UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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☑
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31,
2018
OR
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission file number: 000-29169
Chinawe.com Inc.
(Exact name of registrant as specified in
its charter)
California
(State or other jurisdiction of
incorporation or organization)
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95-4627285
(I.R.S. Employer Identification No.)
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Room 1208, Block A
Fuk Keung Industrial Building
66-68 Tong Mei Road
Kowloon, Hong Kong
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including
area code: (852) 23810818
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: common stock, par value $0.001 per share
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑
Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
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 if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to Form 10-K. ☑
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):
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☑
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☑ No ☐
The aggregate market value of common stock
held by non-affiliates of the registrant (computed by reference to the average bid and asked price on June 29, 2018) was $247,139.
Shares held by each executive officer, director and by each person who owns 10% or more of the outstanding common stock have been
excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive
determination for other purposes.
As of March 28, 2019, there were 43,800,000
shares of common stock, $0.001 per share par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Part I
Item 1. Business.
Chinawe.com Inc. (the “Company”, “Chinawe”
or “we”), formerly known as Neo Modern Entertainment Corp. (“NeoModern”), was formed pursuant to the corporation
laws of the State of California on March 19, 1997.
Chinawe’s principal business was providing professional
management services relating to non-performing loans (“NPLs”) in the People’s Republic of China (“PRC”),
as well as other consulting services. During the first quarter of 2009, the Company’s sole customer, Huizhou One Limited
(“HOL”), issued a notice of termination to terminate its service contracts with the Company with effect from March
26 and March 27, 2009. Effective from March 27, 2009, the Company became a non-operating company.
Item 1A. Risk Factors.
Set forth below are certain risks and uncertainties relating
to our business. These are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known
to us or that we currently deem immaterial may also impair our business. If any of the following risks actually occur, our business,
operating results or financial condition could be materially adversely affected.
RISK RELATED TO OUR BUSINESS
THE COMPANY CURRENTLY HAS NO OPERATING BUSINESS
The Company is currently seeking one or more lines of business
that it can enter into. The Company, however, has not identified a specific line of business or territory for any such new business.
There can be no assurance that the Company will be successful in identifying a new line of business that it can enter into or that
it will be successful in operating any such new business. If we do not successfully address these risks and uncertainties, our
financial condition will be materially adversely affected and the Company may have to dissolve.
WE WILL REQUIRE FUNDS TO FINANCE ENTRY INTO A NEW LINE
OF BUSINESS
We will need financing to enter into a new line of business.
We may seek to obtain such funds through sales of equity and/or debt, or other external financing in order to fund any new operations.
We cannot assure that any capital resources will be available to us, or, if available, will be on terms that will be acceptable
to us. Any equity financing will dilute the equity interests of existing security holders. If adequate funds are not available
or are not available on acceptable terms, our ability to execute any new business plan and our business will be materially and
adversely affected. The principal stockholder of the Company has in the past advanced funds to the Company to continue its operations.
Although this stockholder has indicated that it will continue to fund the Company while the Company searches for a new line
of business, there can be no assurance that the principal stockholder will continue to so fund the Company until a new line of
business is located.
THE COMPANY MAY BE SUBJECT TO INTEREST AND PENALTIES FOR
FAILURE TO FILE FEDERAL AND CALIFORNIA INCOME TAX RETURNS
The Company filed Forms 5471 and 5472 with the Internal Revenue
Service (the “IRS”) late. The IRS could impose aggregate penalties of approximately $330,000 for such late filings.
As of December 31, 2018 and the date of the Company’s financial statements, the Company has not received any correspondence
from the IRS in respect of such penalties. The imposition of such penalties would have a material adverse effect upon the Company’s
financial condition.
RISKS RELATING TO OUR STOCK
BECAUSE OUR COMMON STOCK PRICE IS BELOW $5.00, WE ARE SUBJECT
TO ADDITIONAL RULES AND REGULATIONS.
The Securities and Exchange Commission (“SEC”) has
adopted regulations which generally define a “penny stock” to be any equity security that has a market price (as defined)
of less than $5.00 per share, subject to certain exceptions. The Company’s common stock, par value $0.001 per share (“Common
Stock”), presently is a “penny stock”. Because our Common Stock is a “penny stock”, it is subject
to rules that impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established
customers and accredited investors. There can be no assurance that the Common Stock will trade for $5.00 or more per share, or
if so, when.
TRADING ON THE OTC MARKETS; POSSIBLE DELISTING
Absent NASDAQ Capital Market or other NASDAQ or stock exchange
listing, trading, if any, in our Common Stock will, as it presently is, continue on the OTC Markets. As a result, you may find
it difficult to dispose of or to obtain accurate quotations as to the market value of the Common Stock. If delisted, we cannot
predict when, if ever, our class of Common Stock would be re-listed for trading on the OTC Markets or any other market or exchange
as the approval to re-list the Common Stock is subject to review by applicable regulatory authorities.
POSSIBLE TERMINATION OF REGISTRATION OF OUR COMMON STOCK
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
The Company may elect to terminate the registration of the Common
Stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In the event the Company so terminates
the registration of the Common Stock (i.e., “goes Dark”), the Company’s reporting obligations under the Exchange
Act will be suspended and stockholders will no longer have access to current information about the Company.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
The Company’s headquarters are located in Kowloon, Hong
Kong.
Item 3. Legal Proceedings.
We are not engaged in any litigation or governmental proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
(a) Our
shares of Common Stock are traded on the OTC Pink marketplace under the symbol “CHWE”. Trading in the Common Stock
is limited.
The following table sets forth the range of high and low bids
for our Common Stock for our two most recent fiscal years:
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High
(U.S.$)
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Low
(U.S.$)
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2018
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January 1, 2018 – March 31, 2018
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.03
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.01
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April 1, 2018 – June 30, 2018
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.02
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.01
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July 1, 2018 – September 30, 2018
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.02
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.01
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October 1, 2018 – December 31, 2018
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.03
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.01
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2017
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January 1, 2017 – March 31, 2017
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.01
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.01
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April 1, 2017 – June 30, 2017
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.02
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.01
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July 1, 2017 – September 30, 2017
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.01
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.01
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October 1, 2017 – December 31, 2017
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.02
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.01
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The foregoing quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual transactions.
On March 28, 2019, the last day the Common Stock traded, the
Common Stock was quoted at U.S.$.03 per share.
(b) As
of March 28, 2019, the Company had 43,800,000 shares of Common Stock outstanding and, as of March 28, 2019, 20 stockholders computed
by the number of record holders, not including holders for whom shares are being held in the name of brokerage houses and clearing
agencies.
(c) We
have not paid any cash dividends with respect to our Common Stock, nor does our Board of Directors intend to declare cash dividends
on our Common Stock in the foreseeable future, in order to conserve cash for working capital purposes.
Item 6. Selected Financial Data.
Not applicable.
Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this Form 10-K. The following discussion contains forward-looking
statements. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might
cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to,
those discussed in “Risk Factors” and elsewhere in this Report.
Overview — Results of Operations
The Company’s financial statements for the year ended
December 31, 2018 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. For the year ended December 31, 2018, the Company reported a net
loss of U.S.$36,926, and as of December 31, 2018 had a negative working capital and stockholders’ deficit of U.S.$447,123
and U.S.$447,123, respectively. Effective March 27, 2009, the Company ceased providing professional management services relating
to NPLs in the PRC. The Company has terminated its employees and closed down its offices. The Company has not identified a specific
line of business or territory for any new business. There can be no assurance that the Company will be successful in identifying
a new line of business that it can enter into or that if such new line of business is identified, the Company will have adequate
funding to commence operations of a new line of business. A principal stockholder has indicated its intention to finance the Company
for a reasonable period of time to enable the Company to continue as a going concern, assuming that in such a period of time the
Company would not be able to raise additional capital to support its continuation. However, it is uncertain for how long or to
what extent such a period of time would be “reasonable” and there can be no assurance that the financing from this
stockholder will be continued. The Company is also considering de-registering its Common Stock with the SEC with the result that
the Company’s reporting obligations under the Exchange Act will be suspended. See “Item1A. RISK FACTORS-RISKS RELATING
TO OUR STOCK-POSSIBLE TERMINATION OF REGISTRATION OF OUR COMMON STOCK UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.”
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Year ended December 31,
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2018
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2017
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U.S.$
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U.S.$
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Revenue
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—
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—
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Administrative and general expenses
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(36,926
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(67,086
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Loss before income taxes
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(36,926
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(67,086
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Income tax expense
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—
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—
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Net loss
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(36,926
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(67,086
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Year ended December 31, 2018 compared to the year ended
December 31, 2017
Revenues.
Revenues for the year ended December 31, 2018
were U.S.$0 as compared to U.S.$0 for the year ended December 31, 2017. The Company discontinued its sole business with HOL in
March 2009 and has not generated new business in this or any other field.
Administrative and general expenses.
Administrative and
general expenses for the year ended December 31, 2018 were U.S.$36,926, a decrease of 45% as compared to U.S.$67,086 for the year
ended December 31, 2017. The decrease was due to payment of franchise tax and related interest and penalties of US$20,000 and legal
and professional fees to pursue reinstatement in California during 2017.
Income tax expense.
No income tax expense for the years
ended December 31, 2018 and 2017 was incurred because the Company reported a net loss in both years.
Liquidity and Capital Resources
The Company’s financial statements for the year ended
December 31, 2018 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. For the year ended December 31, 2018, the Company reported a net
loss of U.S.$36,926 and had a negative working capital and stockholders’ deficit of U.S.$447,123 and U.S.$447,123, respectively.
The Company has relied on private financing by advances from the principal stockholder of the Company, who has agreed not to demand
repayment of amounts due 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 this stockholder will be continued. The accompanying financial statements do not include or reflect any
adjustments that might result from the outcome of these uncertainties.
Critical Accounting Policies and Estimates
A company’s financial statements reflect the selection
and application of accounting policies which require management to make significant estimates and assumptions. Since the Company
has no business, we believe there is no critical judgment area in the application of our accounting policies that currently affects
our financial condition and results of operations except for the disclosure above under “Liquidity and Capital Resources”.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to the Company.
Future Operations
The Company is seeking investment opportunities that may provide
revenue for the Company. However, the Company has not identified a specific line of business or territory for any such new business.
There can be no assurance that the Company will be successful in identifying a new line of business that it can enter into or that
if such new line of business is identified, that the receipt of revenue is probable. The Company is also considering de-registering
its Common Stock with the SEC with the result that it would no longer have to file periodic reports with the SEC. See “Item
1A. RISK FACTORS–RISKS RELATING TO OUR STOCK–POSSIBLE TERMINATION OF REGISTRATION OF OUR COMMON STOCK UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.”
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk.
Not applicable.
Item 8. Financial Statements and Supplementary
Data.
The financial statements required by this Item are set forth
at the pages indicated in Item 15 in this Report.
Item 9. Changes in and Disagreements
with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
(a) Evaluation
of Disclosure Controls and Procedures.
As of the end of the period covered by this Report, the Company
conducted an evaluation, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer,
of its disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this
evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files
or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules
and forms of the SEC and which also are effective in ensuring that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the
Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
The Company’s management is responsible for establishing
and maintaining adequate internal control over financial reporting for the Company as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance
regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable
laws and regulations. The Company’s internal controls framework is based on the criteria set forth in the Internal Control
— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
Management’s assessment of the effectiveness of the Company’s
internal control over financial reporting is as of the fiscal year ended December 31, 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.
This Report does not include an attestation report of the Company’s
registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject
to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to
provide only management’s report in this Report.
(b) Changes
in Internal Controls.
There were no changes in the Company’s internal control
over financial reporting for the year ended December 31, 2018 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
Item 9B. Other Information.
Not applicable.
PART III
Item 10. Directors, Executive Officers
and Corporate Governance.
Management
The following sets forth information regarding our executive
officers, directors and other key employees:
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Name
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Age
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Title
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Man Keung Alan Wai
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58
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Chairman of the Board, Chief Executive Officer, Chief Financial Officer and President
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Man Ying Ken Wai
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53
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Vice President and Secretary, Director
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Xiaojiang Zhao
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51
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Director
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The following is a brief account of the business experience
of the above mentioned individuals. References to “our Company” and “since its incorporation” in the following
description refer to Gonet Associates Limited (“Gonet”) and affiliates and not Neo Modern as it existed prior to the
merger of Chinawe.com Inc., a Delaware corporation, with and into Neo Modern on March 15, 2001.
Mr. Wai, Man Keung Alan
— Chairman of the Board,
Chief Executive Officer, Chief Financial Officer and President
Mr. Wai, Man Keung Alan is the founder of the Company and the
Chairman and Chief Executive Officer since its incorporation. He became Chief Financial Officer on August 26, 2010. He is responsible
for identifying business opportunities, overall strategic planning and development of the Company. Mr. Wai has over 15 years of
entrepreneurial experience in business development and administration prior to founding Welcon Info-Tech in Hong Kong in 1997.
Mr. Wai, Man Ying Ken
— Director, Vice President
and Secretary
Mr. Wai, Man Ying Ken is the co-founder, Director, Vice President
and Secretary of our Company since its incorporation. He became Secretary on August 26, 2010. He has responsibility for determining
and developing the Company’s direction, establishing operation strategies, considering economic benefits, assets valuation
and financial decision making. Prior to his current position, Mr. Wai was a director in a Hong Kong-based company specializing
in property development and construction. Having co-founded Chinawe with his elder brother Mr. Wai Man Keung Alan, he has dedicated
himself to the development and management of our Company ever since. He studied General Science at the University of Waterloo,
Canada.
Mr. Zhao, Xiaojiang
— Director
Mr. Zhao become a director of the Company in November 2016.
He is a principal and director of Guangdong Rui Sheung Properties Co. Ltd. (“Rui Sheung”), a Chinese company engaged
in the real estate business. Prior to Rui Sheung, he was affiliated with Guangzhou Zan Bu Trade Co. Ltd. from April 2000 through
August 2010. He was affiliated with First Tractor Manufactory from September 1988 through March 2000. Mr. Zhao holds a diploma
from the Henan College of Economics in China.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Federal securities laws, the Company’s directors,
executive officers and any person holding more than 10% of the Company’s Common Stock are required to report their ownership
of the Company’s Common Stock and any changes in that ownership to the SEC on the SEC’s Forms 3, 4 and 5. Based on
the Company not having received copies of any such forms, the Company believes that no officers, directors or owners of greater
than 10% of the Company’s Common Stock engaged in any transactions in the Company’s Common Stock during the fiscal
year ended December 31, 2018.
Code of Ethics
The Company has adopted a Code of Ethics that applies to all
of its directors, officers (including its Chief Executive Officer, Chief Financial Officer, Controller and any person performing
similar functions) and employees. The Company has filed a copy of this Code of Ethics as Exhibit 14 to its Annual Report on Form
10-KSB for the year ended December 31, 2003.
Audit Committee Financial Expert
The Company does not have a standing Audit Committee and, accordingly,
does not have an “Audit Committee Financial Expert” within the meaning of the rules and regulations of the SEC.
Item 11. Executive Compensation.
No compensation was paid to the Chief Executive Officer during
the years ended December 31, 2018 and December 31, 2017. No other executive officer received a total annual salary and bonus exceeding
$100,000 during either of such years.
Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth information as of March 28,
2019, regarding the beneficial ownership of Common Stock of (1) each person or group known by us to beneficially own 5% or
more of the outstanding shares of Common Stock, (2) each director and named executive officer and (3) all directors and
executive officers as a group. Unless otherwise noted, the persons named below have sole voting and investment power with
respect to the shares shown as beneficially owned by them.
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Name of Beneficial Owner
(1)
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Amount of Beneficial Ownership
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Percent of Outstanding
Shares of Class Owned
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Gonet Associates Ltd.
(2)
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25,804,090
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58.9
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Man Keung Alan Wai
(2)
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25,804,090
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58.9
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Man Ying Ken Wai
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0
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0
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Xiaojiang Zhao
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1,520,000
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3.5
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Properties of Light, LLC
(3)
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4,196,366
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9.6
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All officers and directors as a group (3 persons)
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27,324,090
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(2)(3)
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62.4
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(1)
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The address for each of the officers and directors of the Company is c/o our corporate headquarters in Kowloon, Hong Kong.
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(2)
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Man Keung Alan Wai, through his control of Gonet Associates Ltd., beneficially owns the shares of Common Stock held by Gonet.
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(3)
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The address for Properties of Light, LLC, a California limited liability company, is 1901 Avenue of the Stars, Suite 240, Los
Angeles, CA 90067.
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* * *
The following table sets forth information as of December 31,
2018 with respect to compensation plans (including individual compensation arrangements) under which shares of the Company’s
Common Stock are authorized for issuance.
Equity Compensation Plan Information
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Plan category
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Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
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Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
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Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
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Equity compensation plans approved by security holders
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0
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N/A
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0
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Equity compensation plans not approved by security holders
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0
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N/A
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0
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Total
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0
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N/A
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0
|
|
Item 13. Certain Relationships and Related
Transactions, and Director Independence.
The following chart shows advances and repayments made in the
year ended December 31, 2018:
|
Name
|
|
Advances made
U.S.$
|
|
|
Repayment made
U.S.$
|
|
|
Balance
U.S.$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gonet Associates Ltd.
(1)
|
|
|
21,566
|
|
|
|
—
|
|
|
|
411,132
|
|
(1) Gonet is
controlled by Man Keung Alan Wai.
The Company’s Board of Directors consists of Man Keung
Alan Wei, Man Ying Ken Wai and Xiaojiang Zhao. Mr. Zhao is the only director who is “independent” as such term is defined
in the Corporate Governance Rules of the Nasdaq Stock Market.
Item 14. Principal Accountant Fees and
Services.
Audit Fees.
The aggregate fees billed for the fiscal years ended December
31, 2018 and 2017 for professional services rendered by Moore Stephens CPA Limited (“Moore Stephens”) for the audit
of the Company’s annual financial statements for the year ended December 31, 2018 and 2017 and the review of the financial
statements included in our quarterly reports on Form 10-Q for the years ended December 31, 2018 and 2017 were U.S.$5,500 and U.S.$5,500,
respectively.
Audit-Related Fees.
The Company did not pay any audit-related fees to Moore Stephens
for the fiscal years ended December 31, 2018 and 2017.
Tax Fees.
Moore Stephens did not provide any tax services to the
Company in either of the fiscal years ended December 31, 2018 and 2017. KWM CPA’s LLP billed the Company U.S.$10,000
for tax services rendered to the Company for the year ended December 31, 2017. No tax fees were paid in 2018.
All Other Fees.
Moore Stephens did not provide any other services to the Company
in either of the fiscal years ended December 31, 2018 and 2017.
PART IV
Item 15. Exhibits and Financial Statement
Schedules
(b) EXHIBITS
|
|
(1)
|
Filed as an exhibit to our Company’s Form 10-SB, as filed with the SEC on May 19, 2000, and hereby incorporated by reference
herein.
|
|
|
(2)
|
Filed as an exhibit to our Company’s Annual Report on Form 10-KSB, as filed with the SEC on April 14, 2004, and hereby
incorporated by reference herein.
|
Item 16. Form 10-K Summary
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: March 29, 2019
|
|
CHINAWE.COM INC.
|
|
|
(Registrant)
|
|
|
|
|
|
By:
|
/s/ Man Keung Alan Wai
|
|
|
|
Man Keung Alan Wai
|
|
|
|
Chief Executive Officer
|
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
|
SIGNATURES
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
|
|
/s/ Man Keung Alan Wai
|
|
Chairman of the Board, Chief Executive Officer,
|
|
March 29, 2019
|
|
Man Keung Alan Wai
|
|
Chief Financial Officer and Director
(Principal Executive Officer and Principal
Financial Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Man Ying Ken Wai
|
|
Vice President of Marketing, Secretary and Director
|
|
March 29, 2019
|
|
Man Ying Ken Wai
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Xiaojiang Zhao
|
|
Director
|
|
March 29, 2019
|
|
Xiaojiang Zhao
|
|
|
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
CHINAWE.COM INC.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Chinawe.com
Inc. (the “Company”) as of December 31, 2018 and 2017, and the related statements of comprehensive loss, changes in
stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2018, and the related notes
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly,
in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations
and its cash flows for each of the two years in the period ended December 31, 2018, in conformity with accounting principles generally
accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are
a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of
the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ Moore Stephens CPA Limited
Certified Public Accountants
We have served as the Company’s auditor since 2016.
Hong Kong
March 29, 2019
CHINAWE.COM INC.
STATEMENTS OF COMPREHENSIVE LOSS
|
|
|
Year ended December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
U.S.$
|
|
|
U.S.$
|
|
|
|
|
|
|
|
|
|
|
Administrative and general expenses
|
|
|
(36,926
|
)
|
|
|
(67,086
|
)
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES
|
|
|
(36,926
|
)
|
|
|
(67,086
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
|
(36,926
|
)
|
|
|
(67,086
|
)
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE LOSS
|
|
|
(36,926
|
)
|
|
|
(67,085
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share of common stock
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares of common stock outstanding
|
|
|
43,800,000
|
|
|
|
43,800,000
|
|
See accompanying notes to financial statements.
CHINAWE.COM INC.
BALANCE SHEETS
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
Note
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
U.S.$
|
|
|
U.S.$
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses and other current liabilities
|
|
|
|
|
|
|
35,991
|
|
|
|
20,631
|
|
|
Due to principal stockholder
|
|
|
3
|
|
|
|
411,132
|
|
|
|
389,566
|
|
|
Total current liabilities
|
|
|
|
|
|
|
447,123
|
|
|
|
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.$0.001 per share, authorized 100,000,000 shares; issued and outstanding 43,800,000 shares
|
|
|
|
|
|
|
43,800
|
|
|
|
43,800
|
|
|
Additional paid-in capital
|
|
|
|
|
|
|
191,825
|
|
|
|
191,825
|
|
|
Accumulated losses
|
|
|
|
|
|
|
(682,748
|
)
|
|
|
(645,822
|
)
|
|
Accumulated other comprehensive loss
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Total stockholders’ deficit
|
|
|
|
|
|
|
(447,123
|
)
|
|
|
(410,197
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
See accompanying notes to financial statements.
CHINAWE.COM INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
|
|
|
Number
of shares
|
|
|
Amount
|
|
|
Additional
paid-in
capital
|
|
|
Accumulated
losses
|
|
|
Total
Stockholders’
Deficit
|
|
|
|
|
|
|
|
|
|
U.S.$
|
|
|
|
U.S.$
|
|
|
|
U.S.$
|
|
|
|
U.S.$
|
|
|
Balance as of January 1, 2017
|
|
|
43,800,000
|
|
|
|
43,800
|
|
|
|
191,825
|
|
|
|
(578,736
|
)
|
|
|
(343,111
|
)
|
|
Net loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(67,086
|
)
|
|
|
(67,086
|
)
|
|
Balance as of December 31, 2017
|
|
|
43,800,000
|
|
|
|
43,800
|
|
|
|
191,825
|
|
|
|
(645,822
|
)
|
|
|
(410,197
|
)
|
|
Net loss for the year
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(36,926
|
)
|
|
|
(36,926
|
)
|
|
Balance as of December 31, 2018
|
|
|
43,800,000
|
|
|
|
43,800
|
|
|
|
191,825
|
|
|
|
(682,748
|
)
|
|
|
(447,123
|
)
|
See accompanying notes to financial statements.
CHINAWE.COM INC.
STATEMENTS OF CASH FLOWS
|
|
|
Year ended December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
U.S.$
|
|
|
U.S.$
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(36,926
|
)
|
|
|
(67,086
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Accrued expenses and other current liabilities
|
|
|
15,360
|
|
|
|
15,387
|
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(21,566
|
)
|
|
|
(51,699
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Advance from principal stockholder
|
|
|
21,566
|
|
|
|
51,699
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
21,566
|
|
|
|
51,699
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
|
—
|
|
|
|
—
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
—
|
|
|
|
—
|
|
|
Effect of exchange rate changes
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
—
|
|
|
|
—
|
|
|
Income taxes paid
|
|
|
—
|
|
|
|
—
|
|
See accompanying notes to financial statements.
CHINAWE.COM INC.
N
OTES TO FINANCIAL STATEMENTS
|
|
1.
|
DESCRIPTION OF BUSINESS AND ORGANIZATION STRUCTURE
|
Chinawe.com Inc. (“Chinawe” or the “Company”) 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 from March 27, 2009, the Company became a non-operating company.
|
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
(a) Basis
of accounting
The financial statements have been prepared in accordance with
generally accepted accounting principles (“GAAP”) in the United States of America (“U.S.”). The functional
and reporting currency of the Company is the U.S. dollar (“U.S.$”).
(b) Going
concern consideration
The Company’s financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the
normal course of business. As of December 31, 2018, the Company had negative working capital and stockholders’ deficit of
U.S.$447,123 and U.S.$447,123, respectively, which raise substantial doubt about its ability to continue as a going concern.
The Company has relied on private financing by cash inflows
from the principal stockholder of the Company, who has agreed not to demand repayment of amounts due to it as long as the Company
has negative working capital. The principal stockholder has indicated its intention to finance the Company for a reasonable period
of time to enable the Company to continue as a going concern, assuming that in such a period of time the Company would not be able
to raise additional capital to support its continuation. However, it is uncertain for how long or to what extent such a period
of time would be “reasonable” and there can be no assurance that the financing from the principal stockholder will
be continued. The accompanying financial statements do not include or reflect any adjustments that might result from the outcome
of these uncertainties.
CHINAWE.COM INC.
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
(c) Cash
and cash equivalents
The Company considers all highly liquid investments purchased
with an original maturity of three months or less that are readily convertible into a known amount of cash to be cash equivalents.
(d) Revenue
recognition
The Company has no business currently.
(e) Income
taxes
Provision for income and other taxes has been made in accordance
with the tax rates and laws of the countries in which the Company operates.
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled.
Financial Accounting Standards Board Accounting Standards Codification
740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes
a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. It also provides accounting guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. Interest and penalties from tax assessments, if any, are included in
income taxes in the statement of comprehensive loss.
(f) Earnings
(loss) per common share
Basic earnings (loss) per share amounts are based on the weighted
average shares of common stock outstanding. Diluted earnings (loss) per share assumes the conversion, exercise or issuance of all
potential common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss
or increase earnings per share. The Company had no potential common stock instruments which would result in diluted earnings (loss)
per share in 2018 or 2017.
CHINAWE.COM INC.
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(g) Foreign
currency translation
The Company’s functional currency is the U.S.$, which
is the currency of the primary economic environment in which the Company operates. The financial statements are presented in U.S.$.
All transactions in currencies other than functional currency
during the year are translated at the exchange rates prevailing on the respective transaction dates. Monetary assets and liabilities
existing at the balance sheet date denominated in currencies other than functional currency are remeasured at the exchange rates
existing on that date. Exchange differences are recorded in the statement of comprehensive loss.
(h) Use
of estimates
The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
(i) Fair
value of financial instruments
The estimated fair values for financial instruments are
determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot
be determined with precision. The estimated fair values of the Company’s financial instruments, which include advances
from the Company’s principal stockholder, approximate their carrying value in the financial statements.
|
|
3.
|
RELATED PARTY BALANCES AND TRANSACTIONS
|
The balances with related parties are as follows:
|
|
|
As of
December 31, 2018
|
|
|
As of
December 31, 2017
|
|
|
|
|
|
U.S.$
|
|
|
|
U.S.$
|
|
|
Advances from principal stockholder
|
|
|
411,132
|
|
|
|
389,566
|
|
|
|
|
|
|
|
|
|
|
|
The amounts due are unsecured, interest free and repayable on
demand.
CHINAWE.COM INC.
NOTES TO FINANCIAL STATEMENTS
There is a contingent liability of approximately U.S.$330,000
in respect of penalties for late filing of Internal Revenue Service (“IRS”) Forms 5471 and 5472. As of December 31,
2018 and the date of this Form 10-K, 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.
At December 31, 2018 and 2017,
the Company had an unused net operating loss carryforward of approximately U.S.$409,422 and U.S.$372,496, respectively,
for income tax purposes, which expires between 2026 to indefinitely and between 2026 to 2037, respectively. At December
31, 2018 and 2017, these net operating losses carryforward may result in future income tax benefits of U.S.$114,638 and
U.S.$104,299, respectively, however, because realization is uncertain at this time, a valuation allowance in the same amount
has been established. Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company’s
deferred tax assets of December 31, 2018 and 2017 are as follows:
|
|
|
As of
December 31, 2018
|
|
|
As of
December 31, 2017
|
|
|
|
|
|
U.S.$
|
|
|
|
U.S.$
|
|
|
Deferred tax asset-
|
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
|
|
|
114,638
|
|
|
|
104,299
|
|
|
Valuation allowance
|
|
|
(114,638
|
)
|
|
|
(104,299
|
)
|
|
|
|
|
—
|
|
|
|
—
|
|
Movement of valuation allowance:
|
|
|
As of
December 31, 2018
|
|
|
As of
December 31, 2017
|
|
|
|
|
|
U.S.$
|
|
|
|
U.S.$
|
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the year
|
|
|
104,299
|
|
|
|
85,515
|
|
|
Current year addition
|
|
|
10,339
|
|
|
|
18,784
|
|
|
At the end of the year
|
|
|
114,638
|
|
|
|
104,299
|
|
A reconciliation of the income tax expense
to the amount computed by applying the current statutory tax rate to the loss before income taxes in the statements of comprehensive
loss is as follows:
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2018
|
|
|
As of
December 31, 2017
|
|
|
|
|
|
U.S.$
|
|
|
|
U.S.$
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. statutory income tax rate
|
|
|
21
|
%
|
|
|
35
|
%
|
|
State income tax rate
|
|
|
8.8
|
|
|
|
8.8
|
|
|
Valuation reduction
|
|
|
(1.8
|
)
|
|
|
(2.8
|
)
|
|
Enacted tax reform on future tax rates
|
|
|
—
|
|
|
|
(13
|
)
|
|
Change in valuation allowance of deferred tax asset
|
|
|
(28
|
)
|
|
|
(28
|
)
|
|
Net deferred tax asset
|
|
|
—
|
|
|
|
—
|
|
EXHIBIT INDEX
Chinawe Com (CE) (USOTC:CHWE)
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From Nov 2024 to Dec 2024
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From Dec 2023 to Dec 2024
