Attached files
| file | filename |
|---|---|
| EX-32.1 - CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER - WECONNECT Tech International, Inc. | weconnect_ex3201.htm |
| EX-31.1 - CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER - WECONNECT Tech International, Inc. | weconnect_ex3101.htm |
| EX-21 - LIST OF SUBSIDIARIES - WECONNECT Tech International, Inc. | weconnect_ex21.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________________
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 000-52879
WECONNECT TECH INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Nevada | 39-2060052 |
| (State or Other Jurisdiction | (I.R.S. Employer |
| of Incorporation or Organization) | Identification No.) |
25, Jalan Puteri 7/15, Bandar Puteri,
47100 Puchong, Selangor, Malaysia
+6019 373 8718
(Address of Principal Executive Offices and Issuer’s
Telephone Number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001
(Title of class)
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. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Non-accelerated filer ☐ | Smaller reporting company ☒ | |
| Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
As of June 11, 2021, the issuer had outstanding 593,610,070 shares of common stock.
| 2 |
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical facts, included in this Form 10-Q including, without limitation, statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); expansion and growth of the Company's business and operations; and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether actual results or developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation and other factors, most of which are beyond the control of the Company.
These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "plans," "may," "will," or similar terms. These statements appear in a number of places in this filing and include statements regarding the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company's financial condition or results of operations for its limited history; (ii) the Company's business and growth strategies; and, (iii) the Company's financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company's limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change and competition. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to our filings with the SEC under the Exchange Act and the Securities Act of 1933, as amended, including the Risk Factors section of the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 11, 2018.
Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.
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WECONNECT TECH INTERNATIONAL, INC.
(Unaudited)
| January 31, 2021 Unaudited | July 31, 2020 Audited | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 542 | $ | 544 | ||||
| Accounts Receivable | – | – | ||||||
| Total Current Assets | 542 | 544 | ||||||
| Property and Equipment, net | – | – | ||||||
| Total Assets | $ | 542 | $ | 544 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | 87,874 | $ | 83,458 | ||||
| Other Payable and Accrued Liabilities | 995,891 | 933,410 | ||||||
| Amount due to Related Party | 1,300,920 | 1,236,274 | ||||||
| Current tax liabilities | 21,222 | 21,194 | ||||||
| Total Current Liabilities | 2,405,907 | 2,274,336 | ||||||
| Deferred tax | 9,642 | 9,143 | ||||||
| Total Liabilities | 2,415,549 | 2,283,479 | ||||||
| Shareholders’ Equity: | ||||||||
| Common Stock 593,610,070 shares issued and outstanding as of January 31, 2021, and July 31, 2020 respectively | 593,610 | 593,610 | ||||||
| Additional paid-up share capital | 4,958,781 | 4,958,781 | ||||||
| Accumulated loss | (7,666,709 | ) | (7,638,503 | ) | ||||
| Other comprehensive loss | (300,689 | ) | (196,823 | ) | ||||
| Total Owners’ Equity | (2,415,007 | ) | (2,282,935 | ) | ||||
| Total Liabilities and Owners ‘Equity | $ | 542 | $ | 544 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
WECONNECT TECH INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended January 31, 2021 | For the Three Months Ended January 31, 2020 | For the Six Months Ended January 31, 2021 | For the Six Months Ended January 31, 2020 | |||||||||||||
| Revenue | $ | – | $ | 23,710 | $ | – | $ | 60,288 | ||||||||
| Cost of revenue | – | (2 | ) | – | (2 | ) | ||||||||||
| Gross Margin | – | 23,708 | – | 60,286 | ||||||||||||
| Other Income | (6,138 | ) | 525 | (12,507 | ) | 981 | ||||||||||
| General and Administrative Expense | (8,473 | ) | (107,267 | ) | (15,699 | ) | (262,325 | ) | ||||||||
| Loss Before Tax | (14,611 | ) | (83,034 | ) | (28,206 | ) | (201,058 | ) | ||||||||
| Taxation | – | – | – | – | ||||||||||||
| Net Loss | (14,611 | ) | (83,034 | ) | (28,206 | ) | (201,058 | ) | ||||||||
| Other Comprehensive Income: | ||||||||||||||||
| Translation Adjustment | (52,921 | ) | (21,689 | ) | (103,866 | ) | (21,689 | ) | ||||||||
| (52,921 | ) | (21,689 | ) | (103,866 | ) | (21,689 | ) | |||||||||
| Comprehensive Loss | $ | (67,532 | ) | $ | (104,723 | ) | $ | (132,072 | ) | $ | (222,747 | ) | ||||
| Income per share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
| Weighted average shares outstanding | 593,610,070 | 593,610,070 | 593,610,070 | 593,610,070 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
WECONNECT TECH INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
July 31, 2020, October 31, 2020, and January 31, 2021
(Unaudited)
| Common Stock | Additional Paid in | Other Comprehensive | Retained | |||||||||||||||||||||
| Shares | Amount | Capital | Loss | Earnings | Total | |||||||||||||||||||
| Balance, July 31, 2019 | 593,610,070 | $ | 593,610 | $ | 4,958,781 | $ | (235,369 | ) | $ | (6,535,337 | ) | $ | (1,218,315 | ) | ||||||||||
| Net Loss for the year | – | – | – | – | (1,103,166 | ) | (1,103,166 | ) | ||||||||||||||||
| Translation Adjustment | – | – | – | 38,546 | – | 38,546 | ||||||||||||||||||
| Balance, July 31, 2020 | 593,610,070 | 593,610 | 4,958,781 | (196,823 | ) | (7,638,503 | ) | (2,282,935 | ) | |||||||||||||||
| Net loss for the period | – | – | – | – | (13,595 | ) | (13,595 | ) | ||||||||||||||||
| Translation Adjustment | – | – | – | (50,945 | ) | – | (50,945 | ) | ||||||||||||||||
| Balance, October 31,2020 | 593,610,070 | 593,610 | 4,958,781 | (247,768 | ) | (7,652,098 | ) | (2,347,475 | ) | |||||||||||||||
| Net loss for the period | – | – | – | – | (14,611 | ) | (14,611 | ) | ||||||||||||||||
| Translation Adjustment | – | – | – | (52,921 | ) | – | (52,921 | ) | ||||||||||||||||
| Balance, January 31, 2021 | 593,610,070 | $ | 593,610 | $ | 4,958,781 | $ | (300,689 | ) | $ | (7,666,709 | ) | $ | (2,415,007 | ) | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
WECONNECT TECH INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended January 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Loss | $ | (28,206 | ) | $ | (201,058 | ) | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | – | 11,778 | ||||||
| Gain on Disposal of PPE | – | (45 | ) | |||||
| Deferred Tax | 499 | – | ||||||
| Foreign translation reserve | (103,866 | ) | 3,453 | |||||
| Operation loss | (131,573 | ) | (185,872 | ) | ||||
| Changes in operating assets and liabilities | ||||||||
| Account receivables | – | 1,289 | ||||||
| Other receivables, deposit, and prepayments | – | 29,976 | ||||||
| Amount due to directors | – | 214,142 | ||||||
| Due to related party | 64,674 | – | ||||||
| Account payable | 4,416 | (15,596 | ) | |||||
| Other payables and accrued liabilities | 62,481 | (44,367 | ) | |||||
| Net cash provided by operations | (2 | ) | (428 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Proceed from Disposal of PPE | – | 73 | ||||||
| Net cash used in investing activities | – | 73 | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Foreign currency translation adjustment | – | 20 | ||||||
| Net cash provided by financing activities | – | 20 | ||||||
| Net increase (decrease) in cash | (2 | ) | (335 | ) | ||||
| Cash at Beginning of Year | 544 | 3,343 | ||||||
| Cash at End of Year | $ | 542 | $ | 3,008 | ||||
| Supplemental Disclosure of non-cash activity: | ||||||||
| Interest paid | $ | – | $ | – | ||||
| Taxes paid | $ | – | $ | – | ||||
The accompanying notes are an integral part of these consolidated financial statements.
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WECONNECT TECH INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2021
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
WECONNECT Tech International Inc. was incorporated under the laws of the State of Nevada on April 25, 2007. For purposes of financial statements presentation, WECONNECT Tech International Inc. and its subsidiary are herein referred to as “the Company” or “We”.
Our business office is located at 25, Jalan Puteri 7/15, Bandar Puteri, 47100 Puchong, Selangor, Malaysia.
On June 8, 2018, we have acquired approximately 99.662% equity interest of MIG Mobile Tech Bhd, a public limited company incorporated in Malaysia. MIG Mobile Tech Bhd is mainly engaged in e-commerce, online to offline marketplace and payment eco-system. This transaction was accounted for as a transaction among entities under common control and the assets, liabilities, revenues, and expenses of MIG Mobile Tech Bhd were carried over to and combined with the Company at historical cost, and as if the transfer occurred at the beginning of the period. We have conducted our business through MIG Mobile Tech Bhd since then.
Details of the Company’s subsidiary:
| No |
Company Name |
Place and date of Incorporation |
Particulars of issued capital |
Principal activities | ||||
| 1 |
MIG Mobile Tech Bhd |
Malaysia Oct 1, 2015 |
50,000,000 ordinary shares
|
E-commerce, online to offline |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
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 of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the period ended January 31, 2021.
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Inventories
Inventories are valued at the lower of cost or net realizable value. In general cost is determined by applying either the first in first out (FIFO) or percentages mark-up to the selling price valuations for the inventory item. Net realizable value is the estimated selling price in the ordinary course of business, less selling expenses. Allowances is made for obsolete, slow moving and defective inventories. All of the Company’s inventories consists of merchandise held for sale.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. There are no potentially dilutive shares of common stock.
Revenue recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
Comprehensive Income
ASC Topic 220, “Comprehensive Income” establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statements of stockholders’ equity consists of changes in unrealized gains and losses on foreign currency translation and cumulative net change in the fair value of available-for-sale investments held at the balance sheet date. This comprehensive income is not included in the computation of income tax expense or benefit.
Accounts receivable
Accounts receivable, which generally have thirty-day terms are recognized and carried at original invoice amount, less an allowance for uncollectible amounts, if applicable.
The Company maintains an allowance for doubtful accounts at a level considered adequate to provide for potential uncollectible receivables. The level of this allowance is evaluated by management based on collection experience and other factors affecting the accounts such as customer relationship and market factors.
Taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company computes tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future year.
The company conducts major businesses in Malaysia and is subject to tax in their own jurisdiction. As a result of its business activities, the company will file separate tax returns that are subject to examination by the foreign tax authorities.
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Fair Value Measurements
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritize the inputs used to measure fair value into three levels and bases the categorization with the hierarchy upon the lowest level of input that is available and significant to the fair value measurement.
The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy under ASC 820 are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 - Inputs, other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
The Company’s cash and cash equivalents and short-term investments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The carrying amounts of accounts payable, advances payable and short-term loans approximate their fair value due to short term maturities.
Recently issued accounting pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company has adopted this accounting standard update.
On June 20, 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC718 and forgo revaluing the award after this date. The guidance is effective for interim and annual periods beginning after December 15, 2018.
In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivative and Hedging (Topic 815, and Leases (Topic 841). This new guidance will be effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods. While the Company is continuing to assess the potential impacts of ASU 2019-10, it does not expect ASU 2019-10 to have a material effect on its financial statements.
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 its financial position or results of operations.
| 10 |
Foreign currency translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The functional currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the subsidiary maintains its books and record in a local currency, Malaysian Ringgit (“MYR” or “RM”), which is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of other comprehensive income. The Company has not to, the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Translation of amounts from the local currency of the Company into US$1 has been made at the following exchange rates for the respective years:
For the Period Ended January 31, | ||||||||
| 2021 | 2020 | |||||||
| Period - end MYR: US$1 exchange rate | 4.0450 | 4.1133 | ||||||
| Period - end average MYR: US$1 exchange rate | 4.1159 | 4.0885 | ||||||
NOTE 3 – PROPERTY AND EQUIPMENT
Property and Equipment are first recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of assets.
Long lived assets, including property and equipment, to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
As of January 2021 the company did not have property, plant and equipment.
NOTE 4 – RELATED PARTY TRANSACTIONS
The Company, in the regular conduct of business, has entered transaction with related parties in the form of cash or expenses paid on behalf of the related party and rendering of services. All advances are unsecured, due on demand and non-interest bearing.
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The table below show the breakdown of revenue generated from related party during the period
| Related Party | January 31, 2021 | January 31, 2020 | July 31, 2020 | |||||||||
| East Cloud Sdn Bhd | $ | – | $ | 16,863 | $ | 16,470 | ||||||
| Creative Property Management | – | 4,855 | 6,390 | |||||||||
| MIG Network and Consultancy Sdn Bhd | – | 10,819 | 15,042 | |||||||||
| $ | – | $ | 32,534 | $ | 37,902 | |||||||
East Cloud Sdn Bhd, Creative Property Management Sdn Bhd, MIG O2O Berhad and MIG Network & Consultancy Sdn Bhd are owned by our executive officers and directors, Shiong Han Wee and Kwueh Lin Wong. Messrs. Wee and Wong also serve as directors of these companies.
As of January 31, 2021 and July 31, 2020, the Company was indebted to MIG Network & Consultancy Sdn Bhd, our related company, in the amount of $1,300,920 and $1,236,274, respectively, for advances and expenses incurred on behalf of the Company. The amounts are included in due to related parties and are non-interest bearing, unsecured, and due on demand.
For the six months ended January 31, 2021, and 2020 we recognized a total of $ Nil and $28,679 respectively for manpower charge back to MIG O2O Berhad, our related company, which have been included in the statements of operations and comprehensive (loss) income.
For the six months ended January 31, 2021, and 2020, we recognized the following transactions with MIG Network & Consultancy Sdn Bhd, our related company.
| As of January 31, | ||||||||
| 2021 | 2020 | |||||||
| Rental paid to | $ | – | $ | 34,738 | ||||
| Legal fees paid to | – | 6,899 | ||||||
| Payroll outsourcing paid to | – | 304 | ||||||
NOTE 5 – GOING CONCERN
The accompanying financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
As of January 31, 2021, the Company suffered an accumulated deficit of $7,666,709 and continuously incurred a net operating loss of $28,206 for the six months ended January 31, 2021. The continuation of the Company as a going concern is dependent upon improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.
| 12 |
NOTE 6 – CONTINGENT LIABILITY
On November 12, 2018, MIG Mobile Tech Berhad, a subsidiary of the Company, filed a claim against Digiland Private Limited (“Digiland”) for breach of contract and misrepresentation arising from, among other things, Digiland’s failure to perform under its supplier contract with the Company. In its suit, MIG Mobile Tech Berhad is seeking a return of funds previously paid to Digiland in the amount of S$800,000 Singaporean Dollars (approximately US $584,000) together with a claim for damages to be assessed by the Singapore Court. Within the same suit, Digiland has filed a counterclaim against MIG Mobile Tech Berhad for the balance of the payment due to it under contract in the sum of S$800,000, together with a claim for damages to be assessed by the Singapore Court.
Prior to the filing of the its claims against Digiland, the Company recognized the amount of $596,912 in receivable, deposits and prepayments. The amount is being recognized as deposit because the development of the application-based software has not been materialized to-date. Subsequent to the filing of its claims, the Company has recognized a full impairment in the amount of $596,612.
As the COVID-19 pandemic had seriously affected the economy and business environment worldwide, in view of the uncertainty on the recovery of the refund of deposit paid to Digiland and the costs of prolonging the legal proceedings in light of the Company’s limited resources, the Company discontinued its proceedings on April 17, 2020.
On November 5, 2020, the Singapore Court awarded a judgment in favor of Digiland, and as a result, MIG Mobile Tech Berhad was ordered to pay:
| a) | The Judgment Sum of S$800,000 |
| b) | Interest on the Judgment Sum at 5.33% per annum from 29th November 2018 to the date of payment; and |
| c) | Legal costs of the action to be taxed if not agreed. |
Interest on the Judgment Sum calculated up to February 16, 2021 is S$94,507.38. Digiland further claimed legal cost together with disbursement in the sum of S$79,616.88. The total liability is estimated to be at S$974,124.26 and was accrued in the financial statement for the period ended January 31, 2021.
NOTE 7 - SUBSEQUENT EVENTS
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statement were available to be issued and has determined that there are no material subsequent events that require disclosure in these financial statements.
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ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless otherwise noted, all currency figures quoted as “U.S. dollars”, “dollars” or “$” refer to the legal currency of the United States. Throughout this report, assets and liabilities of the Company’s subsidiaries are translated into U.S. dollars using the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
Overview
We were an IT-solutions provider that provided a multi-dimensional e-commerce platform to facilitate shopping, business, trade and integrates online & office transactions in a single application. Prior to June 2019, we developed and operated a mobile platform designed to consolidate users’ cash and connect merchants to consumers by offering a cashless form of transaction, in-app shopping and a user rewards system. On June 2019, we ceased the operation of the platform but continue to maintain our IT solution business operations. For the six months ended January 31, 2021, and 2020, we generated comprehensive losses of $132,072 and $222,747, respectively.
Since we ceased operations of our platform June 2019, we unsuccessfully attempted to diversify into the energy, oil & gas sector to strengthen our financial position. Our current principal business is to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. Based on proposed business activities, we are a “blank check” company. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as it is subject to those requirements.
As of the date of this Quarterly Report, we have not entered into any binding agreement with any party regarding acquisition opportunities for us. We hope to continue to engage in discussions with other operating businesses affiliated with our executive officers regarding potential acquisition opportunities. There is no assurance that any nonbinding term sheet will result into a definitive purchase transaction nor can we assure you that we will be able to successfully acquire such company or any company in the near future.
We are in active discussions to dispose our operating subsidiary to a third party.
Financial Condition; Going Concern
We have had limited operations and have been issued a "going concern" opinion by our auditor, based upon our reliance on the sale of our common stock and loans from a related party, as the sole source of funds for our future operations. We have no assurance that future financing will be available to us on acceptable terms, or at all. If financing is not available on satisfactory terms, we may be unable to continue our business plan. Equity financing could result in additional dilution to existing shareholders. If we are unable to raise additional capital to maintain our operations in the future, we may be unable to carry out our full business plan of finding an acquisition partner.
Our financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As of January 31, 2021, the Company had working capital deficit of $2,405,365 and has incurred losses since its inception resulting in an accumulated deficit of $7,666,709. Further losses are anticipated, raising substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.
The ability to continue as a going concern is dependent upon the Company finding an acquisition partner in the future and/or to obtain the necessary financing to meet its obligations. Management intends to finance operating costs over the next twelve months with loans from directors and/or private placements of common stock.
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Results of Operations
The following table provides selected financial data about our company as of January 31, 2021 and 2020.
| For the Three Months Ended January 31, 2021 | For the Three Months Ended January 31, 2020 | For the Six Months Ended January 31, 2021 | For the Six Months Ended January 31, 2020 | |||||||||||||
| Revenue | $ | – | $ | 23,710 | $ | – | $ | 60,288 | ||||||||
| Cost of revenue | – | (2 | ) | – | (2 | ) | ||||||||||
| Gross Margin | – | 23,708 | – | 60,286 | ||||||||||||
| Other Income | (6,138 | ) | 525 | (12,507 | ) | 981 | ||||||||||
| General and Admin Expense | (8,473 | ) | (107,267 | ) | (15,699 | ) | (262,325 | ) | ||||||||
| Net Loss | (14,611 | ) | (83,034 | ) | (28,206 | ) | (201,058 | ) | ||||||||
| Translation Adjustment | (52,921 | ) | (21,689 | ) | (103,866 | ) | (21,689 | ) | ||||||||
| (52,921 | ) | (21,689 | ) | (103,866 | ) | (21,689 | ) | |||||||||
| Comprehensive Loss | $ | (67,532 | ) | $ | (104,723 | ) | $ | (132,072 | ) | $ | (222,747 | ) | ||||
Three Months Ended January 31, 2021, Compared to Three Months Ended January 31, 2020.
Revenue. During the three months ended January 31, 2021, and 2020, we earned revenue of $0 and $23,710, respectively. Our revenue consisted primarily of IT service fees and merchant platform maintenance fees. The decrease in our revenue is primarily attributable to the impact of COVID-19 and related government actions on our business operations. We do not expect to generate any revenues for the foreseeable future unless an extraordinary corporate event such as a merger or acquisition or other strategic partnership occurs.
No customers accounted for 10% or more of our total net revenue during the three months ended January 31, 2021. During the three months ended January 31, 2020, the following customers accounted for 10% or more of our total net revenue:
| Three months ended January 31, 2020 | ||||||||
| Revenues | Percentage of revenues | |||||||
| MIG Network & Consultancy Sdn Bhd | $ | 5,437 | 22.93% | |||||
| Creative Property Management Sdn Bhd | 2,481 | 10.46% | ||||||
| MIG O2O Berhad | – | – | ||||||
| East Cloud Sdn Bhd | 3,443 | 14.52% | ||||||
| North Cloud Sdn Bhd | 12,349 | 52.09% | ||||||
| $ | 23,710 | |||||||
East Cloud Sdn Bhd, MIG Network & Consultancy Sdn Bhd, and MIG O2O Berhad are affiliated with our executive officers and directors, Shiong Han Wee and Kwueh Lin Wong.
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Gross Profit. We recorded a gross profit of $0 and gross profit of $23,708 for the three months ended January 31, 2021, and 2020, respectively. The decrease in gross profit is mainly attributable to the the cessation of business operations arising from the COVID-19 pandemic and related government actions.
General and Administrative Expenses. General and administrative expenses were $8,473 and $107,267 for the three months ended January 31, 2021, and 2020, respectively. The decrease in general and administrative expenses was primarily attributable to the cessation of business operations arising from the COVID-19 pandemic and related government actions.
During the three months ended January 31, 2021 and 2020, no vendors accounted for 10% or more of our total operating costs.
Income Tax Expense. We did not record income tax expenses for the three months ended January 31, 2021, and 2020 respectively.
Net Loss. We recorded a net loss of $14,611 and $83,034 for the three months ended January 31, 2021, and 2020, respectively. The decrease in net loss is primarily attributable to the the cessation of business operations arising from the COVID-19 pandemic and related government actions.
Six Months Ended January 31, 2021, Compared to Three Months Ended January 31, 2020.
Revenues. During the six months ended January 31, 2021, and 2020, we earned revenues of $0 and $60,288, respectively. The decrease in our revenue is primarily attributable to the impact of COVID-19 and related government actions on our business operations. We do not expect to generate any revenues for the foreseeable future unless an extraordinary corporate event such as a merger or acquisition or other strategic partnership occurs.
No customers accounted for 10% or more of our total net revenue during the six months ended January 31, 2021. During the six months ended January 31, 2020, the following customers accounted for 10% or more of our total net revenues:
| Six months ended January 31, 2020 | ||||||||
| Revenues | Percentage of revenues | |||||||
| North Cloud Sdn Bhd | $ | 27,702 | 45.95% | |||||
| Creative Property Management Sdn Bhd | 4,855 | 8.08% | ||||||
| East Cloud Sdn Bhd | 16,863 | 27.97% | ||||||
| MIG O2O Berhad | – | – | ||||||
| MIG Network & Consultancy Sdn Bhd | 10,819 | 17.95% | ||||||
| $ | 60,239 | |||||||
Creative Property Management Sdn Bhd, East Cloud Sdn Bhd, MIG O2O Berhad and MIG Network & Consultancy Sdn Bhd are affiliated with our executive officers and directors, Shiong Han Wee and Kwueh Lin Wong. North Cloud Sdn Bhd is a shareholder holding less than 5% of our issued and outstanding securities.
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General and Administrative Expenses. General and administrative expenses were $15,699 and $262,325 for the six months ended January 31, 2021, and 2020, respectively. The decrease in general and administrative expenses was primarily attributable to the cessation of business operations arising from the COVID-19 pandemic and related government actions.
During the six months ended January 31, 2021 and 2020, no vendors accounted for 10% or more of our total operating costs.
Gross Profit. We recorded a gross profit of $0 and $60,286 for the six months ended January 31, 2021, and 2020, respectively. The decrease in gross profit is mainly attributable to the the cessation of business operations arising from the COVID-19 pandemic and related government actions.
Income Tax Expense. We did not record income tax expenses for the six months ended January 31, 2021, and 2020, respectively.
Comprehensive Loss. We suffered a net loss of $132,072 and $222,747 for the six months ended January 31, 2021, and 2020, respectively. The decrease in comprehensive loss is primarily attributable to the decrease of general and administrative expenses.
Liquidity and Capital Resources
Working Capital
| January 31,2021 | July 31, 2020 | |||||||
| Current Assets | $ | 542 | $ | 544 | ||||
| Current Liabilities | (2,405,907 | ) | (2,274,336 | ) | ||||
| Working Capital Deficit | $ | (2,405,365 | ) | $ | (2,273,792 | ) | ||
We had current assets of $524 consisting solely of cash and cash equivalents as of January 31, 2021. Our current liabilities of $2,405,907 consisted of $1,300,920 of amount due to related parties, $995,891 of other payables and accrued liabilities, $87,874 of accounts payable and $21,222 of current tax liabilities.
As of July 31, 2020, we had current assets of $544 and current liabilities of $2,274,336. Our current assets consisted solely of cash and cash equivalents. Our current liabilities consisted of $1,236,274 of amount due to related parties, $933,410 of other payables and accrued liabilities, $83,458 of accounts payable and $21,194 of current tax liabilities.
Cash Flows
| Six Months Ended | Six Months Ended | |||||||
| January 31, 2021 | January 31, 2020 | |||||||
| Net Cash (Used in) / Provided by Operating Activities | $ | – | $ | (428 | ) | |||
| Net Cash Provided by Investing Activities | $ | – | $ | 73 | ||||
| Net Cash Provided by Financing Activities | $ | – | $ | – | ||||
Cash Flow from Operating Activities
There was no net cash used in or provided by operating activities during the six months ended January 31, 2021.
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During the six months ended January 31, 2020, net cash used in operating activities was $428. Net cash used in operating activities during the six months ended January 31, 2020 consisted primarily of a net loss of $201,058, a decrease in account payables of $15,596, a decrease in other payables and accrued liabilities of $44,367, and gain on disposal of PPE $45, offset by an increase in account receivables of $1,289, an increase in other receivables, deposits and prepayments of $29,976, an increase in amount due to related parties of $214,142, unrealized exchange loss of $3,453, and depreciation of plant and equipment of $ 11,778.
Cash Flow from Investing Activities
During the six months ended January 31, 2021, investing activities did not provide nor use any net cash.
During the six months ended January 31, 2020, there was net cash generated from investing activities of $73 consisted of sales proceeds from disposal of property, plant and equipment of $73.
Cash Flow from Financing Activities
During the six months ended January 31, 2021, and 2020, financing activities did not provide nor use any net cash.
Financing Requirements
During the twelve-month period following the date of this quarterly report, we anticipate that we will not generate sufficient operating revenue. Accordingly, we will be required to obtain additional financing in order to pursue our plan of operations during and beyond the next twelve months. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock or shareholder loans. However, there is no assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our business plan should we decide to proceed.
We anticipate continuing to rely on equity sales of our common shares and advances from our executive officers and directors in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our business operations.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have not identified any additional critical accounting policies and judgments. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in note 2 to our financial statements. Although we believe that our estimates, assumptions and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions.
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Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
ITEM 3 Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 4 Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures, subject to limitations as noted below, as of January 31, 2021, and during the period prior to and including the date of this report, were effective to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Inherent Limitations
Because of its inherent limitations, our disclosure controls and procedures may not prevent or detect misstatements. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, 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 and procedures may deteriorate.
Changes in Internal Control over Financial Reporting
Our annual report on Form 10-K reported that our internal control over financial reporting was effective as of July 31, 2020. Subject to the foregoing disclosures in this Item 4, there were no changes in our internal control over financial reporting that occurred during our fiscal quarter ended January 31, 2021, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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On November 12, 2018, MIG Mobile Tech Berhad, a subsidiary of the Company, filed a claim against Digiland Private Limited (“Digiland”) for breach of contract and misrepresentation arising from, among other things, Digiland’s failure to perform under its supplier contract with the Company. In its suit, MIG Mobile Tech Berhad is seeking a return of funds previously paid to Digiland in the amount of S$800,000 Singaporean Dollars (approximately US $584,000) together with a claim for damages to be assessed by the Singapore Court. Within the same suit, Digiland has filed a counterclaim against MIG Mobile Tech Berhad for the balance of the payment due to it under contract in the sum of S$800,000, together with a claim for damages to be assessed by the Singapore Court.
Prior to the filing of the its claims against Digiland, the Company recognized the amount of $596,912 in receivable, deposits and prepayments. The amount is being recognized as deposit because the development of the application-based software has not been materialized to-date. Subsequent to the filing of its claims, the Company has recognized a full impairment in the amount of $596,612.
As the COVID-19 pandemic had seriously affected the economy and business environment worldwide, in view of the uncertainty on the recovery of the refund of deposit paid to Digiland and the costs of prolonging the legal proceedings in light of the Company’s limited resources, the Company discontinued its proceedings on April 17, 2020.
On November 5, 2020, the Singapore Court awarded a judgment in favor of Digiland, and as a result MIG Mobile Tech Berhad was ordered to pay:
a) The Judgment Sum of S$800,000
b) Interest on the Judgment Sum at 5.33% per annum from 29th November 2018 to the date of payment; and
c) Legal costs of the action to be taxed if not agreed.
Interest on the Judgment Sum calculated up to February 16, 2021 is S$94,507.38. Digiland further claimed legal cost together with disbursement in the sum of S$79,616.88. The total liabilities are estimated to be at S$974,124.26 and was accrued in the financial statement for the period ended January 31, 2021.
Other than the item set forth in Note 6 Contingent Liability of Notes to our Condensed Financial Statements, we are not a party to any legal or administrative proceedings that we believe, individually or in the aggregate, would be likely to have a material adverse effect on our financial condition or results of operations.
None.
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds
None.
ITEM 3 Defaults upon Senior Securities
None.
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ITEM 4 Mine Safety Disclosures
Not applicable.
None.
____________________
| Notes: | |
| (1) | Incorporated by reference from Exhibit 1 of our Definitive Information Statement on Schedule 14C filed with the Securities and Exchange Commission on October 18, 2017. |
| (2) | Incorporated by reference from our Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on October 1, 2007. |
| (3) | Incorporated by reference from our Annual Report on Form 10-K filed with the Securities and Exchange Commission on October 29, 2018. |
| (4) | Incorporated by reference from our Annual Report on Form 10-K filed with the Securities and Exchange Commission on October 29, 2019. |
| (5) | Incorporated by reference from our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 11, 2018. |
| (6) | Incorporated by reference from our Annual Report on Form 10-K filed with the Securities and Exchange Commission on October 29, 2008. |
| (7) | Incorporated by reference from our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 22, 2017. |
*Filed Herewith.
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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.
| WECONNECT TECH INTERNATIONAL, INC. | ||
| By: | /s/ Shiong Han Wee | |
| Shiong Han Wee | ||
| Chief Executive Officer and Chief Financial Officer | ||
| Date: June 14, 2021 | ||
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