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EX-21 - EX-21 - CHINAWE COM INCc14706exv21.htm
EX-31.2 - EXHIBIT 31.2 - CHINAWE COM INCc14706exv31w2.htm
EX-23.1 - EX-23.1 - CHINAWE COM INCc14706exv23w1.htm
EX-32.2 - EXHIBIT 32.2 - CHINAWE COM INCc14706exv32w2.htm
EX-31.1 - EXHIBIT 31.1 - CHINAWE COM INCc14706exv31w1.htm
EX-32.1 - EXHIBIT 32.1 - CHINAWE COM INCc14706exv32w1.htm
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
     
þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 000-29169
Chinawe.com Inc.
(Exact name of registrant as specified in its charter)
     
California
(State or other jurisdiction of
incorporation or organization)
  95-462728
(I.R.S. Employer Identification No.)
Room 1208, Block A
Fuk Keung Industrial Building
66-68 Tong Mei Road
Kowloon, Hong Kong
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (852) 23810818
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer o   Accelerated filer o   Non-accelerated filer o   Smaller reporting company þ
        (Do not check if a smaller reporting company)    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o
The aggregate market value of Common Stock held by non-affiliates of the registrant (based upon the closing sale price) on June 30, 2010 was $0.00. Shares held by each executive officer, director and by each person who owns 10% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
As of March 28, 2011, there were 43,800,000 shares of Common Stock, $0.001 per share par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
 
 

 

 


TABLE OF CONTENTS

PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. [Removed and Reserved]
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures.
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits and Financial Statement Schedules
SIGNATURES
EXHIBIT INDEX
EX-21
EX-23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2


Table of Contents

PART I
Item 1.  
Business.
Chinawe.com Inc. (the “Company”, “Chinawe” or “we”), formerly known as Neo Modern Entertainment Corp., was formed pursuant to the corporation laws of the State of California on March 19, 1997.
Chinawe’s principal business activity was providing professional management services relating to non-performing loans (“NPLs”) in the People’s Republic of China (“PRC”), as well as other consulting services. During the first quarter of 2009, the Company’s sole customer, Huizhou One Limited (“HOL”), issued a notice of termination to terminate its service contracts with the Company with effect from March 26 and March 27, 2009. Effective from March 27, 2009, the Company has become a non-operating company.
The consolidated financial statements include the accounts of Chinawe and Officeway Technology Limited; a company incorporated in the British Virgin Islands in December 1999, which was formed for the purpose of acquiring (in March 2000) its wholly-owned subsidiary, Chinawe Asset Management Limited (“CAM (HK)”).
CAM (HK), a company incorporated in Hong Kong in June 1997, which was an investment holding company, ceased to be an indirect subsidiary of Chinawe when CAM (HK) was sold to an independent third party, on July 26, 2010 (the “CAM (HK) Sale”). Chinawe Asset Management (PRC) Limited (“CAM (PRC)”), established in the PRC in April 2005 to service the NPLs under the service agreements with HOL, accounted for 100% of the revenue from assets management and related services for the nine months ended September 30, 2009 and 2008 and became non-operating since the termination of the aforesaid service contracts with HOL in March 2009. As a result of the CAM (HK) Sale, CAM(PRC), a subsidiary of CAM (HK) also ceased to be an indirect subsidiary of Chinawe.
The Company is currently suspended in the State of California due to failure to file reports with the Franchise Tax Board. The Company is in the process of preparing the relevant reports and expects to be back in good standing shortly. The Company believes that the amount of taxes and penalties owed will not be material to the financial statements.
Item 1A.  
Risk Factors.
Set forth below are certain risks and uncertainties relating to our business. These are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business. If any of the following risks actually occur, our business, operating results or financial condition could be materially adversely affected.
RISK RELATED TO OUR BUSINESS
THE COMPANY CURRENTLY HAS NO OPERATING BUSINESS
The Company is currently seeking one or more lines of business that it can enter into. The Company, however, has not identified a specific line of business or territory for any such new business. There can be no assurance that the Company will be successful in identifying a new line of business that it can enter into or that it will be successful in operating any such new business. If we do not successfully address these risks and uncertainties, our financial condition will be materially adversely affected and the Company may have to dissolve.

 

 


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WE WILL REQUIRE FUNDS TO FINANCE ENTRY INTO A NEW LINE OF BUSINESS
We will need financing to enter into a new line of business. We may seek to obtain such funds through sales of equity and/or debt, or other external financing in order to fund any new operations. We cannot assure that any capital resources will be available to us, or, if available, will be on terms that will be acceptable to us. Any equity financing will dilute the equity interests of existing security holders. If adequate funds are not available or are not available on acceptable terms, our ability to execute any new business plan and our business will be materially and adversely affected. Management has in the past advanced funds to the Company to continue its operations. Although Management has indicated that it will continue to fund the Company while the Company searches for a new line of business, there can be no assurance that Management will continue to so fund the Company until a new line of business is located.
RISKS RELATING TO OUR STOCK
POSSIBLE DELISTING OF OUR STOCK FROM TRADING ON THE ELECTRONIC BULLETIN BOARD
Absent NASDAQ Capital Market or other NASDAQ or stock exchange listing, trading, if any, in our common stock will, as it presently is, continue on the “OTC Bulletin Board” administered by the Financial Industry Regulatory Authority, Inc., or “FINRA”. As a result, you may find it difficult to dispose of or to obtain accurate quotations as to the market value of the common stock. Once delisted, we cannot predict when, if ever, our class of common stock would be re-listed for trading on the OTC Bulletin Board or any other market or exchange as the approval to re-list the common stock is subject to review by applicable regulatory authorities.
BECAUSE OUR COMMON STOCK PRICE IS BELOW $5.00, WE ARE SUBJECT TO ADDITIONAL RULES AND REGULATIONS.
The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price (as defined) of less than $5.00 per share, subject to certain exceptions. Our common stock presently is a “penny stock”. Because our stock is a “penny stock”, it is subject to rules that impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors. There can be no assurance that the Common Stock will trade for $5.00 or more per share, or if so, when.
Item 1B.  
Unresolved Staff Comments.
Not applicable.
Item 2.  
Properties.
The Company’s headquarters are located in Kowloon, Hong Kong.
Item 3.  
Legal Proceedings.
We are not engaged in any litigation or governmental proceedings.
Item 4.  
[Removed and Reserved].

 

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PART II
Item 5.  
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
(a) Our shares of common stock, par value $0.001 per share (“Common Stock”), presently are traded on the OTC Bulletin Board under the symbol “CHWE”.
The following table sets forth the range of high and low bids for our Common Stock for our two most recent fiscal years:
                 
    High     Low  
 
               
2010
               
 
               
January 1, 2010 – March 31, 2010
    .01       .00  
April 1, 2010 – June 30, 2010
    .01       .00  
July 1, 2010 – September 30, 2010
    .00       .00  
October 1, 2010 – December 31, 2010
    .02       .01  
 
               
2009
               
 
               
January 1, 2009 – March 31, 2009
    .01       .00  
April 1, 2009 – June 30, 2009
    .01       .00  
July 1, 2009 – September 30, 2009
    .00       .00  
October 1, 2009 – December 31, 2009
    .02       .01  
The foregoing quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
On March 10, 2011, the last day the Common Stock traded, the Common Stock was quoted at $0.01 per share.
(b) As of March 21, 2011, the Company had 43,800,000 shares of Common Stock outstanding and 44 stockholders computed by the number of record holders, not including holders for whom shares are being held in the name of brokerage houses and clearing agencies.
(c) We have not paid any cash dividends with respect to our Common Stock, nor does our Board of Directors intend to declare cash dividends on our Common Stock in the foreseeable future, in order to conserve cash for working capital purposes.
Item 6.  
Selected Financial Data.
Not applicable.
Item 7.  
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K. The following discussion contains forward-looking statements. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in “Risk Factors” and elsewhere in this Report.

 

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Overview — Results of Operations
The Company’s financial statements for the year ended December 31, 2010 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the year ended December 31, 2010, the Company reported a net income of US$1,832,713 and as of December 31, 2010 had a negative working capital and stockholders’ deficit of US$334,457 and US$334,457, respectively. Effective March 27, 2009, the Company ceased providing professional management services relating to non-performing loans in the People’s Republic of China. The Company has terminated its employees and closed down its offices. The Company has not identified a specific line of business or territory for any new business. There can be no assurance that the Company will be successful in identifying a new line of business that it can enter into or that if such new line of business is identified, that the Company will have adequate funding to commence operations of a new line of business. The principal stockholders of the Company have indicated their intention to finance the Company for a “reasonable” period of time to enable the Company to continue as a going concern, assuming that in such a period of time the Company would not be able to raise additional capital to support its continuation. However, it is uncertain for how long or to what extent such a period of time would be “reasonable” and there can be no assurance that the financing from these stockholders will be continued. Management of the Company currently intends to continue to fund the expenses of the Company until a new line of business has been identified. “See Risk Factors.”
                 
    Year ended December 31,  
    2010     2009  
    US$     US$  
 
               
Turnover
          131,462  
Operating costs
    (94,837 )     (359,639 )
Finance costs
    (1,143 )     (3,923 )
Gain on disposal
    1,827,289        
Other income
    138,319       3,918  
Non-operating expenses
    (41,711 )      
Surcharge on tax
    138,319       (102,632 )
 
           
 
               
Gain (loss) before taxation
    1,827,917       (462,276 )
Taxation
           
 
           
 
               
Gain (loss) before minority interest
    1,827,917       (462,276 )
Minority interest
           
 
           
 
               
Net gain (loss) attributable to discontinued operation
    1,827,917       (462,276 )
 
           
Year ended December 31, 2010 compared to the year ended December 31, 2009
Revenues. Revenues for the year ended December 31, 2010 were US$0 as compared to US$131,462 for the year ended December 31, 2009, a decrease of 100%. The Company discontinued its sole business with HOL in March 2009 and has not generated new business in this field.

 

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Expenses. Administrative and general expenses for the year ended December 31, 2010 were US$91,687, a decrease of 80.96% as compared to US$481,573 for the year ended December 31, 2009. The decrease in salary paid to employees, reduction in rental fees to branch offices and decrease in motor vehicle expenses were the main reasons for the decrease.
Gain on Disposal. Gain on disposal for the year ended December 31, 2010 was US$1,827,917, an increase of 100% as compared to US$0 for the year ended December 31, 2009. The increase was due to the CAM(HK) sale on July 26, 2010.
Taxation. No income tax expense for the year ended December 31, 2010 and 2009 was incurred mainly because the PRC enterprise incurred a loss from asset management and related services earned in the PRC.
Liquidity and Capital Resources
The Company’s financial statements for the year ended December 31, 2010 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the year ended December 31, 2010, the Company reported a net income of US$1,832,713 and as of December 31, 2010 had a negative working capital and stockholders’ deficit of US$334,457 and US$334,457, respectively. The Company has relied on private financing by advances from the principal stockholders of the Company, who have agreed not to demand repayment of amounts due to them as long as the Company has negative working capital. These stockholders have indicated their intention to finance the Company for a “reasonable” period of time to enable the Company to continue as a going concern, assuming that in such a period of time the Company would not be able to raise additional capital to support its continuation. However, it is uncertain for how long or to what extent such a period of time would be “reasonable” and there can be no assurance that the financing from these stockholders will be continued. The accompanying financial statements do not include or reflect any adjustments that might result from the outcome of these uncertainties.
Critical Accounting Policies and Estimates
Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and assumptions. We believe that the following are some of the more critical judgment areas in the application of our accounting policies that currently affect our financial condition and results of operations.
Revenue Recognition. The Company has no business.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to the Company.
Item 7A.  
Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.

 

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Item 8.  
Financial Statements and Supplementary Data.
The financial statements required by this Item are set forth at pages indicated in Item 15 in this Report.
Item 9.  
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
The Board of Directors (the “Board”) of the Company, effective March 9, 2010, dismissed Mazars CPA Limited (“Mazars”), as the Company’s independent auditors. Mazars had been the Company’s auditors since June 29, 2007. The Board dismissed Mazars in order to engage less costly independent auditors. Mazars’ audit report on the Company’s consolidated financial statements for each of the past two fiscal years did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles, except that Mazars’ reports on the Company’s consolidated financial statements for the fiscal year ended December 31, 2008 included an explanatory paragraph describing the uncertainty as to the Company’s ability to continue as a going concern. During the Company’s fiscal years ending December 31, 2007 and 2008 and through the subsequent interim period on or prior to March 9, 2010, (a) there were no disagreements between the Company and Mazars on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Mazars, would have caused Mazars to make reference to the subject matter of the disagreement in connection with its report; and (b) no reportable events as set forth in Item 304(a)(1)(v)(A) through (D) of Regulation S-K have occurred.
Item 9A.  
Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures.
As of the end of the period covered by this Report, the Company conducted an evaluation, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of its disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”) and which also are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. The Company’s internal controls framework is based on the criteria set forth in the Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting is as of the fiscal year ended December 31, 2010. We believe that our internal control over financial reporting is effective. We have not identified any current material weaknesses considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
(b) Changes in Internal Controls.
There were no changes in the Company’s internal control over financial reporting for the year ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B.  
Other Information.
Not applicable.
PART III
Item 10.  
Directors, Executive Officers and Corporate Governance.
Management
The following sets forth information regarding our executive officers, directors and other key employees:
             
Name   Age   Title
 
           
Man Keung Alan Wai
    49     Chairman of the Board, Chief Executive Officer, Chief Financial Officer and President
Man Ying Ken Wai
    44     Vice President and Secretary, Director
Barry Yiu
    49     Vice President, Director
The following is a brief account of the business experience of the above mentioned individuals. References to “our Company” and “since its incorporation” in the following description refer to Gonet Associates Limited and affiliates and not Neo Modern Entertainment Corp. as it existed prior to the merger of Chinawe.com Inc., a Delaware corporation, with and into Neo Modern on March 15, 2001.
Mr. Wai, Man Keung Alan — Chairman, Chief Executive Officer, Chief Financial Officer and President
Mr. Wai, Man Keung Alan is the founder of the Company, and the Chairman and Chief Executive Officer since its incorporation. He becaome Chief Financial Officer on August 26, 2010. He is responsible for identifying business opportunities, overall strategic planning and development of the Company. Mr. Wai has over 15 years of entrepreneur experience in business development and administration prior to founding Welcon Info-Tech in Hong Kong in 1997.

 

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Mr. Wai, Man Ying Ken — Director, Vice President and Secretary
Mr. Wai, Man Ying Ken is the co-founder, Director, Vice President and Secretary of our Company since its incorporation. He becaome Secretary on August 26, 2010. He has responsibility for determining and developing the Company’s direction, establishing operation strategies, considering economic benefits, assets valuation and financial decision making. Prior to his current position, Mr. Wai was a director in a Hong Kong -based company specializing in property development and construction. Having co-founded Chinawe with his elder brother Mr. Wai Man Keung Alan, he has dedicated himself to the development and management of our Company ever since. He studied General Science at the University of Waterloo, Canada.
Mr. Barry Yiu — Director
Mr. Barry Yiu is responsible for fund raising. He has over 15 years of experience in business development, strategy planning and financing management. Prior to his current position, Mr. Yiu has been engaged in several companies in Hong Kong and China involving sizable developments and investments. Mr. Yiu obtained his Bachelor degree from the University of Toronto, Canada in 1983 and his MBA in Finance from McMaster University in Hamilton, Canada in 1985.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Federal securities laws, the Company’s directors, its executive officers and any person holding more than 10% of the Company’s Common Stock are required to report their ownership of the Company’s Common Stock and any changes in that ownership to the SEC on the SEC’s Forms 3, 4 and 5. Based on the Company not having received copies of any such forms, the Company believes that no officers, directors and owners of greater than 10% of the Company’s Common Stock engaged in any transactions in the Company’s Common Stock during the fiscal year ended December 31, 2010.
Code of Ethics
The Company has adopted a Code of Ethics that applies to all of its directors, officers (including its Chief Executive Officer, Chief Financial Officer, Controller and any person performing similar functions) and employees. The Company has filed a copy of this Code of Ethics as Exhibit 14 to its Annual Report on Form 10-KSB for the year ended December 31, 2003.
Audit Committee Financial Expert.
The Company does not have a standing Audit Committee and, accordingly, does not have an “Audit Committee Financial Expert” within the meaning of the rules and regulations of the SEC.
Item 11.  
Executive Compensation.
No compensation was paid to the Chief Executive Officer during the years ended December 31, 2010 and December 31, 2009. No other executive officer received a total annual salary and bonus exceeding $100,000 during either of such years.

 

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Item 12.  
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth information as of March 28, 2011, regarding the beneficial ownership of Common Stock of (1) each person or group known by us to beneficially own 5% or more of the outstanding shares of Common Stock, (2) each director and named executive officer and (3) all directors and executive officers as a group. Unless otherwise noted, the persons named below have sole voting and investment power with respect to the shares shown as beneficially owned by them.
                 
            Percent of Outstanding  
Name of Beneficial Owner(1)   Amount of Beneficial Ownership     Shares of Class Owned  
 
               
Gonet Associates Ltd
    22,054,090       50.4  
Man Keung Alan Wai(2)
    22,054,090       50.4  
Man Ying Ken Wai
    0       0  
Barry Yiu
    3,800,000 (3)     8.7  
Charter One Investments Limited(4)
    3,800,000       8.7  
All officers and directors as a group (3 persons)
    25,854,090 (2)(3)     59.1  
     
(1)  
The address for each of the officers and directors of the Company is c/o our corporate headquarters in Kowloon, Hong Kong.
 
(2)  
Man Keung Wai, through his control of Gonet Associates Ltd., beneficially owns the shares of Common Stock held by Gonet.
 
(3)  
By virtue of his ownership interest in Charter One Investments Limited, Mr. Yiu may be deemed to beneficially own the shares of Common Stock owned by Charter One Investments Limited.
 
(4)  
The address for Charter One Investments Limited is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. Barry Yiu is a director of Charter One Investments Limited.
* * *
The following table sets forth information as of December 31, 2010 with respect to compensation plans (including individual compensation arrangements) under which shares of the Company’s Common Stock are authorized for issuance:
Equity Compensation Plan Information
                         
                    Number of securities  
                    remaining available for  
    Number of securities to     Weighted-average     future issuance under  
    be issued upon exercise     exercise price of     equity compensation plans  
    of outstanding options,     outstanding options,     (excluding securities  
    warrants and rights     warrants and rights     reflected in column (a))  
Plan category   (a)     (b)     (c)  
Equity compensation plans approved by security holders
    0       N/A       0  
 
                       
Equity compensation plans not approved by security holders
    0       N/A       5,000,000  
 
                       
Total
    0       N/A       5,000,000  

 

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On July 25, 2001, the Board adopted the 2001 Restricted Stock Plan (the “Plan”). The purpose of the Plan is to promote the long-term growth of the Company by making awards of Common Stock to key employees and directors of the Company or its subsidiaries.
The Plan is administered by the Board. The Board is authorized, subject to the provisions of the Plan, to (i) select the participants; (ii) determine the number of shares of Common Stock to be awarded to each of the participants and the terms and conditions on which such awards will be made; (iii) establish from time to time regulations for the administration of the Plan; (iv) interpret the Plan; and (v) make all determinations deemed necessary or advisable for the administration of the Plan.
5,000,000 shares of Common Stock are reserved for award under the Plan. At the time of an award of restricted stock, the Board will establish for each participant one or more restricted periods during which shares of Common Stock awarded under the Plan may not be sold, assigned, transferred, pledged or otherwise disposed of or encumbered, except as described below; provided, however, that the Board may, in its discretion, accelerate such restricted periods with respect to outstanding awards of restricted stock. Except for such restrictions, the participant as owner of restricted stock shall have all the rights of a stockholder including but not limited to the right to receive all dividends paid on such shares and the right to vote such shares.
Upon the death, retirement or permanent disability of a participant, upon the involuntary termination by the Company or any subsidiary for reasons other than cause, or upon the sale of assets of the Company or the merger or consolidation of the Company with another corporation and the terms of such sale, merger or consolidation do not entitle the participant to shares of the purchasing, surviving or resulting corporation, all of such shares shall be free of such restrictions. If the participant ceases to be an employee of the Company or its subsidiaries for any other reason, then all unvested shares of restricted stock therefore awarded to him, will upon such termination of employment be forfeited and returned to the Company and available for award to another participant.
An award of restricted stock shall not be effective unless the participant enters into an agreement with the Company in a form specified by the Board agreeing to the terms, conditions and restrictions of the award and such other matters as the Board shall in its sole discretion determine.
At the expiration of a restricted period, the Company will deliver to the participant (or his legal representatives, beneficiaries or heirs) the certificates of Common Stock held by the Company for which such restricted period has terminated.
The aggregate number of shares of Common Stock which may be awarded under the Plan will be appropriately adjusted for any increase or decrease in the total number of shares of the Company’s Common Stock resulting from a division or combination of shares or other capital adjustment; or resulting from the payment of a stock dividend, or other increase or decrease in such shares by the Company.
The Board of Directors may amend the Plan from time to time in such respects as the Board of Directors may deem advisable, provided that no change may be made in any award theretofore granted which would impair the rights of a participant, without consent of the participant. The Board may amend agreements between participants and the Company from time to time as the Board may deem advisable, provided that no change may be made in any award theretofore granted which would impair the rights of a participant without the written consent of the participant.

 

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The Board may at any time terminate the Plan. Any such termination will not affect awards already in effect and such awards shall remain in full force and effect as if the Plan had not been terminated.
No awards may be made under the Plan subsequent to December 31, 2011. No awards have been made under the Plan as of the date of this Annual Report.
Item 13.  
Certain Relationships and Related Transactions, and Director Independence.
The following chart shows advances and repayments made in the year ended December 31, 2010:
                                 
Name   Advances made     Repayment made     Disposal of CAM(HK)     Balance  
    US$     US$     US$     US$  
Gonet Associates Ltd. (1)
                89,953        
Man Keung Alan Wai
    20,012             1,053,006       329,322  
Man Ying Ken Wai
                14,559        
Vivian Wai Wa Chu
                1,829        
     
(1)  
Gonet Associates Ltd. is controlled by Man Keung Alan Wai.
The Company’s Board of Directors consists of Man Keung Alan Wei, Man Ying Ken Wai and Barry Yiu. None of such directors are “independent” as such term is defined in the Corporate Governance Rules of the Nasdaq Stock Market.
Item 14.  
Principal Accountant Fees and Services.
Audit Fees.
The aggregate fees billed for the fiscal years ended December 31, 2010 and 2009 for professional services rendered by Parker Randall for the audit of the annual financial statements and the review of the financial statements included in our quarterly reports on Form 10-Q were $3,000 and $15,000, respectively.
Audit-Related Fees.
The Company did not pay any audit-related fees to Parker Randall for the fiscal years ended December 31, 2010 and December 31, 2009.
Tax Fees.
Parker Randall did not provide any tax services to the Company in either of the fiscal years ended December 31, 2010 and December 31, 2009.
All Other Fees.
Parker Randall did not provide any other services to the Company in either of the fiscal years ended December 31, 2010 and December 31, 2009.

 

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PART IV
Item 15.  
Exhibits and Financial Statement Schedules
         
    PAGE  
 
       
1. Financial Statements of Chinawe.com Inc.:
       
 
       
    F-1  
 
       
    F-2  
 
       
    F-3  
 
       
    F-4  
 
       
    F-5  
 
       
    F-6  
(b) EXHIBITS
         
Exhibit No.   Description
       
 
  3. (i)  
Articles of Incorporation (1)
  3. (ii)  
By-Laws (1)
  10.1    
Chinawe.com Inc. 2001 Restricted Stock Plan (2)
  14    
Code of Ethics (3)
  21    
Subsidiaries
  23.1    
Consent of Parker Randall CF (H.K.) CPA Limited
  31.1    
Rule 13a-14(a)/15d-14(a) Certification
  31.2    
Rule 13a-14(a)/15d-14(a) Certification
  32.1    
Section 1350 Certification of Chief Executive Officer
  32.2    
Section 1350 Certification of Chief Financial Officer
     
1  
Filed as an exhibit to our Company’s Form 10-SB, as filed with the SEC on May 19, 2000, and hereby incorporated by reference herein.
 
2  
Filed as an exhibit to our Company’s Form S-8, as filed with the SEC on October 17, 2001, and hereby incorporated by reference herein.
 
3  
Filed as an exhibit to our Company’s Annual Report on Form 10-KSB, as filed with the SEC on April 14, 2005, and hereby incorporated by reference herein.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
CHINAWE.COM INC.
We have audited the accompanying consolidated balance sheets of Chinawe.com Inc. (the “Company”) as of December 31, 2010 and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the year ended December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2010 and the results of its operations and its cash flows for the year ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company had negative working capital and stockholders’ deficit as of December 31, 2010 of US$334,457 and US$334,457, respectively, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
PARKER RANDALL CF (H.K.) CPA LIMITED
Certified Public Accountants
Hong Kong
March 12, 2011

 

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CHINAWE.COM INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
                         
            Year ended December 31,  
    NOTE     2010     2009  
            US$     US$  
OPERATING REVENUES
                       
Asset management and related services
                  131,462  
 
                   
 
                       
 
                  131,462  
Depreciation of property, plant and equipment
            (3,150 )     (9,528 )
Administrative and general expenses
            (91,687 )     (481,573 )
 
                   
 
                       
LOSS FROM OPERATIONS
            (94,837 )     (359,639 )
 
                       
NON-OPERATING INCOME (EXPENSE)
                       
Interest
            (1,143 )     (3,923 )
Surcharge on taxes
                  (102,632 )
Other income
            138,319       3,918  
Non operating expense
            (41,711 )      
Investment income
    9       1,827,289        
 
                   
 
                       
INCOME/(LOSS) BEFORE INCOME TAXES
            1,827,917       (462,276 )
 
                       
Income tax expense
    5              
 
                   
 
                       
NET INCOME/(LOSS)
            1,827,917       (462,276 )
 
                   
 
                       
OTHER COMPREHENSIVE INCOME
                       
Foreign currency translation
            4,796       1,424  
 
                   
 
                       
COMPREHENSIVE INCOME/(LOSS)
            1,832,713       (460,852 )
 
                   
 
                       
Basic and diluted net income/(loss) per share of common stock
            0.042       (0.0105 )
 
                   
 
                       
Weighted average number of shares of common stock outstanding
            43,800,000       43,800,000  
 
                   
See accompanying notes to the financial statements.

 

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CHINAWE.COM INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                         
            As of     As of  
            December 31,     December 31,  
    Note     2010     2009  
            US$     US$  
ASSETS
                       
Current assets:
                       
Cash and cash equivalents
                  33,427  
Prepayments, deposits and other debtors
                  18,121  
Amount due from a director — Wai Man Keung
                  254,918  
Amount due from the related parties
                  5,523  
Total current assets
                  311,989  
 
                   
 
                       
Property, plant and equipment, net
    3             3,208  
 
                   
 
                       
TOTAL ASSETS
                  315,197  
 
                   
 
                       
LIABILITIES AND STOCKHOLDERS’ DEFICIT
                       
Current liabilities:
                       
Accrued expenses and other current liabilities
            5,135       272,477  
Current portion of long-term debt
    4             7,216  
Due to related parties
    6       329,322       1,392,093  
Income tax payables
    5             453,673  
Surcharge on taxes
                  355,520  
 
                   
Total current liabilities
            334,457       2,480,979  
 
                   
 
                       
Stockholders’ deficit:
                       
Preferred stock, par value US$0.001 per share; authorized 20,000,000 shares; none issued
                       
Common stock, par value US$0.001 per share; authorized 100,000,000 shares; issued and outstanding 43,800,000 shares
            43,800       43,800  
Capital in excess of par
            84,560       85,948  
Accumulated losses
            (462,817 )     (2,290,734 )
Accumulated other comprehensive loss
                  (4,796 )
 
                   
Total stockholders’ deficit
            (334,457 )     (2,165,782 )
 
                   
 
                       
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
                  315,197  
 
                   
See accompanying notes to the financial statements.

 

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CHINAWE.COM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
                                                 
                    Capital             Accumulated     Total  
    Number             in excess     Accumulated     other comprehensive     Stockholders’  
    of shares     Amount     of par     losses     (loss) income     deficit  
            US$     US$     US$     US$     US$  
Balance as of January 1, 2009
    43,800,000       43,800       85,948       (1,828,458 )     (6,220 )     (1,704,930 )
 
                                               
Comprehensive loss:
                                               
Net loss for the year
                      (462,276 )           (462,276 )
Currency translation adjustment
                            1,424       1,424  
 
                                   
Total comprehensive loss
                      (462,276 )     1,424       (460,852 )
 
                                   
 
                                               
Balance as of December 31, 2009
    43,800,000       43,800       85,948       (2,290,734 )     (4,796 )     (2,165,782 )
 
                                   
 
                                               
Comprehensive income:
                                               
Net income for the year
                      1,827,917             1,827,917  
Currency translation adjustment
                            4,796       4,796  
 
                                   
Total comprehensive income
                      1,827,917       4,796       1,832,713  
Disposal on CAM(HK)
                (1,388 )                 (1,388 )
 
                                   
 
                                               
Balance as of December 31, 2010
    43,800,000       43,800       84,560       (462,817 )           (334,457 )
 
                                   
See accompanying notes to the financial statements.

 

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CHINAWE.COM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
                 
    Year ended December 31,  
    2010     2009  
    US$     US$  
CASH FLOWS FROM OPERATING ACTIVITIES
               
Net income/(loss)
    1,827,917       (462,276 )
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
    3,150       9,533  
Gain on disposal
    (1,827,289 )      
Changes in operating assets and liabilities:
               
Prepayments, deposits and other receivables
          (260,441 )
Customer deposits received
          12,297  
Accrued expenses and other current liabilities
    (102,053 )     1,090,063  
Surcharge on taxes
          102,185  
Income tax payable
          (3,945 )
NET CASH USED IN OPERATING ACTIVITIES
    (98,275 )     487,416  
 
           
 
               
CASH FLOWS FROM INVESTING ACTIVITIES
               
Net cash outflow from disposal of subsidiary
    (16,362 )      
 
           
NET CASH USED IN INVESTING ACTIVITIES
    (16,362 )      
 
           
 
               
CASH FLOWS FROM FINANCING ACTIVITIES
               
New loan raised
    34,147        
Repayment of long-term debt
          (20,106 )
Advance from related parties
    88,441       145,347  
Repayment to related parties
    (41,361 )     (920,193 )
NET CASH USED IN FINANCING ACTIVITIES
    81,227       (794,952 )
 
           
 
               
NET DECREASE IN CASH AND CASH EQUIVALENTS
    (33,410 )     (307,536 )
Cash and cash equivalents, beginning of period
    33,427       339,538  
Effect of exchange rate changes
    (17 )     1,425  
 
           
 
               
CASH AND CASH EQUIVALENTS, END OF PERIOD
          33,427  
 
           
 
               
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
               
Cash paid for interest
    1,143       3,923  
See accompanying notes to the financial statements.

 

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CHINAWE.COM INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND ORGANIZATION STRUCTURE
Chinawe.com Inc. (“Chinawe”) was incorporated under the laws of the State of California. Chinawe’s principal business activity was providing professional management services relating to non-performing loans (“NPLs”) in the People’s Republic of China (“PRC”), as well as other consulting services. During the first quarter of 2009, the Company’s sole customer, Huizhou One Limited, issued a notice of termination to terminate the services contracts with effect from March 26 and March 27, 2009. Effective from March 27, 2009, the Company became a non-operating company.
The consolidated financial statements include the accounts of Chinawe and Officeway Technology Limited, a company incorporated in the British Virgin Islands in December 1999 (hereinafter collectively referred to as the “Company”).
Chinawe Asset Management Limited, a company incorporated in Hong Kong (“CAM (HK)”), ceased to be an indirect subsidiary of Chinawe when CAM (HK) was sold on July 26, 2010 (the “CAM (HK) Sale”). As a result of the CAM (HK) Sale, Chinawe Asset Management (PRC) Limited (“CAM (PRC)”), a subsidiary of CAM (HK) also ceased to be an indirect subsidiary of Chinawe.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of accounting
The financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”). The functional currency of its major subsidiary is Renminbi (“RMB”). The financial statements are presented in US dollars (“U.S. $”).
(b) Going concern consideration
The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As of December 31, 2010, the Company had negative working capital and stockholders’ deficit of U.S. $334,457 and U.S. $334,457, respectively, which raise substantial doubt about its ability to continue as a going concern.
The Company has relied on private financing by cash inflow from the principal stockholders of the Company, who have agreed not to demand repayment of amounts due to them as long as the Company has negative working capital. These stockholders have indicated their intention to finance the Company for a “reasonable” period of time to enable the Company to continue as a going concern, assuming that in such a period of time the Company would not be able to raise additional capital to support its continuation. However, it is uncertain for how long or to what extent such a period of time would be “reasonable” and there can be no assurance that the financing from these stockholders will be continued. The accompanying financial statements do not include or reflect any adjustments that might result from the outcome of these uncertainties.

 

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(c) Principles of consolidation
The financial statements include the accounts of Chinawe and its subsidiaries. All material inter-company balances and transactions have been eliminated in consolidation.
(d) Cash and cash equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less that are readily convertible into a known amount of cash to be cash equivalents.
(e) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is calculated on a straight-line basis to write off the cost of each asset using annual percentage rates as follows:
         
Office equipment
    30 %
Computer equipment
    30 %
Leasehold improvements
    20 %
Motor vehicles
    30 %
(f) Accounting for the impairment of long-lived assets
The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Recoverability of assets to be held and used is determined by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the recoverable amount of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
(g) Revenue recognition
The Company has no business currently.
(h) Operating leases
Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Rentals payable under operating leases are recorded in the statement of operations on a straight-line basis over the lease term.
(i) Income taxes
Provision for income and other taxes has been made in accordance with the tax rates and laws of the countries in which the Company operates.

 

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(i) Income taxes (Continued)
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
(j) Earnings (loss) per common share
Basic earnings (loss) per share amounts are based on the weighted average shares of common stock outstanding. Diluted earnings (loss) per share assume the conversion, exercise or issuance of all potential common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings per share. The Company had no potential common stock instruments which would result in diluted earnings (loss) per share in 2010 or 2009.
(k) Foreign currency translation
The Company’s functional currency is RMB, which is the currency of the primary economic environment in which the Company operates. For group reporting purposes, the amounts shown in the financial statements are presented in U.S. dollars (“reporting currency”).
For translation of financial statements into the reporting currency, assets and liabilities for each balance sheet presented are translated at the rates of exchange existing at the year end. Income and expenses for each income statement presented are translated at the average rates during the year. Resulting exchange differences are recognized in accumulated other comprehensive income within stockholders’ equity.
(l) Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates includes provisions for doubtful accounts, sales returns and allowances, impairment of long-lived assets and incomes taxes. Actual results could differ from those estimates.
(m) Fair value of financial instruments
The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair values of the Company’s financial instruments, which include cash, accounts receivable, accounts payable, long-term debt and related party balances, approximate their carrying value in the financial statements.

 

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(n) Comprehensive income
Statement of Financial Accounting Standards (“SFAS”) No. 130, “Reporting Comprehensive Income”, establishes requirements for disclosure of comprehensive income which includes certain items previously not included in the statements of operations, including minimum pension liability adjustments and foreign currency translation adjustments, among others. The Company’s components of comprehensive income include net loss for the year and a foreign currency translation adjustment.
(o) Related parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.
(p) New accounting pronouncements
In January 2010, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2010-02 “Accounting and Reporting for Decrease in Ownership of a subsidiary — a Scope Clarification”. The update provides amendments to subtopic 810-10 and related guidance within US GAAP to clarify that the scope of the decrease in ownership provisions of the Subtopic and related guidance applies to three cases. The amendments in this Update also clarify that the decrease in ownership guidance in Subtopic 810-10 does not apply to the sales of in substance real estate and conveyances of oil and gas mineral rights transactions even if they involve businesses. If a decrease in ownership occurs in a subsidiary that is not a business or nonprofit activity, and entity first needs to consider whether the substance of the transaction causing the decrease in ownership in addressed in other U.S. GAAP, such as transfers of financial assets, revenue recognition, exchanges of nonmonetary assets, sales of in substance real estate, or conveyances of oil and gas mineral rights, and apply that guidance as applicable. If no other guidance exists, an entity should apply the guidance in Subtopic 810-10. The amendments in this Update also expand the disclosure about the deconsolidation of a subsidiary or derecognition of a group of assets within the scope of Subtopic 810-10. The Company adopted this Update on January 1, 2010 and the disclosure is shown in note 10.
In January 2010, the FASB issued ASU No. 2010-06 “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements”. This update provides amendments to Subtopic 820-10 that required new disclosures for two situations. First, a reporting entity should disclose separately the amount of significant transfers in and out of Level 1 and 2 fair value measurements and describe the reasons for the transfers. Second, in the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separate information about purchases, sales, issuance and settlements. This pronouncement has no current application to the Company.

 

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(p) New accounting pronouncements (Continued)
In February 2010, the FASB issued ASU No. 2010-09 “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements”. This Update provides the following amendments to (i) an entity that either (a) is a company that files periodic reports with the Securities and Exchange Commission (“SEC filer”) or (b) is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets) is required to evaluate subsequent events through the date that the financial statements are issued. If an entity meets neither of those criteria, it should evaluate subsequent events through the date the financial statements are available to be issued, (ii) the glossary of Topic 855 is amended to include the definition of SEC filer, (iii) an entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated, (iv) the glossary of Topic 855 is amended to remove the definition of public entity, and (v) the scope of the reissuance disclosure requirements is refined to include revised financial statements only. No aspect of this new pronouncement has current application to the Company.
In May 2010, the FASB issued ASU No. 2010-19 “Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates (“SEC Update”). The purpose of the SEC Update is to codify the SEC Staff Announcement made at the March 18, 2010 meeting of the FASB Emerging Issues Task Force (“EITF”) by the SEC observer to the EITF. The Staff Announcement provides the SEC staff’s view on certain foreign currency issues related to investments in Venezuela. This new pronouncement has no current application to the Company.
In December 2010, the FASB issued ASU No. 2010-29 “ Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force)”. The amendments in this update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This new pronouncement has no current application to the Company.

 

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3. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment are summarized as follows:
                 
    As of     As of  
    December 31, 2010     December 31, 2009  
    U.S $     U.S. $  
Office equipment
          11,869  
Computer equipment
          50,760  
Leasehold improvement
          57,005  
Motor vehicles
          103,065  
 
           
 
               
Total cost
          222,699  
Accumulated depreciation
          (219,487 )
Currency translation adjustment
          (4 )
 
           
 
               
Net
          3,208  
 
           
4. LONG-TERM DEBT
Long term debt consists of obligations under capital leases for purchases of vehicles with U.S. $0 and U.S. $7,216 outstanding as of December 31, 2010 and December 31, 2009, respectively. The debt is collateralized by two motor vehicles with an aggregate net book value of U.S. $0 and U.S. $12,387 as of December 31, 2010 and December 31, 2009, respectively. The long term debt was fully settled in June, 2010.
                 
    As of     As of  
    December 31, 2010     December 31, 2009  
    U.S. $     U.S. $  
Within 1 year
          8,605  
Less: Amount representing interest
          (1,389 )
 
           
 
               
Present value of net minimum lease payments
          7,216  
 
           
 
               
Current portion
          7,216  
 
           
 
               
Total
          7,216  
 
           

 

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5. INCOME TAXES
It is management’s intention to reinvest all the income attributable to the Company earned by its operations outside the U.S. Accordingly, no U.S. corporate income taxes are provided for in these financial statements.
The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.
Under the current laws of the British Virgin Islands (the “BVI”), dividends and capital gains arising from the Company’s investments in the BVI are not subject to income taxes and no withholding tax is imposed on payments of dividends to the Company.
Companies that carry on business and derive income in Hong Kong (“HK”) are subject to Hong Kong Profits Tax at 16.5% for the year ended December 31, 2010 and 2009, respectively. Companies that carry on business and derive income in the PRC are subject to income tax at 25% for the year ended December 31, 2010 and 2009. No income taxes have been provided for the subsidiary in Hong Kong as it has incurred losses for taxation purposes during the year ended December 31, 2010 and 2009, respectively. A 100% valuation allowance has been established against the deferred tax asset, as the utilization of the loss carry-forwards cannot reasonably be assured
The reconciliation between the effective tax rate and the statutory U.S. federal, HK and PRC income tax rate is as follows:
                 
    Year ended  
    December 31,  
    2010     2009  
    % of Pre- Tax Income     % of Pre- Tax Income  
U.S. federal income tax rate
    34       34  
Valuation allowance — U.S. federal income tax
    (34 )     (34 )
 
           
 
           
 
           
                 
    Year ended  
    December 31,  
    2010     2009  
    % of Pre- Tax Income     % of Pre- Tax Income  
HK income tax rate
    16.5       16.5  
Valuation allowance — HK income tax
    (16.5 )     (16.5 )
 
           
 
           
 
           
                 
    Year ended  
    December 31,  
    2010     2009  
    % of Pre- Tax Income     % of Pre- Tax Income  
PRC income tax rate
    25       25  
Valuation allowance — PRC income tax
    (25 )     (25 )
 
           
 
           
 
           

 

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6. RELATED PARTY BALANCES AND TRANSACTIONS
The balances with related parties are as follows:
                 
    As of     As of  
    December 31, 2010     December 31, 2009  
    U.S. $     U.S. $  
Advances from stockholders
    329,322       1,392,093  
 
           
The amounts due are unsecured, interest free and repayable on demand. As of December 31, 2010 and 2009, the Company had advances from related parties of U.S. $329,322 and U.S. $1,392,093, respectively. The decrease in advances from stockholders reflects the application of proceeds from the sale of CAM (HK) to the outstanding balance.
7. OPERATING LEASE COMMITMENTS
The Company had total future minimum lease payments under non-cancelable operating leases payable as follows:
                 
    As of December 31,  
    2010     2009  
    U.S. $     U.S. $  
 
               
Within one year
          3,868  
In the second to fifth years inclusive
           
 
           
 
               
 
          3,868  
 
           
Operating lease payments of U.S. $0 and U.S. $102,041 for the years ended December 31, 2010 and 2009, respectively, represent rental paid by the Company for its office premises and staff quarters of which leases are negotiated for a term of one year.
8. STOCK PLAN
As of July 25, 2001 the Board of Directors approved the Chinawe.com Inc. 2001 Restricted Stock Plan (the “Plan”), under which 5,000,000 shares of the Company’s common stock have been reserved for award under the Plan.
Pursuant to the Plan, stock awards may be granted to eligible officers, directors, employees and consultants of the Company. As of December 31, 2010 and December 31, 2009, no awards have been made under the Plan.

 

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9. INVESTMENT INCOME
As of July 26, 2010, the Company announced the decision of its board of directors to dispose of its entire interests in CAM (HK). As a result of the CAM (HK) Sale, CAM (PRC), a subsidiary of CAM (HK), also ceased to be an indirect subsidiary of Chinawe.
                 
    As of     As of  
    December 31, 2010     December 31, 2009  
    U.S. $     U.S. $  
Net assets disposed of:
               
Cash and cash equivalents
    16,362        
Prepayments, deposits and other receivables
    272,885        
Property, plant and equipment, net
    56        
Accrued expenses and other current liabilities
    (172,470 )      
Income tax payable
    (402,083 )      
Surcharge on taxes
    (358,953 )      
Due to directors
    (1,150,215 )      
Exchange fluctuation reserve realized
    (32,871 )      
 
           
 
               
Subtotal
    (1,827,289 )      
 
               
Gain on disposal of CAM (HK)
    1,827,289        
 
           
 
               
 
           
 
           
As of July 26, 2010, the cost and impairment of investment in CAM (HK) was U.S. $264,635 and U.S. $264,634, leaving the net book value of U.S. $1. The cash consideration was U.S. $1, mainly due to the negative balance of the net asset of CAM (HK) by U.S. $1,794,418.
An analysis of the net inflow of cash and cash equivalents in respect of the disposal of CAM (HK) is as follows:
                 
    As of     As of  
    December 31, 2010     December 31, 2009  
    U.S. $     U.S. $  
Cash consideration
    1        
Due from a director-Wai Man Keung
    (1 )      
Cash and bank balance disposed of
    (16,362 )      
 
           
 
               
Net inflow of cash and cash equivalents in respect of the disposal of CAM (HK)
    (16,362 )      
 
           
10. CONTINGENCIES
The Company is currently suspended in the State of California due to failure to file reports with the Franchise Tax Board. The Company is in the process of preparing the relevant reports and expects to be back in good standing shortly. The Company believes that the amount of taxes and penalties owed will not be material to the financial statements. The Company is also delinquent in filing its U.S. Federal tax returns. The Company is in the process of preparing the relevant returns and does not believe that the amount of taxes owed will be material.
11. SUBSEQUENT EVENT
The Company has evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission on December 31, 2010. The Company has determined that there are no other such events that warrant disclosure or recognition in the consolidated financial statements.

 

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
         
 
Date: March 30, 2011
CHINAWE.COM INC.
(Registrant)
 
 
  By:   /s/ Man Keung Wai    
    Man Keung Wai   
    Chief Executive Officer   
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
         
SIGNATURES   TITLE   DATE
 
       
/s/ Man Keung Wai
 
Man Keung Wai
  Chairman of the Board, Chief Executive Officer,
Chief Financial Officer and Director
(Principal Executive Officer and Principal Financial Officer)
  March 30, 2011
 
       
/s/ Man Ying Ken Wai
 
Man Ying Ken Wai
  Vice President of Marketing, Secretary and Director    March 30, 2011
 
       
/s/ Barry Yiu
 
Barry Yiu
  Vice President and Director    March 30, 2011

 

 


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EXHIBIT INDEX
         
Exhibit No.   Description
  21    
Subsidiaries
       
 
  23.1    
Consent of Parker Randall CF (H.K.) CPA Limited
       
 
  31.1    
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
       
 
  31.2    
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
       
 
  32.1    
Section 1350 Certification of Chief Executive Officer
       
 
  32.2    
Section 1350 Certification of Chief Financial Officer