FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2010
OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission file number: 000-29169
Chinawe.com Inc.
(Exact name of registrant as specified in its charter)
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California
(State or other jurisdiction of
incorporation or organization)
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95-462728
(I.R.S. Employer Identification No.)
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Room 1307, Block A
Fuk Keung Industrial Building
66-68 Tong Mei Road
Kowloon, Hong Kong
(Address of principal executive offices) (Zip Code)
(852) 23810818
(Registrants telephone number, including area code)
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 (§ 232.405 of this chapter) 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 the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(check one):
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
þ
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Indicate by check whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes
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No
o
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practical date:
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Class of Common Stock
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Outstanding at August 13, 2010
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Common Stock, $.001 par value
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43,800,000
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
CHINAWE.COM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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Six months ended June 30,
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NOTE
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2010
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2009
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(Unaudited)
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US$
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US$
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OPERATING REVENUES
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On-line services income
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Asset management and related services
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131,623
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131,623
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Depreciation
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(3,139
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(4,765
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Administrative and general expenses
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(120,172
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(363,147
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INCOME/(LOSS) FROM OPERATIONS
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(123,311
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)
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(236,289
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)
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NON-OPERATING INCOME (EXPENSE)
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Interest
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(1,139
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(1,961
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Surcharge on taxes
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(25,716
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Other income
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1,391
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397
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INCOME/(LOSS) BEFORE INCOME TAXES
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(123,059
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(263,569
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Income tax expense
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7
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NET INCOME/(LOSS)
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(123,059
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(263,569
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OTHER COMPREHENSIVE INCOME/(LOSS)
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Foreign currency translation
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35,971
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34,069
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COMPREHENSIVE INCOME/(LOSS)
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(87,088
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(229,500
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Basic and diluted net income per share of common stock
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(0.002
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(0.006
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Weighted average number of shares
of common stock outstanding
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43,800,000
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43,800,000
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The financial statements should be read in conjunction with the accompanying notes.
3
CHINAWE.COM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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As of
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As of
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Note
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June 30, 2010
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December 31, 2009
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(Unaudited)
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US$
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US$
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ASSETS
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Current assets:
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Cash and cash equivalents
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17,077
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33,427
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Prepayments, deposits and other receivables
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15,458
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23,644
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Amount due from a director Wai Man Keung
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256,431
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254,918
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Total current assets
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288,966
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311,989
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Property, plant and equipment, net
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4
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56
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3,208
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TOTAL ASSETS
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289,022
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315,197
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LIABILITIES AND STOCKHOLDERS DEFICIT
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Current liabilities:
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Accrued expenses and other current liabilities
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270,262
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272,476
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Current portion of long-term debt
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5
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1,285
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7,216
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Due to related parties
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6
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1,456,014
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1,392,093
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Income tax payables
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7
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456,388
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453,673
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Surcharge on taxes
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357,943
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355,520
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Total current liabilities
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2,541,892
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2,480,978
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Contingencies and commitments
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8
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Stockholders deficit:
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Preferred stock, par value US$0.001 per
share; authorized 20,000,000 shares; none
issued
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Common stock, par value US$0.001 per share;
authorized 100,000,000 shares;
issued and outstanding 43,800,000 shares
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43,800
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43,800
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Capital in excess of par
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85,948
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85,948
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Accumulated losses
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(2,413,793
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(2,290,734
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Accumulated other comprehensive loss
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31,175
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(4,796
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Total stockholders deficit
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(2,252,870
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(2,165,781
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TOTAL LIABILITIES AND STOCK HOLDERS DEFICIT
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289,022
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315,197
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The financial statements should be read in conjunction with the accompanying notes.
4
CHINAWE.COM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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Six months ended June 30,
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2010
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2009
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(Unaudited)
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US$
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US$
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income/(loss)
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(123,059
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(263,569
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)
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Adjustments to reconcile net income to net
cash provided by operating activities:
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Depreciation
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3,139
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4,765
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Changes in operating assets and liabilities:
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Accounts receivable, net
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(38,875
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Prepayments, deposits and other receivables
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8,186
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12,308
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Customer deposits received
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(17,179
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Accrued expenses and other current liabilities
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2,214
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(23,748
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Surcharge on taxes
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(192
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)
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25,703
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Income tax payable
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(214
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)
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(3,793
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NET CASH PROVIDED BY OPERATING ACTIVITIES
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(109,926
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(304,388
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CASH FLOWS FROM INVESTING ACTIVITIES
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Purchase of property, plant, equipment
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239
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1
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NET CASH USED IN INVESTING ACTIVITIES
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239
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1
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CASH FLOWS FROM FINANCING ACTIVITIES
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Repayment of long-term debt
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(5,931
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(10,051
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Advance from related parties
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63,921
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171,344
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Repayment to related parties
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(311
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)
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NET CASH USED IN FINANCING ACTIVITIES
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57,990
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160,982
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
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(51,697
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)
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(143,405
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)
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Cash and cash equivalents, beginning of period
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33,427
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339,538
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Effect of exchange rate changes
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35,346
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34,239
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CASH AND CASH EQUIVALENTS, END OF PERIOD
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17,076
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230,372
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
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Cash paid for interest
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1,139
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1,961
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The financial statements should be read in conjunction with the accompanying notes.
5
CHINAWE.COM INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying financial statements present the financial position of the Company as of June 30,
2010 and December 31, 2009, and its results of operations for the six months ended June 30, 2010
and 2009. All inter-company accounts and transactions have been eliminated on consolidation.
The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been included. Operating
results for the six months ended June 30, 2010 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2010.
The balance sheet at December 31, 2009 has been derived from the audited financial statements at
that date but does not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These financial statements should be read
in conjunction with the consolidated financial statements included in the Companys Annual Report
on Form 10-K for the year ended December 31, 2009.
Adoption of recently issued accounting pronouncements
In April 2009, the Financial Accounting Standards Board (the FASB) issued FSP 157-4, Determining
Fair Value When the Volume and Level of Activity For the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly (FSP 157-4). FSP 157-4 provides
additional guidance for estimating fair value in accordance with SFAS 157 when the volume and level
of activity for the asset or liability have significantly decreased. FSP 157-4 also includes
guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009. FSP 157-4 does not require disclosures for
earlier periods presented for comparative purposes at initial adoption. In periods after initial
adoption, FSP 157-4 requires comparative disclosures only for periods ending after initial
adoption. The adoption of the provisions of FSP 157-4 is not anticipated to materially impact the
Companys results of operations or the fair values of its assets and liabilities.
In May 2009, the FASB issued SFAS No. 165, Subsequent Events (SFAS 165). SFAS 165 establishes
general standards for accounting for and disclosure of events that occur after the balance sheet
date but before financial statements are issued or available to be issued and was effective for
interim and annual periods ending after June 15, 2009. The adoption of SFAS No. 165 did not have an
impact on the Companys results of operations or financial condition.
In June 2009, the FASB issued SFAS No. 166 Accounting For Transfers Of Financial Assets (SFAS
166). This statement is intended to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its financial reports about a
transfer of financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferors continuing involvement in transferred financial
assets. This Statement must be applied as of the beginning of each reporting entitys first annual
reporting period that begins after November 15, 2009, and is required to be adopted by the Company
in the first quarter of fiscal year 2010. Earlier application is prohibited. This Statement must be
applied to transfers occurring on or after the effective date. The Company does not expect that the
adoption of SFAS 166 will have a material impact on the Companys financial position, results of
operations and cash flows.
6
In June 2009, the FASB issued SFAS No.167, Amendments to FASB Interpretation No.46(R), which is
codified as Accounting Standards Codification (ASC) 810. ASC 810 amends FASB Interpretation
No.46(R), Variable Interest Entities for determining whether an entity is a variable interest
entity (VIE) and requires an enterprise to perform an analysis to determine whether the
enterprises variable interest or interests give it a controlling financial interest in a VIE.
Under ASC 810, an enterprise has a controlling financial interest when it has (a) the power to
direct the activities of a VIE that most significantly impact the entitys economic performance and
(b) the obligation to absorb losses of the entity or the right to receive benefits from the entity
that could potentially be significant to the VIE. ASC 810 also requires an enterprise to assess
whether it has an implicit financial responsibility to ensure that a VIE operates as designed when
determining whether it has power to direct the activities of the VIE that most significantly impact
the entitys economic performance. ASC 810 also requires ongoing assessments of whether an
enterprise is the primary beneficiary of a VIE, requires enhanced disclosures and eliminates the
scope exclusion for qualifying special-purpose entities. ASC 810 is effective as of the beginning
of each reporting entitys first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period, and for interim and annual reporting
periods thereafter. Earlier application is prohibited. ASC 810 is effective for the Company in the
first quarter of fiscal 2010. The Company is currently evaluating the effect of ASC 810 on its
financial statements and results of operations and is currently not yet in a position to determine
such effect.
In August 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-05, Measuring
Liabilities at Fair Value, which is codified as ASC 820, Fair Value Measurements and
Disclosures. This Update provides amendments to ASC 820-10, Fair Value Measurements and
Disclosures Overall, for the fair value measurement of liabilities. This Update provides
clarification that in circumstances in which a quoted price in an active market for the identical
liability is not available, a reporting entity is required to measure fair value using a valuation
technique that uses the quoted price of the identical liability when traded as an asset, quoted
prices for similar liabilities or similar liabilities when traded as assets, or that is consistent
with the principles of ASC 820. The amendments in this Update also clarify that when estimating the
fair value of a liability, a reporting entity is not required to include a separate input or
adjustment to other inputs relating to the existence of a restriction that prevents transfer of the
liability. The amendments in this Update also clarify that both a quoted price in an active market
for the identical liability at the measurement date and the quoted price for the identical
liability when traded as an asset in an active market when no adjustments to the quoted price of
the assets are required are Level 1 fair value measurements. ASC 820 is effective for the first
reporting period (including interim periods) beginning after August 28, 2009. The adoption of this
Update did not have a significant impact on the Companys financial statements.
In December 2009, the FASB issued ASU No. 2009-17, Improvements to Financial Reporting by
Enterprises Involved with Variable Interest Entities (ASU 2009-17). ASU 2009-17 amends the
variable-interest entity guidance in FASB ASC 810-10-05-8 to clarify the accounting treatment for
legal entities in which equity investors do not have sufficient equity at risk for the entity to
finance its activities without financial support. ASU 2009-17 is effective as of the beginning of
each reporting entitys first annual reporting period that begins after November 15, 2009. ASU
2009-17 is effective for the Company in the first quarter of fiscal 2010. The Company is currently
evaluating the effect of ASU 2009-17 on its financial statements and results of operations and is
currently not yet in a position to determine such effect.
None of the above new pronouncements has current application to the Company, but one or more of
such pronouncements may be applicable to the Companys future financial reporting.
2. Organization
Chinawe.com Inc. (Chinawe) was incorporated under the laws of the State of California. Chinawes
principal business activity was providing professional management services relating to
non-performing loans (NPLs) in the Peoples Republic of China (PRC), as well as other
consulting services. During the first quarter of 2009, the Companys sole customer, Huizhou One
Limited (HOL) issued a notice of termination to terminate the services contracts with effect from
March 26 and March 27, 2009. Effective from March 27, 2009, the Company has become a non-operating
company.
The consolidated financial statements include the accounts of Chinawe and the following
subsidiaries (collectively referred to as the Company):
Officeway Technology Limited (Officeway); a company incorporated in the British Virgin Islands in
December 1999, which was formed for the purpose of acquiring (in March 2000) its wholly-owned
subsidiary, Chinawe Asset Management Limited (CAM (HK)).
CAM (HK); a company incorporated in Hong Kong in June 1997, which is an investment holding company.
7
Chinawe Asset Management (PRC) Limited (CAM (PRC)) was established in the PRC in April 2005 to
service the NPLs under services agreements with HOL, which accounted for 100% of the revenue from
assets management and related services for the six months ended June 30, 2009.
3. Going concern consideration
The Companys financial statements have been prepared on a going concern basis, which contemplates
the realization of assets and the settlement of liabilities and commitments in the normal course of
business. As of June 30, 2010, the Company had negative working capital and stockholders deficit
of US$2,252,870 and US$2,165,781, respectively, which raise substantial doubt about its ability to
continue as a going concern. The Company has relied on private financing by cash inflow from the
principal stockholders of the Company, who have agreed not to demand repayment of amounts due to
them as long as the Company has negative working capital. These stockholders have indicated their
intention to finance the Company for a reasonable period of time to enable the Company to
continue as a going concern, assuming that in such a period of time the Company would not be able
to raise additional capital to support its continuation. However, it is uncertain for how long or
to what extent such a period of time would be reasonable and there can be no assurance that the
financing from these stockholders will be continued. The accompanying financial statements do not
include or reflect any adjustments that might result from the outcome of these uncertainties.
4. Property, plant and equipment, net
Property, plant and equipment are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
June 30 , 2010
|
|
|
December 31, 2009
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
US$
|
|
|
US$
|
|
Office equipment
|
|
|
11,909
|
|
|
|
11,869
|
|
Computer equipment
|
|
|
50,753
|
|
|
|
50,760
|
|
Leasehold improvement
|
|
|
57,221
|
|
|
|
57,005
|
|
Motor vehicles
|
|
|
103,056
|
|
|
|
103,065
|
|
|
|
|
|
|
|
|
Total cost
|
|
|
222,939
|
|
|
|
222,699
|
|
Accumulated depreciation
|
|
|
(222,881
|
)
|
|
|
(219,487
|
)
|
Currency translation adjustment
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
Net
|
|
|
56
|
|
|
|
3,208
|
|
|
|
|
|
|
|
|
8
5. Long term debt
Long term debt consists of obligations under capital leases for purchases of vehicles with US$1,285
and US$7,216 outstanding as of June 30, 2010 and December 31, 2009, respectively. The debt is
collateralized by two motor vehicles with an aggregate net book value of US$10,064 and US$12,387 as
of June 30, 2010 and December 31, 2009, respectively, bearing interest at 3-5% per annum and is
repayable by monthly installments of US$2,002 with the final installment due in January 2011.
Maturity of the debt is as follows:
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
June 30, 2010
|
|
|
December 31, 2009
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
US$
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
Within 1 year
|
|
|
2,139
|
|
|
|
8,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Amount representing interest
|
|
|
(854
|
)
|
|
|
(1,389
|
)
|
|
|
|
|
|
|
|
Present value of net minimum lease payments
|
|
|
1,285
|
|
|
|
7,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
1,285
|
|
|
|
7,216
|
|
|
|
|
|
|
|
|
|
|
|
1,285
|
|
|
|
7,216
|
|
|
|
|
|
|
|
|
6. Related party transactions
The balances with related parties are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
Note
|
|
|
June 30 , 2010
|
|
|
December 31, 2009
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
US$
|
|
|
US$
|
|
Advances from stockholders
|
|
|
(a
|
)
|
|
|
1,465,014
|
|
|
|
1,392,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The amounts due are unsecured, non-interest bearing and repayable on demand. During the six
months ended June 30, 2010 and 2009, the Company received advances from related parties of
US$72,921 and US$171,344, respectively. In addition, during the six
months ended June 30, 2009, the Company repaid advances of
US$311 to related parties.
|
7. Income tax payables
It is managements intention to reinvest all the income attributable to the Company earned by its
operations outside the US. Accordingly, no US corporate income taxes are provided for in these
financial statements.
The Company is subject to income taxes on an entity basis on income arising in or derived from the
tax jurisdiction in which each entity is domiciled.
Under the current laws of the British Virgin Islands (the BVI), dividends and capital gains
arising from the Companys investments in the BVI are not subject to income taxes and no
withholding tax is imposed on payments of dividends to the Company.
Companies that carry on business and derive income in Hong Kong are subject to Hong Kong Profits
Tax at 16.5% for the three month periods ended June 30, 2010 and 2009, respectively. Companies that
carry on business and derive income in the PRC are subject to income tax at 25% for the six months
ended June 30, 2010 and 2009.
9
No income taxes have been provided for the subsidiary in Hong Kong as it has incurred losses for
taxation purposes during the six months ended June 30, 2010 and 2009, respectively.
8. Contingencies
One of the subsidiaries in the PRC is subject to the PRC enterprise income tax and business tax.
However, the Company in previous years only submitted tax returns and made payments for a portion
of the total tax liabilities, which was not in compliance with the tax laws and regulations in the
PRC. For this reason, the Company has made full provision for all tax liabilities in accordance
with the relevant tax laws and regulations, together with a surcharge that may be levied on the
Company at a daily rate of 0.05% of the underpaid taxes.
Despite the fact that the Company has fully accrued for the taxes and related surcharges in the
financial statements, the Company may be subject to penalties ranging from 50% to 500% of the
underpaid tax amounts. The exact amount of the penalty cannot be estimated with any reasonable
degree of certainty.
The Company is currently suspended in the State of California due to failure to file reports with
the Franchise Tax Board. The Company is in the process of preparing the relevant reports and
expects to be back in good standing in the coming future. The Company believes that the amount of
taxes and penalties owed will not be material to the financial statements. The Company is also
delinquent in filing its U.S. Federal tax returns. The Company is in the process of preparing the
relevant returns and does not believe that the amount of taxes owed will be material.
9. Stock Plan
On July 25, 2001 the Board of Directors approved the Chinawe.com Inc. 2001 Restricted Stock Plan
(the Plan), under which 5,000,000 shares of the Companys common stock have been reserved for
award under the Plan.
Pursuant to the Plan, stock awards may be granted to eligible officers, directors, employees and
consultants of the Company. As of June 30, 2010 and December 31, 2009, no awards have been made
under the Plan.
10. Subsequent Event
On July 26, 2010, Vivian Chu (Chu), Officeway, a wholly owned subsidiary of the Company, and ZHU
Guangming (the Purchaser) entered into a purchase agreement (the Agreement). Pursuant to the
Agreement, Chu and Officeway sold all of the outstanding shares of CAM (HK) to the Purchaser for an
aggregate purchase price of $1.00. By purchasing all of the outstanding shares of CAM (HK), the
Purchaser assumed approximately $1,900,000 of debt of CAM (HK) (which includes approximately
$1,500,000 owed to a director of the Company).
10
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the Consolidated Condensed Financial
Statements and notes thereto appearing elsewhere in this Form 10-Q. The following discussion
contains forward-looking statements. Our actual results may differ significantly from those
projected in the forward-looking statements. Factors that might cause future results to differ
materially from those projected in the forward-looking statements include, but are not limited to,
those discussed elsewhere in this document.
Overview Results of Operations
Effective March 27, 2009, the Company ceased providing professional management services relating to
non-performing loans (NPLs) in the Peoples Republic of China (PRC). The Company has terminated
its employees and closed down its offices. The Company has not identified a specific line of
business or territory for any new business. There can be no assurance that the Company will be
successful in identifying a new line of business that it can enter into or that if such new line of
business is identified, that the Company will have adequate funding to commence operations of a new
line of business. The principal stockholders of the Company have indicated their intention to
finance the Company for a reasonable period of time to enable the Company to continue as a going
concern, assuming that in such a period of time the Company would not be able to raise additional
capital to support its continuation. However, it is uncertain for how long or to what extent such
a period of time would be reasonable and there can be no assurance that the financing from these
stockholders will be continued.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
Turnover
|
|
|
|
|
|
|
65
|
|
|
|
|
|
|
|
131,623
|
|
Operating costs
|
|
|
(26,018
|
)
|
|
|
(149,033
|
)
|
|
|
(123,311
|
)
|
|
|
(367,912
|
)
|
Finance costs
|
|
|
(363
|
)
|
|
|
(980
|
)
|
|
|
1,139
|
|
|
|
(1,961
|
)
|
Other income
|
|
|
1,387
|
|
|
|
168
|
|
|
|
1,391
|
|
|
|
397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before taxation
|
|
|
(24,994
|
)
|
|
|
(149,780
|
)
|
|
|
(123,059
|
)
|
|
|
(237,853
|
)
|
Taxation
|
|
|
|
|
|
|
(16
|
)
|
|
|
|
|
|
|
(25,716
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before minority interest
|
|
|
(24,994
|
)
|
|
|
(149,796
|
)
|
|
|
(123,059
|
)
|
|
|
(263,569
|
)
|
Minority interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
discontinued operation
|
|
|
(24,994
|
)
|
|
|
(149,796
|
)
|
|
|
(123,059
|
)
|
|
|
(263,569
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED JUNE 30, 2010 (UNAUDITED) COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2009
(UNAUDITED)
OPERATING REVENUES
Operating revenues for the three months ended June 30, 2010 were US$0 compared to US$0 for the
comparable period last year.
OPERATING EXPENSES
The Companys operating expenses totaled US$26,018 for the three months ended June 30, 2010,
compared to US$149,033. This represented a decrease of US$123,015.
NET NON-OPERATING EXPENSES
Net non-operating expenses for the second quarter of 2010 totaled US$363, compared to US$980 for
the second quarter of 2009.
PROVISION FOR INCOME TAXES
No income tax expense for the three months ended June 30, 2010 and 2009 was incurred because the
Company and its subsidiaries incurred losses for taxation purposes.
NET LOSS FROM DISCONTINUED OPERATIONS
The Company has recorded a net loss from discontinued operations of US$24,994 for the second
quarter of 2010, compared to a net loss from discontinued operations of US$149,796 for the second
quarter of 2009.
SIX MONTHS ENDED JUNE 30, 2010 (UNAUDITED) COMPARED TO SIX MONTHS ENDED JUNE 30, 2009
(UNAUDITED)
OPERATING REVENUES
Operating revenues for the six months ended June 30, 2010 were US$0 compared to US$131,623 for the
comparable period last year.
OPERATING EXPENSES
The Companys operating expenses totaled US$123,311, for the six months ended June 30, 2010,
compared to US$367,912, for the first two quarters of 2009. This represented a decrease of
US$244,601.
11
NET NON-OPERATING EXPENSES
Net non-operating expenses for the first two quarters of 2010 totaled US$1,139 compared to US$1,961
in the first two quarters of 2009.
PROVISION FOR INCOME TAXES
No income tax expense for the six months ended June 30, 2010 and 2009 was incurred because the
Company and its subsidiaries incurred losses for taxation purposes.
NET LOSS FROM DISCONTINUED OPERATIONS
The Company has recorded a net loss from discontinued operations of US$123,059 for the first two
quarters of 2010, compared to a net loss from discontinued operations of US$263,569 for the first
two quarters of 2009.
LIQUIDITY AND CAPITAL RESOURCES
The Company is currently financing its operations primarily through cash generated from financing
activities.
Cash and cash equivalent balances as of June 30, 2010 and June 30, 2009 were US$17,076 and
US$230,372, respectively.
Net cash used in operating activities of discontinued operations was US$128,033 and US$304,388 for
the six months ended June 30, 2010 and 2009, respectively.
Net cash provided by financing activities of discontinued operations was US$65,240 and US$160,982
in the six months ended June 30, 2010 and 2009, respectively. The decrease in net cash provided by
financing activities of discontinued operations mainly resulted from the decrease in net advances
from related parties.
During the six months ended June 30, 2010, the Company did not enter into any transactions using
derivative financial instruments or derivative commodity instruments nor held any marketable equity
securities of publicly traded companies. Accordingly, the Company believes its exposure to market
interest rate risk and price risk is not material.
During the six months ended June 30, 2010 and 2009, the Company had no material purchases or
investments.
CRITICAL ACCOUNTING POLICIES
Given that the Company currently has no operating business, there are no critical accounting
policies that currently affect our financial condition and results of operations.
Related party transactions
We do not have any of the following:
|
|
Trading activities that include non-exchange traded contracts accounted for at fair value.
|
|
|
|
Relationships and transactions with persons or entities that derive benefits from any
non-independent relationships other than related party transactions discussed in this
Report.
|
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the Companys financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources
that are material to the Company.
12
Future Operations
The Company is seeking investment opportunities that may provide revenues for the Company. However,
the Company has not identified a specific line of business or territory for any such new business.
There can be no assurance that the Company will be successful in identifying a new line of business
that it can enter into or that if such new line of business is identified, that the receipt of
revenues is probable.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are not exposed to a material level of market risk due to changes in interest rates, since we
have never registered or issued debt instruments. Our outstanding long term liabilities are mostly
loans from a director or other related parties, which are unsecured and interest rate fixed or
interest-free. Currently we do not maintain a portfolio of interest-sensitive debt instruments or
any fixed-income derivatives. Management has continuously paid great attention to the financial
leverage in business development and interest expenses in operations.
Item 4T. Controls and Procedures
.
(a) Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company conducted an evaluation, under the
supervision and with the participation of its Chief Executive Officer and Chief Financial Officer,
of its disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the
Securities Exchange Act of 1934, as amended (Exchange Act)). Based upon this evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures are effective to ensure that information required to be disclosed by the
Company in the reports that the Company files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms and which also are effective in ensuring that information required to
be disclosed by the Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Companys management, including the Companys Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Managements assessment of the effectiveness of the Companys internal control over financial
reporting is as of the six months ended June 30, 2010. We believe that our internal control over
financial reporting is effective. We have not identified any current material weaknesses
considering the nature and extent of our current operations and any risks or errors in financial
reporting under current operations.
(b) Changes in Internal Controls
There were no changes in the Companys internal control over financial reporting for the six months
ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect,
the Companys internal control over financial reporting.
13
PART II OTHER INFORMATION
Item 6. Exhibits.
|
|
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
|
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
|
|
|
32.1
|
|
Section 1350 Certification of Chief Executive Officer
|
|
|
|
32.2
|
|
Section 1350 Certification of Chief Financial Officer
|
14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
Date: August 16, 2010
|
CHINAWE.COM INC.
(Registrant)
|
|
|
By:
|
/s/ Man Keung Wai
|
|
|
|
Man Keung Wai
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
By:
|
/s/ Vivian Chu
|
|
|
|
Vivian Chu
|
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
15
EXHIBIT INDEX
|
|
|
Exhibit No.
|
|
Description
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
|
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
|
|
|
32.1
|
|
Section 1350 Certification of Chief Executive Officer
|
|
|
|
32.2
|
|
Section 1350 Certification of Chief Financial Officer
|
16
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