ITEM 1. FINANCIAL STATEMENTS

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WEYLAND TECH INC.

NOTES TO THE FINANCIAL STATEMENT

NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION

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

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

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 globally 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.

We identify our reportable segments as those customer groups that represent more than 10% of our combined revenue or gross profit or loss of all reported operating segments.  We manage our business on the basis of the one reportable segment e-commerce solutions and service provider.  The accounting policies for segment reporting are the same as for the Company as a whole.  We do not segregate assets by segments since our chief operating decision maker, or decision making group, does not use assets as a basis to evaluate a segment’s performance.

IDENTIFIABLE INTANGIBLE ASSETS

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Identifiable intangible assets are recorded at cost and are amortized over 3 years. Similar to tangible property and equipment, the Company periodically evaluates identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

EQUIPMENT

Equipment is carried at cost less a provision for depreciation on a straight-line basis over their estimated useful lives. Estimated useful life of the computer equipment is 3 years.

INVESTMENT IN JOINT VENTURE

The Company’s accounting policy for joint ventures is as follows:

The Company uses the cost method when it does not have joint control or significant influence in a joint venture. Under the cost method, these investments are carried at cost. If other than temporary impairment in value is determined, it would then be charged to current net income or loss.

If the Company enters into a joint venture in which there is joint control between the parties or the Company has significant influence, the equity method is utilized whereby the Company’s share of the ventures’ earnings and losses is included in the statement of operations as earnings in joint ventures and its investments therein are adjusted by a similar amount. If other than temporary impairment in value is determined, it would then be charged to current net income or loss.

In a joint venture where the Company holds more than 50% of the voting interest and has significant influence, the joint venture is consolidated with the presentation of non-controlling interest.  In determining whether significant influences exist, the Company considers its participation in policy-making decisions and its representation on the venture’s management committee.

PREPAYMENTS

Prepayments represent amounts advanced to suppliers. The suppliers usually require advance payments or deposits when the Company makes purchase or orders service and the prepayments and deposits will be utilized to offset the Company’s future payments

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. 

STOCK-BASED COMPENSATION

The Company accounts for stock based compensation by recognizing the fair value of stock compensation as an expense in the calculation of net income (loss). The Company recognizes stock compensation expense in the period in which the employee is required to provide service, which is generally over the vesting period of the individual equity instruments. Stock options issued in lieu of cash to non-employees for services performed are recorded at the fair value of the options at the time they are issued and are expensed as service is provided.

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EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share of common stock is computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding during the period.  Diluted earnings (loss) per share of common stock is computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding during the period, including vested and unvested stock options that are in the money.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash, accounts payable, interest payable, shareholder loans and other current liabilities. The carrying values of financial instruments reflected in these financial statements approximate their fair values due to the short-term maturity of the instruments.

REVENUE RECOGNITION

The Company recognizes revenue from providing hosting and integration services and licensing the use of its technology platform to its customers. The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer (for licensing, revenue is recognized when the 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

There were various other accounting standards and interpretations recently issued, none of which is expected to have a material impact on the Company's financial position, operations or cash flows.

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NOTE 3 – INTANGIBLE ASSETS

As of June 30, 2017, and December 31, 2016, the company has the following amounts related to intangible assets:

No significant residual value is estimated for these intangible assets. Amortization expense for six months ended June 30, 2017 totaled $175,967 and $125,000, respectively.

The remaining amortization period of the Company’s amortizable intangible assets is approximately 8.5 years as of June 30, 2017. The estimated future amortization of the intangible assets is as follows:

NOTE 4 – STOCKHOLDERS’ EQUITY

Common Shares

As of June 30, 2017, and December 31, 2016, authorized common shares of the Company consists of 250,000,000 shares with par value of $0.0001 each.

Issuance of Common Stock

During the 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.

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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.

During the six months ended June 30, 2017, 807,000 shares with par value of $ 0.0001 per share were issued to various stockholders.

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Operating lease

The Company did not have any operating lease as of June 30, 2017.

Legal proceedings

There has been no legal proceeding in which the Company is a party for the six months ended June 30, 2017.

NOTE 6 – SUBSEQUENT EVENTS

There were no events or transactions other than those disclosed in this report, if any, that would require recognition or disclosure in our consolidated financial statements for the six months ended June 30, 2017.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OF OPERATION

Forward Looking Statements

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

• dependence on key personnel;

• Competitive factors;

• degree of success of research and development programs;

• the operation of our business; and

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

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

Use of Terms

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

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

• “SEC” are to the Securities and Exchange Commission;

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

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

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

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

Overview

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

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

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 Growth 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 SMBs to create a mobile application ("app") without the need of technical knowledge, high investment or background in IT.

We believe that through our app, SMBs 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

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markets:

Asia: 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.

• Indonesia, via a Strategic Cooperation agreement with Orient Asia Pacific Limited. Indonesian SMBs 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 and Vietnam via a Strategic Cooperation agreement with MocaApp

SMBs

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 SMBs, a typical go- to-market strategy would have direct sales force or resellers approach SMBs 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 SMBs either through an installed base of customers or groups of Direct Sellers with a sales force encompassing SMBs as end customers.

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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.

Subsequent Events

On April 8, 2017, Weyland Tech, Inc. (the “Company”) entered into that certain Amended and Restated Software License Agreement by and between the Company and Technopreneur’s Resource Centre Private Limited (the “Amended License Agreement”) and that certain Amended and Restated Sale and Purchase Agreement by and among the Company, Eddie Foong Wai Keong, Zhao Yongxin and Brent Suen (the “Amended Purchase Agreement”).  The Amended Licensing Agreement continues and amends and restates Weyland Tech’s exclusive use of the ‘CreateApp Platform’ together with any instances or variations to it and all current and future revenues and income that are a result of sales, licensing and sub-licensing agreements for an initial ten-year term, which is extendable at the Company’s option for two consecutive five year periods, for a total of twenty years.  The Amended Purchase Agreement provides for the purchase of a controlling interest in Technopreneur’s Resource Centre Private Limited by the Company.  The Amended License Agreement and Amended Purchase Agreement amends and restates the rights of the parties with respect to the (i) that certain MOU dated May 2015, and the subsequent Sale and Purchase Agreement (the “Original Purchase Agreement”), and (ii) the global license agreement relating to the ‘CreateApp Platform’ (the “Global License Agreement”).

On April 27, 2017 the Company announced initial subscriptions and revenues from its South East Asian partner, MOCAAPP. Marketing and development of additional applications -- powered by CreateApp -- continues in the Philippines through the Company's white label channel partner.

On May 1, 2017, Weyland Tech, Inc. (the "Company"), a provider of mobile business applications announces that it has signed a definitive acquisition agreement with Escape Pixel, a provider of Web Development, Mobile Development, & Digital Customized Solutions, based in Singapore and Yangon Myanmar. The terms of the acquisition are confidential. Following the closing of the transaction, Escape Pixel will become a wholly-owned subsidiary of the Company.

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On May 1, 2017, the Company signed a software development agreement with Faith United Technology LTD, a Hong Kong based software developer.  Weyland Tech and Faith United are collaborating on Online-to-Offline (“O2O”) applications initially targeting the food service industry. Weyland Tech believes O2O solutions allow merchants to reach online buyers that are not directly served by Third Party Logistics providers (“3PL”) but can reach more centralized physical locations for pick-up. 

On June 1, 2017, our Chief Executive Officer, filed Form 4 with the Securities and Exchange Commission, that he had purchased 5,000 shares of common stock at an average price of $3.92.

On July 20, 2017, Weyland Tech, Inc. (the “Company”) entered into an advisory agreement with TMC Prime Pte. Ltd (TMC) for the sourcing of strategic investments into the company by Southeast Asian technology companies and high net worth individuals with experience investing in technology companies TMC will commit to fund up to $10 million USD over a period of one year via direct investments.

On July 31, 2017, the Company updated shareholders on the status of its NASDAQ application for uplisting and address several key issues regarding market rumors.

As indicated in previous filings with the Securities and Exchange commission, the Company has filed its NASDAQ application and the standard review by NASDAQ staff is in process. We understand that that process can take up to twelve months. We have responded to initial comments and requests for information by NASDAQ staff, and those responses are under review. We have not been given a definitive timeline for approval, nor have we been notified that our application has or will be rejected. We believe that the Company currently qualifies for inclusion to the NASDAQ Capital Market and that our application will be approved following NASDAQ's normal and standard review period and processes.

In the interim, the Company's management has been made aware that it qualifies for the OTCQX, the highest tier of the OTC Markets Group where a number of esteemed companies such as Roche Holding, Allianz, BNP Paribas, BASF, Adidas and numerous others are listed. There are currently only 406 companies listed on the OTCQX, and the management of Weyland Tech is pursuing a transition to the OTCQX while its NASDAQ application is being processed.

Results of Operation

Service Revenue

Service Revenue was $6,476,022 and $6,394,984 for the six months ended June 30, 2017 and 2016, respectively.  The increase is due to the service income from our customers.

Cost of Service

Cost of Service was $5,095,509 and $3,673,639 for the six months ended June 30, 2017 and 2016, respectively.  Included are development costs of $ 390,772 (2016: $1,750,000).  The increase during the period reflects our revised normal gross margins.

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Operating Expenses

General and Administrative expenses were $478,893 and $493,188 and for the six months ended June 30, 2017 and 2016, respectively.

Net Profit (Loss)

The Company had a net profit of $745,536 and $2,259,327 for the six months ended June 30, 2017 and 2016, respectively. Gross margins decreased from 43% to 21% for six months ended June 30, 2017, decreased from 28% to -11% for three months ended June 30, 2017.

Included in Net profit was amortization of $175,967 for the six months ended June 30, 2017. (2016: $125,000).

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Liquidity and Capital Resources

On June 30, 2017, we had negative working capital of $2,139,449. The decrease in working capital is due to prepayment of service costs of $882,119 in the period.  

Revenue Recognition

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-415(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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Changes in Internal Controls Over Financial Reporting

During the period, we have by board resolution formulated the directors forming our audit committee.  Our audit committee comprises Mr. Matt Burlage as acting chairman with Messrs. Brett Lay and Ross O’Brien as members.

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

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is currently undergoing civil litigation in Singapore where a dispute has arisen between a shareholder and the Company in relation to the ownership of approximately 3,500,000 shares of the Company’s common stock.  Currently, the Company is pursuing alternative means of dispute resolution which if successful is expected to be able to resolve the aforementioned litigation proceedings by the third quarter of 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. 

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

ITEM 1A. RISK FACTORS

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

ITEM 2. RECENT UNREGISTERED SALES OF EQUITY SECURITIES

During the six months ended June 30, 2017, the Company received proceeds of $855,862 for the private placement of the company's common shares to professional investors and management at prices ranging from $2.50-$4.00 These shares were issued pursuant to Regulation D under the Securities Act of 1933, as amended, are exempt from registration by reason of Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and bear an appropriate restrictive legend.

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ITEM 3. EXHIBITS

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SIGNATURES

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

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