10-Q/A 1 weyl10qa_093016apg.htm WEYL 10-Q/A 09/30/16 WEYL 10-QA 09/30/16


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q/A

Amendment #1


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


For the quarterly period ended September 30, 2016


or


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


For the transition period from _____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.)

 

 

198 Wellington Street,

8/F The Wellington,

Central, Hong Kong SAR.

Hong Kong HKSAR

(Address of principal executive offices, including Zip Code)

 

+852 9316 6780

(Registrant’s telephone number, including area code)



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 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)

 


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   [  ] Yes   [X] No


APPLICABLE ONLY TO CORPORATE ISSUERS:


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class

Outstanding as of November 8, 2016

Common stock, $0.0001 par value

19,657,261



ii



EXPLANATORY NOTE


The purpose of this Amendment No. 1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the Securities and Exchange Commission on November 14, 2016, is solely to adjust the net income per common share figure on the Condensed Statements of Operations for the three months ended September 30, 2016.



TABLE OF CONTENTS

 

 

 

 

PART I – FINANCIAL INFORMATION

 

1

Item 1.

Financial Statements

 

1

Item 2.

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

 

4

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

8

Item 4.

Controls and Procedures

 

8

PART II – OTHER INFORMATION

 

9

Item 1.

Legal Proceedings

 

9

Item 1A.

Risk Factors

 

9

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

9

Item 3.

Exhibits

 

9

SIGNATURES

 

 

10




iii



PART I – FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


WEYLAND TECH INC.

Condensed Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30

 

December 31

 

 

 

 

 

2016

 

2015

 

 

 

 

 

(Unaudited)

 

(I)

ASSETS

 

 

 

Current assets

 

 

 

 

 

 

Account Receivables

 

 

736,781 

 

722,700 

 

Cash and Bank

 

 

949,046 

 

832,218 

 

Temporary Payment

 

 

8,000 

 

8,000 

 

    Total current assets

 

 

1,693,827 

 

1,562,918 

 

Non-Current Assets

 

 

 

 

 

 

 

Investment in Joint Venture

 

 

289,970 

 

20,230 

 

 

Software development cost

 

 

479,167 

 

666,667 

 

 

Software development cost (incomplete)

 

 

2,933,044 

 

 

 

Trademark

 

 

5,000 

 

 

  Total Non-Current Assets

 

 

3,707,181 

 

686,897 

 

    Total assets

 

 

5,401,008 

 

2,249,815 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts Payables

 

 

853,500 

 

1,250,584 

 

Accrued expenses and other payable

 

 

35,650 

 

301,675 

 

Deposit received for share to be issued

 

 

925,001 

 

147,456 

 

Development Fee Recoverable

 

 

8,977 

 

 

    Total current liabilities

 

 

1,823,128 

 

1,699,715 

 

 

 

 

 

 

 

 

 

    Net assets

 

 

3,577,880 

 

550,100 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

Authorized 250,000,000 shares at par value of $ 0.0001 each

 

 

 

 

 

 

 

Issued and outstanding 19,657,261 shares as of September 30, 2016 and 12,628,688 shares as of December 31, 2015

 

 

146,179 

 

146,179 

 

Additional paid-in capital

 

 

36,104,037 

 

36,104,037 

 

Subscriptions received

 

 

1,765,855 

 

1,765,855 

 

Accumulated deficit

 

 

(34,438,191)

 

(37,465,971)

 

 

Total stockholders' funds

 

 

3,577,880 

 

550,100 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

5,401,008 

 

2,249,815 

 

 

 

 

 

 

 

 

(I) Derived from the audited financial statements included in the Company’s Annual Report on

Form 10-K for the year ended December 31, 2015.




1




WEYLAND TECH INC.

Condensed Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

Ended September 30,

 

 

Nine Months

Ended September 30,

 

 

 

 

 

2016

 

2015

 

 

2016

 

2015

 

 

 

 

 

(Unaudited)

 

(Audited)

 

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Revenue

 

$

2,778,552

$

648,159

 

$

9,173,536

$

1,228,159

Cost of Service

 

 

1,710,733

 

264,740

 

 

5,384,371

 

834,740

Gross Profit (Loss)

 

 

1,067,819

 

383,419

 

 

3,789,165

 

393,419

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

25,443

 

-

 

 

181,612

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

262,309

 

57,016

 

 

755,497

 

86,007

 

Depreciation and amortization

 

 

62,500

 

7,318

 

 

187,500

 

7,318

Total Operating Expenses

 

 

324,809

 

64,334

 

 

942,997

 

93,325

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from Operations

 

 

768,453

 

319,085

 

 

3,027,780

 

300,094

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

-

 

 

-

 

-

Net Income

 

$

768,453

 $

319,085

 

$

3,027,780

 $

300,094

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income per common share - basic and fully diluted:

 

0.05

 

0.08

 

 

0.18

 

0.23

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of basic and fully diluted common shares outstanding

 

 

15,421,850

 

3,938,845

 

 

16,696,496

 

1,316,555

 

 

 

 

 

 

 

 

 

 

 

 

 




2




WEYLAND TECH INC.

Condensed Statements of Cash Flows

 

 

 

 

 

 

 

 

 

Nine Months

Ended September 30,

 

 

 

 

 

2016

 

2015

 

 

 

 

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

 

 

Cash flows from operations:

 

 

 

 

 

 

Profit from continuing operations

 

$

3,027,780 

$

307,412 

 

Adjustment to reconcile net loss to net cash

used in operating activities:

 

 

 

 

 

 

 

Depreciation expense/amortization software development costs

 

 

187,500 

 

7,318 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Software development cost increase

 

 

(2,938,044)

 

 

 

Accounts receivable increase

 

 

(14,080)

 

(520,000)

 

 

Software Development fee recoverable increase

 

 

8,976 

 

 

 

Temporary payment increase

 

 

 

(8,000)

 

 

Accrued expenses & Accounts Payable decrease

 

 

(577,578)

 

609,000 

 

 

Amounts due to CEO payables decrease

 

 

(85,530)

 

179,719 

 

 

Elimination of non-cash effects of net assets acquired

 

 

 

(1,918,487)

 

 

Net assets of subsidiary acquired

 

 

 

1,384,076 

Net cash (used) provided from operations

 

 

(390,976)

 

41,038 

 

 

 

 

 

 

 

 

Investment activities:

 

 

 

 

 

Net cash (used in) Investment activities

 

 

(269,740)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

Share subscriptions received

 

 

777,544 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

777,544 

 

 

 

 

 

 

 

 

 

Net increase in cash

 

 

116,828 

 

41,038 

 

 

 

 

 

 

 

 

Balances per prior period balance sheet

 

 

832,218 

 

Ending balances

 

$

949,046 

 

41,038 

 

 

 

 

 

 

 

 




3



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 Asia-Pacific Region.


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 periodic report.


Use of Terms


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



4



-

“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;


-

“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 is provided in twelve languages and 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 SMB's can increase sales, reach more customers and promote their products and services via a simple easy to build mobile app at an affordable and cost-effective manner.


On September 6, 2016 the Company signed a strategic licensing agreement with BGT Corporation Public Company Limited ("BGT"), for the Thai market.


BGT owns the rights to Body Glove, founded in 1953, in Redondo Beach, California. BGT distributes men's & women's sport and casual wears and wetsuits in Thailand and ASEAN countries such as Myanmar, Vietnam, Laos, Cambodia, Malaysia, Singapore and the Philippines. The company has 149 company owned locations in Thailand alone and was listed on the Thailand Stock Exchange in 2007. Body Glove Thailand's website is: http://www.bodyglove.co.th/. BGT, in 2013, established BGT Technology in order to distribute electronic devices and other related accessories under trademarks of Wolfeye, Moontech and Boost.


BGT Technology intends to utilize the Weyland Tech CreateApp platform for BGT's m-Commerce app as well as provide a 'branded app' to other industries in Thailand.


Our Growth Strategy


Although Weyland Tech's CreateApp platform originally focused on the Pan-Asia markets, we have partners that work with us to develop the EU and North American markets. The CreateApp platform is provided in twelve languages and enables small-medium-sized businesses ("SMB's") to create a mobile application ("app") without the need of technical knowledge, high investment or background in IT.




5



Given the nature of DIY mobile apps ("apps"), and the primary target market of Small-Medium-sized-Businesses ("SMB's"), a typical go-to-market strategy would have direct sales force or resellers approach SMB's directly to drive license sales.

Over the past eight months, the Company has evolved this model with two distinct market paths to drive recurring revenue sales:


A)

Strategic Partnerships in countries/regions where our partners are responsible for targeting SMB's either thru an installed base of customers OR groups of Direct Sellers with a sales force encompassing SMB's as end customers.


B)

Enterprise Solutions where large retailers (hypermarket chains, mall owners, brand owners with company-owned and franchise stores) adopt a 'Master App' on a white-label basis, hosted at a 3rd party regional Hosting or Data Center facility.


With the above strategy, we believe that the Company has been able to maintain a lower capital expenditure base due to the 'level-two' customer support vs. 'level-one' customer support, smaller sales and marketing teams, and the need to provide hosting services.


In addition to the previously announced partnerships this year, the Company is currently in late stage discussions and negotiations with a number of strategic partners and enterprise-sized customers, including major regional and country telecommunications providers, Fortune 500 retailers and 'affiliate' groups.


Specific terms of the relationships and agreements will remain confidential for competitive reasons. However, agreements are expected to continue to support a transition from a license model to a multi-year model with subscriptions, m-commerce revenue sharing and advertising revenues.


Subsequent Events


On October 27, 2016 - Weyland Tech Inc., announces that its partner, domiciled in Hong Kong with primary base of operations in Kuala Lumpur, Malaysia, has signed and launched a "white label" App. Named "MocaApp," this App focuses on the South East Asian small-medium-sized businesses ("SMB's") market.


Marketing to the mid-tier SMB's in South East Asia, MocaApp plans to offer additional modules and services not available and provided in its standard version over time to help customers' better serve their end users. Actual support and development work is provided in Malaysia although the focus of MocaApp is in the Philippines initially and to other South East Asian countries over the next six months.


A team of 90 across five offices in the Philippines, Malaysia, Vietnam, Thailand, and Singapore supported and customized MocaApp.


MocaApp can be downloaded at www.mocaapp.com launched on November 1st, 2016.


During the months of September and October, 2016, the Company’s management met with current and former officials of the New York Stock Exchange and the NASDAQ Stock Market in order to ascertain which market would be better suited for the Company for an



6



uplisting. The Company is currently in application stage and will release further details as they become available.


Results of Operation


Service Revenue


Service Revenue was $2,778,552 and $648,159 for the three months ended September 30, 2016 and 2015, respectively.  The increase is due to continuing service income from our existing customers and the beginning of customer traction from new customers, partners and geographical regions.


Cost of Service


Cost of Service was $1,710,733 and $264,740 for the three months ended September 30, 2016 and 2015, respectively.  The increase was due to increased service costs arising from an increase in our service level income.


License fees


Included in other income are license fees from our Hong Kong partner of $142,803 and a one- time fee from a Singapore company of $ 35,750. (2015: Nil)


Operating Expenses


General and administrative:  General and administrative expenses were $262,309 and $57,016 and for the three months ended September 30, 2016 and 2015, respectively.  Other than our continuing expenditure in software development of $250,262 (2015: nil), a general increase arose due to increased personnel costs, travel and professional costs as a result of the increased level of business and contribution from our CreateApp business.  


Net Profit


The Company reports a net profit of $768,453 and $319,085 for the three months ended September 30, 2016 and 2015, respectively.  The net profit for the period was due to the increased level of business and contribution from our CreateApp business. 


Included in Net profit was amortization of software development costs of $62,500 for the three months ended September 30, 2016. (2015: nil).


Off-Balance Sheet Arrangements


The Company has no off-balance sheet arrangements.


Liquidity and Capital Resources


On September 30, 2016, we had negative working capital of $129,301.  The decrease in working capital is due to our investment in Software development in our CreateApp SMB platform of $2,938,044 during the period.  Operating activities provided funds of $3,027,780 for the nine months ended September 30, 2016.  There was a further Investment in our



7



Indian operations of $269,740 and there were share subscription proceeds of $777,544 during the nine months ended September 30, 2016.


Revenue Recognition


The Company's CreateApp platform generates sales to SMB's on a monthly licensing basis (direct sales model) as well as through 'resellers of the platform (reseller model) and country/market specific partnerships whereby the partner rebrands the CreateApp platform under their own branding (white label sales model).


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.


ITEM 4. CONTROLS AND PROCEDURES


Disclosure Controls and Procedures


Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-415(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.


Changes in Internal Controls Over Financial Reporting


During the period, we have increased control in our accounting function with the implementation of a cloud based computerized accounting and reporting system.  This has reduced the cycle time of our quarterly results, provided increased financial transparency and enhanced our segregation of duties with our bookkeeper maintaining the accounts and our CFO reviewing these for the CEO and COO and the audit committee and our board.


Our auditors were engaged to review our results for the six months ended June 30, 2016.  No independent review was performed on the results for the three months ended September 30, 2016.


Other than the above, there has been no changes in our internal controls over financial reporting that occurred during our fiscal quarter of the period covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.



8



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. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.


ITEM 1A. RISK FACTORS


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


ITEM 2. RECENT UNREGISTERED SALES OF EQUITY SECURITIES


During the nine months ended September 30, 2016, the Company received proceeds of $777,545 for the private placement of the company's common shares to professional investors at prices ranging from $0.75 - $1.48. 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. The primary purpose of the share issuances was to increase the shareholder base in order to meet NASDAQ Capital Market minimum entry requirements. Several of the share purchasers are professional investment managers at well-known Registered Fund Management Companies and the Company believes their participation increases company credibility in the investment community.


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.




9




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 14, 2016

/s/ Brent Y Suen

President, Chief Executive Officer

(Principal Executive Officer)




10