SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________  FORM 10-Q  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934  For Quarter Ended: June 30, 2009  Commission File Number: 000-26673 ___________________________________  WELWIND ENERGY INTERNATIONAL CORP.  Delaware98-0207081(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.) 10-20172 113B Avenue, Maple Ridge, British Columbia, Canada V2X 0Y9 (Address of principal executive offices)  (604) 460-8487 (Registrant's telephone number, including area code)  with a copy to: Carrillo Huettel, LLP 501 W. Broadway, Suite 800 San Diego, CA 92101 Telephone (619) 399-3090 Telecopier (619) 330-1888  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No  .  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes     No   .  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.   See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.  Large Accelerated Filer.Accelerated Filer.  Non-Accelerated Filer.Smaller Reporting CompanyX.  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes . No X.  Issuers revenues for its most recent fiscal year: Nil  As of August 18, 2009, there were 207,747,692 shares of the registrants Common Stock outstanding.   WELWIND ENERGY INTERNATIONAL CORPORATION (A Development Stage Company)  Report on Form 10-Q   PART I  FINANCIAL INFORMATIONItem 1.Unaudited Financial Statements3Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations9Item 3.Quantitative and Qualitative Disclosure About Market Risk26Item 4.Controls and Procedures26PART II  OTHER INFORMATIONItem 1.Legal Proceedings28Item 1A.Risk Factors28Item 2.Unregistered Sales of Equity Securities and Use of Proceeds28Item 3.Default Upon Senior Securities28Item 4.Submission of matters to a Vote of Security Holders28Item 5.Other Information28Item 6.Exhibits29       ITEM 1. FINANCIAL STATEMENTS  PART 1.  FINANCIAL STATEMENTS  Welwind Energy International Corporation (A Development Stage Company) June 30, 2009    IndexConsolidated Balance Sheets as of June 30, 2009 (Unaudited) and December 31, 20083Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2009 and June 30, 2008 and the period of inception (August 17, 2006) through June 30, 20094Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and June 30, 2008 and the period of inception (August 17, 2006) through June 30, 20095Notes to the Unaudited Consolidated Financial Statements6            2   Welwind Energy International Corporation (A Development Stage Company) Consolidated Balance Sheets (Expressed in Canadian Dollars)  June 30,
2009
(Unaudited)
$December 31,
2008
$ASSETSCurrent AssetsCash9,24228,734Taxes recoverable22,56216,985Prepaid expenses1,1041,104Total Current Assets32,90846,823Property and equipment, net of accumulated depreciation of ($53,212) and ($46,290) as of June 30, 2009 and December 31, 2008, respectively562,118569,039Total Assets595,026615,862LIABILITIES AND STOCKHOLDERS DEFICITCurrent LiabilitiesAccounts payable170,866107,507Accrued liabilities182,090175,090Due to related parties1,429,8661,073,803Total Liabilities1,782,8221,356,400Commitments and ContingenciesStockholders DeficitPreferred Stock:Authorized: 10,000,000 shares, US$0.001 par value Issued and outstanding: 10,000,000 shares  as of June 30, 2009  and December 31, 200811,13711,137Common Stock:Authorized: 290,000,000 shares, US$0.001 par value  Issued and outstanding: 207,747,692 and 198,164,837 shares as of June 30, 2009 and December 31, 2008, respectively229,460218,321Additional paid-in capital19,740,69119,442,170Deficit accumulated during development stage(21,169,084)(20,412,166)Total Stockholders Deficit(1,187,796)(740,538)Total Liabilities and Stockholders Deficit595,026615,862  (The accompanying notes are an integral part of these consolidated financial statements)  3    Welwind Energy International Corporation (A Development Stage Company) Consolidated Statements of Operations (Expressed in Canadian Dollars) (Unaudited)  For the
Three Months
Ended
June 30,
2009
$For the
Three Months
Ended
June 30,
2008
$For the
Six Months
Ended
June 30,
2009
$For the
Six Months
Ended
June 30,
2008
$Accumulated from
August 17, 2006
(Date of inception)
to
June 30,
2009
$Revenue-----Operating Expenses---General and Administrative366,046638,638708,3521,172,29618,934,596Net Loss from Continuing Operations(366,046)(638,638)(708,352)(1,172,296)(18,934,596)Interest Expense(25,037)-(48,566)-(175,575)Impairment of Goodwill----(1,714,187)Loss on Disposal of Property and Equipment----(1,000)Net Loss before Discontinued Operations(391,083)(638,638)(756,918)(1,172,296)(20,825,358)Discontinued Operations (Note 10)-1,678-(54,694)(343,726)Net Loss and Comprehensive Loss for the Period(391,083)(636,960)(756,918)(1,226,990)(21,169,084)Net Loss Per Common ShareContinuing Operations  Basic and Diluted(0.00)(0.01)(0.00)(0.01)Discontinued Operations  Basic and Diluted(0.00)(0.01)(0.00)(0.01)Weighted Average Number of Common Shares Outstanding202,544,395161,335,000201,303,494156,514,000   (The accompanying notes are an integral part of these consolidated financial statements)  4   Welwind Energy International Corporation (A Development Stage Company) Consolidated Statements of Cash Flows (Expressed in Canadian Dollars) (Unaudited)  For the
Six Months Ended
June 30,
2009
$For the
Six Months
Ended
June 30,
2008
$Accumulated from
August 17, 2006
(Date of inception)
to
June 30, 2009
$Operating ActivitiesNet loss for the period(756,918)(1,226,990)(21,169,084)Adjustments to reconcile net loss to net cash used in operating activities:Amortization--8,066Foreign exchange loss and other--15,410Stock issued for compensation and services113,271464,44514,844,338Gain on cancellation of shares--(572,901)Loss (Gain) on settlement of debt(17,177)157,278571,047Write-off of subscription receivable--770,310Imputed interest on shareholder loans48,566-175,575Depreciation expense6,9219,89045,270Impairment loss on goodwill--1,714,187Changes in operating assets and liabilities:Taxes recoverable(5,577)7,513(4,664)Accounts receivable--(16,985)Inventory-4,870-Prepaid expenses-8,069(1,104)Accounts payable and accrued liabilities220,359113,414625,416Net Cash Flows Used In Operating Activities(390,555)(461,511)(2,995,119)Investing ActivitiesCash acquired--2,194Purchase and construction of equipment-(74,550)(614,223)Net Cash Flows Used In Investing Activities-(74,550)(612,029)Financing ActivitiesProceeds from subscriptions and issuance of stock-357,2692,165,810Borrowings on debt- related party371,063257,5721,908,915Principal payments on debt-(12,100)(464,049)Net Cash Flows Provided By Financing Activities371,063602,7413,610,676Decrease in Cash from Discontinued Operations--5,714Increase (Decrease) in Cash(19,492)66,6809,242Cash  Beginning of Period28,73418,211-Cash  End of Period9,24284,8919,242Supplementary DisclosuresInterest paid-Income taxes paid-Non-cash Investing and Financing ActivitiesShares issued for finders fee--1,188,001Shares issued to settle debt165,000481,2552,287,600  (The accompanying notes are an integral part of these consolidated financial statements)  5   Welwind Energy International Corporation (A Development Stage Company) Consolidated Statements of Operations (Expressed in Canadian Dollars) (unaudited)   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.  2. Going Concern The Company has not realized revenues on its wind power projects, has a working capital deficiency of $1,749,914 and has an accumulated deficit at June 30, 2009 of $21,169,084. 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.  3. Property and Equipment  Cost
$Accumulated Depreciation
$June 30,
2009
Net Carrying
Value
$December 31,
2008
Net Carrying Value
$Wind equipment under construction521,037521,037521,037Automobile70,84340,49730,34635,700Computer hardware11,6518,0843,5674,755Office furniture and equipment11,7984,6307,1687,547615,32953,211562,118569,039  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 June 30, 2009.   6   4. Related Party Transactions/Balances  a) As at June 30, 2009, the balance due to related parties amounted to $1,268,664 (December 31, 2008 - $912,601), which includes $294,638 (December 31, 2008 - $233,438) owed to the former President of the Company for management fees and working capital purposes and $974,026 (December 31, 2008 - $679,163) owed to the Newly appointed President and spouse of the former President of the Company for working capital purposes.  The amounts are unsecured, non-interest bearing, and due on demand.  b) As at June 30, 2009, the Company owes $161,202 (December 31, 2008 - $161,202) to shareholders for advances to the Company and expenses paid on behalf of the Company. Of this amount, $112,798 (December 31, 2008 - $112,798) is unsecured, bears interest at 10% per annum, and is due on demand. The remaining balance of $48,404 (December 31, 2008 - $48,404) is unsecured, non-interest bearing, and payable on demand.  Imputed interest of $48,566 (December 31, 2008- $53,440) at 8% interest rate has been recorded on the shareholder loans and is included as an increase to additional paid in capital.  5. 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, 2009, there are 10,000,000 shares of preferred stock issued and outstanding.  6. Common Stock  a) On February 4, 2009, the Company issued 1,500,000 common shares of the Company with a total value of $55,926 based on the closing price of the Companys common stock on the date of issuance in relation to settlement of debt in the amount of $75,000.  The Company recorded a gain of $19,074.  b) On February 4, 2009, the Company issued 1,582,855 common shares of the Company with a total value of $59,015 based on the closing price of the Companys common stock on the date of issuance in relation to settlement of debt in the amount of $15,000.  The Company recorded a loss of $44,015.  c) On May 29, 2009, the Company issued 10,000,000 common shares of the Company with a total value of $219,220 based on the closing price of the Companys common stock on the date of issuance in relation to services rendered. The Company subsequently cancelled these shares on June 16, 2009.  d) On May 29, 2009, the Company issued 1,500,000 common shares of the Company with a total value of $32,883 based on the closing price of the Companys common stock on the date of issuance in relation to settlement of debt in the amount of $75,000.  The Company recorded a gain of $42,118.  e) On June 16, 2009, the Company issued 5,000,000 common shares of the Company with a total value of $113,270 based on the closing price of the Companys common stock on the date of issuance in relation to services rendered.  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.   7   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, 2009, there are no stock options outstanding.   7. Commitments  a) 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.  8. 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:  Six months
Ended
June 30, 2009Six Months
Ended
June 30, 2008$$Revenue-3,054Cost of sales-(2,131)Gross Profit-923Operating Expenses:General and administrative-(55,617)Net Loss-(54,694)  As at June 30, 2009 and December 31, 2008, there were no remaining assets and liabilities of the discontinued retail and wholesale foods division.   8    ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CAUTIONARY FORWARD - LOOKING STATEMENT  Statements included in this Management's Discussion and Analysis of Financial Condition and Results of Operations, and in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases and in oral statements made with the approval of an authorized executive officer which are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect the Company's actual results and could cause the Company's actual financial performance to differ materially from that expressed in any forward-looking statement: (i) the extremely competitive conditions that currently exist in the three dimensional software development marketplace are expected to continue, placing further pressure on pricing which could adversely impact sales and erode profit margins; (ii) many of the Company's major competitors in its channels of distribution have significantly greater financial resources than the Company; and (iii) the inability to carry out marketing and sales plans would have a materially adverse impact on the Company's projections. The foregoing list should not be construed as exhaustive and the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.  Introduction  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.  The Company will also work on extending its business plan into other markets including Canada and the United States.  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.  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.  9    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 (an Alberta, CanadaCcorporation).  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.  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.  Recent Business Developments  Subsequent to December 31, 2008, the Company announced the following:  (1) Termination of relationship with Ningxia Electric Power Corp. in late January 2009   10   Organizational Structure  Our current organizational structure is summarized by the illustration below:   [welwind10q063009001.jpg]  Overview of our Business  The Company is engaged in the research, development and construction of wind farms, primarily involving small scale wind power.  Our ultimate goal is to build small to medium scale wind farms of which our company has operating control. It is our goal to have our wind farm connected to the general utility electric grid to produce clean, environmentally-sound wind power for use by the electric power industry.  Since 2006, we have been engaged primarily in the development of two projects, both located in the Guangdong Province in China.  Our management has been involved in the wind power industry for more than 10 years. We have experience in the design, manufacture, maintenance and sale of wind turbines, as well as the full-scale development of wind farms. We hold contract rights, are involved with projects in development and under negotiation, and provide development activities in the wind power industry.  A wind farm is a group of wind turbines in the same location used for production of electric power. Individual turbines are interconnected with a medium voltage (usually 34.5 kV) power collection system and communications network. At a substation, this medium-voltage electrical current is increased in voltage with a transformer for connection to the high voltage transmission system. A large wind farm may consist of a few dozen to about 100 individual wind turbines, and cover an extended area of hundreds of square miles (square kilometers), but the land between the turbines may be used for agricultural or other purposes. A wind farm may be located off-shore to take advantage of strong winds blowing over the surface of an ocean or lake.  Our two China projects would be considered, at least initially, small scale wind power wind farms, which is the name given to wind generation systems with the capacity to produce 50 kW or less of electrical power. Isolated communities, that otherwise rely on diesel generators, may use wind turbines to displace diesel fuel consumption. Individuals may purchase these systems to reduce or eliminate their dependence on grid electricity for economic or other reasons, or to reduce their carbon footprint. Wind turbines have been used for household electricity generation in conjunction with battery storage over many decades in remote areas. Increasingly, U.S. consumers are choosing to purchase grid-connected turbines in the 1 to 10 kilowatt range to power their whole homes. Household generator units of more than 1 kW are now functioning in several countries, and in every state in the U.S. Grid-connected wind turbines may use grid energy storage, displacing purchased energy with local production when available. Off-grid system users can either adapt to intermittent power or use batteries, photovoltaic or diesel systems to supplement the wind turbine. In urban locations, where it is difficult to obtain predictable or large amounts of wind energy (little is known about the actual wind resource of towns and cities), smaller systems may still be used to run low power equipment. Equipment such as parking meters or wireless Internet gateways may be powered by a wind turbine that charges a small battery, replacing the need for a connection to the power grid, making the potential carbon savings of small wind turbines difficult to determine.   11   A new Carbon Trust study into the potential of small-scale wind energy has found that small wind turbines could provide up to 1.5 terawatt hours (TW·h) per year of electricity and 0.6 million tonnes of carbon dioxide (Mt CO2) emission savings. This is based on 10% of households installing turbines at costs competitive with grid electricity, which is currently around 12p per kilowatt-hour.  Distributed generation from renewable resources is increasing as a consequence of the increased awareness of climate change. The electronic interfaces required to connect renewable generation units with the utility system can include additional functions such as active filtering to enhance the power quality.  What is Wind Power?  Wind power is the conversion of wind energy into a useful form, such as electricity, using wind turbines.  Wind energy has historically been used directly to propel sailing ships or converted into mechanical energy for pumping water or grinding grain, but the principal application of wind power today is the generation of electricity. Wind power, along with solar power, is non-dispatchable, meaning that for economic operation all of the available output must be taken when it is available, and other resources, such as hydroelectricity, must be used to match supply with demand.  What is a MET tower?  MET towers (Meteorological towers), are used to gather wind data necessary for site evaluation and development of wind energy projects.  [welwind10q063009002.jpg]  MET tower instrumentation data logs wind direction and speed. In addition the MET tower can be equipped to record temperature, solar radiation and air pressure if necessary.  The most reliable wind energy assessments depend on wind data recorded continually, over a 1 year period at 40 and 60 meter heights (or greater). The wind data is sampled periodically (every 10 minutes is typical) and stored locally at the tower base using solid state memory devices. MET towers data loggers can be fitted with web server software and an internet connection for remote downloading of the meteorological information stored at the site.  MET tower installation costs typically range between $45,000 - $100,000 (tubular v. lattis) depending on site conditions and the necessity for site improvement, as well as the instrumentation and data logging strategies employed.  Note: Wind turbine efficiencies are proportional (in part) to the turbine rotor diameter.  Since modern rotor diameters can exceed 80 meters it is necessary to gather information on the differing wind conditions that exist along the radius of a rotor blade. Wind differences occur in great part as a result of wind shear, or drag, along hilly contours and heavily wooded or developed surfaces surrounding the turbine. Wind readings at different heights are used to extrapolate wind energy data for all heights along the rotor diameter.   12   Market Overview  Demand for electricity has dramatically increased as our society has become more technologically driven, Demand for Green Energy has also dramatically increased due to consumers desire to become environmentally conscious.  Both trends are expected to continue. Significant new capacity for the generation of electricity will be required to meet anticipated demand.  Most of the worlds main energy sources are still based on the consumption of non-renewable resources such as petroleum, coal, natural gas and uranium. However, while still a small segment of the energy supply, renewable sources such as wind power are growing rapidly in market share. Wind power delivers multiple environmental benefits. Wind power operates without emitting any greenhouse gases and has one of the lowest greenhouse gas lifecycle emissions of any power technology. Wind power results in no harmful emissions, no extraction of fuel, no radioactive or hazardous wastes and no use of water to steam or cooling. Wind projects are developed over large areas, but their carbon footprint is light. Farmers, ranchers and most other land owners can continue their usual activities after wind turbines are installed on their property.  According to the U.S. Department of Energy, Energy Information Administrations publication Renewable Resources in the U.S. Electricity Supply, wind power generation is projected to increase eight-fold between 1990 and 2010, a rate of 10.4% per year. Annual growth in the wind power industry for the past ten years has exceeded 28% per year according to the Global Wind Energy Council. Although wind power produces under 1% of electricity worldwide according to the Global Wind Energy Councils Global Wind 2007 Report, it is a leading renewable energy source and accounts for 19% of electricity production in Denmark (according to the U.S. Department of Energys Energy Facts web page), 10% in Spain and 7% in Germany (according to the Global Wind Energy Councils Europe region web page).  Wind power has become a mainstream option for electricity generation, and we believe that it is a critical element to solving climate change and delivering cost-effective power.  According to the Global Wind Energy Councils Global Wind 2007 Report, the United States led the world in wind power installations in 2007 and global wind capacity increased by more than 20,000 megawatts, with 5,244 megawatts installed in the United States alone. Spain and China were the second and third largest wind power growth countries in 2007 with 3,522 megawatts and 3,304 megawatts of wind power capacity added, respectively, according to the report.  Wind power can deliver zero-emissions electricity in large amounts. Wind projects do not use any fuel for their operations, so the price of wind power does not vary when fuel prices increase. When utilities acquire wind power, they lock in electricity at a stable price for, on average, 20 years or more.  Wind, however, is intermittent and electricity generated from wind power can be highly variable. Good site selection and advantageous positioning of turbines on a selected site are critical to the economic production of electricity by wind energy. In our experience, the primary cost of producing wind-powered electricity is the construction cost; wind energy has no fuel costs and relative low maintenance costs.  Though we have largely focused on the development of wind projects in China we intend to identify sites to produce wind energy in the United States and Canada.  Growth in Demand for Wind Power  Growth in wind power is being driven by several environmental, socio-economic and energy policy factors that include:  ·ongoing increases in electricity demand due to population growth and growth in energy consuming devices such as computers, televisions and air conditioning systems,  ·the increasing cost of the predominant fuels required to drive the existing fleet of conventional electric generation such as coal, natural gas, nuclear and oil,  ·the increasing cost and difficulty faced in the construction of conventional electric generation plants,  ·existing and growing legislative and regulatory mandates for cleaner forms of electric generation,   13    ·ongoing improvements to wind power systems making them more cost effective and improving availability to meet demand, and  ·worldwide concern over greenhouse gas emissions and calls to reduce global warming due to the carbon dioxide produced by conventional electric generation.  Chinas abundant inland and offshore wind energy resources provide potential for large-capacity, in-grid wind farms. By the end of 2005, China had built 59 wind farms with 1,854 wind turbine generators and a 1,266 megawatt in-grid wind power installed capacity, ranking it number ten globally.  CHINAS WIND POWER POTENTIAL[welwind10q063009004.gif]green=great, pink=good, blue=ok, yellow=poor
(offshore & coastal potential not shown)  Today, wind power in China is developing rapidly and receives particularly strong government support. The new Renewable Energy Law and its detailed incentive policies reflect the Chinese governments intention to build up this industry. By 2020, China plans to have 30 gigawatts of wind power.  European companies dominate Chinas wind power equipment market. Among U.S. companies, only GE Wind Power is active in China. In 2005, GE Wind Power occupied 3% of the in-grid wind turbine market in China.  According to the China Academy of Meteorological Sciences, the country possesses a total 235 gigawatts of practical onshore wind power potential that can be utilized at 10 meters above the ground. Annual potential production from wind power could reach 632.5 gigawatts if the annual, full-load operation reaches 2,000-2,500 hours. A detailed survey is needed, however, for economically utilizable wind power resources. The potential for offshore wind power is even greater, estimated at 750 gigawatts. Offshore wind speed is higher and more stable than onshore wind, and offshore wind farm sites are closer to the major electricity load centers in eastern China. Areas rich in wind power resources are mainly concentrated in two areas: northern Chinas grasslands and Gobi desert, stretching from Inner Mongolia, Gansu, and Xinjiang provinces; and in the east coast from Shangdong and Liaoning and the Southeast Coast in Fujian and Guangdong provinces.  In 1986, China built its first wind farm in Rongcheng, Shandong Province. From 1996 to 1999, in-grid wind power developed very quickly, entering a localization stage. By the end of 2004, there were 43 wind farms with 1291 wind turbines in China, with 764 megawatts of installed capacity. Liaoning, Xinjiang, Inner Mongolia, and Guangdong experienced the fastest wind power development, representing 60% of the installed power generating capacity of national wind power. Currently, Xinjiangs Dabancheng is the largest wind farm in China, with 100 megawatts of installed power generating capacity. Most generators range from 500 kilowatts to 1 megawatt, accounting for 84% of Chinas wind turbine generators.   14   Regulations and Economic Incentive Plans Implemented by Chinese Government for Renewable Energy Projects  To support the development of wind power technology and growth of the in-grid wind power market, the Chinese government has recently pushed hard on renewables, and it implemented a series of projects and also stipulated a series of economic incentive policies:   Ride the Wind Program [welwind10q063009006.gif]Windmills, while still subsidized, are
economically viable in high-wind areas
(photo: Nordex 2.5 MW units)  To import technology from foreign companies and to establish a high-quality Chinese wind turbine generator sector, the former State Development and Planning Commission (SDPC) initiated the Ride the Wind Program in 1996. This initiative led to two joint ventures, NORDEX (Germany) and MADE (Spain). These JVs effectively introduced 600kilowatts wind turbine generator manufacturing technology of 600 kilowatts into China.   National Debt Wind Power Program  To encourage the development of domestic wind power equipment manufacturing, the former State Economic & Trade Commission (SETC) implemented the National Debt Wind Power Program. This program required the purchase of qualified, locally-made wind power components for new generation projects. Chinas government provided bank loans with subsidized interest to wind farm owners of as compensation for the risk of using locally-made wind turbine generators. These loans funded construction of demonstration project wind farms with a total installed capacity of 8megawatts. This program has been completed.   Wind Power Concession Project  The National Development and Reform Commission (NDRC) initiated the Wind Power Concession Project in 2004 with a 20-year operational period. This program aims to reduce the in-grid wind power tariff by building large capacity wind farms and achieving economies of scale. Each of the wind farms built in this program must reach a 100 megawatts capacity. By 2006, NDRC had approved 5 wind farms, in Jiangsu, Guangdong, Inner Mongolia, and Jilin Province.  In any typical wind power concession, the power grid company signs a long-term power purchase agreement with the wind power project investor and agrees to purchase electricity generated by the project. The bidding competition determines in-grid tariff and the agreement clearly prescribes the quantity of in-grid wind power to be purchased. The duration of the agreement covers the total operation period of the wind project.  Therefore, the investor minimizes risk in recovering investment costs. The concession agreement between the government and project investor guarantees the power-purchase agreement. All end-users of the grids electricity share the tariff increase due to wind power purchase. As incentives, the government waves import customs tariff and VAT on the equipment and accessories.   15   Although Chinas government has, for many years, encouraged the use of wind power, favorable conditions for wide-scale development have yet to develop. Through the wind power concession project, the Chinese government hopes to create further incentives for companies to develop this renewable energy resource. The concession agreement and long-term power purchase agreement protect the interests of wind power investors, encouraging large companies, especially foreign ones, to invest in the Chinese wind power sector. Under this policy, market risk is reduced significantly, which in turn reduces the risk premium of the internal rate of return for wind power projects. Eventually, the wind tariff shared by end-users will be cut due to this decreased risk.  The Chinese government has expanded the capacity of wind farms to a 100 megawatt level, and has created new wind power tariffs based on the market mechanism and tendering process. This has attracted a number of Chinese companies into this program. Through successful implementation of the project, the Chinese government hopes to make wind power an economically-viable power choice, effectively competing with conventional power sources in China.  [welwind10q063009007.jpg]  Incentive policies have finally begun to emerge within China. China encourages the development of wind power in its National Middle and Large Term Development Plan. According to the plan, by 2010, Chinas installed capacity of wind power will reach 5 gigawatts. By 2020, it will achieve 30 gigawatts. In order to achieve this level of growth, China needs to build 800 megawatts of new wind power capacity each year from 2006 to 2010.  In February 2005, Chinas Renewable Energy Law was formulated and was put into effect on January 1, 2006. The law stipulates that the power grid company must sign a grid connection agreement with the wind power generating company and purchase the full amount of the wind power generated by it. The wind power tariff will be determined by the wind farm project tendering. The winners quoted tariff will be the tariff of that wind farm project.  Wind power is a priority National Clean Development Mechanism Project, i.e., wind farm developers can sell Certified Emission Reduction Certificates (CERs) to developed countries under the terms of the Kyoto Protocol.  The Chinese government reduced the Value-added Tax (VAT) for wind power from 17% to 8.5% in 2001 and adjusted the import custom tariff of wind turbine generator sets to 8% and that of its components to 3% in 2004. The import duty of wind power equipment and accessories can be waived if it is for the wind farm developers own use.  Some local governments in Guangdong, Jilin, Xinjiang and Inner Mongolia formulated their own incentive policies to develop wind power. By the end of 2005, Chinas wind power installed capacity was about 1gigawatts. According to NDRCs planning, Chinas wind power installed capacity will reach 5gigawatts by 2010 and 30-40 gigawatts by 2020. According to statistics, the cost of wind power is 33%-60% higher than that of coal, which makes the wind power tariff 68%-94% higher than the coal tariff. Industry expert predicts that the wind power can be commercially viable and compete with clean coal-fired power economically by 2020.   16    [welwind10q063009008.jpg]  On any listing of the very best prospects for China-focused wind sector business development, these would be amongst the top priorities:  -Large capacity wind turbine generators, especially at the 1megawatts level and above.  -Design and operation technology of large-scale wind farms.  Development trends for single wind turbine generators favor large capacity sets, especially at the 1 megawatt level. Before 1997, the 1 megawatt-level wind turbine generators occupied less than 10% of the worldwide market share. In 2001, that figure had risen to 52.3% and reached 62.1% in 2002. Although China has the ability to manufacture wind turbine generators below the 750 kilowatt level, production of higher capacity generators remains a challenge. Although China has made a prototype of a 1.2 megawatt level wind turbine, it has only been used for demonstration projects. International suppliers will find strong demand in China for wind turbine generators at 1 megawatt and above levels. Beyond the manufacturing sector, Chinese companies also lack experience for investment, design, and operation of large wind farms.  With the recent passage of China's new Renewable Energy Law, one of the world's largest economies has now made one of the largest state-sponsored commitments toward renewable energy. China's government imposed a national renewable energy requirement that is expected to boost the use of renewable energy capacity up to 10 percent by the year 2020.  The law requires power grid operators to purchase resources from registered renewable energy producers. The law also offers financial incentives, such as a national fund to foster renewable energy development, and discounted lending and tax preferences for renewable energy projects.  Rapid economic development throughout China has resulted in a significant increase in energy consumption, leading to a rise in harmful emissions and power shortages. The Renewable Energy Law is designed to help protect the environment, prevent energy shortages, and reduce dependence on imported energy.  China's new law sets the stage for the widespread development of renewables, particularly for commercial scale renewable generating facilities. Through this legislation, the State officially encourages the construction of renewable energy power facilities. China's electricity grid is obligated to purchase all the electricity generated by approved renewable energy facilities located in its service area. The grid's buying price for renewables will be set by the National Development and Reform Commission (NDRC), a regulatory department of the State Council. NDRC will adjust the buying price from time to time as necessary. The cost of purchasing this power will be spread across all customers on the grid.  NDRC will also implement a national renewable energy plan, including specific renewable energy targets that will act as the framework for implementation of the law. Provincial planning agencies will then develop their more specific implementation plans. The law includes other details related to the purchase and use of solar photovoltaics (PV) and solar water heating as well as renewable energy fuels. Finally, the law includes specific penalties for non-compliance with the law.   17   Our Wind Farm Portfolio  We have two (2) wind projects in Chinas Guangdong Province. The following provides an overview of the two projects, including current status:  Project NameMegawattsPhaseZhanjiang Project49 - 400Local Approvals Secured, Pending Construction Permit and Possible Site RelocationYangxi Project49 -400Development Agreement with City of Yangxi signed in June 2007, Wind Testing Completed,  Project Proposal & Feasibility Report along with the Grid Connection Report Anticipated by end of Q3 2009 for Submission to City of Yangxi  Our plan is to develop 49Mw per project per year upon the commencement of construction (subject to securing necessary approvals), which is the maximum allowed by the provincial government.  The Zhanjiang Project  The Zhanjiang Windcor Windfarm Ltd. (ZWWL) began operations in 2006.  The ZWWL was acquired by the Company as part of the acquisition of Welwind (the Alberta corporation) in August 2006.  The ZWWL is the through which all operations pertaining to the Zhanjiang Project would be handled.  The ZWWL commenced initial operations in April 2006, with such operations including establishment of an office location.  The ZWWL project is proposed located on Donghai Island.  A MET tower was installed and began collecting wind data in June 2006.  The data collected was processed in accordance with strict industry standard procedures and correlating data from the 80 meter meteorological tower on site has ensured accurate compilation of atmospheric conditions during the testing period.  Installation of a 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 Guangdong Electric Power Design Institute, and subsequently submitted to the Guangdong Power Grid Corporation for review in anticipation of finalizing a Power Connection Agreement (PCA).  Based on the completed Project Feasibility Study Report and Grid Connection Report, we executed the PCA with the local utility company, the Guangdong Power Grid Corporation, in November 2007.  The local utilitys buying price with respect to each local energy producer is set by the National Development & Reform Commission (NDRC) upon issuance of the Construction Permit by the Guangdong Provincial Government as such buying price, though set by law, is subject to change.  All testing, reports, and other necessary documentation, including all approvals required, were submitted to the City of Zhanjiang for ratification of the Project Feasibility Study Report in June 2008.  In early December 2008, the City of Zhanjiang approved the ZWWL Project Feasibility Study Report, a pre-requisite for submission to the Guangdong Provincial Government for the Construction Permit. Based on the Companys Project Proposal and Feasability Report, the Company received a conditional land use permit, subject to the issuance and approval of the construction permit by the Guangdong Provincial Government, for the construction of a wind farm on Zhanjiang, Donghai Island.   18   Immediately thereafter, the ZWWL submitted the City of Zhanjiang approved Project Feasibility Study Report to the Guangdong Provincial Government for issuance of the Construction Permit.  After corresponding with the Guangdong Provincial Government in January and February 2009, the ZWWL was advised in March 2009 that the Federal Government of China had given preference to a major steel project on Donghai Island.  As a result of this major steel project, the Guangdong Provincial Government was reassessing the location of all other projects in the area.  By way of correspondence received in March 2009, the Guangdong Provincial Government asked the Company to relocate the site for its proposed wind farm to another location as all available lands on Donghai Island were being reserved for the steel project until further notice, with such steel project including an accompanying town of an estimated 100,000 people.  The ZWWL is working with the Guangdong Provincial Government to secure a feasible alternate site, and it is expected that the Guangdong Provincial Government will begin to designate approved alternate sites for the other local projects, including the ZWWL wind farm project, beginning in June 2009.  Depending on the distance of the possible alternate site from the previously designated area, we may be forced to conduct additional win testing.  The Yangxi Project  The Yangxi Windfarm, the subsidiary through which all operations pertaining to the Yangxi Project are handled, commenced operations in July 2006.  The installation of an 80 foot meteorological tower was completed in July 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 data from the tower at the Yangxi location, a formal Project Proposal was submitted to the City of Yangxi Government as well as to the Guangdong Tianlian Engineering Ltd., the Company which is actively engaged in preparing the Project Feasibility Study Report, which includes the Grid Connection Report.  In May 2008, the Company opened its Yangxi office.  In December of 2008, we submitted a process report/update to the City of Yangxi Government.  This process report provided detailed information about our plans to build the wind farm.   On December 24, 2008, we received a letter of support for our project from the City of Yangxi Government.  We anticipate that the Project Feasibility Study Report and Grid Connection Report will be available by the end of September 2009, at which time we anticipate continuing the process of attempting to secure the necessary approvals to move forward.  Supply  The Company and YATU Wind Energy Manufacturing Co. Ltd., formerly known as 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.   19   Competition  Large utility companies dominate the energy production industry and coal continues to dominate as the primary resource for electricity production. Electricity generated from wind energy faces competition from other traditional resources such as nuclear, oil and natural gas. The advantages of conventional production of electricity are that:  ·the technology and infrastructure already exist for the use of fossil fuels such as coal, oil and natural gas,  ·commonly-used fossil fuels in liquid form such as light crude oil, gasoline and liquefied petroleum gas are easy to distribute, and  ·petroleum energy density (an important element in land and air transportation fuel tanks) in terms of volume (cubic space) and mass (weight) is superior to some alternative energy sources.  However, energy produced by conventional resources also faces a number of challenges including:  ·the inefficient atmospheric combustion (burning) of fossil fuels leads to the release of pollution into the atmosphere including carbon dioxide which is largely considered the primary cause of global warming,  ·dependence on fossil fuels from volatile regions or countries of the world creates energy security risks for dependent countries,  ·fossil fuels are non-renewable unsustainable resources which will eventually decline in production and become exhausted with potentially dire consequences to societies that remain highly dependent on them, and  ·extraction of fossil fuels is becoming more expensive and more dangerous as readily-available resources are exhausted and mines get deeper and oil rigs must drill deeper and further out in oceans.  In contrast, electricity generated from wind energy:  ·produces no water or air pollution that can contaminate the environment because there are no chemical processes involved in wind power generation; therefore, there are no waste by-products such as carbon dioxide,  ·does not contribute to global warming because it does not generate greenhouse gases,  ·is a renewable source of energy, and  ·in the case of community wind power, farming and grazing can still take place on land occupied by wind turbines.  However, wind energy producers also face certain obstacles including:  ·the reality that wind is unpredictable and, therefore, wind power is not predictably available, and when the wind speed decreases, less electricity is generated,  ·residents in communities where wind farms exist may consider them an eyesore, and  ·wind farms, depending on the location and type of turbine, may negatively affect bird migration patterns and may pose a danger to the birds themselves; however, newer, larger wind turbines have slower moving blades which seem to be visible to most birds.   20   We expect that primary competition for the wind power industry will continue to come from utility company producers of electricity generated from coal and other non-renewable energy sources.  New entrants in the wind power development market, however, face certain barriers to entry. The capital costs of buying and maintaining turbines are high. Other significant factors include the cost of land acquisition, the availability of transmission lines, land use considerations and the environmental impact of construction and operations. Finally, another critical barrier to entry into the wind power development business is the necessary experience required to bring project to the point where they are able to secure interconnection agreements, power purchase agreements and project financing for construction.  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.  Our Competitive Advantages  We believe that our experience in developing wind farm projects in new market areas will enable us to continue to successfully implement our business plan. Further, we believe our managements understanding of deregulated energy markets enables us to maximize the value of our development portfolio. Our team has experience in site selection, market analysis, land acquisition, community relations, permitting, financing, regulation and construction.  As a result of our project portfolio and management team, we enjoy strong relationships with key trading partners that are required for successful wind farm development. These relationships include regulators, turbine suppliers, electric component suppliers, equity investors, project lenders, engineering firms, constructors, electric transmission operators and electric utilities.  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.  Intellectual Property  We depend on our ability to develop and maintain the proprietary aspects of our technology to distinguish our products from our competitors products. To protect our proprietary technology, we rely primarily on a combination of confidentiality procedures. It is our policy to require employees and consultants to execute confidentiality agreements and invention assignment agreements upon the commencement of their relationship with us. These agreements provide that confidential information developed or made known during the course of a relationship with us must be kept confidential and not disclosed to third parties except in specific circumstances and for the assignment to us of intellectual property rights developed within the scope of the employment relationship.   21   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.   Employees  As of August 7, 2009, we employed 11 full-time employees. None of our employees is subject to a collective bargaining agreement and we believe that relations with our employees are very good. We also frequently use third party consultants to assist in the completion of various projects. Third parties are instrumental to keep the development of projects on time and on budget.  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.  Results of Operations  For the
Three Months
Ended
June 30,
2009Change
from
Prior
PeriodFor the
Three Months
Ended
June 30,
2008Change
from
Prior
Period$%$%Operating Expenses366,046(42.7)638,63864.2Net Loss from Continuing Operations(366,046)(42.7)(638,638)64.2Other Income (Expense)---Net Loss before Discontinued Operations(391,083)(38.8)(638,638)40.8Discontinued Operations--1,67897.9Net Loss for the Year(391,083)(38.6)(636,960)61.3    22    For the
Six Months
Ended
June 30,
2009Change
from
Prior
PeriodFor the
Six
Months
Ended
June 30,
2008Change
from
Prior
Period$%$%Operating Expenses708,352(30.2)1,015,018(60.7)Net Loss from Continuing Operations(708,352)(30.2)(1,015,018)(60.7)Other Income (Expense)---Net Loss before Discontinued Operations(756,918)(35.4)(1,172,296)(56.7)Discontinued Operations--(54,694)(57.8)Net Loss for the Year(756,918)(38.3)(1,226,990)(56.7)  General and Administrative Expenses  During the three month period ended June 30, 2009, the Company incurred general and administrative expenses of $366,046 compared to $638,638 in the same period in the previous year, this is a decrease of 42.7% or $272,592.  During the six month period ended June 30, 2009, the Company incurred general and administrative expenses of $708,352 compared to $1,015,018 in the same period in the previous year, this is a decrease of 30.2% or $303,666  Net Loss  During the three months ended June 30, 2009, the Company incurred a net loss of $366,046 compared to a net loss of $636,960 in the same period in the previous year. The 42.5% decrease of $270,914 in net loss was mainly attributable to a decrease in the loss on the settlement of debt of $104,475.  During the six months ended June 30, 2009, the Company incurred a net loss of $756,918 compared to a net loss of $1,226,990 in the same period in the previous year. The 38.3% decrease of $470,072 in net loss was mainly attributable to a decrease in the loss on the settlement of debt of $481,255.  As at June 30, 2009, the Company had $9,242 in cash, total current assets of $32,908, and current liabilities of $1,782,822. 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 there from and a corresponding negative impact on shareholder liquidity.  During the period ended June 30, 2009, the Company used $390,555 of net cash flows in operating activities.  Uses of Liquidity  The Company's cash requirements through the end of fiscal 2009 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.   23   Cash Requirements  Our cash on hand as of June 30, 2009 is $9,242. 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 2007 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.  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:   24   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.  RECENT ACCOUNTING PRONOUNCEMENTS  In June the FASB issued FASB Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted In Share-Based Payment Transactions Are Participating Securities, (FSP 03-6-1), which states that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method described in SFAS No. 128, Earnings Per Share. FSP 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior period earnings per share data presented shall be adjusted retrospectively (including interim financial statements, summaries of earnings, and selected financial data) to conform with the provisions of FSP 03-6-1. FSP 03-6-1 is not expected to have an impact on our financial statements  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  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.   25   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.  ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.  ITEM 4. CONTROLS AND PROCEDURES  Evaluation of Disclosure Controls and Procedures.  As required by Rule 13a-15 under the Exchange Act, our management, including Tammy-Lynn McNabb, our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2008, and updated the disclosure for the period ended June 30, 2009.  Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.  Management conducted its evaluation of disclosure controls and procedures under the supervision of our chief executive officer and our chief financial officer. Based on that evaluation, Ms. McNabb concluded that because of the material weaknesses in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of June 30, 2009 and December 31, 2008.  Managements Report on Internal Control over Financial Reporting  Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2008, and reviewed our internal controls over financial reporting for the period ended June 30, 2009 using the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Companys annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of June 30, 2009 and December 31, 2008, the Company determined that there were control deficiencies that constituted material weaknesses, as described below:  26    1.As of June 30, 2009, effective controls over the control environment were not maintained.  Specifically, a formally adopted written code of business conduct and ethics that governs to the Companys employees, officers and directors was not in place.  Additionally, management has not developed and effectively communicated to its employees its accounting policies and procedures.  However, the Companys financial reporting process is centralized around the Companys Chief Executive Officer and an external consulting firm responsible for the Companys financial reporting and policies surrounding the day-to-day transactions of the Companys financial reporting and record-keeping in Canada and China have been implemented and reviewed by management with no material errors during the year ended December 31, 2008.  The Company is currently evaluating its internal controls over the control environment.

The Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-B.  Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.2.As of June 30, 2009, effective controls over financial statement disclosure were not maintained.  Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.   Accordingly, management has determined that this control deficiency constitutes a material weakness.  The Company continues to engage a third-party financial statement provider to prepare the required annual and quarterly financial statements to assist in the Companys filing requirements.3.As of June 30, 2009, effective controls over equity transactions were not maintained.  Specifically, controls were not designed and in place to ensure that equity transactions were properly reflected. Accordingly, management has determined that this control deficiency constitutes a material weakness.  The Company, through its financial statement provider, are ensuring that equity transactions in fiscal 2009 are being recorded promptly and that appropriate valuation of the common shares are recorded for financial reporting purposes.  Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the companys internal controls.   As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of June 30, 2009 based on criteria established in Internal ControlIntegrated Framework issued by COSO.  Continuing Remediation Efforts to address deficiencies in Companys Internal Control over Financial Reporting  Our management and Board of Directors plan to establish the following remediation measures during the fiscal year ending December 31, 2009:  1.Our Board of Directors will nominate an audit committee and audit committee financial expert to ensure that we establish appropriate internal controls over our financial reporting process, including formal review and approval of our financial statements and the review, implementation, and monitoring of necessary internal controls, procedures, and policies to mitigate the potential risk of material misstatement of our financial records.2.Our management and Board of Directors are currently finalizing a formal code of ethics that will outline the policies and procedures regarding management, directors, and employees of the Company as well as formalize existing policies and procedures surrounding the Companys financial reporting requirements.  Changes in Internal Controls  There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  27    PART II - OTHER INFORMATION.  ITEM 1. LEGAL PROCEEDINGS.  We are not a party to any pending legal proceeding. No federal, state or local governmental agency is presently contemplating any proceeding against the Company. No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.  Item 1A. RISK FACTORS.  We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.  ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.  1. Issuance of Equity Securities in exchange for services:  a. On June 16, 2009, the Company issued 5,000,000 of the Companys common stock in relation to services rendered.  For a more detailed discussion please refer to Note 6 of the Financial Statements.  2. Convertible Securities:  None  3. Outstanding Warrants:  None  4. Sales of Equity Securities for Cash:  None  5. Other Issuances:  a. On May 29, 2009, the Company issued 1,500,000 of the Companys common stock in relation to settlement of debt, for a more detailed discussion please refer to Note 6 of the Financial Statements.  ITEM 3. DEFAULTS UPON SENIOR SECURITIES.  None  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.  None  ITEM 5. OTHER INFORMATION.  None   28   ITEM 6. EXHIBITS  The following exhibits are filed with this Quarterly Report on Form 10-Q:  EXHIBIT NUMBERDESCRIPTIONLOCATION3.1 - 3.2Articles of Incorporation and BylawsIncorporated by reference as Exhibits to the Form 8-K filed on December 12, 2004 as amended on February 3, 2005.10.1Share Exchange Agreement between Vitasti, Inc. and Welwind Energy International Corporation.Incorporated by reference as an Exhibit to the Form 8-K filed on August 17, 2006 as amended on December 20, 2006.31.1Rule 13a-14(a)/15d-14(a) Certification (CEO)Filed herewith31.2Rule 13a-14(a)/15d-14(a) Certification (CFO)Filed herewith32.1Section 1350 Certification (CEO)Filed herewith32.2Section 1350 Certification (CFO)Filed herewith    29    SIGNATURES  In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the Undersigned, thereunto duly authorized.  WELWIND ENERGY INTERNATIONAL CORP.     Dated: August 18, 2009 /s/ Tammy-Lynn McNabb By: Tammy-Lynn McNabb Its: President and CEO    30