NOTES TO FINANCIAL STATEMENTS
1. Basis
of Presentation
The accompanying financial statements present the financial position of Chinawe.com Inc. (Chinawe or the
Company) as of September 30, 2013 and December 31, 2012, and its results of operations for the nine months ended September 30, 2013 and 2012. 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 nine months ended
September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.
The balance sheet
at December 31, 2012 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, 2012.
Adoption of recently issued accounting pronouncements
In
February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02 Comprehensive Income (Topic 220). The purpose of this Update is to attain that objective by
requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. generally accepted accounting
principles (GAAP) to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to
cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a
balance sheet account (for example, inventory) instead of directly to income or expense in the same reporting period. This pronouncement has no current application to the Company.
In April 2013, the FASB issued ASU No. 2013-04 Liabilities (Topic 405). The purpose of this Update is to provide guidance for the
recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for obligations
addressed within existing guidance in U.S. GAAP. Examples of obligations within the scope of this Update include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. U.S. GAAP does not include specific
guidance on accounting for such obligations with joint and several liability, which has resulted in diversity in practice. Some entities record the entire amount under the joint and several liability arrangement on the basis of the concept of a
liability and the guidance that must be met to extinguish a liability. Other entities record less than the total amount of the obligation, such as an amount allocated, an amount corresponding to the proceeds received, or the portion of the amount
the entity agreed to pay among its co-obligors, on the basis of the guidance for contingent liabilities. This pronouncement has no current application to the Company.
2. Organization
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 in the Peoples Republic of China, as well as other consulting services. During the first
quarter of 2009, the Companys sole customer, Huizhou One Limited, 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 became
a non-operating company.
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The consolidated financial statements include the accounts of Chinawe and the following subsidiary (collectively
referred to as the Company):
Officeway Technology Limited, 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) was disposed of as of July 26, 2010.
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 September 30, 2013, the Company had
negative working capital and stockholders deficit of U.S.$381,683 and U.S.$381,683, respectively, which raise substantial doubt about its ability to continue as a going concern.
The Company has relied on private financing by cash inflows from the principal stockholders of the Company, who have agreed not to demand repayment of amounts
due to them as long as the Company has negative working capital. These stockholders have indicated their intention to finance the Company for a reasonable period of time to enable the Company to continue as a going concern, assuming that in such a
period of time the Company would not be able to raise additional capital to support its continuation. However, it is uncertain for how long or to what extent such a period of time would be reasonable and there can be no assurance that
the financing from these stockholders will be continued. The accompanying financial statements do not include or reflect any adjustments that might result from the outcome of these uncertainties.
4. Due to related parties
The balances with related
parties are as follows:
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As of
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As of
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Note
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September 30, 2013
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December 31, 2012
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(unaudited)
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U.S.$
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U.S.$
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Advances from stockholders
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(a
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378,248
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363,978
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(a)
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The amounts due are unsecured, non-interest bearing and repayable on demand. During the nine months ended September 30, 2013 and 2012, the Company received advances from related parties of U.S.$378,248 and
U.S.$363,978, respectively. In addition, during the nine months ended September 30, 2013 and 2012, the Company repaid advances of U.S.$0 and U.S.$0, respectively, to related parties.
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5. Income tax expenses
It is managements intention
to reinvest all the income attributable to the Company earned by its operations outside the U.S. Accordingly, no U.S. 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.
6. Contingencies
The Company is currently suspended in the State of California due to failure to file reports with the Franchise Tax Board. The Company is also delinquent in
filing its U.S. Federal tax returns. The Company has decided not to pursue reinstatement in California or prepare and file past due U.S. Federal tax returns until it has formulated a plan for once again becoming an operating company.
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