UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 _______________________________
 
 FORM
10 – Q
 _______________________________
 
 [mark
one]
 
 x
              QUARTERLY
      REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
      the quarterly period ended: June 30,
2008
  o
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
      the transition period from ______________ to
  ______________
  Commission
File Number:   000-26673
 WELWIND
ENERGY INTERNATIONAL CORPORATION
 (Name of
Small Business Issuer in Its Charter)
  Delaware
              
              98-0207081(State
      or Other Jurisdiction
              
              IRS
      Employerof
      Incorporation or Organization)
              
              Identification
      Number
 
 10-20172
113B Avenue
 Maple
Ridge, British Columbia
 Canada
V2X 0Y9
 (604)
460-8487
 (Address
and Telephone Number of Principal Executive Offices)
 
 Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class registered:
              Name
      of each exchange on which registered:None
              Over-the-Counter
      Bulletin BoardSecurities
      registered under Section 12(g) of the Exchange Act:Common
      Stock, par value $0.001
                (Title
      of class)
 
 with a
copy to:
 SteadyLaw
Group, LLP
 501 W.
Broadway, Suite 800
 San
Diego, CA 92101
 Telephone
(619) 399-3090
 Telecopier
(619) 330-1888
 Table of Contents
 1
 Indicate
by checkmark 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 is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
  Large
      accelerated filer o
              
              Accelerated
      filer oNon-accelerated
      filer o
              
              Smaller
      reporting company x(Do
      not check if a smaller reporting company)
  Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).YES o  NO x
  The
registrant has 166,074,837 shares of common stock outstanding as of June 30,
2008.
  Table of Contents
 2
 Quarterly
Report on FORM 10-Q For The Period Ended
 June
30, 2008
 
 Table
of Contents
 
 Welwind
Energy International Corp.
  Page No.PART I
      - FINANCIAL INFORMATIONITEM 1.
              FINANCIAL
      STATEMENTS
              4BALANCE SHEETSSTATEMENTS OF OPERATIONSSTATEMENT OF CASH FLOWSNOTES TO FINANCIAL STATEMENTSITEM 2
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
              16ITEM 4T.
              CONTROLS
      AND PROCEDURES
              26PART II
      - OTHER INFORMATIONITEM 1.
              LEGAL
      PROCEEDINGS
              27ITEM 1A.
              RISK
      FACTORS
              27ITEM 2.
              UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
              27ITEM 3.
              DEFAULTS
      UPON SENIOR SECURITIES
              27ITEM 4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
              27ITEM 5.
              OTHER
      INFORMATION
              27ITEM 6.
              EXHIBITS
              28SIGNATURES
              
              29
   Table of Contents
 3
 PART 1.FINANCIAL STATEMENTS
 
 Welwind
Energy International Corporation
 
 June 30,
2008
  IndexConsolidated
      Balance Sheets
              F–1Consolidated
      Statements of Operations
              F–2Consolidated
      Statements of Cash Flows
              F–3Notes to the
      Consolidated Financial Statements
              F–4
 Table of Contents
 4
 Welwind
Energy International Corporation
 Consolidated
Balance Sheets
 (Expressed
in Canadian Dollars)
 (unaudited)
 June
      30,
                2008
                $
              
              
              December
      31,
                2007
                $ASSETSCurrent
      AssetsCash
              
              
              84,891
              
              
              
              18,211Taxes
      recoverable
              
              
              10,385
              
              
              
              17,898Prepaid
      expenses (Note 3)
              
              
              319,844
              
              
              
              426,477Current
      assets of discontinued
                operations
      (Note 10)
              
              
              5,075
              
              
              
              9,579Total
      Current Assets
              
              
              420,195
              
              
              
              472,165Property
      and equipment, net (Note 4)
              
              
              579,057
              
              
              
              514,397Customer
      relationships
              
              
              245,016
              
              
              
              245,016Other
      assets (Note 3)
              
              
              254,345
              
              
              
              266,716Assets
      held for sale (Notes 4 and 10)
              
              
              1,858
              
              
              
              2,224Total
      Assets
              
              
              1,500,471
              
              
              
              1,500,518LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      LiabilitiesAccounts
      payable
              
              
              110,623
              
              
              
              129,618Accrued
      liabilities
              
              
              253,549
              
              
              
              320,117Due
      to related parties (Note 5)
              
              
              1,010,898
              
              
              
              765,426Current
      liabilities of discontinued operations (Note 10)
              
              
              14,038
              
              
              
              14,038Total
      Liabilities
              
              
              1,389,108
              
              
              
              1,229,199Commitments
      and Contingencies (Notes 1 and 8)Stockholders’
      EquityPreferred
      Stock:Authorized:
      10,000,000 shares, US$0.001 par value
                Issued
      and outstanding: 10,000,000 shares
                (2007
      – 10,000,000 issued and outstanding)
              
              
              11,137
              
              
              
              11,137Common
      Stock:Authorized:
      290,000,000 shares, US$0.001 par value
                Issued
      and outstanding: 166,074,837 shares
                (2007
      – 157,572,395 issued and outstanding)
              
              
              183,202
              
              
              
              164,704Additional
      paid-in capital
              
              
              15,604,991
              
              
              
              14,484,429Stock
      subscriptions receivable
              
              
              (72,026
              )
              
              
              -Accumulated
      deficit
              
              
              (15,615,941
              )
              
              
              (14,388,951
              )Total
      Stockholders’ Equity
              
              
              111,363
              
              
              
              271,319Total
      Liabilities and Stockholders’ Equity
              
              
              1,500,471
              
              
              
              1,500,518
    F-1
    Table of Contents
 5
 Welwind
Energy International Corporation
 Consolidated
Statements of Operations
 (Expressed
in Canadian Dollars)
 (unaudited)
 
 For
      the
                Three
      Months
                Ended
                June
      30,
                2008
                $
              
              
              For
      the
                Three
      Months
                Ended
                June
      30,
                2007
                $
              
              
              For
      the
                Six
      Months Ended
                June
      30,
                2008
                $
              
              
              For
      the
                Six
      Months Ended
                June
      30,
                2007
                $
              
              
              Accumulated
      from
                August
      17, 2006
                (Date
      of inception of
                Development
      Stage)
                to
                June
      30,
                2008
                $Revenue
              
              
              -
              
              
              
              -
              
              
              
              –
              
              
              
              –Operating
      ExpensesGeneral
      and Administrative
              
              
              534,163
              
              
              
              1,492,568
              
              
              
              1,015,018
              
              
              
              2,580,820
              
              
              
              5,982,198Net
      Loss from Continuing Operations
              
              
              (534,163
              )
              
              
              (1,492,568
              )
              
              
              (1,015,018
              )
              
              
              (2,580,820
              )
              
              
              (5,982,198
              )Other
      Income (Expense)Loss
      on Settlement of Debt (Note 7)
              
              
              (104,475
              )
              
              
              (74,550
              )
              
              
              (157,278
              )
              
              
              (123,747
              )
              
              
              (301,587
              )Loss
      on Disposal of Property and Equipment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,000
              )Net
      Loss before Discontinued
                Operations
              
              
              (638,638
              )
              
              
              (1,567,118
              )
              
              
              (1,172,296
              )
              
              
              (2,704,567
              )
              
              
              (6,284,785
              )Discontinued
      Operations (Note 10)
              
              
              1,678
              
              
              
              (78,702
              )
              
              
              (54,694
              )
              
              
              (129,581
              )
              
              
              (393,497
              )Net
      Loss and Comprehensive Loss for
                the
      Period
              
              
              (636,960
              )
              
              
              (1,645,820
              )
              
              
              (1,226,990
              )
              
              
              (2,834,148
              )
              
              
              (6,678,282
              )Net
      Loss Per Common ShareContinuing
      Operations – Basic and Diluted
              
              
              (0.01
              )
              
              
              (0.01
              )
              
              
              (0.01
              )
              
              
              (0.02
              )Discontinued
      Operations – Basic and Diluted
              
              
              (0.01
              )
              
              
              (0.01
              )
              
              
              (0.01
              )
              
              
              (0.02
              )Weighted
      Average Number of Common Shares Outstanding
              
              
              161,335,000
              
              
              
              141,202,000
              
              
              
              156,514,000
              
              
              
              135,278,000
  (The
accompanying notes are an integral part of these consolidated financial
statements)
  
  Table of
Contents
 6
 Welwind
Energy International Corporation
 Consolidated
Statements of Cash Flows
 (Expressed
in Canadian Dollars)
 (unaudited)
 For
      the
                Six
      Months Ended
                June 30,
                2008
                $
              
              
              For
      the
                Six
      Months
                Ended
                June
      30,
                2007
                $
              
              
              Accumulated
      from August 17, 2006 (Date of inception of Development Stage)
      to
                June
      30, 2008
                $Operating
      ActivitiesNet
      loss for the period
              
              
              (1,226,990
              )
              
              
              (2,834,148
              )
              
              
              (6,678,282
              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Amortization
              
              
              9,890
              
              
              
              7,600
              
              
              
              38,148Foreign
      exchange loss and other
              
              
              -
              
              
              
              894
              
              
              
              15,410Loss
      on settlement of debt
              
              
              157,278
              
              
              
              123,747
              
              
              
              301,587Stock-based
      compensation
              
              
              464,445
              
              
              
              2,120,922
              
              
              
              3,791,602Changes
      in operating assets and liabilities:Taxes
      recoverable
              
              
              7,513
              
              
              
              -
              
              
              
              7,513Accounts
      receivable
              
              
              -
              
              
              
              2,606
              
              
              
              (12,765
              )Inventory
              
              
              4,870
              
              
              
              9,458
              
              
              
              411Prepaid
      expenses
              
              
              8,069
              
              
              
              (13,755
              )
              
              
              16,415Accounts
      payable and accrued liabilities
              
              
              113,414
              
              
              
              25,574
              
              
              
              225,146Due
      to related parties
              
              
              257,572
              
              
              
              (102,341
              )
              
              
              873,604Net
      Cash Flows Used In Operating Activities
              
              
              (203,939
              )
              
              
              (659,443
              )
              
              
              (1,421,211
              )Investing
      ActivitiesCash
      acquired
              
              
              
              
              
              
              
              
              
              
              2,194Purchase
      and construction of equipment
              
              
              (74,550
              )
              
              
              (287,403
              )
              
              
              (615,328
              )Net
      Cash Flows Used In Investing Activities
              
              
              (74,550
              )
              
              
              (287,403
              )
              
              
              (613,134
              )Financing
      ActivitiesProceeds
      from subscriptions and issuance of stock
              
              
              357,269
              
              
              
              381,295
              
              
              
              2,022,027Advances
      from shareholders
              
              
              (12,100
              )
              
              
              49,006
              
              
              
              92,758Net
      Cash Flows Provided By Financing Activities
              
              
              345,169
              
              
              
              430,301
              
              
              
              2,114,785Increase
      (Decrease) in Cash
              
              
              66,680
              
              
              
              (516,545
              )
              
              
              80,440Cash
      – Beginning of Period
              
              
              18,211
              
              
              
              603,182
              
              
              
              4,451Cash
      – End of Period
              
              
              84,891
              
              
              
              86,637
              
              
              
              84,891Supplementary
      DisclosuresInterest
      paid
              
              
              –
              
              
              
              –
              
              
              
              -Income
      taxes paid
              
              
              –
              
              
              
              –
              
              
              
              -Non-cash
      Investing and Financing ActivitiesShares
      issued for finders fee
              
              
              -
              
              
              
              
              
              
              
              1,188,001Shares issued to settle
      debt
              
              
              481,255
              
              
              
              358,147
              
              
              
              404,101
 (The
accompanying notes are an integral part of these consolidated financial
statements)
 Table of Contents
 7
 Welwind
Energy International Corporation
 Notes to
Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 1.      Nature
of Operations and Continuance of Business
  Welwind
Energy International Corporation (the “Company”) was incorporated in the State
of Delaware on December 18, 1997 as Global Golf Holdings Inc.  The
Company acquired a business on November 23, 2004 to sell and distribute low
carbohydrate and sugar-free foods through retail and wholesale outlets in
Western British Columbia, Canada, and through the Internet. On August 17, 2006,
the Company acquired all of the outstanding and issued share capital of Welwind
Energy International Corporation (“WEIC”), a private Canadian company. WEIC was
founded in 2005 to build, own and operate wind farms on an international
scale.  Accordingly, the Company is now involved with wind power
projects in China. The Company is based in British Columbia,
Canada.  On November 24, 2007, the Company discontinued operations of
the retail and wholesale foods division to focus specifically on the wind power
projects in China.
  The
Company has not realized revenues on its wind power projects, has a working
capital deficiency of $968,913, and has an accumulated deficit at June 30, 2008
of $15,615,941 The Company's ability to continue as a going concern is dependent
upon the Company's ability to obtain additional financing and/or achieving a
profitable level of operations. These factors raise substantial doubt regarding
the Company’s ability to continue as a going concern.  The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 
 Management
of the Company has undertaken a plan with the goal of sustaining the Company’s
operations for the next twelve months and beyond.   These steps
include: (a) becoming cash flow positive via the Company’s Zhanjiang turbine and
a Power Purchase Agreement from the local power authority, (b) continue efforts
to raise significant additional capital and/or other forms of financing with
Acterra Group and Adventis Capital; and (c) controlling overhead expenses. 
There can be no assurance that any of these efforts will be
successful.
 
 2.      Summary
of Significant Accounting Policies
  a)
              Basis
      of Presentation
  These
interim consolidated financial statements and related notes are presented in
accordance with accounting principles generally accepted in the United States,
and are expressed in Canadian dollars. These consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiary, WEIC,
incorporated in the Province of Alberta, Canada. All significant intercompany
balances and transactions have been eliminated. The Company’s fiscal year-end is
December 31.
  b)
              Interim
      Consolidated Financial Statements
  The
interim unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Securities and
Exchange Commission (“SEC”) Form 10-QSB. They do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Therefore, these financial statements should
be read in conjunction with the Company’s audited consolidated financial
statements and notes thereto for the year ended December 31, 2007, included in
the Company’s Annual Report on Form 10-KSB filed on April 15, 2008 with the
SEC.
  The
consolidated financial statements included herein are unaudited; however, they
contain all normal recurring accruals and adjustments that, in the opinion of
management, are necessary to present fairly the Company’s consolidated financial
position at June 30, 2008, and the consolidated results of its operations and
consolidated cash flows for the three months ended June 30, 2008 and 2007. The
results of operations for the three months ended June 30, 2008 are not
necessarily indicative of the results to be expected for future quarters or the
full year.
  
 Table of Contents
 8
 Welwind
Energy International Corporation Notes to
Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 c)
              Use
      of Estimates
  The
preparation of consolidated financial statements in accordance with United
States generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenue and expenses in the reporting period. The Company
regularly evaluates estimates and assumptions related to goodwill and purchased
intangible asset valuations, stock-based compensation expense, deferred income
tax asset valuation allowance and loss contingencies. The Company bases its
estimates and assumptions on current facts, historical experience and various
other factors that it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities. The actual results experienced by the Company may
differ materially and adversely from the Company’s estimates. To the extent
there are material differences between the estimates and the actual results,
future results of operations will be affected.
  d)
              Cash
      and Cash Equivalents
  Cash
consists of bank accounts held at financial institutions in the United States,
Canada, and China. The Company considers all highly liquid instruments with a
maturity of three months or less, at the time of issuance, to be cash
equivalents.
  e)
              Property
      and Equipment
  Equipment
is recorded at cost and is depreciated using the declining balance method over
the estimated useful lives of the related asset. Maintenance and repairs are
charged to expense as incurred. Significant renewals and betterments are
capitalized.  Costs included in wind equipment are under construction
and will be amortized over their useful life on a straight-line basis once they
are put into use.
  f)
              Customer
      Relationships
  Customer
relationships consist of the relationships the Company has attained with the
various levels of governments in China, which resulted in the entering of two
agreements as noted in Note 8(a) and (b). The Company will amortize the carrying
value of the customer relationships on a straight-line basis over the remaining
estimated useful lives of the wind power plants upon commencement of the
commercial production of electricity.
  g)
              Revenue
      Recognition
  The
Company recognizes revenue in accordance with Securities and Exchange Commission
Staff Accounting Bulletin No. 104 (“SAB 104”), “Revenue Recognition in Financial
Statements”.
  h)
              Long-Lived
      Assets
  In
accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets”, the Company tests long-lived assets or asset groups for
recoverability when events or changes in circumstances indicate that their
carrying amount may not be recoverable. Circumstances which could initiate a
review include, but are not limited to: significant decreases in the market
price of the asset; significant adverse changes in the business climate or legal
factors; accumulation of costs significantly in excess of the amount originally
expected for the acquisition or construction of the asset; current period cash
flow or operating losses combined with a history of losses or a forecast of
continuing losses associated with the use of the asset; and current expectation
that the asset will more likely than not be sold or disposed significantly
before the end of its estimated useful life.
  Recoverability
is assessed based on the carrying amount of the asset and its fair value which
is generally determined based on the sum of the undiscounted cash flows expected
to result from the use and the eventual disposal of the asset, as well as
specific appraisal in certain instances. An impairment loss is recognized when
the carrying amount is not recoverable and exceeds fair value.
 
 Table of Contents
 9
 Welwind
Energy International Corporation Notes to
Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 i)
              Foreign
      Currency Translation
  The
Company's functional and reporting currency is the Canadian dollar. Monetary
assets and liabilities denominated in foreign currencies are translated to
Canadian dollars in accordance with SFAS No. 52 “Foreign Currency Translation”
using the exchange rate prevailing at the balance sheet date.  Gains
and losses arising on settlement of foreign currency denominated transactions
are included in the determination of net income or loss. Foreign currency
transactions are primarily undertaken in Chinese Renminbi. At June 30, 2008, the
exchange rate for one Chinese Renminbi was $0.1486 CAD (2007 - $0.1397
CAD).  For the period from January 1, 2008 to June 30, 2008, the
average exchange rate for one Chinese Renminbi was $0.1427 CAD (2007 - $0.1470
CAD). The Company has not, to the date of these consolidated financial
statements, entered into derivative instruments to offset the impact of foreign
currency fluctuations.
  j)
              Comprehensive
      Loss
  SFAS No.
130, “Reporting Comprehensive Income,” establishes standards for the reporting
and display of comprehensive loss and its components in the consolidated
financial statements. As at June 30, 2008 and 2007, the Company has no items
that represent a comprehensive loss and, therefore, has not included a schedule
of comprehensive loss in the consolidated financial statements.
  k)
              Basic
      and Diluted Net Income (Loss) Per
Share
  The
Company computes net income (loss) per share in accordance with SFAS No. 128,
"Earnings per Share". SFAS No. 128 requires presentation of both basic and
diluted earnings per share (EPS) on the face of the income statement. Basic EPS
is computed by dividing net income (loss) available to common shareholders
(numerator) by the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period using the treasury stock method and
convertible preferred stock using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all dilutive potential shares since their effect is
anti-dilutive.
  l)
              Stock-based
      Compensation
  The
Company records stock-based compensation in accordance with SFAS No. 123R “Share
Based Payments”, using the fair value method. All transactions in which goods or
services are the consideration received for the issuance of equity instruments
are accounted for based on the fair value of the consideration received or the
fair value of the equity instrument issued, whichever is more reliably
measurable. Equity instruments issued to employees and the cost of the services
received as consideration are measured and recognized based on the fair value of
the equity instruments issued.
  m)
              Financial
      Instruments and Concentrations of
Business
  The fair
values of financial instruments including cash, accounts receivable, accounts
payable, accrued liabilities and amounts due to related parties were estimated
to approximate their carrying values due to the immediate or short-term maturity
of these financial instruments. The Company’s operations are in Canada and China
resulting in exposure to market risks from changes in foreign currency
rates.  The financial risk is the risk to the Company’s operations
that arise from fluctuations in foreign exchange rates and the degree of
volatility of these rates.  Currently, the Company does not use
derivative instruments to reduce its exposure to foreign currency
risk.
  n)
              Discontinued
      Operations
  Certain
amounts have been reclassified to present the Company’s discontinuance of its
retail and wholesale foods division, as discontinued operations. Unless
otherwise indicated, information presented in the notes to the financial
statements relates only to the Company’s continuing operations. Information
relating to discontinued operations is included in Note 10.
  
 Table of Contents
 10
 Welwind
Energy International Corporation Notes to
Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
  o)
              Income
      Taxes
  Potential
benefits of income tax losses are not recognized in the accounts until
realization is more likely than not. The Company has adopted SFAS No. 109
“Accounting for Income Taxes” as of its inception. Pursuant to SFAS No. 109 the
Company is required to compute tax asset benefits for net operating losses
carried forward. The potential benefits of net operating losses have not been
recognized in these consolidated financial statements because the Company cannot
be assured it is more likely than not it will utilize the net operating losses
carried forward in future years.
  The
Company has adopted FASB Interpretation 48 “Accounting for Uncertain Income
Taxes, an Interpretation of SFAS 109” (“FIN 48”), however, this adoption did not
have any impact on the financial statements of the Company.
  p)
              Recently
      Issued Accounting Pronouncements
  In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”.  This identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles
(“GAAP”).  SFAS 162 directs the GAAP hierarchy to the entity, not the
independent auditors, as the entity is responsible for selecting accounting
principles for financial statements that are presented in conformity with
GAAP.  SFAS 162 is effective 60 days following the SEC’s approval of
the Public Company Accounting Oversight Board amendments to remove the GAAP
hierarchy from the auditing standards.  SFAS 162 is not expected to
have an impact on our financial statements.
  In March
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 161,
“Disclosures about Derivative Instruments and Hedging Activities – an amendment
to FASB Statement No. 133”.  SFAS No. 161 is intended to improve
financial standards for derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash
flows. Entities are required to provide enhanced disclosures about: (a) how and
why an
  entity
uses derivative instruments; (b) how derivative instruments and related hedged
items are accounted for under Statement 133 and its related interpretations; and
(c) how derivative instruments and related hedged items affect an entity’s
financial position, financial performance, and cash flows.  It is
effective for financial statements issued for fiscal years beginning after
November 15, 2008, with early adoption encouraged.  The Company is
currently evaluating the impact of SFAS No. 161 on its financial statements, and
the adoption of this statement is not expected to have a material effect on the
Company’s financial statements.
 
  In
December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
141R, “Business Combinations”.  This statement replaces SFAS 141 and
defines the acquirer in a business combination as the entity that obtains
control of one or more businesses in a business combination and establishes the
acquisition date as the date that the acquirer achieves control. SFAS 141R
requires an acquirer to recognize the assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree at the acquisition date,
measured at their fair values as of that date. SFAS 141R also requires the
acquirer to recognize contingent consideration at the acquisition date, measured
at its fair value at that date. This statement is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008, and earlier adoption is prohibited. The adoption of this statement is
not expected to have a material effect on the Company's financial
statements.
  In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements Liabilities –an Amendment of ARB No.
51”.  This statement amends ARB 51 to establish accounting and
reporting standards for the Noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. This statement is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008, and earlier adoption is prohibited. The adoption of this statement is
not expected to have a material effect on the Company's financial
statements.
  
 Table of Contents
 11
 Welwind
Energy International Corporation Notes to
Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 p)
              Recently
      Adopted Accounting Pronouncements
  In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including an Amendment of FASB
Statement No. 115”.  This statement permits entities to choose to
measure many financial instruments and certain other items at fair value. Most
of the provisions of SFAS No. 159 apply only to entities that elect the fair
value option. However, the amendment to SFAS No. 115 “Accounting for Certain
Investments in Debt and Equity Securities” applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity’s first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, “Fair Value Measurements”. The adoption of this
statement did not have a material effect on the Company's financial
statements.
  In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
objective of SFAS No. 157 is to increase consistency and comparability in fair
value measurements and to expand disclosures about fair value
measurements.  SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value
measurements and does not require any new fair value measurements. The
provisions of SFAS No. 157 are effective for fair value measurements made in
fiscal years beginning after November 15, 2007. The adoption of this statement
did not have a material effect on the Company's financial
statements.
  q)
              Reclassifications
  Certain
reclassifications have been made to the prior period’s consolidated financial
statements to conform to the current period’s presentation.
 3.      Prepaid
Expense and Other Long-term Assets
 
 June
      30,
                2008
                $
              December
      31,
                2007
                $Consulting
              
              561,656
              672,591Other
              
              12,533
              12,533Total
              
              574,189
              685,124
 
 As at
June 30, 2008, the Company has non-current prepaid expenses of $296,230
(December 31, 2007 - $266,716) relating to consulting costs.
  
 Table of Contents
 12
 Welwind
Energy International Corporation Notes to
Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 4.      Property
and Equipment
 
 Cost
                $
              Accumulated
      Depreciation
                $
              June
      30,
                2008
                Net
      Carrying
                Value
                $
              December
      31,
                2007
                Net
      Carrying Value
                $Wind
      equipment under construction
              521,037
              –
              521,037
              448,103Automobile
              70,843
              27,493
              43,350
              51,000Computer
      hardware
              11,651
              4,922
              6,729
              7,086Office
      furniture and equipment
              11,798
              3,857
              7,941
              8,208615,329
              36,272
              579,057
              514,397
  The wind
equipment under construction relates to the Company’s wind farm projects, as
disclosed in Note 8.  As the capital assets have not been placed in
use, no depreciation of the wind equipment has been recorded for the three month
period ended March 31, 2008.
  As at
December 31, 2007, the Company had equipment held for sale with a net carrying
value of $1,858 (December 31, 2007 - $2,224) related to discontinued
operations.  Refer to Note 10.
 
 
 5.      Related
Party Transactions/Balances
  a)
              As
      at June 30, 2008, the balance due to related parties amounted to $715,862
      (December 31, 2007 - $767,706), which includes $172,239 (December 31, 2007
      - $111,499) owed to the President of the Company for management fees and
      working capital purposes and $543,624 (December 31, 2007 - $533,736) owed
      to the spouse of the President of the Company for working capital
      purposes.  The amounts are unsecured, non-interest bearing, and
      due on demand.
  b)
              As
      at June 30, 2008, the Company owes $295,036 (December 31, 2007 - $122,471)
      to shareholders for advances to the Company and expenses paid on behalf of
      the Company. Of this amount, $107,363 (December 31, 2007 - $103,040) is
      unsecured, bears interest at 10% per annum, and is due on demand. As at
      June 30, 2008, accrued interest of $8,368 (December 31, 2007 - $3,049) is
      included in due to related parties.  The remaining balance of
      $179,305 (December 31, 2007 - $16,382) is unsecured, non-interest bearing,
      and payable on demand.
 
 
 6.      Preferred
Stock
  On
September 29, 2006, the Company entered into a Stock Purchase Agreement for a
private placement consisting of 10,000,000 shares of preferred stock for cash
proceeds of $556,855 (US$500,000) and 2,000,000 shares of common stock for cash
proceeds of $111,371 (US$100,000). The Company also issued, to the investor, a
20% interest in its Zhanjiang wind farm project described in Note 8(b). The
preferred stock is convertible into common stock, on a one-for-one basis
commencing August 17, 2007.  As at June 30, 2008, there are 10,000,000
shares of preferred stock issued and outstanding.
  
 Table of Contents
 13
 Welwind
Energy International Corporation Notes to
Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 7.      Common
Stock
  a)
              On
      June 17, 2008, the Company issued 2,500,000 common shares of the Company
      at US$0.09 per share, the price of the common stock on that date, in
      relation to services previously rendered.  This issuance
      resulted in a loss on settlement of debt of
  $104,475.
  b)
              On
      May 7, 2008, the Company issued 10,000,000 common shares of the Company at
      US$0.05 per common share
  c)
              On
      March 26, 2008, the Company issued 3,000,000 common shares of the Company
      at US$0.07 per common share for settlement of past services with a fair
      value of $150,000, resulting in a loss on settlement of debt of
      $63,780.
  d)
              On
      March 26, 2008, the Company issued 500,000 common shares of the Company at
      US$0.07 per common share for consulting services with a fair value of
      $35,630 (US$35,000) of which $35,386 is included is prepaid expenses as at
      March 31, 2008.
  e)
              On
      March 6, 2008, the Company issued 2,050,000 common shares of the Company
      at US$0.06 per common share for consulting services with a fair value of
      $121,130 (US$123,000).  At March 31, 2008, $104,672 is included
      in prepaid expenses.
  f)
              On
      January 17, 2008, the Company accepted subscriptions for 10,000,000 common
      shares of the Company at US$0.05 per share for proceeds of
      US$500,000.  At March 31, 2008, $26,385 is included in common
      stock subscribed.
  g)
              On
      January 7, 2008, the Company issued 342,442 common shares of the Company
      at US$0.11 per common share for a fair value of US$37,668 (CDN$38,000) to
      settle debt valued at $48,977, resulting in a gain on settlement of debt
      of $10,977.
  Stock
Options
  On June
23, 2006, the Company adopted a fixed stock option plan that provides for the
issuance of incentive and non-qualified stock options to officers, directors,
employees and consultants to acquire up to 15,000,000 shares of the Company's
common stock. The Board of Directors determines the terms of the options
granted, including the number of options granted, the exercise price and the
vesting schedule. The stock option plan will expire December 31,
2016.
  Effective
February 4, 2008, the Company filed a Form S-8 Registration Statement in
connection with its 2008 Equity Incentive Plan allowing for the direct award of
stock or granting of stock options to directors, officers, employees and
consultants to acquire up to a total of 20,000,000 shares of common stock. The
Plan Administrator determines the terms of the options granted, including the
number of options granted, the exercise price and the vesting schedule. At June
30, 2008, there are no stock options outstanding.
 
 8.      Commitments
  a)
              The
      Company entered into an agreement dated January 18, 2006, with the
      Government of Yangxi City (“Yangxi”) for the development of a wind farm
      producing a total of 400,000 kilowatt (“KW”) per year of electrical power
      in the next ten years.  Yangxi will assist the Company in
      securing land, sale price for the electricity, financing of the project,
      and preferential tax treatment. Initially, the Company will be required to
      prepare a community wind assessment and a feasibility study for approval.
      Yangxi can terminate the agreement if the project is not under
      construction within 24 months of signing the agreement. As at June 30,
      2008, the Company has commenced construction on the plant and the
      agreement is in good standing.
  b)
              The
      Company entered into an agreement dated March 21, 2006, with the Zhanjiang
      Foreign Trade & Economic Bureau (“Zhanjiang”) for the development of a
      wind power generation project in Zhanjiang City in the Guangdong Province.
      The project is expected to produce up to 600,000 KW of electrical power
      per year, with Phase 1 being 100,000 KW per year. The Company had six
      months from the date of the agreement to begin Phase 1 (commenced) or
      Zhanjiang had the right to terminate the agreement. The Company granted a
      20% interest in this project to an investor.  Refer to Note
      6.
  c)
              The
      Company rents, on a month-to-month basis, its industrial and office space
      for $1,726 per month, office space in China for approximately $1,000 per
      month and warehouse space for $1,791 per
month.
  9.      Segmented
Information
  The
Company operates as one operating segment which is wind power projects in China.
The Chief Executive Officer is the Company’s Chief Operating Decision Maker
(CODM) as defined by SFAS 131, “Disclosure about Segments of an Enterprise and
Related Information.” The CODM allocates resources and assesses the performance
of the Company based on the results of operations.
  
 Table of Contents
 14
 Welwind
Energy International Corporation Notes to
Consolidated Financial Statements
 (Expressed
in Canadian Dollars)
 10.           Discontinued
Operations
  On
November 24, 2007, the Company discontinued all operations related to the former
business of selling and distributing low carbohydrate and sugar-free
foods.
  The
results of discontinued operations are summarized as follows:
  Three
      Months
                Ended
                June
      30,
              
              
              Three
      Months
                Ended
                June
      30,
              
              
              Six
      Months
                Ended
                June
      30,
              
              
              Six
      Months
                Ended
                June
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007$
              
              
              
              $
              
              
              
              $
              
              
              
              $Revenue
              
              
              1,678
              
              
              
              48,861
              
              
              
              4,731
              
              
              
              131,436Cost
      of sales
              
              
              -
              
              
              
              (27,237
              )
              
              
              (2,131
              )
              
              
              (50,150
              )Gross
      Profit
              
              
              1,678
              
              
              
              21,624
              
              
              
              2,600
              
              
              
              81,286Operating
      ExpensesGeneral
      and administrative
              
              
              -
              
              
              
              (100,326
              )
              
              
              (56,372
              )
              
              
              (
      210,867
              )Net
      Loss
              
              
              1,678
              
              
              
              (78,702
              )
              
              
              (53,772
              )
              
              
              (129,581
              )
  As at
June 30, 2008 and December 31, 2007, assets and liabilities of the discontinued
retail and wholesale foods division have been reported as discontinued
operations.
  June 30,
                2008
                $
              
              
              December
      31,
                2007
                $Accounts
      receivable
              
              
              2,011
              
              
              
              4,190Inventory
              
              
              3,064
              
              
              
              5,389Current
      assets of discontinued operations
              
              
              5,075
              
              
              
              9,579Property
      and equipment, net
              
              
              1,858
              
              
              
              2,224Assets
      held for sale
              
              
              1,858
              
              
              
              2,224Accounts
      payable
              
              
              (14,038
              )
              
              
              (14,038
              )Current
      liabilities of discontinued operations
              
              
              (14,038
              )
              
              
              (14,038
              )
 11.           Subsequent
event
 
 In July, 2008, the Company issued
10,000,000 common shares to settle outstanding debt.
  Table of Contents
 15
 ITEM2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF
OPERATION
 
 This
discussion and analysis should be read in conjunction with the accompanying
Financial Statements and related notes. Our discussion and analysis of our
financial condition and results of operations are based upon our financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of any contingent
liabilities at the financial statement date and reported amounts of revenue and
expenses during the reporting period. On an on-going basis we review our
estimates and assumptions. Our estimates are based on our historical experience
and other assumptions that we believe to be reasonable under the circumstances.
Actual results are likely to differ from those estimates under different
assumptions or conditions, but we do not believe such differences will
materially affect our financial position or results of operations. Our critical
accounting policies, the policies we believe are most important to the
presentation of our financial statements and require the most difficult,
subjective and complex judgments, are outlined below in ‘‘Critical Accounting
Policies,’’ and have not changed significantly.
  In
addition, certain statements made in this report may constitute “forward-looking
statements”. These forward-looking statements involve known or unknown risks,
uncertainties and other factors that may cause the actual results, performance,
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking
statements. Specifically, 1) our ability to obtain necessary regulatory
approvals for our products; and 2) our ability to increase revenues and
operating income, is dependent upon our ability to develop and sell our
products, general economic conditions, and other factors. You can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "intends," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "continues" or the negative of these terms or other
comparable terminology. Although we believe that the expectations reflected-in
the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements.
 
 Overview
  We see
wind power becoming an efficient power source globally. Welwind’s current
projects focus is in the wind energy sector with future renewable energy
applications under consideration. Renewable energy is power that comes from
renewable resources such as the sun, wind and organic matter. These resources
are constantly replenished by nature and are a cleaner source of energy.
Welwind’s goal is to add more renewable energy globally, resulting in cleaner
air and a more stable energy supply for our future.
  Welwind
Energy International was founded to build, own and operate wind farms on an
international scale. Our current project focus is to bridge the North
America-China link by building wind farms in China. Concurrently with the
development of the wind farm projects, the Company intends to continue to
operate the retail bakery and food store and its manufacturing and distribution
of specialty health food products.
 
 Our
Corporate History
 
 The
Company was incorporated on December 18, 1997, pursuant to the laws of the State
of Delaware under the name of Autoeye Inc. On February 25, 2000, as part of an
acquisition of The Forest Industry Online Inc., we changed our name to
forestindustry.com, Inc. Prior to this acquisition, our Company was inactive. On
October 25, 2002, we entered into a share exchange agreement with GolfLogix,
Inc., a British Columbia, Canada corporation (“GolfLogix Canada”) that was
incorporated in February 2000, as West Coast Electric Vehicle Distributors, Inc.
Under the terms of the Share Exchange Agreement, we acquired all of the
outstanding shares of GolfLogix Canada in exchange for 2,500,000 shares of our
common stock. As a result, GolfLogix Canada was a wholly owned subsidiary of our
Company.
 
 Prior to
the acquisition of Golflogix Canada, our business activities included designing
web sites and operating and maintaining a computer internet web site for
companies associated with the forest and wood product industries. However,
subsequent to the acquisition of this business we failed to generate
profitability and incurred negative cash flows from operations. GolfLogix
Canada, a distributor of golfing merchandise and has entered into an agreement
to purchase a licensing right to market and distribute the GolfLogix System in
Canada.
 
 Table of Contents
 16
 After our
acquisition of GolfLogix Canada, on November 30, 2002, we entered into a stock
purchase agreement with Cherry Point Consulting, resulting in a divestiture of
the assets of Forest Industry Online. Under the agreement, Cherry Point
Consulting purchased shares of Forest Industry Online and assumed all of the
related assets and liabilities of the same. On January 7, 2003, we changed our
name to Global Golf Holdings, Inc.
 
 On April
15, 2004, the Company filed a Form 8-K announcing that due to lack of success in
executing the Company’s business plan and considerable under funding of the
same, that the Board of Directors had determined that it was no longer viable to
continue operations under the current business plan.
  On
November 23, 2004 the Registrant closed on the Agreement with Low Carb Centre
and affiliates (hereinafter “LCC”). LCC is a privately held company organized
under the laws of British Columbia, Canada with its primary business being the
retail sales and distribution of gourmet low carbohydrate food products through
its traditional brick-and-mortar retail stores and the World Wide Web at
www.lowcarbcentre.com. The Low Carb Bakery (“LCB”) is a privately held company
organized under the laws of British Columbia, Canada with its primary business
being the manufacturing of food products for the LCC retail market. McNabb &
Associates (“MNA”) is a privately held company organized under the laws of
British Columbia, Canada with its primary business being the management and
supervision of the business operations of both LCC and LCB.
 
 Under the
terms of the LCC Transaction, the Registrant acquired substantially all of the
assets of LCC, including, but not limited to, LCC’s suppliers, customer and
vendor lists and records pertaining thereto, the trade names “Low Carb Centre,”
“Low Carb Bakery” and “McNabb and Associates,” all registered and unregistered
trademarks, service marks, sales marks, colors, names and slogans relating to
the business, and all applications for any of the foregoing, together with all
of the Sellers’ rights to use all of the foregoing forever, and all goodwill
associated with the foregoing, the existing phone number(s) and websites of the
business, all assets referred to or referenced within any audited financial
statements of the business in preparation or consideration of the closing of the
LCC Transaction and any and all recipes, trade secrets, trade practices, décor,
goodwill, clients, equipment, furniture, assets, machinery, trade fixtures,
miscellaneous supplies, inventory, existing contracts and tangible personal
property.
 
 Consideration
for the LCC Transaction was 14,743,199 newly issued shares of the Registrant
post-reverse split. The terms and conditions of the Agreement were determined in
arm’s length negotiations between the Registrant and LCC.
 
 The terms
and conditions of the Asset Purchase Agreement were determined in arm’s length
negotiations between the Company and LCC.
 
 Since the
LCC Transaction effectively constituted a reverse purchase with the management
and shareholders of LCC essentially assuming the same positions in Vitasti,
reverse purchase accounting principles were utilized by the Company in
accounting for that transaction.
 
 The
Acquisition of Welwind Energy International Corporation.
 
 On April
11, 2006, the Company and Welwind Energy International Corporation, a
corporation duly incorporated under the laws of the Province of Alberta, Canada,
and the shareholders of Welwind Energy International Corporation (the
“Shareholders”), entered into a Share Exchange Agreement (the ‘Agreement”). The
Agreement was closed on the 17th of
August 2006. Per the Agreement, the Company acquired 100% of Welwind Energy
International Corporation (“WEIC”) in exchange for 11,000,000 unregistered
shares of Vitasti, which were distributed to the Shareholders as required by the
terms of the Agreement. The Shareholders are subject to the resale provisions of
Rule 144.
 
 On
October 26, 2006, the Company filed in the office of the Secretary of State for
the State of Delaware a Certificate of Amendment to the Company’s Certificate of
Incorporation, causing the name of the Company to be changed from Vitasti, Inc.
to Welwind Energy International Corp.
 
 Table of Contents
 17
 WEIC was
founded in 2005 to build, own and operate wind farms on an international scale.
Our current project is to bridge the North America-China link by building wind
farms in China beginning along the South China Sea.
 
 During
2006, Company representatives took several trips to China where two contracts
were signed with the cities of Yangxi and Zhanjiang in the Province of
Guangdong. The signed contracts allow the Company to build up to 1000 Megawatts
(“MW”) of wind power in Guangdong Province. The company has also been in
negotiations for a 50 year purchase price agreement (“PPA”) as
well.  The engineering, procurement and Construction (EPC) contractor,
China Machine International Building Corp., has agreed to provide the
engineering, procurement and construction on the projects along with performance
bonds.
 
 In June
2006, Representatives of the Company attended the Renewable Energy Finance Asia
Conference in Hong Kong. The investment forum brought together International
Industry leaders and presented networking discussions from Carbon markets and
alternative energy. Investors, Fund managers, Utilities Government, Asian
Development Banks, The World Bank and the United Nations were among those in
attendance, providing experience and perspective to this growing market. The
event clearly solidifies the confidence of renewable energy in Asia and provided
us with numerous networking opportunities.
 
 While at
the conference, Company representatives spent time with representatives of the
International Finance Corporation/World Bank to discuss international
developments and economic growth of the company.
 
 In 2006,
while in China, Company representatives formally signed the commitment for a
land lease pertaining to the Zhanjiang wind farm. We plan to build forty-nine
(49) MW in the first phase of a six hundred (600) MW wind farm on this
property.
 
 Projects
 
 The Zhanjiang
Project
 
 The
Zhanjiang Project will see the instillation of a six hundred (600) MW wind farm
on the subject property.  Through a cooperative agreement with
Guangzhou Engga Wind Energy Co. Ltd (“Engga”), the first turbine produced by
Engga for the Company rolled-off the production line in February 2007. During
this Phase 1, the Company expects to build forty-nine (49) MWs.
 
 Installation
of the 750 KW test turbine was completed in May 2007.  ENGAA, the
turbine manufacturer, immediately commenced monitoring the data from this first
turbine. By July 2007, ENGAA had completed its commissioning stage of the
Zhanjiang Turbine and had begun to assess and analyze the data from that
turbine.
 
 A Project
Feasibility Study Report and Grid Connection Report were finalized in November
2007 by the Guandong Electric Power Design Institute, and subsequently submitted
to the Guangdong Power Grid Corporation for review in anticipation of finalizing
a Power Purchase Agreement (“PPA”).
  However,
certain unexpected issues arose late in 2007 related to the Zhanjiang
Windfarm.  During the due diligence period for the PPA, an issue with
the local Port Authority arose requiring meetings with various levels of the
Zhanjiang Government and the Port Authority. In a meeting during January 2008
between Welwind representatives and high ranking officials of the Port Authority
and Government, all outstanding issues were resolved. It is anticipated that the
PPA due diligence process should be completed soon.  Table of Contents
 18
 The Yangxi
Project
  The base
of the Yangxi Wind Farm Project was completed, along with the installation of
the 100 meter meteorological tower, in June of 2006. At that time, we began to
collect data necessary to provide the information required to build out the wind
farm. Phase 1 of the Yangxi wind farm will consist of a 49 MW
project.  We anticipate that the Yangxi project will consist of a
total of 400 MWs once fully completed.
  In
January 2008, after 16 months of collecting date from the tower at the Yangxi
location, a formal Project Proposal was submitted to the Yangxi Government. All
data collected to date shows promising results for the future build out of this
wind farm.
  Funding the
Projects
  In
January 2008, the Company also completed a $500,000 financing, which will be
used to fund the two projects and as general working capital. The Company
believes that these funds will be sufficient to meet our working capital
requirements until the signing of the PPAs and subsequent completion of the
financing for the projects.
  Supply
  The
Company and Guangzhou Engga Wind Energy Co. Ltd. (“ENGGA”) have a cooperative
relationship where by the Company and ENGGA will work together on the technology
and future supply of all Welwind turbines. The agreement gives Welwind priority
for all turbines to be manufactured by ENGGA. ENGGA is the sino-joint enterprise
with the shareholders by Britain ENGGA Power Generator Co., Ltd. and Hong Kong
ENGGA Investment Co., Ltd. with the registered capital reaching RMB30 million
and specializing in making, selling and installing wind power generation
equipments, as well as selling parts of wind power generation
equipments.
 
 Our
Strategy
 
 During
2007, we successfully completed several important milestones that we believe
were fundamental to our being able to achieve growth from our business model for
project developments in the alternative energy market and continued growth in
our health and wellness operations.
 
 In
addition to those described herein, the Company announced the following in
2007:
 
 (1)
              Begin
      a study to expand into the Peace River Region of British Columbia;
      and
 (2)
              The
      Company retained Wall Street Transfer Agents, Inc. as its transfer
      agent.
 
 In
November 2007, the Company was announced that Acterra Group signed a letter of
commitment to fund Phase 1 of the Zhanjiang Wind Farm Project, which we
anticipate will expedite the PPA with the Zhanjiang Government.  A
second announcement was made early 2008 for a letter of commitment to fund Phase
1 of the Yangxi Wind Farm Project with Acterra.
 
 As a
result of the achievements of these milestone and our ongoing marketing and
business development efforts, we have set the ground work for promising results
for the organization.  Our current focus in the alternative energy
market will be our only focus in our business moving forward for 2008. The
capital currently available to us and future financings will be for the
development and operation of wind farms in China and continued expansion of wind
projects globally. The company sees additional growth via acquisitions of
additional wind farm projects.
 
 Our
Industry
 
 On
February 2, 2007, the Global Wind Energy Council (“GWEC”) announced that the
wind energy markets around the world exceeded expectations in 2006. GWEC is the
industry's global trade organization, with a combined membership of over 1,500
organizations involved in hardware manufacture, project development, power
generation, finance and consultancy, as well as researchers, academics and
associations. More information can be viewed on their web site which is
www.gwec.org and it contains much information on the industry and its
markets.
 
 The GWEC
report further states that in terms of economic value, the wind energy sector
has now become firmly installed as one of the important players in the energy
markets, with the total value of new generating equipment installed in 2006
reaching €18 billion, or USD$23 billion.  Outside of Europe, Asia has
experienced the largest growth in the industry, in 2006 the continent accounted
for 24% of new instillations of wind power facilities.
 
 Table of Contents
 19
 Specifically,
according to the GWEC release, China more than doubled its total installed
capacity by installing 1,347 MW of wind energy in 2006, a 70% increase from last
year’s figure. This brings China up to 2,604 MW of capacity, making it the sixth
largest market worldwide. The Chinese market was boosted by the country’s new
Renewable Energy Law, which entered into force on January 1, 2006.
 
 Wind
Energy Industry Participants
 
 As wind
energy technology gains wider acceptance, competition may increase as large,
well-capitalized companies enter the business. As previously stated, wind energy
is the fastest growing source of energy worldwide for three consecutive years.
Energy companies such as British Petroleum, Shell Oil Company’s Wind Energy arm,
Siemens and other major companies in the energy sector, see opportunities in
wind power development.  Additionally, there are many smaller
companies that are seeking out opportunities in the wind energy
sector.
 
 In some
cases, competitors may have longer operating histories, more customers, greater
financial strength, more name recognition, and larger technical
staffs.  These competitors may be able to more readily identify and
acquire suitable locations to exploit the growth in the wind energy sector more
easily because of their financial resources and awareness in the market. Our
larger competitors can also devote substantially more resources to business
development and may adopt more aggressive pricing policies.
 
 Distribution
 
 The
Company continually analyzes population growth and both national and
international economic factor, in determining energy demands in identified
areas. Should the Company make the determination and successfully identify
suitable property or properties, the Company would test the site to determine
whether sufficient wind energy resources are available to effectively and
efficiently displace current electricity sources, thus reducing pollution from
fossil fuel. Upon completion of the analysis, the Company would attempt, if
conditions were favorable, to obtain land right and apply for permits to install
and operate a wind power generating plant.
 
 Trademarks
 
 The
Company currently holds no Trademarks.
 
 Governmental
Regulation
 
 We do not
use, generate or discharge toxic, volatile or otherwise hazardous chemicals and
wastes in our research and development and manufacturing activities. However, we
are subject to a variety of foreign, federal, state and local governmental
regulations. At this time, we believe that we have all permits necessary to
conduct our business.
 
 We are
not aware of any environmental investigation, proceeding or action by foreign,
federal or state agencies involving our current facilities or operations. If we
fail to comply with present or future environmental regulations, we could be
subject to fines, suspension of production or a cessation of operations. Any
failure by us to adequately comply with existing and future regulations could
subject us to financial liabilities, operational interruptions and adverse
publicity, any of which could materially and adversely affect our business,
results of operations and financial condition.
 Table of Contents
 20
 Employees
 
 As of
August 14, 2008, 11 full time employees.
 
 Change
in Reporting Currency
 
 Effective
January 1, 2005, the Company changed its reporting currency from the U.S.
dollar to the Canadian dollar. The reason for this change was because a majority
of the Company’s assets and operations are located in Canada. All amounts set
forth in this filing are in Canadian Dollars, unless otherwise
indicated.
 
 Available
Information
 
 We file
electronically with the Securities and Exchange Commission our annual reports on
Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K,
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. 
You may obtain a free copy of our reports and amendments to those reports on the
day of filing with the SEC by going to http://www.sec.gov.
   Period
Ended June 30, 2008 Compared to Period Ended June 30, 2007
   The
following table summarizes the Company’s results of operations. The table and
the discussion below should be read in conjunction with the audited financial
statements and the notes thereto appearing elsewhere in this
report.
  Results
of Operations
  For
      the
                Three
      Months Ended
                June
      30, 2008
                $
              
              
              Change
      from Prior Period
                %
              
              
              For
      the
                Three
      Months
                Ended
                June
      30, 2007
                $Operating
      Expenses
              
              
              534,163
              
              
              
              64.2
              
              
              
              1,492,568Net
      Loss from Continuing Operations
              
              
              (534,163
              )
              
              
              64.2
              
              
              
              (1,492,568
              )Other
      Income (Expense)
              
              
              (104,475
              )
              
              
              -
              
              
              
              (74,550
              )Net
      Loss before Discontinued Operations
              
              
              (638,638
              )
              
              
              40.8
              
              
              
              (1,567,118
              )Discontinued
      Operations
              
              
              1,678
              
              
              
              97.9
              
              
              
              (78,702
              )Net
      Loss for the Period
              
              
              (636,960
              )
              
              
              61.3
              
              
              
              (1,645,820
              )
  General
and Administrative Expenses
  During
the three month period ended June 30, 2008, the Company incurred general and
administrative expenses of $534,163 compared to $1,492,568 in the same period in
the previous year. The 64.2% decrease of $958,405 in general and administrative
expenses was mainly attributable to a decrease in consulting expense during the
period ended June 30, 2007 to the period ended June 30, 2008.
  Net
Loss
  During
the period ended June 30, 2008, the Company incurred a net loss of $636,960,
compared to a net loss of $1,645,820 in the same period in the previous year.
The 61.3% decrease of $1,008,860 in net loss was mainly attributable to a
decrease in consulting.
  Table of Contents
 21
 LIQUIDITY
AND CAPITAL RESOURCES
  As at
June 30, 2008, the Company had $84,891 in cash, total current assets of
$420,195, and current liabilities of $1,389,108. The Company may require
additional capital investments or borrowed funds to meet cash flow projections
and carry forward our future business objectives.  There can be no
assurance that the Company will be able to raise capital from outside sources in
sufficient amounts to fund the business.
 
 The
failure to secure adequate outside funding would have an adverse affect on our
expansion plan of operation and results therefrom and a corresponding negative
impact on shareholder liquidity.
  During
the period ended June 30, 2008, the Company used $203,939 of net cash flows in
operating activities. However, the Company was able to fund operations by
receiving cash proceeds of $357,269 from common stock
subscriptions.
 
 Uses
of Liquidity
  The
Company's cash requirements through the end of fiscal 2008 are primarily to fund
operations and to complete the wind farm projects in China.
  Sources of
Liquidity
  The
Company’s primary source of liquidity for its short-term cash needs is expected
to be from cash and cash equivalents currently on hand. The Company believes
that will be able to borrow additional funds if needed.
  Cash
Requirements
 
 Our cash
on hand as of June 30, 2008 is $84,891. We have sufficient cash on hand to pay
the costs of some of our operations as projected to twelve (12) months or less
and to fund our operations for that same period of time. However, we will
require additional financing in order to proceed with some or all of our goals
as projected over the next twelve (12) months. We presently do not have any
arrangements for potential lines of credit or sources of financing for the
purpose of proceeding with any of our goals projected over the next twelve (12)
months and beyond.
  Any
additional growth of the Company may require additional cash infusions. We may
face expenses or other circumstances such that we will have additional financing
requirements. In such event, the amount of additional capital we may need to
raise will depend on a number of factors. These factors primarily include the
extent of operating expenses, research and development expenses, and capital
expenditures. Given the number of programs that we have ongoing and not
complete, it is not possible to predict the extent or cost of these additional
financing requirements.
 
 Notwithstanding
the numerous factors that our cash requirements depend on, and the uncertainties
associated with each of the major revenue opportunities that we have, we believe
that our plan of operation can build long-term value if we are able to
demonstrate clear progress toward our objectives.
 
 Progress
in the development of our business plan will likely lend credibility to our plan
to maintain profitability. We hired several members to our sales, marketing,
research and development, regulatory and administrative staff during the course
of 2008 in order to fully implement our plans for growth.
 
 The
Company does not anticipate any contingency upon which it would voluntarily
cease filing reports with the SEC, even though it may cease to be required to do
so. It is in the compelling interest of this Registrant to report its affairs
quarterly, annually and currently, as the case may be, generally to provide
accessible public information to interested parties, and also specifically to
maintain its eligibility for the OTCBB.
 
 The
failure to secure any necessary outside funding would have an adverse affect on
our development and results there from and a corresponding negative impact on
shareholder liquidity.
  Table of Contents
 22
 Future
Financings
 
 Our plan
of operation calls for significant expenses in connection with the
implementation of our business plan over the course of the next 24 months. For
the next twelve months, management anticipates that the minimum cash
requirements to fund our proposed goals and our continued operations will be at
least $500,000. As such, we do not have sufficient funds on hand to meet our
planned expenditures over the next 24 months. Therefore, we may require and may
need to seek additional financing to meet our planned expenditures.
  Obtaining
additional financing would be subject to a number of factors, including
development of our business plan and interest in our company. These factors may
make the timing, amount, terms or conditions of additional financing unavailable
to us. Since our inception, we have relied on our revenues to fund our
operations and have used our common stock to raise money for our operations as
well.
 
 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, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to our
investors.
  Critical
Accounting Policies
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make a wide variety of estimates
and assumptions that affect (i) the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities as of the date of the
financial statements, and (ii) the reported amounts of revenues and expenses
during the reporting periods covered by the financial statements. Our management
routinely makes judgments and estimates about the effect of matters that are
inherently uncertain. As the number of variables and assumptions affecting the
future resolution of the uncertainties increases, these judgments become even
more subjective and complex. The most significant accounting policies that are
most important to the portrayal of our current financial condition and results
of operations are as follows:
  Revenue
Recognition
  The
Company recognizes revenue in accordance with Securities and Exchange Commission
Staff Accounting Bulletin No. 104 (“SAB 104”), “Revenue Recognition in Financial
Statements”.
  Acquired
Goodwill
  Goodwill
represents the excess of the purchase price of acquired assets over the fair
values of the identifiable assets acquired and liabilities assumed. Pursuant to
SFAS No. 141, “Business Combinations” the Company does not amortize goodwill,
but tests for impairment of goodwill on an annual basis and at any other time if
events occur or circumstances indicate that the carrying amount of goodwill may
not be recoverable. Circumstances that could trigger an impairment test include
but are not limited to: a significant adverse change in the business climate or
legal factors; an adverse action or assessment by a regulator; unanticipated
competition and loss of key personnel. Goodwill is tested for impairment using
present value techniques of estimated future cash flows; or using valuation
techniques based on multiples of earnings. If the carrying amount of goodwill
exceeds the implied fair value of that goodwill, an impairment loss is charged
to operations.
 
 During
the fourth quarter of the fiscal year ended December 31, 2007 management
performed an assessment of the fair value of WEIC. The Company recognized an
impairment loss of $1,469,171 relating to the goodwill since the carrying value
exceeded the assessed fair value. Management believes that there is not a
reasonable level of certainty as to the timing or amount of future cash flows
related to its wind power project.
 Table of Contents
 23
 Customer
Relationships
  Customer
relationships consist of the relationships the Company has attained with the
various levels of governments in China, which resulted in the entering of two
agreements. The Company used the replacement cost approach for accounting for
customer relationships. This approach uses an estimate of what a notional
purchaser would likely pay for the intangible asset in order to be in the same
position of the Company at the date of the closing of the Asset Purchase
Agreement. The Company will amortize the carrying value of the customer
relationships on a straight-line basis over the remaining estimated useful lives
of the wind power plants upon commencement of the commercial production of
electricity.
 
 RECENT
ACCOUNTING PRONOUNCEMENTS
  In
May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”.  This identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles
(“GAAP”).  SFAS 162 directs the GAAP hierarchy to the entity, not the
independent auditors, as the entity is responsible for selecting accounting
principles for financial statements that are presented in conformity with
GAAP.  SFAS 162 is effective 60 days following the SEC’s approval of
the Public Company Accounting Oversight Board amendments to remove the GAAP
hierarchy from the auditing standards.  SFAS 162 is not expected to
have an impact on our financial statements.
  In March
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 161,
“Disclosures about Derivative
Instruments and Hedging Activities – an amendment to FASB Statement No.
133”. SFAS No. 161 is intended to improve financial standards for
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity's financial
position, financial performance, and cash flows. Entities are required to
provide enhanced disclosures about: (a) how and why an entity uses derivative
instruments; (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations; and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows.  It is effective for
financial statements issued for fiscal years beginning after November 15, 2008,
with early adoption encouraged.  The Company is currently evaluating
the impact of SFAS No. 161 on its financial statements, and the adoption of this
statement is not expected to have a material effect on the Company’s financial
statements.
  In
December 2007, the FASB issued SFAS No. 141R, “Business
Combinations”.  This statement replaces SFAS 141 and defines
the acquirer in a business combination as the entity that obtains control of one
or more businesses in a business combination and establishes the acquisition
date as the date that the acquirer achieves control. SFAS 141R requires an
acquirer to recognize the assets acquired, the liabilities assumed, and any
non-controlling interest in the acquiree at the acquisition date, measured at
their fair values as of that date. SFAS 141R also requires the acquirer to
recognize contingent consideration at the acquisition date, measured at its fair
value at that date. This statement is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008, and
earlier adoption is prohibited. The adoption of this statement is not expected
to have a material effect on the Company's financial statements.
  In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements Liabilities –an Amendment of ARB No.
51”.  This statement amends ARB 51 to establish accounting and
reporting standards for the Noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. This statement is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008, and earlier adoption is prohibited. The adoption of this statement is
not expected to have a material effect on the Company's financial
statements.
  In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an Amendment of FASB Statement No.
115”.  This statement permits entities to choose to measure
many financial instruments and certain other items at fair value. Most of the
provisions of SFAS No. 159 apply only to entities that elect the fair value
option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments
in Debt and Equity Securities” applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity’s first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, “Fair Value Measurements”. The
adoption of this statement did not have a material effect on the Company's
financial statements.
  Table of Contents
 24
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
objective of SFAS No. 157 is to increase consistency and comparability in fair
value measurements and to expand disclosures about fair value
measurements.  SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value
measurements and does not require any new fair value measurements. The
provisions of SFAS No. 157 are effective for fair value measurements made in
fiscal years beginning after November 15, 2007. The adoption of this statement
did not have a material effect on the Company's financial
statements.
 
 Reporting
Currency
 
 Effective
January 1, 2005, the Company changed its reporting currency from the U.S.
dollar to the Canadian dollar. All amounts set forth in this filing are in
Canadian Dollars, unless otherwise indicated.
 
 The
Department of Corporation Finance in its advisory letter titled International
Financial Reporting and Disclosure Issues, dated May 1, 2001 has stated,
“Regulation S-X presumes that a US-incorporated registrant will present its
financial statements in US dollars. In rare instances, the staff has not
objected to the use of a different reporting currency. Those instances have been
limited to situations where the US-incorporated registrant had little or no
assets and operations in the US, substantially all the operations were conducted
in a single functional currency other than the US dollar, and the reporting
currency selected was the same as the functional currency. In these
circumstances, reporting in the foreign currency would produce little or no
foreign currency translation effects under FASB Statement No. 52.”
 
 First,
the Company has its corporate headquarters located in Canada, and therefore has
no assets or operations in the US. Second, all operations of the Company are
conducted only in Canadian currency. Third, the reporting currency is in
Canadian dollars which is the same currency that all operations were conducted
in. Therefore, reporting in Canadian dollars would produce little or no foreign
currency translation effects under FASB Statement No. 52.
  -  -
 Table of Contents
 25
  ITEM
4(T). CONTROLS AND PROCEDURES
 
 (a)           Evaluation of Disclosure Controls
and Procedures:
 
 Our
President and Chief Financial Officer, after evaluating the effectiveness of our
“disclosure controls and procedures” (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)), have concluded that, as of June 30, 2008
due to the material weaknesses in our internal control over financial reporting
identified in our 2007 Form 10-KSB, our disclosure controls and procedures were
not effective in providing reasonable assurance that information we are required
to disclose in reports we file is recorded, processed, summarized and reported
within the periods specified.
 
 (b)           Management’s
Annual Report on Internal Control Over Financial Reporting:
 
 While we
have continued our efforts to address each of the material weaknesses identified
in our 2007 Form 10-KSB, there were no material changes in our internal control
over financial reporting during the most recently completed
quarter.  We have not identified any additional material weaknesses
during this quarter.  We are not planning to report on whether there
has been full remediation of the identified material weaknesses until our 2008
report on internal control over financial reporting is complete.
  (c)           Changes
in Internal Control Over Financial Reporting:
  Subsequent
to the year ended December 31, 2007, the Company retained an outside consulting
firm which specializes in Sarbanes Oxley compliance.  This consulting
firm has assisted the Company in developing a system that should assist in
rectifying the material weaknesses described in our 2007 Form
10-KSB.
 
 During
2008, the company will be directing concerted focus to full compliance with
Sarbanes-Oxley requirements, as revised in Audit Standard No. 5 for small
businesses, in implementing Section 404(a) of the Act.
 Table of Contents
 26
 PART
II.
 
 ITEM 1.  LEGAL PROCEEDINGS
  None.
  ITEM 1(A). RISK FACTORS
 
 Not
required.
 
 ITEM2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
  None.
  ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
 
 None.
 
 ITEM4.  SUBMISSIONOF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 None.
 
 ITEM 5.  OTHERINFORMATION
 
 On May
14, 2008, the chief executive officer and chief financial officer of the
Company, under authority granted to them by, and with the approval of, the board
of directors, concluded that our previously reported consolidated financial
statements included in our annual report for the year ended December 31, 2007
should no longer be relied upon.
 
 In the
course of preparing the quarterly report for the period ended March 31, 2008,
the Registrant discovered that certain transactions had been previously recorded
improperly on the Registrants Financial Statements for the period indicated
above.  As a result of this review, on May 14, 2008, after discussion
with our Board of Directors, we concluded that we should restate our
consolidated financial statements for the period set forth above. The effects of
the restatement are as follows:
 
 December
31, 2007
 
 ·
              The
      Company will restate its consolidated financial statements for the year
      ended December 31, 2007 to record a correction to the stock based
      compensation recognized in the year.  The effect of the
      restatement is to increase net loss by $416,520 for the year ended
      December 31, 2007. Net loss per share was
  unchanged.
 
 As of the
date of this Report, the Company has filed corrected financial information for
the periods set forth above.
 
 Table of Contents
 27
 ITEM
6.  EXHIBITSAND REPORTS ON FORM 8-K
 
 (a)
Exhibits.
 
 EXHIBIT
      NUMBER
              DESCRIPTION
              LOCATION3.1
      - 3.2
              Certificate
      of Incorporation and Bylaws
              Previously
      Filed.31.1
              Rule
      13a-14(a)/15d-14(a) Certification (CEO)
              Filed
      herewith31.2
              Rule
      13a-14(a)/15d-14(a) Certification (CFO)
              Filed
      herewith32.1
              Section
      1350 Certification (CEO)
              Filed
      herewith32.2
              Section
      1350 Certification (CFO)
              Filed
      herewith
 
 (b)           Reports on Form
8-K.
 
 During
the period ended June 30, 2008, we filed reports on Form 8-K on the following
dates:
 
 June 12,
2008
 
 Subsequent
to the period ended June 30, 2008, we filed reports on Form 8-K on the following
dates:
 
 None.
 
  Table of Contents
 28
 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 thereunto
duly authorized.
  Welwind Energy International
      Corp.(Registrant)Date:
      August 14, 2008
                By:
                /s/ Tammy
      Lynn McNabbTammy
      Lynn McNabb
                  Director,
      CEO and CFO
  Table of Contents
 29