W&E Source Corp (OTCMKTS:WESC) revenue declined 90% to $920 for the three months ended September 30,2014. The sharp decline in sales was due to the off season in the travel business. The company went for layoffs in the states and even closed its office in Seattle. The cost-cutting resulted in a 66% drop in General and administrative expenses.
The financial performance
W&E reported that the net loss declined to $18,927 from $52,502 in the same period a year ago. The 64% drop in net losses can be attributed to the sharp decline in general and administrative expenses. The working capital significantly dropped from 2013 as the current assets were not ample to cover liabilities, following which the deficit increased by almost $70,989. There was no other source of revenue to cover the additional expenses.
W&E said that W&E Source Corp (OTCMKTS:WESC) didn’t make any investments in the quarter. However, it gave $21,483 in financing activities received from related parties. W&E believes that it will be able to generate sufficient funds to meet its working capital needs for the next one year. The management is exploring financing opportunities to raise the estimated capital, primarily via private placements of its equity securities.
W&E stated that its operations are dependent upon the equity financing and financial support from the shareholders. If the company opts for issuance of additional equity securities, it can result in a dilution of the equity interest of the company’s current stockholders. As other option, if it opts for commercial loans, it will add to liabilities and increase future cash commitments. W&E Source Corp (OTCMKTS:WESC) would find it tough to acquire commercial loans as the global economies are facing a period of economic uncertainty in respect to the tightening of credit markets across the world. The credit shortage and dismal economic conditions will adversely impact the company’s ability to raise financing.