NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION
Weyland Tech, specialized in providing e-commerce solutions and services that facilitate multi-channel B2C (business-to-consumer) and B2B (business-to-business) transactions. Its solutions and services enabled e-commerce transactions with speed and efficiency, and allowed an interactive and engaging customer experience as well as targeted marketing and advertising.
These financial statements of Weyland Tech Inc. (the Company) have been prepared on a going-concern basis which assumes that the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. The Company believes that it will continue to generate sales from its customers. The Company expects to continue utilizing its cost structure through our Joint Venture partner in Jaipur, India where costs are competitively lower than more developed countries. In order to accelerate the growth of the Company, management will also raise additional funding from investors.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements have been prepared on a historical cost basis to reflect the financial position and results of operations of the Company in accordance with the accounting principles generally accepted in the United States of America (US GAAP).
USE OF ESTIMATES
The preparation of the Companys financial statements in conformity with generally accepted accounting principles of the United States of America 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 revenues and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.
CERTAIN RISKS AND UNCERTAINTIES
The Company relies on cloud based hosting through a global accredited hosting provider. Management believes that alternate sources are available; however, disruption or termination of this relationship could adversely affect our operating results in the near-term.
SEGMENT REPORTING
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by our chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.
The Company specializes in providing e-commerce solutions and services that facilitate multi-channel B2C (business-to-consumer) and B2B (business-to-business) transactions. We identify our reportable
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segments as those customer groups that represent more than 10% of our combined revenue or gross profit or loss of all reported operating segments. We manage our business on the basis of the one reportable segment e-commerce solutions and service provider. The accounting policies for segment reporting are the same as for the Company as a whole. We do not segregate assets by segments since our chief operating decision maker, or decision making group, does not use assets as a basis to evaluate a segments performance.
IDENTIFIABLE INTANGIBLE ASSETS
Identifiable intangible assets are recorded at cost and are amortized over 3 years. Similar to tangible property and equipment, the Company periodically evaluates identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
EQUIPMENT
Equipment is carried at cost less a provision for depreciation on a straight-line basis over their estimated useful lives. Estimated useful life of the computer equipment is 3 years.
INVESTMENT IN JOINT VENTURE
The Companys accounting policy for joint ventures is as follows:
The Company uses the cost method when it does not have joint control or significant influence in a joint venture. Under the cost method, these investments are carried at cost. If other than temporary impairment in value is determined, it would then be charged to current net income or loss.
If the Company enters into a joint venture in which there is joint control between the parties or the Company has significant influence, the equity method is utilized whereby the Companys share of the ventures earnings and losses is included in the statement of operations as earnings in joint ventures and its investments therein are adjusted by a similar amount. If other than temporary impairment in value is determined, it would then be charged to current net income or loss.
In a joint venture where the Company holds more than 50% of the voting interest and has significant influence, the joint venture is consolidated with the presentation of non-controlling interest. In determining whether significant influences exist, the Company considers its participation in policy-making decisions and its representation on the ventures management committee.
ACCOUNTS RECEIVABLE AND CONCENTRATION OF RISK
Accounts receivable, net is stated at the amount the Company expects to collect, or the net realizable value. The Company provides a provision for allowances that includes returns, allowances and doubtful accounts equal to the estimated uncollectible amounts. The Company estimates its provision for allowances based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Companys estimate of the provision for allowances will change.
At December 31, 2015, accounts receivable balances included a concentration from a major customer with receivable balances of $722,700 (2014: $202,700). For the year ended December 31, 2015, the Company had sales in excess of 10% of $2,356,501 with a major customer. For the year ended December 31, 2014 one customer had sales of $2,483,811 that was in excess of 10% of sales.
CASH AND CASH EQUIVALENTS
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Cash and cash equivalents represent cash on hand, demand deposits, and other short-term highly liquid investments placed with banks, which have original maturities of three months or less and are readily convertible to known amounts of cash.
STOCK-BASED COMPENSATION
The Company accounts for stock based compensation by recognizing the fair value of stock compensation as an expense in the calculation of net income (loss). The Company recognizes stock compensation expense in the period in which the employee is required to provide service, which is generally over the vesting period of the individual equity instruments. Stock options issued in lieu of cash to non-employees for services performed are recorded at the fair value of the options at the time they are issued and are expensed as service is provided.
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share of common stock is computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share of common stock is computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding during the period, including vested and unvested stock options that are in the money.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Companys financial instruments consist of cash, accounts payable, interest payable, shareholder loans and other current liabilities. The carrying values of financial instruments reflected in these financial statements approximate their fair values due to the short-term maturity of the instruments.
REVENUE RECOGNITION
The Company recognizes revenue from providing hosting and integration services and licensing the use of its technology platform to its customers. The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer (for licensing, revenue is recognized when the Companys technology is used to provide hosting and integration services); (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of fees is probable. We account for our multi-element arrangements, such as instances where we design a custom website and separately offer other services such as hosting, which are recognized over the period for when services are performed.
COST OF SERVICE
Cost of service results from 1) sales commissions to resellers 2) sourcing technical and engineering personnel in Asia on an hourly or project basis in order to customize multi-site SMB mobile apps and medium to large scale customized apps. 3) cloud based hosting services.
INCOME TAXES
The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standards Codification (ASC) 740, Income Taxes (ASC 740). Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the current year and (ii) future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets
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reported if based on the weight of available evidence it is more likely than not that some portion or all of the deferred tax assets will not be realized.
RECENT ACCOUNTING PRONOUNCEMENTS
There were various other accounting standards and interpretations recently issued, none of which is expected to have a material impact on the Company's financial position, operations or cash flows.
REVERSE SPLIT
On September 1, 2015, we effected a 1-for-1,000 reverse stock split of our outstanding common stock. As a result of the reverse stock split every 1,000 shares of our common stock were converted into 1 share of our common stock. Immediately after the reverse split we had 626,576 shares of our common stock outstanding. All share and per share related amounts in this report have been restated retrospectively to reflect the reverse split.
NOTE 3 - GOING CONCERN
The Company had a negative working capital of $136,797 as of December 31, 2015. The Companys continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its members or other sources, as may be required.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition raises substantial doubt about the Companys ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
In order to maintain its current level of operations, the Company will require additional working capital from either cash flow from operations or from the sale of its equity. However, the Company currently has no commitments from any third parties for the purchase of its equity.
NOTE 4 - INTANGIBLE ASSETS
|
| |
|
As of December 31,
|
|
2015
|
2014
|
Beginning balance, January 1, 2015
|
$
-
|
$
-
|
Additions
|
750,000
|
-
|
Impairment
|
-
|
-
|
Accumulated amortization
|
(83,333)
|
-
|
Ending balance, December 31, 2015
|
$
666,667
|
$
-
|
The remaining amortization period of the Companys amortizable intangible assets is approximately 2.67 years as of December 31, 2015. The estimated future amortization of the intangible assets is as follows:
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| |
For the years ending December 31,
|
Amount
|
2016
|
$ 250,000
|
2017
|
250,000
|
2018
|
166,667
|
Total
|
$ 666,667
|
NOTE 5 - THE JOINT VENTURE
On November 26, 2015, the Company and Ranosys Technologies Pvt. Ltd (Ranosys) agreed to enter into the Joint Venture through CreateApp India Pvt Ltd. (CreateApp), an India limited liability company of which the Company and Ranosys are 50% members. The results of operations of CreateApp from November 26, 2015 were not material.
NOTE 6 - EQUIPMENT
Equipment as of December 2015 and 2014 is summarized as follows:
|
| |
|
As of December 31,
|
|
2015
|
2014
|
Cost
|
$
10,000
|
$
10,000
|
Less: Accumulated depreciation
|
$
10,000
|
$
10,000
|
Net book value
|
-
|
-
|
NOTE 7 ACCRUALS AND OTHER PAYABLE
Accruals and other payable consisted of the following:
|
| |
|
As of December 31,
|
|
2015
|
2014
|
CEO payable
|
$
121,181
|
$
0
|
Other payable
|
$
0
|
$
303,491
|
Legal and professional fees payable
|
$
123,850
|
$
78,500
|
|
$
245,031
|
$
381,991
|
NOTE 8 DEPOSIT FOR STOCK TO BE ISSUED
During the year, the Company received $147,456 as funds designated for issuing of common stock.
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NOTE 9 - STOCKHOLDERS EQUITY/(DEFICIT)
Common Shares
Authorized common shares of the Company consist of 250,000,000 shares with a par value of $0.0001 each (2014: 10,000,000,000 shares with a par value of $0.00001 each).
Issuance of Common Stock
During the year ended December 31, 2015, the Company:
-
Issued 715,600 in common shares with a value of $14,312 for legal and professional services;
-
sold 580,067,155 shares at $0.00001 per share for total proceeds of $5,801 and 10,838,512 shares at $0.0001 per share for total proceeds of $1,084. No warrants were issued with the shares;
-
During the years ended December 31, 2015 and 2014, the Company recognized stock-based compensation of $8,960 and $0, respectively, which was included in selling, general and administrative expense.
Employee Stock Option Plan
The Company has a stock option and incentive plan, the Stock Option Plan. The exercise price for all equity awards issued under the Stock Option Plan is based on the fair market value of the common share price which is the closing price quoted on the Pink Sheets on the last trading day before the date of grant. The stock options generally vest on a monthly basis over a two-year to three-year period, and have a five year life.
Stock-Based Compensation
A summary of the Companys stock option activity during the twelve months ended December 31, 2015 is presented below:
|
|
|
|
|
| |
|
|
Number of options
|
Weighted Average Exercise Price
|
Weighted Average Grant-date Fair Value
|
Weighted Average Remaining Contractual Life (Years)
|
Aggregate Intrinsic Value
|
Options Outstanding
, December 31, 2013
|
|
410,000
|
0.83
|
2.02
|
1.1
|
$0
|
Less: Option expired
|
|
(160,000)
|
0.47
|
0.31
|
|
$0
|
Options Outstanding
, December 31, 2014
|
|
250,000
|
0.6
|
2.8
|
0.67
|
$0
|
Less: Option expired
|
|
(250,000)
|
0.6
|
2.8
|
|
|
Options Outstanding , December 31, 2015
|
|
-
|
-
|
-
|
-
|
-
|
All options outstanding are fully expired as of December 31, 2015. No new options were granted in the fiscal year 2014 or 2015.
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NOTE 10 - INCOME TAXES
Potential benefits of income tax losses have not been recognized in these financial statements because the Company cannot be assured if it's more likely-than-not it will utilize the net operating losses carried forward in future years.
|
|
| |
Income tax recovery differs from what which would be expected by applying the effective rates to net income (loss) as follows:
|
2015
|
|
2014
|
|
|
|
|
Deferred Tax Assets
|
|
|
|
Net Profit/(Loss) for the year
|
$
733,721
|
|
$
(255,693)
|
Statutory and effective tax rates
|
39.8%
|
|
39.8%
|
|
|
|
|
Expected income tax expenses (recovery) based on effective rate
|
292,201
|
|
(101,765)
|
Tax losses carryforward deferred
|
(292,201)
|
|
101,765
|
Corporate Income Tax expense (recovery) recognized in the accounts
|
-
|
|
-
|
The Company has accumulated net operating losses totaling $2,619,205 (2014: 3,352,926) for income tax purposes which expire starting in 2032. The components of the net deferred tax asset at December 31, 2015 and 2014 and the statutory tax rate, the effective tax rate and the amount of the valuation allowance are scheduled below:
|
|
| |
|
2015
|
|
2014
|
Net operating loss carryforwards
|
$
2,619,205
|
|
$
3,352,926
|
Accruals and reserves
|
-
|
|
-
|
|
2,619,205
|
|
3,352,926
|
Statutory tax rate
|
39.8%
|
|
39.8%
|
Deferred tax asset
|
1,042,444
|
|
1,334,465
|
Valuation allowance
|
(1,042,444)
|
|
(1,334,465)
|
Net deferred tax asset
|
-
|
|
-
|
NOTE 11 SUBSEQUENT EVENT
The Company has evaluated all transactions from December 31, 2015 through the financial statement issuance date for subsequent event disclosure consideration and noted no significant subsequent event that needs to be disclosed.
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