UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1 

For the transition period from ________  to ______

 

Commission File Number 000-26673

WELWIND ENERGY INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware	98-0207081
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

10-20172 113B Avenue

Maple Ridge, British Columbia

Canada V2X 0Y9

(Address of principal executive offices)

(604) 460-8487

(Registrant's telephone number, including area code)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes      . No  X  .

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes      .  No  X .

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  X  .  No      .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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/A or any amendment to this Form 10-K/A.     .

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 126.2 of the Exchange Act). Yes      . No  X  .

The aggregate market value of the voting and non-voting common equity on June 30, 2009 held by non-affiliates of the registrant based on the average bid and asked price of such stock on such date was approximately $2,372,262. Shares of common stock held by each officer and director and by each person who owns 10% or more of the outstanding common stock of the registrant 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.  Without acknowledging that any individual director of registrant is an affiliate, all directors have been included as affiliates with respect to shares owned by them.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer       .	Accelerated filer       .	Non-accelerated filer      .	Smaller reporting company    X  .
		(Do not check if a smaller reporting company)

The number of shares of common stock outstanding as of December 31, 2009 was 228,897,692.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Welwind Energy International Corporation

(A Development Stage Company)

December 31, 2009 and 2008

	Index
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Cash Flows	F-5
Consolidated Statement of Stockholders’ Equity (Deficit)	F-6
Notes to the Consolidated Financial Statements	F-7

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Welwind International, Inc.

We have audited the accompanying consolidated balance sheets of Welwind International, Inc. (a development stage company) as of December 31, 2009 and 2008, and the related statements of operations, stockholders’ deficit and of cash flows for the years then ended. These financial statements are the responsibility of the management of Welwind International, Inc. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 controls over financial reporting as a basis for designing audit 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall consolidated 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 Welwind International, Inc. as of December 31, 2009 and 2008, and the results of its operations and its cash flows the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that Welwind International will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, Welwind International suffered recurring losses from operations and has a net stockholders’ deficit. These factors and others raise substantial doubt about Welwind International’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2 to the consolidated financial statements. The financial statements do not include any adjustments that might reflect these uncertainties.

/s/ M&K CPAS, PLLC

Houston, Texas

April 15, 2010

F-2

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Welwind Energy International Corporation

(A Development Stage Company)

Consolidated Balance Sheets

(expressed in Canadian dollars)

	December 31, 2009 $	December 31, 2008 $
ASSETS
Current Assets
Cash	6,741	28,734
Accounts receivable	1,090	16,985
Prepaid expenses	1,104	1,104
Total Current Assets	8,935	46,823
Property and Equipment, net (Note 4)	555,196	569,039
Total Assets	564,131	615,862
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable	164,515	107,507
Accrued liabilities	–	175,090
Due to related parties	1,566,738	1,073,803
Total Liabilities	1,731,253	1,356,400
Stockholders’ Equity (Deficit)
Preferred Stock Authorized: 10,000,000 preferred shares, with par value US$0.001 per share Issued and outstanding: 10,000,000 shares as of December 31, 2009 and 2008	11,137	11,137
Common Stock Authorized: 290,000,000 common shares, with par value US$0.001 per share Issued and outstanding: 228,800,692 and 198,064,837 shares, as of December 31, 2009 and 2008 respectively	252,131	218,321
Additional Paid-In Capital (Notes 6 and 7)	20,050,569	19,442,170
Deficit accumulated during development stage	(21,480,959)	(20,412,166)
Total Stockholders’ Equity (Deficit)	(1,167,122)	(740,538)
Total Liabilities and Stockholders’ Equity (Deficit)	564,131	615,862

Going Concern (Note 2)

Commitments and Contingencies (Note 8)

Subsequent Events (Note 11)

(The accompanying notes are an integral part of these consolidated financial statements)

F-3

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Welwind Energy International Corporation

( A Development Stage Company)

Consolidated Statements of Operations

(expressed in Canadian dollars)

	For the Year Ended December 31, 2009	For the Year Ended December 31, 2008	Accumulated from August 17, 2006 (Date of Inception) to December 31, 2009
	$	$	$
			(unaudited)
Revenue	–	–	–
Operating Expenses
General and Administrative	926,273	5,067,886	19,152,517
Total Operating Expenses	926,273	5,067,886	19,152,517
Loss from Operations	(926,273)	(5,067,886)	(19,152,517)
Other Income (Expenses)
Interest Expense	(105,621)	(73,569)	(232,630)
Impairment of goodwill	–	–	(1,714,187)
Loss on settlement of debt	(36,899)	–	(36,899)
Loss on disposal of property and equipment	–	–	(1,000)
Total Other Income (Expenses)	(142,520)	(73,569)	(1,984,716)
Net Loss from continuing operations	(1,068,793)	(5,141,455)	(21,137,233)
Discontinued operations	–	(4,923)	(343,726)
Net loss and comprehensive loss	(1,068,793)	(5,146,378)	(21,480,959)
Net Loss Per Share – Basic and Diluted Net Loss Per Share – Basic and Diluted
Continuing operations	(0.01)	(0.03)
Discontinued operations	–	–
Weighted Average Shares Outstanding	208,281,665	170,633,971

(The accompanying notes are an integral part of these consolidated financial statements)

F-4

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Welwind Energy International Corporation

( A Development Stage Company)

Consolidated Statements of Cash Flows

(expressed in Canadian dollars)

	For the Year Ended December 31, 2009		For the Year Ended December 31, 2008		Accumulated from August 17, 2006 (Date of Inception) to December 31, 2009
	$		$		$
					(unaudited)
Operating Activities
Net Loss	(1,068,793)		(5,146,378)		(21,480,959)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization	–		–		8,066
Depreciation	13,843		20,034		52,192
Foreign exchange loss and other	–		–		15,410
Gain on cancellation of shares	–		–		(572,901)
Impairment loss	–		–		1,714,187
Imputed interest on shareholder loans	105,621		73,569		232,630
Issuance of shares to settle debt	36,899		539,028		625,123
Issuance of shares for compensation and services	289,689		3,504,002		15,020,756
Write-off of subscription receivable	–		–		770,310
Changes in operating assets and liabilities:
Accounts receivable	15,895		913		16,808
Accounts receivable	–		–		(16,985)
Prepaid expenses and other	–		4,950		(1,104)
Accounts payable and accrued liabilities	(43,082)		293,690		361,975
Net Cash Used In Operating Activities	(649,928)		(710,192)		(3,254,492)
Investing Activities
Net cash acquired from acquisition	–		–		2,194
Purchase and construction of equipment	–		(74,676)		(614,223)
Net Cash Used In Investing Activities	–		(74,676)		(612,029)
Financing Activities
Proceeds from issuance of common shares	–		501,052		2,165,810
Proceeds from related parties, net	627,935		308,377		2,165,787
Repayment of debt	–		–		(464,049)
Net Cash Provided By (Used In) Financing Activities	627,935		809,429		3,867,548
Net cash used in discontinued operations	–		(14,038)		5,714
Increase (Decrease) in Cash	(21,993)		10,523		6,741
Cash – Beginning of Year	28,734		18,211		–
Cash – End of Year	6,741		28,734		6,741
Supplemental Disclosures
Interest paid	–		–		–
Income tax paid	–		–		–
Non-Cash Disclosures
Shares issued for Debt and AP	210,000		–		–

(The accompanying notes are an integral part of these consolidated financial statements)

F-5

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Welwind Energy International Corporation

(A Development Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficit)

From January 1, 2007 to December 31, 2009

(expressed in Canadian dollars)

	Preferred Stock			Common Stock				Additional		Stock
	Shares		Par Value	Shares		Par Value		Paid-In Capital		Subscription Receivable		Accumulated Deficit		Total
	#		$	#		$		$		$		$		$
Balance – December 31, 2006	10,000,000		11,137	128,583,583		144,875		12,274,139		(1,151,605)		(8,074,381)		3,204,165
Issuance of shares to settle debt	–		–	2,006,557		2,366		265,044		–		–		267,410
Issuance of shares for services	–		–	26,982,255		28,876		2,461.173		–		–		2,490,048
Stock subscriptions received	–		–	–		–		–		381,295		–		381,295
Cancellation of shares	–		–	(10,000,000)		(11,459)		(561,442)		–		–		(572,901)
Write-off of subscriptions receivable	–		–	–		–		–		770,310		–		770,310
Imputed interest on shareholder loan	–		–	–		–		53,440		–		–		53,440
Net loss for the year	–		–	–		–		–		–		(7,191,407)		(7,191,407)
Balance – December 31, 2007	10,000,000		11,137	147,572,395		164,658		14,492,354		–		(15,265,788)		(597,639)
Issuance of shares for cash	–		–	10,000,000		10,098		490,954		–		–		501,052
Issuance of shares for services	–		–	30,992,442		31,711		3,472,291		–		–		3,504,002
Issuance of shares to settle debt	–		–	9,500,000		11,854		913,002		–		–		925,856
Imputed interest on shareholder loan	–		–	–		–		73,569		–		–		73,569
Net loss for the year	–		–	–		–		–		–		(5,146,378)		(5,146,378)
Balance – December 31, 2008	10,000,000		11,137	198,064,837		218,321		19,442,170		–		(20,412,166)		(740,538)
Issuance of shares for services	–		–	15,650,000		17,210		272,479		–		–		289,689
Issuance of shares to settle debt	–		–	15,082,855		16,600		246,899		–		–		246,899
Imputed interest on shareholder loan	–		–	–		–		105,621		–		–		105,621
Net loss for the year	–		–	–		–		–		–		(1,068,793)		(1,068,793)
Balance – December 31, 2009	10,000,000		11,137	22,800,692		252,131		20,050,569		–		(21,480,959)		(1,167,122)

(The accompanying notes are an integral part of these consolidated financial statements)

F-6

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Welwind Energy International Corporation

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

1.

Nature of Operations and Continuance of Business

Welwind Energy International Corporation (the “Company”) was incorporated in the State of Delaware on December 18, 1997 as Global Golf Holdings Inc.  The Company acquired a business on November 23, 2004 to sell and distribute low carbohydrate and sugar-free foods through retail and wholesale outlets in Western British Columbia, Canada, and through the Internet. On August 17, 2006, the Company acquired all of the outstanding and issued share capital of Welwind Energy International Corporation (“WEIC”), a private Canadian company. WEIC was founded in 2005 to build, own and operate wind farms on an international scale.  Accordingly, the Company is now involved with wind power projects in China. The Company is based in British Columbia, Canada.  On November 24, 2007, the Company discontinued operations of the retail and wholesale foods division to focus specifically on the wind power projects in China.

2.

Going Concern

The Company has not realized revenues on its wind power projects, has a working capital deficiency of $1,722,318 and $1,309,577 as of December 31, 2009 and 2008, respectively, and has an accumulated deficit of $21,480,959 and $20,412,166 as of December 31, 2009 and 2008, respectively.  The Company's ability to continue as a going concern is dependent upon the Company's ability to obtain additional financing and/or achieving a profitable level of operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management of the Company has undertaken a plan with the goal of sustaining the Company’s operations for the next twelve months and beyond.   These steps include: (a) becoming cash flow positive via the Company’s Zhanjiang turbine and a Power Purchase Agreement from the local power authority, (b) continue efforts to raise significant additional capital and/or other forms of financing with Acterra Group and Adventis Capital; and (c) controlling overhead expenses.  There can be no assurance that any of these efforts will be successful.

3.

Summary of Significant Accounting Policies

a)

Basis of Presentation

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in Canadian dollars. These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Zhanjiang Windcor Windfarm Ltd. and Yangxi Windfarm Ltd. All significant intercompany balances and transactions have been eliminated. The Company’s fiscal year-end is December 31.

b)

Use of Estimates

The preparation of these consolidated financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to goodwill and purchased intangible asset valuations, stock-based compensation expense, deferred income tax asset valuation allowance and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

c)

Cash and Cash Equivalents

Cash consists of bank accounts held at financial institutions in the United States, Canada, and China. The Company considers all highly liquid instruments with a maturity of three months or less, at the time of issuance, to be cash equivalents.  

F-7

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Welwind Energy International Corporation

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

3.

Summary of Significant Accounting Policies (continued)

d)

Property and Equipment

Property and equipment are recorded at cost and is depreciated using the declining balance method over the estimated useful lives of the related asset. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized.  Costs included in wind equipment are under construction and will be amortized over their useful life on a straight-line basis once they are put into use.

e)

Long-Lived Assets

In accordance with ASC 360, Property Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

f)

Foreign Currency Translation

The Company's functional and reporting currency is the Canadian dollar. Monetary assets and liabilities denominated in foreign currencies are translated to Canadian dollars in accordance with SFAS No. 52 “Foreign Currency Translation” using the exchange rate prevailing at the balance sheet date.  Gains and losses arising on settlement of foreign currency denominated transactions are included in the determination of net income or loss. Foreign currency transactions are primarily undertaken in Chinese Renminbi. At December 31, 2009, the exchange rate for one Chinese Renminbi was $0.1533 CAD (2008 - $0.1548CAD).  For the period from January 1, 2009 to December 31, 2009, the average exchange rate for one Chinese Renminbi was $0.1671 CAD (2008 - $0.1459 CAD). The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

g)

Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements. As at December 31, 2009 and 2008, the Company had no items representing comprehensive income/loss.

h)

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. As of December 31, 2009 and 2008, the Company did not recognize any stock based compensation expense.

i)

Financial Instruments and Concentrations of Business

The fair values of financial instruments including cash, accounts receivable, accounts payable, accrued liabilities and amounts due to related parties were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The Company’s operations are in Canada and China resulting in exposure to market risks from changes in foreign currency rates.  The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates.  Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

F-8

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Welwind Energy International Corporation

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

3.

Summary of Significant Accounting Policies (continued)

j)

Discontinued Operations

Certain amounts have been reclassified to present the Company’s discontinuance of its retail and wholesale foods division, as discontinued operations. Unless otherwise indicated, information presented in the notes to the financial statements relates only to the Company’s continuing operations. Information relating to discontinued operations is included in Note 10.

k)

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The Company files federal income tax returns in Canada.  The Company may be subject to a reassessment of federal taxes by tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. In certain circumstances, the federal statute of limitations can reach beyond the standard three year period. Tax authorities have not audited any of the Company’s income tax returns.

The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the years ended December 31, 2009 and 2008, there were no charges for interest or penalties.

l)

Recently Issued Accounting Pronouncements

In August 2009, FASB issued an amendment to the accounting standards related to the measurement of liabilities that are recognized or disclosed at fair value on a recurring basis. This standard clarifies how a company should measure the fair value of liabilities and that restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard. This standard is effective for the Company on October 1, 2009. The adoption of this amendment did not have a material effect on the Company’s consolidated financial statements.

In October 2009, FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective on January 1, 2011.

In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product’s essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the impact, will become effective on January 1, 2011.

F-9

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Welwind Energy International Corporation

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

3.

Summary of Significant Accounting Policies (continued)

m)

Recently Issued Accounting Pronouncements (continued)

In January 2010, the FASB issued an amendment to ASC 505, Equity, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend.  This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis.  The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.  

In January 2010, the FASB issued an amendment to ASC 820, Fair Value Measurements and Disclosure, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis.  This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010.  

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial statements.    

n)

Reclassifications

Certain reclassifications have been made to the prior period’s consolidated financial statements to conform to the current period’s presentation.

4.

Property and Equipment

	Cost $	Accumulated Depreciation $	December 31, 2009 Net Carrying Value $	December 31,  2008 Net Carrying Value $
Wind equipment under construction	521,037	–	521,037	521,037
Automobile	70,843	45,853	24,990	35,700
Computer hardware	11,651	9,273	2,378	4,755
Office furniture and equipment	11,798	5,007	6,791	7,547
	615,329	60,132	555,196	569,039

The wind equipment under construction relates to the Company’s wind farm projects. The Company incurred $13,843 and $0 in depreciation expense for the year ended December 31, 2009 and 2008, respectively.  

F-10

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Welwind Energy International Corporation

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

5.

Related Party Transactions/Balances

a)

As at December 31, 2009, the balance due to related parties amounted to $1,405,527 (December 31, 2008 - $912,601), which includes $352,613 (December 31, 2008 - $233,438) owed to the former President of the Company for management fees and working capital purposes and $1,052,914 (December 31, 2008 - $679,163) owed to the newly appointed President and spouse of the President of the Company for working capital purposes.  The amounts are unsecured, non-interest bearing, and due on demand.

b)

As at December 31, 2009, the Company owes $161,202 (December 31, 2008 - $161,202) to shareholders for advances to the Company and expenses paid on behalf of the Company. Of this amount, $112,798 (December 31, 2008 - $112,798) is unsecured, bears interest at 10% per annum, and is due on demand. The remaining balance of $48,404 (December 31, 2008 - $48,404) is unsecured, non-interest bearing, and payable on demand.

6.

Common Stock

Year Ended December 31, 2009

a)

On November 19, 2009, the Company issued 14,150,000 common shares of the Company with a total value of $150,485 based on the closing price of the Company’s common stock on the date of issuance in relation to $100,000 of amounts owing to related parties and the remaining amount for services rendered.  A loss on debt settlement of $6,350 was recognized.

b)

On October 26, 2009, the Company issued 2,000,000 common shares of the Company with a total value of $25,608 based on the closing price of the Company’s common stock on the date of issuance in relation to settlement of $20,000 of amounts owing to related parties.  A loss on debt settlement of $5,608 was recognized

c)

On August 26, 2009, the Company issued 5,000,000 common shares of the Company with a total value of $99,401 based on the closing price of the Company’s common stock on the date of issuance in relation to services rendered.

d)

On June 16, 2009, the Company issued 5,000,000 common shares of the Company with a total value of $113,270 based on the closing price of the Company’s common stock on the date of issuance in relation to services rendered.

e)

On May 29, 2009, the Company issued 11,500,000 common shares of the Company with a total value of $32,883 based on the closing price of the Company’s common stock on the date of issuance in relation to services rendered.

f)

On February 4, 2009, the Company issued 1,582,855 common shares of the Company with a total value of $59,015 based on the closing price of the Company’s common stock on the date of issuance in relation to settlement of debt in the amount of $15,000.  The Company recorded a loss on settlement of $44,015.

g)

On February 4, 2009, the Company issued 1,500,000 common shares of the Company with a total value of $55,926 based on the closing price of the Company’s common stock on the date of issuance in relation to settlement of debt in the amount of $75,000.  The Company recorded a gain on settlement of $19,074.  

Year Ended December 31, 2008

h)

On December 8, 2008, the Company issued 2,000,000 common shares of the Company with a total value of $188,123 based on the closing price of the Company’s common stock on the date of issuance. On December 3, 2008, the Company issued 5,000,000 common shares of the Company in relation to settlement of amounts due from the Company.  The Company also issued 200,000 common shares for consulting services provided.  The total value of shares issued was $621,953 based on the closing price of the Company’s common stock on the date of issuance.

i)

On November 18, 2008, the Company issued 2,500,000 common shares of the Company with a total value of $138,701 based on the closing price of the Company’s common stock on the date of issuance in relation to services previously rendered.

j)

On September 11, 2008, the Company issued 3,000,000 common shares of the Company with a value of $301,655 based on the closing price of the Company’s common stock on the date of issuance.

F-11

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Welwind Energy International Corporation

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

6.

Common Stock (continued)

k)

On September 4, 2008, the Company issued 3,000,000 common shares of the Company with a value of $294,989 based on the closing price of the Company’s common stock on the date of issuance.

l)

On July 17, 2008, the Company issued 10,000,000 common shares of the Company in relation to settlement of debt in the amount of $100,000. The remaining value of $1,302,243 was expensed to General and Administrative. The total value was $1,402,660 based on the closing price of the Company’s common stock on the date of issuance.

m)

On July 8, 2008, the Company issued 200,000 common shares of the Company for consulting services previously rendered with a value of $22,436 based on the closing price of the Company’s common stock on the date of issuance.

Year Ended December 31, 2008

n)

On July 3, 2008, the Company issued 6,000,0000  common shares of the Company to related parties and 200,000 common shares of the Company to consultants for consulting services previously rendered  with a value of $612,827 based on the closing price of the Company’s common stock on the date of issuance.

o)

On June 17, 2008, the Company issued 2,500,000 common shares of the Company in relation to services previously rendered with a value of $436,475 based on the Company’s common stock on the date of issuance.

p)

On May 7, 2008, the Company issued 10,000,000 common shares of the Company at US$0.05 per common share for proceeds of $501,052.

q)

On March 26, 2008, the Company issued 3,000,000 common shares of the Company for settlement of past services with a fair value of $213,549 the Company’s common stock on the date of issuance.

r)

On March 26, 2008, the Company issued 500,000 common shares of the Company for consulting services with a fair value of $35,592 the Company’s common stock on the date of issuance.

s)

On March 6, 2008, the Company issued 2,050,000 common shares of the Company for consulting services with a fair value of $122,102 the Company’s common stock on the date of issuance.

t)

On January 7, 2008, the Company issued 342,442 common shares of the Company with a fair value of $37,797 the Company’s common stock on the date of issuance.

 

7.

Stock Options

On June 23, 2006, the Company adopted a fixed stock option plan that provides for the issuance of incentive and non-qualified stock options to officers, directors, employees and consultants to acquire up to 15,000,000 shares of the Company's common stock. The Board of Directors determines the terms of the options granted, including the number of options granted, the exercise price and the vesting schedule. The stock option plan will expire December 31, 2016.

Effective February 4, 2008, the Company filed a Form S-8 Registration Statement in connection with its 2008 Equity Incentive Plan allowing for the direct award of stock or granting of stock options to directors, officers, employees and consultants to acquire up to a total of 20,000,000 shares of common stock. The Plan Administrator determines the terms of the options granted, including the number of options granted, the exercise price and the vesting schedule. At December 31, 2009 and 2008, there are no stock options outstanding.

F-12

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Welwind Energy International Corporation

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

8.

Commitments

a)

The Company entered into an agreement dated January 18, 2006, with the Government of Yangxi City (“Yangxi”) for the development of a wind farm producing a total of 400,000 kilowatt (“KW”) per year of electrical power in the next ten years.  Yangxi will assist the Company in securing land, sale price for the electricity, financing of the project, and preferential tax treatment. Initially, the Company will be required to prepare a community wind assessment and a feasibility study for approval. Yangxi can terminate the agreement if the project is not under construction within 24 months of signing the agreement. As at June 30, 2009, the Company has commenced construction on the plant and the agreement is in good standing.

b)

The Company entered into an agreement dated March 21, 2006, with the Zhanjiang Foreign Trade & Economic Bureau (“Zhanjiang”) for the development of a wind power generation project in Zhanjiang City in the Guangdong Province. The project is expected to produce up to 600,000 KW of electrical power per year, with Phase 1 being 100,000 KW per year. The Company had six months from the date of the agreement to begin Phase 1 (commenced) or Zhanjiang had the right to terminate the agreement. The Company granted a 20% interest in this project to an investor.  

c)

The Company rents, on a month-to-month basis, its industrial and office space for $1,726 per month, office space in China for approximately $1,000 per month and warehouse space for $1,791 per month.

9.

Income Taxes

The components of the net deferred tax asset at December 31, 2009 and 2008, the statutory tax rate, the effective tax rate and the amount of the valuation allowance are indicated below:

		December 31, 2009 $	December 31, 2008 $
Deferred tax asset
- Cumulative net operating losses		1,271,504	980,275
- Less valuation allowance		(1,271,504)	(980,275)
Net deferred tax asset		–	–

The Company has incurred operating losses of $3,739,719 which, if unutilized, will expire through to 2029. Future tax benefits, which may arise as a result of these losses, have not been recognized in these consolidated financial statements, and have been offset by a valuation allowance.

The Company is in arrears on filing its statutory income tax returns and it therefore has estimated the expected amount of loss carryforwards available once the outstanding returns are filed. The Company expects to have net operating loss carryforwards for income tax purposes available to offset future taxable income. There are no potential uncertain tax consequences that would require disclosure.

F-13

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Welwind Energy International Corporation

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

10.

Discontinued Operations

On November 24, 2007, the Company discontinued all operations related to the former business of selling and distributing low carbohydrate and sugar-free foods.

The results of discontinued operations are summarized as follows:

	Year Ended December 31, 2009	Year Ended December 31, 2008
	$	$
Revenue	–	6,098
Cost of sales	–	(2,131)
Gross Profit	–	3,967
Operating Expenses:
General and administrative	–	(8,890)
Net Loss	–	(4,923)

As at December 31, 2009 and December 31, 2008, there were no remaining assets and liabilities of the discontinued retail and wholesale foods division.

11.

Subsequent Events

In accordance with ASC 855, Subsequent Events, the Company has evaluated subsequent events through April 15, 2010, the date the financial statements were issued. During this period, the Company did not have any material recognizable subsequent events.

F-14

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ITEM 15.   EXHIBITS

    

(1)

Incorporated by reference as an Exhibit to the Form 8-K filed on December 12, 2004 as amended on February 3, 2005.

(2)

Incorporated by reference as an Exhibit to the Form 8-K filed on December 12, 2004 as amended on February 3, 2005.

(3)

Incorporated by reference as an Exhibit to the Form 8-K filed on August 17, 2006 as amended on December 20, 2006.

(4)

Filed herewith.

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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 21st day of December, 2010.

	Welwind Energy International Corporation, a Delaware Corporation
	By:	/s/ Tammy-Lynn McNabb
		Tammy-Lynn McNabb Chief Executive Officer, Chief Financial Officer and Chairwoman of the Board

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of Welwind Energy International Corporation and in the capacities and on the dates indicated.

Signature		Position		Date
/s/Tammy-Lynn McNabb		Chief Executive Officer and Chairwoman of the Board		December 21, 2010
Tammy-Lynn McNabb
/s/Feng Junyi		Director		December 21, 2010
Feng Junyi

 

/s/ Patrick Higgins		Director		December 21, 2010
Patrick Higgins

 

/s/ David Wing Yiu Cho		Director		December 21, 2010
David Wing Yiu Cho
/s/ Chong-Jian Zhao		Director		December 21, 2010
Chong-Jian Zhao
/s/ Simon Wong Wai Hung		Director		December 21, 2010
Simon Wong Wai Hung

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