WEWARDS, INC. (Form: 10-Q, Received: 01/14/2021 16:35:50)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarter ended November 30, 2020

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

Commission file number: 000-55957

WEWARDS, INC.

(Exact name of registrant as specified in its Charter)


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

2960 West Sahara Avenue

Las Vegas, NV

89102

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: 702-944-5599

Securities registered pursuant to Section 12(b) of the Act:


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

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 þ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ 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 ¨

Non-accelerated filer þ

Emerging growth company ¨

Accelerated filer ¨

Smaller reporting company þ

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 þ

As of January 11, 2021, the registrant had 107,483,450 shares of common stock issued and outstanding.

TABLE OF CONTENTS


		Page
		No.
PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1
	Condensed Balance Sheets as of November 30, 2020 (Unaudited) and May 31, 2020	1
	Condensed Statements of Operations for the Three and Six Months Ended November 30, 2020 and 2019 (Unaudited)	2
	Condensed Statement of Changes in Stockholders’ Equity for the Three and Six Months Ended November 30, 2020 and 2019 (Unaudited)	3
	Condensed Statements of Cash Flows for the Six Months Ended November 30, 2020 and 2019 (Unaudited)	5
	Notes to the Condensed Financial Statements (Unaudited)	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21
ITEM 4.	CONTROLS AND PROCEDURES	21
PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	22
ITEM 1A.	RISK FACTORS	22
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	22
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	22
ITEM 4.	MINE SAFETY DISCLOSURES	22
ITEM 5.	OTHER INFORMATION	22
ITEM 6.	EXHIBITS	22
	SIGNATURES	24

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


WEWARDS, INC.
CONDENSED BALANCE SHEETS

	November 30,			May 31,
	2020			2020
	(Unaudited)
ASSETS

Current assets:
Cash	$	3,947,456		$	4,017,107
Prepaid expense		2,349			—
Total current assets		3,949,805			4,017,107

Right-of-use asset		369,519			443,014

Total assets	$	4,319,324		$	4,460,121


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable	$	15,100		$	325
Accounts payable, related party		17,620			15,006
Accrued interest, related parties		1,682,686			1,419,467
Deferred revenues, related party		30,835			5,834
Current maturities of operating lease obligation, related party		156,079			149,979
Total current liabilities		1,902,320			1,590,611

Long term liabilities:
Operating lease obligation, related party		213,440			293,035
Convertible notes payable, related party		10,500,000			10,500,000

Total liabilities		12,615,760			12,383,646

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		(13,565,451	)		(13,192,540	)
Total stockholders' equity (deficit)		(8,296,436	)		(7,923,525	)

Total liabilities and stockholders' equity (deficit)	$	4,319,324		$	4,460,121

See accompanying notes to financial statements.


WEWARDS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	November 30,						November 30,
	2020			2019			2020			2019

Revenue, related party	$	22,501		$	—		$	34,999		$	—

Operating expenses:
General and administrative		585			918			4,493			2,946
Rent expense		45,000			45,000			90,000			90,000
Professional fees		24,639			27,400			64,384			217,075
Total operating expenses		70,224			73,318			158,877			310,021

Operating loss		(47,723	)		(73,318	)		(123,878	)		(310,021	)

Other income (expense):
Interest expense, related party		(130,890	)		(133,288	)		(263,219	)		(268,015	)
Interest income		6,361			20,091			14,186			41,845
Total other income (expense)		(124,529	)		(113,197	)		(249,033	)		(226,170	)

Net loss	$	(172,252	)	$	(186,515	)	$	(372,911	)	$	(536,191	)


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

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

See accompanying notes to financial statements.


WEWARDS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)

	For the Three Months Ended November 30, 2019
									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity

Balance, August 31, 2019		—	$	—		107,483,450	$	107,483	$	5,083,348	$	(12,644,835	)	$	(7,454,004	)

Net loss for the three months ended November 30, 2019		—		—		—		—		—		(186,515	)		(186,515	)

Balance, November 30, 2019		—	$	—		107,483,450	$	107,483	$	5,083,348	$	(12,831,350	)	$	(7,640,519	)


	For the Three Months Ended November 30, 2020
								Additional					Total
	Preferred Stock			Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount	Shares		Amount		Capital		Deficit			Equity

Balance, August 31, 2020	—	$	—	107,483,450	$	107,483	$	5,161,532	$	(13,393,199	)	$	(8,124,184	)

Net loss for the three months ended November 30, 2020	—		—	—		—		—		(172,252	)		(172,252	)

Balance, November 30, 2020	—	$	—	107,483,450	$	107,483	$	5,161,532	$	(13,565,451	)	$	(8,296,436	)

See accompanying notes to financial statements.


WEWARDS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)

	For the Six Months Ended November 30, 2019
								Additional					Total
	Preferred Stock			Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount	Shares		Amount		Capital		Deficit			Equity

Balance, May 31, 2019	—	$	—	107,483,450	$	107,483	$	5,083,348	$	(12,295,159	)	$	(7,104,328	)

Net loss for the six months ended November 30, 2019	—		—	—		—		—		(536,191	)		(536,191	)

Balance, November 30, 2019	—	$	—	107,483,450	$	107,483	$	5,083,348	$	(12,831,350	)	$	(7,640,519	)


	For the Six Months Ended November 30, 2020
								Additional					Total
	Preferred Stock			Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount	Shares		Amount		Capital		Deficit			Equity

Balance, May 31, 2020	—	$	—	107,483,450	$	107,483	$	5,161,532	$	(13,192,540	)	$	(7,923,525	)

Net loss for the six months ended November 30, 2020	—		—	—		—		—		(372,911	)		(372,911	)

Balance, November 30, 2020	—	$	—	107,483,450	$	107,483	$	5,161,532	$	(13,565,451	)	$	(8,296,436	)

See accompanying notes to financial statements.


WEWARDS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

	For the Six Months Ended
	November 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(372,911	)	$	(536,191	)
Adjustments to reconcile net loss to net cash used in operating activities:
Decrease (increase) in assets:
Prepaid expenses		(2,349	)		25,000
Right-of-use asset		73,495			—
Increase (decrease) in liabilities:
Accounts payable		14,775			(229	)
Accounts payable, related party		2,614			—
Accrued interest, related party		263,219			268,015
Deferred revenue, related party		25,001			—
Operating lease obligation, related party		(73,495	)		—
Net cash used in operating activities		(69,651	)		(243,405	)

NET CHANGE IN CASH		(69,651	)		(243,405	)
CASH AT BEGINNING OF PERIOD		4,017,107			4,508,397

CASH AT END OF PERIOD	$	3,947,456		$	4,264,992

SUPPLEMENTAL INFORMATION:
Interest paid	$	—		$	—
Income taxes paid	$	—		$	—

See accompanying notes to financial statements.

WEWARDS, INC.

NOTES TO THE FINANCIAL STATEMENTS

November 30, 2020

(Unaudited)

NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization

Wewards, Inc. (“Wewards” or “the Company”) was incorporated in the state of 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 with Future Continental Limited (“Purchaser”), pursuant to which, on May 11, 2015, the Seller sold 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 at such time, for $340,000. In October 2015, the Purchaser sold the 6,000,000 Shares to Mr. Lei Pei, an affiliate of the Purchaser, in consideration of Mr. Pei’s agreement to serve as our director and CEO. On January 8, 2018, by consent of Lei Pei as the Company’s principal shareholder, the Company changed its name to Wewards, Inc. The Company’s corporate office is located in Las Vegas, Nevada.

The Company has developed and is the owner of a web-based platform accessible by mobile apps (the “Platform”) that will enable consumers to purchase goods from merchants and earn rebates payable in the form of Bitcoin. The Platform provides an innovative Bitcoin rewards ecosystem. It is designed to transform traditional concepts of commerce into a cooperative society where both merchants and consumers are collaborating, utilizing Bitcoin to reward consumers. The ecosystem provides consumers with rewards each time they complete a challenge defined by a merchant. This is intended to make the ecommerce process beneficial to all market participants, and to help distribute commercial wealth among and between the merchants and consumers. The Company intends to generate revenue by licensing “white-label” versions of the Platform to third parties. However, to date, no such license agreement has been entered into, and the Company has not generated any revenues.

Basis of Presentation

The unaudited condensed financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Condensed Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Financial Statements, and the accompanying notes, are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and do not contain certain information included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2020. The interim Condensed Financial Statements should be read in conjunction with that Annual Report on Form 10-K. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year.

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.

Concentrations of Credit Risk

The Company maintains our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 under current regulations. The Company had approximately $3,512,946 and $3,768,042 in excess of FDIC insured limits at November 30, 2020 and May 31, 2020, respectively. The Company has not experienced any losses in such accounts.

Reclassifications

In the current period, the Company separately classified professional fees from general and administrative expenses in the Condensed Statement of Operations. For comparative purposes, amounts in the prior period have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported results of operations.

Fair Value of Financial Instruments

Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short-term nature of the instruments. The Company had no items that required fair value measurement on a recurring basis.

WEWARDS, INC.

NOTES TO THE FINANCIAL STATEMENTS

November 30, 2020

(Unaudited)

Software Development Costs

The Company expenses software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external users, before technological feasibility is reached. Technological feasibility is typically reached shortly before the release of such products. Software development costs also include costs to develop software to be used solely to meet internal needs and cloud-based applications used to deliver our services. The Company capitalizes development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed, and the software will be used to perform the function intended. Capitalization ends, and amortization begins when the product is available for general release to customers.

Impairment of Intangible Assets

The Company reviews intangible assets for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. The Company measures recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows that the assets or the asset group are expected to generate. If the carrying value of the assets are not recoverable, the impairment recognized is measured as the amount by which the carrying value of the asset exceeds its fair value.

Convertible Instruments

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. We analyzed the derivative financial instruments (the Convertible Notes), in accordance with ASC 815. The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. There is a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions. The Company utilized multinomial lattice models that value the derivative liability within the notes based on a probability weighted discounted cash flow model. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

Revenue Recognition

Effective June 1, 2019, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the licensing of our software by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

There was no impact on the Company’s financial statements from the adoption of ASC 606 for the six months ended November 30, 2020 or the year ended May 31, 2020.

We derive revenue principally from licensing our intellectual property, including our game, and related extra content and services that can be utilized by players of our game. Our product and service offerings include, but are not limited to, licensing to third parties (“software license”) to distribute and host our games and content (“Online-Hosted Service Games”).

WEWARDS, INC.

NOTES TO THE FINANCIAL STATEMENTS

November 30, 2020

(Unaudited)

We evaluate and recognize revenue by:

identifying the contract(s) with the customer;

identifying the performance obligations in the contract;

determining the transaction price;

allocating the transaction price to performance obligations in the contract; and

recognizing revenue as each performance obligation is satisfied through the transfer of a promised good or service to a customer (i.e., “transfer of control”).

Online-Hosted Service Games. Sales of our Online-Hosted Service Games are determined to have one distinct performance obligation: the online hosting. We recognize revenue from these arrangements as the service is provided through our licensing agreement(s).

Licensing Revenue

We utilize third-party licensees to distribute and host our games and content in accordance with license agreements, for which the licensees typically pay us a fixed minimum guarantee and/or sales-based royalties. These arrangements typically include multiple performance obligations, such as a time-based license of software and future update rights. We recognize as revenue a portion of the minimum guarantee when we transfer control of the license of software (generally upon commercial launch) and the remaining portion ratably over the contractual term in which we provide the licensee with future update rights. Any sales-based royalties are generally recognized as the related sales occur by the licensee.

Significant Judgments around Revenue Arrangements

Identifying performance obligations. Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, (i.e., the customer can benefit from the goods or services either on its own or together with other resources that are readily available), and are distinct in the context of the contract (i.e., it is separately identifiable from other goods or services in the contract). To the extent a contract includes multiple promises, we must apply judgment to determine whether those promises are separate and distinct performance obligations. If these criteria are not met, the promises are accounted for as a combined performance obligation.

Determining the transaction price. The transaction price is determined based on the consideration that we will be entitled to receive in exchange for transferring our goods and services to the customer. Determining the transaction price often requires judgment, based on an assessment of contractual terms and business practices. It further includes review of variable consideration such as discounts, sales returns, price protection, and rebates, which is estimated at the time of the transaction. In addition, the transaction price does not include an estimate of the variable consideration related to sales-based royalties. Sales-based royalties are recognized as the sales occur.

Allocating the transaction price. Allocating the transaction price requires that we determine an estimate of the relative stand-alone selling price for each distinct performance obligation. Determining the relative stand-alone selling price is inherently subjective, especially in situations where we do not sell the performance obligation on a stand-alone basis (which occurs in the majority of our transactions). In those situations, we determine the relative stand-alone selling price based on various observable inputs using all information that is reasonably available. Examples of observable inputs and information include: historical internal pricing data, cost plus margin analyses, third-party external pricing of similar or same products and services such as software licenses and maintenance support within the enterprise software industry. The results of our analysis resulted in a specific percentage of the transaction price being allocated to each performance obligation.

Determining the Estimated Offering Period. The offering period is the period in which we offer to provide the future update rights and/or online hosting for the game. Because the offering period is not an explicitly defined period, we must make an estimate of the offering period for the service-related performance obligations (i.e., future update rights and online hosting). Determining the Estimated Offering Period is inherently subjective and is subject to regular revision. Generally, we consider the specified contract period of our software licenses and therefore, the offering period is estimated to be over the term of the license. We recognize revenue for future update rights and online hosting performance obligations ratably on a straight-line basis over this period as there is a consistent pattern of delivery for these performance obligations.

WEWARDS, INC.

NOTES TO THE FINANCIAL STATEMENTS

November 30, 2020

(Unaudited)

Stock-Based Compensation

The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 2018-07 (ASC 2018-07). All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty's performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance.

Basic and Diluted Loss Per Share

Basic earnings per share (“EPS”) are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants and restricted stock. The number of potential common shares outstanding relating to stock options, warrants and restricted stock is computed using the treasury stock method. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the 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 in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered through future operations.

Uncertain Tax Positions

In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Various taxing authorities may periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize assets and liabilities for most leases. ASU 2016-02 is effective for public entity financial statements for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. ASU 2016-02 was further clarified and amended within ASU 2018-01, ASU 2018-10, ASU 2018-11 and ASU 2018-20 which included provisions that would provide us with the option to adopt the provisions of the new guidance using a modified retrospective transition approach, without adjusting the comparative periods presented. We adopted the new standard on May 31, 2019 and used the effective date as our date of initial application under the modified retrospective approach. We elected the short-term lease recognition exemption for all of our leases that qualify. This means, for those leases we will not recognize right-of-use (RoU) assets or lease liabilities. The implementation of this new standard did not have a material impact on our financial statements, other than the presentation of a right of use asset and an operating lease obligation liability on the balance sheet in an equal amount.

No other new accounting pronouncements, issued or effective during the period ended November 30, 2020, have had or are expected to have a significant impact on the Company’s financial statements.

WEWARDS, INC.

NOTES TO THE FINANCIAL STATEMENTS

November 30, 2020

(Unaudited)

NOTE 2 – RELATED PARTIES

Accounts Payable, Related Party

The Company owed United Power, Inc. (“United Power”) $15,006 for unpaid rent and utilities as of May 31, 2020. As disclosed in Note 6, below, prior to September 1, 2020, the Company subleased office space from United 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. The building is owned by Future Property Limited.

As of November 30, 2020, the Company owed Sandbx Corp. (“Sandbx”), $17,620, which amount was subsequently refunded in December of 2020. Sandbx is a related party to the Company as it is owned by the Chief Operating Officer of related party entities, United Power and FL Galaxy.

Revenues, Related Party

We began generating revenues in the fourth quarter of our fiscal year ended May 31, 2020 from licensing Megopoly and related IP to Sandbx. Pursuant to our license agreement with Sandbx, we received a $50,000 initial setup fee, paid in five equal monthly installments from May 1, 2020 through September 1, 2020. In addition, we are entitled to receive a monthly royalty under the license agreement equal to the greater of 10% of net revenues from the sale of in-game assets by the licensee, or $5,000, commencing upon completion of the initial setup, which was October 1, 2020. The monthly royalty for October and November was the $5,000 minimum, and the Company received the December and January minimum royalty payments in advance, resulting in deferred revenue of $30,835 as of November 30, 2020.

See also Notes 4 and 5, below, for additional related party transactions.

NOTE 3 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has certain financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs include quoted prices for similar assets and 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, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of November 30, 2020 and May 31, 2020, respectively:


	Fair Value Measurements at November 30, 2020
	Level 1		Level 2		Level 3
Assets
Cash	$	3,947,456	$	—	$	—
Total assets		3,947,456		—		—
Liabilities
Convertible notes payable, related party		—		—		10,500,000
Total liabilities		—		—		10,500,000
	$	3,947,456	$	—	$	(10,500,000	)

WEWARDS, INC.

NOTES TO THE FINANCIAL STATEMENTS

November 30, 2020

(Unaudited)


	Fair Value Measurements at May 31, 2020
	Level 1		Level 2		Level 3
Assets
Cash	$	4,017,107	$	—	$	—
Total assets		4,017,107		—		—
Liabilities
Convertible notes payable, related party		—		—		10,500,000
Total liabilities		—		—		10,500,000
	$	4,017,107	$	—	$	(10,500,000	)

There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the period ended November 30, 2020 or the year ended May 31, 2020.

NOTE 4 – INTANGIBLE ASSETS

On April 2, 2020, the Company purchased intellectual property rights (“IP”) from United Power, a Nevada corporation under common ownership with Lei Pei, the Company’s sole officer and director and majority shareholder, for cash consideration of $179,300, based on a price determined by an independent valuation. The IP consists of technology and related rights associated with the game Megopoly, an MMO (Massively Multiplayer Online Game). Because United Power is a related party, the acquisition did not result in a stepped-up basis in the IP, and the full purchase price of $179,300 was treated as an equity contribution during the year ended May 31, 2020.

NOTE 5 – CONVERTIBLE NOTES PAYABLE, RELATED PARTY

Convertible notes payable, related party consists of the following at November 30, 2020 and May 31, 2020, respectively:


	November 30,		May 31,
	2020		2020

On February 26, 2017, Sky Rover Holdings, Ltd (“Sky Rover), which is owned and 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, 2022, 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 November 30, 2020, there is $470,631 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, 2022, 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 November 30, 2020, there is $1,212,055 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

WEWARDS, INC.

NOTES TO THE FINANCIAL STATEMENTS

November 30, 2020

(Unaudited)

If Sky Rover converts the remaining $10,500,000 of principal on the Convertible Notes at the present conversion price of $0.08 per share into 131,250,000 shares, those shares, plus the approximate 101,353,450 shares Mr. Pei currently owns, would give him beneficial ownership of 232,603,450 shares of the Company’s 238,733,450 then-issued and outstanding shares (assuming that no other shares are issued prior to conversion), which would approximate 97.4% of the then-outstanding shares.

The Company recognized interest expense for the six months ended November 30, 2020 and 2019, respectively, as follows:


	November 30,		November 30,
	2020		2019

Interest on due to related parties	$	—	$	4,796
Interest on convertible notes, related party		263,219		263,219
Total interest expense	$	263,219	$	268,015

NOTE 6 – COMMITMENTS AND CONTINGENCIES - LEASE

On March 1, 2018, the Company began occupying its current corporate headquarters at 2960 West Sahara Avenue, Las Vegas, NV 89102, under a five-year sublease with United Power, an affiliate of the Company by reason of common ownership with Lei Pei. The sublease provided for base monthly rent of $15,000, plus increases 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 Property Limited entered into a lease with United Power, and the Company then sublet the space from United Power. On September 1, 2020, the Company terminated its sublease agreement with United Power and entered into a new lease agreement with the owner of the building, Future Property Limited, under substantially the same terms as the sublease agreement. The Company is occupying the space for executive and administrative offices. Rent expense for the six months ended November 30, 2020 and 2019 was $90,000. The Company has accounted for the lease under ASC 842, as follows:

The components of lease expense were as follows:


	For the Six
	Months Ended
	November 30,
	2020
Operating lease cost:
Amortization of assets	$	73,495
Interest on lease liabilities		16,505
Total operating lease cost	$	90,000

Supplemental balance sheet information related to leases was as follows:


	November 30,
	2020
Operating lease:
Operating lease assets	$	369,519

Current portion of operating lease obligation	$	156,079
Noncurrent operating lease obligation		213,440
Total operating lease obligation	$	369,519

Weighted average remaining lease term:
Operating leases		2.25 years

Weighted average discount rate:
Operating lease		8.00	%

WEWARDS, INC.

NOTES TO THE FINANCIAL STATEMENTS

November 30, 2020

(Unaudited)

Supplemental cash flow and other information related to operating leases was as follows:


	For the Six
	Months Ended
	November 30,
	2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	90,000

Future minimum annual lease payments required under the operating lease and the present value of the net minimum lease payments are as follows at November 30, 2020:


For the Fiscal Year	Minimum Lease
Ended May 31:	Commitments
2021*	$	90,000
2022		180,000
2023		135,000
Total payments	$	405,000
Amount representing interest	$	(35,481	)
Lease obligation, net		369,519
Less current portion		(156,079	)
Lease obligation – long term	$	213,440

* Liability pertains to the remaining six-month period from December 1, 2020 through May 31, 2021.

NOTE 7 – CHANGES IN STOCKHOLDERS’ EQUITY

Preferred Stock

The Company has authorized preferred stock of 50,000,000 shares, par value $0.001 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.

Common Stock

The Company has 500,000,000 authorized shares of $0.001 par value Common Stock, and had 107,483,450 shares issued and outstanding as of November 30, 2020.

NOTE 8 - INCOME TAX

The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.

For the six months ended November 30, 2020 and the year ended May 31, 2020, the Company incurred a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At November 30, 2020, the Company had approximately $5,900,000 of federal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2034.

Based on the available objective evidence, including the Company’s history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at both November 30, 2020 and May 31, 2020.

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.

WEWARDS, INC.

NOTES TO THE FINANCIAL STATEMENTS

November 30, 2020

(Unaudited)

NOTE 9 – SUBSEQUENT EVENTS

On January 4, 2021, the Company entered into a Statement of Work with Sandbx Corp., a related party, as disclosed in Note 2, pursuant to which Sandbx has been engaged to provide software development and related services to further develop and improve Megopoly, the Company’s online MMO Game, at a rate of $50 per hour of service. Upon execution of the Statement of Work, the Company paid Sandbox $168,500 for services to be provided in January, 2021.

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

The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended May 31, 2020 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Annual Report on Form 10-K for the year ended May 31, 2020 in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.

Overview

Wewards, Inc. (“Wewards” or the “Company”) was incorporated in Nevada on September 10, 2013, as Betafox Corp. On January 8, 2018, we changed our name to Wewards, Inc.

We have developed and are the owner of a web-based platform accessible by mobile apps (the “Platform”) that will enable consumers to purchase goods from merchants and earn rebates payable in the form of Bitcoin. The Platform provides an innovative Bitcoin rewards ecosystem. It is designed to transform traditional concepts of commerce into a cooperative society where both merchants and consumers are collaborating, utilizing Bitcoin to reward consumers. The ecosystem will provide consumers with rewards each time they complete a challenge defined by a merchant. This is intended to make the ecommerce process beneficial to all market participants, and to help distribute commercial wealth among and between the merchants and consumers. We intend to generate revenue by licensing “white-label” versions of the Platform to third parties. However, to date, no such license agreement has been entered into, and we have not generated any revenues from the Platform.

On April 2, 2020, we purchased intellectual property rights (“IP”) from United Power, a Nevada corporation under common ownership with Lei Pei, our sole officer and director and majority shareholder, for cash consideration of $179,300, based on a price determined by an independent valuation.

The IP consists of technology and related rights associated with the game Megopoly, an MMO (Massively Multiplayer Online Game). Megopoly is an MMO board game where players are able to earn fractions of Bitcoins (satoshi) through buying, selling, and managing virtual real estate properties using in-game currency (Megopoly Coins). The game is similar in some respects to Monopoly.

The game allows players around the world to interact with each other online. Players travel (move) through different parts of a city, earning profit by investing in properties, charging rent, acquiring bonus assets, and selling their properties to other players for in-game currency. A player is able to progress to higher levels of “cities” at any time.

The player’s goal in Megopoly is to earn Megopoly Coins by investing in properties and collecting rent from other players. Players can keep playing the game using their Megopoly Coins for the opportunity to earn more coins, or they can exchange those coins for Bitcoins based on real-time market exchange rates.

Megopoly is playable at any time through a web browser on a PC, tablet or smart phone, in both Chinese and English. The game has been designed for players of all skill levels.

We began generating revenues in the fourth quarter of our fiscal year ended May 31, 2020 from licensing Megopoly and related IP to Sandbx. Pursuant to our license agreement with Sandbx, we received a $50,000 initial setup fee, paid in five equal monthly installments from May 1, 2020 through September 1, 2020. In addition, we are entitled to receive a monthly royalty under the license agreement equal to the greater of 10% of net revenues from the sale of in-game assets by the licensee, or $5,000, commencing upon completion of the initial setup, which was October 1, 2021. The initial term of the licensing agreement is through April 19, 2021, with automatic monthly renewals, unless terminated by either party via sixty (60) days written notice of non-renewal.

Results of Operations for the Three Months Ended November 30, 2020 and 2019:

The following table summarizes selected items from the statement of operations for the three months ended November 30, 2020 and 2019.


	Three Months Ended
	November 30,			November 30,			Increase /
	2020			2019			(Decrease)
Revenue, related party	$	22,501		$	—		$	22,501

Operating expenses:
General and administrative		585			918			(333	)
Rent expense		45,000			45,000			—
Professional fees		24,639			27,400			(2,761	)
Total operating expenses:		70,224			73,318			(3,094	)

Operating loss		(47,723	)		(73,318	)		(25,595	)

Total other income (expense)		(124,529	)		(113,197	)		11,332

Net loss	$	(172,252	)	$	(186,515	)	$	(14,263	)

Revenue, Related Party

We began to generate revenues from the licensing of our Megopoly game platform to a company owned by United Power’s Chief Operating Officer during the fourth fiscal quarter of 2020. Such revenues were $22,501 for the three months ended November 30, 2020.

General and Administrative Expenses

General and administrative expenses for the three months ended November 30, 2020 were $585, compared to $918 during the three months ended November 30, 2019, a decrease of $333, or 36%. The expenses consisted primarily of office, travel, compliance and business development expenses. General and administrative expense decreased during the current period due to decreased office expenses.

Rent Expense

Rent expense was $45,000 during the three months ended November 30, 2020 and 2019.

Professional Fees

Professional fees for the three months ended November 30, 2020 were $24,639, compared to $27,400 during the three months ended November 30, 2019, a decrease of $2,761, or 10%. Professional fees decreased primarily due to cost savings related to transitioning to new compliance team members and reductions in fees paid to software developers during the current period.

Operating Loss

Our operating loss for the three months ended November 30, 2020 was $47,723, compared to $73,318 during the three months ended November 30, 2019, a decrease of $25,595, or 35%. Our operating loss decreased primarily due to cost savings related to reductions in business development fees, transitioning to new compliance team members and reductions in fees paid to software developers during the current period.

Other Income (Expense)

Other expense, on a net basis, for the three months ended November 30, 2020 was $124,529, compared to other expense, on a net basis, of $113,197 during the three months ended November 30, 2019, an increase of $11,332, or 10%. Other expense consisted of $130,890 of interest expense on related party loans, as offset by $6,361 of interest income for the three months ended November 30, 2020. Other expense consisted of $133,288 of interest expense on related party loans, as offset by $20,091 of interest income for the three months ended November 30, 2019. Other expense, on a net basis, increased due to diminished interest income on cash balances.

Net Loss

Net loss for the three months ended November 30, 2020 was $172,252, compared to $186,515 during the three months ended November 30, 2019, a decrease of $14,263, or 8%. The decreased net loss was due to cost savings related to reductions in business development fees, transitioning to new compliance team members and reductions in fees paid to software developers during the current period.

Results of Operations for the Six Months Ended November 30, 2020 and 2019:

The following table summarizes selected items from the statement of operations for the six months ended November 30, 2020 and 2019.


	Six Months Ended
	November 30,			November 30,			Increase /
	2020			2019			(Decrease)
Revenue, related party	$	34,999		$	—		$	34,999

Operating expenses:
General and administrative		4,493			2,946			1,547
Rent expense		90,000			90,000			—
Professional fees		64,384			217,075			(152,691	)
Total operating expenses:		158,877			310,021			(151,144	)

Operating loss		(123,878	)		(310,021	)		(186,143	)

Total other income (expense)		(249,033	)		(226,170	)		22,863

Net loss	$	(372,911	)	$	(536,191	)	$	(163,280	)

Revenue, Related Party

General and Administrative Expenses

General and administrative expenses for the six months ended November 30, 2020 were $4,493, compared to $2,946 during the six months ended November 30, 2019, an increase of $1,547, or 53%. The expenses consisted primarily of office, travel, compliance and business development expenses. General and administrative expense increased during the current period due to increased business development expenses.

Rent Expense

Rent expense was $90,000 during the six months ended November 30, 2020 and 2019.

Professional Fees

Professional fees for the six months ended November 30, 2020 were $64,384, compared to $217,075 during the six months ended November 30, 2019, a decrease of $152,691, or 70%. Professional fees decreased primarily due to cost savings related to transitioning to new compliance team members and reductions in fees paid to software developers during the current period.

Operating Loss

Our operating loss for the six months ended November 30, 2020 was $123,878, compared to $310,021 during the six months ended November 30, 2019, a decrease of $186,143, or 60%. Our operating loss decreased primarily due to cost savings related to reductions in business development fees, transitioning to new compliance team members and reductions in fees paid to software developers during the current period.

Other Income (Expense)

Other expense, on a net basis, for the six months ended November 30, 2020 was $249,033, compared to other expense, on a net basis, of $226,170 during the six months ended November 30, 2019, an increase of $22,863, or 10%. Other expense consisted of $263,219 of interest expense on related party loans, as offset by $14,186 of interest income for the six months ended November 30, 2020. Other expense consisted of $268,015 of interest expense on related party loans, as offset by $41,845 of interest income for the six months ended November 30, 2019. Other expense, on a net basis, increased due to diminished interest income on cash balances.

Net Loss

Net loss for the six months ended November 30, 2020 was $372,911, compared to $536,191 during the six months ended November 30, 2019, a decrease of $163,280, or 30%. The decreased net loss was due to cost savings related to reductions in business development fees, transitioning to new compliance team members and reductions in fees paid to software developers during the current period.

Liquidity and Capital Resources

The following is a summary of the Company’s cash flows used in operating, investing, and financing activities for the six-month periods ended November 30, 2020 and 2019:


	2020			2019
Operating Activities	$	(69,651	)	$	(243,405	)
Investing Activities		—			—
Financing Activities		—			—
Net Decrease in Cash	$	(69,651	)	$	(243,405	)

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. During the six months ended November 30, 2020, net cash flows used in operating activities was $69,651. For the same period ended November 30, 2019, net cash flows used in operating activities was $243,405. The decrease in cash used in operating activities is primarily attributable to our decreased net loss.

Cash Flows from Investing Activities

We did not engage in any investing activities during the six months ended November 30, 2020 and 2019.

Cash Flows from Financing Activities

We did not engage in any financing activities during the six months ended November 30, 2020 and 2019.

Satisfaction of our Cash Obligations for the Next 12 Months

As of November 30, 2020, our balance of cash on hand was $3,947,456. We believe we currently have sufficient funds to fund our operations at their current levels for the next twelve months. Since our CEO and majority shareholder, Mr. Pei, acquired control over the Company in May 2015, we have been wholly dependent upon Mr. Pei and his affiliated companies, to provide financing to us when needed, generally in the form of convertible loans. There can be no assurance that Mr. Pei will continue to make additional financing available to us if and when needed.

We will need additional funds to repay our related party debts should they not be converted to equity. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing (whether from our affiliates or third parties), the terms of such financing may contain undue restrictions on our operations and result in substantial dilution for our stockholders. We cannot guarantee that we will ever become profitable. Even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may not be able to sustain or increase profitability, and our failure to do so would adversely affect our business, including our ability to raise additional funds.

Material Commitments

As of the date of this Quarterly Report, we do not have any material commitments.

Purchase of Significant Equipment

We do not have any agreements at this time, to purchase any significant equipment during the next twelve months.

Off-Balance Sheet Arrangements

As of the date of this Quarterly Report, we do not have any 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 are material to investors.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management’s subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.

While our significant accounting policies are more fully described in notes to our consolidated financial statements appearing elsewhere in this Form 10-Q, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we used in the preparation of our financial statements.

Concentrations of Credit Risk

Reclassifications

Revenue Recognition

There was no impact on the Company’s financial statements from the adoption of ASC 606 for the six months ended November 30, 2020 or the year ended May 31, 2020.

We evaluate and recognize revenue by:

identifying the contract(s) with the customer;

identifying the performance obligations in the contract;

determining the transaction price;

allocating the transaction price to performance obligations in the contract; and

recognizing revenue as each performance obligation is satisfied through the transfer of a promised good or service to a customer (i.e., “transfer of control”).

Licensing Revenue

Significant Judgments around Revenue Arrangements

Software Development Costs

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, who is one and the same, evaluated the effectiveness of our disclosure controls and procedures as of November 30, 2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of November 30, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended May 31, 2020 under “Evaluation of Disclosure Controls and Procedures”.

Changes in Internal Control over Financial Reporting

There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that occurred during the period of our evaluation or subsequent to the date we carried out our evaluation which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any system of controls and procedures will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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.

ITEM 1A. RISK FACTORS

As a “smaller reporting company”, the Company is not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are included as part of this report by reference:


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
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*		XBRL Instance Document


101.SCH*		XBRL Schema Document
101.CAL*		XBRL Calculation Linkbase Document
101.DEF*		XBRL Definition Linkbase Document
101.LAB*		XBRL Labels Linkbase Document
101.PRE*		XBRL Presentation Linkbase Document

* Filed herewith.

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.


	WEWARDS, INC.

Date: January 14, 2021	By:	/s/ Lei Pei
		Lei Pei
		President, Chief Executive Officer and Chief Financial Officer

EXHIBIT 10.4

[WEWA_EX10Z4003.GIF]

Statement of Work

The following Statement of Work (SOW) to be agreed by the parties under this Agreement in respect of any Services requested by the Client where applicable and agreed by the parties:

Sandbx Corp.

and

Wewards Inc.

This SOW is entered into between Wewards Inc. (hereafter Client) and Sandbx Corp. (hereafter Sandbx) on January 4, 2021. The Terms and Conditions below apply to this Statement of Work in full and any modifications to these terms and conditions should be included in this Statement of Work.

Sandbx Corp. shall supply professional services in accordance with the Work Breakdown Estimate (Sandbx Services).

Prepared for: Lei Pei, Wewards Inc.

Prepared by: Sandbx Corp.

[WEWA_EX10Z4004.GIF]

Statement of Work

Project Summary

Wewards Inc. is looking to engage Sandbx Corp in development and improvements of a web based MMO game.

Work Breakdown

Sandbx Corp will provide the services of Product Manager, Business Analyst, Front End, Back End, Quality Assurance and Design professionals at an hourly rate of $50 / hr.

Payment Instructions

We accept Wire, ACH or Credit Card payment. A 3% fee is added to all Credit Card payments.

Email for financial / accounting inquiries: finance@sandbx.co

ACH / Wire Instructions:

Wire / ACH Instructions:

Routing Number: 031101169

Account number : 875101167778

SANDBX CORP, 10 Grace Ave, Ste 4, Great Neck, NY 11021

Bank Name: Bancorp

Bank Address: 401 Warren St Suite 300 Redwood City, CA 94063

CC Payments:

Please email finance@sandbx.co if you would like to pay via a CC.

Signatures & Invoice Information

/S/ Uri Soroka

/S/ Lei Pei

_________________

______________________

By: Uri Soroka

By: Lei Pei

Sandbx Corp.

Wewards, Inc.

CEO

[WEWA_EX10Z4004.GIF]

Terms and Conditions

1. SERVICES

1.1. Sandbx will provide various services to Client including, but not limited to oustaffing, project management, business analysis, software development, quality assurance engineering, graphic, user interface, and user experience design (“Sandbx Services”).

1.2. The term Sandbx Services may be further defined in addendums to this Agreement or the Statement of Work (“SOW”) more specifically detailing services on a project basis. Upon receipt of written approval from Client in the form of email or other written modes of communication, Sandbx may provide additional services that are not included in this SOW. Client hereby agrees that such communication from authorized client representatives will constitute approval of such additional services.

1.3. Sandbx and third-party subcontractors providing Sandbx Services are not engaged in the practice of law. Sandbx does not provide legal advice or representation. To achieve the highest quality and efficiency, Client and/or its counsel is responsible for reviewing Sandbx Services deliverables and work product and providing feedback on a regular basis.

2. PAYMENT TERMS

2.1. Price. Client will pay Sandbx in accordance with the price terms for the Sandbx Services listed on an addendum to this Agreement, Statement of Work or invoice. If additional services are requested outside the scope of the addendum or Statement of Work, Sandbx standard rate will apply, unless the parties agree otherwise in writing.

2.2. Taxes. Client is responsible for the payment of all applicable sales, use and/or other similar taxes (except for taxes based on Sandbx’ income or personnel costs) which may be levied or assessed in connection with this Agreement.

2.3. Payment. Invoices will be submitted according to milestone payments defined in the SOW. A Client Deposit in the amount equivalent to the estimated value of 1 month of work must be received prior to project initiation. Client will pay Sandbx within 14 days of the date of each invoice submitted for all Sandbx Services. Sandbx’ acceptance of payment of any amount less than the full amount due will not be a waiver of the remaining amount due. Sandbx may apply any overpayment on any invoice or proposal to any other amount due from Client.

Undisputed past due obligations will bear interest at the rate of 15% per annum, or the maximum rate allowed by law, whichever is less. Any interest charged or received greater than the maximum amount allowed by law will be applied to the principal obligations, or if none is owed, will be refunded to Client. If any undisputed Client payment becomes past due, Sandbx will have the right to retain possession of any Client property in Sandbx’ possession, and any Images produced by Sandbx, and Sandbx may suspend performance on any work in process, including but not limited to, availability of any hosted platforms or services until payment is made.

2.4. Commencement of Work. Sandbx will begin processing of Client work upon receipt of a signed Statement of Work (SOW) or email approval from the Client and Client Deposit.

2.5. Disputed Amounts. Client may dispute any amounts invoiced provided that the dispute is made in good faith. Any amounts disputed may be deducted from the invoice; however, a disputed amount does not relieve the Client from payment obligations for the remainder of the invoice. The remainder amount of any invoice containing a disputed amount must be paid within 30 days of the date of the invoice. The disputed amount and the reasons for disputing the amount must be submitted to Sandbx in writing within 14 calendar days of receipt of the invoice. Sandbx will work together with Client in good faith to resolve such disputes in a mutually acceptable manner. Client agrees to pay any disputed amounts within 5 business days once the dispute has been resolved.

3. SERVICE LEVEL AGREEMENT

3.1. Operation. Sandbx will use its best efforts to maintain availability of provided services, except for specific scheduled downtime periods during which Sandbx may shut down access to the Services for system upgrades, maintenance and backup procedures (“Scheduled Downtime”). Unless otherwise agreed to in writing by Sandbx and the Client, the Scheduled Downtime shall occur after three days advance notice to the Client and no more than once per month. In addition, there may be events that from time to time will services and support inaccessible for a limited amount of time due to unforeseen, unavoidable software, hardware, network, power and/or Internet outages (“Unscheduled Downtime”). Sandbx will use its best efforts to ensure that Scheduled Downtime and Unscheduled Downtime cause the availability percentage to be no less than ninety-nine and three-tenths percent (99.3%) in each calendar year.

3.2. Disaster Recovery. Where applicable, Sandbx shall (a) cooperate with Client in participating, testing and implementing a disaster recovery plan (“DRP”) as part of Client’s own business continuity plan; (b) update and test the operability of the DRP to ensure that the DRP is fully operational; (c) certify to Client at least once during every six-month period that data is being stored for Client that the DRP is fully operational; and (d) implement the DRP upon the occurrence of a disaster. In the event the applicable Services are not reinstated within the applicable Service Levels, Client may terminate this Agreement, in whole or in part, without further liability other than for payment for services already performed by Sandbx prior to a services interruption. In the event of a disaster, Sandbx shall not increase its charges under any Services Schedule under this Agreement or charge Client usage fees in addition to the charges set forth in this Agreement.

[WEWA_EX10Z4004.GIF]

3.3. Storage of Data. Upon conclusion of any Client project, and for a period of sixty (60) days after delivery to Client of all client data (the “Standard Storage Period”), Sandbx will store a copy of such client data provided to Client. After the foregoing Standard Storage Period, Sandbx may erase, write over, destroy or discontinue storage of any client data without any liability or obligation to Client.

3.4. Client Inspection. Client (or Client’s counsel) shall review completely all services, documents and/or data delivered by Sandbx (“Deliverables”) to determine whether any Deliverables or any other aspect of the Sandbx Services fail to conform to the requirements of this Agreement. Client (or Client’s counsel) must notify Sandbx of every failure to conform to the requirements of this Agreement or any addendum incorporated herein, or any other complaints about Sandbx Services within 60 days after delivery. Notice shall be by direct communication with the Sandbx project manager assigned to this matter by electronic mail or certified mail. If Sandbx receives any such notice from Client (or Client’s counsel), Sandbx will provide the services necessary to comply with the requirements of this Agreement or any addendum incorporated herein within a reasonable amount of time. If Client (or Client’s counsel) does not notify Sandbx as required above, then it will be deemed conclusive that Sandbx provided the Sandbx Services and the Deliverables as required by this Agreement or any addendum incorporated herein; that Client accepted all Deliverables; and that Client did not reject any of the Deliverables.

4. CONFIDENTIALITY

4.1. Confidential Information. "Confidential Information" shall mean any non-public information of the other Party that is designated as confidential, or that the receiving Party knew or reasonably should have known was confidential because it derives independent value from not being generally known to the public. Without limiting the generality of the foregoing, the terms and conditions of this Agreement shall be considered Client and Sandbx Confidential Information. Confidential Information shall not include any information which: (a) a Party can demonstrate was rightfully in its possession prior to the date of disclosure to it by the other Party; (b) at the time of disclosure or later, is published or becomes part of the public domain through no act or failure to act on the part of a Party; (c) a Party has developed independently without reference to any Confidential Information of the other Party; or (d) a Party can demonstrate came into its possession from a third party who had a bona fide right to make such information available.

4.2. The Party receiving Confidential Information will not at any time disclose to any person or use for its own benefit or the benefit of anyone, Confidential Information of the other Party without the prior written consent of said Party. Each Party shall limit disclosure of Confidential Information to its employees or agents who have a need to know related to the Parties' business relationship for a minimum period of 2 years.

4.3. Upon termination of a Services Schedule or this Agreement, the recipient of Confidential Information shall promptly deliver to the other Party or destroy any and all such information in its possession or under its control, and any copies made thereof which the recipient of said information may have made, except as the Parties by prior express written permission have agreed to retain.

4.4. Neither Party shall be liable for disclosure of Confidential Information if made in response to a valid order of a court or authorized agency of government; provided that, if available, five (5) days' notice first be given to the other Party so a protective order, if appropriate, may be sought by such Party. The Parties acknowledge and agree that a breach of its obligations under this Section may cause harm to the other Party for which monetary damages are not a sufficient remedy. In such event the Parties understand and agree that the non-defaulting Party shall be entitled to seek to obtain from a court of appropriate jurisdiction immediate injunctive or other equitable relief to which it may be entitled under the circumstances in addition to other remedies allowed under this Agreement and under applicable law.

5. PERSONALLY IDENTIFIABLE INFORMATION

5.1."Personally Identifiable Information,” includes any information that can be associated with or traced to any individual, including an individual’s name, address, telephone number, e-mail address, credit card information, social security number, or other similar specific factual information, regardless of the media on which such information is stored (e.g., on paper or electronically) and includes such information that is generated, collected, stored or obtained as part of this Agreement. Sandbx will comply with all applicable privacy and other laws and regulations relating to protection, collection, use, and distribution of Personally Identifiable Information, including Credit Card Company Regulations if the Services, collect, process or store credit card information.

5.2.As between Client and Sandbx, Personally Identifiable Information is the exclusive property of Client and will be deemed Client Materials under the applicable provisions of this Agreement.

5.3. Sandbx will not, without the prior written consent of an authorized representative of Client, use Personally Identifiable Information for any purpose other than to provide the Services under this Agreement. In no event may Sandbx (a) use Personally Identifiable Information to market its services or those of a third party, or (b) sell or transfer Personally Identifiable Information to third parties, or (c) otherwise provide third parties with access thereto.

5.4. Without limiting its other obligations under this Agreement, Sandbx agrees that all such information under its control will be secured from unauthorized access, use, disclosure and loss using commercially acceptable security practices and technologies.

[WEWA_EX10Z4004.GIF]

5.5. If there is a suspected or actual breach of security involving Personally Identifiable Information Sandbx will notify Client within twelve (12) hours of becoming aware of such occurrence. Sandbx shall provide Client with access to Personally Identifiable Information at any time as Client may request. Upon termination of this Agreement all Personally Identifiable Information in the possession of Sandbx will be provided to Client in a manner reasonably requested by Client and all copies will be permanently removed from all Sandbx systems, records and backups and all subsequent use of such information by Sandbx will cease.

REPRESENTATIONS, WARRANTIES & COVENANTS.

6.1. Compliance with Laws. Sandbx warrants that the Services will not violate, and Sandbx will obtain all permits required to comply with, any applicable law, rule, regulation, ordinance, order, direction and regulation (as they may be amended from time to time) of the applicable government agencies having jurisdiction over the provision and use of the Services.

6.2. Mutual Obligations. Each party represents, warrants, and covenants that: (a) it has the requisite power and authority to execute, deliver and perform its obligations under this Agreement; (b) it is in compliance with all applicable laws related to such performance, including it having obtained all necessary permits and licenses; and (c) it is authorized to deliver data and information to perform requested services.

6.3. Loss or Damage. Client assumes all risk or loss or damage related to Client’s documents or other materials provided to Sandbx, except as provided in this Agreement. Sandbx will use reasonable care when any documents or other materials are provided to Sandbx by Client or at the request or direction of Client; during the time such documents and materials are in Sandbx’ offices. Sandbx may deliver Client’s documents, other materials and client data by any commercial or employee delivery.

6.4. Client Indemnity. Client will indemnify Sandbx against all claims for damages made by any third party relating to any imaging, copying, retention or storage or possession of any Client documents or data by Sandbx on any paper, media, or other form, and/or related to Sandbx providing data to Client or to any other party at Client’s request, and Client will defend Sandbx against all such claims (using counsel approved by Sandbx and Client). Client agrees to defend, indemnify and hold harmless Sandbx, its officers, directors and employees (collectively, “Sandbx Indemnitees”) from and against any and all claims, damages, costs, expenses (including reasonable attorneys’ fees), or other liabilities of any nature incurred or asserted against Sandbx Indemnitees to the extent that such claims, damages, costs, expenses, or other liabilities are caused by (a) the negligence, fraud or misconduct of Client, its employees, agents, officers or directors; (b) any breach of warranty or (c) failure of Client to comply with the terms hereof.

6.5. Sandbx Indemnity. Sandbx agrees to defend, indemnify and hold harmless Client, its officers, directors and employees (collectively, “Client Indemnitees”) from and against any and all claims, damages, costs, expenses (including reasonable attorneys’ fees), or other liabilities of any nature incurred or asserted against Client Indemnitees to the extent that such claims, damages, costs, expenses, or other liabilities are caused by (a) the negligence, fraud or misconduct of Sandbx, its employees, agents, officers or directors; (b) any breach of warranty or (c) failure of Sandbx to comply with the terms hereof. Neither party shall be liable hereunder for any consequential or indirect loss or damage or any other special or incidental damages incurred or suffered by the other. Sandbx’s liability shall be limited in all cases to a maximum of $50,000. Sandbx will never be liable for any damage caused wholly or partially by Client’s delivery of damaged documents, data, media or other materials to Sandbx.

6.6. Limited Warranty. Sandbx shall perform the services in good faith and in a timely and professional manner. Sandbx shall exercise the same level of professional care commonly found in services business in carrying out the terms of this Agreement. THE FOREGOING LIMITED WARRANTY IS Sandbx’ SOLE WARRANTY FOR ANY SERVICES AND/OR PRODUCTS PROVIDED HEREUNDER OR ARISING OUT OF THIS AGREEMENT, AND IS IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE, ALL SUCH WARRANTIES BEING HEREBY FULLY DISCLAIMED.

OWNERSHIP OF SOFTWARE

7.1.

Sandbx assigns to Client its entire right, title and interest in perpetuity and throughout the universe on anything created or developed by Sandbx for Client under this Agreement including source code, all patents, intellectual property copyrights, trade secrets and other proprietary rights. This assignment is conditioned upon full payment of the compensation due to Sandbx under this Agreement.

7.2.

Sandbx shall not retain right or title to any of the products developed or services rendered in connection with the services. Sandbx cannot sell, transfer, publish or otherwise make the Work Product available to third parties. Any rights granted to Sandbx under this Agreement shall not affect Client's exclusive ownership of the software package. Sandbx can publish the description of the finished projects for marketing purposes and is obliged to include the reference to Client as an owner of any and all any intellectual property created during the term of this agreement.

7.3.

Sandbx leaves the right to publish the application of Client in Sandbx Portfolio without disclosing any previously information covered by an NDA signed between the Parties with the prior written consent of Client, which consent will not be unreasonably withheld.

[WEWA_EX10Z4004.GIF]

WARRANTY

8.1.

Warranty of Software Performance: Sandbx warrants that for 30 days following acceptance of the Software by Client, the Software will be free from material reproducible programming errors and defects in workmanship and materials, and will substantially conform to the Specifications when maintained and operated in accordance with Sandbx 's instructions. If material re producible programming errors are discovered during the warranty period, Sandbx shall promptly remedy them at no additional expense to Client. This warranty to Client shall be null and void if Client is in default under this Agreement or if the non-conformance is due to:

Hardware failures due to defects, power problems, environmental problems or any cause other than the Software itself;

Modification of the Software operating systems or computer hardware by any party other than Sandbx; or

Misuse, errors or negligence of Client, its employees or agents in operating the Software. Sandbx shall not be obligated to cure any defect unless Client notifies it of the existence and nature of such defect promptly upon discovery.

8.2.

Warranty of Title: Sandbx owns and has the right to license or convey to Client title to the Software and documentation covered by this Agreement. Sandbx will not grant any rights or licenses to any intellectual property or technology that would conflict with Sandbx 's obligations under this Agreement.

8.3.

Warranty against Disablement: Sandbx expressly warrants that no portion of the Software contains or will contain any protection feature designed to prevent its use. This includes, without limitation, any computer virus, worm, software lock, drop dead device, Trojan-horse routine, trap door, time bomb or any other codes or instructions that may be used to access, modify, delete, damage or disable Client's Software or computer system. Sandbx further warrants that it will not impair the operation of the Software in any way other than by order of a court of law.

INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS

9.1.

Sandbx warrants that Sandbx will not knowingly infringe on the copyright or trade secrets of any third party in performing services under this Agreement. To the extent any material used by Sandbx contains matter proprietary to a third party, Sandbx shall obtain a license from the owner permitting the use of such matter and granting Sandbx the right to sub-license its use. Sandbx will not knowingly infringe upon any existing patents of third parties in the performance of services required by this Agreement.

If any third party brings a lawsuit or proceeding against Client based upon a claim that the Software breaches the third party's patent, copyright or trade secrets rights, and it is determined that such infringement has occurred, Sandbx shall hold Client harmless against any loss, damage, expense or cost, including reasonable attorney fees, arising from the claim.

This indemnification obligation shall be effective only if:

The third party intellectual property rights involved were known to Sandbx prior to delivery of the Software

Client has made all undisputed payments required by this Agreement

Client has given prompt notice of the claim and permitted Sandbx to defend, and

The claim does not result from Client's modification of the Software.

10.

TERMINATION

10.1.

Either party may elect to terminate this Agreement by providing written notice to the other party. Termination notice is required 60 day prior to final day of notice of termination. This Agreement’s Termination Date is defined as the date that notice of termination is received by the non-terminating party. Should Client elect to terminate this Agreement, Client will still be charged and responsible for all services performed by Sandbx prior to the date of termination, in addition to, all monthly charges for services fees invoiced for the month in which the Termination Date falls. Client will not be due any pro-rata refunds or offsets for days left in the month following the Termination Date.

11.

COMMUNICATIONS

11.1.

Notices. Notices of default shall be sent by e-mail and certified mail to the parties contacts provided below. All certificates, reports, records, subordinate agreements (and their applicable amendments), notices, requests, demands and other communications under this Agreement shall be in writing and sent by e-mail and shall be deemed to have been duly given: (a) on the date of service if served personally on the party hereto to whom notice is to be given; (b) on the date of confirmed transmission if sent via facsimile to the number given below, and telephonic confirmation of transmission is obtained promptly after completion of transmission, and followed by mail delivery; (c) on the day after delivery to commercial or postal overnight carrier service; or (d) on the fifth day after mailing, if mailed to the party to whom such notice is to be given, by first class mail, registered or certified, postage prepaid and properly addressed, to the party as follows:

If to Sandbx:

Sandbx Corp

77 Water St., 8^th Floor

New York, NY 10004

If to Client:

Wewards Inc., Attn: Lei Pei

2960 W Sahara Ave, Las Vegas, NV 89102

[WEWA_EX10Z4004.GIF]

Any party hereto may change its address for the purpose of this section by giving the other party timely, written notice of its new address in the manner set forth above. Failure by either party to timely and fully deliver any documents required pursuant to this Agreement shall not constitute a waiver of their obligations hereunder.

12.

MISCELLANEOUS

12.1. 12.2.

Client Authority. The person signing this Agreement below represents that he/she is authorized to execute this Agreement on behalf of the Client.

Dispute Resolution. If a dispute arises under this Agreement, the parties agree to first try to resolve the dispute with the help of a mutually agreed-upon mediator in the following location: New York, NY. Any costs and fees other than attorney fees associated with the mediation shall be shared equally by the parties.

12.3.

Applicable Law, Venue and Jurisdiction. This Agreement shall be governed by the laws of the State of New York. Any action brought by Sandbx or Client which refers or relates to this Agreement, the Sandbx Services shall be brought in, and each party hereby consents to the jurisdiction of and venue in the courts in Southern District of New York.

12.4.

Attorneys’ Fees and Court Costs. If either party to this Agreement is forced to bring legal action to prosecute claims arising from obligations bound by this Agreement, the prevailing party in such action will have the right to recover all reasonable attorneys’ fees and court costs from the non-prevailing party.

12.5.

Relationship of the Parties. Nothing in this Agreement shall be construed as creating any agency or partnership between the parties and neither party shall have any express or implied power or authority to act on or make any representations whatsoever on behalf of the other party.

12.6.

No Rights of Third Parties. This Agreement does not create any right enforceable by any person who is not a party, except that the terms of this Agreement may be enforced by any affiliate of any Party hereto.

12.7.

Cumulative Remedies. All remedies available to either party for breach of this Agreement are cumulative and may be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed an election of such remedy to the exclusion of other remedies.

12.8.

Natural Disaster/Force Majeure. Regardless of any other provision in this Agreement, Sandbx will not be liable for any damages, for any delay or failure in performance of any part of this Agreement, or for any damage to or loss of Client documents or other materials held by Sandbx pursuant to this Agreement, to the extent that such delay, failure, damage, or loss results, wholly or partially, from causes beyond Sandbx’ control; including but not limited to: fire, flood, explosion, war, labor dispute, embargo, government requirement, civil or military authority, natural disasters, or other similar situation. If any such situation occurs, Sandbx will make reasonable efforts to give prompt notice to Client and, in the case of a delay or failure in performance, Sandbx will use commercially reasonable efforts to resume performance of the Agreement, to the extent possible, as soon as practicable after the cessation of the situation.

12.9.

Headings. The headings of the sections, subsections and paragraphs of this Agreement are inserted for convenient reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

12.10.

Amendments/Counterparts. No amendment, waiver or modifications to this Agreement shall be valid or enforceable unless in writing, and executed by the authorized representatives of Client and Sandbx. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original. Facsimile of a party’s authorized representative’s signature and electronic signatures shall be deemed to be binding upon such party, unless otherwise prohibited by law.

12.11.

Severability. If any provision of this Agreement is held to be unenforceable, the parties shall substitute for the affected provision an enforceable provision that approximates the intent and economic effect of the affected provision and the remaining provisions hereof shall be unimpaired and shall remain in full force and effect.

12.12.

Assignment. Neither Client nor Sandbx may assign, by operation of law or otherwise (including, without limitation, by means of outsourcing), this Agreement, in whole or in part, without the prior written consent, which consent will not be unreasonably withheld.

12.13.

Waiver; Remedies Non-Exclusive. No failure or delay on the part of any party in exercising any right or remedy provided in this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of or failure to exercise any such right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy provided herein or at law or in equity. Except as expressly provided herein, no remedy specified in this Agreement is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to every other right or remedy provided herein or available at law or in equity.

12.14. Amendment. This Agreement may be modified or amended only by written agreement executed by both parties.

12.15 Entire Agreement. This Agreement, together with the attached Exhibits, supersedes all prior written or oral agreements, understandings and discussions between Sandbx and Client.

[WEWA_EX10Z4004.GIF]

EXHIBIT 31.1

CERTIFICATIONS PURSUANT TO
RULE 13A-14(A) OR RULE 15D-14(A),
AS ADOPTED PURSUANT TO
RULE 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lei Pei, certify that:

I have reviewed this quarterly report on Form 10-Q of Wewards, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Lei Pei

Lei Pei

Chief Executive Officer and Chief Financial Officer

Dated: January 14, 2021

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Wewards, Inc. (the “Company”) on Form 10-Q for the period ending November 30, 2020 (the “Report”) I, Lei Pei, Chief Executive Officer and Principal Financial Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 14, 2021

/s/ Lei Pei

Name: Lei Pei

Title: Chief Executive Officer and Principal Financial Officer