UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 10-K

(Mark One)

 

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

 

For the fiscal year ended December 31, 2017

 

OR

 

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

 

For the transition period from                      to                     

 

Commission file number: 000-29169

 

Chinawe.com Inc.

(Exact name of registrant as specified in its charter)

 

California
(State or other jurisdiction of
incorporation or organization) 		  95-4627285
(I.R.S. Employer Identification No.)

 

Room 1208, Block A
Fuk Keung Industrial Building
66-68 Tong Mei Road
Kowloon, Hong Kong

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (852) 23810818

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act: common stock, par value $0.001 per share

 

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

 

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

 

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

 

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 ¨ No þ

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to Form 10-K. þ

 

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

 

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

 

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

 

The aggregate market value of common stock held by non-affiliates of the registrant (computed by reference to the average bid and asked price on June 30, 2017) was $98,855.46. Shares held by each executive officer, director and by each person who owns 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

 

As of March 21, 2018, there were 43,800,000 shares of common stock, par value $0.001 per share, outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

 

PART I

 

Item 1.  Business.

 

Chinawe.com Inc. (the “Company”, “Chinawe” or “we”), formerly known as Neo Modern Entertainment Corp. (“NeoModern”), was formed pursuant to the corporation laws of the State of California on March 19, 1997.

 

Chinawe’s principal business was providing professional management services relating to non-performing loans (“NPLs”) in the People’s Republic of China (“PRC”), as well as other consulting services. During the first quarter of 2009, the Company’s sole customer, Huizhou One Limited (“HOL”), issued a notice of termination to terminate its service contracts with the Company with effect from March 26 and March 27, 2009. Effective from March 27, 2009, the Company became a non-operating company.

 

Item  1A. Risk Factors.

  

Set forth below are certain risks and uncertainties relating to our business. These are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business. If any of the following risks actually occur, our business, operating results or financial condition could be materially adversely affected.

    

RISK RELATED TO OUR BUSINESS

 

THE COMPANY CURRENTLY HAS NO OPERATING BUSINESS

 

The Company is currently seeking one or more lines of business that it can enter into. The Company, however, has not identified a specific line of business or territory for any such new business. There can be no assurance that the Company will be successful in identifying a new line of business that it can enter into or that it will be successful in operating any such new business. If we do not successfully address these risks and uncertainties, our financial condition will be materially adversely affected and the Company may have to dissolve.

 

WE WILL REQUIRE FUNDS TO FINANCE ENTRY INTO A NEW LINE OF BUSINESS

 

We will need financing to enter into a new line of business. We may seek to obtain such funds through sales of equity and/or debt, or other external financing in order to fund any new operations. We cannot assure that any capital resources will be available to us, or, if available, will be on terms that will be acceptable to us. Any equity financing will dilute the equity interests of existing security holders. If adequate funds are not available or are not available on acceptable terms, our ability to execute any new business plan and our business will be materially and adversely affected. The principal stockholder of the Company has in the past advanced funds to the Company to continue its operations. Although this stockholder has indicated that it will continue to fund the Company while the Company searches for a new line of business, there can be no assurance that the principal stockholder will continue to so fund the Company until a new line of business is located.

 

THE COMPANY MAY BE SUBJECT TO PENALTIES FOR FAILURE TO FILE FEDERAL INCOME TAX RETURNS

 

The Company filed Forms 5471 and 5472 with the Internal Revenue Service (the “IRS”) late. The IRS could impose aggregate penalties of approximately $330,000 for such late filings. As of December 31, 2017 and the date of the Company’s financial statements, the Company has not received any correspondence from the IRS in respect of such penalties. The imposition of such penalties would have a material adverse effect upon the Company’s financial condition.

 

RISKS RELATING TO OUR STOCK

 

BECAUSE OUR COMMON STOCK PRICE IS BELOW $5.00, WE ARE SUBJECT TO ADDITIONAL RULES AND REGULATIONS.

 

The Securities and Exchange Commission (“SEC”) has adopted regulations which generally define a “penny stock” to be any equity security that has a market price (as defined) of less than $5.00 per share, subject to certain exceptions. The Company’s common stock, par value $0.001 per share (“Common Stock”), presently is a “penny stock”. Because our Common Stock is a “penny stock”, it is subject to rules that impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors. There can be no assurance that the Common Stock will trade for $5.00 or more per share, or if so, when.

 

TRADING ON THE OTC MARKETS; POSSIBLE DELISTING

 

Absent NASDAQ Capital Market or other NASDAQ or stock exchange listing, trading, if any, in our Common Stock will, as it presently is, continue on the OTC Markets. As a result, you may find it difficult to dispose of or to obtain accurate quotations as to the market value of the Common Stock. If delisted, we cannot predict when, if ever, our class of Common Stock would be re-listed for trading on the OTC Markets or any other market or exchange as the approval to re-list the Common Stock is subject to review by applicable regulatory authorities.

 

  2  

 

 

POSSIBLE TERMINATION OF REGISTRATION OF OUR COMMON STOCK UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

 

The Company may elect to terminate the registration of the Common Stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In the event the Company so terminates the registration of the Common Stock (i.e., “goes Dark”), the Company’s reporting obligations under the Exchange Act will be suspended and stockholders will no longer have access to current information about the Company.

 

Item 1B.  Unresolved Staff Comments.

 

Not applicable.

 

Item 2.     Properties.

 

The Company’s headquarters are located in Kowloon, Hong Kong.

 

Item 3.    Legal Proceedings.

 

We are not engaged in any litigation or governmental proceedings.

 

Item 4.    Mine Safety Disclosures

 

Not applicable.

 

PART II

 

Item 5.     Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

(a) Our shares of Common Stock are traded on the OTC Pink marketplace under the symbol “CHWE”. Trading in the Common Stock is limited.

 

The following table sets forth the range of high and low bids for our Common Stock for our two most recent fiscal years:

 

  3  

 

 

    High
(U.S.$) 		    Low
(U.S.$) 		 
             
2017                
                 
January 1, 2017 – March 31, 2017     .01       .01  
April 1, 2017 – June 30, 2017     .02       .01  
July 1, 2017 – September 30, 2017     .01       .01  
October 1, 2017 – December 31, 2017     .02       .01  
                 
2016                
                 
January 1, 2016 – March 31, 2016     .02       .00  
April 1, 2016 – June 30, 2016     .00       .00  
July 1, 2016 – September 30, 2016     .01       .00  
October 1, 2016 – December 31, 2016     .01       .01  

 

The foregoing quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 

On March 28, 2018, the last day the Common Stock traded, the Common Stock was quoted at U.S.$.01 per share.

 

(b) As of March 21, 2018, the Company had 43,800,000 shares of Common Stock outstanding and, as of March 21, 2018, 20 stockholders computed by the number of record holders, not including holders for whom shares are being held in the name of brokerage houses and clearing agencies.

 

(c) We have not paid any cash dividends with respect to our Common Stock, nor does our Board of Directors intend to declare cash dividends on our Common Stock in the foreseeable future, in order to conserve cash for working capital purposes.

 

Item 6.     Selected Financial Data.

 

Not applicable.

 

  4  

 

 

Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K. The following discussion contains forward-looking statements. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in “Risk Factors” and elsewhere in this Report.

 

Overview — Results of Operations

 

The Company’s financial statements for the year ended December 31, 2017 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the year ended December 31, 2017, the Company reported a net loss of U.S.$67,086, and as of December 31, 2017 had a negative working capital and stockholders’ deficit of U.S.$410,197 and U.S.$410,197, respectively. Effective March 27, 2009, the Company ceased providing professional management services relating to NPLs in the PRC. The Company has terminated its employees and closed down its offices. The Company 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, the Company will have adequate funding to commence operations of a new line of business. A principal stockholder has indicated its 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 the principal stockholder will be continued. The Company is also considering de-registering its Common Stock with the SEC with the result that the Company’s reporting obligations under the Exchange Act will be suspended. See “Item1A. RISK FACTORS-RISKS RELATING TO OUR STOCK-POSSIBLE TERMINATION OF REGISTRATION OF OUR COMMON STOCK UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.” and “Item 13. Certain Relationships and Related Transactions, and Director Independence.”

 

    Year ended December 31,  
    2017     2016  
    U.S.$     U.S.$  
Revenue     —       —  
Administrative and general expenses     (67,086 )     (25,636 )
                 
Loss before income taxes     (67,086 )     (25,636 )
Income tax expense     —       —  
                 
Net loss     (67,086 )     (25,636 )

 

  5  

 

 

Year ended December 31, 2017 compared to the year ended December 31, 2016

 

Revenues. Revenues for the year ended December 31, 2017 were U.S.$0 as compared to U.S.$0 for the year ended December 31, 2016. The Company discontinued its sole business with HOL in March 2009 and has not generated new business in this or any other field.

 

Administrative and general expenses. Administrative and general expenses for the year ended December 31, 2017 were U.S.$67,086, an increase of 162% as compared to U.S.$25,636 for the year ended December 31, 2016. The increase was due to payment of franchise tax and related interest and penalties of $25,000 and an increase in legal and professional fees to pursue reinstatement in California.

 

Income tax expense. No income tax expense for the years ended December 31, 2017 and 2016 was incurred because the Company reported a net loss in both years.

 

Liquidity and Capital Resources

 

The Company’s financial statements for the year ended December 31, 2017 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the year ended December 31, 2017, the Company reported a net loss of U.S.$67,086 and had a negative working capital and stockholders’ deficit of U.S.$410,197 and U.S.$410,197, respectively. The Company has relied on private financing by advances from the principal stockholder of the Company, who has agreed not to demand repayment of amounts due to it as long as the Company has negative working capital. The principal stockholder has indicated its 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 the stockholder will be continued. The accompanying financial statements do not include or reflect any adjustments that might result from the outcome of these uncertainties.

 

Critical Accounting Policies and Estimates

 

A company’s financial statements reflect the selection and application of accounting policies which require management to make significant estimates and assumptions. Since the Company has no business, we believe there is no critical judgment area in the application of our accounting policies that currently affects our financial condition and results of operations except for the disclosure above under “Liquidity and Capital Resources”.

 

  6  

 

 

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 revenue 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 revenue is probable. The Company is also considering de-registering its Common Stock with the SEC with the result that it would no longer have to file periodic reports with the SEC. See “Item 1A. RISK FACTORS–RISKS RELATING TO OUR STOCK–POSSIBLE TERMINATION OF REGISTRATION OF OUR COMMON STOCK UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.”

 

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable.  

 

Item 8.  Financial Statements and Supplementary Data.

 

The financial statements required by this Item are set forth at the pages indicated in Item 15 in this Report.

 

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

Not applicable.

 

Item 9A. Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures.

 

As of the end of the period covered by this Report, the Company conducted an evaluation, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of its disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and which also are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. The Company’s internal controls framework is based on the criteria set forth in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting is as of the fiscal year ended December 31, 2017. We believe that our internal control over financial reporting is effective. We have not identified any current material weaknesses considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations.

 

This Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this Report.

  

  7  

 

 

(b) Changes in Internal Controls.

 

There were no changes in the Company’s internal control over financial reporting for the year ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

Item 9B.  Other Information.

 

Not applicable.

 

PART III

 

Item 10.  Directors, Executive Officers and Corporate Governance.

 

Management

 

The following sets forth information regarding our executive officers, directors and other key employees:

 

Name   Age   Title
Man Keung Alan Wai   57   Chairman of the Board, Chief Executive Officer, Chief Financial Officer and President
Man Ying Ken Wai   52   Vice President and Secretary, Director
Xiaojiang Zhao   50   Director

 

The following is a brief account of the business experience of the above mentioned individuals. References to “our Company” and “since its incorporation” in the following description refer to Gonet Associates Limited (“Gonet”) and affiliates and not Neo Modern as it existed prior to the merger of Chinawe.com Inc., a Delaware corporation, with and into Neo Modern on March 15, 2001.

 

Mr. Wai, Man Keung Alan — Chairman of the Board, Chief Executive Officer, Chief Financial Officer and President

 

Mr. Wai, Man Keung Alan is the founder of the Company and the Chairman and Chief Executive Officer since its incorporation. He became Chief Financial Officer on August 26, 2010. He is responsible for identifying business opportunities, overall strategic planning and development of the Company. Mr. Wai has over 15 years of entrepreneurial experience in business development and administration prior to founding Welcon Info-Tech in Hong Kong in 1997.  

 

Mr. Wai, Man Ying Ken — Director, Vice President and Secretary

 

Mr. Wai, Man Ying Ken is the co-founder, Director, Vice President and Secretary of our Company since its incorporation. He became Secretary on August 26, 2010. He has responsibility for determining and developing the Company’s direction, establishing operation strategies, considering economic benefits, assets valuation and financial decision making. Prior to his current position, Mr. Wai was a director in a Hong Kong-based company specializing in property development and construction. Having co-founded Chinawe with his elder brother Mr. Wai Man Keung Alan, he has dedicated himself to the development and management of our Company ever since. He studied General Science at the University of Waterloo, Canada.

 

Mr. Zhao, Xiaojiang — Director

 

Mr. Zhao become a director of the Company in November 2016. He is a principal and director of Guangdong Rui Sheung Properties Co. Ltd. (“Rui Sheung”), a Chinese company engaged in the real estate business. Prior to Rui Sheung, he was affiliated with Guangzhou Zan Bu Trade Co. Ltd. from April 2000 through August 2010. He was affiliated with First Tractor Manufactory from September 1988 through March 2000. Mr. Zhao holds a diploma from the Henan College of Economics in China.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Under Federal securities laws, the Company’s directors, executive officers and any person holding more than 10% of the Company’s Common Stock are required to report their ownership of the Company’s Common Stock and any changes in that ownership to the SEC on the SEC’s Forms 3, 4 and 5. Based on the Company not having received copies of any such forms, the Company believes that no officers, directors or owners of greater than 10% of the Company’s Common Stock engaged in any transactions in the Company’s Common Stock during the fiscal year ended December 31, 2017.

 

  8  

 

 

Code of Ethics

 

The Company has adopted a Code of Ethics that applies to all of its directors, officers (including its Chief Executive Officer, Chief Financial Officer, Controller and any person performing similar functions) and employees. The Company has filed a copy of this Code of Ethics as Exhibit 14 to its Annual Report on Form 10-KSB for the year ended December 31, 2003.

 

Audit Committee Financial Expert

 

The Company does not have a standing Audit Committee and, accordingly, does not have an “Audit Committee Financial Expert” within the meaning of the rules and regulations of the SEC.

 

  Item 11.  Executive Compensation.

 

No compensation was paid to the Chief Executive Officer during the years ended December 31, 2017 and December 31, 2016. No other executive officer received a total annual salary and bonus exceeding $100,000 during either of such years.

 

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table sets forth information as of March 21, 2018, regarding the beneficial ownership of Common Stock of (1) each person or group known by us to beneficially own 5% or more of the outstanding shares of Common Stock, (2) each director and named executive officer and (3) all directors and executive officers as a group. Unless otherwise noted, the persons named below have sole voting and investment power with respect to the shares shown as beneficially owned by them.

 

Name of Beneficial Owner (1)   Amount of Beneficial
Ownership 		    Percent of Outstanding
Shares of Class Owned 		 
             
Gonet Associates Ltd. (2)     25,804,090       58.9  
Man Keung Alan Wai (2)     25,804,090       58.9  
Man Ying Ken Wai     0       0  
Xiaojiang Zhao     1,520,000       3.5  
Properties of Light, LLC (3)     4,196,366       9.6  
All officers and directors as a group (3 persons)     27,324,090 (2)     62.4  

 

(1) The address for each of the officers and directors of the Company is c/o our corporate headquarters in Kowloon, Hong Kong.
   
(2) Man Keung Alan Wai, through his control of Gonet Associates Ltd., beneficially owns the shares of Common Stock held by Gonet.
   
(3) The address for Properties of Light, LLC, a California limited liability company, is 1901 Avenue of the Stars, Suite 240, Los Angeles, CA 90067.

 

* * *

  

  9  

 

 

The following table sets forth information as of December 31, 2017 with respect to compensation plans (including individual compensation arrangements) under which shares of the Company’s Common Stock are authorized for issuance.

 

Equity Compensation Plan Information

 

                Number of securities  
                remaining available for  
    Number of securities to     Weighted-average     future issuance under  
    be issued upon exercise     exercise price of     equity compensation plans  
    of outstanding options,     outstanding options,     (excluding securities  
    warrants and rights     warrants and rights     reflected in column (a))  
Plan category   (a)     (b)     (c)  
Equity compensation plans approved by security holders     0       N/A       0  
                         
Equity compensation plans not approved by security holders     0       N/A       0  
                         
Total     0       N/A       0  

 

Item 13.  Certain Relationships and Related Transactions, and Director Independence.

 

The following chart shows advances and repayments made in the year ended December 31, 2017:

 

Name   Advances
made 		    Repayment made     Balance  
    U.S.$     U.S.$     U.S.$  
                   
Gonet Associates Ltd. (1)     51,699       —       389,566  

 

(1) Gonet Associates Ltd. is controlled by Man Keung Alan Wai.

 

The Company’s Board of Directors consists of Man Keung Alan Wei, Man Ying Ken Wai and Xiaojiang Zhao. Mr. Zhao is the only director who is “independent” as such term is defined in the Corporate Governance Rules of the Nasdaq Stock Market.

 

Item 14.  Principal Accountant Fees and Services.

 

Audit Fees.

 

The aggregate fees billed for the fiscal years ended December 31, 2017 and 2016 for professional services rendered by Moore Stephens CPA Limited (“Moore Stephens”) for the audit of the Company’s annual financial statements for the year ended December 31, 2017 and 2016 and the review of the financial statements included in our quarterly reports on Form 10-Q for the years ended December 31, 2017 and 2016 were U.S.$5,500 and U.S.$5,500, respectively.

 

Audit-Related Fees.

 

The Company did not pay any audit-related fees to Moore Stephens for the fiscal years ended December 31, 2017 and December 31, 2016.

 

Tax Fees.

 

Moore Stephens did not provide any tax services to the Company in either of the fiscal years ended December 31, 2017 and December 31, 2016. KWM CPA’s LLP billed the Company $10,000 for tax services rendered to the Company for the year ended December 31, 2017.

 

All Other Fees.

 

Moore Stephens did not provide any other services to the Company in either of the fiscal years ended December 31, 2017 and December 31, 2016.  

 

  10  

 

 

PART IV

 

Item 15.  Exhibits and Financial Statement Schedules

 

    PAGE
     
Financial Statements of Chinawe.com Inc.:    
     
Report of Independent Registered Public Accounting Firm   F-1
     
Statements of Comprehensive Loss for the Years ended December 31, 2017 and 2016   F-2
     
Balance Sheets as of December 31, 2017 and 201 6   F-3
     
Statements of Changes in Stockholders’ Deficit for the Years ended December 31, 2017 and 201 6   F-4
     
Statements of Cash Flows for the Years ended December 31, 2017 and 201 6   F-5
     
Notes to Financial Statements   F-6

 

(b) EXHIBITS

 

Exhibit No.   Description
     
3. (i)   Articles of Incorporation (1)
3. (ii)   By-Laws (1)
14     Code of Ethics (2)
31.1     Rule 13a-14(a)/15d-14(a) Certification
31.2     Rule 13a-14(a)/15d-14(a) Certification
32.1     Section 1350 Certification of Chief Executive Officer
32.2     Section 1350 Certification of Chief Financial Officer

 

1 Filed as an exhibit to our Company’s Form 10-SB, as filed with the SEC on May 19, 2000, and hereby incorporated by reference herein.
   
2 Filed as an exhibit to our Company’s Annual Report on Form 10-KSB, as filed with the SEC on April 14, 2004, and hereby incorporated by reference herein.

 

Item 16.  Form 10-K Summary

 

Not applicable.

  11  

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: March 29, 2018

CHINAWE.COM INC .

(Registrant)

   
  By: /s/ Man Keung Alan Wai  
    Man Keung Alan Wai 
    Chief Executive Officer 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

SIGNATURES   TITLE   DATE
         
/s/ Man Keung Alan Wai    Chairman of the Board, Chief Executive Officer,   March 29, 2018
Man Keung Alan Wai  

Chief Financial Officer and Director

(Principal Executive Officer and Principal Financial Officer)

   
         
/s/ Man Ying Ken Wai   Vice President of Marketing, Secretary and Director    March 29, 2018
Man Ying Ken Wai        
         
/s/ Xiaojiang Zhao   Director    March 29, 2018
Xiaojiang Zhao        

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

To the Stockholders and the Board of Directors of
CHINAWE.COM INC.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Chinawe.com Inc. (the “Company”) as of December 31, 2016 and 2017, and the related statements of comprehensive loss, changes in stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ Moore Stephens CPA Limited  
   
Certified Public Accountants  
   
We have served as the Company's auditor since 2016.  
   
Hong Kong  
March 29, 2018  

 

  F- 1  

 

 

CHINAWE.COM INC.

STATEMENTS OF COMPREHENSIVE LOSS

 

    Year ended December 31,  
    2017     2016  
    U.S.$     U.S.$  
             
Administrative and general expenses     (67,086 )     (25,636 )
                 
LOSS BEFORE INCOME TAXES     (67,086 )     (25,636 )
                 
Income tax expense     —       —  
                 
NET LOSS     (67,086 )     (25,636 )
                 
OTHER COMPREHENSIVE INCOME                
Foreign currency translation     —       —  
                 
TOTAL COMPREHENSIVE LOSS     (67,086 )     (25,636 )
                 
Basic and diluted loss per share of common stock     0.00       0.00  
                 
Weighted average number of shares of common stock outstanding     43,800,000       43,800,000  

 

See accompanying notes to financial statements.

 

  F- 2  

 

 

CHINAWE.COM INC.

BALANCE SHEETS

 

          As of     As of  
          December 31,     December 31,  
    Note     2017     2016  
          U.S.$     U.S.$  
ASSETS                        
Total current assets             —       —  
                         
TOTAL ASSETS             —       —  
                         
LIABILITIES AND STOCKHOLDERS’ DEFICIT                        
Current liabilities:                        
Accrued expenses and other current liabilities             20,631       5,244  
Due to related parties     3       389,566       337,867  
Total current liabilities             410,197       343,111  
                         
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  
Additional paid-in capital             191,825       191,825  
Accumulated losses             (645,822 )     (578,736 )
Accumulated other comprehensive loss             —       —  
Total stockholders’ deficit             (410,197 )     (343,111 )
                         
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT             —       —  

 

See accompanying notes to financial statements.

 

  F- 3  

 

 

CHINAWE.COM INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

 

    Number
of shares 		    Amount     Additional
 paid-in
 capital 		    Accumulated
losses 		    Total
Stockholders’
Deficit 		 
          U.S.$     U.S.$     U.S.$     U.S.$  
Balance as of January 1, 2016     43,800,000       43,800       191,825       (553,100 )     (317,475 )
Net loss for the year     —       —       —       (25,636 )     (25,636 )
Balance as of December 31, 2016     43,800,000       43,800       191,825       (578,736 )     (343,111 )
                                         
Net loss for the year     —       —       —       (67,086 )     (67,086 )
Balance as of December 31, 2017     43,800,000       43,800       191,825       (645,822 )     (410,197 )

 

See accompanying notes to financial statements.

 

  F- 4  

 

 

CHINAWE.COM INC.

STATEMENTS OF CASH FLOWS

 

    Year ended December 31,  
    2017     2016  
    U.S.$     U.S.$  
CASH FLOWS FROM OPERATING ACTIVITIES                
Net loss     (67,086 )     (25,636 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Accrued expenses and other current liabilities     15,387       1,444  
NET CASH USED IN OPERATING ACTIVITIES     (51,699 )     (24,192 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Advance from related parties     51,699       24,192  
NET CASH PROVIDED BY FINANCING ACTIVITIES     51,699       24,192  
                 
NET CHANGE IN CASH AND CASH EQUIVALENTS     —       —  
Cash and cash equivalents, beginning of period     —       —  
Effect of exchange rate changes     —       —  
                 
CASH AND CASH EQUIVALENTS, END OF PERIOD     —       —  
                 
SUPPLEMENTAL DISCLOSURE                
Interest paid     —       —  
Income taxes paid     —       —  

 

See accompanying notes to financial statements.

 

  F- 5  

 

 

CHINAWE.COM INC.

NOTES TO FINANCIAL STATEMENTS

 

1. DESCRIPTION OF BUSINESS AND ORGANIZATION STRUCTURE


Chinawe.com Inc. (“Chinawe”) was incorporated under the laws of the State of California. Chinawe’s principal business activity was providing professional management services relating to non-performing loans (“NPLs”) in the People’s Republic of China (“PRC”), as well as other consulting services. During the first quarter of 2009, the Company’s sole customer, Huizhou One Limited, issued a notice of termination to terminate the services contracts with effect from March 26 and March 27, 2009. Effective from March 27, 2009, the Company became a non-operating company.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

(a) Basis of accounting

 

The financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”). The functional and reporting currency of the Company is U.S. dollars (“U.S.$”).

 

(b) Going concern consideration

 

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As of December 31, 2017, the Company had negative working capital and stockholders’ deficit of U.S.$410,197 and U.S.$410,197, respectively, which raise substantial doubt about its ability to continue as a going concern.

 

The Company has relied on private financing by cash inflows from the principal stockholder of the Company, who has agreed not to demand repayment of amounts due to it as long as the Company has negative working capital. The principal stockholder has indicated its 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 the principal stockholder will be continued. The accompanying financial statements do not include or reflect any adjustments that might result from the outcome of these uncertainties. 

 

  F- 6  

 

 

CHINAWE.COM INC.

NOTES TO FINANCIAL STATEMENTS

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

(c) Cash and cash equivalents

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less that are readily convertible into a known amount of cash to be cash equivalents.

 

(d) Revenue recognition

 

The Company has no business currently.

 

(e) Income taxes

 

Provision for income and other taxes has been made in accordance with the tax rates and laws of the countries in which the Company operates.

 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

Financial Accounting Standards Board Accounting Standards Codification 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides accounting guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Interest and penalties from tax assessments, if any, are included in income taxes in the statement of comprehensive loss.

 

(f) Earnings (loss) per common share

 

Basic earnings (loss) per share amounts are based on the weighted average shares of common stock outstanding. Diluted earnings (loss) per share assume the conversion, exercise or issuance of all potential common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings per share. The Company had no potential common stock instruments which would result in diluted earnings (loss) per share in 2017 or 2016.

 

  F- 7  

 

 

CHINAWE.COM INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

(g) Foreign currency translation

 

The Company’s functional currency is the U.S.$, which is the currency of the primary economic environment in which the Company operates. The financial statements are presented in U.S.$.

 

All transactions in currencies other than functional currency during the year are translated at the exchange rates prevailing on the respective transaction dates. Monetary assets and liabilities existing at the balance sheet date denominated in currencies other than functional currency are remeasured at the exchange rates existing on that date. Exchange differences are recorded in the consolidated statement of comprehensive loss.

 

(h) Use of estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

(i) Fair value of financial instruments

 

The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair values of the Company’s financial instruments, which include related party balances, approximate their carrying value in the financial statements.

 

3. RELATED PARTY BALANCES AND TRANSACTIONS

 

The balances with related parties are as follows:

 

    As of     As of  
    December 31, 2017     December 31, 2016  
             
    U.S.     U.S.  
Advances from principal stockholder   $ 389,566     $ 337,867  

 

The amounts due are unsecured, interest free and repayable on demand.

 

  F- 8  

 

 

CHINAWE.COM INC.

NOTES TO FINANCIAL STATEMENTS

 

4. CONTINGENCIES

 

The Company is in the process of pursuing reinstatement in California. It filed all past due income tax returns, U.S. Federal tax returns and information forms. Franchise taxes, including penalties and interest, of US$25,000 were paid during the year. There is a contingent liability of approximately $330,000 in respect of penalties for late filing of Internal Revenue Service (“IRS”) Forms 5471 and 5472. As of December 31, 2017 and the date of the financial statements, the Company has not received any correspondence from the IRS in respect of such penalties.

 

The recently filed income tax returns for all the lapsed years are subject to examination by the IRS and State tax authorities, generally for three years after they are filed. 

 

5. SUBSEQUENT EVENTS

 

The Company was reinstated in California on or about March 27, 2018.

 

  F- 9  

 

 

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

 

 

 

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