WEBUY GLOBAL LTD. Ordinary Shares (WBUY) 6-KResults of Operations

Exhibit 99.1

Results of Operations

The following table sets forth certain operational data for the six months ended June 30, 2024 and 2023:

Revenues

For the six months ended June 30, 2024 and 2023, we derived our revenues primarily from the sales of groceries through our online platform, the Webuy mobile App and the sale of packaged tour. Our breakdown of revenues in terms revenue stream and geographical locations for the six months ended June 30, 2024 and 2023, respectively, is summarized below:

Total revenue increased by approximately $3.75 million or 15.4% increase in revenue, totaling $28.15 million for the first half of 2024, compared to the same period last year. The revenue growth was primarily driven by a 26.8% increase in sales of groceries in Indonesia through our platform and a physical retail store was newly opened in Indonesia during the first half of 2024, reaching $17.31 million in revenue for the first half of 2024.

The double-digit growth in sales of groceries in Indonesia, evidenced by an increase of $3.66 million in revenue from the previous period, can be attributed primarily to a significant influx of offline bulk purchase orders. This surge underscores the escalating demand for our offerings within the region, highlighting our products’ appeal and the effectiveness of our distribution strategies. The robust increase not only showcases our strong market presence but also aligns with our strategic focus on expanding our footprint and enhancing supply chain efficiencies to cater to the burgeoning needs of the market.

Cost of revenues

Cost of revenue for the six months ended June 30, 2024 and 2023 was approximately $25.58 million and $23.67 million, respectively, representing an increase of 8.1% as a results of increased groceries sales in Indonesia, as well as cost of revenues incurred from our packaged-tour business. The increase in cost of revenues was in line with the increase in revenue. Our cost of revenues consists primarily of changes in inventory, direct labor costs (including salaries and benefits) for employees, sub-contractor fees associated with warehouse operations and packing and handling for grocery sales, including freight and delivery charges, costs for transacting with the principal service providers such as airlines and hotels for our new packaged-tour business and cost incurred for our newly opened retail stores in Indonesia.

Our breakdown of cost of revenues for the six months ended June 30, 2024 and 2023, respectively, is summarized below:

Gross profit

Gross profit for the six months ended June 30, 2024 amounted to approximately $2.58 million as compared to gross profit of approximately $0.73 million for the six months ended June 30, 2023. Gross profit margin was approximately 9.1% and 3.0% for the six months ended June 30, 2024 and 2023, respectively. The increase in gross profit margin was mainly due to our success in growing our Indonesian market to achieve economies of scale by increasing our grocery sales and lowering costs to improve our profitability.

Operating Expenses

Our operating expenses consist of selling and distribution expenses and general administrative expenses.

Selling and distribution expenses

Selling and distribution expenses for the six months ended June 30, 2024 and 2023 amounted to approximately $1.63 million and $1.32 million, respectively, representing an increase of approximately $0.31 million or 23.3%.

The increase was mainly due to payment gateway fee increased for six months ended June 30, 2024.

General administrative expenses

General administrative expenses for the six months ended June 30, 2024 and 2023 amounted to approximately $3.96 million and $3.06 million, respectively, representing an increase of approximately $0.90 million or 29.4%. The increase was mainly due to (1) an increase in lease expense of approximately $0.19 million due to the new leases that we entered; (2) an increase in staff costs of approximately $0.19 million due to the increased headcount to expand our business mainly in our travel segment; (3) an increase in amortization of intangible assets of approximately $0.12 million as we acquired certain software and application development system; and (4) an increase in consultancy and professional fees of approximately $0.25 million of operating as a public company since we successfully listed on Nasdaq in October 2023.

Total other Income (expense), net

Total other income amounted to approximately $0.08 million for the six months ended June 30, 2024, compared with other expense amounted to approximately $0.02 million for the six months ended June 30, 2023. Total other income (expense) mainly comprised of (1) an increase of approximately $0.29 million representing storage fees charged to the third parties with temporary storage needs. We generate this income from renting out our extra storage space; (2) a decrease in the finance costs of approximately $0.008 million which was in line with the decrease in loans borrowed from third parties; and (3) foreign exchange losses transaction gains related to the transacted balances associated with our operations in Indonesia.

Income Tax Expense

We conducted our businesses in Singapore and Indonesia and are subject to tax in these jurisdictions. As a result of its business activities, we file separate tax returns in these countries that are subject to examination by the foreign tax authorities.

No provision for income tax expenses as we did not have taxable profits for the six months ended June 30, 2024 and 2023.

Net Loss

During the six months ended June 30, 2024, we incurred a net loss of approximately $2.94 million, as compared to approximately $3.67 million for the six months ended June 30, 2023. The decrease in net loss is primarily attributable to our improved gross profit margin and other reasons discussed above.

Liquidity and Capital Resources 

As of June 30, 2024, the Company’s operating losses raise substantial doubt about the Company’s ability to continue as a going concern. In assessing the going concern, management and the Board has considered the following:

No assurance can be provided that these additional financings will be available on acceptable terms or at all. If management is unable to execute this plan, there would likely be a material adverse effect on the Company’s business. These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The following table sets forth a summary of our cash flows for the six months ended June 30, 2024 and 2023 indicated:

Cash used in operating activities

For the six months ended June 30, 2024, net cash used in operating activities amounted to approximately $5.55 million primarily resulting from the net loss of approximately $2.94 million, adjusted for non-cash items and changes in working capital. Adjustments for non-cash items consist of the expense items for amortization of intangible assets to approximately $0.34 million, depreciation of leasehold improvements and equipment of approximately $0.13 million and the non-cash lease costs of approximately $0.45 million. Changes in working capital included decrease in inventories of approximately $0.22 million, increase in accounts receivables of approximately $(0.06) million, increase in prepaid expenses and other assets of approximately $(5.31) million, a decrease in operating lease liability of approximately $(0.32) million, increase in accounts payable of approximately $1.26 million, increase in deferred revenue of approximately $0.37 million, increase in other current liabilities of approximately $0.30 million.

For the six months ended June 30, 2023, net cash used in operating activities amounted to approximately $0.88 million primarily resulting from the net loss of approximately $3.67 million, adjusted for non-cash items and changes in working capital. Adjustments for non-cash items consist of the expense items for amortization of intangible assets to approximately $0.23 million, depreciation of leasehold improvements and equipment to approximately $0.08 million. Changes in working capital included increase in inventories of approximately $0.79 million, increase in accounts receivables of approximately $(0.73) million, increase in prepaid expenses and other assets of approximately $(1.79) million, decrease in operating lease liabilities of approximately $(0.11) million, increase in accounts payable of approximately $2.32 million, increase in other current liabilities of approximately $1.72 million and decrease in amount due from/to related parties of approximately $0.02 million.

Cash provided by (used in) investing activities

For the six months ended June 30, 2024, net cash provided by investing activities amounted to approximately $0.34 million due to the receipt from the collection of a promissory note of $3 million, partially offset by the purchase of leasehold improvements and equipment of approximately $(0.16) million and the purchase of a promissory note of $(2.50) million from a third party.

For the six months ended June 30, 2023, net cash used in investing activities amounted to approximately $0.56 million due to the purchase of leasehold improvements and equipment.

Cash provided by financing activities

For the six months ended June 30, 2024, net cash provided by financing activities amounted to approximately $1.70 million which primarily consisted of net proceeds from the self-underwritten public offering of approximately $2.30 million, partially offset by the repayment of convertible notes of approximately $(0.36) million and the repayment of loan payables of approximately $(0.24) million.

For the six months ended June 30, 2023, net cash provided by financing activities amounted to approximately $0.83 million which consists of proceeds from convertible notes of approximately $1.29 million and the repayment of loan payables of approximately $(0.46) million.

Inflation

Inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in our industry and continually maintain effective cost control in operations.

Off Balance Sheet Arrangements

As of June 30, 2024 and December 31, 2023, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our shareholders.

Critical Accounting Policies and Estimates

Revenue recognition

The Company adopts Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (ASC Topic 606) for all periods presented. The core principle underlying the revenue recognition of this ASU allows the Company to recognize revenue that represents the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.

To achieve that core principle, the Company applies five-step model to recognize revenue from customer contracts. The five-step model requires the Company to (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the performance obligation is satisfied.

Product revenues

- Performance obligations satisfied at a point in time

The Company primarily sells goods through group orders directly through the Company’s mobile application. The Company accounts for the revenues generated from sales on a gross basis as the Company is acting as a principal in these transactions and is responsible for fulfilling the promise to provide the specified goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits. Revenues are measured based on the amount of consideration that the Company expects to receive reduced by sales return and discount. In making this determination, the Company also assesses whether the Company is primarily obligated, subject to inventory risk, has latitude in establishing prices, or has met several but not all of these indicators in accordance with ASC 606-10-55-36 through 40. The Company recognizes the sales of goods when the control of the specified goods is transferred to customers which is upon delivery of goods to customers. Revenues also exclude any amounts collected on behalf of the third parties, including sales taxes and indirect taxes.

The Company sells goods to customers and the revenues are earned from the cash payment made by customers or customers settle their balances with “Assets”. The Company grants “Assets” upon (i) Cash collected from customers via Webuy mobile APP to top up their e-wallet balance; (ii) Refund to customers’ e-wallet due to order cancellation or products returned from customers; (iii) Commissions payable to Group Leaders for the provision of services to the Company. These “Assets” entitle the holders to offset future purchases. As such, “Assets” are initially recognized and recorded as “Advances from customers” upon the grant and when customers have yet placed the purchase orders to create an underlying sales agreement with the Company. The Company uses the term “Assets” to represent the payment procedures and balances of customers’ user accounts on the Company’s Webuy mobile APP platform.

Until “Assets” are used at the time when customers have placed the purchase orders, “Assets” of customers’ user accounts in the Company’s Webuy mobile APP will be reduced; as for the Company’s book-keeping, the Company reclassifies the “Advance from customers” balance to “Deferred revenue”. “Deferred revenue” is a contract liability that the Company is obligated to transfer goods to customers for which the Company has received consideration (or the amount is due) from customers in the form of cash or “Assets”. The balance of “Deferred revenue” represents unfulfilled performance obligations in the sales agreement, i.e. products that have not yet been delivered. Once the related products have been delivered, the amount in “Deferred revenue” account is shifted to a revenue account.

The revenue deferred from the year ended December 31, 2023, and 2022 which was recognized as income during the six months ended June 30, 2024 and 2023 was $1,829,730 and $990,981, respectively.

Packaged-tour revenue

- Performance obligations satisfied at a point in time

Within each contract, the Company identify whether it is principal or agent at the performance obligation level. In arrangements where the Company has substantive control over the service before transferring it to the customer and is primarily responsible for integrating the services into the final deliverables, the Company acts as principal. The Company’s revenue on the sale of packaged-tour is reported as a gross basis, that is, the amounts billed to the customer are recorded as revenues, and amounts paid to travel supplier (such as airlines, hotels, travel buses, etc.) are recorded as cost of revenues. The Company is principal in accordance with ASC paragraphs 606-10-55-36 through 55-40 because the Company controls the packaged-tour including the underlying travel services before the services are transferred to the customer. The control is evidenced by the Company being primarily responsible to its customer and is having a level of discretion in establishing pricing.

The Company operates as a single operating segment including product revenue from the sale of goods, which represent 79% of the Company’s revenues, and sale of packaged tour, which represent 21% of the Company’s revenues. Due to the integrated structure of the Company’s business, the sale of goods revenue and sale of packaged tour revenue are combined with each other. The Company’s chief operating decision maker, its Chief Executive Officer, reviews financial information on an aggregate basis for the purposes of allocating resources and evaluating financial performance. The Company’s primary operations are in Singapore and Indonesia, and it has derived substantially all of its revenue from sales to customers in these jurisdictions.

In accordance with ASC 280-10-50-40, the Company’s disaggregation information of revenues by each product and service or each group of similar product and service type which were recognized based on the nature of performance obligation disclosed above was as follows:

Revenues classified by the geographic areas in which the customers were located was as follows:

During the six months ended June 30, 2024 and 2023, all revenues were generated from third parties.

Recent accounting pronouncements

All new standards and amendments that are effective for annual reporting period commencing January 1, 2024 have been applied by the Company for the six months ended June 30, 2024. The adoption did not have material impact on the unaudited interim consolidated financial statements of the Company. A number of new standards and amendments to standards have not come into effect for the year beginning January 1, 2024, and they have not been early adopted by the Company in preparing these unaudited interim consolidated financial statements. None of these new standards and amendments to standards is expected to have a significant effect on the unaudited interim consolidated financial statements of the Company.