UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2010


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from to

Commission File Number 333-16057

WECOSIGN, INC.

(Exact name of registrant as specified in its charter)


California (State or other jurisdiction of incorporation or organization)		26-1476002 (I.R.S. Employer Identification No.)

3400 West MacArthur Blvd, Suite I,		92704
Santa Ana, CA 92704		(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:

(714) 556-6800

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large Accelerated Filer o	Accelerated Filer o	Non-Accelerated Filer o	Smaller Reporting Company þ
		(Do not check if a smaller reporting Company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

The number of shares of common stock outstanding on June 30, 2010 was 81,932,600, $0.001 par value, issued and outstanding.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION

Item 1. Financial Statements			1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			7
Item 3. Quantitative and Qualitative Disclosures About Market Risk			13
Item 4. Controls and Procedures			13

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			14
Item 1A. Risk Factors			14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			14
Item 3. Defaults Upon Senior Securities			15
Item 4. Submission of Matters to a Vote of Security Holders			15
Item 5. Other Information			15
Item 6. Exhibits			18
Signatures			18
EX-3.1
EX-3.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I – FINANCIAL INFORMATION


Item 1.		FINANCIAL STATEMENTS

WECOSIGN®

BALANCE SHEETS

AS OF MAY 31, 2010, AND NOVEMBER 30, 2009

	May 31,			November 30,
	2010			2009
	(Unaudited)			(Audited)
ASSETS

CURRENT ASSETS:
Cash	$	11,323		$	195,702
Prepaids and other current assets		5,726			12,964
Accounts receivable		44,896			102,171
Total Current Assets		61,945			310,837

Property, equipment and trademark, net of accumulated depreciation and amortization		63,146			35,117
Other assets		2,156			2,396

TOTAL ASSETS	$	127,247		$	348,350


LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accounts payable	$	64,814		$	46,928
Accrued liabilities		5,548			25,580
Stand- ready obligations (deferred revenues - Notes 1 & 4)		78,158			131,763
Guarantee liabilities (Notes 1 & 4)		15,943			20,190
Total Current Liabilities		164,463			224,461

Total Liabilities		164,463			224,461

STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred Stock; $0.001 Par Value; 25,000,000 shares authorized;
no shares issued and outstanding		-			-
Common Stock; $0.001 Par Value; 100,000,000 shares authorized;
94,932,600 at May 31, 2010 and 81,932,600 at November 30, 2009 shares issued and outstanding.		94,933			81,933
Additional paid-in capital		3,819,082			966,682
Accumulated deficit		(3,951,231	)		(924,726	)

Total Stockholders’ Equity (Deficit)		(37,216	)		123,889

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	127,247		$	348,350

See accompanying notes to financial statements.

WECOSIGN®

STATEMENTS OF OPERATIONS

(Unaudited)

	Quarter Ended May 31,						Six Months Ended May 31,
	2010			2009			2010			2009
REVENUE	$	50,299		$	22,478		$	117,748		$	38,435
Cost of revenue – (Notes 1 & 4)		18,027			30,016			40,572			43,027

Gross profit (loss)		32,272			(7,538	)		77,176			(4,592	)

OPERATING EXPENSES:
General and administrative		2,858,177			242,485			3,056,340			309,515
Sales and marketing		22,910			9,932			51,706			26,721

TOTAL OPERATING EXPENSES		2,881,087			252,417			3,108,046			336,236

LOSS FROM OPERATIONS		(2,848,815	)		(259,955	)		(3,030,870	)		(340,828	)

OTHER INCOME AND EXPENSE:
Other income		3,671			579			4,475			893
Interest expense		(110	)		(3,395	)		(110	)		(4,953	)

TOTAL OTHER INCOME (EXPENSES)		3,561			(2,816	)		4,365			(4,060	)

NET LOSS	$	(2,845,254	)	$	(262,771	)	$	(3,026,505	)	$	(344,888	)
NET LOSS PER COMMON SHARE – BASIC AND DILUTIVE		(0.03	)	$	(0.00	)	$	(0.03	)	$	(0.00	)
Weighted Average Number of Shares Outstanding		94,932,600			78,828,727			94,932,600			79,828,727

See accompanying notes to financial statements.

WECOSIGN®

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTH PERIOD

(Unaudited)

	Six Months Ended May 31,
	2010			2009
Cash flows from operating activities
Net loss	$	(3,026,505	)	$	(344,888	)

Adjustments to reconcile net loss to net cash
used in operating activities:
Fair value of services contributed		-			40,000
Fair value of common stock issued for services		2,827,074			25,000
Depreciation and amortization		4,334			3,272
Changes in operating assets and liabilities:
Accounts receivable		57,275			(66,198	)
Prepaids and other current assets		7,478			600
Accounts payable		17,886			(11,753	)
Accrued liabilities		(20,033	)		7,994
Guarantee liability and unearned fees		(57,852	)		97,483
Advances due to related party		38,326			(19,102	)

Net cash used in operating activities		(152,017	)		(267,592	)

Cash flows from investing activities:
Purchases of property and equipment		(32,362	)		(21,298	)

Net cash used in investing activities		(32,362	)		(21,298	)

Cash flows from financing activities:
Proceeds from issuance of convertible notes payable		-			253,000
Net proceeds from issuance of common stock		-			291,915

Net cash provided by financing activities		-			544,915


Net increase (decrease) in cash and equivalents		(184,379	)		256,025
Cash and equivalents, beginning of period		195,702			6,180

Cash and equivalents, end of period	$	11,323		$	262,205

Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest expense	$	110		$	-
Income tax	$	-		$	-

Non-cash investing and financing activities:
Common stock issued for convertible notes payable	$	-		$	273,000
Common stock issued for advances to related parties	$	38,326		$	-

See accompanying notes to financial statements.

WECOSIGN®

NOTES TO FINANCIAL STATEMENTS

Note 1 – Organization, History and Significant Accounting Policies and Procedures

Organization and History

WeCoSign, Inc. (the “Company,” “we” or “us”) incorporated on November 24, 2007 in the state of California. The Company’s sole business purpose is to charge a monthly service fee to applicants of rental properties in exchange for cosigning on their apartment or rental home lease agreements. This service guarantees the rent to the landlord each month. The service provided by the Company reduces vacancy and risk for landlords, while helping tenants with poor credit scores live in their desired apartment or rental house. The Company is based in Santa Ana, California where their proprietary underwriting techniques evaluate the potential risk of an applicant by looking beyond typical screening methods like FICO credit scores. Approved applicants are responsible for paying rent to their landlord, and paying an additional monthly service fee to the Company based on a percentage of their rent. By allowing the Company’s approved tenants to live in their properties, landlords are guaranteed to receive the rent even if that tenant defaults on their lease agreement. After one year, the landlord re-evaluates the tenant's payment history to determine if a co-signer is still required on the lease, and if the tenant is determined to be in good standing then the Company’s monthly service fee is no longer applied. If the tenant is marginal, the Company will stay on the lease for an increased monthly fee. This condition alone is incentive for the tenant to make his payments timely. The Company has presently signed 77 major apartment management firms across the country representing almost one million individual apartment complexes across the country.

Managements’ Plans

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred operating losses and used cash from operations. During the year ended November 30, 2009, the Company funded losses from proceeds from an equity offering and convertible notes totaling $620,058. In addition, the Company's former Chief Executive Officer contributed additional capital of $150,000 in November 2009. The future of the Company is dependent upon its ability to achieve profitable operations and cash flows. In the event the Company is unable to achieve profitable operations in the near term, it may require additional equity and/or debt financing, or reduce expenses, including officer’s compensation, to reduce such losses. With the cash on hand at August 13, 2010, we have approximately $18,888 of available liquidity. Over the short term, our CFO will arrange short-term liquidity if necessary. Over the longer term, we expect that cash flows from operations, supplemented by short-term and long-term financing, as necessary, will be adequate to fund our day-to-day operations and capital expenditure requirements. Our ability to secure short-term and long-term financing in the future will depend on several factors, including our future profitability, the quality of our accounts receivable and guarantee obligations, our relative levels of debt and equity, and the overall condition of the credit markets.

Unaudited Interim Financial Information

The accompanying unaudited condensed financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, and pursuant to the instructions to Form 10-Q promulgated by the Securities and Exchange Commission (SEC). Accordingly, they do not include all information and disclosures required by generally accepted accounting principles for complete financial statement presentation. In the opinion of management, the accompanying condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company's financial position as of May 31, 2010 and the results of its operations and its cash flows for the three months ended May 31, 2010 and 2009. Results for the six months ended May 31, 2010 are not necessarily indicative of the results to be expected for the year ending November 30, 2010.

While management believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes included in the Company's Annual Report on Form 10-K for the year ended November 30, 2009.

Advertising Costs

The Company expenses all costs of advertising as incurred. The Company expensed $13,733 and $2,561 of advertising costs for the three months ended May 31, 2010 and 2009, respectively.

The Company expensed $31,947 and $5,661 of advertising costs during the six months ended May 31, 2010 and 2009, respectively.

WECOSIGN®

NOTES TO FINANCIAL STATEMENTS

Note 2 – Property, Equipment, & Trademark

Property, equipment, and trademark as of May 31, 2010 and November 30, 2009 consisted of the following:

	May 31,			November 30,
	2010			2009

Vehicle	$	5,000		$	5,000
Office equipment		21,619			21,408
Furniture		2,909			2,909
Website		4,121			4,121
Trademark		41,982			9,918
Total property and equipment		75,631			43,356
Accumulated depreciation and amortization		(12,485	)		(8,239	)
Net property, equipment and trademark	$	63,146		$	35,117

The cost of maintenance and repairs is charged to expense as incurred. When depreciable property is retired or otherwise disposed of, the related cost and accumulated depreciation/amortization are removed from the accounts and any gain or loss is reflected in the statement of operations. During the three months ended May 31, 2010 and three months ended May 31, 2009, we had depreciation expense of $2,170 and $1,744, respectively. During the six months ended May 31, 2010 and six months ended May 31, 2009, we had depreciation expense of $4,334 and $2,569, respectively.

Management assesses the recoverability of property, equipment and trademark by determining whether the depreciation and amortization of the above described assets over its remaining life can be recovered through projected undiscounted future cash flows. The amount of property, equipment, and trademark impairment if any, is measured based on fair value and is charged to operations in the period that such impairment is determined by management. As of November 30, 2009 and 2008, management believes that there is no impairment of property, equipment, and trademark.

Note 3 – Accrued Liabilities

Accrued liabilities as of May 31, 2010 and November 30, 2009 consisted of the following:

	May 31,		November 30,
	2010		2009
Accrued payroll and taxes	$	5,548	$	25,580

Operating Lease

The Company leases its facility under non-cancelable operating lease arrangements for office space to serve as its corporate office in Santa Ana, California. The lease is currently a month-to-month agreement at a rental rate of $1,200 per month. The lease agreement required a security deposit of $1,200.

Guarantee Liability

The Guarantee Liability account is made up of stand-ready obligations, unearned application fees and guarantee liability for defaults.

WECOSIGN®

NOTES TO FINANCIAL STATEMENTS

Note 4 – Commitments and Contingencies

Stand-ready obligations - Management records the tenant’s full contract fees owed to us as accounts receivable and or any prepayments, with a corresponding increase to the stand-ready obligation included as a guarantee liability. Additionally, all application fees are also recorded as a stand-ready obligation. The Company records these liabilities based on the estimated fair value of the tenant’s contracted fee to us. The stand- ready obligation may alternatively be viewed as deferred revenues to the extent these tenants ultimately pay. The stand-ready obligation for a tenant is reduced as revenues as the tenant complies with the terms of the agreement over time.

Unearned tenants prepaid (contract) fees and registration fees - These fees are collected in advance and amortized over the life of the contract period. At month end, a cutoff analysis is prepared and we adjust the above Guarantee Liabilities using the individual remaining contract life.

Defaults - In accordance with FASB Accounting Standards Codification (“ASC”) 450-20-25 Loss Contingencies, formerly Statement of Financial Accounting Standards (“SFAS”) No. 5 and ASC 460-10 Guarantees, formerly FASB Interpretation No. 45, contingent liabilities are recorded when the future loss is probable (the confirming event is likely to occur) and the amount of loss can be at least reasonably estimated. The Company reviews all Tenants under contract to determine if there is a probable chance of a default, and if so, provide a reasonable estimate for losses. For agreements in effect as of May 31, 2010, management identified nine tenants that had defaulted and estimated a contingent liability of $15,943 for these probable losses.

The Company immediately expenses all specific leases that have defaulted as an operating expense. For the six-months ended May 31, 2010 and 2009, the Company expensed actual default losses of $12,870 and $2,353, respectively.

At May 31, 2010, if every tenant under our program defaulted for their remaining lease agreement period, in aggregate, assuming no recoveries or replacement renters to mitigate losses, the total financial exposure would be approximately $653,876. We currently have 114 approved customer accounts that we collect a service fee from each month as of May 31, 2010 compared to 78 at May 31, 2009.

Note 5 – Stockholders' Equity (Deficit)

Authorized Shares

The Company is authorized to issue 100,000,000 shares of $0.001 par value common stock and 25,000,000 shares of $0.001 par value preferred stock.

Common Stock Issued For Cash

From December 2008 to June 2009, the Company issued 1,436,000 shares of common stock to non-accredited investors as part of a private placement at a price of $0.25 per share for total gross proceeds of $359,000. In connection with these issuances, the Company incurred cash placement costs of $10,585 and issued 28,600 shares of common stock, which were offset against the proceeds. Included within the private placement, were proceeds received of $20,000 resulting in issuance of 80,000 shares to the Chief Financial Officer. The investment was made prior to the commencement of the officer’s employment.

Common Stock Issued For Services

In April 2009, the Company issued 100,000 shares of common stock for legal services rendered. The Company valued the shares on the date of issuance as there were no future performance conditions. The shares were valued at $25,000 based on the estimated fair value of the Company’s common stock which was deemed to be $0.25 per share based on the recent private placement. The Company recorded the charge to general and administrative expenses.

WECOSIGN®

NOTES TO FINANCIAL STATEMENTS

On April 16, 2010, the Company issued 13,000,000 shares of common stock for services rendered by Frank Jakubaitis. The Company recorded stock-based compensation amounting to $2, 827,074 in general and administrative expense, and the forgiveness of $38,326 in advances made to the Company in connection with the issuance. The fair value of the shares was determined based on the closing stock price of $0.24 per share on the date of issuance and the shares were earned on the date of issuance.

Contributed Services

The Company’s prior Chairman and Chief Executive Officer was providing services to the Company on a full-time basis. The Company determined that the fair value of these services was approximately $13,900 per month based upon his previous employment agreement. The prior Chief Executive Officer has elected to contribute his salaries to the Company, and thus, they are accounted for as a contribution within additional paid-in capital.

Note 6 – Provision for Income Taxes

There was no provision for income taxes in fiscal quarter ending May 31, 2010, or 2009, except for minimum state taxes, since the Company incurred taxable losses during such years.

Note 7 – Related-Party Transactions

From time to time, the prior Chief Executive Officer paid expenses on behalf of the Company. The advances are due on demand and do not bear interest. As of May 31, 2010, no amounts are due to the former Chief Executive Officer.

Note 8 – Subsequent Events

On July 15, 2010, the Board of Directors approved the issuance of 25,000,000 shares of preferred stock to Frank Jakubaitis in consideration and forgiveness of all debt owed, and will satisfy such debts in lieu of any cash payments. As of August 13, 2010, the stock has not been issued due to the pending filing of the stock designations. The Company estimates the value of the shares to be approximately $1,125,000 based on the quoted price of the Company’s common stock, as adjusted for dilution, of $0.045 per share. The Company will record the charge to general and administrative expenses in the third quarter 2010.

In August 2010, the Company filed an action against 17 defendants in Federal Court for trademark infringement and racketeering. To date, the estimated legal fees amounted to $25,000 and the estimated damage to the company is presently unknown. However, such a suit was filed to protect the integrity and good name of WECOSIGN, Inc.

There have been no other events or transactions during this time which would have a material effect on the financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

Statements contained in this Report that are not statements of historical fact should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). In addition, certain statements in our future filings with the Securities and Exchange Commission (“SEC”), in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenue, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other statements concerning future financial performance; (ii) statements of our plans and

objectives by our management or Board of Directors, including those relating to products or services; (iii) statements of assumptions underlying such statements; (iv) statements regarding business relationships with vendors, customers

or collaborators; and (v) statements regarding products, their characteristics, performance, sales potential or effect in the hands of customers. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “should,” “potential,” “goals,” “strategy,” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in Part II, Item 1A “Risk Factors”, below. The performance of our business and our securities may be adversely affected by these factors and by other factors common to other businesses and investments, or to the general economy. Forward-looking statements are qualified by some or all of these risk factors. Therefore, you should consider these risk factors with caution and form your own critical and independent conclusions about the likely effect of these risk factors on our future performance. Such forward-looking statements speak only as of the date on which statements are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made to reflect the occurrence of unanticipated events or circumstances. Readers should carefully review the disclosures and the risk factors described in this and other documents we file from time to time with the SEC, including our reports on Forms 10-Q and 8-K to be filed by the Company in fiscal 2010.

Overview

We help prospective renters with poor credit by acting as their cosigner on an apartment or house rental agreement. We provide the service of acting as the guarantor for a renter by cosigning on their lease agreement in exchange for a monthly fee, enabling rental applicants with low FICO scores to bypass the strict qualifications that many property

owners enforce. Landlords currently face high levels of vacancy in their properties because of the recent nationwide

increase in apartment construction, along with a simultaneous decrease in the number of qualified rental applicants.

Landlords predominantly use the FICO credit scoring system as a tool to screen potential tenants, since this has long been a widely accepted method of evaluation. This system saves landlords time by standardizing their application process and reducing personal interaction with renters, but it has also resulted in a growing number of applicants that fail to qualify for rental properties, since poor credit scores have become a problem for a large number of Americans in recent years. We help both tenants and property owners solve the problem of poor credit in the rental market. We allow landlords to fill vacancies in their property without having to worry about an applicant's FICO score or their potential risk for default, and enables tenant with poor credit to qualify for properties that would otherwise reject them.

Targeted Customers: A majority of rental property owners rely on FICO credit scores to approve or deny their new applicants, and once a tenant has a blemish on their credit history it can be a struggle to improve their score and qualify for a lease. Our customers are renters with imperfect credit that don't meet the strict requirements for a typical apartment application because of their low FICO scores. Our proprietary underwriting techniques allow the company to determine which applicants are likely to become financially responsible tenants, despite their inability to meet the necessary FICO requirements for a particular rental property. There are a variety of factors that can contribute to a rental applicant's negative FICO score including divorce, personal bankruptcy, or late bill payments. And often times just one of these factors can negatively affect someone's FICO score for years and make it extremely difficult to gain approval on a lease agreement for a rental property. We recognize that this score does not necessarily reflect the most current or accurate financial picture of a potential tenant, or their ability to pay the rent each month.

Operations: Our revenue comes from the collection of the application fee, and the monthly recurring service fee paid by approved customers currently living in rental housing. The application fee is $100 and the monthly service fee is 10% of a customer’s monthly rent plus $20. The applicant is responsible for paying rent to the property owner, and our service fee is collected directly from the applicant’s credit or debit card account on the 1st of each month. After one year, the applicant’s payment history is reviewed to determine if a cosigner is still necessary, or if we will continue to retain the applicant for another 12 months with a new fee structure reflecting a reduced or elevated concern of the applicant’s financial situation. We currently have 114 approved customer accounts that we collect a service fee from each month. The three month average of new monthly applications exceeded 53 at $100 each as of the date hereof.

Prospects: The future of the market for co-signing services in the United States appears strong for a variety of factors. Vacancy rates across the country are likely to stay at high levels as renters continue moving back in with family or other roommates in order to lower costs, leaving property owners with empty units. In addition, many current homeowners are now looking to rent their own unsold properties which will create even more vacancies in the rental market. Meanwhile, current unemployment rates and personal bankruptcies will create a large number of potential renters in the future that will suffer from low FICO scores and struggle to gain approval on many lease agreements. These factors point to an increasing need in the future among property owners to fill vacancies, while many renters

will likely need assistance with their poor credit in order to successfully gain approval to live in these properties. We plan to expand our operations nationwide through the WECOSIGN® Affiliates and Associates in 2010. There are currently 13 Affiliates and 77 Associates that are working to bring in new applicants around the country, and we plan to add an additional 60 Affiliates and 100 Associates through the end of 2010. This expansion, increased online traffic, and referrals from current customers and property owners are likely to help us reach our projected goals of 100 applications per month, and a total of 300 approved applicants living in rental properties by the end of 2010. It takes an individual many years to substantially improve his or her FICO credit scores. Therefore, our market capacity will not materially shrink as the economy improves. Even if the economy improves, there will always be a need for our services since bad credit transcends all socioeconomic status.

Competition: We believe we are the first to market the business model of providing cosigning services for rental applicants, and have a trademark with the United States Patent and Trademark Office. Specifically, the trademark is a service mark that protects the name of WECOSIGN® as being the first company that was engaged in providing

cosigning services to tenants on a nationwide basis. Although there are no barriers to entry to compete with us, our management is not aware of and our customers and Affiliates have not informed us of any competition currently providing cosigning services similar to ours.

Trademarks and Copyrights: WECOSIGN® is now a U.S. Service Mark. We have not applied for a patent application for our propriety underwriting techniques and do not intend to do so at this time. Our management considers our servicemark and future similar intellectual property critical to our business, so we intend to take steps to protect our intellectual property rights. However, effective trademark and other intellectual property may not be available in every country where we intend to sell our products and services online.

Affiliates that house our applicant tenants: We intend to expand our business via establishing WECOSIGN®. Affiliates across the country, and a portion of our future growth is dependent upon new affiliates which promote our concept and reputation. To attract Affiliates, for each successful application, we pay referral fees to an Affiliate in the amount of 30% of the initial application fee, and 10% of each established monthly fee from the client, not to exceed a twelve (12) months period.

Results of Operations

Three Months Ended May 31, 2010 Compared to the Three Months Ended May 31, 2009.

The following tables and narrative discussion set forth key components of our results of operations for the periods indicated, in dollars.

							Period-to-Period			Period-to-Period
	Quarter Ending May 31						Dollar			Percentage
	2010			2009			Change			Change

Revenue	$	50,299		$	22,478		$	27,821			124	%

Cost of Revenue		18,027			30,016			(11,989	)		40	%
Gross Profit (Loss)		32,272			(7,538	)		39,810			528	%
Operating Expenses:
General & Administrative Professional Fees		18,015			139,788			(121,773	)		87	%
General & Administrative Salaries		2,814,258			75,381			2,738,877			3,633	%
General &Administrative Other		25,904			27,316			(1,412	)		5	%
General &Administrative Subtotal		2,858,177			242,485			2,615,692			1,079	%
Sales and Marketing		22,910			9,932			12,978			131	%
Total Operating Expenses		2,881,087			252,417			2,628,670			1,041	%
Loss from Operations		(2,848,815	)		(259,955	)		(2,588,860	)		996	%
Other Income & Expense:
Other Income		3,671			579			3,092			534	%
Interest Expense		(110	)		(3,395	)		3,285			97	%
Total Other Income and (Expense)		3,561			(2,816	)		6,377			226	%

Net Loss	$	(2,845,254	)	$	(262,771	)	$	(2,582,483	)		983	%
Net Loss Per Common Share – Basic & Dilutive		(0.03	)		(0.00	)		(0.03	)
Weighted Average Number of Common Shares		94,932,600			79,828,727			15,103,873			19	%

Employees at fiscal quarter-end		6			4

Executive Summary

The Company reported a net loss of $2,845,254 for the three months ended May 31, 2010, which included gross profit of $32,272. As of May 31, 2010, the Company’s accumulated deficit totaled $3,951,231. During the quarter ended May 31, 2010, the Company used $152,017 of cash for operations.

Revenue: During the three months ended May 31, 2010, we generated $50,299 in revenues. The increase in revenues from the comparable 2009 was directly related to the commencement of operations subsequent to that period.

Cost of Revenue: Our cost of revenue was $18,027 during the three months ended May 31, 2010, which primarily

consisted of guarantee obligations reserves for defaulting tenants, underwriting payroll, and facilities. This decrease is primarily attributable to no additional guarantee obligation expense being recorded to the current period.

General and Administrative: Our general and administrative professional fees of $18,015 during the three months ended May 31, 2010, consisted of audit services, SEC legal services rendered, and a non-cash add back related to the fair value of 13,000,000 shares of common stock for services contributed by Frank Jakubaitis. Our general and administrative consisted of allocated salaries of approximately $2,814,258. Additional amounts primarily consisted of supplies, depreciation, allocated rent and utilities. The total general and administrative increase of $2,615,692 or 1,079%, is between the three months ended May 31, 2010 and the same period in 2009.

Sales and Marketing: Our Sales & Marketing expense of $22,910 during the three months ended May 31, 2010, primarily consisted of allocated payroll, marketing, supplies, and allocated rent. The increase of $12,978, or 131%, between the three months ended May 31, 2010 and the same period in 2009 was primarily attributable to the increase in staffing due to the commencement of operations.

Six Months Ended May 31, 2010 Compared to the Six Months Ended May 31, 2009.

The following tables and narrative discussion set forth key components of our results of operations for the periods indicated, in dollars.

							Period-to-Period			Period-to-Period
	Quarter Ending May 31						Dollar			Percentage
	2010			2009			Change			Change

Revenue	$	117,748		$	38,435		$	79,313			206	%

Cost of Revenue		40,572			43,027			(2,455	)		6	%
Gross Profit (Loss)		77,176			(4,592	)		81,768			1,781	%
Operating Expenses:
General & Administrative Professional Fees		95,812			152,018			(56,206	)		37	%
General & Administrative Salaries		2,910,922			128,479			2,782,443			2,166	%
General &Administrative Other		49,606			29,018			20,588			71	%
General &Administrative Subtotal		3,056,340			309,515			2,746,825			887	%
Sales and Marketing		51,706			26,721			24,985			94	%
Total Operating Expenses		3,108,046			336,236			2,771,810			824	%
Loss from Operations		(3,030,870	)		(340,828	)		(2,690,042	)		789	%
Other Income & Expense:
Other Income		4,475			893			3,582			401	%
Interest Expense		(110	)		(4,953	)		4,843			98	%
Total Other Income and (Expense)		4,365			(4,060	)		8,425			208	%

Net Loss	$	(3,026,505	)	$	(344,888	)	$	(2,681,617	)		778	%
Net Loss Per Common Share – Basic & Dilutive		(0.03	)		(0.00	)		(0.03	)		-
Weighted Average Number of Common Shares		94,932,600			79,828,727			15,103,873			19	%

Employees at fiscal quarter-end		6			4

	May 31,			November 30,
Summary of Balance Sheet Data	2010			2009

Current Assets	$	61,945		$	310,837
Total Assets		127,247			348,350
Total Liabilities		164,463			224,461
Total Stockholders’ Equity		(37,216	)		123,889
Total Liabilities Stockholders’ Equity	$	127,247		$	348,350

Executive Summary

The Company reported a net loss of $3,026,505 for the six months ended May 31, 2010, which included gross profit of $77,176. As of May 31, 2010, the Company’s accumulated deficit totaled $3,951,231. During the quarter ended May 31, 2010, the Company used $152,017 of cash for operations. At August 13, 2010, we had cash and cash equivalents of approximately $18,888 and accounts payables of approximately $64,814. We will continue to review and evaluate various marketing strategies to increase sales and other alternatives to streamline our operations, improve efficiencies and reduce costs.

Revenue: During the six months ended May 31, 2010, we generated $117,748 in revenues. The increase in revenues from the comparable 2009 was directly related to the commencement of operations subsequent to that period.

Cost of Revenue: Our cost of revenue was $40,572 during the six months ended May 31, 2010, which primarily consisted of guarantee obligations reserves for defaulting tenants, underwriting payroll, and facilities. This decrease is primarily attributable to no additional guarantee obligation expense being recorded to the current period.

General and Administrative: Our general and administrative professional fees of $3,056,340 during the six months ended May 31, 2010, primarily consisted of audit services, SEC legal services rendered, and a non-cash add back related to the fair value of 13,000,000 shares of common stock for services contributed by Frank Jakubaitis. Our general and administrative consisted of allocated salaries of approximately $2,910,922. Additional amounts primarily consisted of supplies, depreciation, allocated rent and utilities. The total general and administrative increase of $2,746,825, or 887%, is between the three months ended May 31, 2010 and the same period in 2009.

Sales and Marketing: Our Sales & Marketing expense of $51,706 during the six months ended May 31, 2010, primarily consisted of allocated payroll, marketing, supplies, and allocated rent. The increase of $24,985, or 94%, between the six months ended May 31, 2010 and the same period in 2009 was attributable to the company’s decision to streamline its advertising costs and match the company’s current goals and objectives.

Liquidity and Capital Resources

During the six months ended May 31, 2010, we have not generated cash from financing activities. Although we intend to fund our future growth through cash flows from operations in the future, we may have to curtail our operating plans and rely on funds to be generated from operations if we are unable to raise such capital. We fully expect to significantly improve upon our prior 2009 performance with an increased penetration of the large national rental market, further penetrate their existing property management customer base, develop streamlined screening processes, and taking steps to identify and eliminate all other non-essential operating costs. We may require additional equity as well as reductions of expenses, including officer’s compensation, to reduce overhead. Our CFO will arrange for additional liquidity, if necessary. We will continue to monitor our expenditures and cash flow position and we are presently long-term debt free. We do not believe that we shall be forced to enter into any long or short term debt arrangements. We believe our cash on hand and anticipated cash flows from operations will enable us to meet our obligations for the next year.

	For the Six Months			For the Six Months
	Ended May			Ended May
	31, 2010			31, 2009

Net cash used in operating activities	$	(152,017	)	$	(267,592	)
Net cash used in investing activities		(32,362	)		(21,298	)
Net cash provided by financing activities		-			544,915
Net increase in cash and equivalents		(184,379	)		256,025
Cash and equivalents, beginning of period		195,702			6,180
Cash and equivalents, end of period	$	11,323		$	262,205

Operating Activities:

Cash used in operating activities was $152,017 for the six months ended May 31, 2010, compared to $267,592 for the same period in 2009. Operating cash flows for both periods reflect primarily our net loss for both periods.

Investing Activities:

Cash used in investing activities was $32,362 for the six months ended May 31, 2010, compared to $21,298 for the same period in 2009. Investing cash flows for both periods reflect primarily purchases of capital assets, such as office equipment, used in our operations.

Financing Activities:

Cash provided by financing activities were $0 for the six months ended May 31, 2010, compared to $544,915 for the same period in 2009. These funds were needed to fund our operations and retain a minimum level of liquidity.

Contractual Obligations and Contingent Liabilities and Commitments: The Company leases its facility under non-cancelable operating lease arrangements for office space to serve as its corporate office in Santa Ana, California. The lease is currently a month-to-month agreement at a rental rate of $1,200 per month. The lease agreement required a security deposit of $1,200.

Off-Balance Sheet Arrangements: We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the small business issuer’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk Disclosures

We do not enter into derivative financial instruments for trading, speculation or other purposes that would expose the Company to market risk.

Item 4. Controls And Procedures

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 A. The Company’s internal control over

financial reporting is a process designed under the supervision of the Company’s Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

As of May 31, 2010, we are in the process of assessing the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in SEC guidance on conducting such assessments.

We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical

accounting expertise within the accounting function. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the department occur. Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures, and preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Changes in Internal Control: There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls: The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures or its system of internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed or operated, can provide only reasonable, but not absolute, assurance that the objectives of the system of internal control are met. The design of the Company’s control system reflects the fact that there are resource constraints, and that the benefits of such control system must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control failures and instances of fraud, if any, within the Company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the intentional acts of individuals, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part on certain assumptions about the likelihood of future events, and there can be no assurance that the design of any particular control will always succeed in achieving its objective under all potential future conditions.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in various lawsuits, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims against us that we believe will have a material adverse effect on our business, financial condition, or operating results.

No director, officer, or affiliate of the issuer and no owner of record or beneficiary of more than 5% of the securities of the issuer, or any security holder is a party adverse to the Company or has a material interest adverse to the Company.

Item 1A. Risk Factors

Our Annual Report on Form 10-K for the year ended November 30, 2009 contains a full discussion of the risks associated with our business. There have been no material changes to the risks described in our Annual Report on Form 10-K.

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

There were no sales of unregistered Equity Securities during the first quarter of the year ended May 31, 2010.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the first quarter of the fiscal year ended May 31, 2010.

Item 5. OTHER INFORMATION

Not applicable

Item 6. EXHIBITS

EXHIBIT INDEX

WECOSIGN®

Report On Form 10-Q For The Quarter Ended May 31, 2010.

EXHIBIT NUMBER		DESCRIPTION
3.1		Articles of Incorporation *
3.2		By-Laws*
10.3		Sample Application Form*
10.4		Contract with Applicant*
10.5		Standard Tenant Agreement*
10.6		Standard Rental Payment Guarantee Agreement with Associates*
10.7		Standard Rental Payment Guarantee Certificate*
31.1		Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).**

32.1		Certification pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and 18 U.S.C. Section 1350.**

* Filed as Exhibits to the Form S-1/A filed on December 2, 2009 and incorporated herein by reference.

** Filed Electronically as Exhibits attached to this Form 10-Q.

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.


Dated: August 16, 2010	By:	/s/ Jeff Padilla
		Jeff Padilla,
		Chief Financial Officer (Principal Financial Officer)

Wecosign, Inc. 10-Q