowance for doubtful accounts. The Group 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 the 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 acquires 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. 22 Table of Contents 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. Off-Balance Sheet Arrangements There is no off-balance sheet arrangements. ITEM 7. 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.