UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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| þ | | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2009
OR
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| 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 | | 95-462728 |
| (State or other jurisdiction of | | (I.R.S. Employer Identification No.) |
| incorporation or organization) | | |
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. Yeso Noþ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yeso Noþ
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. Yesþ Noo
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). Yeso Noo
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. Yesþ
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):
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| Large accelerated filero | | Accelerated filero | | Non-accelerated filero | | Smaller reporting companyþ |
| | | | | (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). Yesþ Noo
The aggregate market value of Common Stock held by non-affiliates of the registrant (based upon the closing sale price on June 30, 2009) 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 April 14, 2010, there were 43,800,000 shares of Common Stock, $0.001 per share par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
PART I
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.
Effective March 27, 2009, the Company ceased providing professional management services relating to non-performing loans (“NPL” or “NPLs”) in the People’s Republic of China (“PRC”). The Company has terminated its employees and closed down its offices. The Company is currently seeking one or more new lines of business that it can enter into. The Company has not identified a specific line of business or territory for any such new business. There can be no assurance that the Company will be successful in identifying a new line of business that it can enter into or that if such new line of business is identified, that the Company will have adequate funding to commence operations of the new line of business. 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” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Through March 27, 2009, Chinawe’s principal business was the provision of professional management services relating to NPLs in the PRC. The Company’s professional service platform provided a comprehensive solutions to NPL assets, either by expediting ownership transactions between the portfolio owners and their purchasers, or by negotiating with the relevant debtors to facilitate financial restructurings.
On February 24, 2009, Huizhou One Limited (“Huizhou”), an indirect subsidiary of Citigroup Inc., notified Chinawe Asset Management (PRC) Limited (“CAM”), a wholly owned subsidiary of the Company, that it was terminating the Master Consulting Agreement, dated September 22, 2005 and the Amendment Letter, dated May 28, 2007, between Huizhou and CAM, effective March 26, 2009. On March 20, 2009, Huizhou notified CAM that it was terminating the Master Asset Consulting Agreement dated April 20, 2005 and the Amendment Letters dated November 2, 2005, November 1, 2006 and March 18, 2008 between Huizhou and CAM, effective March 27, 2009.
Huizhou had retained CAM, pursuant to the Master Consulting Agreements, to manage portfolios of NPLs in the PRC owned by Huizhou. In each case, the agreements were terminated by Huizhou pursuant to provisions allowing termination at the convenience of Huizhou. Prior to such terminations, CAM managed the portfolio of NPLs owned by Huizhou pursuant to the Master Consulting Agreements, as discussed in the Company’s prior Annual Reports on Form 10-KSB as filed with the Securities and Exchange Commission (“SEC”).
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 be material to the financial statements.
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.
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
Our common stock is listed on the electronic bulletin board of the over-the-counter market. Once delisted, we cannot predict when, if ever, our class of common stock would be re-listed for trading on the electronic 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.
Absent NASDAQ Capital Market or other NASDAQ or stock exchange listing, trading, if any, in 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.
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| Item 1B. | | Unresolved Staff Comments. |
Not applicable.
The Company’s headquarters are located in Kowloon, Hong Kong.
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| Item 3. | | Legal Proceedings. |
We are not engaged in any litigation or governmental proceedings.
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| Item 4. | | Submission of Matters to a Vote of Security Holders. |
Removed.
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PART II
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| Item 5. | | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Market Information:
(a) Our shares of common stock, par value $.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 | |
| |
| 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 | |
| | | | | | | | | |
| 2008 | | | | | | | | |
| |
| January 1, 2008 - March 31, 2008 | | | .08 | | | | .03 | |
| April 1, 2008 - June 30, 2008 | | | .04 | | | | .02 | |
| July 1, 2008 - September 30, 2008 | | | .04 | | | | .01 | |
| October 1, 2008 - December 31, 2008 | | | .01 | | | | .00 | |
The foregoing quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
On March 16, 2010, the last day the Common Stock traded, the Common Stock was quoted at $0.01 per share.
(b) As of April 14, 2010, the Company had 43,800,000 shares of Common Stock outstanding and 101 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.
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| Item 6. | | Selected Financial Data. |
Not applicable.
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| 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 document.
Overview — Results of Operations
The Company’s financial statements for the year ended December 31, 2009 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, 2009, the Company reported a net loss of US$462,276 and as of December 31, 2009 had a negative working capital and stockholders’ deficit of US$2,168,989 and US$2,165,782, respectively.
Effective March 27, 2009, the Company ceased providing professional management services relating to NPLs in the PRC. The Company has terminated its employees and closed down its offices. The Company is currently seeking one or more new lines of business that it can enter into. The Company has not identified a specific line of business or territory for any such new business. There can be no assurance that the Company will be successful in identifying a new line of business that it can enter into or that if such new line of business is identified, that the Company will have adequate funding to commence operations of a new line of business. 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, 2009 compared to the year ended December 31, 2008
Revenues.Revenues for the year ended December 31, 2009 were US$131, 462 as compared to US$745,425 for the year ended December 31, 2008, a decrease of 82.36%. As the Company discontinued its sole business with Huizhou One Limited in March 2009, and the Company has not generated new business in this field.
Expenses.Administrative and general expenses for the year ended December 31, 2009 were US$481,574, decreased by 50.68% as compared to US$976,434, for the year ended December 31, 2008.
The decrease in salary paid to employees, reduce in rental fee to branch offices and decrease in motor vehicle expenses were the main reasons for the total decrease of US$494,860 for the year ended December 31, 2009 compared to the year ended December 31, 2008.
Taxation.No income tax expense for the year ended December 31, 2009 was incurred because the PRC enterprise incurred a loss from asset management and related services earned in the PRC.
As a consequence of the foregoing, we had a loss from operations for the year ended December 31, 2009 of US$359,639 as compared to loss from operations of US$290,046 for the year ended December 31, 2008. The net loss for the year ended December 31, 2009 was US$462,276, as compared to net loss of US$397,508 for the year ended December 31, 2008.
Liquidity and Capital Resources
The Company’s financial statements for the twelve months ended December 31, 2009 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, 2009, the Company reported a net loss of US$462,276 and as of December 31, 2009 had a negative working capital and a stockholders’ deficit of US$2,168,989 and US$2,165,782, 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.
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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 currently has no operating 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.
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| 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 the pages indicated in Item 13 in this Report.
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| 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, 2009 included an explanatory paragraph describing the uncertainty as to the Company’s ability to continue as a going concern.
During the Company’s two most recent fiscal years 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.
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The Board appointed Parker Randall CF (H. K.) CPA Limited (“Parker Randall”) as the Company’s new independent auditors (the “New Auditors”), effective from March 15, 2010.
During the Company’s two most recent fiscal years and subsequent interim period on or prior to March 15, 2010, the Company did not consult with Parker Randall regarding any of the matters or events set forth in Item 304(a)(2) of Regulation S-K.
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| 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 SEC’s rules and forms and which also are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the 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).
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, 2009. 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.
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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 temporary 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, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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| Item 9B. | | Other Information. |
Not applicable.
PART III
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| 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, and President |
| Man Ying Ken Wai | | | 44 | | | Vice President, Director |
| Barry Yiu | | | 49 | | | Vice President, Director |
| Vivian Wai Wa Chu | | | 39 | | | Chief Financial Officer, Secretary and 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. (“Neo Modern”) 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 & President
Mr. Wai, Man Keung Alan is the founder of the Company, and the Chairman & CEO since its incorporation. He is responsible for identifying business opportunities, overall strategic planning and development of the Company. Under his leadership and management, the Company has grown and expanded quickly in Hong Kong and China. 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 and Vice President
Mr. Wai, Man Ying Ken is the co-founder, Director and Vice President of our Company since its incorporation. He takes comprehensive responsibilities of determining and developing its 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.
Ms. Chu, Vivian Wai Wa – Director, Chief Financial Officer & Secretary
Ms. Chu, Vivian Wai Wa has been our Secretary and Director since incorporation, taking responsibilities for the financial management as well as the Company’s various administrative affairs. Later she became our Chief Financial Officer. She has accumulated her skills from managing diversified areas before joining us. Ms. Chu takes charge of financial planning, overall cost controlling, and strategic planning. She also identifies and establishes the Company’s core competition. She obtained both her Bachelor of Economics and Bachelor of Arts in Asian Studies from The Australian National University in 1992. Ms. Chu is the spouse of Mr. Wai Man Ying Ken.
Mr. Barry Yiu – Director
Mr. Barry Yiu is responsible for fund raising. He has over 15 years of experience in business development, strategy planning, 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.
Other employees
Ms. Susan Song Hanqiu– Financial Manager
Ms. Susan Song Hanqiu joined our company in 2007. She is our Financial Manager whose responsibilities include internal control and financial reporting. She was assigned to a technical secondary school in Hunan as a teacher after she had received her bachelor degree in accounting in July 1988. Afterward, she has joined Guangzhou Medicine Group as financial manager since July 1998. She has 10 years working experience in the accounting field.
Mr. Eugene Lin – Senior Manager
Mr. Lin has been the Legal Compliance Officer since he joined our Company in 2005. He is in charge of the Company’s comprehensive legal activities. His experiences include serving as a Legal Specialist specializing in international copyright protection in Tenwell Consulting Co., Ltd. Mr. Lin holds a Qualification Certificate of Law Practitioner in China. He obtained a LLB degree from International Law School, Guangdong University of Foreign Studies.
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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, 2009.
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.
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| Item 11. | | Executive Compensation. |
The Company’s philosophy is to maintain a peer-based executive compensation program comprised of fixed and performance variable elements. The design and operation of the program reflect the following objectives:
| | • | | Recruiting and retaining talented leadership. |
| | • | | Implementing measurable performance targets. |
| | • | | Correlating compensation directly with shareowner value. |
| | • | | Emphasizing performance based compensation, progressively weighted with seniority level. |
| | • | | Adherence to high ethical, safety and leadership standards. |
Designing a Competitive Compensation Package
Recruitment and retention of leadership to manage our Company requires a competitive compensation package. Our Board of Directors emphasizes (i) fixed compensation elements of base salary, and (ii) variable compensation contingent on above-target performance.
Fixed Compensation
The principal element of fixed compensation not directly linked to performance targets is the base salary. We target the value of fixed compensation generally at the median of our compensation peer group to facilitate a competitive recruitment and retention strategy.
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Incentive Compensation
Our incentive compensation programs are linked directly to earnings growth, cash flow and total shareowner return.
Employment Agreements
Our executives do not have the typical employment agreements that specify compensation or length of employment. These matters are left to the discretion of the Board of Directors and the employee. At present, there are no employment contracts with any of our executives.
No compensation was paid to the Chief Executive Officer during the years ended December 31, 2009 and December 31, 2008. 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 April 14, 2010, 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 officer and (3) all executive officers and directors 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 | |
| Vivian Wai Wa Chu | | | 0 | | | | 0 | |
Charter One Investments Limited(4) | | | 3,800,000 | | | | 8.7 | |
| All officers and directors as a group (4 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. |
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The following table sets forth information as of December 31, 2009 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 | |
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.
10
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 heir) 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 may amend the Plan from time to time in such respects 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 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.
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 followings chart shows advances and repayments made in 2009:
| | | | | | | | | | | | | |
| Name | | Advances made | | | Repayment made | | | Balance | |
| | | | $ | | | | $ | | | | $ | |
Gonet Associates Ltd.(1) | | | — | | | | 203,589 | | | | 90,015 | |
| Man Keung Alan Wai | | | 456,801 | | | | 16,977 | | | | 1,030,760 | |
| Man Ying Ken Wai | | | — | | | | — | | | | 14,569 | |
| Vivian Wai Wa Chu | | | — | | | | 9,072 | | | | 1,831 | |
| | | |
| (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, Barry Yiu and Vivian Wai Wa Chu. None of such directors are ‘‘independent’’ as such term is defined in the Marketplace Rules of the Nasdaq Stock Market.
11
| | |
| Item 14. | | Principal Accountant Fees and Services. |
Audit Fees.
The aggregate fees billed for the fiscal years ended December 31, 2009 and 2008 for professional services rendered by Parker Randall and Mazars, respectively, 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 $15,000 and $12,821, respectively.
Audit-Related Fees.
The Company did not pay any audit-related fees to Parker Randall or Mazars for the fiscal years ended December 31, 2009 and December 31, 2008.
Tax Fees.
Neither Parker Randall nor Mazars provided any tax services to the Company in either of the fiscal years ended December 31, 2009 and December 31, 2008.
All Other Fees.
Neither Parker Randall nor Mazars provided any other services to the Company in either of the fiscal years ended December 31, 2009 and December 31, 2008.
PART IV
| | |
| Item 15. | | Exhibits and Financial Statement Schedules. |
Documents filed as part of this Report:
1. Financial Statements of Chinawe.com Inc.:
| | | |
| Report of Independent Registered Public Accounting Firm | | F-2 |
| Report of Independent Registered Public Accounting Firm | | F-3 |
| Consolidated Statements of Operations | | F-4 |
| Consolidated Balance Sheets | | F-5 |
| Consolidated Statements of Changes in Stockholders’ Deficit | | F-6 |
| Consolidated Statements of Cash Flows | | F-7 |
| Notes to and Forming Part of the Financial Statements | | F-8 – F-16 |
12
2. Exhibits and Index:
| | | | | |
| Exhibit No. | | Description |
| | | | | |
| | 3. | (i) | | Articles of Incorporation (1) |
| | | | | |
| | 3. | (ii) | | By-Laws (1) |
| | | | | |
| | 10.1 | | | Chinawe.com Inc. 2001 Restricted Stock Plan (3) |
| | | | | |
| | 14 | | | Code of Ethics (6) |
| | | | | |
| | 21 | | | Subsidiaries |
| | | | | |
| | 23.1 | | | Consent of Mazars CPA Limited |
| | | | | |
| | 23.2 | | | 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 Securities and Exchange Commission on May 19, 2000, and hereby incorporated by reference herein. |
| |
| 2 | | Filed as an exhibit to our Company’s Information Statement, as filed with the Securities and Exchange Commission on February 12, 2001, and hereby incorporated by reference herein. |
| |
| 3 | | Filed as an exhibit to our Company’s Form S-8, as filed with the Securities and Exchange Commission on October 17, 2001, and hereby incorporated by reference herein. |
| |
| 4 | | Filed as an exhibit to our Company’s Quarterly Report on Form 10-QSB, as filed with the Securities and Exchange Commission on August 23, 2005, and hereby incorporated by reference herein. |
| |
| 5 | | Filed as an exhibit to our Company’s Quarterly Report on Form 10-QSB, as filed with the Securities and Exchange Commission on May 23, 2005, and hereby incorporated by reference herein. |
| |
| 6 | | Filed as an exhibit to our Company’s Annual Report on Form 10-KSB, as filed with the Securities and Exchange Commission on April 14, 2005, and hereby incorporated by reference herein. |
13
INDEX TO FINANCIAL STATEMENTS
Years ended December 31, 2009 and 2008
CONTENTS
| | | | | |
| | | F-2 | |
| | | | | |
| Report of Independent Registered Public Accounting Firm | | | F-3 | |
| | | | | |
| | | F-4 | |
| | | | | |
| | | F-5 | |
| | | | | |
| | | F-6 | |
| | | | | |
| | | F-7 | |
| | | | | |
| | | F-8 – F-16 | |
F-1
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, 2009 and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the year ended December 31, 2009. 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits also included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and 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, 2009 and the results of its operations and its cash flows for the year ended December 31, 2009, 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 2(b) to the financial statements, the Company had negative working capital and stockholders’ deficit as of December 31, 2009 of US$2,168,989 and US$2,165,781, 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 2(b). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ PARKER RANDALL CF (H.K.) CPA LIMITED
Certified Public Accountants
Hong Kong
April 15, 2010
F-2
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 sheet of Chinawe.com Inc. (the “Company”) as of December 31, 2008 and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the year ended December 31, 2008. 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 audit.
We conducted our audit 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit also included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audit 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, 2008 and the results of its operations and its cash flows for the year ended December 2008, 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. The Company had negative working capital and stockholders’ deficit as of December 31, 2008 of US$1,710,449 and US$1,704,930, respectively, which raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Mazars CPA Limited
Certified Public Accountants
Hong Kong
April 15, 2009
F-3
CHINAWE.COM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | | | | | |
| | | | | | | Year ended December 31, | |
| | | NOTE | | | 2009 | | | 2008 | |
| | | | | | US$ | | | US$ | |
| | | | | | | | | | | | | |
| OPERATING REVENUES | | | | | | | | | | | | |
| Asset management and related services | | | | | | | 131,462 | | | | 745,425 | |
| | | | | | | | | | | |
| | | | | | | | 131,462 | | | | 745,425 | |
| Depreciation of property, plant and equipment | | | | | | | (9,528 | ) | | | (41,155 | ) |
| Impairment loss on property, plant and equipment | | | | | | | — | | | | (17,882 | ) |
| Administrative and general expenses | | | | | | | (481,573 | ) | | | (976,434 | ) |
| | | | | | | | | | | |
| | | | | | | | | | | | | |
| LOSS FROM OPERATIONS | | | | | | | (359,639 | ) | | | (290,046 | ) |
| | | | | | | | | | | | | |
| NON-OPERATING INCOME (EXPENSE) | | | | | | | | | | | | |
| Other income | | | | | | | 3,918 | | | | 12,594 | |
| Interest | | | | | | | (3,923 | ) | | | (19,526 | ) |
| Surcharge on taxes | | | | | | | (102,632 | ) | | | (100,530 | ) |
| | | | | | | | | | | |
| | | | | | | | | | | | | |
| LOSS BEFORE INCOME TAXES | | | | | | | (462,276 | ) | | | (397,508 | ) |
| | | | | | | | | | | | | |
| Income tax expense | | | 5 | | | | — | | | | — | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| NET LOSS | | | | | | | (462,276 | ) | | | (397,508 | ) |
| | | | | | | | | | | |
| | | | | | | | | | | | | |
| OTHER COMPREHENSIVE LOSS | | | | | | | | | | | | |
| Foreign currency translation | | | | | | | 1,424 | | | | (18,774 | ) |
| | | | | | | | | | | |
| COMPREHENSIVE LOSS | | | | | | | (460,852 | ) | | | (416,282 | ) |
| | | | | | | | | | | |
| | | | | | | | | | | | | |
| Basic and diluted net income per share of common stock | | | | | | | (0.0105 | ) | | | (0.0091 | ) |
| | | | | | | | | | | |
| | | | | | | | | | | | | |
| Weighted average number of shares of common stock outstanding | | | | | | | 43,800,000 | | | | 43,800,000 | |
| | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
F-4
CHINAWE.COM INC.
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | | | |
| | | | | | | As of December 31, | |
| | | Note | | | 2009 | | | 2008 | |
| | | | | | US$ | | | US$ | |
| ASSETS | | | | | | | | | | | | |
| Current assets: | | | | | | | | | | | | |
| Cash and cash equivalents | | | | | | | 33,427 | | | | 339,538 | |
| Prepayments, deposits and other debtors | | | | | | | 18,121 | | | | 30,419 | |
| Due from a director | | | | | | | 254,918 | | | | — | |
| Due from the related parties | | | | | | | 5,523 | | | | — | |
| | | | | | | | | | | |
| Total current assets | | | | | | | 311,989 | | | | 369,957 | |
| | | | | | | | | | | | | |
| Property, plant and equipment, net | | | 3 | | | | 3,208 | | | | 12,741 | |
| | | | | | | | | | | |
| TOTAL ASSETS | | | | | | | 315,197 | | | | 382,698 | |
| | | | | | | | | | | |
| | | | | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | |
| Current liabilities: | | | | | | | | | | | | |
| Accrued expenses and other current liabilities | | | | | | | 272,476 | | | | 294,208 | |
| Customer deposits received | | | | | | | — | | | | 134,952 | |
| Current portion of long-term debt | | | 4 | | | | 7,216 | | | | 20,100 | |
| Due to related parties | | | 6 | | | | 1,392,093 | | | | 920,193 | |
| Income tax payable | | | | | | | 453,673 | | | | 457,618 | |
| Surcharge on taxes | | | | | | | 355,520 | | | | 253,335 | |
| | | | | | | | | | | |
| | | | | | | | | | | | | |
| Total current liabilities | | | | | | | 2,480,978 | | | | 2,080,406 | |
| | | | | | | | | | | |
| Long term liabilities: | | | | | | | | | | | | |
| Non-current portion of long-term debt | | | 4 | | | | — | | | | 7,222 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Contingencies and commitments | | | 9 | | | | | | | | | |
| | | | | | | | | | | | | |
| Stockholders’ deficit: | | | | | | | | | | | | |
| Preferred stock, par value US$0.001 per share; authorized 20,000,000 shares; none issued | | | | | | | | | | | | |
| Common stock, par value US$0.001 per share; authorized 100,000,000 shares; issued and outstanding 43,800,000 shares | | | | | | | 43,800 | | | | 43,800 | |
| Capital in excess of par | | | | | | | 85,948 | | | | 85,948 | |
| Accumulated losses | | | | | | | (2,290,734 | ) | | | (1,828,458 | ) |
| Accumulated other comprehensive loss | | | | | | | (4,796 | ) | | | (6,220 | ) |
| | | | | | | | | | | |
| | | | | | | | | | | | | |
| Total stockholders’ deficit | | | | | | | (2,165,782 | ) | | | (1,704,930 | ) |
| | | | | | | | | | | |
| | | | | | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | 315,197 | | | | 382,698 | |
| | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
F-5
CHINAWE.COM INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Accumulated | | | | |
| | | | | | | | | | | Capital | | | | | | | other | | | Total | |
| | | Number | | | | | | | in excess | | | Accumulated | | | comprehensive | | | Stockholders’ | |
| | | of shares | | | Amount | | | of par | | | losses | | | (loss) income | | | deficit | |
| | | | | | US$ | | | US$ | | | US$ | | | US$ | | | US$ | |
| Balance as of January 1, 2008 | | | 43,800,000 | | | | 43,800 | | | | 85,948 | | | | (1,430,950 | ) | | | 12,554 | | | | (1,288,648 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss for the year | | | — | | | | — | | | | — | | | | (397,508 | ) | | | — | | | | (397,508 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Currency translation adjustment | | | — | | | | — | | | | — | | | | — | | | | (18,774 | ) | | | (18,774 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | (416,282 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2008 | | | 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 | | | | | | | | | | | | | | | | | | | | | | | (460,852 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2009 | | | 43,800,000 | | | | 43,800 | | | | 85,948 | | | | (2,290,734 | ) | | | (4,796 | ) | | | (2,165,782 | ) |
| | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
F-6
CHINAWE.COM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | |
| | | Year ended December 31, | |
| | | 2009 | | | 2008 | |
| | | US$ | | | US$ | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
| Net loss | | | (462,276 | ) | | | (397,508 | ) |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | | | | |
| Depreciation | | | 9,533 | | | | 41,155 | |
| Impairment loss on property, plant and equipment | | | — | | | | 17,882 | |
| Gain on disposal of property, plant and equipment | | | — | | | | (11,634 | ) |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable, net | | | — | | | | 2,365 | |
| Prepayments, deposits and other debtors | | | (260,441 | ) | | | 27,981 | |
| Customer deposits received | | | 12,297 | | | | (29,633 | ) |
| Accrued expenses and other current liabilities | | | 1,090,063 | | | | (28,294 | ) |
| Surcharge on taxes | | | 102,185 | | | | 100,530 | |
| Income tax payable | | | (3,945 | ) | | | (1,332 | ) |
| | | | | | | |
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | | | 487,416 | | | | (278,488 | ) |
| | | | | | | |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
| Proceeds from disposal of property, plant and equipment | | | — | | | | 11,759 | |
| Purchase of property, plant and equipment | | | — | | | | (6,447 | ) |
| | | | | | | |
| NET CASH PROVIDED BY INVESTING ACTIVITIES | | | — | | | | 5,312 | |
| | | | | | | |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
| Repayment of long-term debt | | | (20,106 | ) | | | (20,099 | ) |
| Advance from related parties | | | 145,347 | | | | 321,024 | |
| Repayment to related parties | | | (920,193 | ) | | | (8,498 | ) |
| | | | | | | |
| NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | | | (794,952 | ) | | | 292,427 | |
| | | | | | | |
| | | | | | | | | |
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | | | (307,535 | ) | | | 19,251 | |
| Cash and cash equivalents, beginning of period | | | 339,538 | | | | 301,695 | |
| Effect of exchange rate changes | | | 1,425 | | | | 18,592 | |
| | | | | | | |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | | | 33,427 | | | | 339,538 | |
| | | | | | | |
| | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | | | | | | |
| Cash paid for interest | | | 3,923 | | | | 19,526 | |
| | | | | | | |
| NON-CASH TRANSACTION | | | | | | | | |
| Assignment of amount due to a director to a stockholder (see note 6(a)) | | | 145,347 | | | | 143,001 | |
| | | | | | | |
The accompanying notes are an integral part of these financial statements.
F-7
CHINAWE.COM INC.
NOTES TO AND FORMING PART OF THE CONSOLIDATED 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 is providing professional management services relating to non-performing loans (“NPLs”) in the People’s Republic of China (“PRC”), as well as other consulting services.
The consolidated financial statements include the accounts of Chinawe and the following subsidiaries (collectively referred to as the “Company”):
Officeway Technology Limited; a company incorporated in the British Virgin Islands in December 1999, which was formed for the purpose of acquiring (in March 2000) its wholly-owned subsidiary, Chinawe Asset Management Limited (“CAM (HK)”).
CAM (HK); a company incorporated in Hong Kong in June 1997, which is an investment holding company.
Chinawe Asset Management (PRC) Limited (“CAM (PRC)”) was established in the PRC in April 2005 to service the NPLs under service agreements with Huizhou One Limited (“HOL”), a subsidiary of Citigroup Financial Products Inc. (“CFP”),which accounted for 100% of the revenue from assets management and related service for the years ended December 31, 2009. There is no substantial business being operated by the Company currently.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of accounting
The financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US”). The functional currency of its major subsidiary is Renminbi (“RMB”). The financial statements are presented in US dollars (“US$”).
(b) Going concern considerations
These 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, 2009, the Company had negative working capital and stockholders’ deficit of US$2,168,989 and US$2,165,781, respectively, which raise substantial doubt about its ability to continue as a going concern. The Company has relied on private financing by 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.
F-8
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. Determination of recoverability of assets to be held and used is 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 substantial 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.
F-9
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(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.
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 2009 or 2008.
(k) Foreign currency translation
The Company’s functional currency is Renminbi, 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 US 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 accounting principles generally accepted in the US 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.
F-10
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 April 2009, the Financial Accounting Standards Board (the “FASB”) issued FSP 157-4, “Determining Fair Value When the Volume and Level of Activity For the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP 157-4”). FSP 157-4 provides additional guidance for estimating fair value in accordance with SFAS 157 when the volume and level of activity for the asset or liability have significantly decreased. FSP 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP 157-4 does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, FSP 157-4 requires comparative disclosures only for periods ending after initial adoption. The adoption of the provisions of FSP 157-4 is not anticipated to materially impact the Company’s results of operations or the fair values of its assets and liabilities.
In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165 establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued and was effective for interim and annual periods ending after June 15, 2009. The adoption of SFAS No. 165 did not have an impact on the Company’s results of operations or financial condition. The Company evaluated all subsequent events that occurred from January 1, 2010 through January 30, 2010, inclusive, and did not find any material subsequent events are required to disclose.
In June 2009, the FASB issued SFAS No. 166 “Accounting For Transfers Of Financial Assets” (“SFAS 166). This statement is intended to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets. This Statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, and is required to be adopted by the Company in the first quarter of fiscal year 2011. Earlier application is prohibited. This Statement must be applied to transfers occurring on or after the effective date. The Company does not expect the adoption of SFAS 166 to have a material impact on the Company’s financial position, results of operations and cash flows.
F-11
In June 2009, the FASB issued SFAS No.167, “Amendments to FASB Interpretation No.46(R)”, which is codified as ASC 810. ASC 810 amends FASB Interpretation No.46(R), “Variable Interest Entities” for determining whether an entity is a variable interest entity (“VIE”) and requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a VIE. Under ASC 810, an enterprise has a controlling financial interest when it has a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. ASC 810 also requires an enterprise to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has power to direct the activities of the VIE that most significantly impact the entity’s economic performance. ASC 810 also requires ongoing assessments of whether an enterprise is the primary beneficiary of a VIE, requires enhanced disclosures and eliminates the scope exclusion for qualifying special-purpose entities. ASC 810 shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. ASC 810 is effective for the Company in the first quarter of fiscal 2011. The Company is currently evaluating the effect of ASC 810 on its financial statements and results of operations and is currently not yet in a position to determine such effect.
In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, “Measuring Liabilities at Fair Value”, which is codified as ASC 820, “Fair Value Measurements and Disclosures”. This Update provides amendments to ASC 820-10, Fair Value Measurements and Disclosures — Overall, for the fair value measurement of liabilities. This Update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using a valuation technique that uses the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities when traded as assets, or that is consistent with the principles of ASC 820. The amendments in this Update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents transfer of the liability. The amendments in this Update also clarify that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the assets are required are Level 1 fair value measurements. ASC 820 is effective for the first reporting period (including interim periods) beginning after August 28, 2009. The adoption of this Update did not have a significant impact on the Company’s financial statements.
In December 2009, the FASB issued ASU No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities” (“ASU 2009-17”). ASU 2009-17 amends the variable-interest entity guidance in FASB ASC 810-10-05-8 to clarify the accounting treatment for legal entities in which equity investors do not have sufficient equity at risk for the entity to finance its activities without financial support. ASU 2009-17 shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009. ASU 2009-17 is effective for the Company in the first quarter of fiscal 2011. The Company is currently evaluating the effect of ASU 2009-17 on its financial statements and results of operations and is currently not yet in a position to determine such effects.
F-12
None of the above new pronouncements has current application to the Company, but may be applicable to the Company’s future financial reporting.
3. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment are summarized as follows:
| | | | | | | | | |
| | | As of December 31, | |
| | | 2009 | | | 2008 | |
| | | US$ | | | US$ | |
| Office equipment | | | 11,869 | | | | 10,741 | |
| Computer equipment | | | 50,760 | | | | 11,646 | |
| Leasehold improvement | | | 57,004 | | | | 62,921 | |
| Motor vehicle | | | 103,065 | | | | 96,174 | |
| | | | | | | |
| | | | 222,699 | | | | 181,482 | |
| Accumulated depreciation | | | (219,487 | ) | | | (153,202 | ) |
| Accumulated impairment loss | | | — | | | | (17,882 | ) |
| Currency translation adjustment | | | (4 | ) | | | 2,343 | |
| | | | | | | |
| Net | | | 3,208 | | | | 12,741 | |
| | | | | | | |
4. LONG-TERM DEBTS
Long-term debt consists of obligation under capital leases with US$7,216 and US$7,322 outstanding as of December 31, 2009 and 2008, respectively. The debt is collateralized by two motor vehicles with an aggregate net book value of US$3,095, bearing interest at 3-5% per annum and is repayable in monthly installments of US$2,002, with the final installments due in February 2010 and January 2011, respectively. Maturity of the debt is as follows:
Payable during the following periods:
| | | | | | | | | |
| | | As of December 31, | |
| | | 2009 | | | 2008 | |
| | | US$ | | | US$ | |
| | | | | | | | | |
| Within 1 year | | | 8,605 | | | | 24,023 | |
| Over 1 year but not exceeding 2 years | | | — | | | | 8,610 | |
| Over 2 years but not exceeding 3 years | | | — | | | | — | |
| | | | | | | |
| | | | 8,605 | | | | 32,633 | |
| Less: Amount representing interest | | | (1,388 | ) | | | (5,311 | ) |
| | | | | | | |
| Present value of net minimum lease payments | | | 7,216 | | | | 27,322 | |
| | | | | | | |
| |
| Current portion | | | 7,216 | | | | 20,100 | |
| Non-current portion | | | — | | | | 7,222 | |
| | | | | | | |
| | | | | | | | | |
| | | | 7,216 | | | | 27,322 | |
| | | | | | | |
F-13
It is management’s intention to reinvest all the income attributable to the Company earned by its operations outside the US. Accordingly, no US corporate income taxes are provided for in these financial statements.
The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.
Under the current laws of the British Virgin Islands (the “BVI”), dividends and capital gains arising from the 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 are subject to Hong Kong income tax at 16.5% and 16.5% for the years ended December 31, 2009 and 2008, respectively. Companies that carry on business and derive income in the PRC are subject to income tax at 25% and 33% for the years ended December 31, 2009 and 2008, respectively.
No income taxes have been provided for the Hong Kong and PRC subsidiaries as they have incurred losses for taxation purpose in current year.
The reconciliation between the effective tax rate and the statutory US federal income tax rate is as follows:
| | | | | | | | | |
| | | Year ended | |
| | | December 31, | |
| | | 2009 | | | 2008 | |
| | | % of Pre- | | | % of Pre- | |
| | | Tax Income | | | Tax Income | |
| | | | | | | | | |
| US federal income tax rate | | | 34 | | | | 34 | |
| Differences in tax rates in the countries in which the Company operates | | | (6 | ) | | | (11 | ) |
| Deferred tax asset valuation allowance | | | (6 | ) | | | (2 | ) |
| Non-deductible expenses | | | (22 | ) | | | (21 | ) |
| | | | | | | |
| | | | | | | | | |
| | | | — | | | | — | |
| | | | | | | |
The Company’s deferred tax asset is as follows:
| | | | | | | | | |
| | | As of December 31, | |
| | | 2009 | | | 2008 | |
| | | US$ | | | US$ | |
| | | | | | | | | |
| Hong Kong operating losses carry forward | | | 145,963 | | | | 185,971 | |
| PRC operating losses carry forward | | | 18,344 | | | | 7,161 | |
| Deferred tax asset valuation allowance | | | (164,307 | ) | | | (193,132 | ) |
| | | | | | | |
| | | | | | | | | |
| Net deferred tax asset | | | — | | | | — | |
| | | | | | | |
F-14
As of December 31, 2009 and 2008, the Company had Hong Kong and PRC operating losses carry forwards of approximately US$1,420,842 and US$1,149,455, respectively. The operating loss in Hong Kong has no expiry date and the operating loss in PRC will expire five years after the loss was incurred. Management has provided a full valuation allowance for the deferred tax asset as it is more likely than not that the asset will not be realized.
6. RELATED PARTY BALANCES AND TRANSACTIONS
The balances with related parties are as follows:
| | | | | | | | | | | | | |
| | | | | | | As of December 31, | |
| | | NOTE | | | 2009 | | | 2008 | |
| | | | | | US$ | | | US$ | |
| | | | | | | | | |
| At cost: | | | | | | | | | | | | |
| Loan from a director, including interest | | | (a | ) | | | — | | | | — | |
| Advances from stockholders | | | (b | ) | | | 1,392,093 | | | | 920,193 | |
| | | | | | | | | | | |
| | | | | | | | 1,392,093 | | | | 920,193 | |
| | | | | | | | | | | |
Note:
| (a) | | The amount due to the director was unsecured, interest bearing at 23% per annum and repayable on demand. On July 1, 2008, the director assigned the amount due to her to a stockholder who is also a director of the Company. The stockholder has agreed not to demand repayment of this unsecured loan if such repayment would have a material adverse impact on the Company and no interest will be charged on the advance. Accordingly, the assigned amount is now included under “Advances from Stockholders”. |
| |
| (b) | | The amounts due are unsecured, non-interest bearing and repayable on demand. During the twelve months ended December 31, 2009 and 2008, the Company received advances from related parties of US$5,523 and US$321,024, respectively. In addition, during the twelve months ended December 31, 2009 and 2008, the Company repaid advances of US$315,501 and US$8,498 to related parties, respectively. |
7. OPERATING LEASE COMMITMENTS
The Company had total future minimum lease payments under non-cancelable operating lease payable as follows:
| | | | | | | | | |
| | | As of December 31, | |
| | | 2009 | | | 2008 | |
| | | US$ | | | US$ | |
| | | | | | | | | |
| Within one year | | | 3,868 | | | | 88,320 | |
| In the second to fifth years inclusive | | | — | | | | 1,171 | |
| | | | | | | |
| | | | 3,868 | | | | 89,491 | |
| | | | | | | |
Operating lease payments of US$102,041 and US$120,052 for the years ended December 31, 2009 and 2008, 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.
F-15
8. RETIREMENT PLAN AND POST-EMPLOYMENT BENEFITS
Following the introduction of the Mandatory Provident Fund Schemes Ordinance (“MPFO”) in Hong Kong, the subsidiary in Hong Kong has participated in the defined contribution mandatory provident fund since December 1, 2000. Both the Company and its employees make monthly contributions to the fund at 5% of the employees’ earnings as defined under the MPFO. The contributions of the Company and the employees are subject to a cap of HK$1,000 (US$129) per month and thereafter contributions are voluntary.
As stipulated by the rules and regulations in the PRC, the Company is required to contribute to a state-sponsored social insurance plan for all of its employees at 12% of the basic salary of its employees. The state-sponsored retirement plan is responsible for the actual pension payments or any post-retirement benefits beyond the annual contributions.
During the years ended December 31, 2009 and 2008, the aggregate amount of the Company’s contributions amounted to US$9,834 and US$37,513, respectively.
9. CONTINGENCIES
One of the subsidiaries in the PRC is subject to the PRC enterprise income tax and business tax. However, up to December 31, 2009, the Company only submitted tax returns and made payments for a portion of the total tax liabilities, which is not in compliance with the tax laws and regulations in the PRC. For this reason, the Company has made full provision for all tax liabilities in accordance with the relevant tax laws and regulations, together with a surcharge that may be levied on the Company at a daily rate of 0.05% of the underpaid taxes.
Despite the fact that the Company has fully accrued the taxes and related surcharges in the financial statements, the Company may be subject to penalties ranging from 50% to 500% of the underpaid tax amounts. The exact amount of the penalty cannot be estimated with any reasonable degree of certainty.
The Company is currently suspended in the State of California due to failure to file reports with the Franchise Tax Board. The Company is in the process of preparing the relevant reports and expects to be back in good standing 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.
10. STOCK PLAN
On July 25, 2001 the Board of Directors approved the Chinawe.com Inc. 2001 Restricted Stock Plan (the “Plan”), under which 5,000,000 shares of the 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. Through 2009, no awards have been made under the Plan.
11. RISK CONSIDERATIONS
As a majority of the Company’s operations are conducted in the PRC, the Company is subject to special considerations and significant risks not typically associated with investments in equity securities of North American and Western European companies. The Company’s operations may be adversely affected by significant political, economic and social uncertainties in the PRC.
Although the PRC government has been pursuing economic reform policies for the past several years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC’s political, economic and social life. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective.
F-16
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.
| | | | | | | |
| | | CHINAWE.COM INC. | | |
| | | | | | | |
| | | By: | | /s/ Man Keung Wai | | |
| | | | | Man Keung Wai | | |
| | | | | Chairman of the Board | | |
Date: April 15, 2010
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, 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 and Director
(Principal Executive Officer) | | April 15, 2010 |
| | | | | |
/s/ Man Ying Ken Wai Man Ying Ken Wai | | Vice President of Marketing, Director | | April 15, 2010 |
| | | | | |
/s/ Vivian Wai Wa Chu Vivian Wai Wa Chu | | Chief Financial Officer, Secretary and Director
(Principal Financial Officer) | | April 15, 2010 |
| | | | | |
| | Vice President and Director | | April 15, 2010 |
