Business context and reporting period
This is an unaudited Form 10-Q for the quarter and nine months ended September 30, 2023. The filing identifies the registrant as WeTrade Group Inc., whereas the request metadata names Next Technology Holding Inc.; verify the intended issuer. WeTrade describes two strategies: AI-enabled software development services and acquiring and holding bitcoin. It also reports a shift in SaaS focus from China toward overseas markets and the September 2023 discontinuation of WeTrade Information System Limited and its subsidiaries.
Financial results and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $1.634 million | $5.607 million | $2.230 million | $9.198 million |
| Gross profit (loss) | $1.235 million | ($1.295 million) | $0.838 million | $1.527 million |
| Loss from continuing operations | ($8.497 million) | ($8.657 million) | ($9.455 million) | ($8.539 million) |
| Loss from discontinued operations | ($4.177 million) | ($4.937 million) | ($5.421 million) | ($6.419 million) |
| Reported total net loss | ($12.674 million) | ($13.594 million) | ($14.877 million) | ($14.958 million) |
Gross margin was approximately 75.6% in Q3 2023, compared with a gross loss in Q3 2022; for the nine-month periods it was approximately 37.6%, versus 16.6%. These figures use the statements’ revenue and gross profit amounts. The filing reports basic and diluted loss per share of $0.18 for Q3 2023 and $0.08 for the nine-month period; per-share data are said to reflect the reverse split and share issuance.
At September 30, 2023, total assets were $41.876 million, including $22.399 million of bitcoin and $12.126 million of prepayments, and cash was $1.417 million. Current liabilities were $2.118 million, including $1.674 million due to related parties; the filing shows no long-term debt. Stockholders’ equity was $39.758 million. Cash used in operating activities was $8.531 million and cash used in investing activities was $23.375 million for the nine months; financing provided $12.999 million. Cash fell from $20.025 million at the beginning of the period.
Material changes versus prior comparable periods
- Nine-month revenue declined about 76%, which management attributes to lower YCloud gross merchandise volume after a business-plan adjustment and no YCloud revenue in Q2 or Q3. Q3 revenue fell about 71% year over year; management says new AI-enabled SaaS revenue partly offset the decline.
- Nine-month general and administrative expense rose to $15.129 million from $10.420 million; management attributes the increase primarily to system-development spending.
- The company purchased approximately 833 bitcoin for $24.990 million, recorded a $2.591 million impairment, and reported a $22.399 million carrying value at quarter-end. It also reported a $12.126 million prepayment toward 1,000 bitcoin expected to be delivered by the end of November 2023.
- In September, the company issued 1,570,600 shares for $12.616 million. A 1-for-185 reverse stock split was effected in 2023; 2,625,130 shares were outstanding as of September 30, 2023.
- The board resolved on September 29, 2023 to dissolve the WeTrade Information System operations. The filing reports a $1.125 million gain related to the discontinued operation, alongside a $6.546 million loss on disposal.
Outlook, risks and unusual items
No quantified revenue or earnings guidance is provided. Management expects to continue accumulating bitcoin, has no stated target holding, and says it may raise capital to fund bitcoin purchases, sell bitcoin for corporate purposes, or use bitcoin holdings in financing or other income-generating strategies. MD&A says the company has an option to purchase 6,000 bitcoin over 12 months at a locked-in price of $30,000 per bitcoin; the filing does not explain the option’s terms or funding requirements in detail.
Key risks include bitcoin price volatility and impairment accounting, the company’s reduced cash balance and ongoing operating cash use, execution of the SaaS business shift, and potential need for additional financing. The filing states disclosure controls and internal control over financial reporting were ineffective as of September 30, citing limited resources, lack of segregation of duties and multiple review levels, no audit committee, and concentrated management. It says remediation is planned subject to funding. The filing also states it had not undergone external audit review and that the company would file an amended 10-Q/A after auditor review. Forward-looking statements are subject to risks including execution of growth strategies, access to manufacturing partners, economic conditions, and working-capital needs.
Important facts for investors to verify
- Confirm the issuer identity: the filing is for WeTrade Group Inc., not the company named in the request metadata.
- Reconcile the financial statements with MD&A and notes: the filing gives revenue of $2.230 million in the statements but $2.238 million in MD&A; cash is $1.417 million on the balance sheet versus $1.420 million in MD&A. MD&A also describes operating cash flow as positive, while the cash-flow statement reports $8.531 million used.
- Confirm the presentation of total net loss, discontinued-operation results, impairment charges, and loss per share: some narrative figures differ from the statements, and reported loss per share does not appear straightforward to reconcile with total net loss.
- Verify bitcoin purchase, custody, valuation, impairment, the 1,000-bitcoin prepayment and delivery, and the stated option to acquire 6,000 bitcoin, including funding and contractual terms.
- Review the auditor’s subsequent review or amendment, the remediation of disclosed material weaknesses, and the effect of share issuances and the reverse split on per-share comparisons.