Weyland Tech Announces Further Information and Tax Treatment of Its Spin-Off of the eWallet Business
New York – (NewMediaWire) – November 30, 2018 – Weyland Tech Inc. (OTCQX: WEYL) (“Weyland” or the “Company”) announced today that the distribution of its holdings in Weyland AtoZPay Indonesia (“WAI”) will be completed with a distribution of WAI shares on December 11th 2018.
The Company’s shareholders of record as of the close of trading on October 12, 2018 will receive a pro-rata distribution of one (1) share of common stock of WAI for each five (5) shares of the Company’s common stock held as of the record date. Fractional shares of WAI common stock will not be issued in the distribution, as fractional shares will be rounded up to the immediate next whole share. The spin-off is expected to be effective as of the end of the day on December 11th, 2018, the new distribution date for the spin-off.
- The spin-off of (“WAI”) holds a 49% equity ownership interest in PT Weyland Indonesia Perkasa, a limited liability company organized under the laws of the Republic of Indonesia (“WIP”).
- WIP’s primary business operations include a digital financial transactions app serving the rapidly growing Indonesia e-commerce and e-payment markets (“eWallet”).
- Post distribution Weyland will retain an option for 31% of AtoZPay which can be acquired by the Company at its discretion for a nominal exercise price.
- As AtoZPay was at no time consolidated into Company financial statements the spin-off will have no effect on the Company’s core business financials.
WAI will be free to enter the capital markets to unlock value for its shareholders.
While Weyland continues to support AtoZPay generating additional value for Weyland shareholders based on its 31% option to purchase AtoZPay.
It is management’s expectation that the distribution of Weyland AtoZ Pay to WTI’s shareholders is a taxable transaction. The reason is that Weyland AtoZ Pay has neither conducted active trade or business for 5 years ending on the date of distribution (as it’s a newly formed entity), neither does it control (within terms of § 1504(a) – 80% of vote and value) any corporation which has conducted such trade or business for the period of 5 years.
Therefore the distribution of Weyland AtoZ Pay to WTI’s shareholders is likely to be taxable at the shareholder’s level under § 301(c).
As WTI has no tax earnings and profits then, per aforementioned § 301(c), such distribution (equal to fair market value of the Weyland AtoZPay’s stock on the date of distribution) will (1) reduce such shareholder’s adjusted basis of WTI’s stock (i.e., be treated as a return of capital), and (2) after the adjusted basis has been reduced to zero, the remaining part will be treated as capital gain (gain from sale or exchange of property) of such shareholder, and taxable at either long or short-term capital gain rates (in case of individual shareholder) or corporate tax rate (in case of corporate shareholder).
The basis of Weyland AtoZ Pay’s stock to the shareholder will be its FMV on the date of distribution (as provided in § 301(d)). With a loan of $122,500 to WAI provided by the Company to purchase the Company’s WIP shares for $122,500 the book value of WAI is estimated as zero. Further as an illiquid private company, WAI is estimated FMV of $122,500 – allocated across the shares of 36,816,109 shares or $0.0033 per share.
As the Company has no tax earnings or profits the distribution is likely to be tax-free for foreign shareholders, as (a) return of capital is always tax-free, and (b) per § 871/881 and § 1441/1442, non-resident aliens and foreign corporations in general are not subject to U.S. withholding tax on U.S.-source capital gains (in a preamble to one of the Treas. Reg. under § 1441, the Department of Treasury has explicitly acknowledged that § 301(c)(3) capital gain is not a dividend, and shall not be subject to § 1441 withholding – see Treasury Decision 8881, 65 FR 32151-32212 May 22, 2000).
Business Overview and History of Weyland Tech and AtoZPay
Weyland Tech, Inc. is focused on mobile commerce enablement via our enhanced platform built in 2017 and offered on a Platform-as-a-Service (“PaaS”) basis, as well as the company’s AtoZPay eWallet initiative. Recent product launches with our strategic partners DPEX (Indonesia), BGT (Thailand), Augicom/Orange (France) are representative of the PaaS platform strategy and product offering.
As a result, the Company’s core product has evolved over the course of 2017 and 2018 to capitalize on the immediate opportunity for developing a larger network of valuable users and merchants by developing services that will enable the adoption of mobile commerce across Greater South East Asia. The platform enhancements have taken the Company’s technology from a standalone DIY app builder to an enhanced platform built to enable mobile commerce.
In 2018, Weyland is focusing on scaling this business model by continuing to develop and expand strategic partnerships that would increase the number of users and merchants available to users of the Company’s products on a Platform-as-a-Service (“PaaS”) basis. These efforts will expand on the success of recent product launches representative of the PaaS platform strategy and product offering with our strategic partners DPEX (Indonesia), BGT (Thailand), and Augicom/Orange (France). And after extensive discussions with our partners, management believes that supporting these initiatives through deeper engagement, interaction and co-marketing/sales will substantially benefit the Company in 2018 and beyond.
With the launch of AtozPay eWallet in May 2018, the Company created a ‘consumer facing’ product offering that supports the PaaS strategy developed by the enhancements to the CreateApp platform and enables Weyland to drive higher monetization on those platforms by providing payments capabilities.
AtozPay exited the closed beta environment on May 23, 2018 and officially launched for business.
AtozPay is designed to be a robust, universal payment platform expanding its growth potential beyond the Company’s PaaS customers alone.
In order to maximize the independent growth of AtoZPay and consequently shareholder value, management made the decision to spin-off the eWallet business via a special dividend.
This effort is intended to boost shareholder value by creating a ‘stand-alone’ vehicle for the fast-growing global e-money/eWallet industry. Private and public transactions in the e-money/eWallet industry in South East Asia are growing more frequent with valuations that would represent substantial value creation for existing shareholders.
It is the Company’s belief that either a trade sale or an IPO of the eWallet business can be completed by the end of 2019.
Safe Harbor Statement
This release contains certain “forward-looking statements” relating to the business of the Company. All statements, other than statements of historical fact included herein are “forward-looking statements” including statements regarding: the continued growth of the e-commerce segment and the ability of the Company to continue its expansion into that segment; the ability of the Company to attract customers and partners and generate revenues; the ability of the Company to successfully execute its business plan; the business strategy, plans, and objectives of the Company; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks, and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume any duty to update these forward-looking statements.
For further information contact: Howard Gostfrand American Capital Ventures, Inc. President Office: 305-918-7000 Email: [email protected] www.amcapventures.com