NOTES TO THE CONDENSED FINANCIAL STATEMENTS
February 28, 2018
(Unaudited)
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
WEWARDS, INC. (the corporate name of which was Global Entertainment Clubs, Inc. until January 8, 2018) was incorporated in Nevada on September 10, 2013 as Betafox Corp., with the initial intent to manufacture and sell color candles. On April 26, 2015, Giorgos Kallides (the “Seller”), entered into an Agreement for the Purchase of Common Stock (the “Stock Purchase Agreement”) with Future Continental Limited, (“Purchaser”) pursuant to which the Seller agreed to sell to Purchaser, six million (6,000,000) shares of common stock of the Company (the “Shares”) owned by the Seller, constituting approximately 73.8% of the Company’s 8,130,000 issued and outstanding common shares, for $340,000. The sale was consummated on May 11, 2015. As a result of the transfer of the shares, there was a change of control of the Company. The Company’s corporate office is located in Walnut, California.
On August 6, 2016 the Company signed Statements of Work (“SOWs”) with Intellectsoft LLC, an unaffiliated company, to perform services for the development and administration of websites to support a mobile app which will enable consumers to purchase goods with “Future World Group” vouchers, and merchants will be able to sell their goods directly to the users, using this platform.
The SOWs provide that after this mobile app has been developed, Intellectsoft LLC will then proceed to phase 2, which is intended to be the development of this app for trade centers.
In addition to the SOWs with Intellectsoft, between August 20, 2016 and September 27, 2016, the registrant signed five SOWs with hedgehog lab, an unaffiliated UK-based company which is also unaffiliated with Intellectsoft, to provide additional services to the registrant in connection with the app being developed. The objective of these services, to be completed in two phases, is for the Company to become the exclusive worldwide licensee (except in the United States) for (1) creating a white labelled version of Future World which can be packaged up in a way by which small co-operatives of merchants can create their own eco systems of product selling and loyalty point trading, using “Future Vouchers”; (2) taking the current version of the app, improving the identified pain points and providing versions in English and Chinese, to allow the app to be used in Asia, Europe and North America (except the United States), by the merchants and customers in as short a time as possible; (3) having a loyalty point trading platform visualized within the new iOS and Android applications, as well as defining the distribution of future vouchers and loyalty points; and (4) the creation of a prototype of a 3D globe system, visualizing the potential for the globalization of the app into cities. The Company has now acquired this technology from an affiliated entity, and owns this technology.
The Company also intends to be the exclusive licensee of an online gaming platform, F&L Galaxy, Inc. (“F&L”), a company that is affiliated with the Company,, by virtue of common control by the Company’s principal shareholder and CEO, will purchase (from an affiliated, privately-owned company), the blockchain technology for use in setting up the global gaming platform. All IP addresses for the United States will be blocked by the Company, which means that a US-based person will not be able to participate in the global gaming platform. F&L intends to license the technology to the Company exclusively, and on a worldwide basis—except for the United States, and the Company then intends to sublicense the gaming platform to unaffiliated White Label licensees. The White Label sublicensees will pay the Company a sublicense fee for the use of the technology, each time that an end user signs up. As of the date of the filing of this Quarterly Report on Form 10-Q, no definitive agreements have been signed by the Company with F&L, with respect to the gaming platform.
As of the date of the filing of this Quarterly Report on Form 10-Q, the merchant platform has been completely developed, and the Company owns this technology; however, no licensee has yet been signed by the Company, and no revenues have been generated. The gaming platform described above has not yet been completed and is not operational.
January 8, 2018, by consent of Lei Pei, the principal shareholder, the Company changed its corporate name in Nevada to WEWARDS, INC. The Company’s trading symbol is now WEWA.
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WEWARDS, INC.
(formerly Global Entertainment Clubs, Inc.)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
February 28, 2018
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES
Basis of presentation
The Company’s unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in 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. Actual results may differ from those estimates. The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending May 31, 2018. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2018.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents and amounts due to shareholder. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
The three levels of valuation hierarchy are defined as follows:
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Level 1.
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Observable inputs such as quoted prices in active markets;
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Level 2.
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Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;
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Level 3.
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Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
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Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.
NOTE 3 – PREPAID EXPENSES
As of
February 28, 2018, the company had $25,000 of prepaid services. $25,000 was paid to a service provider for consulting services to be provided in March. In addition, the CEO has prepaid $35,000 on the Company credit card to be used for future expenses.
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WEWARDS, INC.
(formerly Global Entertainment Clubs, Inc.)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
February 28, 2018
(Unaudited)
NOTE 4 – RELATED PARTY LOANS
As of February 28, 2018 and May 31, 2017, the Company owed another company owned by Mr. Pei $70,740 and $70,740, respectively. All funds expended to date have been used for professional fees, and for other general operating purposes. The loans are unsecured, non-interest bearing and due on demand.
As of February 28, 2018 and May 31, 2017, the Company owed F&L Galaxy, Inc., another company owned by Mr. Pei, $12,582 and $12,582, respectively for software development expense. The loan is unsecured, non-interest bearing and due on demand. F&L Galaxy, Inc.
On February 23, 2017, Sky Rover loaned the Company $1,000,000, the loan is not convertible and is in addition to the $11,000,000 loaned by Sky Rover in the form of convertible notes. The loan is unsecured, bears interest at 5% and is due February 23, 2020. As of February 28, 2018 there is $50,833 of accrued interest on this loan.
Convertible Promissory Note
On each of August 1, 2016 and August 3, 2016, Sky Rover Holdings, Ltd., a California corporation (“Sky Rover”) which is 100% owned by Lei Pei, the CEO and principal shareholder, loaned $500,000 to the Company (total of $1,000,000). Sky Rover was issued an unsecured, 5%, convertible promissory note which is due on August 1, 2019, and is convertible in whole or in part, at the option of the holder, into common shares at any time before the due date, at a conversion price of $0.04 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. All funds expended to date have been used for professional fees, other general operating purposes and for payments in accordance with the SOWs discussed in Note 1. As of February 28, 2018 there is $79,306 of accrued interest on this loan.
On September 27, 2016, Sky Rover loaned an additional $2,000,000 to the Company. Sky Rover was issued an unsecured, 5%, convertible promissory note which is due on September 27, 2019, and is convertible, in whole or in part, at the option of the holder, into common shares at any time before the due date, at a conversion price of $0.04 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. All funds expended to date have been used for professional fees, other general operating purposes and for payments in accordance with the SOWs discussed in Note 1. As of February 28, 2018 there is $142,778 of accrued interest on this loan.
February 26, 2017, Sky Rover agreed to loan up to an additional $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 is due on February 26, 2020, 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 February 28, 2018 there is $401,111 of accrued interest on this loan.
On November 20, 2017, Sky Rover loaned the remaining $8,000,000 to the Company. Sky Rover was issued an unsecured, 5%, convertible promissory note which is due on November 20, 2020, 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 February 28, 2018 there is $109.589 of accrued interest on this loan.
The two loans of the $8,000,000, combined with the $4,000,000 previously loaned means that Sky Rover has loaned the Company a total of $19,000,000 in convertible debt and $1,000,000 in non-convertible debt since August 2016.
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WEWARDS, INC.
(formerly Global Entertainment Clubs, Inc.)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
February 28, 2018
(Unaudited)
If and when Sky Rover converts the entire $16,000,000 Note at the present conversion price of $.08 per share to 200,000,000 shares, and assuming that Sky Rover also converts the $3,000,000 in notes which Sky Rover currently holds, at the conversion price of $.04 per share, Sky Rover would be issued a total of 275,000,000 restricted shares of the Company’s common stock. Those shares, plus the 6,000,000 shares Mr. Pei currently owns, would give him beneficial ownership of 283,000,000 of the Company’s 285,130,000 then-issued and outstanding shares (assuming that no other shares are issued before conversion), which would be approximately 98.8% of the then-outstanding shares.
NOTE 5 – PREFERRED STOCK
The Company has authorized preferred stock of 50,000,000 shares, par value $.001 per share. The voting powers, conversion features, if any, designations, preferences, limitations, restrictions and other rights of the preferred stock shall be prescribed by resolution of the Board of Directors at the time a specific series of preferred stock is designated. None of the preferred shares have been issued as of the date of this Report.
NOTE 6 – SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued, April 5, 2018, and has determined that it does not have any material subsequent events to disclose in these financial statements.
On March 1, 2018, the Company began occupying its new corporate headquarters at 2960 West Sahara Avenue, Las Vegas, NV 89102. The Company is occupying 8,015 square feet, consisting of 70% of the second floor of the building. The Company signed a five-year sublease with United Power, Inc. (“Power”), an affiliate of the Company by reason of common ownership with Lei Pei, the Company’s sole officer and director and majority shareholder, at a base monthly rent of $15,000, plus a possible increase of up to 3% each year based on increases, if any, of the Consumer Price Index. The building is owned by Future Property Limited (“Future”), another affiliate of the Company because of common ownership; Future entered into a lease with Power, and the Company then sublet the space from Power. The Registrant is occupying the space for executive and administrative offices.
On March 5, 2018, Sky Rover Holdings, Ltd., converted a total of $3,000,000 in convertible promissory notes, issued to Sky Rover in August and September 2016, together with $224,138 in accrued interest, into the Company’s common shares, at the Notes’ conversion price of $.04 per share (including accrued interest). As a result of this conversion, the Registrant issued a total of 80,603,450 shares to Lei Pei, as requested by Sky Rover, in cancellation of the Notes and accrued interest.
As of March 6, 2018, the Registrant completed the development (subject to future improvements) of the platform to support a mobile app which will enable consumers to purchase goods and receive rewards, and merchants will be able to sell their goods directly to the users, using this platform. The Registrant is now the owner of this intellectual property, but the Registrant has not entered into any agreements with licensees to date, and no revenues have been generated.
On March 6, 2018, the Company adopted the Wewards 2018 Equity Incentive Plan (the “Plan”). The purpose of the Plan is to promote the success and enhance the value of the Company by attracting and retaining the best available personnel for positions of substantial responsibility and providing such individuals with an incentive for outstanding performance. The Company has authorized up to 10,000,000 shares to be issued to eligible recipients, including employees, key employees, consultants, and other persons who provide advice to the Company, as either outright shares, or qualified stock options, nonqualified stock options, or stock appreciation rights.
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