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, 2022 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, 2022 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 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. 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 did not generate any revenue during the nine months ended February 28, 2023 or 2022.







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Results of Operations for the Three Months Ended February 28, 2023 and 2022:

The following table summarizes selected items from the statement of operations for the three months ended February 28, 2023 and 2022.





                                             Three Months Ended
                                       February 28,       February 28,      Increase /
                                           2023               2022          (Decrease)
Revenue, related party                $            -     $            -     $         -

Operating expenses:
General and administrative                       734                727              74
Software development, related party                -            611,500        (611,500 )
Rent expense                                  45,000             45,000               -
Professional fees                             12,097             12,689            (592 )
Total operating expenses:                     57,831            669,916        (612,085 )

Operating loss                               (57,831 )         (669,916 )      (612,085 )

Total other income (expense)                (128,051 )         (128,603 )          (552 )

Net loss                              $     (185,882 )   $     (798,519 )   $  (612,637 )




Revenue, Related Party

We did not generate any revenues during the three months ended February 28, 2023 and 2022.

General and Administrative Expenses

General and administrative expenses for the three months ended February 28, 2023 were $734, compared to $727 during the three months ended February 28, 2022, an increase of $74, or 1%. The expenses consisted primarily of office, travel, compliance and business development expenses. General and administrative expense increased during the current period due to increased office expenses.

Software Development, Related Party

Software development expenses for the three months ended February 28, 2023 were $-0-, compared to $611,500 during the three months ended February 28, 2022, a decrease of $611,500. The software development costs relate to improvements in the Megopoly game performed by Sandbx. Software development expense decreased during the current period due to the termination of the development agreement with Sandbx Corp. in December of 2021.





Rent Expense

Rent expense was $45,000 during both the three months ended February 28, 2023 and 2022.





Professional Fees

Professional fees for the three months ended February 28, 2023 were $12,097, compared to $12,689 during the three months ended February 28, 2022, a decrease of $592, or 5%. Professional fees decreased primarily due to more efficient financial reporting processes by professionals during the current period.





Operating Loss

Our operating loss for the three months ended February 28, 2023 was $57,831, compared to $669,916 during the three months ended February 28, 2022, a decrease of $612,085, or 91%. Our operating loss decreased primarily due to $611,500 of software development fees incurred during the comparative period that was not present in the current period due to the termination of the development agreement with Sandbx Corp. in December of 2021.





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Other Income (Expense)

Other expense, on a net basis, for the three months ended February 28, 2023 was $128,051, compared to other expense, on a net basis, of $128,603 during the three months ended February 28, 2022, a decrease of $552, or less than 1%. Other expense consisted of $129,453 of interest expense on related party loans, as offset by $1,402 of interest income for the three months ended February 28, 2023. Other expense consisted of $129,452 of interest expense on related party loans, as offset by $849 of interest income for the three months ended February 28, 2022. Other expense, on a net basis, decreased primarily due to increased interest income on cash balances due to rising interest rates.





Net Loss

Net loss for the three months ended February 28, 2023 was $185,882, compared to $798,519 during the three months ended February 28, 2022, a decrease of $612,637, or 77%. The decreased net loss was due primarily to $611,500 of software development fees incurred during the comparative period that was not present in the current period due to the termination of the development agreement with Sandbx Corp. in December of 2021.

Results of Operations for the Nine Months Ended February 28, 2023 and 2022:

The following table summarizes selected items from the statement of operations for the nine months ended February 28, 2023 and 2022.





                                             Nine Months Ended
                                       February 28,      February 28,       Increase /
                                           2023              2022           (Decrease)
Revenue, related party                $            -     $           -     $          -

Operating expenses:
General and administrative                     2,114             2,191              (77 )
Software development, related party                -         1,622,500       (1,622,500 )
Rent expense                                 135,000           135,000                -
Professional fees                             51,104            49,057            2,047
Total operating expenses:                    188,218         1,808,748       (1,620,530 )

Operating loss                              (188,218 )      (1,808,748 )     (1,620,530 )

Total other income (expense)                (388,168 )        (386,722 )          1,446

Net loss                              $     (576,386 )   $  (2,195,470 )   $ (1,619,084 )




Revenue, Related Party

We did not generate any revenues during the nine months ended February 28, 2023 and 2022.

General and Administrative Expenses

General and administrative expenses for the nine months ended February 28, 2023 were $2,114, compared to $2,191 during the nine months ended February 28, 2022, a decrease of $77, or 4%. 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.

Software Development, Related Party

Software development expenses for the nine months ended February 28, 2023 were $-0-, compared to $1,622,500 during the nine months ended February 28, 2022, a decrease of $1,622,500. The software development costs relate to improvements in the Megopoly game performed by Sandbx. Software development expense decreased during the current period due to the termination of the development agreement with Sandbx Corp. in December of 2021.





Rent Expense

Rent expense was $135,000 during both the nine months ended February 28, 2023 and 2022.





Professional Fees

Professional fees for the nine months ended February 28, 2023 were $51,104, compared to $49,057 during the nine months ended February 28, 2022, an increase of $2,047, or 4%. Professional fees increased primarily due to professional fees paid related to tax services during the current period.





Operating Loss

Our operating loss for the nine months ended February 28, 2023 was $188,218, compared to $1,808,748 during the nine months ended February 28, 2022, a decrease of $1,620,530, or 90%. Our operating loss decreased primarily due to $1,622,500 of software development fees incurred during the comparative period that was not present in the current period due to the termination of the development agreement with Sandbx Corp. in December of 2021.





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Other Income (Expense)

Other expense, on a net basis, for the nine months ended February 28, 2023 was $388,168, compared to other expense, on a net basis, of $386,722 during the nine months ended February 28, 2022, an increase of $1,446, or less than 1%. Other expense consisted of $392,672 of interest expense on related party loans, as offset by $4,504 of interest income for the nine months ended February 28, 2023. Other expense consisted of $392,671 of interest expense on related party loans, as offset by $5,949 of interest income for the nine months ended February 28, 2022. Other expense, on a net basis, increased primarily due to diminished interest income on cash balances.





Net Loss

Net loss for the nine months ended February 28, 2023 was $576,386, compared to $2,195,470 during the nine months ended February 28, 2022, a decrease of $1,619,084, or 74%. The decreased net loss was due primarily to $1,622,500 of software development fees incurred during the comparative period that was not present in the current period due to the termination of the development agreement with Sandbx Corp. in December of 2021.

Liquidity and Capital Resources





The following is a summary of the Company's cash flows used in operating,
investing, and financing activities for the nine-month periods ended February
28, 2023 and 2022:



                        February 28,      February 28,
                            2023              2022
Operating Activities   $     (183,739 )   $  (1,799,631 )
Investing Activities                -                 -
Financing Activities                -                 -
Net Decrease in Cash   $     (183,739 )   $  (1,799,631 )

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. During the nine months ended February 28, 2023, net cash flows used in operating activities was $183,739. For the same period ended February 28, 2022, net cash flows used in operating activities was $1,799,631. The increase in cash used in operating activities is primarily attributable to our increased net loss.

Cash Flows from Investing Activities

We did not engage in any investing activities during the nine months ended February 28, 2023 and February 28, 2022.

Cash Flows from Financing Activities

We did not engage in any financing activities during the nine months ended February 28, 2023 and February 28, 2022.

Satisfaction of our Cash Obligations for the Next 12 Months

As of February 28, 2023, our balance of cash on hand was $956,643, and we had negative working capital of $1,920,271. We do not currently have sufficient funds to fund our operations at their current levels for the next twelve months. As we continue to develop our business and attempt to expand operational activities, we expect to continue to experience net negative cash flows from operations in amounts not now determinable, and will be required to obtain additional financing to fund operations. Our ability to continue as a going concern is dependent upon our ability to raise additional capital and to achieve sustainable revenues and profitable operations. Since our CEO and majority shareholder, Mr. Pei, acquired control over the Company in May 2015, we have been wholly dependent upon him 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 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.





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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 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

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 $706,643 and $890,382 in excess of FDIC insured limits at February 28, 2023 and May 31, 2022, respectively. The Company has not experienced any losses in such accounts.





Revenue Recognition

The Company recognizes revenue in accordance with 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. All revenues to date have been recognized from licensing Megopoly and related IP to Sandbx Corp., a separate company owned by the Chief Operating Officer of United Power and FL Galaxy, related parties of the Company, as our Chief Executive Officer, Lei Pei, is also the Chief Executive Officer of United Power and FL Galaxy.

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").

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).





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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.





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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.

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