Amended Quarterly Report (10-q/a)

Date : 11/20/2018 @ 10:03PM
Source : Edgar (US Regulatory)
Stock : Weyland Tech Inc. (QX) (WEYL)
Quote : 0.65  0.0673 (11.55%) @ 9:52PM

Amended Quarterly Report (10-q/a)


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q/A

Amendment #2


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the half year period ended   June 30, 2018


or


[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from to_ _ to __


Commission File Number:  000-51815


WEYLAND TECH INC.

(Exact name of registrant as specified in its charter)


Delaware

20-1945139

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

85 Broad Street, 16-079

New York, NY 1004

(Address of principal executive offices, including Zip Code)

 

(808) 829-1057

(Registrant’s telephone number, including area code)



Securities registered under Section 12 (b) of the Exchange Act: None


Securities registered under Section 12 (g) of the Exchange Act: Common stock, $0.0001 par value (the “Common Stock”).


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[  ] Yes  [X] No


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

[  ] Yes  [X] No





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes  [  ] No


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[X] Yes  [  ] No


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [  ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer  [  ]                     Accelerated filer  [  ]

Non-accelerated filer  [  ]                      Smaller reporting company  [X]

(Do not check if a smaller reporting company)       Emerging Growth Company  [ ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [  ]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

[  ] Yes   [X] No


There were a total of 29,517,501 shares of the registrant’s common stock outstanding as of June 30, 2018.



2



Explanatory Note


The sole purpose of this Amendment No. 2 to Weyland Tech, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2018, as filed with the Securities and Exchange Commission on August 14, 2018, in the form of a Form 10-Q/A (Amendment No. 2) is to furnish revised and additional disclosure to Item 9A(T).  No other material changes have been made to the Form 10-Q.  This Amendment No. 2 does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way the additional disclosures made in the original Form 10-Q.



TABLE OF CONTENTS

 

 

 

 

PART I – FINANCIAL INFORMATION

 

6

Item 1.

Financial Statements

 

6

 

Unaudited condensed Consolidated Balance sheets as of June 30, 2018 and Audited condensed Balance sheet as of December 31, 2017.

 

6

 

Unaudited condensed Consolidated statements of operations and comprehensive loss for the three and Six months ended June 30, 2018 and 2017.

 

7

 

Unaudited condensed Consolidated statements of cash flows for the Six months ended June 30, 2018 and 2017.

 

8

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

21

Item 4.

Controls and Procedures

 

22

PART II – OTHER INFORMATION

 

24

Item 1.

Legal Proceedings

 

24

Item 1A.

Risk Factors

 

24

Item 2.

Recent Unregistered Sales of Equity Securities

 

28

Item 3.

Exhibits

 

28

SIGNATURES

 

 

29





3



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS


This annual report on Form 10-Q and other reports that we file with the SEC contain statements that are considered forward-looking statements.  Forward-looking statements give the Company’s current expectations, plans, objectives, assumptions or forecasts of future events.  All statements other than statements of current or historical fact contained in this annual report, including statements regarding the Company’s future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements.  In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” and similar expressions.  These statements are based on the Company’s current plans and are subject to risks and uncertainties, and as such the Company’s actual future activities and results of operations may be materially different from those set forth in the forward-looking statements.  Any or all of the forward-looking statements in this annual report may turn out to be inaccurate and as such, you should not place undue reliance on these forward-looking statements.  The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs.  The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions due to a number of factors, including:


dependence on key personnel;


competitive factors;


continued growth of mobile app markets;


the operation of our business; and


general economic conditions in the ASEAN, Asia-Pacific Region and in the United States.


These forward-looking statements speak only as of the date on which they are made, and except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.  In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.  All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this annual report.


USE OF TERMS


Except as otherwise indicated by the context, all references in this report to:


“Weyland Tech,” “Company,” “we,” or “our,” unless the context otherwise requires, are to Weyland Tech Inc.


“SEC” are to the United States Securities and Exchange Commission;


“Securities Act” are to the Securities Act of 1933, as amended;


“Exchange Act” are to the Securities Exchange Act of 1934, as amended;




4



“U.S. dollar,” “USD,” “US$” and “$” are to the legal currency of the United States.


Available Information


The Company’s website is www.weyland-tech.com, where information about the Company may be reviewed and obtained.  In addition, the Company’s filings with the Securities and Exchange Commission (“SEC”) may be accessed at the internet address of the SEC, which is http://www.sec.gov.  Also, the public may read and copy any materials that the Company files with at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580 Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.




5



PART I – FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


WEYLAND TECH INC.

Condensed Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30

 

December 31

 

 

 

 

 

2018

 

2017

 

 

 

 

 

(Unaudited)

 

(Audited)

ASSETS

 

 

 

Current assets

 

 

 

 

 

 

Account Receivables

 

 

$

 

$

 

Cash and Bank

 

 

767,091 

 

1,056,399 

 

Temporary Payment and prepayments

 

 

2,362,164 

 

1,485,597 

 

Amount due from Associate

 

 

542,000 

 

 

Deposit and other receivables

 

 

1,687,139 

 

1,773,334 

 

    Total current assets

 

 

5,358,394 

 

4,315,330 

 

Non-Current Assets

 

 

 

 

 

 

 

Software development cost

 

 

802,414 

 

978,131 

 

 

Trademark

 

 

3,750 

 

4,000 

 

  Total Non-Current Assets

 

 

806,164 

 

982,131 

 

    Total assets

 

 

6,164,558 

 

5,297,461 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts Payables

 

 

18,000 

 

18,000 

 

Accrued expenses and other payable

 

 

225,498 

 

257,508 

 

Deposit received for share to be issued

 

 

3,524,466 

 

1,771,028 

 

 

Total current liabilities

 

 

3,767,964 

 

2,046,536 

 

 

 

 

 

 

 

 

 

 

 Net Assets

 

 

2,396,594 

 

3,250,925 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

Common stock, $0.0001 par value,

 

 

 

 

 

 

 

250,000,000 shares authorized,

 

 

 

 

 

 

 

Issued and outstanding 29,517,501

shares as of June 30, 2018 and 23,460,628 shares as of December 31, 2017

 

 

2,952 

 

2,346 

 

Additional paid-in capital

 

 

40,921,144 

 

40,221,873 

 

Subscriptions received

 

 

 

 

Accumulated deficit

 

 

(38,527,502)

 

(36,973,294)

 

 

Total stockholders' funds

 

 

2,396,594 

 

3,250,925 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

6,164,558 

 

$

5,297,461 

 

 

 

 

 

 

 

 

 




6




WEYLAND TECH INC.

Condensed Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

Ended June 30,

 

 

Six Months

Ended June 30,

 

 

 

 

 

2018

 

2017

 

 

2018

 

2017

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Revenue

 

$

4,658,980 

$

3,638,776

 

$

8,838,686

$

6,476,022

Cost of Service

 

 

570,735 

 

4,055,461

 

 

1,082,758

 

5,095,509

Gross (Loss) Profit

 

 

4,088,245

 

(416,685)

 

 

7,755,928

 

1,380,513

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

 

19,889

 

 

-

 

19,883

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

     547,116 

 

227,767

 

 

1,543,790

 

478,893

 

Research and development

 

 

   2,403,854

 

            -

 

 

   3,612,971

 

            -

 

Sales and marketing

 

 

   2,096,541

 

            -

 

 

   3,977,409

 

            -

 

Depreciation &amortization

 

 

87,983 

 

87,983

 

 

175,966

 

175,967

Total Operating Expenses

 

 

5,135,494 

 

315,750

 

 

9,310,136

 

654,860

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Profit from Operations

 

 

(1,047,249)

 

(712,546)

 

 

(1,554,208)

 

745,536

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

 

-

 

 

-

 

-

Net (Loss) Income

 

$

(1,047,249)

 $

(712,546)

 

$

(1,554,208)

 $

745,536

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) per common share - basic and fully diluted:

 

(0.0359)

 

(0.0332)

 

 

(0.0623)

 

0.0353

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of basic and fully diluted common shares outstanding

 

 

29,186,966 

 

21,455,963

 

 

24,951,557

 

21,118,918

 

 

 

 

 

 

 

 

 

 

 

 

 




7




WEYLAND TECH INC.

Condensed Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

Six Months

Ended June 30,

 

 

 

 

 

2018

 

2017

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

Cash flows from operations:

 

 

 

 

 

 

(Loss) Profit from continuing operations

 

$

(1,554,208)

$

745,536 

 

Adjustment to reconcile net (loss) profit to net cash

used in operating activities:

 

 

 

 

 

 

 

Depreciation expense/amortization development costs

 

 

175,967 

 

175,967 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Amount due from Associates

 

 

(542,000) 

 

 

 

Deposit and other receivables

 

 

86,195

 

(4,920) 

 

 

Prepayment

 

 

(876,567)

 

(1,856,998)

 

 

Account payable

 

 

 

101,863 

 

 

Accruals and other payables

 

 

(32,010)

 

218,850 

 

 

Stock subscription payables

 

 

1,753,438 

 

855,862 

Net cash (used) in operations

 

 

(989,185)

 

236,160

 

 

 

 

 

 

 

 

Investment activities:

 

 

 

 

 

      Investment in Joint Venture

 

 

 

Net cash provided by / (used in) investment activities

 

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Proceeds from stock issuance

 

 

699,877 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

(289,308) 

 

236,160 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash

 

 

(289,308)

 

236,160 

 

 

 

 

 

 

 

 

Balances per prior period balance sheet

 

 

1,056,399 

 

1,003,924 

Ending balances

 

$

767,091 

 

$

1,240,084 

 

 

 

 

 

 

 

 




8



NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION


Weyland Tech’s CreateApp platform enables small-medium-sized businesses ("SMBs") to create a mobile application ("app") without the need of technical knowledge, high investment or background in IT.


We believe that SMBs can increase sales, reach more customers and promote their products and services via a simple easy to build mobile app at an affordable price and in a cost-effective manner.


On April 23, 2018, The Company completed the incorporation of PT Weyland Indonesia Perkasa (“WIP”), a company incorporated in Indonesia. WIP is the corporate entity used for the eWallet business, AtoZPay.


Digital Wallet or eWallet a digital financial services business, a distinguishing characteristic of GSEA compared to the United States is the substantially lower percentage of the population with bank accounts, credit cards, or debit cards. This creates the need for alternative payment methods, specifically e-wallets. GSEA is poised for its own payments transformation in much the same way that China has shifted to online payments, according to IDC. Online payments in GSEA is divided into four broad payment modes: e-wallets, such as our AtoZPay platform, credit cards, debit cards and online banking. Of these, the e-wallet mode is expected to grow the fastest over the next five years, according to IDC. Drivers for GSEA’s e-wallet industry include the mismatch between internet penetration and banking penetration, which creates a structural opportunity for e-wallets; the increasing integration of e-wallets with use cases such as online games and e-commerce; and the opportunity to offer broader digital financial services using e-wallets as a foundation.



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 Company’s 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




9



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 is focused on mobile commerce enablement via our enhanced platform built in 2017, and offered on a Platform-as-a-Service (“PaaS”) basis, and the company’s e-wallet initiative.  We identify our reportable 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 segment’s performance.


IDENTIFIABLE INTANGIBLE ASSETS


Identifiable intangible assets are recorded at cost and are amortized over 3-10 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.


IMPAIRMENT OF LONG-LIVED ASSETS


The Company classifies its long-lived assets into: (i) computer and office equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv) finite – lived intangible assets.


Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology, economy or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, relief from royalty income approach, quoted market values and third-party independent appraisals, as considered necessary.


The Company makes various assumptions and estimates regarding estimated future cash flows and other factors in determining the fair values of the respective assets. The assumptions and estimates used to determine future values and remaining useful lives of long-lived assets are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as the Company’s business strategy and its forecasts for specific market expansion.


ASSOCIATES


Associates are all entities over which the group has significant influence but not control or joint control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. The group’s investment in associates includes goodwill identified on acquisition. The group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised as a reduction in the carrying amount of the investment. Where the group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured long-term receivables, the group



10



does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the group and its associates are eliminated to the extent of the group’s interest in the associates. Unrealised losses are also eliminated, unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed, where necessary, to ensure consistency with the policies adopted by the group.


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 Company’s estimate of the provision for allowances will change.


The Company’s CreateApp business effective 1 September 2015 is based on a nil accounts receivable balance as subscriptions are collected on a usage basis.  


As of December 31, 2017, sales included a concentration from a major customer although accounts receivable had a nil balance.


CASH AND CASH EQUIVALENTS


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 six months or less and are readily convertible to known amounts of cash.


EARNINGS PER SHARE


Basic (loss) earnings per share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per share.


FASB Accounting Standard Codification Topic 260 (“ASC 260”), “Earnings Per Share,” requires that employee equity share options, non-vested shares and similar equity instruments granted to employees be treated as potential common shares in computing diluted earnings per share. Diluted earnings per share should be based on the actual number of options or shares granted and not yet forfeited, unless doing so would be anti-dilutive. The Company uses the “treasury stock” method for equity instruments granted in share-based payment transactions provided in ASC 260 to determine diluted earnings per share. Antidilutive securities represent potentially dilutive securities which are excluded from the computation of diluted earnings or loss per share as their impact was antidilutive.


REVENUE RECOGNITION


The Company’s CreateApp Platform operates as a Platform as a Service (“PaaS”) by providing the infrastructure allowing users to develop their own applications and IT services, which users can access anywhere via a web or desktop browser. The Company recognizes revenue on a pay to use subscription basis when our customers use our platform. For the territories licensed to our distributors and on a white label basis, we derive royalty income from the end user use of our platform on a white label basis.  


The Company maintains the CreateApp software platform at its own cost. Any enhancements and minor customization for our resellers/distributors are not separately billed. Major new proprietary features are billed to the customer separately as Development income while re-usable features are



11



added to the features available to all customers on subsequent releases of our platform.


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 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


In January 2017, the FASB has issued Accounting Standards Update (“ASU”) No. 2017-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments. The new guidance makes targeted improvements to existing U.S. GAAP by: (1) requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (2) Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; (3) Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and. (4) Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not anticipate that this adoption will have a significant impact on its financial position, results of operations, or cash flows.


In February 2017, the FASB issued ASU 2017-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2017-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for all entities. ASU 2017-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. he Company does not anticipate that this adoption will have a significant impact on its financial position, results of operations, or cash flows.





12



In April 2017, the FASB released ASU 2017-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, EPS, and the statement of cash flows. Implementation and administration may present challenges for companies with significant share-based payment activities. The ASU is effective for public companies in annual periods beginning after December 15, 2017, and interim periods within those years. The Company does not anticipate that this adoption will have a significant impact on its financial position, results of operations, or cash flows.


In April 2017, FASB issued Accounting Standards Update No. 2017-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The Company does not anticipate that this adoption will have a significant impact on its financial position, results of operations, or cash flows.


In May 2017, the FASB issued ASU No. 2017-11 Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815); Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2017 EITF Meeting, which is rescinding certain SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities—Oil and Gas, effective upon adoption of Topic 606.  The Company does not anticipate that this adoption will have a significant impact on its financial position, results of operations, or cash flows.


In May 2017, FASB issued ASU No. 2017-12—Revenue from Contracts with Customers (Topic 606); Narrow-Scope Improvements and Practical Expedients, which is intended to not change the core principle of the guidance in Topic 606, but rather affect only the narrow aspects of Topic 606 by reducing the potential for diversity in practice at initial application and by reducing the cost and complexity of applying Topic 606 both at transition and on an ongoing basis.  The Company does not anticipate that this adoption will have a significant impact on its financial position, results of operations, or cash flows.

In August 2017, the FASB issued ASU No. 2017-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to provide guidance on the presentation and classification of certain cash receipts and cash payments on the statement of cash flows. The guidance specifically addresses cash flow issues with the objective of reducing the diversity in practice. The guidance will be effective for the Company in fiscal year 2018, but early adoption is permitted. The Company does not anticipate that this adoption will have a significant impact on its financial position, results of operations, or cash flows.


In October 2017, the FASB issued ASU No. 2017-17, Consolidation (Topic 810): Interest Held through Related Parties That Are under Common Control, to provide guidance on the evaluation of whether a reporting entity is the primary beneficiary of a VIE by amending how a reporting entity, that is a single decision maker of a VIE, treats indirect interests in that entity held through related parties that are under common control. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not anticipate that this adoption will have a significant impact on its financial position, results of operations, or cash flows.




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In November 2017, the FASB issued ASU No. 2017-18, "Statement of Cash Flows: Restricted Cash". The amendments address diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendment is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not anticipate that this adoption will have a significant impact on its financial position, results of operations, or cash flows.


The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.



NOTE 3 - INTANGIBLE ASSETS


As of June 30, 2018 and 2017, the company has the following amounts related to intangible assets:


 

 

As of June 30,

 

 

2018

 

2017

Software acquired

$

1,764,330

$

1,764,330

Other intangible assets

 

5,000

 

5,000

 

 

1,769,330

 

1,769,330

Less: accumulated amortization

 

963,166

 

611,233

Net intangible assets

$

806,164

$

1,158,097



No significant residual value is estimated for these intangible assets. Amortization expense for six months ended June 30, 2018 and 2017 totaled $175,966 for both periods.



NOTE 4 – INVESTMENT IN ASSOCIATE

 

On April 23, 2018, the Company participated in the incorporation of a company in Indonesia with the name of PT Weyland Perkasa Indonesia (“WIP’), an Indonesian limited liability company of which the Company holds a 49% equity interest.  The results of operations of WIP from April 23, 2018 to June 30, 2018, was not material and have not been included.


The following amounts are outstanding at June 30, 2018:


Deposits paid for new AtoZ Payment platform of WIP

1,668,138

Amount due from WIP

  542,000

________

2,210,138



 

NOTE 5 – ACCRUALS AND OTHER PAYABLE


Accruals and other payable consisted of the following:





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As of June 30,

 

 

2018

 

2017

Accruals

$

  219,985

$

  289,070

Other payables

 

  5,513

 

  121,316

 

$

  225,498

$

  410,386



NOTE 6 - STOCKHOLDERS’ EQUITY


Common Shares


As of June 30, 2018 and 2017, authorized common shares of the Company consists of 250,000,000 shares with par value of $0.0001 each.


Issuance of Common Stock


During the three months ended June 30, 2018, 2,722,495 shares with par value of $ 0.0001 per share were issued for consultancy services received including shares issued in exchange for the CreateApp Software Licensing Agreement announced on April 8, 2017 and 148,724 shares with par value of $0.0001 per share were issued to various stockholders.



NOTE 8 - INCOME TAXES


The Company and its subsidiaries file separate income tax returns.


The United States of America


Weyland Tech, Inc. is incorporated in the State of Delaware in the U.S., and is subject to a gradual U.S. federal corporate income tax of 21%. The Company generated taxable income for the year ended December 31, 2017 and 2016, and which is subject to U.S. federal corporate income tax rate of 21% and 34%, respectively.


Hong Kong


Weyland Tech Limited is incorporated in Hong Kong and Hong Kong’s profits tax rate is 16.5%. Weyland Tech Limited did not earn any income that was derived in Hong Kong for the six months ended June 30, 2018 and years ended December 31, 2017 and 2016, and therefore, Weyland Tech Limited was not subject to Hong Kong profits tax.


The Company’s effective income tax rates were 21% and 34% for the years ended December 31, 2017 and 2016, respectively. Income tax mainly consists of foreign income tax at statutory rates and the effects of permanent and temporary differences.


 

For the year ended December 31,

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

U.S. statutory tax rate

 

 

21.0%

 

 

 

34.0%

 



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Hong Kong profit tax rate

 

 

16.5%

 

 

 

16.5%

 

Foreign income not registered in the Hong Kong

 

 

(16.5%) 

 

 

 

(16.5%) 

 

Others

 

 

0.0%

 

 

 

0.0%

 

Effective tax rate

 

 

21.0%

 

 

 

34.0%

 



NOTE 9 – COMMITMENTS AND CONTINGENCIES


Operating lease


The Company did not have any operating lease as of June 30, 2018.


Legal proceedings


The Company is currently undergoing civil litigation in Singapore where a dispute has arisen between a shareholder and the Company in relation to the ownership of approximately 3,500,000 shares of the Company’s common stock.  Currently, the Company is pursuing alternative means of dispute resolution which if successful is expected to be able to resolve the aforementioned litigation proceedings by the third quarter of 2018.  Given that the matter is still in discussion and negotiation stages, no assurances can be given about the outcome of these proceedings.  In the meanwhile, the Company believes that there are unlikely to be any negative repercussions to the other shareholders.


Additionally, the Company has settled a suit against another shareholder in Singapore, in a confidential settlement that is favorable and non-dilutive to the Company.



NOTE 10 – SUBSEQUENT EVENTS


There were no events or transactions other than those disclosed in this report that would require recognition or disclosure in our consolidated financial statements for the six months ended June 30, 2018.



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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


Forward Looking Statements


This quarterly report on Form 10-Q and other reports that we file with the SEC contain statements that are considered forward-looking statements. Forward-looking statements give the Company’s current expectations, plans, objectives, assumptions or forecasts of future events.  All statements other than statements of current or historical fact contained in this quarterly report, including statements regarding the Company’s future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements.  In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” and similar expressions.  These statements are based on the Company’s current plans and are subject to risks and uncertainties, and as such the Company’s actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. Any or all of the forward-looking statements in this periodic report may turn out to be inaccurate and as such, you should not place undue reliance on these forward-looking statements.  The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs.  The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions due to a number of factors, including:


-

dependence on key personnel;


-

Competitive factors;


-

degree of success of research and development programs;


-

the operation of our business; and


-

general economic conditions in the ASEAN, Asia-Pacific Region and in the Unit States.


These forward-looking statements speak only as of the date on which they are made, and except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this annual report.


Use of Terms


Except as otherwise indicated by the context and for the purposes of this report only, references in this report to:


-

“Weyland” the “Company,” “we,” “us,” or “our,” are to the business of Weyland Tech Inc., a Delaware corporation;


-

“SEC” are to the Securities and Exchange Commission;


-

“Securities Act” are to the Securities Act of 1933, as amended;




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-

“Exchange Act” are to the Securities Exchange Act of 1934, as amended;


-

“U.S. dollars,” “dollars” and “$” are to the legal currency of the United States.


You should read the following plan of operation together with our financial statements and related notes appearing elsewhere in this quarterly report and the most recent Form 10-K and Form 10-Q.  This plan of operation contains forward-looking statements that involve risks, uncertainties, and assumptions.  The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors.  


Overview


Weyland Tech’s CreateApp platform, offered as a Platform as a Service (“PaaS”), enables small-medium-sized businesses ("SMB") to create a mobile application ("app") without the need of technical knowledge, high investment or background in IT.  At present, the Company does not charge for use of the PaaS platform. The Company recognizes revenue on a pay to use subscription basis when our customers use our platform.


We believe that SMB can increase sales, reach more customers and promote their products and services via a simple easy to build mobile app at an affordable price and in a cost-effective manner.


Our corporate headquarters are located at 85 Broad Street, 16-079 New York, NY 10004.  Although we maintain a website at www.weyland-tech.com, we do not intend the information available on our website be incorporated into this filing.


On May 17 and 31, and on June 27, the Company reported via Form 4, with the Securities and Exchange Commission, that certain insiders and management members, purchased shares in the open market.


On May 23, the Company announced that the AtozPay eWallet exited from its ‘closed beta’ testing and officially launched its business. Additionally, Price Waterhouse Coopers was engaged as advisor to the Company on the eWallet business and proposed spinoff to shareholders.


Business Outlook


Weyland Tech, Inc. is focused on mobile commerce enablement via our enhanced platform built in 2017, and offered on a Platform-as-a-Service (“PaaS”) basis, and the company’s e-wallet initiative.  Recent product launches with our strategic partners DPEX (Indonesia), BTG (Thailand), Augicom/Orange (France) are representative of the PaaS platform strategy and product offering.


As a result, the Company’s core product has evolved over the course of 2017 and 2018 to capitalize on the immediate opportunity for developing a larger network of valuable users and merchants by developing services that will enable the adoption of mobile commerce across Greater South East Asia. The platform enhancements have taken the Company’s technology from a standalone DIY app builder to an enhanced platform built to enable mobile commerce.


In 2018, Weyland will focus on scaling this business model by continuing to develop and expand strategic partnerships that would increase the number of users and merchants available to users of the Company’s products on a Platform-as-a-Service (“PaaS”) basis. These efforts will expand on the success of recent product launches representative of the PaaS platform strategy and product offering with our strategic partners DPEX (Indonesia), BTG (Thailand), and Augicom/Orange (France). And after extensive discussions with our partners, management believes that supporting these initiatives through deeper engagement, interaction and co-marketing/sales will substantially benefit the Company in 2018 and beyond. 




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The Company is also pleased to report that its 2017 e-wallet initiative, AtozPay, has surpassed expectations since its launch, achieving stronger than anticipated customer traction with limited marketing expense. With the AtozPay e-wallet, the Company created a ‘consumer facing’ product offering that supports the PaaS strategy developed by the enhancements to the CreateApp platform and enables Weyland to drive higher monetization on those platforms by providing payments capabilities.


AtozPay officially exited the closed beta environment on May 23, 2018 and officially launched for business.


AtozPay is designed to be a robust, universal payment platform therefore its growth is not limited to the Company’s PaaS customers alone. 


In order to maximize the independent growth of AtoZPay and consequently shareholder value, management has begun the process to spin-off the e-wallet business via a special dividend.


This effort is intended to boost shareholder value by creating a ‘stand-alone’ vehicle for the fast growing global e-money/e-wallet industry. Private and public transactions in the e-money/e-wallet industry in South East Asia are growing more frequent with valuations that would represent substantial value creation for existing shareholders.


While additional details will be released over the coming months, it is the Company’s belief that the spin-off and a subsequent IPO of the e-wallet business can be completed by the end of fiscal 2018. 


Plan of Operations


Although Weyland Tech's CreateApp platform originally focused on the Pan-Asia markets—the platform is provided in fourteen, predominantly Asian, languages—we have partners that work with us to develop the EU and North American markets.


The CreateApp platform enables SMB to create a mobile application ("app") without the need of technical knowledge, high investment or background in IT.


We believe that through apps created on our platform, SMBs can increase sales, reach more customers and promote their products and services via a simple easy to build mobile app at an affordable price and in a cost-effective manner.


Weyland Tech currently offers the CreateApp platform directly, as a Platform as a Service (“PaaS”) in the following key markets:


Singapore: www.createappsingapore.com


India (Jaipur): www.aapkiapp.in


Weyland Tech currently offers a DIY App builder through a 'white label' platform, also under a PaaS model, with the apps developed generating revenue in the following markets, primarily via cooperation agreements that were structured in late 2015, 2016 and 2017:


EU, via a Strategic Cooperation with Augicom S.A. (www.augicom.ch) (https://createapp.pro/)


Malaysia, via a Cooperation Agreement with Silver Ridge Tangerine Sdn Bhd (www.silverridge.com.my)


Hong Kong and South China via a Cooperation Agreement with Info Zone Development Ltd.



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Indonesia, via a Cooperation Agreement with DPEX Worldwide (www.dpex.com)


Thailand via a Cooperation Agreement with BGT Corporation Public Company Limited (http://www.bgtech.co.th/)


The Philippines via a Cooperation Agreement with MocaApp  (www.mocaapp.com)


France via a Cooperation Agreement with Orange Pro (https://pro.orange.fr/) (https://createapp.pro/)


For the territories licensed to our distributors and on a white label basis, we derive royalty income from the end user use of our platform.  


The Company recognizes revenue on a pay to use subscription basis when our customers use our platform.  For the territories licensed to our distributors and on a white label basis, we derive royalty income from the end user use of our platform on a white label basis.  


Need for Additional Capital


To become profitable and competitive, and execute strategic transactions, we may have to raise additional capital.  If we are unable to raise additional equity capital to develop our business and continue earning revenues, we might have to suspend or cease operations and our investors may lose their investment.


We have no assurance that future financings will be available to us on acceptable terms.  If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Equity financing could result in additional dilution to existing shareholders.


Results of Operation


Service Revenue


Service Revenue was $8,838,686 and $6,476,022 for the six months ended June 30, 2018 and 2017, respectively.  The increase is due to the service income from our customers.


Cost of Service


Cost of Service was $1,082,758 and $5,095,509 for the six months ended June 30, 2018 and 2017, respectively. The decrease reflects classification of certain Research and Development and Sales and Marketing expense previously included in Cost of Service.


Gross margin


Gross margin has increased to 87.7% from 21.3% as a result of the classification of certain Research and Development and Sales and Marketing expense previously included in Cost of Service.


Operating Expenses


General and administrative:  General and administrative expenses were $1,543,790 and $478,893 and for the six months ended June 30, 2018 and 2017, respectively.  The increase was due to increased staff costs, travel, consultancy and professional costs from the increased level of business and our new digital wallet business.


Research and Development: Research and Development expense were $3,612,971 and $0 for the six



20



months ended June 30, 2018 and 2017, respectively. The increase reflects spending on website, e-commerce platform and mobile app development (powered by CreateApp & Magento), completion of the DPEX Enable dashboard as well as integrating various functionality including the AtoZ Pay payment facility into the CreateApp platform. Additionally, the company continued development of the company’s system support knowledge base and other internal systems.


Sales and Marketing: Sales and Marketing expenses were $3,977,409 and $0 for the six months ended June 30, 2018 and 2017, respectively. The increase reflects expenditures on Market Development Funds, Commissions, Sales Performance Incentive Funds as well as non-reusable module development undertaken in efforts to win business all of which were previously classified as Cost of Sales.


Stock-based compensation


Stock-based compensation expenses for the six months ended June 30, 2018 was $ 699,877. (2017: Nil)


Net (Loss) profit


The Company reports a net loss of ($1,554,208) for the six months ended June 30, 2018 as compared to net profit $745,536 for the six months ended June 30, 2017. The decrease in the net income is due to increase in research & development costs, legal and professional costs, travelling cost, consultancy fee, staff costs for the business and stock-based compensation.


Off-Balance Sheet Arrangements


The Company has no off-balance sheet arrangements.


Liquidity and Capital Resources


On June 30, 2018, we had working capital of $1,590,430.  The decrease in working capital compared to December 31, 2017 is due to advances to our associated company, for our AtoZ Pay digital wallet business and prepayment made for the development for our platform against deposits for shares to be issued.


Revenue Recognition


The Company’s CreateApp Platform operates as a Platform as a Service (“PaaS”) allowing users to develop their own applications and IT services, which users can access anywhere via a web or desktop browser. The Company recognizes revenue on a pay to use subscription basis when our customers use our platform. For the territories licensed to our distributors and on a white label basis, we derive royalty income from the end user use of our platform on a white label basis.  


The Company maintains the CreateApp software platform at its own cost. Any enhancements and minor customization for our resellers/distributors are not separately billed. Major new proprietary features are billed to the customer separately as Development income while re-usable features are added to the features available to all customers on subsequent releases of our platform.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


As a smaller reporting company” (as defined by §229.10(f)(1)), the Company is not required to provide the information required by this Item.




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ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures.  


With the appointment on July 15, 2015 of Lionel Choong, our present acting Chief Financial Officer, procedures over the timely reporting of financial quarterly results for the September 2015 quarter were introduced and are being used for the annual reporting of the Company’s annual 10-K and interim 10-Q’s.  With the current procedures in place, we have increased our ability to identify significant transactions that require disclosure under the Securities Exchange Act of 1934.  We have enhanced our current procedures and they comply fully with the disclosure controls in fiscal year 2018 .


Annual Report of Management on Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:


1.  Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;


2.  Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and


3.  Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be



22



effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.


As of December 31, 2016, management assessed the effectiveness of our internal control over financial reporting and based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.


The matters involving internal control over financial reporting that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and (2) inadequate segregation of duties consistent with control objectives. The aforementioned material weaknesses were identified by our Chief Executive Officer and Chief Financial Officer in connection with the review of our financial statements as of December 31,  2016 .


Management believes that the material weakness set forth in item (2) above did not have an effect on our financial results.  However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.  As a result, we have enhanced our current procedures  during 2017  and  believe that our internal control over financial reporting  will be effective in fiscal year 2018.


As a smaller reporting company, the Company is not required to include in this Quarterly Report a report on the effectiveness of internal control over financial reporting by the Company’s independent registered public accounting firm.




23



PART II – OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.


The Company is currently undergoing civil litigation in Singapore where a dispute has arisen between a shareholder and the Company in relation to the ownership of approximately 3,500,000 shares of the Company’s common stock.  Currently, the Company is pursuing alternative means of dispute resolution which if successful is expected to be able to resolve the aforementioned litigation proceedings by the third quarter of 2018.  Given that the matter is still in discussion and negotiation stages, no assurances can be given about the outcome of these proceedings.  In the meanwhile, the Company believes that there are unlikely to be any negative repercussions to the other shareholders.


Additionally, the Company has settled a suit against another shareholder in Singapore, in a confidential settlement that is favorable and non-dilutive to the Company.


ITEM 1A. RISK FACTORS


We operate in a highly competitive environment in which there are numerous factors which can influence our business, financial position or results of operations and which can also cause the market value of our common stock to decline. Many of these factors are beyond our control and therefore, are difficult to predict. The following section sets forth what we believe to be the principal risks that could affect us, our business or our industry, and which could result in a material adverse impact on our financial results or cause the market price of our common stock to fluctuate or decline.


RISKS RELATED TO OUR BUSINESS


We are subject to risks associated with changing technologies in the mobile apps industry, which could place us at a competitive disadvantage.


The successful implementation of our business strategy requires us to continuously evolve our existing solutions and introduce new solutions to meet customers’ needs. We believe that our customers rigorously evaluate our solution and service offerings on the basis of a number of factors, including, but not limited to: quality; price competitiveness; technical expertise and development capability; innovation; reliability and timeliness of delivery; operational flexibility; customer service; and overall management.


Our success depends on our ability to continue to meet our customers’ changing requirements and specifications with respect to these and other criteria. There can be no assurance that we will be able to address technological advances or introduce new offerings that may be necessary to remain competitive within the mobile apps industry.


Systems failures could cause interruptions in our services or decreases in the responsiveness of our services which could harm our business.


If our systems fail to perform, we could experience disruptions in operations, slower response times or decreased customer satisfaction. Our ability to host mobile apps successfully and provide high quality customer service depends on the efficient and uninterrupted operation of our hosting company's computer and communications hardware and software systems. Although unlikely, our hosting company's systems are vulnerable to damage or interruption from human error, natural disasters, power loss, telecommunication failures, break-ins, sabotage, computer viruses, intentional acts of vandalism and similar events. Any systems failure that causes an interruption in our services or



24



decreases the responsiveness of our services could impair our reputation, damage our brand name and materially adversely affect our business, financial condition and results of operations and cash flows.


Our cost structure is partially fixed. If our revenues decline and we are unable to reduce our costs, our profitability will be adversely affected.


Our cost structure is partially fixed. We base our cost structure on historical and expected levels of demand for our services, as well as our fixed operating infrastructure, such as computer hardware and software, and staffing levels. If demand for our services declines and, as a result, our revenues decline, we may not be able to adjust our cost structure on a timely basis and our profitability may be materially adversely affected.


Attrition of customers and failure to attract new customers could have a material adverse effect on our business, financial condition and results of operations and cash flows.


Although we offer mobile apps designed to support and retain our customers, our efforts to attract new customers or prevent attrition of our existing customers may not be successful. If we are unable to retain our existing customers or acquire new customers in a cost-effective manner, our business, financial condition and results of operations and cash flows would likely be adversely affected. Although we have spent significant resources on business development and related expenses and plan to continue to do so, these efforts may not be cost-effective at attracting new customers.


Any future acquisitions may result in significant transaction expenses, integration and consolidation risks and risks associated with entering new markets, and we may be unable to profitably operate our consolidated company.


The Company intends to selectively pursue acquisitions and new businesses. Any future acquisitions may result in significant transaction expenses and present new risks associated with entering additional markets or offering new products and services, and integrating the acquired companies. We may not have sufficient management, financial and other resources to integrate companies we acquire or to successfully operate new businesses and we may be unable to profitably operate our expanded company. Additionally, any new businesses that we may acquire, once integrated with our existing operations, may not produce expected or intended results.


We may be unable to respond to customers' demands for new mobile app solutions and service offerings and our business, financial condition and results of operations and cash flows may be materially adversely affected.


Our customers may demand new mobile app solutions and service offerings.  If we fail to identify these demands from customers or update our offerings accordingly, new offerings provided by our competitors may render our existing solutions and services less competitive. Our future success will depend, in part, on our ability to respond to customers' demands for new offerings on a timely and cost-effective basis and to adapt to address the increasingly sophisticated requirements and varied needs of our customers and prospective customers. We may not be successful in developing, introducing or marketing new offerings. In addition, our new offerings may not achieve market acceptance. Any failure on our part to anticipate or respond adequately to customer requirements, or any significant delays in the development, introduction or availability of new offerings or enhancements of our current offerings could have a material adverse effect on our business, financial condition and results of operations and cash flows.


We may be unable to respond to the evolving industry practices and technology solutions, and our business, financial condition and results of operations and cash flows may be materially adversely affected.




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To remain competitive as a mobile app provider, we must continue to invest in research and development of new technology solutions in order to keep up with the ever-evolving industry practices and enhancements to our existing solutions. The process of developing new technologies, products and services is complex and expensive. The introduction of new solutions by our competitors, the market acceptance of competitive solutions based on new or alternative technologies or the emergence of new industry practices could render our solutions less competitive.


We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices Act could have a material adverse effect on our business.


We are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We have operations, agreements with third parties and make sales in Asia, which may experience corruption. Our activities in Asia create the risk of unauthorized payments or offers of payments by one of the employees, consultants or agents of our company, because these parties are not always subject to our control. It is our policy to implement safeguards to discourage these practices by our employees. Also, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.


RISKS RELATED TO THE MARKET FOR OUR STOCK


The market price of our common stock can become volatile, leading to the possibility of its value being depressed at a time when you may want to sell your holdings.


The market price of our common stock can become volatile. Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. These factors include:


our earnings releases, actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations of financial market analysts and investors;

changes in financial estimates by us or by any securities analysts who might cover our stock;

speculation about our business in the press or the investment community;

significant developments relating to our relationships with our customers or suppliers;

stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in our industry;

customer demand for our business solutions;

investor perceptions of our industry in general and our Company in particular;

the operating and stock performance of comparable companies;

general economic conditions and trends;

announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures;

changes in accounting standards, policies, guidance, interpretation or principles;



26



loss of external funding sources;

sales of our common stock, including sales by our directors, officers or significant stockholders; and

addition or departure of key personnel.


Securities class action litigation is often instituted against companies following periods of volatility in their stock price. Should this type of litigation be instituted against us, it could result in substantial costs to us and divert our management’s attention and resources.


Moreover, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to the operating performance of particular companies. These market fluctuations may adversely affect the price of our common stock and other interests in our Company at a time when you want to sell your interest in our common stock.


Our common stock is quoted on the over-the-counter electronic quotation system maintained by the OTC Markets which may have an unfavorable impact on our stock price and liquidity.


Our common stock is quoted on the OTCQX, an over-the-counter electronic quotation system maintained by the OTC Markets. The OTCQX is more limited than a trading market such as the New York Stock Exchange or NASDAQ. The OTCQX is a less visible market for the trading of our common stock by existing and potential stockholders, and so trading of our common stock on the OTCQX could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future. We plan to list our common stock as soon as practicable. However, we cannot assure you that we will be able to meet the initial listing standards of any stock exchange, or that we will be able to maintain any such listing.


We may be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.


The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. If our common stock becomes a “penny stock,” we may become subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by the Penny Stock Rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.


For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.


There can be no assurance that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.



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We may be required to raise additional financing by issuing new securities with terms or rights superior to those of our shares of common stock, which could adversely affect the market price of our shares of common stock.


We may require additional financing to fund future operations, develop and exploit existing and new products and to expand into new markets. We may not be able to obtain financing on favorable terms, if at all. If we raise additional funds by issuing equity securities, the percentage ownership of our current shareholders will be reduced, and the holders of the new equity securities may have rights superior to those of the holders of shares of common stock, which could adversely affect the market price and the voting power of shares of our common stock. If we raise additional funds by issuing debt securities, the holders of these debt securities would similarly have some rights senior to those of the holders of shares of common stock, and the terms of these debt securities could impose restrictions on operations and create a significant interest expense for us.


We do not intend to pay dividends for the foreseeable future.


For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Accordingly, investors must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our common stock. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.


ITEM 2. RECENT UNREGISTERED SALES OF EQUITY SECURITIES


During the six months ended June 30, 2018, the Company received proceeds of $1,753,438 for the private placement of the company's common shares to professional investors at prices ranging from $2.00-$4.00 These shares were issued pursuant to Regulation D under the Securities Act of 1933, as amended, are exempt from registration by reason of Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and bear an appropriate restrictive legend.


ITEM 3. EXHIBITS



Exhibit No.

 

Description

 

 

 

31.1

 

Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

 

Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

 

Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 

Weyland Tech Inc.

November 20, 2018

/s/ Brent Y Suen

President, Chief Executive Officer

(Principal Executive and Financial Officer)





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