UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: September 30, 2012

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

For the transition period from ____________ to _____________

Commission File No. 333-154610

GOLDENWAY, INC.
(Exact name of registrant as specified in its charter)

Nevada	22-3968194
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

28/F, Tower 2,
The Gateway, Harbour City,
Tsim Sha Tsui, Kowloon,
Hong Kong
(Address of principal executive offices)

+852-3719-9399
(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock

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 [ X ] No [ ]

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 whether the registrant has submitted electronically and posted on its corporate Website, 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 [ X ] No [ ]

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 [ ] (Do not check if a smaller reporting company)	Smaller reporting company [ X ]

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [ ] No [ X ]

State the number of shares outstanding of each of the Issuers classes of common equity, as of the latest practicable date: Common Stock, $0.001 par value per share: 14,660,029 outstanding as of November 14, 2012.

Quarterly Report on Form 10-Q
For the Quarterly Period Ended September 30, 2012

TABLE OF CONTENTS

PART I— FINANCIAL INFORMATION

Item 1.	Interim Condensed Consolidated Financial Statements	3
	Notes to the Interim Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	31

PART II— OTHER INFORMATION

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	(Removed and Reserved)	32
Item 5.	Other Information	32
Item 6.	Exhibits	32

SIGNATURES

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PART I. FINANCIAL INFORMATION

Item 1. Interim Condensed Consolidated Financial Statements.

GOLDENWAY, INC.
Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended
September 30, 2012 and 2011

Table of Contents

	Page
Interim Condensed Consolidated Balance Sheets	4
Interim Condensed Consolidated Statements of Operations and Comprehensive Income	5
Interim Condensed Consolidated Statements of Shareholders’ Equity	6
Interim Condensed Consolidated Statements of Cash Flows	7
Notes to Interim Condensed Consolidated Financial Statements	8

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Goldenway, Inc.
Interim Condensed Consolidated Balance Sheets
(Expressed in US dollars)
(Unaudited)

			September 30,			December 31,
As of	Note		2012			2011
ASSETS
Current Assets:
Cash		$	26,032,628		$	10,267,457
Accounts receivable, net of allowance for doubtful accounts ($638,717 for September 30, 2012 and $Nil for December 31, 2011)			3,250,934			2,358,677
Unrealized profits on open contracts	[3]		2,927,889			1,837,642
Other receivables	[4]		159,592			722,607
Trading precious metals	[3]		549,221			1,674,077
Deposits and prepaid expenses	[5]		4,347,630			1,965,475
Deferred income tax assets			449,946			449,234
Total current assets			37,717,840			19,275,169
Property and equipment, net	[6]		4,923,337			4,828,890
Intangible assets, net	[7]		3,018,363			2,585,422
Goodwill	[7]		427,149			427,136
Deposits and prepaid expenses – non-current	[5]		1,496,519			1,105,441
Due from sister companies	[10]		202,302			-
Due from majority stockholder	[10]		68,333			494,732
Total assets		$	47,853,843		$	28,716,790

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	[8]	$	968,645		$	1,564,918
Customer deposits			13,641,501			8,389,460
Unrealized losses on open contracts	[3]		613,972			245,856
Accrued expenses and other liabilities			2,293,086			1,870,947
Income taxes payable			4,433,043			1,921,033
Deferred income tax liabilities			35,110			35,054
Total current liabilities			21,985,357			14,027,268
Other liabilities:
Deferred income tax liabilities – non-current			1,055,001			968,464
Total liabilities			23,040,358			14,995,732
COMMITMENTS AND CONTINGENCIES	[11]
Shareholders' Equity
Common Stock, $0.001 par value, 75,000,000 shares authorized, 14,660,029 shares issued and outstanding			14,660			14,660
Additional paid-in capital			12,877,163			12,877,163
Retained earnings			11,943,157			889,060
Accumulated other comprehensive income			(21,495	)		(59,825	)
Total shareholders' equity			24,813,485			13,721,058
Total liabilities and shareholders' equity		$	47,853,843		$	28,716,790

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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Goldenway, Inc.
Interim Condensed Consolidated Statements of Operations and Comprehensive Income
(Expressed in US dollars)
(Unaudited)

			For the Nine Months Ended						For the Three Months Ended
			September 30						September 30
	Note		2012			2011			2012			2011

REVENUES

Trading revenue		$	39,603,880		$	35,837,233		$	10,967,942		$	17,771,970
Foreign exchange brokerage services	[10]		380,306			-			102,252			-
Interest income from customers’ trading accounts			1,081,819			839,064			406,239			317,518
Gains from sales of gold and silver			311,235			-			311,235			-
Fair value change of trading precious metals			(84,402	)		264,221			(111,673	)		133,804
Total revenues			41,292,838			36,940,518			11,675,995			18,223,292

EXPENSES
Management fees	[10]		827,525			6,627,683			355,345			2,327,897
Trading expenses and commissions			9,478,327			7,864,800			2,081,176			3,818,658
Employee compensation and benefits			5,786,536			809,161			2,128,532			287,701
General and administrative expenses			2,306,143			904,725			655,722			342,398
Advertising expenses	[10]		5,018,652			688,575			2,353,126			208,336
Bad debt expenses			1,346,384			1,307,555			672,991			852,793
Occupancy expenses			967,204			520,682			561,802			173,623
Depreciation and amortization			774,762			376,961			253,992			178,400
Data processing and service fees	[10]		955,667			158,918			368,523			50,761
Total expenses			27,461,200			19,259,060			9,431,209			8,240,567
OTHER INCOME			25,024			9,062			11,288			4,324
INCOME BEFORE INCOME TAXES			13,856,662			17,690,520			2,256,074			9,987,049
INCOME TAXES
Provision for income taxes			2,687,202			2,494,888			535,219			1,116,872
Deferred income tax provision			115,363			471,750			18,896			489,392
			2,802,565			2,966,638			554,115			1,606,264
NET INCOME			11,054,097			14,723,882			1,701,959			8,380,785
OTHER COMPREHENSIVE INCOME
Foreign currency translation			38,330			(1,880	)		8,826			1,070
COMPREHENSIVE INCOME		$	11,092,427		$	14,722,002		$	1,710,785		$	8,381,855


NET INCOME		$	11,054,097		$	14,723,882		$	1,701,959		$	8,380,785

WEIGHTED AVERAGE COMMON SHARE OUTSTANDING
Basic and Diluted	[9]		14,660,029			14,660,029			14,660,029			14,660,029

BASIC AND DILUTED EARNINGS PER COMMON SHARE
Basic and Diluted	[9]	$	0.75		$	1.00		$	0.12		$	0.57

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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Goldenway, Inc.
Interim Condensed Consolidated Statements of Shareholders’ Equity
As of September 30, 2012 and December 31, 2011
(Expressed in US dollars)
(Unaudited)

	Common Stock
									Accumulated
					Additional				Other			Total
	Number of				Paid-in		Retained		Comprehensive			Shareholders’
	Shares		Par Value		Capital		Earnings		Income			Equity
BALANCE, December 31, 2011	14,660,029	$	14,660	$	12,877,163	$	889,060	$	(59,825	)	$	13,721,058
Net income for the period	-		-		-		1,190,072		-			1,190,072
Foreign currency translation adjustment	-		-		-		-		39,197			39,197

BALANCE, March 31, 2012	14,660,029	$	14,660	$	12,877,163	$	2,079,132	$	(20,628	)	$	14,950,327
Net income for the period	-		-		-		8,162,066		-			8,162,066
Foreign currency translation adjustment	-		-		-		-		(9,693	)		(9,693	)

BALANCE, June 30, 2012	14,660,029	$	14,660	$	12,877,163	$	10,241,198	$	(30,321	)	$	23,102,700
Net income for the period	-		-		-		1,701,959		-			1,701,959
Foreign currency translation adjustment	-		-		-		-		8,826			8,826

BALANCE, September 30, 2012	14,660,029	$	14,660	$	12,877,163		11,943,157		(21,495	)		24,813,485

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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Goldenway, Inc.
Interim Condensed Consolidated Statements of Cash Flows
(Expressed in US dollars)
(Unaudited)

		For the Nine Months Ended
		30 September
		2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	11,054,097		$	14,723,882
Adjustments to reconcile net income to net cash provided by operating activities:
Net unrealized profit		(722,131	)		(1,049,781	)
Depreciation and amortization		774,762			376,961
Deferred income tax		115,363			471,750
Gains on sales of gold and silver		(311,235	)		-
Change in fair value of trading precious metals		84,402			(264,221	)
Bad debt expenses		1,346,384			1,450,586
Changes in assets and liabilities:
(Increase) decrease in assets -
Restricted cash		-			128,518
Accounts receivable		(2,238,641	)		(9,406,110	)
Other receivables		563,015			(938,738	)
Trading precious metals		1,351,689			(581,801	)
Deposits and prepaid expenses		(2,773,233	)		(449,533	)
Due from sister companies		(202,302	)		-
Due from majority stockholder		426,399			-
Increase (decrease) in liabilities -
Accounts payable		(596,273	)		1,573,979
Customer deposits		5,252,041			3,816,638
Accrued expenses and other liabilities		422,139			(118,097	)
Income taxes payable		2,482,528			1,058,116
Net cash provided by operating activities		17,029,004			10,792,149

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(675,712	)		(4,764,032	)
Purchase of intangible assets		(592,188	)		-
Due to majority stockholder		-			(3,750,468	)
Acquisition of subsidiary, net of cash acquired		(13	)		-
Net cash used in investing activities		(1,267,913	)		(8,514,500	)

NET INCREASE IN CASH		15,761,091			2,277,649
EFFECT OF EXCHANGE RATE CHANGES ON CASH		4,080			6,222
Cash, beginning of period		10,267,457			7,975,652
Cash, end of period	$	26,032,628		$	10,259,523
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Interest received	$	1,081,819		$	839,064

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Non-cash Investing Activities

Before the reverse merger and recapitalization as described in Note 1, the Company declared dividends totaling $18,240,268 during the nine months ended September 30, 2011 to reduce the due from majority stockholder account. No such dividend was declared during the nine months ended September 30, 2012.

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Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

1.	Nature of Operations and Basis of Presentation

Goldenway, Inc. (formerly Cyber Informatix, Inc.) (“CII”) was organized under the laws of the State of Nevada on September 10, 2007, as a software design and e-commerce company. From September 10, 2007 (date of incorporation) through to the date of reverse acquisition discussed below, CII was a development stage company, engaged in the business of distributing economically-priced downloadable application software via the Internet, but with minimal operations.

On September 30, 2011, CII closed a share exchange agreement (the “Share Exchange Agreement”), with Goldenway Precious Metals Limited (“GPML”), its sole shareholder, Goldenway Investments Holding Limited (“GIHL”), and Mr. Terry G. Bowering, CII’s majority stockholder, pursuant to which CII acquired 100% of the issued and outstanding capital stock of GPML in exchange for 24,587,299 shares of CII’s common stock, par value $0.001, which constituted 80.80% of CII’s issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the transactions contemplated by the Share Exchange Agreement. This transaction was recorded as a reverse merger and recapitalization ("RTO") for accounting purposes whereby CII (the legal acquirer) is considered the accounting acquiree and GPML (the legal acquiree) is considered the accounting acquirer and the historical operations are those of the accounting acquirer. As a result of this transaction, GPML is deemed to be a continuation of the business of CII. Accordingly, the accompanying interim condensed consolidated financial statements are those of GPML. The assets and liabilities of GPML have been brought forward at their book value and no goodwill has been recognized. The historical shareholders’ equity of CII prior to the share exchange has been retroactively restated for the equivalent number of shares received as if the share exchange occurred as of the beginning of the first period presented.

Subsequent to the RTO, CII changed its name to Goldenway, Inc.

GPML was incorporated in Hong Kong on April 7, 2009. GPML is involved in the trading of precious metals and precious metals trading contracts through its electronic trading platform. GPML has obtained requisite licenses from the Chinese Gold & Silver Exchange Society (the “CGSE”) and is one of the CGSE’s recognized E-Trading members.

On November 1, 2011, GPML acquired 100% of Goldenway Global Investments (UK) Limited (“Goldenway UK”) which was incorporated in United Kingdom on July 14, 1997. Goldenway UK is licensed by the London Financial Services Authority (“FSA”) and is involved in the provision of foreign exchange brokerage services.

On August 14, 2012, Goldenway, Inc. established Goldenway Financial Holdings Limited (“Goldenway Financial”) as its wholly-owned Hong Kong subsidiary, for the purpose of a merger and reorganization with Goldenway, Inc. As of the date of this report, Goldenway Financial remains inactive and the reorganization is not yet effective.

On August 30, 2012, GPML acquired a 100% equity interest in Goldtop Success Limited (“Goldtop”), an inactive Hong Kong company, for an aggregate purchase price of HK$600 (approximately $77), pursuant to a purchase and sale agreement, dated August 30, 2012. Goldtop was incorporated in Hong Kong on June 26, 2012 by an employee of the Company, for the purpose of promoting the Company but has been inactive since its formation.

These interim condensed consolidated financial statements include the accounts of the CII, GPML, Goldenway UK, Goldtop and Goldenway Financial (collectively referred as the “Company”, “we”, “our” or “us”). All inter-company balances and transactions have been eliminated on consolidation. These interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary in order to make the interim financials not misleading have been included and all such adjustments are of a normal recurring nature. The result of operations for any interim period is not necessarily indicative of results for the full year.

The interim condensed consolidated financial statements are based on accounting principles that are consistent in all material respects with those applied in the Form 10-K dated March 29, 2012; except as disclosed in Note 2. They do not include certain footnote disclosures and financial information normally included in annual financials prepared in accordance with U.S. GAAP and, therefore, should be read in conjunction with the Form 10-K as aforementioned.

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Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

2.	Summary of Significant Accounting Policies

	*Recently Adopted Accounting Standards*

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This standard results in a common requirement between the FASB and the International Accounting Standards Board (IASB) for measuring fair value and for disclosing information about fair value measurements. ASU 2011-04 is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s interim condensed consolidated financial statements.

In June, 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU 2011-05 requires entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. ASU 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s interim condensed consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08, Intangibles Goodwill and Other (Topic 350): The amendments in this Update will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments include a number of events and circumstances for an entity to consider in conducting the qualitative assessment. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s interim condensed consolidated financial statements.

In December 2011, the FASB issued ASU 2011-12, “Comprehensive income”. The amendments are being made to allow FASB time to re- deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While FASB is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05. ASU No. 2011-12 is effective for the Company on January 1, 2012. The adoption of this ASU did not have a material impact on the Company’s interim condensed consolidated financial statements.

In August 2012, the FASB issued ASU No. 2012-03, “Technical Amendments and Corrections to SEC Sections – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114. Technical Amendments Pursuant to SEC Release No. 33-9230, and Corrections Related to FASB Accounting Standards Update 2010-22, which amends various SEC paragraphs pursuant to the issuance of SAB No. 114. This ASU became effective on issuance, and the adoption of the ASU had no impact on the Company’s financial position or results of operations.

Recent Accounting Pronouncements

In December 2011, the FASB issued ASU 2011-11, “Balance Sheet”. The amendments in this Update require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. ASU 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2012. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

On July 27, 2012, the FASB issued ASU No. 2012-02 under which an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. An entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments are effective for annual and interim impairment tests performed for fiscal periods beginning after September 15, 2012 or January 1, 2013 for the Company. Early adoption is permitted. The adoption of ASU No. 2012-02 is not expected to have a material impact on the Company’s consolidated financial statements.

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Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

2.	Summary of Significant Accounting Policies - continued

On October 2012, the FASB issued ASU No. 2012-04, Technical Amendments and Corrections. The updates to current guidance make the codification easier to understand and the fair value measurement guidance easier to apply by eliminating inconsistencies and providing needed clarification. ASU No. 2012-04 is effective for fiscal periods beginning after December 15, 2012. The adoption of ASU No. 2012-04 is not expected to have a material effect on the Company’s consolidated financial statements.

Foreign exchange rates used:
	September 30,	December 31,	September 30,
	2012	2011	2011
Period end USD/HK$ exchange rate	7.7540	7.7663	7.7840
Average USD/HK$ exchange rate	7.7590	7.7841	7.7858

3.	Fair Value Measurement

	The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and the related hierarchy levels as of September 30, 2012 and December 31, 2011:

		Fair Value Measurements on a Recurring Basis
		As of September 30, 2012

		Level 1		Level 2		Level 3		Total
Assets:
Unrealized profits on open contracts	$	-	$	2,927,889	$	-	$	2,927,889
Trading precious metals		549,221		-		-		549,221

Total	$	549,221	$	2,927,889	$	-	$	3,477,110
Liabilities:
Unrealized losses on open contracts	$	-	$	613,972	$	-	$	613,972

		Fair Value Measurements on a Recurring Basis
		As of December 31, 2011

		Level 1		Level 2		Level 3		Total
Assets:
Unrealized profits on open contracts	$	-	$	1,837,642	$	-	$	1,837,642
Trading precious metals		1,674,077		-		-		1,674,077

	$	1,674,077	$	1,837,642	$	-	$	3,511,719

Liabilities:
Unrealized losses on open contracts	$	-	$	245,856	$	-	$	245,856

Level 1

The Company has investments in gold and silver that are recorded based upon listed or quoted gold and silver market prices. The investments in gold and silver are recorded in Trading precious metals.

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Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

Level 2

The Company has open trading contracts that are Level 2 financial instruments and are recorded based on the difference in market price of the underlying precious metal of the open trading contracts between the date when the contracts are entered and the balance sheet date. The open trading contracts are recorded in Unrealized profits on open contracts and Unrealized losses on open contracts.

4.	Other Receivables

	Other receivables consisted of the following as of September 30, 2012 and December 31, 2011:

		September 30,		December 31,
		2012		2011
Funds in transit ⁽ⁱ⁾	$	-	$	81,868
CGSE rebate receivable ⁽ⁱⁱ⁾		117,242		611,750
Staff loan ⁽ⁱⁱⁱ⁾		20,297		28,989
VAT receivable		9,072		-
Others		12,981		-

	$	159,592	$	722,607

	(i)	Funds in transit represents the amount transferred from agents but have yet to be received by the Company as of December 31, 2011. Funds in transit were received subsequent to the period end date (i.e. in January 2012). Normally funds in transit will be received within 5 business days.

	(ii)	CGSE charges the Company a fee for each precious metal price trading transaction and issues rebates based on the transaction volume.

	(iii)	The staff loan is the advance to a director of Goldenway UK. The amount is unsecured, non-interest bearing and has no fixed repayment terms.

5.	Deposits and Prepaid Expenses

	Deposits and prepaid expenses consisted of the following as of September 30, 2012 and December 31, 2011:

			September 30,		December 31,
			2012		2011

Deposit in Hantec Bullion Limited	(a)	$	-	$	475,708
Advertising expenses			688,076		481,912
Funds to transfer agents			2,702,202		590,817
Legal and professional fee			457,922		437,078
Other deposits and prepaid expenses	(b)		1,995,949		1,085,401
Deposits and prepaid expenses		$	5,844,149	$	3,070,916
Represented by:
Deposits and prepaid expenses – current		$	4,347,630	$	1,965,475
Deposits and prepaid expenses – non-current			1,496,519		1,105,441
		$	5,844,149	$	3,070,916

	(a)	The Company executed trading of precious metal trading contracts through Hantec Bullion Limited (“Hantec”), a private precious metal trading company in Hong Kong. All the deposit with Hantec can be used for future trading or withdrawn at the Company’s discretion. The deposit was completely refunded in August 2012.

	(b)	The balance mainly represented the deposits for utility, leased offices, e-trading fees, service fees of data processing and analysis to Shenzhen Gateway Technology Limited (“Gateway”) and other miscellaneous prepaid expenses for daily operations (Note 10).

- 11 -

Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

6.	Property and Equipment

	Property and equipment, including leasehold improvements, consisted of the following as of September 30, 2012 and December 31, 2011:

		September 30,			December 31,
		2012			2011
Office equipment	$	26,678		$	23,106
Computer equipment		729,440			411,772
Leasehold improvements		363,387			363,194
Furniture and fixtures		45,148			44,503
Motor vehicle		424,368			80,127
Motor vessel		4,531,204			4,516,244
		6,120,225			5,438,946
Less: Accumulated depreciation		(1,196,888	)		(610,056	)

Property and equipment, net	$	4,923,337		$	4,828,890

Depreciation expense was $192,007 and $613,482 for the three and nine months ended September 30, 2012, respectively ($146,321 and $280,631, respectively, for the same periods ended September 30, 2011), and was recorded as depreciation and amortization in the Company’s interim condensed consolidated statements of operations and comprehensive income.

7.	Intangible Assets and Goodwill

	Intangible assets and goodwill consisted of the following as of September 30, 2012 and December 31, 2011:

		September 30,			December 31,
		2012			2011
Precious metal price trading licenses ⁽ⁱ⁾	$	638,381		$	637,369
Precious metal trading platform ⁽ⁱⁱ⁾		1,237,016			643,807
FSA license ⁽ⁱⁱⁱ⁾		1,529,578			1,529,578
Intangible assets		3,404,975			2,810,754
Less: accumulated amortization		(386,612	)		(225,332	)
Intangible assets, net	$	3,018,363		$	2,585,422


		September 30,			December 31,
		2012			2011
Goodwill arising on consolidation⁽ⁱⁱⁱ⁾	$	427,149		$	427,136

	(i)	The Company acquired a precious metal price trading license from an unrelated party in 2009 and a physical precious metal trading license from another unrelated party in 2010. These licenses allow the Company to engage in the precious metal price trading activities with the public in Hong Kong, as a result, the Company became a member of CGSE, and can engage in trading of physical precious metals.

		Both licenses can be traded freely with no expiration date and hence, considered to have indefinite useful lives.

	(ii)	In 2010, the Company purchased an online precious metal trading platform from Gateway, which is controlled by Mr. Hao Tang. The platform is amortized over its useful life of 5 years. During the nine months ended September 30, 2012, the Company acquired a) another online trading platform from GIHL; b) software development for the online precious metal trading platform from Gateway; and c) a license for new trading software for trading platform in a) from MetaQuotes, all of the newly-acquired intangible assets are amortized over its useful life of 5 years. Details of a) and b) are set out in Note 10 to the interim condensed consolidated financial statements.

	(iii)	These are FSA licenses identified, goodwill recognized from the acquisition of Goldenway UK and Goldtop of $427,136 and $13, respectively. Further details of the acquisition of Goldtop are set out in Note 1.

- 12 -

Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

7.	Intangible Assets and Goodwill - continued

Amortization expense was $61,985 and $161,280 for the three and nine months ended September 30, 2012, respectively ($32,079 and $96,330, respectively, for the same periods ended September 30, 2011), and was recorded as depreciation and amortization in the Company’s interim condensed consolidated statements of operations and comprehensive income.

The estimated amortization expenses for the next 5 years are as follow:

2012	$	61,851
2013	$	247,403
2014	$	247,403
2015	$	150,679
2016	$	118,438

8.	Accounts Payable

	Accounts payable consisted of the following as of September 30, 2012 and December 31, 2011:

		September 30,		December 31,
		2012		2011
Commissions payable to agents	$	841,100	$	1,143,573
Withdrawals requested by customers		108,752		215,135
Other vendors		18,793		206,210
	$	968,645	$	1,564,918

As of September 30, 2012 and December 31, 2011, the balance with other vendors includes a balance of $nil and $54,382, respectively, payable to a company whose director is also a director of Goldenway UK.

9.	Earnings Per Share

	Earnings per share information for the three and nine months ended September 30, 2012 and 2011 were determined by dividing net income attributable to the shareholders for the period by the weighted average number of both basic and diluted shares of common stock and common stock equivalents outstanding.

	For the three and nine months ended September 30, 2012 and 2011, the Company did not have any securities that may potentially dilute the basic earnings per share. Therefore the basic and diluted earnings per share for the respective periods are equal.

		For the Nine Months Ended				For the Three Months Ended
		September 30				September 30
		2012		2011		2012		2011
Numerator
Net income attributable to common shareholders	$	11,054,097	$	14,723,882	$	1,701,959	$	8,380,785

Denominator
Weighted average shares of common stock		14,660,029		14,660,029		14,660,029		14,660,029

Basic and diluted earnings per common stock	$	0.75	$	1.00	$	0.12	$	0.57

- 13 -

Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

10.	Related Party Transactions and Balances

	The Company has engaged in related party transactions with certain majority stockholders, directors and officers of the Company and sister companies as described below. Management believes that the transactions described below and in the related notes were completed on terms substantially equivalent to those that could prevail in arm’s-length transactions.

The related parties are:

Entities	Business	Relationship
Gateway	IT services	Affiliated Company - Controlled by Mr. Hao Tang
GIHL	Investment	Majority Stockholder
Goldenway Global Investments (New Zealand) Limited (“GWNZ”)	Foreign exchange trading and related brokerage services	GIHL Subsidiary or Sister Company
Goldenway Investments (HK) Limited (“HK”)	Securities and futures broker	GIHL Subsidiary or Sister Company
Goldenway Asset Management Limited (“GAML”)	Securities and asset management advisors	GIHL Subsidiary or Sister Company
Mr. Hao Tang	N/A	Controlling Party of Majority Stockholder
Keen Ocean Technology Limited (“Keen Ocean”)	Inactive	Affiliated Company – Controlled by Mr. Jian Qin Huang, a director of the Company
Goldenway Global Investors L.P. (“GGILP”)	Investment holding	Partnership partly-owned by Majority Stockholder

Gateway

During the three and nine months ended September 30, 2012, the Company incurred $142,797 and $207,224, respectively, in IT service fees to Gateway ($5,346 and $37,451, respectively, for the same periods ended September 30, 2011), which were recorded as data processing and service fees under the interim condensed consolidated statements of operations and comprehensive income. As of September 30, 2012, the Company was obligated to pay approximately $556,900 in IT service fees to Gateway.

Moreover, the Company incurred $78,972 and $78,972 for the three and nine months ended September 30, 2012, respectively, in service fees in relation to data analysis to Gateway, which were recorded as advertising expenses under the interim condensed consolidated statements of operations and comprehensive income. As of September 30, 2012, the Company was obligated to pay approximately $398,000 in data analysis fees to Gateway.

During the three and nine months ended September 30, 2012, the Company also incurred $nil and $193,000, respectively, of software developments for the online precious metal trading platform (Note 7(ii)).

As of December 31, 2011, the Company prepaid $91,206 to Gateway for future IT services and recorded the amounts as other deposits and prepaid expenses (Note 5(b)).

- 14 -

Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

10.

Related Party Transactions and Balance - continued

GIHL

During the three and nine months ended September 30, 2012, the Company incurred $355,345 and $827,525 management fees to GIHL, respectively ($2,327,897 and $6,627,683, respectively, for the same periods ended September 30, 2011). The Company also made advances to GIHL during the year ended December 31, 2011. As of September 30, 2012, the Company has $68,333 net receivable from GIHL ($494,732 as of December 31, 2011).

In addition, for the three and nine months ended September 30, 2012, the Company incurred approximately $nil and $258,000, respectively, set up fees for its online trading platforms. The fees were capitalized as intangible assets (Note 7(ii)). The Company also incurred a monthly maintenance fee of approximately $46,000 and $139,000, for the three and nine months ended September 30, 2012, respectively, from GIHL, which were recorded as data processing and service fees under the interim condensed consolidated statements of operations and comprehensive income.
GWNZ

During the three and nine months ended September 30, 2012, the Company earned $102,252 and $380,306, respectively, in commissions from GWNZ (no such commissions incurred during the same periods ended September 30, 2011). As of September 30, 2012, the Company has $204,881 net receivable from the GWNZ ($nil as of December 31, 2011).
HK

The Company entered into a marketing and advertising service agreement with HK, whereby the Company is obligated to pay approximately $700,000 annually. The agreement is subject to annual renewal. During the three and nine months ended September 30, 2012, the Company incurred $174,070 and $521,974, respectively, for advertising services ($173,226 and $520,180, respectively, for the same periods ended September 30, 2011), which were recorded as advertising expenses under the interim condensed consolidated statements of operations and comprehensive income. As of September 30, 2012, the Company was obligated to pay approximately $174,100 to HK for the remaining of the year under this agreement.
GAML

The Company entered into an investment advisory service agreement with GAML, whereby the Company is obligated to pay approximately $31,000 annually. The agreement is subject to annual renewal. During the three and nine months ended September 30, 2012, the Company incurred approximately $7,700 for both periods, for investment advisory services ($nil for the same periods ended September 30, 2011), which were recorded as advertising expenses under the interim condensed consolidated statements of operations and comprehensive income. As of September 30, 2012, the Company was obligated to pay approximately $7,736 to GAML for the remaining of the year under this agreement and has $2,579 net payable to the GAML ($nil as of December 31, 2011).
Dividend

Prior to the closing of the share exchange transaction, GPML declared a dividend of $4,234,406 and $18,240,268 or $0.04 and $0.18 per share, respectively, for the three and nine months ended September 30, 2011, on the 100,000,000 shares issued to GIHL. No dividend was declared during the three and nine months ended September 30, 2012.
Mr. Hao Tang

Mr. Hao Tang, the major shareholder and an officer of the Company, has a trading account on the Company’s trading platform as of September 30, 2012. No trading activity was made by Mr. Tang during the three and nine months ended September 30, 2012 and 2011. His deposit balance in the trading account with the Company as of September 30, 2012 was $857 ($56,857 as of December 31, 2011).
Keen Ocean

In May 2012, the Company acquired a license for new trading software for trading platform of $140,666 (Note 7(ii)) through Keen Ocean.

- 15 -

Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

GGILP

During the three and nine months ended September 30, 2012, the Company sold 0 and 10 taels of gold bars for $nil and $18,669, respectively, to GGILP (2011 – Nil), in the ordinary course of business.

All balances with related parties are unsecured, non-interest bearing and have no fixed terms of repayments.

11.	Commitments and contingencies

	Leases - The Company leases office space under non-cancellable operating lease agreements that expire on various dates through 2015. Future annual minimum lease payments, including maintenance and management fees, for non-cancellable operating leases, are as follows:

	Year ending December 31,

2012	$	452,067
2013		1,737,375
2014		1,651,867
2015		855,009

	$	4,696,318

On May 14, 2012, the Company’s solicitors commenced a legal action in the High Court of Hong Kong for the collection of an outstanding debt of RMB 4,037,244 (approximately, $642,000) due from one of the Company’s payment agents (referred to hereafter as the “Proceeding”). The Proceeding is being scheduled for hearing. An allowance for this outstanding amount has been provided for.

12.	Regulatory Requirements

	The Company, as a member of CGSE, is subject to working capital and asset requirements. Under the requirements, the minimum required working capital, defined as cash plus precious metals, is approximately $193,000 (HK$1.5 million) and the minimum required assets are $645,000 (HK$5 million).

	As of September 30, 2012, the GPML has $24,913,580 and $549,221 cash and trading precious metals, respectively, (as compared to $9,845,686 and $1,674,077 as of December 31, 2011).

	The GPML’s total assets are $49,074,915 as of September 30, 2012 (as compared to $28,645,454 as of December 31, 2011).

	In addition, the FSA requires Goldenway UK to maintain a regulatory basic capital of $161,000 (EUR 125,000), and a Pillar 2 capital requirement of $818,000 (GBP 507,000). As of September 30, 2012, Goldenway UK has net asset of $1,214,524.

	The Company was in compliance with all the requirements as of September 30, 2012 and December 31, 2011.

13.	Segment Information

	The Company has two reportable segments: i) Foreign Exchange Brokerage Services and Others segment and ii) Precious Metals segment. The Foreign Exchange Brokerage Services and Others segment consists of Goldenway UK and CII, while the Precious Metals segment represents GPML. These two segments offer different products and services. The reportable segments are managed separately because they provide distinct products and provide different services.

	Financial information with respect to the reportable segments and reconciliation to the amounts reported in the Company’s interim condensed consolidated financial statements for the three and nine months ended September 30, 2012 are as follows:

- 16 -

Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

For the three and nine months ended September 30, 2012, the information concerning the Company’s operations by reportable segment is as follows:

For the three months ended September 30, 2012	Foreign Exchange Brokerage Services and Others		Precious Metals		Elimination		Consolidated
	$		$		$		$
Revenue from foreign exchange brokerage services	102,252		-				102,252
Trading revenue	-		10,967,942				10,967,942
Interest income from customers’ trading accounts	-		406,239				406,239
Gains from sales of gold and silver	-		311,235				311,235
Fair value change of trading precious metals	-		(111,673	)			(111,673	)
Total revenues	102,252		11,573,743				11,675,995

Income before income taxes	(410,846	)	2,666,968		(48	)	2,256,074

Income taxes	-		554,115				554,115

Depreciation and amortization	2,971		251,021				253,992

For the nine months ended September 30, 2012	Foreign Exchange Brokerage Services and Others		Precious Metals		Elimination		Consolidated
	$		$		$		$
Revenue from foreign exchange brokerage services	380,306		-				380,306
Trading revenue	-		39,603,880				39,603,880
Interest income from customers’ trading accounts	-		1,081,819				1,081,819
Gains from sales of gold and silver	-		311,235				311,235
Fair value change of trading precious metals	-		(84,402	)			(84,402	)
Total revenues	380,306		40,912,532				41,292,838

Income before income taxes	(1,415,056	)	15,271,820		(102	)	13,856,662

Income taxes	-		2,802,565				2,802,565

Depreciation and amortization	25,175		749,587				774,762

As of September 30, 2012	Foreign Exchange Brokerage Services and Others		Precious Metals		Elimination		Consolidated
	$		$		$		$
Additions to property and equipment	-		675,712				675,712

Additions to intangible assets	-		592,188				592,188

Goodwill	-		-		427,149		427,149

Segment assets	1,656,727		49,074,915		(2,877,799	)	47,853,843

During the three and nine months ended September 30, 2011, the Company had only one reportable segment being the Precious Metals segment.

- 17 -

Goldenway, Inc.
Notes to Interim Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2012 and 2011
(Expressed in US dollars)
(Unaudited)

14.	Subsequent Event

		On October 4, 2012, GPML signed a non-binding memorandum of understanding (the “MOU”) with Denling Limited and its sole shareholder, Ms. Yeung Yin, to explore the potential acquisition by the Company of 20,000 ordinary shares, representing 40% of the issued share capital of HXPM Holdings Limited, a company incorporated under the laws of British Virgin Islands, and its wholly-owned Hong Kong subsidiary, HXPM Limited (“HXPM”). HXPM is engaged in the trading and brokering of bullion and is also a member of CGSE. The Company is exploring the acquisition of the HXPM minority interests for a price of up HK$110 million (approximately $14.2 million) and the Company’s payment of a non-interest bearing and refundable deposit of HK$50 million (approximately $6.5 million), subject to the completion of an independent valuation of, and the conduct of due diligence on HXPM.

- 18 -

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this Form 10-Q.

Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A “Risk Factors” included herein, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Certain Defined Terms

Except where the context otherwise requires and for the purposes of this report only:

the “Company,” “we,” “us,” and “our” refer to the combined business of Goldenway, Inc., a Nevada corporation, and its wholly-owned subsidiaries, (i) Goldenway Precious Metals Limited, a Hong Kong company, or “Goldenway Precious Metals”; (ii) Goldenway Global Investments (UK) Limited, a United Kingdom company or “Goldenway UK”; (iii) Goldtop Success Limited, a Hong Kong company, or “Goldtop”; and (iv) Goldenway Financial Holdings Limited, a Hong Kong company, or “Goldenway Financial”;
“BVI” refers to the British Virgin Islands;
“CGSE” refers to “The Chinese Gold and Silver Exchange Society”;
“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
“Goldenway Investments” refers to Goldenway Investments Holdings Limited, the former sole shareholder of Goldenway Precious Metals and now the Company’s 71% majority stockholder;
“Goldenway HK” refers to Goldenway Investments (HK) Limited, an entity owned and controlled by Goldenway Investments;
“Goldenway Asset Management” refers to Goldenway Asset Management Limited, an entity owned and controlled by Goldenway Investments;
“Goldenway NZ” refers to Goldenway Global Investments (New Zealand) Limited, an entity owned and controlled by Goldenway Investments;
“Shenzhen Gateway” refers to Shenzhen Gateway Technology Co. Ltd., a PRC-based IT services provider in which our former CEO, Hao Tang, holds a 29% equity interest;
“Hong Kong” refers to the Hong Kong Special Administrative Region of the People's Republic of China;
“Renminbi” and “RMB” refer to the legal currency of China;
“SEC” refers to the Securities and Exchange Commission;
“Securities Act” refers to the Securities Act of 1933, as amended; and
“U.S. dollars,” “dollars”, “USD” and “$” refer to the legal currency of the United States; and “HKD” and “HK$” refers to Hong Kong dollars, the legal currency of Hong Kong;.

- 19 -

Business Overview

Through our subsidiary, Goldenway Precious Metals, we are a recognized electronics trading member of the Chinese Gold and Silver Exchange Society, or the CGSE, in Hong Kong, and hold a Type AA License which authorizes us to engage in the electronic trading of Kilo Gold and Loco London Gold and Silver. We also engage in the provision of foreign exchange brokerage services in the United Kingdom through our newly acquired subsidiary, Goldenway UK.

We provide precious metals contract trading services via our 24-hour electronic trading platform and telephone transaction system in Hong Kong. Our electronic trading platform provides our customers with CGSE price quotations on gold and silver trading contracts, on a Loco London basis, as well as information updates on the gold and silver market, based on an evaluation of third-party market pricing sources such as M-Finance and Bloomberg. In addition to our retail customers, we also trade contracts of precious metals with other third-party providers of trading contract services in Hong Kong. See details regarding our services under the “Our Products, Services and Customers” heading in this report.

We face daily fluctuations in the price of gold and silver, foreign exchange rates, as well as interest rates. Although we have not done so since incorporation, through our client agreement with Goldenway HK, an entity owned and controlled by Goldenway Investments, our majority stockholder, we may engage in the trade of future contracts and other derivative instruments to hedge against these market risks. Goldenway HK holds Type 1 and Type 2 licenses approved by the Securities and Futures Commission, SFC, which enables Goldenway HK to deal in futures contracts as defined under Hong Kong’s Securities and Futures Ordinance, SFO. Through our client agreement we are also able to ensure our ability to cover any excess customer demand for gold and silver.

Our revenue from our electronic trading platform trading contracts of precious metals is derived from the difference between the customer’s bid and offer prices and the eventual settlement price. If we receive customers’ trading contract orders requesting physical delivery, we will meet their demands either by selling bullion from our inventory or purchasing the bullion from a third-party bullion provider and reselling them to our customers. Hence, our revenue from our purchase and sale of gold and silver products is earned on the resale of the resulting bullion to our customers based on the revaluation of precious metals on hand at higher prices.

In addition, through our subsidiary, Goldenway UK, our revenue generated is derived from the provision of foreign exchange brokerage services to active retail customers globally.

Our revenues increased from $36.94 million for the nine months ended September 30, 2011 to $41.29 million for the nine months ended September 30, 2012, representing an increase of approximately 11.8% . Our net income decreased to $11.05 million for the nine months ended September 30, 2012, from $14.72 million for the nine months ended September 30, 2011. Revenue generated from contracts traded on the electronic trading platform accounted for approximately 95.9% and 97.0% (including the investment loss from trading contracts) of our revenues for the nine months ended September 30, 2012 and 2011, respectively. Revenue generated from foreign exchange brokerage services, resulted in 0.9% and nil of our revenues for the nine months ended September 30, 2012 and 2011, respectively. Revenue generated from rollover interest revenue accounted for approximately 2.6% and 2.3% of our revenues for the nine months ended September 30, 2012 and 2011, respectively. Revenue generated from the sales of gold and silver accounted for approximately 0.8% and nil of our revenues for the nine months ended September 30, 2012 and 2011, respectively. Revenue generated from realized and revaluation of precious metals accounted for (0.2)% and 0.7% of our revenues for the nine months ended September 30, 2012 and 2011, respectively.

Our principal executive offices are relocated at 28/F, Tower 2, The Gateway, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong. The telephone number at our principal executive office is +852 3719-9399. All our transactions and the technologies, including the servers that carry out these transactions, are all executed and located in Hong Kong.

Recent Developments

On August 30, 2012, Goldenway Precious Metals acquired a 100% equity interest in Goldtop Success Limited (“Goldtop”), an inactive Hong Kong limited company, for an aggregate purchase price of HK$600 (approximately $77), pursuant to a purchase and sale agreement, dated August 30, 2012. Goldtop was incorporated in Hong Kong on June 26, 2012, to engage in business promotions but has been inactive since inception.

On October 4, 2012, Goldenway Precious Metals signed a non-binding memorandum of understanding (the “MOU”) with Denling Limited and its sole shareholder, Ms. Yeung Yin, to explore the potential acquisition by the company of 20,000 ordinary shares, representing 40% of the issued share capital of HXPM Holdings Limited, a company incorporated under the laws of British Virgin Islands, and its wholly-owned Hong Kong subsidiary, HXPM Limited (“HXPM”). HXPM is engaged in the trading and brokering of bullion and is also a member of CGSE. The Company is exploring the acquisition of the HXPM minority interests for a price of up HK$110 million (approximately $14.2 million) and the Company’s payment of a non-interest bearing and refundable deposit of HK$50 million (approximately $6.5 million), subject to the completion of an independent valuation of, and the conduct of due diligence on HXPM.

- 20 -

Results of Operations

Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011

The following table sets forth key components of our results of operations during the three months ended September 30, 2012 and 2011, both in dollars and as a percentage of our net sales.

For the Three Months Ended

September 30,

September 30,

2012

2011

(Unaudited)

(Unaudited)

Amount

% of

Amount

% of

Total

Total

REVENUES

Revenue

Revenue

Trading revenue

10,967,942

93.9%

17,771,970

97.5%

Foreign exchange brokerage services

102,252

0.9%

Interest income from customers’ trading accounts

406,239

3.5%

317,518

1.8%

Gains from sales of gold and silver

311,235

2.7%

Fair value change of trading precious metals

(111,673

)

(1.0

133,804

0.7%

Total revenues

11,675,995

100.0%

18,223,292

100.0%

EXPENSES

Management fees

355,345

3.0%

2,327,897

12.8%

Trading expenses and commissions

2,081,176

17.8%

3,818,658

21.0%

Employee compensation and benefit

2,128,532

18.2%

287,701

1.6%

General and administrative expenses

655,722

5.6%

342,398

1.9%

Advertising expenses

2,353,126

20.2%

208,336

1.1%

Bad debt expenses

672,991

5.8%

852,793

4.7%

Occupancy expenses

561,802

4.8%

173,623

1.0%

Depreciation and amortization

253,992

2.2%

178,400

1.0%

Data processing and service fees

368,523

3.2%

50,761

0.3%

Total expenses

9,431,209

80.8%

8,240,567

45.4%

Other income

11,288

0.1%

4,324

INCOME BEFORE INCOME TAXES

2,256,074

19.3%

9,987,049

54.6%

INCOME TAXES

Provision for income taxes

535,219

4.6%

1,116,872

6.1%

Deferred income tax provision

18,896

0.2%

489,392

2.7%

554,115

4.8%

1,606,264

8.8%

NET INCOME

1,701,959

14.5%

8,380,785

45.8%

OTHER COMPREHENSIVE INCOME

Foreign currency translation

8,826

0.1%

1,070

COMPREHENSIVE INCOME

1,710,785

14.6%

8,381,855

45.8%

Revenue. Total revenue decreased by $6.54 million, or 35.9%, to $11.68 million for the three months ended September 30, 2012, compared to $18.22 million for the three months ended September 30, 2011. This net decrease was primarily due to (i) a decrease in trading volume, which was in line with the decrease in the number of speculative customers as well as a decrease in income from spread, the net difference between the prices at which we buy and sell, or sell and buy, Loco London Gold and Silver contracts, which accounted for 103.9% of the net decrease; (ii) an increase in commission income earned by Goldenway UK for introducing trading customers to principal(s), which accounted for (1.6)% of the net decrease; (iii) an increase in rollover interest revenue, which is one of our carrying costs, on customers’ open positions on trading contracts of precious metals upon exceeding the daily cutoff period (mainly caused by the changes in the amount and the length of period for unliquidated contracts), which accounted for (1.4)% of the net decrease; (iv) an increase in gains from sales of gold and silver, which accounted for (4.7)% of the net decrease; and (v) a decrease in fair value change of trading precious metals, which accounted for 3.8% of the net decrease. Commissions to Goldenway UK are determined by the number and size of transactions executed by the customers and is recognized currently in income and on a trade date basis. Revenue from contracts traded on our electronic trading platform accounted for approximately 93.9% and 97.5% of our revenues for the three months ended September 30, 2012 and 2011, respectively. Revenue generated from foreign exchange brokerage services (which commenced in January 2012), resulted in 0.9% and nil of our revenues, for the respective periods. During the three months ended September 30, 2012 and 2011, revenue generated from rollover interest revenue accounted for approximately 3.5% and 1.8% of our revenues, respectively. Revenue generated from the sales of gold and silver accounted for approximately 2.7% and nil of our revenues for the three months ended September 30, 2012 and 2011, respectively. Revenue generated from realized and revaluation of precious metals accounted for (1.0)% of our revenues for the three months ended September 30, 2012, whereas revenue generated from the same activity accounted for 0.7% of our revenues for the three months ended September 30, 2011, due to changes in market prices from period to period and the realization of gain for the third quarter 2012.

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Expenses. During the three months ended September 30, 2012, the expenses were comprised of Management fees, Trading expenses and commissions, Employee compensation and benefit, General and administrative expenses, Advertising expenses, Bad debt expenses, Occupancy expenses, Depreciation and amortization, and Data processing and service fees. Expenses increased by $1.19 million, or 14.4%, during the three months ended September 30, 2012, to $9.43 million, as compared to $8.24 million during the 2011 period, due to increases in each expense component discussed in more details below.

Management fee. Management fee expenses were comprised of rental, entertainment, travel and computer expenses of Goldenway Investments. Management fee was $0.36 million for the three months ended September 30, 2012, compared to $2.33 million for the three months ended September 30, 2011. The $1.97 million, or 84.7% decrease in management fee is mainly attributable to our amendment of our management fee agreement with Goldenway Investments during the 2011 fourth quarter, to remove the mark-up rate component and to apportion operating costs based on the number of employees engaged in activities for the Company so that the Company could incur costs, such as employee costs, directly.

Trading expenses and commissions. Trading expenses and commissions decreased by $1.74 million, or 45.5%, to $2.08 million for the three months ended September 30, 2012, compared to $3.82 million for the three months ended September 30, 2011. The decrease in trading expenses and commissions was mainly driven by (i) a decrease in trading volume, which accounted for 1.5% of the decrease; (ii) a decrease in customers brought in by agents, which led to a decrease in collection fees for customer deposits and commissions to agents, which accounted for 44.9% of the decrease; (iii) a decrease in commission fee paid to agents, which accounted for 43.0% of the decrease; and (iv) a decrease in CGSE reference code, which accounted for 10.6% of the decrease.

Employee compensation and benefit. Employee compensation and benefit increased by $1.84 million, or 639.8%, to $2.13 million or the three months ended September 30, 2012, compared to $0.29 million for the three months ended September 30, 2011. The increase was primarily due to an increase in the number of new employees hired in connection with our amendment of the management fee agreement, as well as in connection with the fulfillment of the necessary vacancies for the newly-developed department, such as dealing function and IT audit function etc.

General and administrative expenses. General and administrative expenses increased by $0.32 million, or 91.5%, to $0.66 million for the three months ended September 30, 2012, as compared to $0.34 million for the three months ended September 30, 2011. The net increase was primarily due to (i) an increase in office expenses necessitated by the increase in employees of $0.14 million; (ii) an increase in consultancy and professional fees in connection with financial reporting and Sarbanes-Oxley compliance of $0.23 million; and (iii) a decrease in exchange loss, which was mainly driven by the translation between HKD to USD of $(0.05) million.

Advertising expenses. Advertising expenses increased by $2.14 million, or 1029.5%, to $2.35 million for the three months ended September 30, 2012, compared to $0.21 million for the three months ended September 30, 2011. The increase was primarily due to (i) an advertising fee to our celebrity spokesperson during the three months ended September 30, 2012 which was not incurred in the 2011 period as most of it was recognized in early 2010, which accounted for 1.7% of the increase; and (ii) an increase in the cost of our online promotional activities and other promotions during the 2012 period, which accounted for 65.3% and 28.7%, respectively, of the increase. Pursuant to our renewed client agreement with Goldenway HK and investment advisory service agreement was signed with Goldenway Asset Management, we are obligated to pay consulting fees to Goldenway HK for marketing and advertising services and to Goldenway Asset Management for investment advisory.

Bad debt expenses. Bad debt expenses decreased by $0.18 million, or 21.1% to $0.67 million for the three months ended September 30, 2012, compared to $0.85 million for the same period in 2011. The decrease is primarily attributable to a decrease in doubtful payments from gateway agents during the third quarter of 2012.

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Occupancy expenses. Occupancy expenses increased by $0.39 million, or 223.6%, to $0.56 million for the three months ended September 30, 2012, compared to $0.17 million for the three months ended September 30, 2011. The increase is mainly attributable to occupancy expenses for (i) our new subsidiary, Goldenway UK; and (ii) renting additional floor space as compared to the previous periods as our new principal executive office since 2012 third quarter.

Depreciation and amortization. Depreciation and amortization increased by $0.07 million, or 42.4%, to $0.25 million for the three months ended September 30, 2012, as compared to $0.18 million for the three months ended September 30, 2011. This increase was primarily due to the addition of a motor vessel in late 2011 and acquisition of more computer equipment, servers, and a motor vehicle during the 2012 period.

Data processing and service fee. Data processing and service fees increased by $0.32 million, or 626.0%, to $0.37 million for the three months ended September 30, 2012, as compared $0.05 million for the three months ended September 30, 2011. The increase was primarily due to (i) a continuous expansion of our business which caused a corresponding increase in rental fees for the occupancy of more proxy servers, which accounted for approximately 27.9% of the increase; (ii) the commencement in January 2012 of additional monthly consultancy fee payments to Goldenway Investments for the maintenance of our additional online trading platform (pursuant to a new service and maintenance agreement, dated January 1, 2012, between the Company and Goldenway Investments), which accounted for approximately 14.6% of the increase; (iii) an increase of maintenance fee for the trading platform by Shenzhen Gateway, which accounted for approximately 34.8% of the increase; and (iv) an increase of the expenditure for strengthening the internet security, which accounted for approximately 11.0% of the increase.

Income before income taxes. Income before income taxes decreased by $7.73 million, or 77.4%, to $2.26 million for the three months ended September 30, 2012, as compared $9.99 million for the three months ended September 30, 2011. This decrease was primarily due to the decrease in our number of active customers, resulting in a decrease of trading revenue of $6.54 million and an increase of total expenses of $1.19 million, for the three months ended September 30, 2012.

Income taxes. Income taxes decreased by $1.06 million, or 65.5%, to $0.55 million for the three months ended September 30, 2012, compared to $1.61 million for the three months ended September 30, 2011, due to a decrease in income before income taxes for the reasons as explained above during the 2012 third quarter.

Net income. For the foregoing reasons, we generated a net income of $1.70 million for the three months ended September 30, 2012, a decrease of $6.68 million, or 79.7%, from $8.38 million for the three months ended September 30, 2011.

Other comprehensive income. Our other comprehensive income was $0.01 million for both of the three months ended September 30, 2012 and 2011. The balance relates to the foreign currency translation, which is the exchange rate fluctuations from translation of the Company’s Hong Kong and UK subsidiaries’ accounts from Hong Kong dollars, our functional currency, to United States dollars, our reporting currency.

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011

The following table sets forth key components of our results of operations during the nine months ended September 30, 2012 and 2011, both in dollars and as a percentage of our net sales.

For the Nine Months Ended

September 30,

September 30,

2012

2011

(Unaudited)

(Unaudited)

Amount

% of

Amount

% of

Total

Total

REVENUES

Revenue

Revenue

Trading revenue

39,603,880

95.9%

35,837,233

97.0%

Foreign exchange brokerage services

380,306

0.9%

Interest income from customers’ trading accounts

1,081,819

2.6%

839,064

2.3%

Gains from sales of gold and silver

311,235

0.8%

Fair value change of trading precious metals

(84,402

)

(0.2

264,221

0.7%

Total revenues

41,292,838

100.0%

36,940,518

100.0%

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EXPENSES
Management fees		827,525	2.0%		6,627,683		17.9%
Trading expenses and commissions		9,478,327	23.0%		7,864,800		21.3%
Employee compensation and benefit		5,786,536	14.0%		809,161		2.2%
General and administrative expenses		2,306,143	5.6%		904,725		2.4%
Advertising expenses		5,018,652	12.2%		688,575		1.9%
Bad debt expenses		1,346,384	3.3%		1,307,555		3.5%
Occupancy expenses		967,204	2.3%		520,682		1.4%
Depreciation and amortization		774,762	1.9%		376,961		1.0%
Data processing and service fees		955,667	2.3%		158,918		0.4%
Total expenses		27,461,200	66.6%		19,259,060		52.0%
Other income		25,024	0.1%		9,062		-
INCOME BEFORE INCOME TAXES		13,856,662	33.3%		17,690,520		48.0%
INCOME TAXES
Provision for income taxes		2,687,202	6.5%		2,494,888		6.8%
Deferred income tax provision		115,363	0.3%		471,750		1.3%
		2,802,565	6.8%		2,966,638		8.1%
NET INCOME		11,054,097	26.5%		14,723,882		39.9%

OTHER COMPREHENSIVE INCOME
Foreign currency translation		38,330	0.1%		(1,880	)	-
COMPREHENSIVE INCOME	$	11,092,427	26.6%	$	14,722,002		39.9%

Revenue. Total revenue increased by $4.35 million, or 11.8%, to $41.29 million for the nine months ended September 30, 2012, compared to $36.94 million for the nine months ended September 30, 2011. This net increase was primarily due to (i) the increase in trading volume, which was in line with the increase in the number of customers as well as an increase in income from spread, which accounted for 86.6% of the net increase; (ii) an increase in commission income to Goldenway UK, which accounted for 8.7% of the net increase; (iii) an increase in rollover interest revenue (mainly caused by the changes in the amount and the length of period for unliquidated contracts), which accounted for 5.6% of the net increase; (iv) an increase in gains from sales of gold and silver, which accounted for 7.1% of the net decrease; and (v) a decrease in fair value change of trading precious metals, which accounted for (8.0)% of the net increase. Revenue from contracts traded on our electronic trading platform accounted for approximately 95.9% and 97.0% of our revenues for the nine months ended September 30, 2012 and 2011, respectively. Revenue generated from foreign exchange brokerage services (which commenced in January 2012), resulted in 0.9% and nil of our revenues, respectively. During the nine months ended September 30, 2012 and 2011, revenue generated from rollover interest revenue accounted for approximately 2.6% and 2.3% of our revenues, respectively. Revenue generated from the sales of gold and silver accounted for approximately 0.8% and nil of our revenues for the three months ended September 30, 2012 and 2011, respectively. Revenue generated from realized and revaluation of precious metals during the same periods accounted for (0.2)% and 0.7% of our revenues, respectively, mainly due to changes in market prices from period to period and the realization of gain for the third quarter 2012.

Expenses. During the nine months ended September 30, 2012, the expenses were comprised of Management fee, Trading expenses and commissions, Employee compensation and benefit, General and administrative expenses, Advertising expenses, Bad debt expenses, Occupancy expenses, Depreciation and amortization, and Data processing and service fees. Expenses increased by $8.20 million, or 42.6%, during the nine months ended September 30, 2012, to $27.46 million, as compared to $19.26 million during the 2011 period, due to increases in each expense component discussed in more detail below.

Management fee. Management fee expenses are comprised of rental, entertainment, travel and computer expenses of Goldenway Investments. Management fee was $0.83 million for the nine months ended September 30, 2012, compared to $6.63 million for the nine months ended September 30, 2011. The $5.80 million, or 87.5% decrease in management fee, is mainly attributable to the amendment of our management fee agreement with Goldenway Investments during the 2011 fourth quarter, to remove the mark-up rate component and to apportion operating costs based on the number of employees engaged in activities for the Company so that the Company could incur costs, such as employee costs, directly.

Trading expenses and commissions. Trading expenses and commissions increased by $1.62 million, or 20.5%, to $9.48 million for the nine months ended September 30, 2012, compared to $7.86 million for the nine months ended September 30, 2011. The net increase in trading expenses and commissions was mainly driven by (i) the increase in trading volume, which accounted for 102.2% of the net increase; (ii) the decrease in customers brought in by agents, which led to a decrease in collection fees for customer deposits and commissions to agents, which accounted for (131.2)% of the net increase; (iii) an increase in commission fee paid to agents, which accounted for 123.5% of the net increase; and (iv) an increase in CGSE reference code, which accounted for 5.5% of the net increase.

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Employee compensation and benefit. Employee compensation and benefit increased by $4.98 million, or 615.1%, to $5.79 million for the nine months ended September 30, 2012, compared to $0.81 million for the nine months ended September 30, 2011. The increase was primarily due to an increase in the number of new employees hired in connection with our amendment of the management fee agreement, as well as in connection with the fulfillment of the necessary vacancies for the newly-developed department, such as dealing function and IT audit function etc.

General and administrative expenses. General and administrative expenses increased by $1.41 million, or 154.9%, to $2.31 million for the nine months ended September 30, 2012, as compared to $0.90 million for the nine months ended September 30, 2011. The increase was primarily due to (i) an increase in office expenses necessitated by the increase in employees of $0.73 million; (ii) an increase of consultancy and professional fees in connection with financial reporting and Sarbanes-Oxley compliance of $0.53 million and (iii) an increase in exchange loss, which was mainly driven by the translation between HKD to USD of $0.15 million.

Advertising expenses. Advertising expenses increased by $4.33 million, or 628.8%, to $5.02 million for the nine months ended September 30, 2012, compared to $0.69 million for the nine months ended September 30, 2011. The increase was primarily due to (i) an advertising fee to our celebrity spokesperson during the nine months ended September 30, 2012 which was not incurred in the 2011 period as most of it was recognized in early 2010, which accounted for 2.5% of the increase; and (ii) an increase in the cost of our online promotional activities and other promotions during the 2012 period, which accounted for 66.4% and 28.2%, respectively, of the increase. Pursuant to our renewed client agreement with Goldenway HK and investment advisory service agreement was signed with Goldenway Asset Management, we are obligated to pay consulting fees to Goldenway HK for marketing and advertising services and to Goldenway Asset Management for investment advisory.

Bad debt expenses. Bad debt expenses increased by $0.04 million, or 3.0% to $1.35 million for the nine months ended September 30, 2012, compared to $1.31 million for the same period in 2011. The increase is primarily attributable to an increase in doubtful payments from gateway agents during the first two quarter of 2012.

Occupancy expenses. Occupancy expenses increased by $0.45 million, or 85.8%, to $0.97 million for the nine months ended September 30, 2012, compared to $0.52 million for the nine months ended September 30, 2011. The increase is mainly attributable to additional occupancy expenses for (i) our new subsidiary, Goldenway UK; and (ii) renting additional floor space as compared to the previous periods as our new principal executive office since 2012 third quarter.

Depreciation and amortization. Depreciation and amortization increased by $0.39 million, or 105.5%, to $0.77 million for the nine months ended September 30, 2012, as compared to $0.38 million for the nine months ended September 30, 2011. This increase was primarily due to the addition of a motor vessel in late 2011 and acquisition of more computer equipment, servers and motor vehicles during the 2012 period.

Data processing and service fee. Data processing and service fees increased by $0.80 million, or 501.4%, to $0.96 million for the nine months ended September 30, 2012, as compared $0.16 million for the nine months ended September 30, 2011. The increase was primarily due to (i) a continuous expansion of our business which caused a corresponding increase in rental fees for the occupancy of more proxy servers, which accounted for 19.2% of the increase; (ii) an increase in additional monthly consultancy fee payments to Goldenway Investments commencing in January 2012, for the maintenance of our additional online trading platform (pursuant to a new service and maintenance agreement, dated January 1, 2012, between the Company and Goldenway Investments), which accounted for 17.5% of the increase; and (iii) an increase of maintenance fees for the trading platform by Goldenway UK and Shenzhen Gateway, which accounted for approximately 34.3% and 13.9%, respectively, of the increase; and (iv) an increase of the expenditure for strengthening the internet security, which accounted for approximately 10.2% of the increase.

Income before income taxes. Income before income taxes decreased by $3.83 million, or 21.7%, to $13.86 million for the nine months ended September 30, 2012, as compared $17.69 million for the nine months ended September 30, 2011. This net decrease was primarily contributed by (i) a decrease in number of speculative customers in the third quarter 2012, resulting in a slightly increase of trading revenue of $4.35 million; and (ii) an increase in total expenses of $8.20 million, for the nine months ended September 30, 2012.

Income taxes. Income taxes decreased by $0.17 million, or 5.53%, to $2.80 million for the nine months ended September 30, 2012, compared to $2.97 million for the nine months ended September 30, 2011, due to a decrease in income before income taxes for the reasons as explained above for the during the 2012 third quarter.

Net income. For the foregoing reasons, we generated a net income of $11.05 million for the nine months ended September 30, 2012, an increase of $3.67 million, or 24.9%, from $14.72 million for the nine months ended September 30, 2011.

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Other comprehensive income. Our other comprehensive income was $0.04 million for the nine months ended September 30, 2012, compared with comprehensive income of $(0.001) million for the nine months ended September 30, 2011. The balance relates to foreign currency translation, which is the exchange rate fluctuation from translation of the Company’s Hong Kong and UK subsidiaries’ accounts from Hong Kong dollars to United States dollars.

Liquidity and Capital Resources

To date, we have financed our operations primarily through cash flows from operations and equity contributions by our stockholders. We are not aware of any other restrictions that will significantly impact our ability to transfer cash within our corporate structure or restrict the net assets of our subsidiary, Goldenway Precious Metals. As of September 30, 2012, we had cash and cash equivalents of $26.03 million, primarily consisting of cash on hand and demand deposits. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report:

Cash Flows
(all amounts in millions of U.S. dollars)

		Nine Months Ended
		September 30,
		2012			2011
		(Unaudited)			(Unaudited)
Net cash provided by operating activities	$	17,029,004		$	10,792,149
Net cash used in investing activities		(1,267,913	)		(8,514,500	)
Effect of exchange rate changes on cash		4,080			6,222
Net increase in cash and cash equivalents		15,765,171			2,283,871
Cash, beginning of the period		10,267,457			7,975,652
Cash, end of the period	$	26,032,628		$	10,259,253

As a member of the CGSE, we are also subject to working capital and minimum asset requirements. Under the requirements, the minimum required working capital, defined as cash plus precious metals, is approximately $193,000 and the minimum required asset is $645,000. We were in compliance with these requirements as of September 30, 2012.

The United Kingdom’s Financial Services Authority, or the FSA, requires Goldenway UK to maintain a regulatory basic capital of €125,000 (approximately, $161,000), and a Pillar 2 capital requirement of £507,000 (approximately, $818,000). Capital is managed through budgeting, forecasting and daily and monthly entity and consolidated capital reporting. As of September 30, 2012, Goldenway UK had net assets of $1,214,524 which made the company in compliance with these requirements as of that date.

As of September 30, 2012, we had $26,032,628 in cash and $549,221 in gold and silver, and as of December 31, 2011, we had $10,267,457 and $1,674,077, respectively. As of September 30, 2012 and December 31, 2011, we had $47,853,843 and $28,716,790, respectively, in total assets.

Operating Activities

Net cash provided by operating activities was $17.03 million for the nine months ended September 30, 2012, as compared to $10.79 million for the nine months ended September 30, 2011, an increase of $6.24 million. The increase was due to the lower net income and more adjustments to reconcile net income to net cash provided by operating activities for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011. For the nine months ended September 30, 2012, (i) change in accounts receivable held by the Company resulted in a cash outflow of $2.24 million, compared to a cash outflow of $9.41 million for the nine months ended September 30, 2011; (ii) change in other receivables resulted in a cash inflow of $0.56 million for the nine months ended September 30, 2012, compared to a cash outflow of $0.94 million for the nine months ended September 30, 2011; (iii) change in trading precious metals resulted in a cash inflow of $1.35 million for the nine months ended September 30, 2012, compared to a cash outflow of $0.58 million for the nine months ended September 30, 2011; (iv) change in deposits and prepaid expenses resulted in a cash outflow of $2.77 million for the nine months ended September 30, 2012, compared to a cash outflow of $0.45 million for the nine months ended September 30, 2011; (v) change in accounts payable resulted in a cash outflow of $0.60 million for the nine months ended September 30, 2012, compared to a cash inflow of $1.57 million for the nine months ended September 30, 2011; (vi) change in accrued expenses and other liabilities resulted in a cash inflow of $0.42 million for the nine months ended September 30, 2012, compared to a cash outflow of $0.12 million for the nine months ended September 30, 2011; (vii) change in customer deposits resulted in a cash inflow of $5.25 million for the nine months ended September 30, 2012, compared to a cash inflow of $3.82 million for the nine months ended September 30, 2011; (viii) change in income taxes payable resulted in a cash inflow of $2.48 million for the nine months ended September 30, 2012, compared to a cash inflow of $1.06 million for the nine months ended September 30, 2011; (ix) the change in the balances related to a cash inflow of $0.43 million from Goldenway Investments, our majority stockholder, for the nine months ended September 30, 2012; (x) the change in the balance related to a cash outflow of $0.20 million from Goldenway NZ and Goldenway Asset Management for the nine months ended September 30, 2012; (xi) the change in restricted cash resulted in cash inflow of $0.13 million for the nine months ended September 30, 2011.

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Investing Activities

Net cash used in investing activities was $1.27 million for the nine months ended September 30, 2012, compared to $8.51 million for the nine months ended September 30, 2011, resulting in a change of $7.24 million. The change is mainly due to: (i) a cash outflow of $0.68 million for the acquisition of property and equipment during the nine months ended September 30, 2012, compared to $4.76 million in cash used for such purpose during the nine months ended September 30, 2011; and (ii) a cash outflow of acquisition of intangible assets of $0.59 million for the nine months ended September 30, 2012.

In addition, the cash flow used in investing activities related to our majority stockholder, Goldenway Investments, decreased from $3.75 million used in the nine months ended September 30, 2011, prior to the Company’s acquisition of Goldenway Precious Metals, to $nil used in the nine months ended September 30, 2012

Financing Activities

There were no financing activities for the nine months ended September 30, 2012 and 2011.

Operating Lease Commitments

The Company leases its office space under non-cancelable operating lease agreements that expire on various dates through 2015. Future annual minimum lease payments, including maintenance and management fees, for non cancelable operating leases, are as follows:

Year ending December 31,	(in‘000	)

2012	452
2013	1,737
2014	1,652
2015	855
$	4,696

Obligations under Material Contracts

Pursuant to a Software Development Contract, dated August 1, 2012, between Goldenway Precious Metals and Shenzhen Gateway, we are obligated to pay fees to Gateway in exchange for IT maintenance services through July 31, 2013. As of September 30, 2012, we were obligated to pay $0.56 million in IT maintenance fees to Gateway under this agreement.
Pursuant to a Data Analysis Management Services Contract, dated August 1, 2012, between Goldenway Precious Metals and Shenzhen Gateway, we are obligated to pay fees to Gateway in exchange for data analysis management services through July 31, 2013. As of September 30, 2012, we were obligated to pay $0.40 million in data analysis fees to Gateway under this agreement.
Goldenway Investments is the former parent of Goldenway Precious Metals and is now our majority stockholder. On January 1, 2010, Goldenway Precious Metals entered into a management fee agreement with Goldenway Investments, pursuant to which Goldenway Investments provides management services to Goldenway Precious Metals in exchange for management fees based on the actual operating cost incurred by Goldenway Investments, plus a mark-up rate on certain operational costs. The management fee is payable on an annual basis or on demand after provision of management services by Goldenway Investments. Since October 1, 2011, the management fee agreement was amended to eliminate the mark-up rate component and apportion operating costs based on the number of employees engaged in activities for the Company. The management fee is payable on a monthly basis or on demand after a provision of service by Goldenway Investments. Management fees were $0.36 million and $0.83 million, respectively, for the three and nine months ended September 30, 2012, compared to $2.33 million and $6.63 million, respectively, for the three and nine months ended September 30, 2011.

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The Company and Goldenway Investments are also party to a maintenance and service agreement, dated January 1, 2012, pursuant to which the Company is obligated pay a monthly fee of HKD 120,000 (approximately, $0.02 million) to Goldenway Investments in exchange for precious metals trading platform maintenance services. Fees incurred under the maintenance and service agreement totaled $0.05 million and $0.14 million, respectively, for the three and nine months ended September 30, 2012.
The Company is party to a marketing and advertising service agreement, dated October 1, 2009, between the Company and Goldenway Investments (HK) Limited, or Goldenway HK, a Goldenway Investments subsidiary, whereby the Company is obligated to pay an annual fee of $0.70 million to Goldenway HK, in exchange for marketing and advertising consulting services. The contract is subject to annual renewal. As of September 30, 2012, we were obligated to pay $0.18 million to Goldenway HK for the remaining of the year under this agreement. Fees incurred under the marketing and advertising service agreement totaled $0.18 million and $0.53 million, respectively, for the three and nine months ended September 30, 2012.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. There have been no material changes to the critical accounting policies previously disclosed in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.

Recently Adopted Accounting Standards

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. This standard results in a common requirement between the FASB and the International Accounting Standards Board (IASB) for measuring fair value and for disclosing information about fair value measurements. ASU 2011-04 is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s interim condensed consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU 2011-05 requires entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. ASU 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s interim condensed consolidated financial statements.

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In December 2011, the FASB issued ASU 2011-12, “Comprehensive income”. The amendments are being made to allow FASB time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While FASB is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05.ASU No. 2011-12 is effective for the Company on January 1, 2012. The adoption of this ASU did not have a material impact on the Company’s interim condensed consolidated financial statements.

Recently Accounting Pronouncements

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Market risk is the risk of losses in on- and off-balance sheet positions arising from movements in market prices. As we operate predominantly on an agency model with the exception of certain trades of our customers, we are not exposed to the market risk of a position moving up or down in value.

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Liquidity Risk

In normal conditions, our business of providing electronic trading precious metals and related services is self financing as we generate sufficient cash flows to pay our expenses as they become due. As a result, we generally do not face the risk that we will be unable to raise cash quickly enough to meet our payment obligations as they arise. Our cash flows, however, are influenced by customer trading volume and the income we derive on that volume. These factors are directly impacted by domestic and international market and economic conditions that are beyond our control. In an effort to manage this risk, we maintain a substantial pool of liquidity. As of September 30, 2012, the percentage of cash and cash equivalents, excluding cash and cash equivalents held for customers and restricted cash, to total assets were 54.4%, as compared to 35.8% as of December 31, 2011.

Operational Risk

Our operations are subject to various risks resulting from technological interruptions, failures, or capacity constraints in addition to risks involving human error or misconduct. We are heavily dependent on our technology infrastructure, among other functions, to operate our trading platform. Our ability to facilitate transactions successfully and provide high quality customer service depends on the efficient and uninterrupted operation of our computer and communications hardware and software systems. Our systems are vulnerable to damage or interruption from human error, natural disasters, power loss, telecommunication failures, break-ins, sabotage, computer viruses, intentional acts of vandalism, computer denial-of-service attacks and other similar events. If our systems fail to perform, we could experience periodic interruptions and disruptions in operations, slower response times or decreased customer satisfaction.

Our systems have in the past experienced disruptions in operations, which we believe will continue to occur from time to time. On December 8, 2011 and February 29, 2012, our trading system was seriously attacked by unknown actors and our business and operations were temporarily disrupted, which led to quoting errors. As of the date of this report, we have not been notified of any claim against us alleging harm caused to third parties by this disruption, and our customers have continued to actively place precious metals trading orders through their respective trading accounts, but we can provide no assurance that we will not receive any claims in the future in connection with this disruption.

Our IT department is working with IT security consultants to strengthen and protect our network from intentional attacks. We have also established a separate department to monitor our networks and to indentify and minimize human errors, such as clerical mistakes and incorrectly placed trades, as well as intentional misconduct, such as unauthorized trading, mischief and fraud. Furthermore, we seek to mitigate the impact of any operational issues by maintaining insurance coverage for various contingencies. Despite any precautions we may take, any systems failure that causes an interruption in our services or decreases the responsiveness of our services could, among other consequences, impair our reputation, damage our brand name and materially adversely affect our business, financial condition and results of operations and cash flows.

Regulatory Capital Risk

Various domestic and foreign government bodies and self-regulatory organizations responsible for overseeing our business activities require that we maintain specified minimum levels of regulatory capital in our operating subsidiaries. If not properly monitored or adjusted, our regulatory capital levels could fall below the required minimum amounts set by our regulators, which could expose us to various sanctions ranging from fines and censure to the imposition of partial or complete restrictions on our ability to conduct business. To mitigate this risk, we continuously evaluate the levels of regulatory capital at each of our operating subsidiaries and adjust the amounts of regulatory capital in each operating subsidiary as necessary to ensure compliance with all regulatory capital requirements.

These may increase or decrease as required by regulatory authorities from time to time. We also maintain excess regulatory capital to provide liquidity during periods of unusual or unforeseen market volatility, and we intend to continue to follow this policy. In addition, we monitor regulatory developments regarding capital requirements to be prepared for increases in the required minimum levels of regulatory capital that may occur from time to time in the future. As of September 30, 2012, the Company’s capital position was $24.81 million, including all financial assets and liabilities.

The FSA requires Goldenway UK to maintain a regulatory basic capital of €125,000 (approximately, $161,000), and a Pillar 2 capital requirement of £507,000 (approximately, $818,000). Capital is managed through budgeting, forecasting and daily and monthly entity and consolidated capital reporting. As of September 30, 2012 Goldenway UK had net assets of $1.21 million which made the Company in compliance with these requirements as of such date.

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ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer, Mr. Ricky Wai Lam Lai, and our Chief Financial Officer or CFO, Mr. Yue Yuen Chan, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2012. Based on that evaluation, Mr. Lai and Mr. Chan concluded that, as of September 30, 2012, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, because of the material weakness in our internal control over financial reporting described below, our disclosure controls and procedures were not effective to satisfy the objectives for which they are intended.

During its evaluation of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2012, our management determined that our accounting personnel lacked the sufficient skill and experience in the application of U.S. generally accepted accounting principles (GAAP) necessary to fulfill the our public reporting obligations in accordance with U.S. GAAP and the SEC’s rules and regulations. While our accounting personnel have several years of accounting and audit experience, none of them were trained in the U.S. or hold a U.S. CPA designation. We plan to recruit qualified accounting personnel with sufficient experience and training in U.S. GAAP to cure this material weakness. We also plan to engage qualified entities to train our financial and accounting personnel so that they may attain the requisite knowledge of and experience with U.S. GAAP. In the interim, we are working with a U.S. GAAP consultant to assist us with our financial reporting.

Notwithstanding management’s determination that our internal control over financial reporting was ineffective as of September 30, 2012, we believe that the consolidated financial statements included in this report correctly present our financial condition, results of operations and cash flows for the periods covered thereby in all material respects.

Changes in Internal Controls over Financial Reporting

There were no changes in its internal controls over financial reporting in the third quarter of 2012 that would materially affect, or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business.

On May 14, 2012, the Company’s solicitors commenced a legal action in the High Court of Hong Kong for the collection of an outstanding debt of RMB 4,037,244 (approximately, $639,000) due from one of the Company’s payment agents (referred to hereafter as the “Proceeding”). The Proceeding is scheduled to be heard by the High Court. Management does not believe that a ruling against the Company in the Proceeding will have a material adverse impact on the Company’s results of operations.

We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS.

There have been no material changes in the Company’s risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2011.

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The risks described in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission are not the only risks facing us. Additional risks and uncertainties, not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

We have no information to disclose that was required to be in a report on Form 8-K during the period covered by this report, but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

ITEM 6. EXHIBITS.

The list of exhibits included in the attached Exhibit Index is hereby incorporated herein by reference.

Exhibit No.	Description
31.1	Certifications of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certifications of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certifications of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	Interactive data files pursuant to Rule 405 of Regulation S-T

Filed with this Form 10-Q for Goldenway, Inc. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

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

Dated: November 14, 2012

GOLDENWAY, INC.

By: /s/ Ricky Wai Lam Lai
Ricky Wai Lam Lai, Chief Executive Officer
(Principal Executive Officer)

By: /s/ Yue Yuen Chan
Yue Yuen Chan, Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Description
31.1	Certifications of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certifications of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certifications of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	Interactive data files pursuant to Rule 405 of Regulation S-T

Goldenway, Inc. 10-Q