Next Technology Holding Inc. 10-Q

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”, which 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. Furthermore, we intend to expand our business in online payment systems and block-chain services in 2023. The market of individual micro-business owners represents a potential of 330 million users by the end of 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 have expanded the application of YCloud to tourism, hospitality, livestreaming and short video, medical beauty and traditional retail industries. 23 Table of Contents 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, 2023 and 2022. Results of Operations for the Three months period Ended March 31, 2023 and 2022 For the period March 31, 2023 From the period March 31, 2022 Revenue: Service revenue- related party $ 37,198 $ 158,518 Service revenue- non related party 577,171 1,980,434 614,369 2,138,952 Cost of Sales (910,506 ) (672,638 ) Gross (Loss)/ Profit (296,137 ) 1,466,314 Operating Expenses: General and Administrative 690,793 792,456 Operation (Loss) /Profit (986,930 ) 673,858 Other (expenses) /revenue 2,088 48,283 Net (Loss) /Profit before income tax (984,842 ) 722,141 Income tax expense - (129,825 ) Net (Loss)/ income (984,842 ) 592,316 Revenue from Operations For the three-month period ended March 31, 2023 and 2022, total revenue was $614,369 and $2,138,952 respectively, the decrease was mainly due to the decrease in Gross Merchandise Volume (“GMV”) in YCloud system as a result of the adjusting of Company business plan in 2023. The Company is aiming to shift its SAAS, block-chain and WT Pay services from PRC to overseas market. As of March 31, 2023 and 2022, Service revenue from third party were $577,171 (2022: $1,980,434) and service revenue from related party were $37,198 (2022: $158,518). The system services fees are collected from five customers of YCloud system based on the GMV as follow: Gross Merchandise Volume (“GMV”) 2023 2022 Service fee US$ US$ % Non-related parties: Customer I 3,824,373 33,884,182 3 % Customer II 5,053,027 9,987,583 3%-4% Customer III 4,572,658 7,823,158 3%-4% Customer IV 4,029,975 11,248,923 3%-4% 17,480,033 62,943,846 Related party: Customer V 1,126,566 4,800,846 3 % Total GMV: 18,606,599 67,744,692 24 Table of Contents Cost of revenue Cost of revenue mainly consists of staff payroll, PRC central provident fund (“CPF”), staff benefits and YCloud system related expenses, the increase is mainly due to the fact that more expenses were incurred for the system development costs during the period. General and Administrative Expenses For the three months period ended March 31, 2023 and 2022, general and administrative expenses were $690,793 and $792,456 respectively, the decrease is mainly due to decrease in advertising and promotion expenses during the period. Net (Loss)/ Income As a result of the factors described above, there was a net loss of $984,842 and net income of $592,316 for the period ended March 31, 2023 and 2022, respectively, the increase in net loss is mainly due to decrease in Gross Merchandise Volume (“GMV”) as a result of the adjusting of Company business plan in 2023. The Company is aiming to shift its SAAS, block-chain and WT Pay services from PRC to overseas market. 25 Table of Contents Liquidity and Capital Resources As of March 31, 2023, we had cash on hand of $20,125,507 as compared to $6,356,060 in prior period. The increase is mainly due to the fact that the Company has uplisted its common stock to the Nasdaq Capital Market with the public offering of 10,000,000 shares of common stock with the net proceeds of $37,057,176 after deducting the total offering cost of $2,942,824 in July 2022. The increase is partially mitigated by the payment of system development fee Operating activities As of March 31, 2023, our cash flow used in cash flow operating activities is $552,687 for the period ended March 31, 2023 as compared to the cash flow provided by operating activities of $6,208,013 in prior period, which was decreased by approximately of $8.1 million. The decrease was mainly due to decrease in revenue and decrease in Y-cloud SAAS services fee received from the customers during the period. Investing activities As of March 31, 2023, cash provided by investing activities is $636,708 for the period ended March 31, 2023 as compared to the cash flow used in investing activities of $586,412 in prior period. The increase was mainly due to loan receivable of $0.7 million from borrower during the period. Financing activities Cash used in our financing activities was $10,331 for the three months period ended March 31, 2023 as compared to cash provided by financing activities of $122,832. The decrease is mainly due to lesser advances from related parties 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. 26 Table of Contents 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.