WORLDWIDE ENERGY & MANUFACTURING USA INC - FORM 10-Q/A

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - WORLDWIDE ENERGY & MANUFACTURING USA INC	ex321.htm
EX-31.2 - EXHIBIT 31.2 - WORLDWIDE ENERGY & MANUFACTURING USA INC	ex312.htm
EX-31.1 - EXHIBIT 31.1 - WORLDWIDE ENERGY & MANUFACTURING USA INC	ex311.htm
EX-32.2 - EXHIBIT 32.2 - WORLDWIDE ENERGY & MANUFACTURING USA INC	ex322.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

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

For the quarterly period ended June 30, 2009

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

For the transition period from ____ to ____

WORLDWIDE ENERGY AND MANUFACTURING USA, INC.

(Exact name of registrant as specified in its charter)

Colorado	0-31761	84-1536519
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

408 N. Canal Street South San Francisco, CA 94080
(Address of principal executive offices)

Registrant’s telephone number, including area code: (650) 794-9888

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 /X/ No / /

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.

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer [ ] Smaller reporting company [X]

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

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 [ ] No [ ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes / / No / /

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of stock, as of the latest practicable date.

Class of Securities	Shares Outstanding at April 15, 2010
Common Stock, no par value	5,642,567

INDEX

	PAGE

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS – AS RESTATED	5

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME – AS RESTATED	7

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – AS RESTATED	9

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	10

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	44

ITEM 4. CONTROLS AND PROCEDURES	44

PART II. OTHER INFORMATION	49

EXHIBITS	49

SIGNATURES	51

PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

(a)

The unaudited condensed consolidated financial statements of registrant for the three and six months ended June 30, 2009 and 2008 , follow. The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.

EXPLANATORY NOTE

This First Amended Quarterly Report on Form 10-Q/A discloses and discusses the impact and effect of a restatement of our previously filed financial statements for the quarters ended June 30, 2009 and 2008; and amends Items 1, 2 and 4 of Part I of our Quarterly Report on Form 10-Q previously filed on August 19, 2009. This restatement is necessary due to the original equity classification of certain warrants granted in connection with the Company’s 2008 equity financing (completed on June 23, 2008 and July 24, 2008), and included in the Company’s previously issued consolidated financial statements being incorrect. Management has subsequently determined that the warrants granted in connection with the 2008 equity financing should have been recorded as a warrant derivative liability and not as equity. In addition, certain bonuses earned during 2008, were incorrectly recorded in the first quarter ended March 31, 2009 and not accrued as of December 31, 2008. Also ,we failed to properly classify direct labor and overhead as cost of goods sold for the year ended December 31, 2008. We previously classified the direct labor and overhead as a component of selling, general and administrative expenses, a line item in the consolidated statements of operations of our previously issued consolidated financial statements. As a result, our management restated our financial statements to reflect these corrections.

This First Amended Quarterly Report on Form 10-Q/A for the quarters ended June 30, 2009 and 2008 amends and restates only those items of the previously filed Quarterly Report on Form 10-Q which have been affected by the restatement. In order to preserve the nature and character of the disclosures set forth in such items as originally filed, no attempt has been made in this amendment (i) to modify or update such disclosures except as required to reflect the effects of the restatement or (ii) to make revisions to the Notes to the Condensed Consolidated Financial Statements except for those which are required by or result from the effects of the restatement. For additional information regarding the restatement, see Note 20 to our Condensed Consolidated Financial Statements included in Part I - Item I. No other information contained in our previously filed Form 10-Q for the quarters ended June 30, 2009 and 2008 has been updated or amended.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS – AS RESTATED

	June 30,		December 31,
	2009		2008
	(Unaudited)
ASSETS	(Restated)		(Restated)
Current assets:
Cash and cash equivalents	$	4,111,937	$	5,092,476
Accounts receivable, net of allowances of $272,000 and $46,000 at June 30, 2009 and December 31, 2008, respectively		9,061,246		4,790,506
Notes receivable		104,081		269,507
Inventories		4,840,432		3,754,765
Income tax receivable		338,148		-
Advances to suppliers		455,390		99,824
Other receivable		185,400		185,400
Prepaid and other current assets		671,119		206,770

Total current assets		19,767,753		14,399,248

Property and equipment, net		2,050,320		1,353,539
Intangible assets		1,101,000		1,101,000
Goodwill		285,714		285,714
Investment at cost		51,892		51,892
Deposits paid for contracts in process		2,500,000		1,673,084
Long term receivable – related party		253,729		260,973
Other assets		-		7,559

Total assets	$	26,010,408	$	19,133,009

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,492,605	$	3,400,253
Accrued expenses		1,046,332		1,073,994
Lines of credit		1,300,000		-
Warrant derivative liability		1,558,752		486,356
Acquisition cost payable		-		285,714
Tax payable		481,468		364,213
Due to related parties		1,242,393		1,243,024
Customer deposits		788,162		964,998

Total current liabilities		14,909,712		7,818,552

Non-current liabilities
Line of credit		848,702		937,075
Loan payable to stockholders		-		60,024
Total non-current liabilities		848,702		997,099

Total liabilities		15,758,414		8,815,651

Commitments and contingencies (Note 3)

Stockholders’ equity
Common stock (No Par Value : 100,000,000 shares authorized;
3,621,612 and 3,493,512 shares issued and outstanding) at June 30, 2009 and December 31, 2008, respectively		2,650,872		2,535,652
Retained earnings		6,270,784		6,681,589
Accumulated other comprehensive income		581,563		487,478

Total equity attributable to Worldwide		9,503,219		9,704,719

Noncontrolling interest		748,775		612,639

Total stockholders’ equity		10,251,994		10,317,358
Total liabilities and stockholders’ equity	$	26,010,408	$	19,133,009

See accompanying notes to unaudited condensed consolidated financial statements.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME – AS RESTATED

(UNAUDITED)

	For The Six Months Ended						For The Three Months Ended
	June 30 ,						June 30,
	2009			2008			2009			2008
	(Restated)			(Restated)			(Restated)			(Restated)
Revenue
Sales	$	20,598,780		$	12,245,410		$	10,316,913		$	6,854,953
Cost of goods sold		17,258,638			10,066,046			8,695,838			5,674,590
Gross profit		3,340,142			2,179,364			1,621,075			1,180,363

Operating Expenses
Selling, general and administrative expenses		1,843,997			1,165,726			1,017,842			621,949
Management and professional fees paid to stockholders		180,000			153,000			90,000			72,680
Stock based compensation		115,220			110,000			83,100			-
Depreciation		162,881			7,834			89,705			3,862

Total operating expenses		2,302,098			1,436,560			1,280,647			698,491

Net operating income		1,038,044			742,804			340,428			481,872

Other Income (expenses)
Interest income		11,157			3,950			44			2,812
Interest expenses		(20,809	)		(73,088	)		(13,207	)		(38,703	)
Interest expense paid to stockholders		-			(17,446	)		-			-
Other income (expense)		(1,079,388	)		189,027			(1,098,793	)		189,027
Exchange gain (loss)		5,425			(693	)		1,460			(691	)


Total other income (expenses)		(1,083,615	)		101,750			(1,110,496	)		152,445

Income (loss) before income taxes		(45,571	)		844,554			(770,068	)		634,317
Income taxes		(242,624	)		(8,298	)		(204,078	)		(19,702	)

Income (loss) after taxes		(288,195	)		836,256			(974,146	)		614,615
Net income(loss) from discontinued operations, net of tax		-			8,132			-			(553	)
Net income (loss) before noncontrolling interest		(288,195	)		844,388			(974,146	)		614,062
Net income attributable to noncontrolling interest		(122,610	)		-			(97,453	)		-

Net income (loss) attributable to Worldwide		(410,805	)		844,388			(1,071,599	)		614,062

Other comprehensive income
Foreign currency translation, net of tax		107,656			244,440			86,621			146,017
Comprehensive loss to attributable to the noncontrolling interest		(13,571	)		-			(19	)		-
Comprehensive income (loss)	$	(316,720	)	$	1,088,828		$	(984,997	)	$	760,079

Basic Earnings (loss) per share	$	(0.12	)	$	0.38		$	(0.30	)	$	0.28

Basic Weighted avg. shares outstanding		3,555,855			2,202,490			3,617,512			2,158,525

Diluted Earnings (loss) per share	$	(0.12	)	$	0.38		$	(0.30	)	$	0.28

Diluted Weighted avg. shares outstanding		3,555,855			2,202,490			3,617,512			2,158,525

See accompanying notes to unaudited condensed consolidated financial statements.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED) –AS RESTATED

	For The Six Months Ended
	June 30
	2009			2008
Cash flows from operating activities
Net income (loss)	$	(288,195	)	$	844,388
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation		162,881			63,407
Allowance for bad debts		226,796			(20,000	)
Stock based compensation		115,220			110,000
(Gain) loss on warrant re-valuation		1,072,396			(189,027	)

Changes in operating assets and liabilities:
Accounts receivable		(4,352,836	)		(1,342,927	)
Notes receivable		165,476			-
Inventories		(1,085,510	)		(1,428,840	)
Income tax receivable		(338,190	)		15,769
Advance to Suppliers		(355,272	)		69,565
Related party payable		6,497			-
Prepaid and other current assets		116,897			(101,209	)
Accounts payable		5,096,026			(475,019	)
Accrued expense and acquisition cost payable		(641,487	)		(48,783	)
Tax payable		117,220			6,221
Customer deposits		(176,385	)		(7,328	)

Net cash used in operating activities		(158,466	)		(2,503,783	)

Cash flows from investing activities
Loan to related parties		-			(816,704	)
Capital expenditures		(847,124	)		(173,142	)
Deposits paid for investment in subsidiaries		(1,120,193	)		(40,680	)


Net cash used in investing activities		(1,967,317	)		(1,030,526	)

Cash flows from financing activities
Proceeds from issuance of common stock and warrants		-			4,356,009
Repayment of loans payable to shareholders		(60,024	)		(84,577	)
Proceeds / (repayment) from lines of credit		1,300,000			(1,234,882	)
Repayment of bank loans		(88,373	)		(884	)

Net cash flows provided by financing activities:		1,151,603			3,035,666

Effect of exchange rate changes in cash and cash equivalents		(6,359	)		126,509

Net decrease in cash and cash equivalents		(980,539	)		(372,134	)

Cash and cash equivalents- beginning of period		5,092,476			2,111,825

Cash and cash equivalents- end of period	$	4,111,937		$	1,739,691

Supplemental disclosure of non cash activities:
Stock based compensation expense	$	115,220		$	110,000

Cash paid during the period for:
Interest paid in cash	$	20,809		$	51,887
Income tax paid in cash	$	47,850		$	35,758

See accompanying notes to unaudited condensed consolidated financial statements.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. MANAGEMENT'S REPRESENTATION OF INTERIM FINANCIAL INFORMATION

The accompanying unaudited condensed financial statements have been prepared by Worldwide Energy and Manufacturing USA, Inc. and subsidiaries without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These condensed consolidated financial statements should be read in conjunction with the restated audited financial statements at December 31, 2008 as filed in the Company Form 10-K filed with the Commission on April 15, 2010.

2. SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the condensed consolidated financial statements and the restated December 31, 2008 financials included in the 10-K/A filed on September 1, 2009 and August 19, 2009 and April 15, 2010 .

Description of Business

Worldwide Energy and Manufacturing USA, Inc. (“Worldwide” or “the Company”) is an international contract manufacturing and engineering firm using factories in China. Worldwide services customers primarily in Europe, South Korea for our solar modules and United States-based companies for their outsource of smaller and scale production orders for offshore production in China. From our inception in 1993 until 2005, we were strictly an intermediary or “middle man,” working with our customers and our subcontractors to assure that our customers received high quality components on a timely basis that fulfilled their specific needs. While we still subcontract a significant portion of our business, since 2005, we have begun the transition to becoming a direct contract manufacturer, operating several of our own factories. Recently, we announced the opening of two additional factories, allowing us to become a direct manufacturer for solar modules and for power supply units as described below.

In February of 2008, Worldwide established a solar division that focuses on photovoltaic module technology under the brand name of “AmeriSolar.” On February 25, 2008, the Company changed its name from Worldwide Manufacturing USA, Inc. to Worldwide Energy and Manufacturing USA, Inc. in order to reflect its expansion into the solar energy industry. The Company issued 300,000 restricted shares for the AmeriSolar brand name. Worldwide leased a 129,167 square foot facility in Ningbo, China. The lease term is from July 18, 2008 to July 17, 2013. This facility houses the production operations and R&D center for the Company’s solar division. Operations at this facility began during the first quarter of 2009.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The terms of the purchase Agreement stated that Worldwide will pay in cash consideration of approximately $1,000,000 dollars for 55% interest in DeHong. Intech paid first installment of $714,286 on behalf of Worldwide in September, 2008. During the three months ended March 31, 2009, Worldwide paid $308,414 for the second installment and the total consideration of the purchase price was $1,022,700.

The Company funded the acquisition with some of the proceeds from its sale of 1,055,103 shares of its common stock for $4,747,970 which took place in June 2008. Shanghai De Hong Electric and Electronic Company is the holding company for the operating subsidiary Shanghai Intech -Detron Electronic Co. (“Detron”). Worldwide received 55% control of Detron. Detron is a power supply factory in Shanghai, China with designing and R & D. This was accounted for as a purchase of Detron, where Worldwide has operating control. The Company began to consolidate the operation of Detron into the Company’s consolidated financial statements beginning on October 1, 2008.

On August 15, 2008, Worldwide formed a new company called Nantong Ningbo Solar factory (“Ningbo Solar”), which is the solar energy research and development manufacturer. The Company established a factory to provide installation services to different solar project. The Company also acts as agent to import or export the products and services overseas. The Ningbo Solar factory began operations from the first quarter of 2009.

On November 14, 2005, Worldwide established a die-casting and machining factory through leasing an existing facility from a former supplier, and initially investing $500,000 to upgrade the equipment and manufacturing buildings. In these transactions we acquired assets, the expertise of the employees, the managers of the factories, and a portion of the existing customers of those factories. In the third quarter of 2005, we also established an electronics manufacturing factory. As a result, these two continued factory operations and the recently announce new factories described above, as of December 31, 2008 we own and operate four factories that we now use for the manufacture of certain product lines that we historically had to subcontract, and we are using the services of approximately 40 subcontractors to manufacture those product lines for which we do not have our own manufacturing capabilities.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Principles of Consolidation

The accompanying consolidated financial statements include Worldwide Energy and Manufacturing USA, Inc., a Colorado corporation and a public company, its operating subsidiary, Worldwide USA, a California corporation, and six subsidiary companies, Shanghai Intech Electro-Mechanical Products Co., Ltd., Shanghai Intech Precision Mechanical Products Ltd., Detron, Ningbo Solar Factory, Nantong Solar Factory and De Hong, owned by Worldwide USA. In accordance with the FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, the Company also consolidates any variable interest entities (VIEs), of which it is the primary beneficiary, as defined. The Company does not have any VIEs that need to be consolidated. When the Company does not have a controlling interest in an entity, but exerts a significant influence over the entity, the Company applies the equity method of accounting. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company adopted SFAS No. 160 “Non-Controlling Interest in Consolidated Financial Statements” on January 1, 2009, whereby Non-Controlling Interest (identified as minority interest) is reclassified to Shareholder equity. The Company’s presentation in the accompanying Consolidated balance sheet has $748,775 and $612,639 in Non-Controlling interest as of June 30, 2009 and December 31, 2008 respectively, due to the consolidation of certain Non-Wholly owned subsidiaries.

Comprehensive Income

The Company reports comprehensive income in accordance with FASB ASC Topic 220 “Comprehensive Income," which established standards for reporting and displaying comprehensive income and its components in a financial statement that is displayed with the same prominence as other financial statements.

The accumulated other comprehensive income on the consolidated balance sheets at June 30, 2009 and December 31, 2008 are summarized as follows:

	June 30, 2009		June 31, 2008
Accumulated Other Comprehensive Income
Foreign Currency Translation Adjustment	$	581,563	$	487,478
Total	$	581,563	$	487,478

The components of comprehensive income on the statements of income and comprehensive income for the three and six month periods ended June 30, 2009 and 2008 are summarized as follows:

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2009			2008		2009			2008
	(Restated)			(Restated)		(Restated)			(Restated)
Other Comprehensive Income
Net Income (loss) attributable to Worldwide	$	(1,071,599	)	$	614,062	$	(410,805	)	$	844,388
Foreign Currency Translation Adjustment		86,621			146,017		107,656			244,440
Comprehensive Income (Loss) attributable to Non-Controlling Interest		(19	)		-		(13,571	)		-
Total Comprehensive Income	$	(984,997	)	$	760,079	$	(316,720	)	$	1,088,828

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Accounts Receivable

Trade accounts receivables are recorded at the invoice amount and do not bear interest. Amounts collected on trade account receivables are included in net cash provided by operations activities in the consolidated cash flow statements. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance management considers historical losses, current receivables aging reports and existing industry and the People’s Republic of China (“PRC”) economic data. The Company reviews its allowances every month. Past due invoices over 90 days and over specific amounts are reviewed individually for collectability. Account receivables are charged off against the allowance after all means of collection have been exhausted and potential for recovery is considered remote. At June 30, 2009 an allowance of $272,000 for doubtful accounts was recorded based on the procedures above. In the period ending June 30, 2008 for both the three and six month period there was a credit for bad debt of $20,000. The Company does not have any off balance sheet credit exposure related to its customers.

Property and equipment

Property, plant and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the related asset type using the straight-line method for financial statement purposes. Maintenance and repairs are charged to expense as incurred and the costs of additions and betterments that increase the useful lives of the assets are capitalized. When property or equipment is disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts and any gain or loss is included in operations.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The estimated service lives of property and equipment are as follows:


Buildings and leasehold improvements		7 to 40 years
Machinery and equipment		5 years
Transportation vehicles		5 years
Furniture and fixtures		7 years
Computers and computer software		3 years

Construction in-progress

Plant and production lines currently under development are accounted for as construction-in-progress. Construction-in-progress is recorded at acquisition cost, including land rights cost, development expenditure, professional fees and the interest expenses capitalized during the course of construction for the purpose of financing the project. Upon completion and readiness for use of the project, the cost of construction-in-progress is to be transferred to property and equipment, at which time depreciation will commence. As of June 30, 2009, the Company has incurred and capitalized into construction-in-progress $439,710 of its construction costs. This construction in progress is for the building of a new solar factory which will be approximately 128,000 square feet. The Company had no capitalized interest and funded this construction through operations without the use of outside financing. The estimated cost to be incurred in 2009 to complete the project is approximately $2,750,000.

Long-Lived Assets

In accordance with FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. As of June 30, 2009, management has determined there is no such impairment on Long-Lived assets. However, there can be no assurance that demand for the Company’s products or services will continue, which could result in an impairment of Long-Lived assets in the future.

Inventories

Inventories are stated at lower of cost or market and consist of materials, labor and overhead. The Company determines the cost of inventory by the first-in, first-out method. The Company evaluates inventories for excess quantities and obsolescence. This evaluation includes analyses of sales levels by product and projections of future demand. In order to state the inventory at lower of cost or market, the Company maintains reserves against its inventory. If future demand or market conditions are less favorable than the Company’s projections, a write-down of inventory may be required, and would be reflected in cost of goods sold in the period the revision is made. Inventories consist of raw material, work in progress and finished goods of manufactured products.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Revenue Recognition

The Company recognizes revenues in accordance with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104 “Revenue Recognition”. The Company recognizes revenue from product sales when the orders are completed and shipped, provided that collection of the resulting receivable is reasonably assured. Amounts billed to customers are recorded as sales while the shipping costs are included in cost of sales. Returns on defective custom parts may only be exchanged for replacement parts within 30 days of the invoice date. Returns on defective catalogue parts, which can be resold, may be exchanged for replacement parts or for a refund. Revenue from non-refundable customer tooling deposits is recognized when the materials are shipped or when the deposit is forfeited, whichever is earlier.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. A substantial amount of the Company’s cash is held in bank accounts in the People’s Republic of China and is not protected by the Federal Deposit Insurance Corporation (FDIC) insurance or any other similar insurance. Accounts held at U.S. financial institutions are insured by the FDIC up to $250,000. As of June 30, 2009 the Company’s cash balance held at U.S banks was $2,008,897, which was $1,758,897 in excess of the insured amounts. Given the current economic environment and the financial conditions of the banking industry there is a risk that deposits may not be readily available or covered by such insurance. The Company has had no loss on excess cash in banks in past years.

Income tax

We are subject to income taxes in the U.S. and China. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes (SFAS 109), and prescribes a recognition threshold of more-likely-than-not to be sustained upon examination. We do not have any material uncertain tax positions regarding disclosure pursuant to FIN 48.

Taxation on profits earned in the PRC has been calculated on the estimated assessable profits for the year at rates of taxation prevailing in the PRC in which the Company operates.

The Company accounts for income tax under the provisions of SFAS 109 Accounting for Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company’s deferred tax assets and liabilities have historically and in the current period been minimal.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company does not accrued United States income tax on unremitted earning from foreign operations, as it is the Company’s intention to invest these earning in the foreign operations indefinitely.

Under the Provisional Regulations of The People’s Republic of China Concerning Income Tax on Enterprises promulgated by the State Council which came into effect on January 1, 1994, income tax is payable by a Wholly Foreign Owned Enterprises at a rate of 15% of their taxable income. Preferential tax treatment may, however, be granted pursuant to any law or regulations from time to time promulgated by the State Council. On March 16, 2007, The People’s Republic of China enacted a new Enterprise Income Tax Law for the purpose of unifying the tax treatment of domestic and foreign enterprises. This new law eliminates the preferential tax treatment for new Wholly Foreign Owned Enterprises but allows previously granted exemptions to stay in place through 2012, with the exception that the statutory tax rate will increase by 2% per year from 15% in 2006 to 25% by 2012. The Company did not have any subsidiaries that qualified for any preferred tax treatment.

Goodwill

Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase businesses combination. Goodwill is reviewed for impairment at least annually in accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets”. The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with FASB Statement No. 141, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.

The Company performs its annual impairment review of goodwill in December, and when a triggering event occurs between annual impairment tests. The Company recorded no impairment loss for December 31, 2008 or for the period ending June 30, 2009.

Non-Cash Equity Transactions

Shares of equity instruments issued for non-cash consideration are recorded at the fair value of the consideration received based on the market value of services to be rendered, or at the value of the stock given, considered in reference to contemporaneous cash sale of stock.

Accounting for Derivatives

The Company evaluates stock options, stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of Financial Accounting Standards Board (“FASB”) Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities’ (“FAS 133”). The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under FAS 133 are reclassified to a liability account at the fair value of the instrument on the reclassification date.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In addition, the Company evaluated EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”, which sets forth conditions that must be met to determine whether the derivative instrument should be classified as equity or classified as a liability.

Estimates

The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Actual results may differ from those estimates and such differences may be material to the financial statements. The more significant estimates and assumptions by management include among others: useful lives and residual values of fixed assets, fair market values of inventory, warrant derivative liability, warranty accrual, and goodwill and intangible assets impairment tests. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.

Foreign Currency Transactions and Translation

The Company’s principal country of operations is The People’s Republic of China. The financial position and results of operations of the Company are determined using the local currency (“Renminbi”) as the functional currency. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period.

Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rates prevailing at the balance sheet date. The registered equity capital denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. All translation adjustments resulting from the translation of the financial statements into the reporting currency (“US Dollars”) are dealt with as a separate component within stockholders’ equity. Translation adjustments net of tax totaled $86,621 and $146,017, for the three months ended June 30, 2009 and 2008, respectively, and $107,656 and $244,440, for the six months ended June 30, 2009 and 2008, respectively.

Fair Value of Financial Instruments

The Company applies the provisions of SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”. SFAS No. 107 requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. SFAS No. 107 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of June 30, 2009 and December 31, 2008 the fair value of cash, accounts receivable, other receivables, accounts payable, commercial notes payable, lines of credit and accrued expenses approximated carrying value due to the short maturity of the instruments, quoted market prices, or interest rates, which fluctuate with market rates.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 establishes a framework for measuring fair value in generally accepted accounting principles, clarifies the definition of fair value within that framework, and expands disclosures about the use of fair value measurements. SFAS No. 157 applies to fair value measurements required by existing accounting pronouncements and does not require any new fair value measurements. The Company adopted FAS 157 on January 1, 2008.

On January 1, 2009 the Company adopted FASB Staff Position No. FAS 157-2 for non-financial assets and non-financial liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a nonrecurring basis as permitted by, which provided a deferral of such provisions until 2009. The adoption of FAS157-2 did not have a material impact on the Company’s consolidated financial statements.

Various inputs are considered when determining the fair value of the Company’s investments and long-term debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.

·	Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets.

·	Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.).

·	Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).

The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company’s had a warrant derivative liability carried at fair value on a recurring basis at June 30, 2009.

The following are the major categories of assets and liabilities measured at fair value on a recurring basis during the period ended June 30, 2009, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

Description	Level 1: Quoted Prices in Active Markets for Identical Assets		Level 2: Significant Other Observable Inputs		Level 3: Significant Unobservable Inputs		Total at June 30, 2009

Warrant Derivative Liability	$	-	$	1,558,752	$	-	$	1,558,752
Total	$	-	$	1,558,752	$	-	$	1,558,752

The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.

Basic and diluted earnings per share

The Company reports basic earnings per share in accordance with SFAS No. 128, “Earnings Per Share”. Basic earnings per share are computed using the weighted average number of shares outstanding during the periods presented. The weighted average number of shares of the Company represents the common stock outstanding during the reporting periods.

Diluted earnings per share is based on the assumption that all dilutive options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options are assumed to be exercised at the time of issuance, and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Basic and diluted earnings per share are the same as there was no dilutive effect of the warrants and stock options for the three and six months ended June 30, 2009 and 2008.

Concentrations, Risks, and Uncertainties

All of the Company’s manufacturing is located in the People’s Republic of China (PRC). There can be no assurance that the Company will be able to successfully continue to manufacture its products and failure to do so would have a material adverse effect on the Company’s financial position, results of operations and cash flows. Also, the success of the Company’s operations is subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general economic conditions, price of raw material, competition, governmental and political conditions, and changes in regulations. Because the Company is dependant on foreign trade in PRC, the Company is subject to various additional political, economic and other uncertainties. Among other risks, the Company’s operations will be subject to risk of restrictions on transfer of funds, domestic and international customs, changing taxation policies, foreign exchange restrictions, and political and governmental regulations.

The Company operates in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between U.S. dollars and the Chinese currency RMB.

At June 30, 2009, one customer accounted for more than 10% of the Company’s accounts receivable, with total amounts of $2,727,733, representing 30% of total accounts receivable in aggregate. At June 30, 2008, one customer accounted for more than 10% of the Company’s accounts receivable, with total amounts of $2,539,464, representing 62% of total accounts receivable in aggregate.

The Company did not have concentration of business with suppliers constituting greater than 10% of the Company’s gross sales during 2009 and 2008.

Payments of dividends may be subject to some restrictions due to the fact that the operating activities are conducted in subsidiaries residing in the Peoples Republic of China.

As of June 30, 2009 and 2008 67.5% and 47% of the Company's business was in the renewable energy industry.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As part of the production process, the Company may be required by its suppliers to advance funds under short-term agreements for tooling and other pre-production costs. The loans are generally unsecured and may carry interest at the prevailing market rate for short-term instruments. Such tooling is in most cases owned by the suppliers, and is a value primarily for the specific needs of the Company’s customers. The Company in turn requires its customers to provide a non-refundable down payment to cover such startup costs. The Company has customer deposit as of June 30, 2009 of $788,162. In the event that a supplier is unable to fulfill its production agreements with the Company, management believes that other suppliers can be found for the Company’s products. However, a change in suppliers would cause a delay in the production process, and could result in loss of tooling deposits and other supplier advances, which could negatively affect the Company’s operating results. At June 30, 2009, the Company has made advances to its suppliers of $ 455,390 for materials and inventory.

The Company sells its goods and services internationally, although the majority of its revenue is derived from customers in the United States and Europe. As such, the Company is susceptible to credit risk on accounts and notes receivable from customers in that region. Generally, the Company does not obtain security from its customers in support of accounts receivable.

Subsequent Events

We evaluated subsequent events through the time of filing this Quarterly Report on Form 10-Q on August 19, 2009. We are not aware of any significant events that occurred subsequent to the balance sheet date but prior to this filing of this report that would have a material impact on our condensed consolidated financial statements.

Stock Based Compensation

Effective January 1, 2006, the Company adopted FASB Statement No. 123(R), Share-Based Payment. This statement replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. Statement 123(R) requires that all stock-based compensation be recognized as an expense in the financial statements and that such cost be measured at the fair value of the award. This Statement was adopted using the modified prospective method of application, which requires the Company to recognize compensation cost on a prospective basis. Under this method, the Company recorded stock-based compensation expense for awards granted prior to, but not yet vested as of January 1, 2006, using the fair value amounts determined for pro forma disclosures under Statement 123. For stock-based awards granted after January 1, 2006, the Company recognizes compensation expense based on estimated grant date fair value using the Black-Scholes option-pricing model.

Statement 123(R) also requires that excess tax benefits related to stock option exercises be reflected as financing cash inflows. Share-based compensation cost that has been included in income from continuing operations amounted to $115,220 and $110,000 for the six months ended June 30, 2009 and 2008, respectively.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation (“FIN”) No. 46(R),” which changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. SFAS No. 167 will require a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements. SFAS No. 167 is effective for fiscal years beginning after November 15, 2009, and interim periods within those fiscal years. Management is currently evaluating the requirements of SFAS No. 167 and the impact on the Company’s condensed consolidated financial statements.

In June 2009, the FASB issued Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Principle-a replacement of FASB no 162” (“SFAS 168”) SFAS 168, or the FASB Accounting Standards (“Codification”), will become the source of authoritative U.S. Generally Accepted Accounting Principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. On the effective date of SFAS 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company does not expect the standard to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.

In May 2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 165, “Subsequent Events,” which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. SFAS No. 165 provides guidance on the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The Company adopted SFAS No. 165 during the second quarter of 2009, and its application had no impact on the Company’s condensed consolidated financial statements. The Company evaluated subsequent events through the date the accompanying financial statements were issued, which was August 19, 2009.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) No. FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, which amends and clarifies the initial recognition and measurement, subsequent measurement and accounting, and related disclosures of assets and liabilities arising from contingencies in a business combination under Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), Business Combinations (SFAS 141R). This FSP is effective for assets and liabilities arising from contingencies in business combinations for which the acquisition date is on or after December 15, 2008. We adopted this FSP on January 1, 2009 and the impact of the adoption on our consolidated financial statements largely depends on the size and nature of potential business combinations in the future.

In April 2009, the FASB issued FSP No. FAS 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, which provides additional guidance for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements (SFAS 157). This FSP states that a significant decrease in the volume and level of activity for the asset or liability when compared with normal market activity is an indication that transactions or quoted prices may not be determinative of fair value because there may be increased instances of transactions that are not orderly in such market conditions. Accordingly, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value. There was no material impact on our consolidated financial statements with the adoption of this FSP.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, which requires disclosures about the fair value of our financial instruments for which it is practicable to estimate that value, whether recognized or not recognized in the balance sheets, in the interim reporting periods as well as in the annual reporting periods. In addition, the FSP requires disclosures of the methods and significant assumptions used to estimate the fair value of those financial instruments. We do not expect the impact of the adoption of this FSP to be material on our consolidated financial statements.

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, which establishes a new method of recognizing and reporting other-than-temporary impairments of debt securities and requires additional disclosures related to debt and equity securities. This FSP does not change existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. We do not expect the impact of the adoption of this FSP to be material on our consolidated financial statements.

On January 1, 2009, the Company adopted FASB Staff Position (FSP) FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. Application of this FSP did not have an impact on the consolidated financial statements as of June 30, 2009 and for the six month months ended June 30, 2009.

On January 1, 2009, the Company adopted FSP EITF 03-6-1, Determining Whether Awards Granted In Share-Based Payment Transactions are Participating Securities. This FSP provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. All prior-period EPS data presented shall be adjusted retrospectively, (including interim financial statements, summaries of earnings, and selected financial data) to conform with the provisions of this FSP. The adoption of EITP 03-6-1 did not have an impact on the Company as the Company does not currently have any share-based awards that would qualify as participating securities. Therefore, application of this FSP did not expected to have an effect on the Company's financial reporting.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3. COMMITMENTS AND CONTINGENCIES

The Company leases its office spaces and certain vehicles under non-cancelable operating leases. The Worldwide office lease requires equal annual payments plus a share of operating costs. Minimum future rental payments under non-cancelable operating leases with remaining terms in excess of one year as of December 31, 2008, in the aggregate and for each of the five succeeding fiscal years are as follows:

Year ending December 31
2009	$	134,000
2010		188,000
2011		153,000
2012		153,000
2013		150,000

Total minimum future rental payment	$	778,000

Total rent and lease expense was $226,453 and $88,163 for the six months ended June 30, 2009 and 2008, respectively.

Total rent and lease expense was $122,579 and $45,889 for the three months ended June 30, 2009 and 2008, respectively.

The Company has various purchase commitments for materials, supplies and services incident to the ordinary conduct of business, generally for quantities required for the Company’s business and at prevailing market prices. No material annual loss is expected from these commitments.

The Company has advances to several material and inventory suppliers in the amount of $455,390 which will be offset against future purchases from those suppliers.

The Company has a contingency associated with our capital raises done in 2008 requiring certain milestones to be met. The contingency states: “If (a) the Company fails to report at least $2,500,000 in EBITDA less noncash expenditures for the fiscal year ending December 31, 2009, as disclosed in the Company’s Form 10-K for the fiscal year ending December 31, 2009 (“2009 Milestone”), the date of disclosure of such 2009 Milestone (“2009 Milestone Date”) and such 10-K, and (b) if the average of the ten closing prices for each of the ten trading days immediately following the 2009 Milestone Date is less than the lesser of the Per Share Purchase Price and the 2008 Milestone Price, which is $4.50 (“2009 Milestone Price”), then, within 13 Trading Days of the 2009 Milestone Date, the Company shall issue to each Purchaser a number of shares of Common Stock equal to the difference between (i) the number of shares of Common Stock issued to such Purchaser on the Closing Date along with any 2008 Milestone Shares issued pursuant to the 2008 Milestone Date and (ii) the number of shares of Common Stock that would otherwise have been issuable to such Purchaser on the closing date if the Per Share Purchase Price was equal to the 2009 Milestone Price (“2009 Milestone Shares”).” In addition, certain shareholders (“CS”) have deposited 1,620,954 shares of common stock into an escrow account. Should a contingency arise, the contingency would be first satisfied by shares issued from the Company and should the Company not have sufficient shares available, the CS shares would be forfeited to help satisfy the contingency. The CS shares are considered to be secondary and not primary consideration in satisfying any potential contingency. As of June 30, 2009, there are no indications that the milestones have not been met.

The Company is not involved in any legal matters other than those arising in the normal course of business. While incapable of estimation, in the opinion of the management, the individual regulatory and legal matters in which it might involve in the future are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

4. ACCOUNTS RECEIVABLE

Accounts receivable by major categories are summarized as follows:

	June 30, 2009

Trade Receivable – pledged to bank	$	3,666,847
Trade Receivable – not pledged to bank		5,666,860
		9,333,707
Less: allowances for doubtful accounts		272,461
Total	$	9,061,246

Under the terms of a revolving line of credit agreement with Bank of the West indicated in Note 13, the revolving line of credit is secured by 70% of accounts receivable and all business assets of the Company and guaranteed by its officers.

5.	INVENTORIES

Inventories by major categories are summarized as follows:

	June 30, 2009

Raw materials	$	1,141,183
Work in progress		179,613
Finished goods		2,674,582
Finished goods – Pledged to the bank		864,444
		4,859,822
Less: allowances for slowing moving items		19,390
Total	$	4,840,432

Under the terms of a revolving line of credit agreement with Bank of the West indicated in Note 13, the revolving line of credit is secured by 50% of inventories of Worldwide USA and all business assets of the Company and guaranteed by its officers.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

6. OTHER RECEIVABLES

The Company has other receivables of $185,400 due from a supplier. In the China legal system we received a judgment for the total amount in May of 2009. Management believes we will be able to collect this amount by the third quarter.

7.	INCOME TAX

We do not have any deferred tax assets or liabilities in the periods presented due to the immaterial amount of such deferred taxes. Our statutory federal income tax is 34% and our state income tax rate is 9.3%. The provision for income taxes consists of the following:

	For The Six Months Ended				For The Three Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
Current income tax expense in China	$	69,455	$	8,298	$	31,709	$	19,702
U.S Federal Tax		158,390				158,390
State and local income taxes currently paid or payable U.S	$	14,779		-	$	13,979		-

Income tax expense	$	242,624	$	8,298	$	204,078	$	19,702

8.	PROPERTY AND EQUIPMENT

The Company has $18,619 property and equipment located in the United States at June 30, 2009. At December 31, 2008, $22,437 of property plant and equipment was located in the United States. Property and equipment for June 30, 2009 was $2,031,701 in the PRC. At December 31, 2008, $1,331,102 of the Company’s property and equipment was located in the PRC. The Company’s property and equipment consisted of the following at June 30, 2009 and December 31, 2008:

	June 30, 2009			December 31, 2008
Vehicles	$	310,774		$	248,112
Furniture and fixtures		184,726			100,346
Equipment		1,605,956			1,107,151
Software		37,253			37,237
Others		38,433			57,669
Leasehold improvements		224,141		-
	$	2,401,283		$	1,550,515
Less: accumulated depreciation		(790,672	)		(627,791	)
		1,610,611			922,724
Construction in progress (Solar Factory)		439,709			430,815

Total	$	2,050,320		$	1,353,539

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9. INTANGIBLE ASSETS

The 1,101,000 or $3.67 per share. The “AMERISOLAR” modules are backed by ISO 9001:2000 and ISO 14000 environmental quality Intangible assets consist of the brand name “Amerisolar”. The brand name “Amerisolar” was purchased on February 25, 2008 from a third party in exchange for 300,000 shares of the Company’s restricted stock.

The Company valued the stock at $3.67 per shares for stated value at $1,101,000 which represent a 25% discount to the closing price of $4.60 on February 25, 2008.

The "AMERISOLAR" modules are backed by ISO 9001:2000 and ISO 14000 environmental quality certifications.

The brand name is carried at cost and is not being amortized as management has determined the asset has an indefinite useful life. If no legal, regulatory, contractual, competitive, economic or other factors limit the useful life of the asset it shall be considered to be indefinite. In recording of the brand name is was determined that the expected useful life is indefinite and cash flows from the brand name are expected to contribute to the Company over an indefinite period of time.

10. INVESTMENT AT COST

On June 24, 2008, the Company paid $51,892 for an Investment in Tomii International representing approximately 20% equity interest in Tomii International. Tomii International is a privately held company that is a development stage entity with no significant operations. The Company’s accounting for this Investment on the cost basis - management has determined there is no impairment on investment as of June 30, 2009.

11. DEPOSITS PAID FOR CONTRACTS IN PROCESS

During the six months ended June 30, 2009, the Company paid $2,500,000 and deposited this amount in an escrow account in the Bank of China for the incorporation of the subsidiary of Nantong Ningbo Solar factory located in China for the purpose of registered capital and working capital. The Chinese government requires the Company to have registered capital in order to complete the project. The money will be used to purchase the land and to build a new facility. This deposit will be used to complete the construction of a new solar factory to be completed by December 31, 2009.

12. GOODWILL

On October 14, 2008, Worldwide Energy and Manufacturing USA, Inc. completed the acquisition of 55% of De Hong through acquiring 55% of the outstanding capital stock of De Hong, a China corporation. This was accounted for as a purchase of Detron, where Worldwide has operating control. Detron was consolidated into the consolidated financial statements of Worldwide as of October 1, 2008 .

Detron's assets are comprised of mostly currents assets where only $158,520 were related to equipment or fixed assets. The Company determined fair value by taking the net tangible assets (less all allowance for receivables and inventory which Worldwide subsidiaries had verified through on site valuation) and discounted all currents liabilities which were determined to be owed and current based on company records (invoices) providing $1,326,214 in net tangible assets of which $729,421 or 55% (Worldwide's ownership) was determined to be fair value for Detron's assets. The Company paid approximately $1,000,000 for these assets of which $285,714 was allocated to goodwill.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Cash	$	411,316
Accounts Receivable		1,929,314
Note receivable		226,877
Inventories		774,295
Advances to suppliers		21,703
Prepaid and other current assets		231,967
Property, plant and equipment, net		158,520
Other assets		11,059
Goodwill		285,714
Trade payables		(962,839	)
Accrued expenses		(422,943	)
Income taxes payable		(29,717	)
Related parties payable		(1,015,773	)
45% Minority Interest		(596,793	)

55% Net assets acquired	$	1,022,700

13. LINES OF CREDIT

As of June 30, 2009, the Company has the following lines of credit:

Banker	Amount of the credit line		Loan period	Interest rate as of 6/30/09			Secured by	Balance as of June 30, 2009

Bank of the West	$	2,000,000	5/20/2008- 5/20/2010		4	%	70% Accounts receivable + 50% inventory	$	1,300,000
Bank of the West	$	1,025,000	5/20/2008 -6/1/2011		4	%	70% Accounts receivable + 50% inventory	$	848,702

Total loans								$	2,148,702
Less : long term portion									(848,702	)
								$	1,300,000

For maturities of long-term loans are as follows as of June 30,


2009		-
2010		848,702
2011		1,300,000
	$	2,148,702

On May 20, 2008 the Company paid off its line of credit with Well Fargo in the amount of $960,000 and established a new line of credit facility with Bank of the West. Under the terms of the revolving line of credit agreement with Bank of the West dated May 20, 2008, the Company could borrow up to $3,025,000 at a rate of 5%. This rate is subject to change based on the prime rate, which was 3.5% as of June 30, 2009, plus a charge of .05% for both lines of credits. The interest rate as of June 30, 2009 was 4% for both lines of credit. The revolving line of credit is secured by the assets of the Company and guaranteed by its officers. Payments on the lines of credit are due monthly and payment varies according to the balance outstanding and interest rate.

The Company can borrow up to $2,000,000 and $1,025,000 within two credit lines. The maturity date of these two credit lines is May 20, 2010 and June 1, 2011 respectively. The balance outstanding under both lines of credit as of June 30, 2009 is $1,300,000 and $848,702, respectively. The Company has approximately $876,298 available on both lines of credit combined. The Company was not in compliance with its bank covenants at June 30, 2009. As a result, the entire balance has been reclassified to a current liability. The Company has the funds to repay these loans if necessary.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

14. STOCK TRANSACTIONS

On January 2, 2009, a consultant returned 4,000 shares to the Company for the work that was not performed. There was no accounting impact on the Company’s financial statements as the stock based compensation related to such shares was never earned.

On March 6, 2009, the Company issued 120,000 shares of its common stock to consultants, valued at $187,200, for the consulting services to be performed. The Company will amortize the consultancy fee of $187,200 over the 12-month term of the agreement from January 1, 2009 to December 31, 2009. The expense is $15,600 each month. Total compensation for the three and six month period ending June 30, 2009 was $46,800 and $78,920 respectively.

On March 20, 2009, the Company issued 8,000 shares of its common stock for the exchange for one unit investment of JK Advisors Fund LLC which was distributed to the shareholders of the fund. On June 23, 2009 the Company and JK advisors mutually agreed to cancel the transaction with no penalties or fees for either party.

On June 23, 2009 the Company issued a total of 12,100 restricted shares for services consisting of 1) 5,000 shares being issued to its outside independent Board of Directors, 2) 4,000 shares being issued for legal services and 3,100 shares being issued to employees in China. The shares had a fair market value of $3.00 which was determined by taking the bid price of $4.63 and discounting by 35% due to the restricted nature, the low volume and wide fluctuations in stock price. The Company recorded $36,300 stock-based compensation expense for six month period ending June 30, 2009.

15. WARRANTS

Accounting for the Warrants

In connection with the Company’s 2008 equity financing (completed on June 23, 2008 and July 24, 2008 (“2008 Financing”), the Company issued 1,111,109 restricted common shares along with warrants to purchase an additional 1,111,109 shares with 722,221 warrants having an exercise price of $7.00 and 388,888 of those warrants having an excise price of $9.00 (“Warrants”). The Company originally analyzed the Warrants in accordance with FAS 133 to determine whether the Warrants meet the definition of a derivative under FAS 133 and, if so, whether the Warrants meet the scope exception of FAS 133, which is that contracts issued or held by the reporting entity that are both (1) indexed to its own stock and (2) classified in stockholders’ equity shall not be considered to be derivative instruments for purposes of FAS 133. The provisions of EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” apply to any freestanding financial instruments or embedded features that have the characteristics of a derivative, as defined by FAS 133 and to any freestanding financial instruments that are potentially settled in an entity’s own common stock. Originally the Company concluded that the warrants should be classified as equity. However, upon subsequent analysis, the Company concluded that the Warrants issued in the 2008 Financing should have been treated as a derivative liability (see Note 20) as the 2008 Financing includes certain milestone provisions which the Company must be in compliance with for each of the years ended December 31, 2009 and 2008 (see Note 3). If the Company fails to meet these milestones, the Company will be required to issue additional shares of common stock to each purchaser in the 2008 Financing equal to the difference between the original purchase price and the average of the ten closing prices for each of the ten trading days immediately following the milestone date (as defined in the agreement). In addition, the warrant agreement provides for a price adjustment provision to allow the Conversion Price to be reduced and the number of warrants shares increased in the event the Company fails to meet certain contingencies associated with the 2008 Financing. As these provisions provide for the possible issuance of additional shares which are indeterminable, the Company has subsequently determined that the proper accounting for the Warrants should have been as a derivative liability under EITF 00-19 (see Note 20). As a result, the warrant derivatives will be measured at fair value and re-measured at fair value at each reporting date with changes in fair value recorded in earnings under other income/expense in the Condensed Consolidated Statement of Operations. During the three and six month periods ending June 30, 2009, the Company recorded a loss on warrant re-valuation of $1,090,898 and $1,072,396, respectively. During the three and six month periods ending June 30, 2008, the Company recorded a gain on warrant re-valuation of $189,027 and $189,027, respectively (see Note 20).

Fair Value of the Warrants

Fair value is generally based on independent sources such as quoted market prices or dealer price quotations. To the extent certain financial instruments trade infrequently or are non-marketable securities, they may not have readily determinable fair values. The Company estimated the fair value of the Warrants using a Black Scholes options pricing model and available information that management deems most relevant. Among the factors considered in determining the fair value of financial instruments: The stock price is the closing price of the Company’s stock on the valuation date; the risk free interest rate is based on the U.S. Government Securities average rate for 1 and 2 year maturities on the date of issuance; the volatility is a statistical measure (standard deviation) of the tendency of the Company’s stock price to change over time; the exercise price is the price at which the warrant can be purchased by exercising prior to its expiration; the dividend yield is not applicable due to the Company not intending to declare dividends; the contractual life is based on the average exercise period of the warrant; and the fair market value is value of the warrants based on the Black Scholes model on the valuation date. The following table provides the valuation inputs used to value the Warrants issued in connection with the 2008 Financing.

2008 Financing Warrants - Valuation Inputs
Attribute	June 30, 2009				June 30, 2008
Stock Price		$	5.39			$	8.00
Risk Free Interest Rate			2.26 – 2.69	%			2.49-2.69	%
Volatility			81.5 – 87.0	%			86.0	%
Exercise Price		$	7.00 – 9.00			$	7.00 – 9.00
Dividend Yield			0	%			0	%
Contractual Life (Years)			1.0 – 1.5				1.0 – 1.5
Fair Market Value		$	1,558,752			$	3,239,483

16. PENSION PLAN AND STOCK OPTION PLAN

The Company established a stock option plan on April 1, 2004 for the benefit of all full-time employees. The Company approved the plan to issue up to 200,000 shares of common stock. The stock option plan provides employees, consultants and directors the opportunity to purchase shares. The exercise price of an incentive stock option granted under this plan must be equal to or greater than the fair market value of the shares of the Company’s common stock on the date the option is granted. The exercise price of a non-qualified option granted under this plan must be equal to or greater than 85% of the fair market value of the shares of the common stock on the date the option is granted. An incentive stock option granted to an optionee owning more than 10% of the voting stock must have an exercise price equal to or greater than 110% of the fair market value of our common stock on the date the option is granted. On April 1, 2004, the Board granted options to purchase 109,213 shares at an exercise price of $6.00 per share. As of June 30, 2009 no stock options have been exercised.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

17. RELATED PARTY TRANSACTIONS

(1) Long term receivable – related party：

	June 30,		December 31,
	2009		2008
	(unaudited)
Mr. Ding Honglin – Mr. Ding is the General Manager of Shanghai Intech Precision Machinery Co. Ltd	$	253,729	$	260,973

The amounts due from related party is unsecured, interest free and have no fixed repayment date.

(2) Due to a related party：

	June 30,		December 31,
	2009		2008
	(unaudited)
Shanghai Jinde Electro-Mechanical Co. Ltd, the shareholder of Shanghai Intech-Tron Electron-Electric Co., Ltd advanced to Detron for working capital purposes.	$	1,242,393	$	1,243,024

The amount due to a related party is unsecured, interest free and have no fixed repayment date.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

18. RELATED PARTY TRANSACTIONS (CONTINUED)

(3) Loan payable to stockholders

	June 30,		December 31,
	2009		2008
	(unaudited)
Mr. Jimmy Wang and Mrs. Mindy Wang, principal stockholders, executive officers and members of the Board of Directors of the Company	$	-	$	60,024

The loan payable was for working capital purposes and was fully paid during the six month ended June 30, 2009.

19. EARNINGS PER SHARE

SFAS 128 requires a reconciliation of the numerator and denominator of the basic and diluted earning per share (EPS) computations.

For the three and six months ended June 30, 2009 and the same period in 2008, there were no dilutive shares included for stock options or warrants. Employee stock options of 109,103 with an exercise price of $6.00 were not included in dilutive shares as the effect would have been anti-dilutive. Class A warrants to purchase 722,221 common shares at an exercise price of $7.00 and Class B warrants to purchase 388,888 shares at an exercise price of $9.00 of common stock were not included in dilutive shares as the effect would have been anti-dilutive.

The following table sets forth the computation of basic and diluted net income per share:

	For The Six Months Ended					For The Three Months Ended
	June 30,					June 30,
	2009			2008		2009			2008
	(unaudited)			(unaudited)		(unaudited)			(unaudited)
	(Restated)			(Restated)		(Restated)			(Restated)
Net income (loss) attributable to the common stockholders	$	(410,805	)	$	844,388	$	(1,071,599	)	$	614,062

Weighted average outstanding shares of common stock		3,555,855			2,202,490		3,617,512			2,158,525
Dilutive effect of options and warrants		-			-		-			-
Common stock and common stock equivalents		3,555,855			2,202,490		3,617,512			2,158,525

Earnings per share:
Basic	$	(0.12	)	$	0.38	$	(0.30	)	$	0.28
Diluted	$	(0.12	)	$	0.38	$	(0.30	)	$	0.28

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

20. RESTATEMENT

Subsequent to August 19, 2009 and after the Company had filed its Quarterly Report on Form 10-Q/A for the three and six month periods ended June 30, 2009 and 2008, management determined that its original equity classification of certain warrants granted in connection with the Company’s 2008 equity financing (completed on June 23, 2008 and July 24, 2008), and included in the Company’s previously issued consolidated financial statements was incorrect. Management has determined that the warrants granted in connection with the 2008 equity financing should have been recorded as a warrant derivative liability and not as equity. As a result, the previously issued consolidated financial statements for the year ended December 31, 2008, which are included in its Form 10-K for the year ended December 31, 2008, the interim quarters ended June 30, 2008, September 30, 2008, March 31, 2009, and June 30, 2009,; are being amended to restate the warrant derivative liability classification.

In addition, management has determined that certain bonuses earned during 2008 totaling $206,703, were incorrectly recorded in first quarter ended March 31 2009 and not accrued as of December 31, 2008. As a result, management is amending its previously issued consolidated financial statements as of December 31, 2008, which will be included in the amended Form 10-K for the year ended December 31, 2008, and the interim consolidated financial statements for the quarter ended March 31, 2009, and June 30, 2009, on Form 10-Q, to properly include the accrued bonus and related bonus expense for the year ended December 31, 2008.

Lastly, management has determined that we had failed to properly classify direct labor and overhead as cost of goods sold for the year ended December 31, 2008. We previously classified the direct labor and overhead as a component of selling, general and administrative expenses, a line item in the consolidated statements of operations of our previously issued consolidated financial statements, in the amount of $621,584. As a result of identifying the error, we concluded that accounting adjustments were necessary to correct the previously issued financial statements for the year ended December 31, 2008.

As a result of the above, the Company has restated its previously issued consolidated financial statements for the year ended 2008 and the interim quarters ended June 30, 2008, and June 30, 2009 to correct the errors noted above and file an amendment to the Company’s Form 10-K for the year ended December 31, 2008 and the Form 10Q for the interim quarters ended June 30, 2008 and June 30, 2009 with the Securities and Exchange Commission. Accordingly, the accompanying consolidated balance sheets and statements of operations for the periods described in the preceding sentence have been retroactively adjusted as summarized below:

Effect of Correction of Derivative Liability and Performance Bonus	As Previously Reported			As Restated			Retroactive Adjustment

At June 30, 2009
LIABILITIES
- Warrant derivative liability	$	-		$	1,558,752		$	1,558,752		(1	)
- Total current liabilities	$	13,350,960		$	14,909,712		$	1,558,752		(1	)
- Total liabilities	$	14,199,662		$	15,758,414		$	1,558,752		(1	)

RETAINED EARNINGS/EQUITY
- Common stock	$	6,223,599		$	2,650,872		$	(3,572,727	)	(2	)
- Retained earnings	$	4,256,809		$	6,270,784		$	2,013,975		(3	)
- Total WEMU stockholders’ equity	$	11,061,971		$	9,503,219		$	(1,558,752	)	(1	)
- Total equity	$	11,810,746		$	10,251,994		$	(1,558,752	)	(1	)
- Total liabilities/stockholders’ equity	$	26,010,408		$	26,010,408		$	-

At June 30, 2008
LIABILITIES
- Warrant derivative liability	$	-		$	3,239,483		$	3,239,483		(1	)
- Total current liabilities	$	2,702,527		$	5,942,010		$	3,239,483		(1	)
- Total liabilities	$	3,116,762		$	6,356,245		$	3,239,483		(1	)

RETAINED EARNINGS/EQUITY
- Common stock	$	4,736,755		$	1,308,245		$	(3,428,510	)	(2	)
- Retained earnings	$	3,905,473		$	4,094,500		$	189,027		(3	)
- Total stockholders’ equity	$	9,181,893		$	5,942,410		$	(3,239,483	)	(1	)
- Total liabilities/stockholders’ equity	$	12,298,655		$	12,298,655		$	-

STATEMENTS OF INCOME
Three Months Ended June 30, 2009
- Cost of goods sold	$	8,515,313		$	8,695,838		$	180,525		(7	)
- Gross profit	$	1,801,600		$	1,621,075		$	(180,525	)	(7	)
- S,G&A expenses	$	1,198,367		$	1,017,842		$	(180,525	)	(7	)
- Total operating expenses	$	1,461,172		$	1,280,647		$	(180,525	)	(7	)
- Other income (expense)	$	(7,895	)	$	(1,098,793	)	$	(1,090,898	)	(4	)
- Total other income (expense)	$	(19,598	)	$	(1,110,496	)	$	(1,090,898	)	(4	)
- Income (loss) before income taxes	$	320,830		$	(770,068	)	$	(1,090,898	)	(4	)
- Income (loss) after taxes	$	116,752		$	(974,146	)	$	(1,090,898	)	(4	)
- Net income (loss) before non-controlling interest	$	116,752		$	(974,146	)	$	(1,090,898	)	(4	)
- Net income (loss)	$	19,299		$	(1,071,599	)	$	(1,090,898	)	(4	)
- Comprehensive income (loss)	$	105,901		$	(984,997	)	$	(1,090,898	)	(4	)
- Earnings (loss) per share	$	0.01		$	(0.30	)	$	(0.31	)

Six Months Ended June 30, 2009
- Cost of goods sold	$	16,897,588		$	17,258,638		$	361,050		(7	)
- Gross profit	$	3,701,192		$	3,340,142		$	(361,050	)	(7	)
- S,G&A expenses	$	2,411,750		$	1,843,997		$	(567,753	)	(5	)
- Other income (expense)	$	(6,992	)	$	(1,079,388	)	$	(1,072,396	)	(4	)
- Total other income (expense)	$	(11,219	)	$	(1,083,615	)	$	(1,072,396	)	(4	)
- Income (loss) before income taxes	$	820,122		$	(45,571	)	$	(865,693	)	(6	)
- Income (loss) after taxes	$	577,498		$	(288,195	)	$	(865,693	)	(6	)
- Net income (loss) before non-controlling interest	$	577,498		$	(288,195	)	$	(865,693	)	(6	)
- Net income (loss)	$	454,888		$	(410,805	)	$	(865,693	)	(6	)
- Comprehensive income (loss)	$	548,973		$	(316,720	)	$	(865,693	)	(6	)
- Earnings (loss) per share	$	0.13		$	(0.12	)	$	(0.25	)	(6	)

Three Months Ended June 30, 2008
- Cost of goods sold	$	5,519,194		$	5,674,590		$	155,396		(7	)
- Gross profit	$	1,335,759		$	1,180,363		$	(155,396	)	(7	)
- S,G&A expenses	$	777,345		$	621,949		$	(155,396	)	(7	)
- Total operating expenses	$	853,887		$	698,491		$	(155,396	)	(7	)
- Other income (expense)	$	-		$	189,027		$	189,027		(4	)
- Total other income (expense)	$	36,582	)	$	152,445		$	189,027		(4	)
- Income (loss) before income taxes	$	445,290		$	634,317		$	189,027		(4	)
- Income (loss) after taxes	$	425,588		$	614,615		$	189,027		(4	)
- Net income (loss) before non-controlling interest	$	425,035		$	614,062		$	189,027		(4	)
- Net income (loss)	$	425,035		$	614,062		$	189,027		(4	)
- Comprehensive income (loss)	$	571,052		$	760,079		$	189,027		(4	)
- Earnings (loss) per share	$	0.20		$	0.28		$	0.08		(6	)

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


Six Months Ended June 30, 2008
- Cost of goods sold	$	9,755,254		$	10,066,046		$	310,792		(7	)
- Gross profit	$	2,490,156		$	2,179,364		$	(310,792	)	(7	)
- S,G&A expenses	$	1,476,518		$	1,165,726		$	(310,792	)	(7	)
- Total operating expenses	$	1,747,352		$	1,436,560		$	(310,792	)	(7	)
- Other income (expense)	$	-		$	189,027		$	189,027		(4	)
- Total other income (expense)	$	(87,277	)	$	101,750		$	189,027		(4	)
- Income (loss) before income taxes	$	655,527		$	844,554		$	189,027		(4	)
- Income (loss) after taxes	$	647,229		$	836,256		$	189,027		(4	)
- Net income (loss) before non-controlling interest	$	655,361		$	844,388		$	189,027		(4	)
- Net income (loss)	$	655,361		$	844,388		$	189,027		(4	)
- Comprehensive income (loss)	$	899,801		$	1,088,828		$	189,027		(4	)
- Earnings (loss) per share	$	0.29		$	0.38		$	0.09		(6	)

STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2009
- Net income	$	454,888		$	(410,805	)	$	(865,693	)	(6	)
- Accrued expense	$	(434,784	)	$	(641,487	)	$	(206,703	)	(5	)
- Warrant derivative liability	$	-		$	1,072,396		$	1,072,396		(4	)
- Cash used in operating activities	$	(158,466	)	$	(158,466	)	$	-		(4	)

Six Months Ended June 30, 2008
- Net income	$	655,361		$	844,388		$	189,027		(4	)
- Warrant derivative liability	$	-		$	(189,027	)	$	(189,027	)	(4	)
- Cash used in operating activities	$	(2,503,783	)	$	(2,503,783	)	$	-		(4	)

(1) Cumulative effect of change in warrant derivative liability as of the period ended

(2) Cumulative effect of reclassifying the derivative from equity to warrant derivative liability

(3) Cumulative effect on results of operations for change in warrant derivative liability

(4) Period effect on results of operations for change in warrant derivative liability

(6) Total period effect on results of operations for change in warrant derivative liability and adjustment for certain bonuses

(7) Total period effect on results of operations for reclassification of labor and overhead

21. OPERATING RISK

Interest rate risk

The interest rates and terms of repayment of bank is disclosed in Note 13. Other financial assets and liabilities do not have material interest rate risk.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Credit risk

The Company is exposed to credit risk from its cash in bank and bills and accounts receivable. The credit risk on cash in bank is limited because the counterparties are recognized financial institutions. Bills and accounts receivable are subjected to credit evaluations. An allowance has been made for estimated irrecoverable amounts which have been determined by reference to past default experience and the current economic environment.

Foreign currency risk

Most of the transactions of the Company were settled in Renminbi and Euros. Thus, the Company has significant foreign currency risk exposure.

Company’s operations are substantially in foreign countries

Substantially all of the Company’s products are manufactured in China. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in China. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.

22. SEGMENT INFORMATION

The Company’s operations are classified into two principal reportable segments that provide different products or services. Worldwide USA purchases and sells manufactured goods from China procured by its subsidiary, Shanghai Intech Electro-Mechanical Products Co., Ltd. (“Intech Electro”). Intech Electro provides technical advisory, design, delivery, material procurement, and manufacturing quality control services. Separate management of each segment is required because each business unit is subject to different marketing, production, and technology strategies, and because of the geographic location of each entity. Shutai Precision sells die cast parts. Intech Detron is a power supply factory in Shanghai, China with designing and R & D capabilities. Worldwide's Ningbo (“WM Ningbo”) manufactures and sells solar modules.

Segmental Data – Three months ended June 30, 2009 and June 30, 2008

Reportable Segments

(amounts in thousands)

	June 30, 2009									June 30, 2008
	WEMU Solar			Wemu Contract Mfg			Total			WEMU Solar			Wemu Contract Mfg			Discont. Operation		Total
External revenue		7,500			2,817			10,317			2,519			4,336					6,855
Costs of goods		6,693			2,003			8,696			2,070			3,605					5,675
Gross profit		807			814			1,621			436			744					1,180
G/A Expense		487			531			1,018			271			351					622
Operating profit		319			21			340			165			317					482
Interest income		0			0			0			-			3					3
Interest expense		-			(13	)		(13	)		-			(39	)				(39	)
Depreciation		(20	)		(70	)		(90	)		(4	)							(4	)
Other income (expense)		(1,098	)		-			(1,098	)		189			-					189
Net profit (loss) after tax		(717	)		(257	)		(974	)		424			191			8		615

Expenditures for long-lived assets		733			27			760			27			-					27

WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In our solar division, Europe represented approximately 52% of our sales in the three months ended June 30, 2009 and South Korea represented 42% of our sales for the same period ending June 30, 2009. For three month period ending June 30, 2008 Spain represented 68.7 % of our business with China representing 27% of our sales. For our contract manufacturing business the United States represents approximately 66% with China representing approximately 34% for both periods in 2009 and 2008.

Segmental Data – Six months ended June 30, 2009 and June 30, 2008

Reportable Segments

(amounts in thousands)

	June 30, 2009									June 30, 2008
	WEMU Solar			Wemu Contract Mfg			Total			WEMU Solar			Wemu Contract Mfg			Discont. Operation		Total
External revenue		13,901			6,698			20,599			5,791			6,441			13		12,245
Costs of Goods		12,596			4,663			17,259			5,078			4,988					10,066
Gross profit		1,793			1,547			3,340			713			1,466					2,179
G/A expense		1,243			601			1,844			488			678					1,166
Operating income		897			141			1,038			225			517					742
Interest income		1			10			11			-			4					4
Interest expense		-			(21	)		(21	)		-			(73	)				(73	)
Depreciation		(56	)		(107	)		(163	)		(4	)		(4	)				(8	)
Other income (expense)		(1,079	)		-			(1,079	)		189			-					189
Net profit (loss) after tax		(224	)		(64	)		(288	)		406			421			9		836

Expenditures for long-lived assets		753			94			847			173			-					173

In our solar division, Europe represented approximately 66.5% of our sales and South Korea represented 20% of our sales for the six month period ended June 30, 2009. For six month period ending June 30, 2008 Spain represented 38.9 % of our business with total Europe representing 43.3% of our sales. For our contract manufacturing business the United States represents approximately 66% and China represents approximately 34% for both periods in 2009 and 2008.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DISCLAIMER REGARDING FORWARD LOOKING STATEMENTS

Certain statements in this Form 10-Q, which are not statements of historical fact, are what are known as "forward-looking statements," which are basically statements about the future. For that reason, these statements involve risk and uncertainty since no one can accurately predict the future. Words such as "plans," "intends," "hopes," "seeks," "anticipates," "expects," and the like, often identify such forward looking statements, but are not the only indication that a statement is a forward-looking statement. Such forward-looking statements include statements concerning our plans and objectives with respect to our present and future operations, and statements which express or imply that such present and future operations will or may produce revenues, income or profits. These and other factors may cause our actual results to differ materially from any forward-looking statement. We caution you not to place undue reliance on these forward-looking statements. Although we base these forward-looking statements on our expectations, assumptions, and projections about future events, actual events and results may differ materially, and our expectations, assumptions, and projections may prove to be inaccurate. The forward-looking statements speak only as of the date hereof, and we expressly disclaim any obligation to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances after the date of this filing.

Overview

Worldwide Energy and Manufacturing USA, Inc. (“Worldwide” or “the Company”) is a manufacturing engineering firm and international contract manufacturer, using factories in China, primarily supplying customers in Europe and South Korea with respect to our solar modules and United States-based companies that outsource their smaller scale production orders for offshore production in China. From our inception in 1993 until 2005, we were strictly an intermediary or “middle man,” working with our customers and our subcontractors to assure that our customers received high quality components on a timely basis that fulfilled their specific needs. While we still subcontract a significant portion of our business, since 2005, we have begun the transition to becoming a direct contract manufacturer, operating several of our own factories. This trend will continue if the right opportunities arise. Recently, we announced two additional factories allowing us to become a direct manufacturer for solar modules and for power supply units as described below:

On October 14, 2008, Worldwide completed the acquisition of 55% of Shanghai De Hong Electric and Electronic Company Limited (“De Hong”) through acquiring 55% of the outstanding capital stock of De Hong, a China corporation, through Worldwide’s wholly owned subsidiary Intech Electro- Mechanical Products Co., Ltd., a Chinese corporation (“Intech”). The Company funded the acquisition with the sale of 1,055,103 shares of its common stock, or $4,747,970. The sale of stock took place on June 23, 2008. Shanghai De Hong Electric and Electronic Company is the holding company for the operating subsidiary Shanghai Intech-Detron Electronic Co. (“Detron”). Therefore, Worldwide received 55% control of the operating subsidiary Shanghai Intech-Detron Electric and Electronic Company Limited (“Detron”). Detron is a power supply factory in Shanghai, China with designing and R & D.

On August 15, 2008, the Company formed a new company called Nantong Ningbo Solar factory (“Ningbo Solar”), which is the solar energy research and development manufacturer. The Company established a factory to provide installation services to different solar projects. The Company also acts as agent to import or export the products and services overseas.

On November 10, 2008 the Company announced the establishment of a new solar module production and R&D facility. We leased a 128,000-square-foot facility in Ningbo, China. This facility houses the Company’s research center and part of its photovoltaic (PV) manufacturing operations. We believe the establishment of this facility will help to improve margins for our solar modules. The Company will focus its efforts on the solar module industry both at present as well as in the future. The trend for the future for Worldwide will be to continue to expand and seek opportunities to increase market share in the solar module industry.

The city of Ningbo is about two hours away from downtown Shanghai. The production capacity of the factory is 60 to 80 megawatts per year.

Despite these additions and enlarging our capability as a direct manufacturer for several products lines we are still constrained in our growth for a number of reasons. Many Fortune 500 and other large companies either cannot, or choose not, to work with contract manufacturers preferring to go directly to the source that can manufacture the product and thereby avoid the additional expense of the middleman. This is particularly true for very large orders, where the added cost of the middleman can have a material impact on the customers’ bottom line. As a result, our revenues have for the most part, but not entirely, been limited to smaller scale production orders primarily (but not entirely) placed by companies that are not among the largest companies in the United States or elsewhere. Additionally, as a middleman we must share any potential gross profit with the subcontracting factory. Therefore, our customers are generally smaller, the orders they place are generally smaller and the income and profit we can generate from those orders is of necessity limited because we are not directly manufacturing the products. On the other hand, when we subcontract the actual manufacturing of our customers’ products and components, we do not need to hire factory employees, purchase materials, purchase and maintain manufacturing equipment or incur the costs of the manufacturing facilities. To some extent, these costs are built into the price charged by our subcontractors, but if we do not place orders, we do not incur those costs.

Our management has carefully considered these factors and during 2004 made the strategic decision to move our Company away from our historical complete reliance on subcontractors. The future trend of these decisions is to control our entire production process and improve profit margins. At the beginning of 2005 we did not own any of our own factories and used as our suppliers of materials and labor approximately 100 factories in China, mostly in Shanghai or the surrounding area. Since 2005 we have acquired an electronics factory, a die-casting and machining factory through leasing an existing facility from a former vendor and initially invested $500,000 to upgrade the equipment and manufacturing buildings, a recently announced power supply company with designing and R & D capabilities and a solar module factory on November 10, 2008. In these transactions we acquired assets, the expertise of the employees, the managers of the factories, and a portion of the existing customers of those factories with the exception of the solar module factory which we established on our own. As a result, as of November 10, 2008, we own and operate four factories that we now use for the manufacture of certain product lines that we historically had to subcontract, and we are using the services of approximately 40 subcontractors to manufacture those product lines for which we do not have our own manufacturing capabilities.

The establishment of these factories, including asset purchases and factory upgrades, was funded by three separate sources. The earlier acquisitions of the die cast and electronic factory primarily was financed by loans from Jimmy and Mindy Wang, our principal stockholders and executive officers, as well as increased lines of credit. Our credit line increased to $3,025,000 with Bank of the West from a $2,250,000 line with Wells Fargo. The power supply company and the establishment of the new solar module factory were funded by two equity transactions dated June 23 and July 24, 2008 where the Company raised approximately $5,000,000 dollars and netted approximately $4,600,000 after fees and costs. In the future, we expect to continue to acquire or newly-establish factories that will give us the capability to manufacture those product lines our management believes are the most profitable.

With the continuing transition into direct manufacturing and the renewable energy field, we expect to continue to increase sales outside the United States, and in particular, increase the number of customers in PRC, other Asian markets and Europe. Our costs to establish and improve these factories will increase along with sales and profits.

Through the development of our product mix, which consists of solar modules, foundry, machining and stamping, electronics and fiber optics products lines, our business has become more diverse. In the past, foundry and machining and stamping accounted for more than 90% of our business. This percentage has decreased since forming our own factories along with our new energy division which now represents approximately 73% of our business and we expect this percentage to continue to increase in the foreseeable future.

Generally, our operating results have been, and will continue to be, affected by a number of factors, and uncertainties including the following:

	•	our customers may cancel or delay orders or change production quantities;

	•	our operating results vary significantly from period to period due to the mix of the manufacturing services we are providing, the number and size of new manufacturing programs, the degree to which we utilize our manufacturing capacity, seasonal demand, shortages of components and other factors;

	•	integration of acquired businesses and facilities; and

	•	managing growth and changes in our operations.

We also are subject to other risks, including risks associated with operating in foreign countries, changes in our tax rates, and fluctuations in currency exchange rates.

Restatements

In March 2010, we became aware that we:

A)	had failed to recognize a bonus accrual that was earned in 2008. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over stating income and understating liabilities by $206,000.

had failed to recognize a Warrant Derivative Liability we granted in 2008 in connection with our equity raise in May 2008 and June 2008 and the subsequent re-measurement of fair value of the warrants derivative, as required by FASB ASC Topic 815 (codification of Financial Accounting Standards Board (SFAS) 133 and Emerging Issues Task Force 00-19). The error had the a significant effect on our previously issued consolidated financial statements for the year ended December 31, 2008, and for each of the quarters for the year ended December 31, 2009.

had failed to properly classify direct labor and overhead as cost of goods sold for the year ended December 31, 2008. We previously classified the direct labor and overhead as a component of selling, general and administrative expenses, a line item in the consolidated statements of operations of our previously issued consolidated financial statements, in the amount of $621,584.

As a result of identifying these errors, we concluded that accounting adjustments were necessary to correct the previously issued financial statements for the year ended December 31, 2008 and for each of the quarters for the year ended December 31, 2009.and that the reports we filed with the SEC that included the financial statements that reported the erroneous information for that periods should no longer be relied upon. Accordingly, we have restated our financial statements for the year ended December 31, 2008 included our Annual Report on Form 10-K filed with the SEC on April 15, 2010 .

In July 2009, we became aware that we:

A)	had failed to record a Goodwill related to our acquisition of Detron in October 2008. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over understating assets and liabilities by $285,000.

had incorrectly recorded a gain on sale of subsidiary in accordance with FASB ASC Topic 205 “Presentation of Financial Statements”(codification of SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets). The error had an effect on our previously issued consolidated financial statements for the year ended December 31, 2008 by overstating our gain on disposal of subsidiary by $245,000.

C)	had failed to record an income tax liability. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over overstating our net income and understating our income tax liability by $217,000.

As a result of identifying these errors, we concluded that accounting adjustments were necessary to correct the previously issued financial statements for the December 31, 2008 and that the reports we filed with the SEC that included the financial statements that reported the erroneous information for that period should no longer be relied upon. We have restated our financial statements for the year ended December 31, 2008 in our filing of our amended Form 10-K filed on August 10, 2009.

Results of Operations

Net sales for the three months ending June 30, 2009 were $10,316,913 compared to net sales of were $6,854,953 for the same period in 2008. This increase of $3,461,960, or approximately 50.5%, was the result of an increase in orders in our energy division. The Company continues to focus on its marketing of its solar module by establishing a sales team in China and the United States. This effort has resulted in increases in sales of our solar modules. Solar module sales for the quarter ending June 30, 2009 were $7,499,560 compared to sales of $2,519,000 in the same quarter of 2008 an increase of $4,980,560 or 197.7% in solar revenues. Solar modules revenues comprise approximately 72.7% of the Company's gross sales in the three month period ending June 30, 2009 compared to 36.6 % in the same period of 2008. Net sales for our contract manufacturing business was $2,817,353 for three months ending June 30, 2009 compared to net sales in contract manufacturing for the same period in 2008 was $4,336,000. The decrease in contract manufacturing sales of $1,518,647 or 35.0% is the result of the Company’s focus on solar and the decline in overall market conditions for contract parts.

Net sales for the six month period ending June 30, 2009 was $20,598,780 compared to sales of $12,245,410 in six month period ending June 30, 2008. The increase of $8,353,370 or approximately 68.2% was the result of an increase in orders in our energy division The Company continues to focus on its marketing of its solar module by establishing a sales team in China and the United States. This effort has resulted in increases in sales of our solar modules. For six months ending June 30, 2009 the Company had revenues from its solar modules of $13,901,000 compared to solar module sales of $5,790,747 for the same period in 2008 an increase of $8,110,253 or 140.1%. Solar modules revenues comprise approximately 67.5% of the Company's gross sales in the six month period ending June 30, 2009 compared to 47.3 % in the same period of 2008. Net sales for our contract manufacturing business was $6,697,780 for six months ending June 30, 2009 compared to net sales in contract manufacturing for the same period in 2008 was $6,454,663 (including $13,000 from discontinued operations).The increase in contract manufacturing sales of $243,117 or 3.8% is the result of the Company’s focus on solar and the decline in overall market conditions for contract parts.

Gross profit increased by $440,712, or approximately 37.3% from $1,180,363 in the quarter ending June 30, 2008 to $1,621,075 for the three months ending June 30, 2009, reflecting solar module sales in the energy division. The gross profit for solar module sales was $807,030 for the three months ended June 30, 2009 compared to $436,427 in the same period of 2008. This represents an increase of $370,603 in gross profit for our energy division or approximately 84.9%. The gross profit for contract manufacturing for the three months ended June 30, 2009 was $814,045 compared to $743,936 in the same period of 2008 an increase of $70,109 or 9.4%.

For the six months ending June 30, 2009 gross profit was $3,340,142 compared to gross profit of $2,179,364 in the same period in 2008. This represents an increase of $1,160,778 or approximately 53.3% due to our energy division. The gross profit for the six months ended June 30, 2009 for the solar division was $1,793,053 compared to $712,730 in the same period of 2008. This represent an increase of $1,080,323 in gross profit in the six month ended June 30, 2009 or approximately 151.6% increase. The gross profit for contract manufacturing for the six months ended June 30, 2009 was $1,547,089 compared to $1,466,634 in the same period of 2008 an increase of $80,455 or 5.5%.

Cost of goods sold for the three months ended June 30, 2009 was $8,695,838 compared to $5,674,590 for the same period in 2008. The increase of $3,021,248 or approximately 53.2% was the result of greater revenues in the energy division. The cost of goods for solar modules for quarter ending June 30, 2009 was $6,692,530 compared to $2,069,550 for the same period in 2008. The increase of $4,622,980 or 223.4% reflects higher sales. The costs of goods sold for contract manufacturing was $2,003,308 for the quarter ending June 30, 2009 compared to cost of goods sold of $3,605,0404 the decrease of $1,601,732 or 44.4% reflects slower sales in this division.

Cost of goods sold for the six months ended June 30, 2009 was $17,258,638 compared to $10,066,046 for the same period in 2008. The increase of $7,192,592 or approximately 71.5% was the result of greater revenues in the energy division. The cost of goods for solar modules for six months ending June 30, 2009 was $12,596,045 compared to $5,078,017 for the same period in 2008. The increase of $7,518,028 or 148.1% reflects higher sales. The costs of goods sold for contract manufacturing was $4,662,593 for the six months ending June 30, 2009 compared to cost of goods sold of $4,988,029 in the same period of 2008. The decrease of $325,436 or 6.5% reflects slower sales in this division.

The gross margin was 15.7% for the three months ending June 30, 2009 compared to 17.2% in the same period in 2008. The decline of 1.5% in gross margin was the result of the Company experiencing declines in contract manufacturing margins due to the downturn in the economy. The gross margin for solar for the quarter ending June 30, 2009 was 10.8% compared to 17.4% .This decline of 6.6% was due to the decline in prices of solar modules. The gross margin for contract manufacturing for the quarter ending June 30, 2009 was 28.9% compared to 13.6% in the same period in 2008. The improvement of gross margin in contract manufacturing was 15.3% was due to improve margins at the power supply factory.

The gross margin was 16.2% for the six months ending June 30, 2009 compared to 17.8% in the same period in 2008. The decline of 1.6% in gross margin was the result of the decline in prices for our solar modules due to the economy. Our gross margins on our solar business were approximately 12.9% for the six month period ending June 30, 2009 and 12.3% in the period ending June 30 2008. Gross margins for our contract manufacturing for the six months ended June 30, 2009 was 23.1% compared to 22.7%.It is expected that gross margins will improve as the outlook for our contract cast manufacturing business looks to improve. Further our solar module margins are expected to improve as demand is expected to improve.

In the six month period ending June 30, 2009 there was stock based compensation of $115,220 compared to the non-cash deduction of $110,000 for stock based compensation in 2008. Further the Company had depreciation expense of $162,881 in the six month period ending June 30, 2009 compared to $7,834 in the same period of 2008, due to the greater amount of depreciable assets owned by the Company.

Net loss after tax for the three months ending June 30, 2009 was $1,071,599 compared to a net profit of $614,062 for the three months ended June 30, 2008. The decrease of $1,685,661 or approximately 274.5% was the result of income taxes of $204,078 being due in the quarter compared to income taxes of $19,702 in the same period of 2008 and the effect of the change in the warrant derivative liability of $1,279,925 from an expense of $1,090,898 in the three months ended June 30, 2009 compared to income of $189,027 in the same period of 2008.

Net loss after tax for the six months ending June 30, 2009 was $410,805 compared to a net profit of $844,388 for the six months ended June 30, 2008. The decrease of $1,255,193 or approximately 148.7% was the result of income taxes of $242,624 being due in the quarter compared to income taxes of $8,298 in the same period of 2008 and the effect of the change in the warrant derivative liability of $1,261,423 from an expense of $1,072,396 in the three months ended June 30, 2009 compared to income of $189,027 in the same period of 2008.

General and administration expenses for the three months ended June 30, 2009, totaled $1,017,842 compared to $621,949 in the same quarter in 2008. The increase of $395,893 or approximately 63.7% was due to the establishment of our energy division. General and administration expenses were $487,303 for period ending June 30, 2009 compared to $270,915 in the same period in 2008 an increase of $216,388 or 79.9% for our solar module division as this division continues to grow. General and administration expenses for the three months ended June 30, 2009 for our contract manufacturing division was $530,539 compared to $351,034 in the same period of 2008. The increase of $179,505 or 51.1% was due to increase costs for being public.

For the six month period ending June 30, 2009 general and administration expenses was $1,843,997 compared to $1,165,726 in the same period in 2008. This increase of $678,271 or approximately 58.2% reflects the establishment of our energy division. General and administration expenses were $1,243,328 for six month period ending June 30, 2009 compared to $487,567 in the same period in 2008 an increase of $755,761 or 155.0% for our solar module division as this division continues to grow. General and administration expenses for the six month period ended June 30, 2009 for our contract manufacturing division was $600,669 compared to $678,159 in the same period of 2008. The decrease of $77,490 or 11.4% was due to some costs control measures.

LIQUIDITY AND CAPITAL RESOURCES

The following is a summary of Worldwide’s cash flows from (used in) operating, investing, and financing activities during the periods indicated:

	Six months ended June 30,
	2009			2008

Cash and cash equivalents at Beginning of Period	$	5,092,476		$	2,111,825
Operating activities	$	(158,466	)		(2,503,783	)
Investing activities	$	(1,967,317	)	$	(1,030,526	)
Financing activities	$	1,151,603		$	3,035,666
Net effect on cash	$	(980,539	)	$	(372,133	)
Cash and cash equivalents at End of Period	$	4,111,937		$	1,739,692

The Company funded its growth largely from its proceeds of $4,747,970 from the sale on June 23, 2008 of 1,055,103 shares of its common stock, and from additional sale of $252,027 or 56,007 shares of common stock later in 2008. This was used to help fund these new acquisitions and to provide additional working capital for the Company. The Company netted $4,356,009 from the sales of these securities.

In 2008 our credit line was increased by approximately $775,000 from a line of credit in the amount of $2.25 million with Golden Gate Bank to $3.025 million, as a result of securing two new credit lines with Bank of the West, one for $1,025,000 and the other for $2,000,000. The credit line with Golden Gate Bank was subsequently closed. These revolving lines of credit are secured by the assets of the Company and guaranteed by its officers. The maturity date of these two credit lines is May 20, 2010 and June 1, 2011, respectively. The balance outstanding as of June 30, 2009 is $1,300,000, and $700,000 is still available for use on the line of credit. Additionally, the second line of credit has a balance of $848,702 as of June 30, 2009.

For the six month period ending June 30 2009, net cash used in operations was $158,466 compared to net cash used in June of 2008 of $2,503,783. The major factors for the decrease in net cash used in operations were the increase in accounts payable for solar module materials where we received better terms due to weakness in the overall economy. Net cash used in investing was $1,967,317 in the six month period ending June 30, 2009, compared to net cash used of $1,030,526 in the same period of 2008. This increase was the result of our acquisition of Detron and the establishment of our new solar module factory. The Company anticipates further growth in 2009 as the economy is anticipated to improve. If such growth materializes we will finance this growth through Company profitability as well as outside sources of funding if required. Net cash flows provided by financing activities in the six month ending June 30, 2009 was $1,151,603 compared to $3,035,666 in 2008.

The Company raised approximately, $4,747,970 on June 23, 2008 and an additional $252,027 on July 24, 2008 for gross proceeds of approximately $5,000,000, or net proceeds of $4,356,009 after offering expenses. The Company issued 1,111,109 restricted common shares along with warrants to purchase an additional 1,111,109 shares with 722,221 warrants having an exercise price of $7.00 and 388,888 of those warrants having an excise price of $9.00. These funds were used to expand our energy division through the establishment of a new solar module factory announced on November 10, 2008 along the acquisition of a power supply company with designing and R&D capabilities. Additionally, these funds will be used to provide additional working capital for the solar module factory to purchase raw materials and to expand the solar module business segment. However, certain contingencies are associated with this sale:

If (a) the Company fails to report at least $2,500,000 in EBITDA less noncash expenditures for the fiscal year ending December 31, 2009, as disclosed in the Company’s Form 10-K for the fiscal year ending December 31, 2009 (“2009 Milestone”), the date of disclosure of such 2009 Milestone (“2009 Milestone Date”) and such 10-K, and (b) if the average of the ten closing prices for each of the ten trading days immediately following the 2009 Milestone Date is less than the lesser of the Per Share Purchase Price and the 2008 Milestone Price, which is$4.50 (“2009 Milestone Price”), then, within 13 Trading Days of the 2009 Milestone Date, the Company shall issue to each Purchaser a number of shares of Common Stock equal to the difference between (i) the number of shares of Common Stock issued to such Purchaser on the Closing Date along with any 2008 Milestone Shares issued pursuant to the 2008 Milestone Date, which are none, and (ii) the number of shares of Common Stock that would otherwise have been issuable to such Purchaser on the closing date if the Per Share Purchase Price was equal to the 2009 Milestone Price (“2009 Milestone Shares”). In addition, certain shareholders (“CE”) have deposited 1,620,954 shares of common stock into an escrow account. Should a contingency arise, the contingency would be first satisfied by shares issued from the Company and should the Company not have sufficient shares available, the CE shares would be forfeited to help satisfy the contingency. The CE shares are considered to be secondary and not primary consideration in satisfying any potential contingency.

PLAN OF OPERATION

The Company will continue to focus on the expansion of its renewable energy division by the continued development of its newly established solar factory in Ningbo, China as well as the continued quality enhancements of its solar module brand, "Amerisolar". Additionally, we intend to develop the U.S. solar module market and plan to expand our operation in this market. We believe that the renewable energy division offers the Company its greatest growth and profit potential in both the present and foreseeable future. The Company presently has enough liquidity to meet its expansion plans. However, depending on growth the Company may need additional funding in the future.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are currently material or reasonably likely to be material to our financial position or results of operations.

Contractual Obligations

We do not have any contractual obligations that are currently material or reasonably likely to be material to our financial position or results of operations.

Critical Accounting Policies and Estimates

This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. On an on-going basis, we evaluate our estimates, including those related to property, plant and equipment, inventories, revenue recognition, inventories, accounts receivable and foreign currency transactions and translation. We base our estimates on historical experience and on various other market-specific assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results, however, may differ significantly from these estimates.

We believe the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements:

Property, plant and equipment

Property, plant and equipment are stated at historical cost and are depreciated over the useful lives of the assets. Leasehold improvements and capitalized leased equipment are amortized over the life of the lease. Repair and maintenance expenditures that do not significantly add to the value of the equipment or prolong its life are charged to expense as incurred. Gains and losses on dispositions of property, plant and equipment are included in the related period’s statement of operations. Depreciation is computed primarily using the straight-line method based on estimated useful lives, which range from 3 to 25 years.

Inventories

Inventories consist of finished goods of manufactured products. Our inventory is based on customer orders and the duration of those orders. Cost is stated at the lower of cost or market on a first-in, first-out (FIFO) basis. We have recorded as of June 30, 2009 an allowance of $19,390 for slow-moving or obsolete inventory.

Revenue Recognition

We recognize revenues in accordance with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104 “Revenue Recognition”. We recognize revenue from product sales when the orders are completed and shipped, provided that collection of the resulting receivable is reasonably assured. Amounts billed to customers are recorded as sales while the shipping costs are included in cost of sales. Returns on defective custom parts may only be exchanged for replacement parts within 30 days of the invoice date. Returns on defective parts, which can be resold, may be exchanged for replacement parts or for a refund. Revenue from non-refundable customer tooling deposits is recognized when the materials are shipped or when the deposit is forfeited, whichever is earlier.

Foreign Currency Transactions and Translation

The Company’s principal country of operations is The People’s Republic of China. The financial position and results of operations of the Company are determined using the local currency (“Renminbi” or “Yuan”) as the functional currency. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period.

Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rates prevailing at the balance sheet date. The registered equity capital denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. All translation adjustments resulting from the translation of the financial statements into the reporting currency (“US Dollars”) are dealt with as a separate component within stockholders’ equity. Translation adjustments net of tax totaled $86,621 and $146,017, for the three months ended June 30, 2009 and 2008, respectively and $107,656 and $244,440, for the six months ended June 30, 2009 and 2008, respectively.

As of June 30, 2009 and 2008, the exchange rate was 6.8448 Yuan and 6.8718 Yuan per U.S. Dollar, respectively.

Management has discussed the development and selection of these critical accounting policies with the Board of Directors and the Board has reviewed the disclosures presented above relating to them.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (also our principal executive officer) and our chief financial officer (also our principal financial and accounting officer) to allow for timely decisions regarding required disclosure.

In connection with the audit for the fiscal year ended December 31, 2008, Child Van Wagner (“Child”), our independent registered public accounting firm, noted matters involving our internal controls that it considered to be significant deficiencies, and taken together constitute a material weakness, under the standards of the Public Company Accounting Oversight Board, or PCAOB. Under the PCAOB standards, a significant deficiency is a control deficiency, or combination of control deficiencies, that, in Child’s judgment, would adversely affect the ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the annual or interim financial statements that is more than inconsequential will not be prevented or detected. A material weakness is a significant deficiency, or combination of significant deficiencies, that, in Child’s judgment, results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

The material weaknesses identified by were as follows:

Identification of Material Weaknesses in Controls and Procedures

In view of the restatements and the reclassification of our financial statements for the year ended December 31, 2008, as described under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations - Restatements, and in connection with the evaluation of our controls and procedures for the year ended December 31, 2009 we have determined that we have numerous material weaknesses in our controls and procedures, as more fully described below.

A material weakness in internal control over financial reporting is defined in Section 210.1-02(4) of Regulation S-X as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the Company's financial reporting.

In March 2010, we became aware that we:

A)	had failed to recognize a bonus accrual that was earned in 2008. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over stating income and understating liabilities by $206,000.

In July 2009, we became aware that we:

A)	had failed to record a Goodwill related to our acquisition of Detron in October 2008. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over understating assets and liabilities by $285,000.

C)	had failed to record an income tax liability. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over overstating our net income and understating our income tax liability by $217,000.

We determined that these failures and related re-statements demonstrated the following weaknesses in our internal control over financial reporting:

·	Accounting and Finance Personnel Weaknesses — The Company lacks appropriate resources within the accounting function. Our accounting staff comprises of few people and the department lacks the required skill set, competence, infrastructure and expertise to meet the higher demands of being a public company. This lack of resources has led to a lack of segregation of duties and insufficient attention to the internal control process over financial reporting.

·	Reliance on Third-Party Professionals: We retained an individual to provide support and accounting advice to the Company for the year ended December 31, 2008. We may not have adequately assessed this individual’s qualifications to ascertain his level of experience to render the services for which we retained the individual. Moreover, we did not adequately monitor the individual’s work and placed undue reliance on its expertise without confirming the accuracy of the finished product.

Remediation Plan for Material Weakness in Internal Control over Financial Reporting

In light of the foregoing, we have introduced and plan to implement a number of remediation measures to address the material weaknesses described above. Many of these measures are entity level in nature and we believe that the organizational and process changes we intend to adopt will improve our internal controls and governance environment. Management recognizes that many of these enhancements require continual monitoring and evaluation for effectiveness. The development of these actions is an iterative process and will evolve as the Company continues to evaluate and improve our internal controls over financial reporting. Initially, we may be foreclosed from implementing some of the more obvious measures, such as retaining additional accounting personnel who have particular areas of expertise, given our resource constraints. However, as we grow, we expect to adopt and implement those measures and to retain additional qualified personnel as management deems necessary to satisfy our control and governance requirements.

Specifically, we have:

·	In mid-February 2010, we hired a new Big 4 CFO with over 25 years experience working in publicly traded companies (see Biographical Information in Item 10).
·	In June 2009, we established an audit committee of the Board of Directors. Our audit committee members both qualify as "audit committee financial expert," as such term is defined in Item 407(d)(5) of Regulation S-K.
·	In September 2009, we hired an Accounting Manager in our Corporate office to add to the Company’s accounting expertise.
·	We are in the process of documenting our processes and procedures in accordance with the requirements of Section 404 (a) of Sarbanes-Oxley. Upon completion, we will implement the necessary changes.

Over the balance of the 2010 year, we will undertake an entity-level review of and test our control procedures and analyze the application of our controls and our control environment generally. In addition, we plan to hire additional accounting personnel in China with knowledge of proper accounting rules. We also expect that the audit committee will set a tone for effective entity-wide corporate governance; inspire rigorous, uniform application of our internal controls and provide ongoing oversight of the preparation and review of our financial statements. In addition, we expect that the audit committee will review and propose improvements to our entity level controls and procedures and other process level controls. We believe that the audit committee and our new financial professionals will substantially decrease the possibility of the occurrence of errors in our financial statements.

Management has discussed these material weaknesses with our board of directors and will continue to review progress on these activities on a consistent and ongoing basis at the senior management level in conjunction with our Board of Directors. We also plan to take additional steps to elevate Company awareness about, and communication of, these important issues through formal channels such as Company meetings and training.

We cannot assure you at this time that the actions and remediation efforts we have taken or ultimately will implement will effectively remediate the material weakness described above or prevent the incidence of other significant deficiencies or material weaknesses in our internal control over financial reporting in the future.

These remediation efforts are designed to address the material weakness identified by Child and to improve and strengthen our overall control environment. We believe these actions will prevent the significant deficiencies from reoccurring. Our management, including our principal executive officer and principal financial officer, does not expect that disclosure controls or internal controls over financial reporting will prevent all errors, even as the aforementioned remediation measures are implemented and further improved to address all deficiencies. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

The implementation of our remediation plan will require substantial expenditures, could take a significant period of time to complete, and could distract our officers and employees from the operation of our business. However, our management believes that these remediation efforts will be complete by the end of the 2010 fiscal year.

Our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the date of this report, under the supervision and with the participation of our president (also our principal executive officer) and chief financial officer (also our principal financial and accounting officer), in order to conclude if our disclosure controls and procedures are effective. Based on the information set forth above, our management has determined that, as of the date of this report, we do not have effective disclosure controls and procedures.

Changes in Internal Control Over Financial Report

In our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2008 (the “Annual Report”), our management reported that, as of the date of such report, our internal control over financial reporting was not effective. In the first quarter of fiscal 2009, the Company employed an outside consultant to assist us with the self-assessment required by Section 404 of the Sarbanes-Oxley Act of 2002 of our internal controls and procedures. However, upon review of the work product, our management determined that the prepared documentation did not contain sufficient detail. The Company will hire additional consultants to help management refine such documentation.

Based upon the foregoing, our management has determined that there were no changes in our internal control over financial reporting, identified in connection with the evaluation that occurred during our last fiscal quarter, under the supervision and with the participation of our president (also our principal executive officer) and chief financial officer (also our principal financial and accounting officer), that materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors (herein incorporated by reference from Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2009).

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed herewith:

	3.1	Articles of Incorporation (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 11, 2000).

	3.2	Bylaws (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 11, 2000).

	3.3	Amendment to the Articles of Incorporation to change the name of the Company from Tabatha III, Inc. to Worldwide Manufacturing USA, Inc., filed with the Colorado Secretary of State on November 4, 2003 (herein incorporated by reference from Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2009).

	3.4	Amendment to the Articles of Incorporation to change the name of the Company from Worldwide Manufacturing USA, Inc. to Worldwide Energy and Manufacturing USA, Inc., filed with the Colorado Secretary of State on February 4, 2008 (herein incorporated by reference from Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2009).

	4.1	Specimen Common Stock Certificate (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 11, 2000).

	4.2	Specimen Class A Convertible Preferred Stock Certificate (incorporated by reference from Registration Statement on Form 10-SB/A filed with the Securities and Exchange Commission on October 11, 2000).

	10.1	Common Stock Purchase Warrant (incorporated by reference from Form 10-KSB filed with the Securities and Exchange Commission on September 27, 2001).

	14.1	Code of Ethics (incorporated by reference from Form 10-KSB filed with the Securities and Exchange Commission on March 31, 2005).

	21.1	Subsidiaries of Worldwide Energy and Manufacturing USA, Inc. (herein incorporated by reference from Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2009).

	31.1	Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

	31.2	Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

	32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.

WORLDWIDE ENERGY AND MANUFACTURING USA, INC.

By: /S/ JIMMY WANG

Jimmy Wang, CEO and Director (duly authorized officer)

Date: April 15, 2010

By: /S/ GERALD DECICCIO

Gerald DeCiccio, Chief Financial Officer (principal financial and accounting officer)

Date: April 15, 2010

Attached files

WORLDWIDE ENERGY & MANUFACTURING USA INC Reports

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