FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

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

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

Commission file number: 000-29169

Chinawe.com Inc.

(Exact name of registrant as specified in its charter)

California (State or other jurisdiction of		95-462728 (I.R.S. Employer Identification No.)
incorporation or organization)

Room 1307, Block A
Fuk Keung Industrial Building
66-68 Tong Mei Road
Kowloon, Hong Kong

(852) 23810818

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:

Class of Common Stock		Outstanding at May 14, 2011
Common Stock, $.001 par value		43,800,000

 

 

TABLE OF CONTENTS

		PAGE
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Statements of Operations for the Three months ended March 31, 2011 and 2010 (unaudited)			3
Condensed Consolidated Balance Sheets at March 31, 2011 (unaudited) and December 31, 2010			4
Condensed Consolidated Statements of Stockholders’ Equity for the Three months ended March 31, 2011 and 2010 (unaudited)			5
Condensed Consolidated Statements of Cash Flows for the Three months ended March 31, 2011 and 2010 (unaudited)			6
Notes to 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			11
ITEM 4. CONTROLS AND PROCEDURES			12
PART II — OTHER INFORMATION
ITEM 6. EXHIBITS			13
SIGNATURES			14
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I — FINANCIAL INFORMATION

Item 1.		Financial Statements.

CHINAWE.COM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

						Three months ended March 31,
		NOTE				2011				2010
						U.S.$				U.S.$
Depreciation							—				(2,349	)
Administrative and general expenses							(1,000	)			(97,687	)
INCOME/(LOSS) FROM OPERATIONS							(1,000	)			(100,036	)
NON-OPERATING INCOME (EXPENSE)
Interest							—				(776	)
Other income							—				4
INCOME/(LOSS) BEFORE INCOME TAXES							(1,000	)			(10,808	)
Income tax expense			5				—				—
NET INCOME/(LOSS)							(1,000	)			(100,808	)
OTHER COMPREHENSIVE INCOME/(LOSS)
Foreign currency translation							—				29,428
COMPREHENSIVE INCOME/(LOSS)							(1,000	)			(71,380	)
Basic and diluted net income per share of common stock							(0.00002	)			(0.0023	)
Weighted average number of shares of common stock outstanding							43,800,000				43,800,000

The financial statements should be read in conjunction with the accompanying notes.

CHINAWE.COM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

						As of				As of
		Note				March 31, 2011				December 31, 2010
						U.S.$				U.S.$
ASSETS
TOTAL ASSETS							—				—
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accrued expenses and other current liabilities							4,935				5,135
Due to related parties			4				330,522				329,322
Total current liabilities							335,457				334,457
Contingencies and commitments			6
Stockholders’ deficit:
Preferred stock, par value U.S.$0.001 per share; authorized 20,000,000 shares; none issued, Common stock, par value U.S.$0.001 per share; authorized 100,000,000 shares; issued and outstanding 43,800,000 shares							43,800				43,800
Capital in excess of par							84,560				84,560
Accumulated losses							(463,817	)			(462,817	)
Accumulated other comprehensive loss							—				—
Total stockholders’ deficit							(335,457	)			(334,457	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT							—				—

The financial statements should be read in conjunction with the accompanying notes.

CHINAWE.COM INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

																		Accumulated
										Capital								other				Total
		Number								in excess				Accumulated				comprehensive				Stockholders’
		of shares				Amount				of par				losses				(loss) income				deficit
						U.S.$				U.S.$				U.S.$				U.S.$				U.S.$
Balance as of December 31, 2009			43,800,000				43,800				85,948				(2,290,734	)			(4,796	)			(2,165,782	)
Comprehensive loss:
Net loss for the year			—				—				—				(100,808	)			—				(100,808	)
Currency translation adjustment			—				—				—				—				34,224				34,224
Total comprehensive loss			—				—				—				(100,808	)			34,224				(66,584	)
Balance as of March 31, 2010			43,800,000				43,800				85,948				(2,391,542	)			29,428				(2,232,366	)
Balance as of December 31, 2010			43,800,000				43,800				84,560				(462,817	)			—				(334,457	)
Comprehensive income:
Net income for the year			—				—				—				(1,000	)			—				(1,000	)
Total comprehensive income			—				—				—				(1,000	)			—				(1,000	)
Balance as of March 31, 2011			43,800,000				43,800				84,560				(463,817	)			—				(335,457	)

The financial statements should be read in conjunction with the accompanying notes.

CHINAWE.COM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three months ended
		March 31,
		2011				2010
		U.S.$				U.S.$
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)			(1,000	)			(100,808	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			—				2,349
Changes in operating assets and liabilities:
Prepayments, deposits and other receivables			—				845
Accrued expenses and other current liabilities			(200	)			(653	)
Surcharge on taxes			—				468
Income tax payable			—				525
NET CASH USED IN OPERATING ACTIVITIES			(1,200	)			(97,274	)
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH USED IN INVESTING ACTIVITIES			—				—
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt			—				(3,992	)
Advance from related parties			1,200				53,824
Repayment to related parties			—				(872	)
NET CASH PROVIDED BY FINANCING ACTIVITIES			1,200				48,960
NET DECREASE IN CASH AND CASH EQUIVALENTS			—				(48,314	)
Cash and cash equivalents, beginning of period			—				33,427
Foreign currency translation on cash and cash equivalents			—				34,223
CASH AND CASH EQUIVALENTS, END OF PERIOD			—				19,336
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest			—				776

The financial statements should be read in conjunction with the accompanying notes.

CHINAWE.COM INC. AND SUBSIDIARIES

1. Basis of Presentation

The accompanying financial statements present the financial position of the Company as of March 31, 2011 and December 31, 2010, and its results of operations for the three months ended March 31, 2011 and 2010. All inter-company accounts and transactions have been eliminated on consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Adoption of recently issued accounting pronouncements

In January 2010, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2010-02 “Accounting and Reporting for Decrease in Ownership of a Subsidiary — a Scope Clarification”. The update provides amendments to Subtopic 810-10 and related guidance under generally accepted accounting principles in the United States (“U.S. GAAP”) to clarify that the scope of the decrease in ownership provisions of the Subtopic and related guidance applies to three cases. The amendments in this Update also clarify that the decrease in ownership guidance in Subtopic 810-10 does not apply to the sales of in substance real estate and conveyances of oil and gas mineral rights transactions even if they involve businesses. If a decrease in ownership occurs in a subsidiary that is not a business or nonprofit activity, an entity first needs to consider whether the substance of the transaction causing the decrease in ownership in addressed in other U.S. GAAP, such as transfers of financial assets, revenue recognition, exchanges of nonmonetary assets, sales of in substance real estate, or conveyances of oil and gas mineral rights, and apply that guidance as applicable. If no other guidance exists, an entity should apply the guidance in Subtopic 810-10. The amendments in this update also expand the disclosure about the deconsolidation of a subsidiary or derecognition of a group of assets within the scope of Subtopic 810-10. The Company adopted this update on January 1, 2010.

In January 2010, the FASB issued ASU No. 2010-06 “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements”. This update provides amendments to Subtopic 820-10 that required new disclosures for two situations. First, a reporting entity should disclose separately the amount of significant transfers in and out of Level 1 and 2 fair value measurements and describe the reasons for the transfers. Second, in the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separate information about purchases, sales, issuance and settlements. This pronouncement has no current application to the Company.

In February 2010, the FASB issued ASU No. 2010-09 “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements”. This update provides the following amendments: (i) an entity that either (a) is a company that files periodic reports with the Securities and Exchange Commission (“SEC filer”) or (b) is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets) is required to evaluate subsequent events through the date that the financial statements are issued. If an entity meets neither of those criteria, it should evaluate subsequent events through the date the financial statements are available to be issued, (ii) the glossary of Topic 855 is amended to include the definition of SEC filer, (iii) an entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated, (iv) the glossary of Topic 855 is amended to remove the definition of public entity, and (v) the scope of the reissuance disclosure requirements is refined to include revised financial statements only. No aspect of this new pronouncement has current application to the Company.

In May 2010, the FASB issued ASU No. 2010-19 “ Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates” (“SEC Update”). The purpose of the SEC Update is to codify the SEC Staff Announcement made at the March 18, 2010 meeting of the FASB Emerging Issues Task Force (“EITF”) by the SEC observer to the EITF. The Staff Announcement provides the SEC staff’s view on certain foreign currency issues related to investments in Venezuela. This new pronouncement has no current application to the Company.

In December 2010, the FASB issued ASU No. 2010-29 “ Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force)”. The amendments in this update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This new pronouncement has no current application to the Company.

2. Organization

Chinawe.com Inc. (“Chinawe”) was incorporated under the laws of the State of California. Chinawe’s principal business activity was providing professional management services relating to non-performing loans in the People’s Republic of China, as well as other consulting services. During the first quarter of 2010, the Company’s sole customer, Huizhou One Limited, issued a notice of termination to terminate the services contracts with effect from March 26 and March 27, 2010. Effective from March 27, 2010, the Company became a non-operating company.

The consolidated financial statements include the accounts of Chinawe and the following subsidiary (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) was disposed of as of July 26, 2010.

3. Going concern consideration

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As of March 31, 2011, the Company had negative working capital and stockholders’ deficit of U.S.$335,457 and U.S.$335,457, respectively, which raise substantial doubt about its ability to continue as a going concern. The Company has relied on private financing by cash inflow from the principal stockholders of the Company, who have agreed not to demand repayment of amounts due to them as long as the Company has negative working capital. These stockholders have indicated their intention to finance the Company for a “reasonable” period of time to enable the Company to continue as a going concern, assuming that in such a period of time the Company would not be able to raise additional capital to support its continuation. However, it is uncertain for how long or to what extent such a period of time would be “reasonable” and there can be no assurance that the financing from these stockholders will be continued. The accompanying financial statements do not include or reflect any adjustments that might result from the outcome of these uncertainties.

4. Due to related parties

The balances with related parties are as follows:

As of

As of

Note

March 31, 2011

December 31, 2010

(Unaudited)

U.S.$

U.S.$

Advances from stockholders

(a

)

330,522

329,322

5. Income tax expenses

It is management’s intention to reinvest all the income attributable to the Company earned by its operations outside the U.S. Accordingly, no U.S. corporate income taxes are provided for in these financial statements.

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.

Under the current laws of the British Virgin Islands (the ''BVI’’), dividends and capital gains arising from the Company’s investments in the BVI are not subject to income taxes and no withholding tax is imposed on payments of dividends to the Company.

6. Contingencies

The Company is currently suspended in the State of California due to failure to file reports with the Franchise Tax Board. The Company is in the process of preparing the relevant reports and expects to be back in good standing in the coming future. 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.

7. 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. As of March 31, 2011 and December 31, 2010, no awards have been made under the Plan.

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the Consolidated Condensed Financial Statements and notes thereto appearing elsewhere in this Form 10-Q. 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 elsewhere in this report.

Overview — Results of Operations

Effective March 27, 2010, the Company ceased providing professional management services relating to non-performing loans in the People’s Republic of China. The Company has terminated its employees and closed down its offices. The Company has not identified a specific line of business or territory for any new business. There can be no assurance that the Company will be successful in identifying a new line of business that it can enter into or that if such new line of business is identified, that the Company will have adequate funding to commence operations of a new line of business. The principal stockholders of the Company have indicated their intention to finance the Company for a “reasonable” period of time to enable the Company to continue as a going concern, assuming that in such a period of time the Company would not be able to raise additional capital to support its continuation. However, it is uncertain for how long or to what extent such a period of time would be “reasonable” and there can be no assurance that financing from these stockholders will be continued.

		Three months ended March 31,
		2011				2010
		U.S.$				U.S.$
Loss from Operation			(1,000	)			(100,036	)
Finance costs			—				(776	)
Other income			—				4
Loss before taxation			(1,000	)			(100,808	)
Taxation			—				—
Net loss attributable to discontinued operation			(1,000	)			(100,808	)

THREE MONTHS ENDED MARCH 31, 2011 (UNAUDITED) COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2010 (UNAUDITED)

LOSS FROM OPERATION

The Company’s operating expenses totaled U.S.$1,000 for the three months ended March 31, 2011, compared to U.S. $100,036 for the three months ended March 31, 2010. This represents a decrease of U.S.$99,036 due to the disposal of Chinawe Asset Management Limited as of July 26, 2010.

NET NON-OPERATING EXPENSES

Net non-operating expenses for the first quarter of 2011 totaled US$0, compared to US$776 for the first quarter of 2010.

PROVISION FOR INCOME TAXES

No income tax expense for the three months ended March 31, 2011 and 2010 was incurred because the Company and its subsidiaries incurred losses for taxation purposes.

NET LOSS FROM DISCONTINUED OPERATIONS

The Company has recorded a net loss from discontinued operations of U.S.$1,000 for the first quarter of 2011, compared to a net loss from discontinued operations of U.S.$100,808 for the first quarter of 2010.

LIQUIDITY AND CAPITAL RESOURCES

The Company is currently financing its operations primarily through cash generated from financing activities.

Cash and cash equivalent balances as of March 31, 2011 and March 31, 2010 were U.S.$0 and U.S.$19,336, respectively.

Net cash used in operating activities of discontinued operations was U.S.$1,200 and U.S.$97,274 for the three months ended March 31, 2011 and 2010, respectively.

Net cash provided by financing activities of discontinued operations was U.S.$1,200 and U.S.$48,960 for the three months ended March 31, 2011 and 2010, respectively. The decrease in net cash provided by financing activities of discontinued operations mainly resulted from the decrease in net advances from related parties.

During the three months ended March 31, 2011 and 2010, the Company did not enter into any transactions using derivative financial instruments or derivative commodity instruments nor held any marketable equity securities of publicly traded companies. Accordingly, the Company believes its exposure to market interest rate risk and price risk is not material.

During the three months ended March 31, 2011 and 2010, the Company had no purchases or investments.

CRITICAL ACCOUNTING POLICIES

Given that the Company currently has no operating business, there are no critical accounting policies that currently affect our financial condition and results of operations.

Related party transactions

We do not have any of the following:

•		Trading activities that include non-exchange traded contracts accounted for at fair value.
•		Relationships and transactions with persons or entities that derive benefits from any non-independent relationships other than related party transactions discussed in this Report.

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.

Future Operations

The Company is seeking investment opportunities that may provide revenues for the Company. However, 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 receipt of revenues is probable.

Item 3.		Quantitative and Qualitative Disclosures About Market Risk.

We are not exposed to a material level of market risk due to changes in interest rates, since we have never registered or issued debt instruments. Our outstanding long term liabilities are mostly loans from a director or other related parties, which are unsecured and interest rate fixed or interest-free. Currently we do not maintain a portfolio of interest-sensitive debt instruments or any fixed-income derivatives. Management has continuously paid great attention to the financial leverage in business development and interest expenses in operations.

Item 4.		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 (“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 Securities and Exchange Commission’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.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting is as of the three months ended March 31, 2011. 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.

(b) Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting for the three months ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 6.		Exhibits.

	31.1			Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
	31.2			Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
	32.1			Section 1350 Certification of Chief Executive Officer
	32.2			Section 1350 Certification of Chief Financial Officer

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

EXHIBIT INDEX

Exhibit No.				Description
	31.1			Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
	31.2			Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
	32.1			Section 1350 Certification of Chief Executive Officer
	32.2			Section 1350 Certification of Chief Financial Officer