Wewards, Inc 10-Q for FY2022 Q1

Wewards, Inc. (WEWA)

10-Q 2021-10-12 For: 2021-08-31

Added on April 06, 2026

About this 10-Q

Wewards, Inc filed this 10-Q on October 12, 2021, covering the quarter ended August 31, 2021 (FY2022 Q1).

Headline figures

Quarter ended August 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $707.22K; compared with a net loss of $200.66K a year earlier

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarter ended August 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________to __________

Nevada	33-1230099
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

		Page
		No.
PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1
	Condensed Balance Sheets as of August 31, 2021 (Unaudited) and May 31, 2021	1
	Condensed Statements of Operations for the Three Months Ended August 31, 2021 and 2020 (Unaudited)	2
	Condensed Statements of Changes in Stockholders’ Equity (Deficit) for the Three Months Ended August 31, 2021 and 2020 (Unaudited)	3
	Condensed Statements of Cash Flows for the Three Months Ended August 31, 2021 and 2020 (Unaudited)	4
	Notes to the Condensed Financial Statements (Unaudited)	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	18
ITEM 4.	CONTROLS AND PROCEDURES	18
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	19
ITEM 1A.	RISK FACTORS	19
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	19
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	19
ITEM 4.	MINE SAFETY DISCLOSURES	19
ITEM 5.	OTHER INFORMATION	19
ITEM 6.	EXHIBITS	19
SIGNATURES		20


	August 31,			May 31,
	2021			2021
		(Unaudited)
ASSETS

Current assets:
Cash	$	2,428,066		$	2,999,798
Prepaid expense		923			249
Total current assets		2,428,989			3,000,047

Right-of-use asset		253,634			293,035

Total assets	$	2,682,623		$	3,293,082


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable	$	19,500		$	15,670
Accrued interest, related parties		2,076,796			1,944,467
Current maturities of operating lease obligation, related party		165,697			162,427
Total current liabilities		2,261,993			2,122,564

Long term liabilities:
Operating lease obligation, related party		87,937			130,608
Convertible notes payable, related party		10,500,000			10,500,000

Total liabilities		12,849,930			12,753,172

Commitments and contingencies		—			—

Stockholders' equity (deficit):
Preferred stock, $0.001 par value, 50,000,000 shares authorized, no shares issued and outstanding		—			—
Common stock, $0.001 par value, 500,000,000 shares authorized, 107,483,450 issued and outstanding		107,483			107,483
Additional paid in capital		5,161,532			5,161,532
Accumulated deficit		(15,436,322	)		(14,729,105	)
Total stockholders' equity (deficit)		(10,167,307	)		(9,460,090	)

Total liabilities and stockholders' equity (deficit)	$	2,682,623		$	3,293,082


	For the Three Months Ended
	August 31,
	2021			2020

Revenue, related party	$	—		$	12,498

Operating expenses:
General and administrative		728			3,908
Software development, related party		505,500			—
Rent expense		45,000			45,000
Professional fees		26,606			39,745
Total operating expenses		577,834			88,653

Operating loss		(577,834	)		(76,155	)

Other income (expense):
Interest expense, related party		(132,329	)		(132,329	)
Interest income		2,946			7,825
Total other income (expense)		(129,383	)		(124,504	)

Net loss	$	(707,217	)	$	(200,659	)


Weighted average number of common shares outstanding - basic and fully diluted		107,483,450			107,483,450

Net loss per share - basic and fully diluted	$	(0.01	)	$	(0.00	)


	For the Three Months Ended August 31, 2021
									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity

Balance, May 31, 2021		—	$	—		107,483,450	$	107,483	$	5,161,532	$	(14,729,105	)	$	(9,460,090	)

Net loss for the three months ended August 31, 2021		—		—		—		—		—		(707,217	)		(707,217	)
Balance, August 31, 2021		—	$	—		107,483,450	$	107,483	$	5,161,532	$	(15,436,322	)	$	(10,167,307	)

Schedule of Valuation of Financial Instruments
	Fair Value Measurements at August 31, 2021
	Level 1		Level 2		Level 3
Assets
Cash	$	2,428,066	$	—	$	—
Total assets		2,428,066		—		—
Liabilities
Convertible notes payable, related party		—		—		10,500,000
Total liabilities		—		—		10,500,000
	$	2,428,066	$	—	$	(10,500,000	)

	Fair Value Measurements at May 31, 2021
	Level 1		Level 2		Level 3
Assets
Cash	$	2,999,798	$	—	$	—
Total assets		2,999,798		—		—
Liabilities
Convertible notes payable, related party		—		—		10,500,000
Total liabilities		—		—		10,500,000
	$	2,999,798	$	—	$	(10,500,000	)

Schedule of Convertible Notes Payable, Related Party
	August 31,		May 31,
	2021		2021

On February 26, 2017, Sky Rover Holdings, Ltd (“Sky Rover), which is owned any controlled by Mr. Pei, agreed to loan up $20,000,000 to the Company, of which $8,000,000 was loaned on February 28, 2017. Sky Rover was issued an unsecured, 5%, convertible promissory note which, as amended, is due on February 28, 2024, and is, in whole or in part, at the option of the holder, convertible into common shares at any time before the due date, at a conversion price of $0.08 per share (subject to adjustment in the event of stock splits, forward splits, recapitalizations, a merger, etc.). At the option of the Company, the interest may also be paid by issuing restricted shares of common stock, at the same conversion price per share. On June 26, 2018, the Company repaid $4,000,000 of principal of this loan. In addition, Sky Rover converted $1,500,000 of principal of this loan into common shares at the conversion price of $0.08 per share into a total of 18,750,000 shares. Sky Rover waived accrued and unpaid interest of $363,904, which was credited to additional paid in capital. As of August 31, 2021, there is $564,467 of accrued interest due on this loan.	$	2,500,000	$	2,500,000

On November 20, 2017, Sky Rover loaned an additional $8,000,000 to the Company. Sky Rover was issued an unsecured, 5%, convertible promissory note which, as amended, is due on November 20, 2024, and is, in whole or in part, at the option of the holder, convertible into common shares at any time before the due date, at a conversion price of $0.08 per share (subject to adjustment in the event of stock splits, forward splits, recapitalizations, a merger, etc.). At the option of the Company, the interest may also be paid by issuing restricted shares of common stock, at the same conversion price per share. As of August 31, 2021, there is $1,512,329 of accrued interest on this loan.		8,000,000		8,000,000

Total convertible notes payable, related party		10,500,000		10,500,000
Less: current portion		—		—
Convertible notes payable, related party, less current portion	$	10,500,000	$	10,500,000

Schedule of Components of lease expense
	For the Three
	Months Ended
	August 31,
	2021
Operating lease cost:
Amortization of assets	$	39,401
Interest on lease liabilities		5,599
Total operating lease cost	$	45,000

Schedule of Supplemental balance sheet information
	August 31,
	2021
Operating lease:
Operating lease assets	$	253,634

Current portion of operating lease obligation	$	165,697
Noncurrent operating lease obligation		87,937
Total operating lease obligation	$	253,634

Weighted average remaining lease term:
Operating leases		1.5 years

Weighted average discount rate:
Operating lease		8.00	%

Schedule of Supplemental cash flow and other information related to operating leases
	For the Three
	Months Ended
	August 31,
	2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	45,000

Schedule of Future minimum annual lease payments
For the Fiscal Year	Minimum Lease
Ended May 31:	Commitments
2022*	$	135,000
2023		135,000
Total payments	$	270,000
Amount representing interest	$	(16,366	)
Lease obligation, net		253,634
Less current portion		(165,697	)
Lease obligation – long term	$	87,937

	Three Months Ended
	August 31,			August 31,			Increase /
	2021			2020			(Decrease)
Revenue, related party	$	—		$	12,498		$	(12,498	)

Operating expenses:
General and administrative		728			3,908			(3,180	)
Software development, related party		505,500			—			505,500
Rent expense		45,000			45,000			—
Professional fees		26,606			39,745			(13,139	)
Total operating expenses:		577,834			88,653			489,181

Operating loss		(577,834	)		(76,155	)		501,679

Total other income (expense)		(129,383	)		(124,504	)		4,879

Net loss	$	(707,217	)	$	(200,659	)	$	506,558

Exhibit		Description
3.1		Articles of Incorporation (incorporated by reference to Exhibit 3.1.1 of the Form S-1 filed with the Securities and Exchange Commission by Wewards, Inc. on August 8, 2014)
3.2		Certificate of Amendment to Articles of Incorporation dated December 18, 2013 (incorporated by reference to Exhibit 3.1.2 of the Form S-1 filed with the Securities and Exchange Commission by Wewards, Inc. on August 8, 2014)
3.3		Bylaws (incorporated by reference to Exhibit 3.2 of the Form S-1 filed with the Securities and Exchange Commission by Wewards, Inc. on August 8, 2014)
10.1		Intellectual Property Rights Purchase and Transfer Agreement between Wewards, Inc. and United Power, Inc., dated as of April 2, 2020 (incorporated by reference to Exhibit 10.1 of the Form 10-K filed with the Securities and Exchange Commission by Wewards, Inc. on August 31, 2020)
10.2		License Agreement between Wewards, Inc. and Sandbx Corp., dated as of April 20, 2020 (incorporated by reference to Exhibit 10.2 of the Form 10-K filed with the Securities and Exchange Commission by Wewards, Inc. on August 31, 2020)
10.3		Lease Agreement between Wewards, Inc. and Future Property Limited, dated as of September 1, 2020 (incorporated by reference to Exhibit 10.3 of the Form 10-Q filed with the Securities and Exchange Commission by Wewards, Inc. on October 9, 2020)
10.4		Statement of Work Agreement between Wewards, Inc. and Sandbx Corp., dated as of January 4, 2021 (incorporated by reference to Exhibit 10.4 of the Form 10-Q filed with the Securities and Exchange Commission by Wewards, Inc. on January 14, 2021)
31.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)
32.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101)

	WEWARDS, INC.

Date: October 12, 2021	By:	/s/ Lei Pei
		Lei Pei
		President, Chief Executive Officer and Chief Financial Officer