Enwin Resources (ENWN) 10-Q 2009 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 10-Q

(Mark One)

þ     Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended May 31, 2009.

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: 000-51713

ENWIN RESOURCES, INC.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization) 98-0379370 (I.R.S. Employer Identification No.)

Seestrasse 8, Zollikon, CH-8702, Switzerland

(Address of principal executive offices) (Zip Code)

41 44 202 00 80

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company as defined by Rule 12b-2 of the Exchange Act:

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ

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

At July 17, 2009 the number of shares outstanding of the registrant's common stock, $0.001 par value (the only class of voting stock), was 43,900,000.

TABLE OF CONTENTS

PART I. - FINANCIAL INFORMATION
	ITEM 1.     FINANCIAL STATEMENTS		3
		Balance Sheets as of May 31, 2009 (unaudited) and August 31, 2008 (audited)	4
		Unaudited  Statements of Operations for the three and nine month periods ended May 31, 2009 and May 31, 2008 and the period from inception	5
		Unaudited Statements of Cash Flows for the nine month periods ended May 31, 2009 and May 31, 2008 and the period from inception	6
		Notes to Unaudited Financial Statements	7
	ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations		10
	ITEM 3.    Quantitative and Qualitative Disclosures about Market Risk		15
	ITEM 4T.  Controls and Procedures		15
PART II. - OTHER INFORMATION
	ITEM 1.     Legal Proceedings		15
	ITEM 1A.  Risk Factors		15
	ITEM 2.     Unregistered Sales of Equity Securities and Use of Proceeds		18
	ITEM 3.     Defaults upon Senior Securities		18
	ITEM 4.     Submission of Matters to a Vote of Securities Holders		18
	ITEM 5.     Other Information		18
	ITEM 6.     Exhibits		18
	Signatures		19
Index to Exhibits			20

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PART I – FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

As used herein, the terms “Company,” “we,” “our,” “us,” “it,” and “its” refer to Enwin Resources, Inc., a Nevada corporation, unless otherwise indicated. In the opinion of management, the accompanying unaudited financial statements included in this Form 10-Q reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

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ENWIN RESOURCES INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
UNAUDITED
						(Unaudited)			(Audited)
						May 31,			August 31,
						2009			2008
ASSETS
Current assets
	Cash and cash equivalents		$		-			$		40
	Other current assets				-					5,000
Total current assets						-			5,040
	Loan receivable				-					-
TOTAL ASSETS			$			-			$                    5,040
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
	Accounts payable and accrued liabilities		$		125,360			$		181,350
	Amounts due to related parties				287,612					97,612
	Loans payable				222,225					210,500
Total current liabilities						635,197			489,462
TOTAL LIABILITIES			$			635,197			$                   489,462
Commitments and contingencies
Stockholders' deficit
	Common stock
	1,000,000,000 common shares authorized at $0.001 par value;
	43,900,000 common shares issued and outstanding				43,900					43,900
		(August 31, 2008 - 43,900,000)
	Additional paid-in capital				486,360					480,503
	Deficit accumulated during the development stage				(1,165,457)					(1,008,825)
Total stockholders' deficit							(635,197)				(484,422)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT				$			-		$		5,040

The accompanying notes are an integral part of these financial statements

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ENWIN RESOURCES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
UNAUDITED
						July 3, 2002
						(Inception)
		For the three months ended		For the nine months ended		through
		May 31,	May 31,	May 31,	May 31,	May 31,
		2009	2008	2009	2008	2009
Sales		$ -	$ -	$ -	$ -	$ -
Cost of sales		-	-	-	-	-
Gross profit		-	-	-	-	-
Operating expenses
	Professional and consulting	6,651	31,055	24,858	106,960	353,604
	Impairment	-	-	-	-	378,793
	Compensation	30,000	9,000	90,000	31,500	181,937
	Exploration costs	-	-	-	-	42,022
	Travel	-	-	-	25,909	45,513
	Other	5,750	8,639	17,917	32,455	89,741
Total operating expenses		44,221	48,694	132,775	196,824	1,091,610
Operating loss		(44,221)	(48,694)	(132,775)	(196,824)	(1,091,610)
Interest income		-	5,218	-	15,839	25,409
Interest expense		(7,952)	(7,952)	(23,857)	(23,857)	(99,256)
Loss before income taxes		(52,173)	(51,428)	(156,632)	(204,842)	(1,165,457)
Provision for income taxes		-	-	-	-	-
Net loss		$ (52,173)	$ (51,428)	$ (156,632)	$ (204,842)	$(1,165,457)
Loss per share - basic and diluted		$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)
Weighted average number of common shares outstanding		43,900,000	43,900,000	43,900,000	43,759,854

The accompanying notes are an integral part of these financial statements

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ENWIN RESOURCES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
UNAUDITED
								July 3, 2002
								(Inception)
			For the nine months ended					through
			May 31,				May 31,	May 31,
			2009				2008	2009
Cash flows from operating activities
	Net loss		(156,632)				(204,842)	(1,165,457)
	Adjustments to reconcile net loss to net cash used in operations:
	Imputed interest on stockholder advances		5,857				5,856	48,323
	Impairment		-				-	378,793
	Compensation expenses		-				-	3,937
	Changes in:
	Other current assets		5,000				(15,193)	-
	Accounts payable and accrued liabilities		(55,990)				36,300	101,067
	Reclassification of payables to related party		190,000				-	190,000
	Net cash used in operating activities		(11,765)				(177,879)	(443,337)
Cash flows from investing activities
	Payment on option to acquire mining interest in property					-	-	(10,000)
	Loan receivable principal advance					-	(107,500)	(344,500)
	Net cash used in investing activities					-	(107,500)	(354,500)
Cash flows from financing activities
	Proceeds from the sale of common stock			-			300,000	478,000
	Shareholder advances				-		-	132,301
	Repayments on shareholder advance			-			-	(34,689)
	Related parties advances			-			(15,000)	(15,000)
	Related parties repayments			-			11,500	15,000
	Proceeds from loans payable			11,725			7,500	241,725
	Payments made on loans payable			-			(19,500)	(19,500)
	Net cash provided by financing activities			11,725			284,500	797,837
Increase (decrease) in cash and cash equivalents				(40)			(879)	-
Cash and cash equivalents, beginning of period				40			892	-
Cash and cash equivalents, end of period				$ -			$ 13	$ -
Supplementary information
		Interest paid			$ -		$ -	$ -
		Taxes Paid			$ -		$ -	$ -

The accompanying notes are an integral part of these financial statements

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ENWIN RESOURCES, INC.
(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

May 31, 2009

NOTE 1 - BASIS OF PRESENTATION
 
The accompanying unaudited interim financial statements of Enwin Resources, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (the “Commission”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with the Commission on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year August 31, 2008 as reported on Form 10-K, have been omitted.

NOTE 2 - GOING CONCERN

The Company has recurring losses and has a deficit accumulated during the development stage of $1,165,457 as of May 31, 2009. This condition raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements are prepared using the generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has no current source of revenue. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The Company’s management plans on raising cash from public or private debt or equity financing, on an as needed basis and in the longer term, revenues from the development of business opportunities, if found. The Company’s ability to continue as a going concern is dependent on these additional cash financings, and ultimately, upon achieving profitable operations.
 

NOTE 3 – LOAN RECEIVABLE
 
In association with the Securities Exchange Agreement and Plan of Exchange (the” Agreement”) with Solar Energy Limited and D2Fusion, Inc. (“D2Fusion”) dated April 11, 2007, the Company entered into a loan agreement to lend $500,000 to D2Fusion with interest payable at a rate of 6% per annum secured by the assignment of 100% of the shares of D2Fusion.

As of May 31, 2009, the Company had advanced $344,500 to D2Fusion and accrued $24,293 in unpaid interest. The Agreement has terminated and loans receivable from D2Fusion are now in default. Due to the uncertainty associated with the satisfaction of amounts owed by D2Fusion, management impaired the value of these loans and interest, as of August 31, 2008.

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ENWIN RESOURCES, INC.
(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

May 31, 2009

NOTE 4 – RELATED PARTY TRANSACTIONS
 
A shareholder and former director of the Company has advances due from the Company of $97,612 at May 31, 2009 and 2008. The advances are non-interest bearing and are due upon demand. The Company has imputed interest at 8% of $5,857 and $5,856 for the nine months ended May 31, 2009 and May 31, 2008, respectively.
During the nine months ended May 31, 2009 the current executive officer has accrued compensation in the amount of $90,000. At May 31, 2009, $190,000 was owed to the current executive officer.
 
As of May 31, 2009, the total amount due to related parties was $287,612.

NOTE 5 – LOANS PAYABLE

Loans payable consist of advances of $100,000 each from two unrelated parties, are unsecured, bear interest at the rate of 12% per annum, and are payable on demand. Past due amounts are subject to a one time two percent (2%) late fee and an ongoing interest rate of 14% per annum. The accrued interest as of May 31, 2009 and May 31, 2008 was $50,933 and $26,933.
 
Loans of $10,500 from unrelated parties are unsecured, bearing no interest and are payable on demand.
 
Loans of $11,725 from a company affiliated with our current executive officer are unsecured, bearing no interest and are payable on demand.

NOTE 6 – CAPITAL STOCK AND WARRANTS

Capital Stock
 
On May 1, 2007 the board of directors of the Company authorized a ten (10) to one (1) forward split of all outstanding common shares and a corresponding forward increase in the Company’s authorized common stock. The forward split was completed on May 16, 2007.
 
The effect of the forward split increased the number of the Company’s common shares issued and outstanding from 4,250,000 to 42,500,000 and increased the Company’s authorized common shares from 100,000,000 shares par value $0.001 to 1,000,000,000 shares par value $0.001.
 
The Company’s symbol on the Over the Counter Bulletin Board was changed, effective May 16, 2007, from “EWNR” to “ENWN”. The weighted average number of common shares outstanding for the previous comparative periods has been adjusted to take into account the effect of the ten to one forward split.

On August 2, 2007, the Company issued 200,000 shares of common stock for cash proceeds of $50,000.
 
On October 1, 2007, the Company issued 1,200,000 shares of common stock and warrants for cash proceeds of $300,000.

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ENWIN RESOURCES, INC.
(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

May 31, 2009

NOTE 6 – CAPITAL STOCK AND WARRANTS - Continued
 

Warrants issued

On October 1, 2007, the Company granted warrants to purchase 1,200,000 share of the Company’s common stock at a price of $0.25 that could be exercised over a four month period. The warrants were valued using the Black-Scholes pricing model that assumed 1% volatility, a term of the warrants of 0.33 year, a risk free rate of 4.0% and a dividend yield of 0%. The total accrued compensation expense relating to these warrants was $3,937, which was fully expensed in the year ended August 31, 2008.

A summary of the status of warrants granted and outstanding as of May 31, 2009 is as follows:

                                                                                                             Weighted
                                                                                                            Number of      Average
                                                                                                               SharesExercise Price
     Outstanding at August 31, 2007                                                                    -                      -
     Warrants issued                                                                              1,200,000               $0.25
     Warrants exercised                                                                                     -                      -
     Warrants expired or otherwise no longer exercisable                       (1,200,000)              $0.25
                                                                                                             ------------            ----------
     Outstanding at August 31, 2008                                                                    -                      -
     Warrants issued                                                                                          -                      -
     Warrants exercised                                                                                     -                      -
     Warrants expired or otherwise no longer exercisable                                     -                      -
                                                                                                              ------------           ----------
     Outstanding at May 31, 2009                                                                       -                      -
                                                                                                           =========     ==========

At May 31, 2009 there were no warrants outstanding or exercisable.

NOTE 7 - COMMITMENT
 
The Company has month-to-month commitments of $10,000 for management fees, $1,000 for consulting fees and $1,500 of office rent.

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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this report. Our fiscal year end is August 31. All information presented herein is based on the six month periods ended May 31, 2009.

Discussion and Analysis

The Company’s plan of operation for the coming year is to identify and acquire or develop a revenue producing business through merger or acquisition. We do not plan to limit our options to any particular industry, but will evaluate each opportunity on its merits.

We have not yet entered into any agreement, nor do we have any commitment or understanding to enter into or become engaged in any transaction, as of the date of this filing.

The Company’s plan of operation will require at least $100,000 in funding over the next twelve months which funding is not currently available. Should we merge with or acquire a suitable business opportunity within the next twelve months our funding requirements will change.

Results of Operations

During the nine month period ended May 31, 2009, our operations were limited to the process of identifying a prospective business opportunity for merger or acquisition and satisfying continuous public disclosure requirements.
 

The Company has been funded since inception through private debt or equity placements or by major shareholders in the form of loans. All of the capital raised to date has been allocated for general and administrative costs, exploration expenses, loans and interest expenses. We do not expect to receive revenues within the next twelve months of operation or ever, since we have yet to acquire a business opportunity, which opportunity if acquired, may or may not produce revenue.

Net Losses

For the period from July 3, 2002, date of inception, until May 31, 2009, the Company incurred a net loss of $1,165,457. Net losses for the nine month period ended May 31, 2009 were $156,632 as compared to $204,842 for the nine month period ended May 31, 2008. The Company’s net losses are primarily attributable to operating expenses. Operating expenses include professional and consulting fees, impairments, compensation costs, exploration costs, travel, and costs associated with the preparation of disclosure documentation. The decrease in net losses over the comparative periods can be attributed to decreases in professional and consulting expenses, travel, and other operating expenses that were only partially offset by increases in the compensation expense for our executive officer. We have not generated any revenues since inception and expect to continue to incur losses through the fiscal year ended 2009.

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Income Tax Expense (Benefit)

The Company has a prospective income tax benefit resulting from a net operating loss carry-forward and start up costs that will offset any future operating profit.

Impact of Inflation

The Company believes that inflation has had a negligible effect on operations over the past three years.

Capital Expenditures

The Company expended no significant amounts on capital expenditures for the period from inception to May 31, 2009.

Liquidity and Capital Resources

The Company is in the development stage and, since inception, has experienced significant changes in liquidity, capital resources and stockholders’ equity.

As of May 31, 2009, the Company had no assets and a working capital deficit of $635,197. The Company had current and total liabilities of $635,197 which consisted of $125,360 in accounts payable and accrued liabilities, $287,612 due to related parties, and $222,225 in loans payable. Net stockholders' deficit in the Company was $635,197 at May 31, 2009.

Cash flow used in operating activities was $443,337 for the period from inception to May 31, 2009. Cash flow used in operating activities for the nine month period ended May 31, 2009 was $11,765 as compared to $177,879 in cash flow used in operating activities for the nine month period ended May 31, 2008. The decrease in cash flow used in operating activities in the current nine month period can be attributed to the reclassification of $190,000 in payables to related parties.

Cash flow provided by financing activities was $797,837 for the period from inception to May 31, 2009. Cash flow provided by financing activities for the nine month period ended May 31, 2009 was $11,725 as compared to $284,500 for the nine month period ended May 31, 2008. Cash flow provided by financing activities in the current nine month period can be attributed to loans payable.

Cash flows used in investing activities was $354,500 for the period from inception to May 31, 2009. Cash flow used in investing activities for the nine month period ended May 31, 2009 was $0 as compared to $107,500 for the nine month period ended May 31, 2008.

The Company’s current assets are insufficient to conduct its plan of operation over the next twelve months and it will have to realize debt or equity financing to fund operations. The Company has no current commitments or arrangements with respect to, or immediate sources of funding. Further, no assurances can be given that funding, if needed, would be available or available to the Company on acceptable terms. Therefore, the Company’s stockholders would be the most likely source of new funding in the form of loans or equity placements though none have made any commitment for future investment and we have no agreement formal or otherwise. The Company’s inability to obtain funding would have a material adverse affect on its plan of operation.
 

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The Company had no formal long term lines or credit or other bank financing arrangements as of May 31, 2009.

The Company does not expect to pay cash dividends in the foreseeable future.

The Company has no defined benefit plan or contractual commitment with any of its officers or directors except that related to executive compensation in the amount of $10,000 per month.
 
The Company has no current plans for any significant purchase or sale of any plant or equipment.

The Company has no current plans to make any changes in the number of employees.

Off Balance Sheet Arrangements

As of May 31, 2009, the Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to stockholders.

Going Concern

Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses, in their report on the annual financial statements for the year ended August 31, 2008 our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

The Company’s ability to continue as a going concern is subject to our ability to realize a profit and /or obtain funding from outside sources. Management’s plan to address our ability to continue as a going concern, include: (i) obtaining funding from private placement sources; (ii) obtaining additional funding from the sale of the Company’s securities; and (iii) obtaining loans and grants from various financial institutions, where possible. Although management believes that we will be able to obtain the necessary funding to allow us to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful.

Critical Accounting Policies

In the notes to the audited financial statements for the year ended August 31, 2008 included in the Company’s Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by us conform to accounting principles generally accepted in the United States of America.

The preparation of financial statements requires Company management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. The Company bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.

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Forward Looking Statements and Factors That May Affect Future Results and Financial Condition

The statements contained in the section titled Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this current report, with the exception of historical facts, are forward looking statements. Forward looking statements reflect our current expectations and beliefs regarding our future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These statements include, but are not limited to, statements concerning:

·      our anticipated financial performance and business plan;

·      the sufficiency of existing capital resources;

·      our ability to raise additional capital to fund cash requirements for future operations;

·      uncertainties related to the Company’s future business prospects;

·      the ability of the Company to generate revenues to fund future operations; and

·      the volatility of the stock market and general economic conditions.

We wish to caution readers that our operating results are subject to various risks and uncertainties that could cause our actual results to differ materially from those discussed or anticipated including the factors set forth in the section entitled Risk Factors included elsewhere in this report. We also wish to advise readers not to place any undue reliance on the forward looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update or revise these forward looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other than as required by law.

Stock-Based Compensation

We have adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), Share-Based Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. In January 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and instead generally requires that such transactions be accounted for using a fair-value-based method. We use the Black-Scholes-Merton (“BSM”) option-pricing model to determine the fair-value of stock-based awards under SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS No. 123, Accounting for Stock-Based Compensation. We have elected the modified prospective transition method as permitted by SFAS No. 123R and accordingly prior periods have not been restated to reflect the impact of SFAS No. 123R. The modified prospective transition method requires that stock-based compensation expense be recorded for all new and unvested stock options, restricted stock, restricted stock units, and employee stock purchase plan shares that are ultimately expected to vest as the requisite service is rendered beginning on January 1, 2006, the first day of our fiscal year 2006. Stock-based compensation expense for awards granted prior to January 1, 2006 is based on the grant date fair-value as determined under the pro forma provisions of SFAS No. 123.Prior to the adoption of SFAS No 123R, we measured compensation expense for our employee stock-based compensation plans using the intrinsic value method prescribed by APB Opinion No. 25. We applied the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, as if the fair-value-based method had been applied in measuring compensation expense. Under APB Opinion No. 25, when the exercise price of our employee stock options was equal to the market price of the underlying stock on the date of the grant, no compensation expense was recognized.

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We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force (“EITF”) in Issue No. 96-18. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.

Recent Accounting Pronouncements

In May, 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 163, “Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60” (SFAS 163). This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for some disclosures about the insurance enterprise’s risk-management activities. This Statement requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period (including interim periods) beginning after issuance of this Statement. Except for those disclosures, earlier application is not permitted.  The adoption of this statement will have no material effect on the Company’s financial condition or results of operations.
 
In May, 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 162, “The Heirarchy of Generally Accepted Accounting Principles” (SFAS No. 162). This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). The sources of accounting principles that are generally accepted are categorized in descending order of authority as follows:

a.      FASB Statements of Financial Accounting Standards and Interpretations, FASB Statement 133 Implementation Issues, FASB Staff Positions, and American Institute of Certified Public Accountants (AICPA) Accounting Research Bulletins and Accounting Principles Board Opinions that are not superseded by actions of the FASB

b.      FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides and Statements of Position

c.     AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the FASB, consensus positions of the FASB Emerging Issues Task Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts (EITF D-Topics)

d.      Implementation guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations, AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB, and practices that are widely recognized and prevalent either generally or in the industry.

The adoption of this statement will have no material effect on the Company’s financial condition or results of operations.

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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4T.     CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended May 31, 2009, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

The Company is currently not a party to any pending legal proceeding.

ITEM 1A.     RISK FACTORS

The Company’s operations and securities are subject to a number of risks. Below we have identified and discussed the material risks that we are likely to face. Should any of the following risks occur, they will adversely affect our business, financial condition, and/or results of operations as well as the future trading price and/or the value of our securities.

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Risks Related to the Company’s Business

We have a history of significant operating losses and such losses may continue in the future.
 
Since our inception in 2002, our operation has resulted in continuing losses and an accumulated deficit of $1,165,457 at May 31, 2009. We expect to incur losses as long as we remain active in our search for a suitable business opportunity and may continue to incur losses even in the event that we acquire a suitable business opportunity. Our only expectation of overcoming future losses is dependent on our ability to acquire or develop a revenue producing business, which eventuality can in no way be assured.

The Company’s limited financial resources cast severe doubt on our ability to acquire or develop a revenue producing business.

Our future operation is dependent on our ability to acquire or develop a revenue producing business. However, the prospect of such an acquisition is doubtful due to the Company’s limited financial resources which limitation may act as a deterrent in future negotiations with prospective acquisition, merger or development candidates. Should we be unable to improve our financial condition through debt or equity offerings our ability to acquire or develop a revenue producing business will be severely limited to the extent that the Company will, in all likelihood, be forced to cease operations.

Need for additional financing.
 
The Company has no revenue from operations and therefore is not able to meet operating costs. As such, we will need to raise capital within the next twelve months to implement our plan of operation. However, there can be no assurance that we will be able to raise the required capital. Failure to obtain adequate capital may cause us to cease operations.

Risks Related to the Company’s Stock

The market for our stock is limited and our stock price may be volatile.

The market for our common stock has been limited due to low trading volume and the small number of brokerage firms acting as market makers. Because of the limitations of our market and volatility of the market price of our stock, investors may face difficulties in selling shares at attractive prices when they want to. The average daily trading volume for our stock has varied significantly from week to week and from month to month, and the trading volume often varies widely from day to day.
 

The Company does not pay cash dividends.

The Company does not pay cash dividends. We have not paid any cash dividends since inception and have no intention of paying any cash dividends in the foreseeable future. Any future dividends would be at the discretion of our board of directors and would depend on, among other things, future earnings, our operating and financial condition, our capital requirements, and general business conditions. Therefore, shareholders should not expect any type of cash flow from their investment.

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The Company incurs significant expenses as a result of the Sarbanes-Oxley Act of 2002, which expenses may continue to negatively impact our financial performance.

The Company incurs significant legal, accounting and other expenses as a result of the Sarbanes-Oxley Act of 2002, as well as related rules implemented by the Commission, which control the corporate governance practices of public companies. Compliance with these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, as discussed in the following risk factor, has substantially increased our expenses, including legal and accounting costs, and made some activities more time-consuming and costly. Further, expenses related to our compliance may increase in the future, as legislation affecting smaller reporting companies comes into effect that may negatively impact our financial performance to the point of having a material adverse effect on our results of operations and financial condition.
 

The Company’s internal controls over financial reporting may not be considered effective in the future, which could result in a loss of investor confidence in its financial reports and in turn have an adverse effect on the stock price.
 
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our management on our internal controls over financial reporting. Such report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end of the year, including a statement as to whether or not our internal controls over financial reporting are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by management. If we are unable to continue to assert that our internal controls are effective, our investors could lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline.

The Company’s shareholders may face significant restrictions on their stock.

The Company’s stock differs from many stocks in that it is a “penny stock.” The Commission has adopted a number of rules to regulate “penny stocks” including, but not limited to, those rules from the Securities Act as follows:
 

3a51-1     which defines penny stock as, generally speaking, those securities which are not listed on either NASDAQ or a national securities exchange and are priced under $5, excluding securities of issuers that have net tangible assets greater than $2 million if they have been in operation at least three years, greater than $5 million if in operation less than three years, or average revenue of at least $6 million for the last three years;

15g-1     which outlines transactions by broker/dealers which are exempt from 15g-2 through 15g-6 as those whose commissions from traders are lower than 5% total commissions;

15g-2      which details that brokers must disclose risks of penny stock on Schedule 15G;

15g-3      which details that broker/dealers must disclose quotes and other information relating to the penny stock market;

15g-4      which explains that compensation of broker/dealers must be disclosed;

15g-5      which explains that compensation of persons associated in connection with penny stock sales must be disclosed;

15g-6      which outlines that broker/dealers must send out monthly account statements; and

15g-9     which defines sales practice requirements.

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Since the Company’s securities constitute a “penny stock” within the meaning of the rules, the rules would apply to us and our securities. Because these rules provide regulatory burdens upon broker-dealers, they may affect the ability of shareholders to sell their securities in any market that may develop; the rules themselves may limit the market for penny stocks. Additionally, the market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all.

Shareholders should be aware that, according to Commission Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered from patterns of fraud and abuse. These patterns include:

·      control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

·      manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

·      “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

·      excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

·      the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.     DEFAULTS ON SENIOR SECURITIES
 

None.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 

None.
 

ITEM 5.     OTHER INFORMATION
 

None.

ITEM 6.     EXHIBITS

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 20 of this Form 10-Q, and are incorporated herein by this reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 

Enwin Resources, Inc.                         Date

/s/ Kurt Dalmata                         July 17, 2009

Kurt Dalmata

Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer and Director

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INDEX TO EXHIBITS

Exhibit      

No.          Description

3(i) *      Amended Articles of Incorporation of the Company (incorporated by reference to the Form SB-2 filed with the Commission on October 18, 2002).

3(ii) *      Amended By-laws of the Company (incorporated by reference to the Form 10-SB filed with the Commission on October 18, 2002).

10(i) *     Addendum to Option Agreement dated April 30, 2006 (incorporated by reference to the Form 10-QSB filed with the Commission on July 13, 2006).

10(ii) *     Securities Exchange Agreement and Plan of Exchange dated May 31, 2007 (incorporated by reference to the Form 8-K filed with the Commission on June 4, 2007).

10(iii) *     Pledge Agreement dated June 29, 2007 (incorporated by reference to the Form 10-QSB filed with the Commission on July 16, 2007).

10(iv) *     Loan Agreement dated July 3, 2007(incorporated by reference to the Form 10-QSB filed with the Commission on July 16, 2007).

10(v) *     Consulting Agreement with First Capital Invest Corp dated April 1, 2007 (incorporated by reference to the Form 10-K filed with the Commission on January 15, 2009).

14 *     Code of Ethics adopted February 25, 2006 (incorporated by reference to the Form 10-KSB filed with the Commission on November 14, 2006).

31           Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as Amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32      Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

     *      Incorporated by reference to previous filings of the Company.

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