10-K 1 weyl10k_123116apg.htm WEYL 10-K 12/31/16 WEYL 10-K 12/31/16


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K



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


For the fiscal years ended December 31, 2016

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

46-5057897

(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)



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)


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

[   ] Yes   [X] No


As of June 30, 2016 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the shares of the registrant’s common stock held by non-affiliates (based upon the closing sale price of such shares as reported on the OTCOB Market) was approximately $42 million. Shares of the registrant’s common stock held by each executive officer and director and each person who owns 10% or more of the outstanding common stock have been excluded from the calculation in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.


There were a total of 20,778,128 shares of the registrant’s common stock outstanding as of March 31, 2017.


DOCUMENTS INCORPORATED BY REFERENCE

None.



ii




Table of Contents


 

 

 

 

Page

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

iv

USE OF TERMS

 

 

 

iv

PART I

 

 

 

1

 

 

Item 1.

 

Business

 

1

 

 

Item 1A.

 

Risk Factors

 

3

 

 

Item 1B

 

Unresolved Staff Comments

 

8

 

 

Item 2.

 

Properties

 

8

 

 

Item 3.

 

Legal Proceedings

 

8

 

 

Item 4.

 

Mine Safety Disclosures

 

8

PART II

 

 

 

9

 

Item 5.

 

Market for Registrant’s Common Equity, Related Stockholder

Matters and Issuer Purchases of Equity Securities

 

9

 

 

Item 6.

 

Selected Financial Data

 

10

 

 

Item 7.

 

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

 

11

 

 

Item 7A.

 

Quantitative and Qualitative Disclosures About Market Risk

 

15

 

 

Item 8.

 

Financial Statements and Supplementary Data

 

15

 

 

Item 9.

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

16

 

 

Item 9A.

 

Controls and Procedures

 

16

 

 

Item 9B.

 

Other Information

 

17

PART III

 

 

 

18

 

 

Item 10.

 

Directors, Executive Officers and Corporate Governance

 

18

 

 

Item 11.

 

Executive Compensation

 

21

 

 

Item 12.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

22

 

 

Item 13.

 

Certain Relationships and Related Transactions, and Director Independence

 

23

 

 

Item 14.

 

Principal Accounting Fees and Services

 

24

 PART IV 

 

 

 

25

                   Item 15.

 

Exhibits, Financial Statement Schedules

 

25

SIGNATURES

 

 

 

26



iii



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS


This annual report on Form 10-K 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;


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



iv



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.



v






PART I


ITEM 1. BUSINESS


Overview


Weyland Tech’s CreateApp platform 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.


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 price and in a cost-effective manner.


The Company is currently in ‘application’ stage with the NASDAQ Market for approval to have its shares traded on the NASDAQ Capital Market. It is anticipated, though not certain, that this process should be completed within the calendar year 2017.


Our corporate headquarters are located at 198 Wellington Street, 8/F The Wellington, Central, Hong Kong HKSAR.  Although we maintain a website at www.weyland-tech.com, we do not intend that information available on our website be incorporated into this filing.


Our Strategy


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


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


We believe that through our app, 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.


Weyland Tech currently offers the CreateApp platform directly, in the following key markets:


Singapore: www.createappsingapore.com


India (Jaipur): www.aapkiapp.in


US/Canada: www.createappamericas.com


Weyland Tech currently offers a DIY App builder through a 'white label' platform, in the following markets, primarily via strategic Cooperation agreements that were structured in late 2015 and early 2016:


EU, via a Strategic Cooperation with Augicom S.A. (www.augicom.ch)


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


Hong Kong and South China via a Strategic Cooperation agreement with Info Zone Ltd.




1





Indonesia, via a Strategic Cooperation agreement with Worldfriend's Network (www.worldfriends.com) and Orient Asia Pacific Limited. Indonesian SMB’s are also targeted via a Strategic Cooperation agreement with DPEX Worldwide


North America, via a Strategic Cooperation agreement with Aurum Digital Inc. (www.createappamericas.com)


Korea via IAM, Inc. (http://www.iamyourapp.co.kr/)


Thailand via a Strategic Cooperation agreement with BGT Corporation Public Company Limited


The Philippines via a Strategic Cooperation agreement with MocaApp


SMB’s


The Company believes that these agreements will create a large enough addressable market opportunity to generate sales and profits in a scalable manner, grow the Company's business and enhance shareholder value.


Given the nature of DIY mobile apps ("apps"), and the primary target market of 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 year, the Company has evolved this model with two distinct market paths to drive recurring revenue sales:


A)  Strategic Cooperation agreements in countries/regions where our partners are responsible for targeting SMB’s either through 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 cooperation agreements this year, the Company is currently in late stage discussions and negotiations with a number of strategic business 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 licensing model to a multi-year model with subscriptions, m-commerce revenue sharing and advertising revenues.




2





Growth of the Mobile Apps Industry


We believe that there are a number of factors that are contributing to the continued growth of the mobile apps industry: (i) smartphone adoption continues to increase globally; (ii) lower purchase prices of smartphones for consumers; (iii) smartphone users are becoming increasingly comfortable with the process of searching for and conducting business on their phones; (iv) SMB’s are placing more emphasis on implementing a mobile app versus a mobile website to enable customers to gain a higher level of interaction and functionality; and (v) internet users in emerging markets use smartphones as their primary internet access device, having bypassed the desktop PC entirely.  We believe that the Company will be able to participate in the growth of the mobile apps industry by offering an affordable, easy to build and use platform.


Competition


Our business is rapidly evolving and highly competitive.  Our current and potential competitors include: (1) Advertising companies, Web design firms and more recently, mobile app makers; (2) other DIY mobile app companies; (3) a number of indirect competitors, including media companies, web portals, comparison shopping websites, and web search engines, either directly or in collaboration with SMB’s; (4) companies that provide e-commerce services, including website/app development.; (5) companies that provide infrastructure web and mobile services. We believe that the principal competitive factors in our mobile apps business include ease of use, affordability and broad range of functionality.  Many of our current and potential competitors have greater resources, slightly longer histories, more customers, and greater brand recognition. They may adopt more aggressive pricing and devote more resources to technology, functionality and ease of use and marketing.  Other companies also may enter into business combinations or alliances that strengthen their competitive positions.


Employees


The Company currently has twelve full-time employees in Singapore, Hong Kong and Jaipur, India. Our software development partner in Jaipur has 200 developers on staff to assist with technical, customer support, integration and engineering tasks.


Transfer Agent


We have engaged Nevada Agency and Trust Company as our stock transfer agent.  Nevada Agency and Trust Company is located at 50 West Liberty Street, Reno, Nevada 89501. Phone: (775) 332-0626.



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.




3





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 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



4





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.


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.




5





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;

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 OTCQB, an over-the-counter electronic quotation system maintained by the OTC Markets. The OTCQB is more limited than a trading market such as the New York Stock Exchange or NASDAQ. The OTCQB 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 OTCQB 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.



6





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.


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 1B.  UNRESOLVED STAFF COMMENTS.


Not Applicable.



7







ITEM 2. PROPERTIES


The Company’s current executive offices are located at, 198 Wellington Street, 8/F The Wellington, Central, Hong Kong. The Company leases space from a strategic business enterprise, OP Investment Management for $1 per month in exchange for providing mobile applications advisory services on an ad-hoc basis.



ITEM 3. 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 2017.  Given that the matter is still in its preliminary 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 also filed a suit against another shareholder in Singapore.  This shareholder had sold 800,000 shares of the Company’s stock, while they were subject to a restrictive legend, to a third party for $800,000 in cash.  That third party is currently attempting to register and sell the shares.  While the Company is contesting such transfer as improper and potentially in violation of US securities laws, it has also named this third party as an additional defendant in the suit for amongst other things, the return of those 800,000 shares.  In addition, the Company may file a related lawsuit naming its Transfer Agent in order to facilitate the requested prohibition on sale of such securities. The Company can give no assurances regarding the outcome of any such litigation, and should this third party be able to clear and sell the 800,000 shares, the market price of the Company’s shares may be adversely affected, regardless of whether the Company may at a later date have a right to recover damages from the aforesaid third party. 



ITEM 4. MINE SAFETY DISCLOSURES


Not applicable.




8






PART II


ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


Common Stock


We are authorized to issue 250,000,000 shares of Common Stock, at a par value $0.0001 per share.  The holders of Common Stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders.  There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voting for the election of directors can elect all of the directors then up for election.


The holders of Common Stock are entitled to receive ratably such dividends when, as and if declared by the Board of Directors out of funds legally available therefore.  In the event we have liquidation, dissolution or winding up, the holders of Common Stock are entitled to share ratably in all assets remaining which are available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the Common Stock.  Holders of shares of Common Stock, as such, have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to the Common Stock.


Market Information


The Company’s Common Stock currently only trades on the OTCQB operated by OTC Markets Inc. under the symbol “WEYL”.  The Company’s Common Stock commenced trading under this symbol on September 1, 2015, and previously traded under the symbol “STOA” from June 7, 2011 on the OTC Pink Sheets Market.


The following historical quotations obtained online at www.yahoo.com reflects the high and low bids for our Common Stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:


Quarter Ended

High ($)

Low ($)

December 31, 2016

4.95

3.05

September 30, 2016

4.60

1.61

June 30, 2016 adj.

2.92

0.31

March 31, 2016 adj.

1.50

0.51

December 31, 2015 adj.

0.99

0.40

September 30, 2015 adj.

1.00

0.00



As of March 31, 2017, the Company’s Common Stock closed at a price of $5.00


Shareholders


As of March 31, 2017, there are 20,778,128 shares of Common Stock issued and outstanding held by 290 shareholders of record.




9





Dividend Policy


We have never paid any cash dividends and have no plans to do so in the foreseeable future.  Our future dividend policy will be determined by our Board of Directors and will depend upon a number of factors, including our financial condition and performance, our cash needs and expansion plans, income tax consequences and the restrictions that applicable laws and other arrangements then impose.


Securities Authorized for Issuance Under Equity Compensation Plans


All compensation plans (including individual compensation arrangements) under which equity securities of the Company are authorized for issuance, outstanding at the year ended December 31, 2015 have been cancelled.


Recent Sales of Unregistered Securities


The following is a summary of transactions since our previous disclosure on our Form 10-Q filed with the Securities and Exchange Commission on November 14, 2016 involving sales of our securities that were not registered under the Securities Act of 1933, as amended (the "Securities Act"). Each offer and sale was exempt from registration under either Section 4(2) of the Securities Act or Rule 506 under Regulation D of the Securities Act because (i) the securities were offered and sold only to accredited investors; (ii) there was no general solicitation or general advertising related to the offerings; (iii) each investor was given the opportunity to ask questions and receive answers concerning the terms of and conditions of the offering and to obtain additional information; (iv) the investors represented that they were acquiring the securities for their own account and for investment; and (v) the securities were issued with restrictive legends.


The securities granted or sold under these agreements are unregistered and may only be resold or transferred if they later become registered or fall under an exemption to the Securities Act or applicable state laws. Our typical investor or grantee generally relies upon Rule 144 of the Securities Act, which, in addition to requiring several other conditions before resale may occur, requires that the securities issued be held for a minimum of six months.


During the year ended December 31, 2016, the Company received proceeds of $1,287,507 for the private placement of the company's common shares to professional investors at prices ranging from $0.75 - $2.75. 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 6. SELECTED FINANCIAL DATA


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 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS




10





You should read the following plan of operation together with our financial statements and related notes appearing elsewhere in this annual report.  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 ("SMB’s") to create a mobile application ("app") without the need of technical knowledge, high investment or background in IT.


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


On January 19, 2016 the company signed a Software Licensing Agreement ("SLA") with Info Zone Development Limited to provide a 'white label' rollout of the Company's CreateApp platform in the Hong Kong and China market.


On January 21, 2016 the company signed an exclusive Software Licensing Agreement ("SLA") with Silver Ridge-Tangerine Sdn Bhd to provide a 'white label' rollout of the Company's CreateApp platform in Malaysia.


On February 11, 2016 the company signed an exclusive Software Licensing Agreement ("SLA") with Augicom S.A., to distribute the Company's CreateApp platform in the Euro-Zone except Russia, Turkey, Armenia and Azerbaijan.


On March 9, 2016 the company signed an exclusive Software Licensing Agreement ("SLA") with Aurum Digital, Inc. to distribute CreateApp in the Americas, covering North, Central and South Americas.


On March 14, 2016 the company signed an exclusive Software Licensing Agreement ("SLA") with IAM, Inc. to distribute CreateApp in the Republic of Korea.


On March 22, 2016 the company signed a strategic Cooperation agreement ("SPA") with Meta4 Group SarL for the rollout of Meta4's 'Worldfriend's' network platform in the greater Indonesia market.


On April 12, 2016 the Company’s partner, Aurum Digital, signed an exclusive customer agreement with World Black Belt, Inc.  (“WBB”), to rollout the CreateApp platform within WBB’s 5,035-Direct member network and marketing to WBB’s Affiliate Network of 33,000 Martial Art’s Schools.


On April 15, 2016, the Company applied for uplisting to the OTC Markets Group’s ‘OTCQB Marketplace’ which is a higher tier market for publicly traded companies. The company’s shares began trading on the OTCQB Market on June 14, 2016.


On June 23, 2016, the Company entered into a memorandum of understanding (MOU) with 2C2P, the leading Southeast Asian payments services company.


2C2P and Weyland Tech have agreed to work together on an m-commerce solution that enables Small-Medium-sized-Businesses to provide multi-payment options to consumers in the Southeast Asia region.


On June 30, 2016, the Company signed a Master Service Agreement ("MSA") with Orient Asia Pacific Limited. ("OAP"), for the Indonesian market.



11






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


On October 27, 2016 the Company signed a strategic licensing agreement with MocaApp for the Philippines market.


On December 16, 2016, the Company announced that it has entered into a Strategic Cooperation agreement with DPEX Worldwide, a leading provider of express and E-Commerce solutions in Asia and for the SMB market in Indonesia.


Plan of Operations


In addition to Weyland Tech’s focus on the ASEAN and pan-Asia markets, we have business partners with whom we develop the EU and North American markets. The CreateApp platform is offered in twelve languages and enables SMB’s to create a mobile application ("app") without the need of technical knowledge, high investment and background in IT.


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.


The Company believes that the strategic Cooperation agreements that were structured in late 2015 and early 2016, represent a significantly large addressable market opportunity allowing the company to generate sales and profits in a scalable manner, grow the Company's business and enhance shareholder value.


Given the nature of DIY mobile apps ("apps"), and the primary target market of 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 year, the Company has evolved this model with two distinct market paths to drive recurring revenue sales:


A)  Strategic Cooperation agreement in countries/regions where our partners are responsible for targeting SMB’s either through an installed base of customers, or though groups of Direct Sellers with a sales force encompassing SMB’s as end customers.


B)  Enterprise Solutions wherein 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 establish a sales footprint in a number of significant markets while maintaining 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 Cooperation agreement this year, the Company is currently in late stage discussions and negotiations with a number of strategic business 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.



12






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.


For the Fiscal Year Ended December 31, 2016


Liquidity and Capital Resources


On December 31, 2016, we had negative working capital arising from changes in operating assets and liabilities of ($1,652,295) compared with a working capital of $755,247 on December 31, 2015. The increase in negative working capital is due to the payments for software development in 2016 Q4 and subsequent expansion of the CreateApp business effective September 1, 2015 and our net profit arising thereon. Net cash generated from operation provided $566,948 in the twelve months ended December 31, 2016.  Financing activities provided $1,434,963 in the twelve months ended December 31, 2016.


We expect to continue utilizing our personnel in Greater Asia, including ASEAN and India for servicing our customers.  In order to accelerate the growth of the Company, we will also consider raising additional funding from investors.


We may not have enough working capital to complete our plan of operations.  If it turns out that we have not raised enough capital to complete our anticipated business development, we will use our best efforts to raise additional funds from private placements or loans.  There is no assurance that we will raise additional capital in the future or that future financings will be available to us on acceptable terms.  If we require additional capital and are unable to raise it, we may have to suspend or cease operations.


Revenue Recognition


Historically, the Company recognized revenue from providing hosting and integration services and licensing the use of its technology platform to its customers.  The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer (for licensing, revenue is recognized when the Company’s technology is used to provide hosting and integration services); (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of fees is probable.  Integration and development revenue is recognized when integration or development was completed and accepted by the customer.  Monthly hosting fees are recognized when billed.


On September 1, 2015, Weyland Tech acquired the exclusive proprietary rights to the CreateApp M-commerce platform from Technopreneurs Resource Centre Private Limited, a Singapore Limited company ("TRC") which was satisfied by the issuance of shares in the Company in exchange for a ‘Global Exclusive Licensing’ agreement. Weyland Tech, owns the rights to the 'CreateApp’ mobile applications ("apps") platform and have also registered the www.createapp.com domain name.


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



13





partnerships whereby our business partner rebrands the CreateApp platform under their own branding (white label sales model).

 

Results of Operation for the Fiscal Year ended December 31, 2016


Service Revenue


Service revenues were $ 12,942,353 and $2,553,992 for the twelve months ended December 31, 2016 and 2015, respectively.  The increase is due to a full-year of operation for the CreateApp platform during 2016 as well as additional subscription sales through existing Cooperation agreements, new subscriptions sold to existing customers and subscriptions sold directly to new customers.


Cost of Service


Cost of service was $7,817,973 and $1,552,258 for the twelve months ended December 31, 2016 and 2015, respectively. The increase reflects a full-year of operation for CreateApp platform during 2016 as well as growth in clients served and one-time pass-through expense related to purchase of equipment for deployment by a customer. This expense was offset by revenue of the same amount in the transaction.


Other income comprise license and royalty fee income received from our Cooperation agreements for CreateApp of $181,391 (2015: nil).


Operating Expenses


General and administrative:  General and administrative expenses were $988,686 and $184,680 for the year ended December 31, 2016 and 2015, respectively. The increase reflects a full-year of operation for CreateApp platform during 2016 as well as additional headcount hired during last quarter of 2016.  Included in General and administrative expenses was Amortization of development cots capitalized of $351,933 (2015: $83,333)  


Research and Development:  Research and development expenses expensed amounts to $ 2,928,947.  This represents software development costs written off of $2,338,714 incurred for the development of CreateApp Version 3.0 prior to its launch and research and development expense of $ 339,971 representing amounts paid to our software development business partner based in India, and includes third party research and development expenses of $250,262 for 1st and 2nd quarter 2016 development cost of CreateApp and Korean game modification & shipping module build out. (2015:Nil)


Stock-based compensation


The Stock-based compensation expenses are $nil and $8,960 respectively for the twelve months ended December 31, 2016 and 2015.


Net Income


The Company had a net profit of $566,948 for the twelve months ended December 31, 2016 as compared to a net profit $733,721 for the year ended December 31, 2015. The increase in the net income is due to recognition of deferred tax asset arising from loss carry-forwards and due to increased sales from Cooperation agreements and recurring customer income.


Included in net profit is a bad debt provision $698,736 for the year 2014 brought forward on the legacy data storage business of the company.





14





Off-Balance Sheet Arrangements


We have no off-balance sheet arrangements.


ITEM 7A. 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



WEYLAND TECH INC.

 

 

 

 

 

 

 

 

 

INDEX TO  FINANCIAL STATEMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

 

 

 

Reports of Independent Registered Public Accounting Firms

F-1

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets at December 31, 2016 and 2015

F-2

 

 

 

 

 

 

 

 

 

Consolidated Statements of Operations for year ended December 31, 2016 and 2015

F-3

 

 

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the year ended December 31, 2016 and 2015

F-4

 

 

 

 

 

 

 

 

 

Consolidated Statements of Stockholders' Equity for the year ended December 31, 2016 and 2015

F-5

 

 

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements

F-6




15





Report of Independent Registered Public Accounting Firm



To the Board of Directors and Stockholders of Weyland Tech Inc


We have audited the accompanying consolidated balance sheets of Weyland Tech Inc. (the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2015, and the results of its operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.










/s/ Centurion ZD CPA Ltd.

Centurion ZD CPA Ltd. (fka DCAW (CPA) Ltd. As successor to Dominic K.F. Chan & Co.)

Certified Public Accountants

Hong Kong, March 31, 2017



F-1






WEYLAND TECH INC.

Consolidated Balance Sheets

 

 

 

 

 

 

December 31

 

December 31

 ASSETS

 

 

2016

 

2015

Non-current assets

 

 

 

Investment in joint venture

 

 $

 $

20,230 

Intangible assets, net

1,334,064 

 

666,667 

Total non-current assets

 

 

1,334,064 

 

686,897 

Current assets

 

 

 

 

 

Accounts receivables

 

 

 

722,700 

Prepayment, deposit and other receivables

 

828,411 

 

8,000 

Deferred tax assets

 

229,479 

 

Cash and cash equivalents

 

1,003,924 

 

832,218 

Total current assets

 

2,061,814 

 

1,562,918 

Total assets

$

3,395,878 

 $

2,249,815 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

 

652,330 

 

1,250,584 

Accruals and other payables

 

 

191,537 

 

301,675 

Stock subscription payables

 

 

 

147,456 

Total current liabilities

 

 

843,867 

 

1,699,715 

Total liabilities

 

 

843,867 

 

1,699,715 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

Common stock, $0.0001 par value,

 

 

 

 

 

250,000,000 shares authorized,

 

 

20,778,128 and 12,628,688 shares issued and outstanding as of December 31, 2016 and 2015, respectively

2,078 

 

1,263 

Additional paid-in capital

 

39,448,945 

 

36,248,942 

Subscriptions received

 

 

1,765,855 

Accumulated deficit brought forward

 

(36,899,012)

 

(37,465,960)

Total stockholder’s equity

 

2,552,011 

 

550,100 

Total liabilities and stockholders' equity

$

3,395,878 

$

2,249,815 

The accompanying notes are an integral part of these financial statements.




F-2








WEYLAND TECH INC.

Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

For The Years Ended December 31,

 

 

 

 

 

2016

 

2015

Service Revenue

 

$

12,942,353

$

2,553,992

Cost of Service

 

 

7,817,973

 

1,552,258

Gross Profit (loss)

 

 

5,124,380

 

1,001,734

 

 

 

 

 

 

 

 

Other Income

 

 

181,391

 

-

Gross Income

 

 

5,305,771

 

1,001,734

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

Depreciation and amortization

 

 

351,933

 

83,333

 

Bad debt provision

 

 

698,736

 

-

 

Research and development

 

 

2,928,947

 

-

 

General and administrative

 

 

988,686

 

184,680

Total Operating Expenses

 

 

4,968,302

 

268,013

 

 

 

 

 

 

 

 

Profit from Operations

 

 

337,469

 

733,721

 

 

 

 

 

 

 

 

Income tax benefits

 

 

229,479

 

-

Net Profit

 

$

566,948

$

733,721

 

 

 

 

 

 

 

 

Net profit per common share - basic and fully diluted:

 

 

0.031

 

0.003

 

 

 

 

 

 

 

 

Weighted average number of basic and fully diluted common shares outstanding

 

 

18,510,393

 

229,809,001

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.




F-3






WEYLAND TECH INC.

Consolidated Statements of Cash Flows

 

 

 

 

 

Year Ended December 31

 

 

 

 

 

2016

 

2015

Cash flows from operations:

 

 

 

 

 

 

Profit/(Loss) from continuing operations

 

$

566,948 

$

733,721 

 

Adjustment to reconcile net profit to net cash used in operating activities:

 

 

Amortization of intangible assets

 

 

351,933 

 

83,333 

 

 

Issuance of common stock for service received

 

 

 

 

 

Bad debt provision

 

 

698,736 

 

 

 

 

Deferred tax benefits

 

 

(229,479)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

 

(520,000)

 

 

Deposits and other receivables

 

 

(14,081)

 

(8,000)

 

 

Prepayment

 

 

(814,330)

 

 

 

Accounts payable

 

 

(566,290)

 

1,250,584 

 

 

Accruals and other payables

 

 

(110,138)

 

(114,793)

 

 

Stock subscription payables

 

 

(147,456)

 

147,456 

Net cash (used in)/provided by operations

 

 

(264,157)

 

1,572,301 

Investment activities:

 

 

 

 

 

 

Investments in Indian operations

 

 

20,230 

 

(20,230)

 

Purchase of intangible assets

 

 

(1,019,330)

 

(750,000)

Net cash (used in) investment activities

 

 

(999,100)

 

(770,230)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from stock issuance

 

 

1,434,963 

 

30,147 

Net cash provided by financing activities

 

 

1,434,963 

 

30,147 

Net increased in cash and cash equivalents

 

 

171,706 

 

832,218 

Cash and cash equivalents, beginning of year

 

 

832,218 

 

Cash and cash equivalents, end of year

 

$

1,003,924 

$

832,218 

Supplemental cash flow disclosure:

 

 

 

 

 

Cash paid for interest expenses

 

$

 

$

 

Cash paid for income taxes

 

$

 

$

 

Non-cash transactions

 

 

 

 

 

 

Issuance of shares for subscription payment received

 

$

3,200,818 

$

23,262 

The accompanying notes are an integral part of these financial statements.




F-4






WEYLAND TECH, INC

Consolidated Statements of Stockholders' Equity

 

Common Stock *

Amount

Additional paid-in capital

Subscriptions received

Accumulated (Deficit)

 Stockholders'

(Deficit)/

Equity

 

 

 

 

 

 

 

Balance December 31, 2014

  46,256,568 

$

463 

$

36,219,595 

$

1,765,855 

$

(38,199,681)

$

(213,768)

Effect of reverse split from 1,000 shares to 1 share

(625,697,147)

(58,407)

58,407 

Shares issued for services

1,163,600 

116 

23,146 

23,262 

Issuance of Shares

590,905,667 

59,091 

(52,206)

6,885 

Net profit for the year

733,721 

733,721 

 

 

 

 

 

 

 

Balance December 31, 2015

12,628,688 

$

1,263 

$

36,248,942 

$

1,765,855 

(37,465,960)

$

550,100 

Issuance of Shares

9,747,440 

975 

3,200,003 

(1,765,855)

1,435,123 

Cancelation of shares

(1,598,000)

(160)

 

 

 

(160)

Net profit for the year

566,948 

566,948 

Balance December 31, 2016

 20,778,128 

$

2,078 

$   39,448,945 

$

$   (36,899,012)

$

2,522,011 

*The number of shares of common stock has been retroactively restated to reflect the 1 for 1,000 reverse stock split on September 1, 2015


The accompanying notes are an integral part of these financial statements.




F-5





Weyland Tech Inc.

DECEMBER 31, 2016 AND 2015

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION


Weyland Tech, specializes in providing e-commerce solutions and services that facilitate multi-channel B2C (business-to-consumer) and B2B (business-to-business) transactions.  Its solutions and services enabled e-commerce transactions with speed and efficiency, and allowed an interactive and engaging customer experience as well as targeted marketing and advertising.


The Company expects to continue development of its platform through a Cooperation agreement in Jaipur, India where costs are competitively lower than more developed countries.  


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


Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by our chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.


The Company specializes in providing e-commerce solutions and services that facilitate multi-channel B2C (business-to-consumer) and B2B (business-to-business) transactions.  We identify our reportable 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.





F-6





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.


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 through a US based payment gateway on a usage basis.  


The Company’s legacy data storage business accounts receivable balance was written off at December 31, 2016. As of December 31, 2016, sales included a concentration from a major customer although accounts receivable had a nil balance (2015: $722,700).  For the year ended December 31, 2016 and 2015, the Company had sales in excess of 10% of $12,566,093 and $2,356,501 with two major customers, respectively.


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




F-7





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 recognizes revenue from providing hosting and integration services and licensing the use of its technology platform to its customers. The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer (for licensing, revenue is recognized when the Company’s technology is used to provide hosting and integration services); (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of fees is probable.  We account for our multi-element arrangements, such as instances where we design a custom website and separately offer other services such as hosting, which are recognized over the period for when services are performed.


COST OF SERVICE


Cost of service results from 1) sales commissions to resellers 2) sourcing technical and engineering personnel in Asia on an hourly or project basis in order to customize multi-site SMB mobile apps and medium to large scale customized apps. 3) cloud based hosting services.  


INCOME TAXES


The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, “Income Taxes” (“ASC 740”). Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the current year and (ii) future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets 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 2016, the FASB has issued Accounting Standards Update (“ASU”) No. 2016-01, 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



F-8





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 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 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 2016-02 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.

 

In April 2016, the FASB released ASU 2016-09, 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, 2016, 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 2016, FASB issued Accounting Standards Update No. 2016-10, 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, 2016, 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 2016, the FASB issued ASU No. 2016-11 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, 2016 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.




F-9





In May 2016, FASB issued ASU No. 2016-12—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 2016, the FASB issued ASU No. 2016-15, 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 2016, the FASB issued ASU No. 2016-17, 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, 2016, 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.

 

In November 2016, the FASB issued ASU No. 2016-18, "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 December 31, 2016 and 2015, the company has the following amounts related to intangible assets:


 

 

As of December 31,

 

 

2016

 

2015

Software developed

$

1,764,330 

$

750,000 

Other intangible assets

 

5,000 

 

 

 

1,769,330 

 

750,000 

Less : accumulated amortization

 

(435,266)

 

(83,333)

Net intangible assets

$

1,334,064 

$

666,667



F-10








No significant residual value is estimated for these intangible assets. Amortization expense for the years ended December 31, 2016 and 2015 totaled $351,933 and $83,333, respectively.


The remaining amortization period of the Company’s amortizable intangible assets is approximately 2.67 years as of December 31, 2016. The estimated future amortization of the intangible assets is as follows:


For the years ending December 31,

 

Estimated Amortization Expenses

2017

 

$  351,933

2018

 

268,600

2019

 

101,933

2020

 

101,933

2021

 

101,933

Thereafter

 

407,732

Total

 

$ 1,334,064



NOTE 4 - THE JOINT VENTURE

 

On November 26, 2015, the Company and Ranosys Technologies Pvt. Ltd (“Ranosys”) agreed to enter into the Joint Venture through CreateApp India Pvt Ltd. (“CreateApp”), an India limited liability company of which the Company and Ranosys are 50% members. The results of operations of CreateApp from November 26, 2015 were not material. The Joint Venture was claimed to be not successful subsequently and changed into strategic software development cooperation.


NOTE 5 – ACCRUALS AND OTHER PAYABLE


Accruals and other payable consisted of the following:


 

 

As of December 31,

 

 

2016

 

2015

Accruals

$

  177,949

$

  301,675

Other payables

 

  13,588

 

  -

 

$

  191,537

$

  301,675



NOTE 6 - STOCKHOLDERS’ EQUITY


Common Shares


As of December 31, 2016 and 2015, authorized common shares of the Company consists of 250,000,000 shares with par value of $0.0001 each.


Issuance of Common Stock




F-11





During the period from January 1, 2015 to June 8, 2015, 580,067,155 shares with par value of $0.0001 per share were issued to various stockholders.


During the period from September 2, 2015 to December 31, 2015, 1,163,600 shares with par value of $ 0.0001 per share were issued for legal and professional services, and 10,838,764 shares with par value of $ 0.0001 per share were issued to various stockholders.


During the year ended December 31, 2016, 9,747,440 shares with par value of $ 0.0001 per share were issued to various stockholders.


Cancellation of Common Stock


During the year ended December 31, 2016, 1,598,000 shares with par value of $0.0001 per share were cancelled by various stockholders.


Stock Reverse Split


On September 1, 2015, the Board of Directors approved a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.0001 per share at a ratio of 1-for-1,000, as a result, the number of shares of the Company’s authorized Common Stock was correspondingly reduced from 626,323,723 shares to 626,324 shares without changes in par value per share. The Company has retroactively restated all shares and per share data for all the periods presented.


Employee Stock Option Plan


The Company has a stock option and incentive plan, the Stock Option Plan. The exercise price for all equity awards issued under the Stock Option Plan is based on the fair market value of the common share price which is the closing price quoted on the Pink Sheets on the last trading day before the date of grant. The stock options generally vest on a monthly basis over a two-year to three-year period, and have a five year life.


Stock-Based Compensation

A summary of the Companys stock option activity during the year ended December 31, 2016 is presented below:

 

 

Number of options

Weighted Average Exercise Price

Weighted Average Grant-date Fair Value

Weighted Average Remaining Contractual Life (Years)



Aggregate Intrinsic Value

Options Outstanding , December 31, 2014

 

250,000

0.6

2.8

0.67

$0

Less: Option expired

 

(250,000)

0.6

2.8

 

 

Options Outstanding , December 31, 2015

 

-

-

-

-

-

Options Outstanding , December 31, 2016

 

-

-

-

-

-


All options outstanding are fully expired as of December 31, 2016.  No new options were granted in the fiscal year 2016 or 2015.




F-12





NOTE 7 – EARNINGS PER SHARE


The following table sets forth the computation of basic and diluted earnings per common share for the year ended December 31, 2016 and 2015, respectively:



 

 

 

For the Years Ended December 31, 31,

 

 

 

 

 

2016

 

 

2015

 

 

     Numerator - basic and diluted

  

 

 

  

 

 

 

 

            Net profit

  

$

 566,948

 

$

 733,721

 

 

     Denominator

  

 

 

  

 

 

 

 

            Weighted average number of common shares outstanding —basic and diluted

  

 

 18,510,393

  

 

 229,809,001

 

 

  Profit per common share — basic and diluted

 

$

0.031

 

$

0.003

 

 



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 15% to 35%. The Company generated taxable income for the year ended December 31, 2016 and 2015, and which is subject to U.S. federal corporate income tax rate of 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 years ended December 31, 2016 and 2015, and therefore, Weyland Tech Limited was not subject to Hong Kong profits tax.


The Company’s effective income tax rates were 34% and 39.8% for the years ended December 31, 2016 and 2015, 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,

 

 

2016

 

 

2015

 

U.S. statutory tax rate

 

 

34.0%

 

 

 

34.0%

 

Hong Kong profit tax rate

 

 

16.5%

 

 

 

16.5%

 

Foreign income not registered in the Hong Kong

 

 

(16.5%) 

 

 

 

(16.5%) 

 

Others

 

 

0.0%

 

 

 

5.8%

 

Effective tax rate

 

 

34.0%

 

 

 

39.8%

 



F-13









As of December 31, 2016 and 2015, the Company has a deferred tax asset of $229,479 and nil, resulting from certain net operating losses in U.S., respectively. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those net operating losses are available. The Company considers projected future taxable income and tax planning strategies in making its assessment. At present, the Company concludes that it is more-likely-than-not that the Company will be able to realize all of its tax benefits in the near future and therefore a valuation allowance has been provided for the full value of the deferred tax asset. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation allowance. As of December 31, 2016 and 2015, the valuation allowance was $714,964 and nil, respectively. $714,964 and nil of increase in the valuation allowance for each of the years ended December 31, 2016 and 2015, respectively.



 

 

 

As of December 31,

 

 

 

 

2016

 

 

 

2015

 

 

 

 

 

 

 

 

 

 

Deferred tax asset from operating losses carry-forwards

 

$

944,443 

 

 

$

-

 

Valuation allowance

 

 

(714,964)

 

 

 

-

 

Deferred tax asset, net

 

$

229,479 

 

 

$

-

 



NOTE 9 – COMMITMENTS AND CONTINGENCIES


Operating lease


The Company did not have any operating lease as of December 31, 2016.


Legal proceedings


Other than as disclosed in Part I, Item 3 of the Company’s 10-K above, as of December 31, 2016, the Company is not aware of any material outstanding claim and litigation against them.



NOTE 10 – SUBSEQUENT EVENTS


The Company has evaluated all transactions from December 31, 2016 through the financial statement issuance date for subsequent event disclosure consideration and noted no significant subsequent event that needs to be disclosed.




F-14





ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES


None



ITEM 9A(T). 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.  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 will comply fully with the disclosure controls and procedures and internal control over financial reporting in fiscal year 2017.


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




16





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 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 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 controls and procedures 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 prior Chief Executive Officer and prior Chief Financial Officer in connection with the review of our financial statements as of December 31, 2015.


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.


This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only the management's report in this annual report.



ITEM 9B. OTHER INFORMATION


None.




17






PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE


Directors, Executive Officers and Significant Employees


The following table sets forth certain information regarding the members of our Board of Directors, executive officers and our significant employees as of March 31, 2017:


Name

Age

Positions and Offices Held

Brent Suen

50

President, Chief Executive Officer,  Director and Secretary

Lionel Choong

55

Acting Chief Financial Officer and Director

Eddie Foong

44

Chief Operating Officer and Director

Thet Twe Aung

31

Chief Technology Officer

Matthew Burlage

54

Independent Non-Executive Board Member

Ross O'Brien

49

Independent Non-Executive Board Member

Brett Lay

55

Independent Non-Executive Board Member



Brent Suen (age 50) has been President & Chief Executive and Financial Officer of the Company since November 19, 2014, and a director of the Company since November 19, 2014.  Mr. Suen has 27 years of experience in the investment banking industry. He attended Westminster receiving his BA in Finance.  He began his career in merger arbitrage at Bear Stearns in 1988, at the age of 20, as the firms’ youngest hire. In 1993, he founded Axis Trading Corp., one of the first online platforms for stock trading and subsequently sold it to a division of Softbank in 1996. In 1997, he co-founded Elevation Capital which invested in and advised Silicon Valley based companies on IPO’s, mergers and acquisitions, strategic partnerships and fund raising. In 2003 Brent moved to Hong Kong and China where he established Bay2Peak S.A. Bay2Peak has invested in and advised over fifty companies which include Internet, software, renewable energy and life science companies. From 2006 to 2008 he also advised IRG TMT Asia Fund on private and public investments. In 2012 Brent served as advisor to McLarty Group and Citibank Venture Capital on a sale/leaseback program valued at $160 million leading to the eventual sale of the company for $630 million. For the past six years, Brent led the start-up and management of Empirica S.A., a security/intelligence and frontier markets focused advisory firm operating in Asia, the Middle East, Africa and Central Asia.


Lionel Choong (age 55) has been acting Chief Financial Officer since July 17, 2015.  In addition, Mr. Choong was the Vice Chairman of the Board and a director of Emerson Radio Corp. (NYSE: MSN) from November 2013 to June 2016.  Mr. Choong was acting Chief Financial Officer of Global Regency Ltd., between April 2009 and June 2015 and remains as a consultant thereafter.  Mr. Choong is a consultant for Zenith Professionals Ltd., a position he has held since August 2004 and Board Advisor to Really Sports Co., Ltd., a position he has held since June 2013. Mr. Choong has a wide range of experience in a variety of senior financial positions with companies in China, Hong Kong SAR, and London, UK. His experience encompasses building businesses, restructuring insolvency, corporate finance, and initial public offerings in a number of vertical markets, including branded apparel, consumer and lifestyle, consumer products, pharmaceuticals, and logistics. From June 2008 to May 2011, Mr. Choong was acting Chief Financial Officer of Sinobiomed, Inc. (now Weyland Technology, Inc.). Mr. Choong is a fellow member and holds a corporate finance diploma from the



18





Institute of Chartered Accountants in England and Wales. He is also a CPA and practicing member of the Hong Kong Institute of Certified Public Accountants and a member of the Hong Kong Securities Institute. Mr. Choong holds a Bachelor of Arts in Accountancy from London Guildhall University, UK, and a Master of Business Administration from the Hong Kong University of Science and Technology and the Kellogg School of Management at Northwestern University.


Based on Mr. Choong’s background in accounting, business and corporate finance, the Board believes that he is well qualified to serve as a director and acting Chief Financial Officer of the Company.


Eddie Foong (age 44), Chief Operating Officer, is the founder and creator of CreateApp, and has over 17 years of experience in IT, sales and marketing and operations. He was involved in a RFID technology company that developed and changed Singapore National Library Books borrowing system islandwide. He previously headed the sales and marketing department of Info. Technology within MNCs and government agencies.  He graduated with a Class 1 BEng Honours Degree and IBM Award holder from University of Strathclyde, U.K.


Thet Twe Aung (age 31), is the Chief Technology Officer of the Company. Spending 10 years in software development industries, Thet has in-depth knowledge in various development methodologies, software design patterns, data modeling and hands-on experience with mobile/web programming, socket programming, frameworks, SDKs and APIs. In 2015, he founded and served as a CEO of Escape Pixel, a digital startup in Singapore that provides customized digital solutions to enterprises and businesses. With vision to shape the future of its community, he is also an active contributor/developer of many open source software projects which advance linguistic evolution, localization, and cognition. Thet holds a Bachelor of Science with honors degree in Business Computing and Information Technology from the University of Wales, Prifysgol Cymru.


Matthew Burlage (age 54) Independent, non-executive Board Member, has spent the last three decades involved in financing and advising Asia’s leading corporations, government enterprises and financial institutions and has been involved in some of the most ground-breaking transactions in Asia, particularly in the telecom, media and technology (TMT) sectors.


In 2000, Matt co-founded IRG, a boutique financial advisory and investment firm focused on the core growth sectors in Asia. He advises Asian and global corporates, private equity funds, hedge funds and sovereign wealth funds on a range of transactions including mergers, acquisitions, corporate restructurings, and debt capital and equity capital financings. He is also responsible for the firms investment strategy and management of its proprietary capital.


Before co-founding IRG, Matt was a Managing Director and Head of Industry Groups at Lehman Brothers in Hong Kong where he created the first and largest dedicated TMT industry group at an investment bank in Asia in the early 1990s. He has been an adviser on capital raisings, equity/debt financings and merger and acquisition strategy to Asias leading companies in Japan, Singapore, Hong Kong, Indonesia, China, Thailand, Taiwan, and South Korea, as well as to global telecommunications operators in Europe and the US.


Matt was ranked Number One in ex-Japan Corporate Asia, and Number Two in Corporate Asia, by Institutional Investor, and is a member of Institutional Investors Top 20 Global E-Finance Elite for Asia and Europe.


He has a MBA from Harvard Business School and a Bachelor of Arts from Yale University, and attended the Japanese Language Institute of Sophia University.


Ross O'Brien (age 49), Independent, non-executive Board Member, is an analyst, writer, presenter, and consultant focused on the economies and business environments of the Asia-Pacific, with over 25 years of experience in the region. His analysis surrounds Asia’s Innovation Economy—the intersection of information technology and the region’s broader society and economy. For nine years



19





he was Director of the Economist Corporate Network, a membership-based business advisory programme for senior executives of multinationals in Asia.


Based in Hong Kong for over 19 years, Ross has an AB in Asian Studies and Anthropology from Dartmouth College (1989), and an MBA from the University of California at Berkeley’s Haas School (1996). He is conversant and literate in Mandarin and Indonesian.


Currently, and beginning in 2003, Ross was Managing Director of the Hong Kong operations of Intercedent Asia, a region-wide partnership of B2B market consultants, which provides research-based market entry and positioning advice in several verticals across Asia. Ross' practice focuses on market entry strategies for telecoms and IT companies, in managed services and wireless solutions. His client work involved extensive research work in over a dozen economies in Asia, including extended field research in China, Indonesia, Vietnam and Bangladesh.


Ross was also for many years an analyst and Asian research director for Pyramid Research (once a subsidiary of the Economist Intelligence Unit, now a division of Progressive Digital Media) a telecoms advisory firm providing forecasts and analysis on infrastructure and services markets in emerging markets. Ross worked for Pyramid in the US, Singapore and Hong Kong.  


Ross has also served as a Research Director of Advisory Services for Strategic Intelligence, a venture-funded economic analysis firm with an emphasis on Internet-based delivery of analysis and forecasts on ‘new economy’ industries and markets in Asia. From 1996 to 1998, he was a consultant in AT&T Solutions' operational process improvement practice, serving financial services and telecoms clients in China and Indonesia, including a yearlong project overseeing customer care service process improvement for PT Telkom, based in Bandung.


Brett Lay (age 55) Independent, non-executive Board Member, is the former Chief Financial Officer of Pacnet Limited, AsiaNetcom, and Pacific Internet from February 2007 to April 2015.  A seasoned successful business executive with 28 years of operating experience including 15 years as a Chief Financial Officer for both private and public companies.  Acted as interim CEO during transition phases.   A member of the board of directors working with private equity owners to grow and harvest their investments.  Over 18 years of work experience in Asia while residing in Singapore and Hong Kong.  Active member of the board of directors for joint ventures in China, India, South Korea, and Philippines.  Originated and completed the successful execution of several mergers and acquisitions, including the post integration efforts.  


Brett has been a company officer in diverse sized organizations including; a large corporation (NYSE $62 billion), a startup company taking it from an idea to now a component of a $14 billion NASDAQ public company, and recently completed the sale of Pacnet to Telstra for $750M.  Created multiple financing programs including equity origination, senior bank facilities, high yield bond facilities, and lines of vendor credit.  Created, maintained and restructured debt programs, operating environments, shareholder equity structures, vendor relationships, and bank facilities.  Reviewed multiple financing structures to meet shareholder objectives including IPO, REIT spinoff, asset trust structures, and minority investments.  Managed a large finance workforce over a widespread diversified region.  Actively managed P&L performance and operating results.  Created and implemented a corporate restructuring that included the downsizing of the workforce by nearly 30% and reducing annual SG&A expenses by $25 million.  Managed shareholder relationships including large private equity groups to meet their financial objectives.


Brett has his Masters of Science Finance and Masters of Science Management, from the University of Colorado, Denver.




20





Family Relationships


There are no family relationships between any of the Company’s directors or executive officers.


Involvement in Certain Legal Proceedings


We are not aware of any material legal proceedings that have occurred within the past five years concerning any director, director nominee, or control person which involved a criminal conviction, a pending criminal proceeding, a pending or concluded administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.


Section 16(a) Beneficial Ownership Reporting Compliance


Under U.S. securities laws, directors, certain executive officers and persons holding more than 10% of our common stock must report their initial ownership of the common stock, and any changes in that ownership, to the SEC.  The SEC has designated specific due dates for these reports.


Code of Ethics


At the present time, the Company has not adopted a code of ethics.  The Company intends to adopt a code of ethics in the near future.


Audit Committee


At the present time, the Company’s audit committee consists of Messrs. Lionel Choong and Brent Suen.  Mr. Choong is the acting Chairman of the Audit Committee.  Mr. Suen is considered an interested member of the audit committee as Mr. Suen is the President and CEO of the Company.  At the Company’s annual board meeting, it is proposed that the three independent, non-executive board directors will join the audit committee and Mr. Choong will retire as acting Chairman of the audit committee.


The Company adopted an Audit Committee Charter and Audit Committee Procedures for Whistleblowers on May 22, 2007, which were filed as exhibits 99.1 and 99.2 to the Form 10-QSB filed with the SEC via EDGAR on August 14, 2007, and are incorporated by reference herein.



ITEM 11. EXECUTIVE COMPENSATION


Summary Compensation Table


The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. No other executive officer received total annual salary and bonus compensation in excess of $100,000:



21






Name and Principal Position

Year

Salary

($)

Bonus

($)

Stock awards

($)

Option awards

($)

All other

Compensation

($)

Total

($)

Brent Suen

President, CEO & Director

2015

 

2016

$9,000

 

$60,000

-

 

-

$5,120

 

-

-

 

-

-

 

-

$14,120

 

$60,000

Lionel Choong

2015


2016

$27,167


$60,000

 

$$3,8407,880,000

 

 

$31,007


$60,000

Eddie Foong

2015


2016

$-


$60,000

 

 

 

 

$-


$60,000

Thet Twe Aung

2015


2016

$-


$60,000

 

 

 

 

$-


$60,000



Narrative Disclosure to the Summary Compensation Table


See Note 5 to the financial statements as of December 31, 2016 for description of the terms of Stock Option grants and the methods and assumptions used to determine fair value of Option Awards.


Retirement Benefits and Change of Control


Not Applicable.


Director Compensation


The following table discloses the compensation of the directors of the Company for the Company’s fiscal year ended December 31, 2016 (unless already disclosed above):


Name

Fees earned or paid in cash

($)

Stock awards

($)

Option awards

($)

Deferred

Compensation

earnings

($)

All other

Compensation

($)

Total

($)

Matthew Burlage

-

-

-

-

-

-

Ross O'Brien

-

-

-

-

-

-

Brett Lay

-

-

-

-

-

-



Summary of Director Agreements

In December 2015 the Company entered into Director Agreements with Messrs. O’Brien, Burlage and Lay, pursuant to which, as serving in the capacity of independent, non-executive Board Directors, they would receive shares of common stock in the Company in the amount of 100,000 shares per



22





year. The Director Agreements have not been finalized and as such, Director Compensation is excluded from the Company’s financial statements.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


The following table sets forth information as of March 31, 2017 (the “Determination Date”), with respect to the Company’s directors, Named Executive Officers, and each person who is known by the Company to own beneficially, more than five percent (5%) of the Company’s Common Stock, and with respect to shares owned beneficially by all of the Company’s directors and executive officers as a group.  Common Stock not outstanding but deemed beneficially owned by virtue of the right of an individual to acquire shares within 60 days is treated as outstanding only when determining the amount and percentage of Common Stock owned by such individual.  Except as noted, each person or entity has sole voting and sole investment power with respect to the shares shown.  Unless otherwise specified, the address of each of the persons set forth below is in care of Weyland Tech Inc., 9/F, The Wellington, 198 Wellington Street, Central, Hong Kong HKSAR


As of the Determination Date, there are 20,778,128 shares of Common Stock issued and outstanding.


Name of Beneficial Owner

Position

Amount and Nature of Beneficial Ownership

Percent of

Common Stock (1)

Brent Suen

Chief Executive Officer

412,000

2.0%

Lionel Choong

Acting Chief Financial Officer

394,000

1.9%

Eddie Foong

Chief Operating Officer

2,000,000

9.6%

Directors and Officers as a group (3 persons)

 

2,806,000

13.5%

 

Notes:

(1)

Beneficial ownership of Common Stock has been determined for this purpose in accordance with Rule 13d-3 under the Exchange Act, under which a person is deemed to be the beneficial owner of securities if such person has or shares voting power or investment power with respect to such securities, has the right to acquire beneficial ownership within 60 days or acquires such securities with the purpose or effect of changing or influencing the control of the Company.

 



Securities Authorized for Issuance Under Equity Compensation Plans


See “ Item 5. Market For Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Securities Authorized for Issuance Under Equity Compensation Plans ” above.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


Transactions with Related Persons


None of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates (other than compensation



23





described under Item 11, “Executive Compensation”) since the beginning of our 2016 fiscal year which are required to be disclosed pursuant to the rules and regulations of the SEC.


Director Independence


According to their respective Directors and Officers annual questionnaire, Messrs. Matthew Burlage, Ross O'Brien and Brett Lay, are considered independent, non-executive board directors.



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES


The following table discloses the fees billed by our auditor in connection with the audit of the Company’s annual financial statements for the years ended December 31, 2016 and 2015.



Financial Statements for Year Ended December 31

Audit Fees (1)

Audit Related Fees(2)

Tax Fees (3)

All Other Fees (4)

2015

$22,000

-

-

-

2016

$30,000

-

-

-

Notes:

(1)

The aggregate fees billed for the fiscal year for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory engagements for that fiscal years.

(2)

The aggregate fees billed in the fiscal year for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported in Note 1.

(3)

The aggregate fees billed in the fiscal year for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

(4)

The aggregate fees billed in the fiscal year for the products and services provided by the principal accountant, other than the services reported in Notes (1), (2) and (3).



Audit Committee’s Pre-Approval Practice  


Our audit committee pre-approves all audit services to be performed by our independent registered public auditor.




24






PART IV



ITEM 15. EXHIBITS, FINANCIAL STATEMENTS


Financial Statements


The financial statements are set forth under Item 8 of this annual report on Form 10-K. Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.


Exhibits


Exhibit No.

  

Description of Exhibit

3.1

  

Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Schedule 14C Information of the Company filed on September 1, 2015)

4.1

  

 

10.1

 

 

31.1*

  

Certificate pursuant to Rule 13a-14(a)

31.2*

  

Certificate pursuant to Rule 13a-14(a)

32.1*

  

Certificate pursuant to 18 U.S.C. Section 1350

32.2*

  

Certificate pursuant to 18 U.S.C. Section 1350


Notes:

 

 

*

 

Filed herewith




25






SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 31st day of March 2017.


 

Weyland Tech, Inc.

(Registrant)

 

 

 

By: /s/ Brent Y. Suen

 

Brent Y. Suen





Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:


Signature

 

Title

 

Date

 

/s/ Brent Y. Suen

    Brent Y. Suen

President and Chief Executive Officer

(Principal Executive and Financial Officer)

March 31, 2017




26