FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended March 31, 2018

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

Commission file number: 000-29169

Chinawe.com Inc.

(Exact name of registrant as specified in its charter)

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

Room 1208, Block A

Fuk Keung Industrial Building

66-68 Tong Mei Road

Kowloon, Hong Kong

(Address of principal executive offices) (Zip Code)

(852) 23810818

(Registrant’s telephone number, including area code)

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☐ No ☒

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

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☒

(Do not check if a smaller reporting company)

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

Yes ☒ No ☐

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

Class of Common Stock	Outstanding at May 9, 2018

Common Stock, $.001 par value	43,800,000

TABLE OF CONTENTS


	PAGE

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Unaudited Condensed Statements of Comprehensive Loss for the Three months ended March 31, 2018 and 2017		3

Unaudited Condensed Balance Sheets at March 31, 2018 and December 31, 2017		4

Unaudited Condensed Statements of Changes in Stockholders’ Deficit for the Three months ended March 31, 2018 and 2017		5

Unaudited Condensed Statements of Cash Flows for the Three months ended March 31, 2018 and 2017		6

Notes to Unaudited Condensed Financial Statements		7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		9

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		10

ITEM 4. CONTROLS AND PROCEDURES		11

PART II — OTHER INFORMATION

ITEM 6. EXHIBITS		12

SIGNATURES		13

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

CHINAWE.COM INC.

UNAUDITED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

		Three months ended March 31,
	Note	2018			2017
		U.S.$			U.S.$

Administrative and general expenses			(14,428	)		(5,414	)

LOSS BEFORE INCOME TAXES			(14,428	)		(5,414	)

Income tax expense			—			—

NET LOSS			(14,428	)		(5,414	)

OTHER COMPREHENSIVE INCOME
Foreign currency translation			—			—

TOTAL COMPREHENSIVE LOSS			(14,428	)		(5,414	)

Basic and diluted loss per share of common stock			0.00			0.00

Weighted average number of shares of common stock outstanding			43,800,000			43,800,000

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

CHINAWE.COM INC.

UNAUDITED CONDENSED BALANCE SHEETS

			As of			As of
	Note		March 31, 2018			December 31, 2017

			U.S.$			U.S.$
ASSETS			—			—
Total current assets
Total assets				—			—

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accrued expenses and other current liabilities				28,693			20,631
Due to related parties		3		395,932			389,566

Total current liabilities				424,625			410,197

Stockholders’ deficit:
Preferred stock, par value U.S.$0.001 per share, authorized 20,000,000 shares, none issued; common stock, par value U.S.$0.001 per share, authorized 100,000,000 shares, issued and outstanding 43,800,000 shares				43,800			43,800
Additional paid in capital				191,825			191,825
Accumulated losses				(660,250	)		(645,822	)
Accumulated other comprehensive loss				—			—
Total stockholders’ deficit				(424,625	)		(410,197	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT				—			—

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

CHINAWE.COM INC.

UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

	Number of shares		Amount		Additional paid-in capital		Accumulated losses			Total Stockholders’ Deficit
				U.S.$		U.S.$		U.S.$			U.S.$
Balance as of January 1, 2017		43,800,000		43,800		191,825		(578,736	)		(343,111	)

Net loss for the period		—		—		—		(5,414	)		(5,414	)
Balance as of March 31, 2017		43,800,000		43,800		191,825		(584,150	)		(348,525	)

Balance as of January 1, 2018		43,800,000		43,800		191,825		(645,822	)		(410,197	)

Net loss for the period		—		—		—		(14,428	)		(14,428	)
Balance as of March 31, 2018		43,800,000		43,800		191,825		(660,250	)		(424,625	)

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

CHINAWE.COM INC.

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

	Three months ended March 31,

	2018			2017

		U.S.$			U.S.$
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		(14,428	)		(5,414	)

Adjustments to reconcile net income to net cash provided by operating activities:
Accrued expenses and other current liabilities		8,062			4,661

NET CASH USED IN OPERATING ACTIVITIES		(6,366	)		(753	)

CASH FLOWS FROM FINANCING ACTIVITIES

Advance from related parties		6,366			753

NET CASH PROVIDED BY FINANCING ACTIVITIES		6,366			753

NET CHANGE IN CASH AND CASH EQUIVALENTS		—			—

Cash and cash equivalents, beginning of period		—			—

Effect of exchange rate changes		—			—

CASH AND CASH EQUIVALENTS, END OF PERIOD		—			—

SUPPLEMENTAL DISCLOSURE
Interest paid		—			—
Taxes paid		—			—

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

CHINAWE.COM INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Basis of Presentation

The accompanying unaudited condensed financial statements present the financial position of Chinawe.com Inc. (the “Company” or “Chinawe”) as of March 31, 2018 and December 31, 2017, and the results of operations for the Company for three months ended March 31, 2018 and 2017.

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

The balance sheet at December 31, 2017 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These unaudited condensed financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

2. Organization

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

3. Going concern consideration

The Company’s unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As of March 31, 2018, the Company had negative working capital and stockholders’ deficit of U.S.$424,625 and U.S.$424,625, respectively, which raise substantial doubt about its ability to continue as a going concern.

The Company has relied on private financing by cash inflows from the principal stockholder of the Company, who has agreed not to demand repayment of amounts due to it as long as the Company has negative working capital. The principal stockholder has indicated its intention to finance the Company for a reasonable period of time to enable the Company to continue as a going concern, assuming that in such a period of time the Company would not be able to raise additional capital to support its continuation. However, it is uncertain for how long or to what extent such a period of time would be “reasonable” and there can be no assurance that the financing from the principal stockholder will be continued. The accompanying unaudited condensed financial statements do not include or reflect any adjustments that might result from the outcome of these uncertainties.

4. Due to related parties

The balances with related parties are as follows:

	As of March 31, 2018		As of December 31, 2017

	U.S.$		U.S.$
Advances from principal stockholder		395,932		389,566

The amounts due are unsecured, non-interest bearing and repayable on demand.

5. Contingencies

There is a contingent liability of approximately $330,000 in respect of penalties for late filing of Internal Revenue Service (“IRS”) Forms 5471 and 5472. As of March 31, 2018 and the date of Form 10-Q, the Company has not received any correspondence from the IRS in respect of such penalties.

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

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

The following discussion should be read in conjunction with the unaudited condensed financial statements and notes thereto appearing elsewhere in this Form 10-Q. The following discussion contains forward-looking statements. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed elsewhere in this report.

Overview — Results of Operations

Effective March 27, 2009, the Company ceased providing professional management services relating to non-performing loans in the People’s Republic of China. The Company has terminated its employees and closed down its offices. The Company has not identified a specific line of business or territory for any new business. There can be no assurance that the Company will be successful in identifying a new line of business that it can enter into or that if such new line of business is identified, that the Company will have adequate funding to commence operations of a new line of business. The principal stockholder of the Company has indicated its intention to finance the Company for a reasonable period of time to enable the Company to continue as a going concern, assuming that in such a period of time the Company would not be able to raise additional capital to support its continuation. However, it is uncertain for how long or to what extent such a period of time would be “reasonable” and there can be no assurance that financing from the principal stockholder will be continued.

	Three months ended March 31,

	2018			2017
	U.S.$			U.S.$
Administrative and general expenses		(14,428	)		(5,414	)

Loss before income taxes		(14,428	)		(5,414	)

Income tax expense		—			—

Net loss		(14,428	)		(5,414	)

THREE MONTHS ENDED MARCH 31, 2018 (UNAUDITED) COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2017 (UNAUDITED)

LOSS FROM OPERATIONS

The Company’s operating expenses totaled U.S.$14,428 for the three months ended March 31, 2018, compared to U.S. $5,414 for the three months ended March 31, 2017. The increase was due to increase in professional fees to pursue reinstatement in California and payment of franchise tax and related interest and penalties of U.S.$5,000.

PROVISION FOR INCOME TAXES

No income tax expense for the three months ended March 31, 2018 and 2017 was incurred because the Company reported a net loss.

LIQUIDITY AND CAPITAL RESOURCES

The Company has relied on private financing by advances from the principal stockholder of the Company, who has agreed not to demand repayment of amounts due to it as long as the Company has negative working capital. The principal stockholder has indicated its intention to finance the Company for a reasonable period of time to enable the Company to continue as a going concern, assuming that in such a period of time the Company would not be able to raise additional capital to support its continuation. However, it is uncertain for how long or to what extent such a period of time would be “reasonable” and there can be no assurance that the financing from the principal stockholder will be continued. The accompanying unaudited condensed financial statements do not include or reflect any adjustments that might result from the outcome of these uncertainties.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to the Company.

Future Operations

The Company is seeking investment opportunities that may provide revenues for the Company. However, the Company has not identified a specific line of business or territory for any such new business. There can be no assurance that the Company will be successful in identifying a new line of business that it can enter into or that if such new line of business is identified, that the receipt of revenues is probable.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are not exposed to a material level of market risk due to changes in interest rates, since we have never registered or issued debt instruments. Our outstanding long term liabilities are mostly loans from the Company’s principal stockholder, which are unsecured and interest rate fixed or interest-free. Currently we do not maintain a portfolio of interest-sensitive debt instruments or any fixed-income derivatives.

Item 4. Controls and Procedures.

(a)

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of its disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and which also are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

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

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

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting is as of the three months ended March 31, 2018. We believe that our internal control over financial reporting is effective. We have not identified any current material weaknesses considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations.

(b) Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting for the three months ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 6. Exhibits.

31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1	Section 1350 Certification of Chief Executive Officer

32.2	Section 1350 Certification of Chief Financial Officer

SIGNATURES

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

Date: May 9, 2018	CHINAWE.COM INC.
	(Registrant)

	By:	/s/ Man Keung Wai
		Man Keung Wai
		Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Man Keung Wai
		Man Keung Wai
		Chief Financial Officer
		(Principal Financial Officer)

EXHIBIT INDEX

Exhibit No.		Description
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1		Section 1350 Certification of Chief Executive Officer

32.2		Section 1350 Certification of Chief Financial Officer

CHINAWE COM INC 10-Q