UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q/A





(Amendment No. 3)





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





For the quarterly period ended March 31, 2009








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


For the transition period from ____ to ____








WORLDWIDE ENERGY AND MANUFACTURING USA, INC.


(Exact name of registrant as specified in its charter)





Colorado
0-31761
84-1536519(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification No.)408 N. Canal Street

South San Francisco,  CA  94080(Address of principal executive offices)





Registrant’s telephone number, including area code: (650) 794-9888







Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / /




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




Large accelerated filer [ ] Accelerated filer [ ]




Non-accelerated filer [ ] Smaller reporting company [X]




Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]




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 [ ]




APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS




DURING THE PRECEDING FIVE YEARS




Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes / / No / /




APPLICABLE ONLY TO CORPORATE ISSUERS




Indicate the number of shares outstanding of each of the issuer's classes of stock, as of the latest practicable date.





Class of Securities
Shares Outstanding at April 15, 2010Common Stock, no par value
5,642,567











INDEX
 
 
 PageITEM 1.  FINANCIAL STATEMENTSCONDENSED CONSOLIDATED BALANCE SHEETS  - As Restated
4UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME  - As Restated
5UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  - As Restated
6NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7ITEM 2.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
24ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4 .       CONTROLS AND PROCEDURES
33PART II.     OTHER INFORMATION
37EXHIBITS
38SIGNATURES
39




2


PART 1 - FINANCIAL INFORMATION
 
 ITEM 1.                      FINANCIAL STATEMENTS
 
 (a)
The unaudited financial statements of registrant for the three months ended March 31, 2009, follow.  The financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented.
 
 
  EXPLANATORY NOTE
  This Third Amended Quarterly Report on Form 10-Q/A discloses and discusses the impact and effect of a restatement of our previously filed financial statements for the quarter ended March 31, 2009; and amends Items 1, 2, and 4 of Part I of our Quarterly Report on Form 10-Q previously filed with the SEC on May 14, 2009 and amended on August 19, 2009 and September 1, 2009.  This restatement is necessary due to the original equity classification of certain warrants granted in connection with the Company’s 2008 equity financing (completed on June 23, 2008 and July 24, 2008), and included in the Company’s previously issued consolidated financial statements was incorrect.  Management has subsequently determined that the warrants granted in connection with the 2008 equity financing should have been recorded as a warrant derivative liability and not as equity.  In addition, certain bonuses earned during 2008, were incorrectly recorded in the first quarter ended March 31, 2009 and not accrued as of December 31, 2008.  As a result, our management decided to restate our financial statements to reflect these corrections.
 
 This Third Amended Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2009 amends and restates only those items of the previously filed Quarterly Report on Form 10-Q/A which have been affected by the restatement.  In order to preserve the nature and character of the disclosures set forth in such items as originally filed, no attempt has been made in this amendment (i) to modify or update such disclosures except as required to reflect the effects of the restatement or (ii) to make revisions to the Notes to the Condensed Consolidated Financial Statements except for those which are required by or result from the effects of the restatement.  For additional information regarding the restatement, see Note 17 to our Condensed Consolidated Financial Statements included in Part I - Item I.  No other information contained in our previously filed Form 10-Q/A for the quarter ended March 31, 2009 has been updated or amended.


3


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS





March 31, 2009


December 31, 2008(Unaudited)(Restated)


(Restated)ASSETSCurrent assets:Cash and cash equivalents

$
3,520,399


$
5,092,476Accounts receivables, net of allowances of $272,430 and $45,634, respectively


8,600,995



4,790,506Notes receivables


149,937



269,507Inventories


4,665,481



3,754,765Tax receivable


240,001



-Advances to suppliers


745,603



99,824Related parties receivables


439,100



185,400Prepaid and other current assets


160,069



206,770Total current assets


18,521,585



14,399,248Property, plant and equipment, net


2,029,878



1,353,539Intangible assets


1,101,000



1,101,000Goodwill


285,714



285,714Deposits paid for investment


1,551,890



1,724,976Investment


16,000



-Other assets

-



7,559Total assets

$
23,506,067


$
19,133,009LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities:Accounts payable

$
7,563,166


$
3,400,253Accrued expenses


524,468



1,073,994Bank loan


1,300,000



-Tax payable


337,951



364,213Warrant derivative liability


467,854



486,356Acquisition cost payable


-



285,714Due to related parties


1,242,248



1,243,024Customer deposits


133,599



964,998Total current liabilities


11,569,286



7,818,552Non-current liabilitiesBank loan-long term portion


877,869



937,075Loan payable to stockholders


-



60,024Total non-current liabilities


877,869



997,099Total liabilities


12,447,155



8,815,651Worldwide’s Stockholders’ equityCommon stock (No Par Value : 100,000,000 shares authorized;3,617,512 shares issued and outstanding)


2,724,172



2,535,652Retained earnings


7,342,383



6,681,589Deferred stock based compensation


(140,400
)


-Accumulated other comprehensive income


508,513



487,478Total Worldwide’s stockholders’ equity


10,434,668



9,704,719Non-controlling interest


624,244



612,639Total equity


11,058,912



10,317,358Total liabilities and stockholders’ equity

$
23,506,067


$
19,133,009


See accompanying notes to unaudited condensed consolidated financial statements.




4


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND


COMPREHENSIVE INCOME


(UNAUDITED)





For The Three Months EndedMarch 31.2009


2008(Restated)RevenueSales, net of returns of $0 in 2009 and $0 in 2008

$
10,281,867


$
5,404,083Cost of goods sold


8,562,800



4,394,429Gross profit


1,719,067



1,009,654Operating ExpensesOther selling, general and administrative expenses


825,740



545,689Advertising


415



--Management and professional fees paid to shareholders (Note 10)


90,000



80,320Stock based compensation


32,120



110,000Depreciation


73,176



3,972Total operating expenses


1,021,451



739,981Operating income


697,616



269,673Other Income (expenses)Interest income


11,113



1,137Interest expenses


(7,602
)


(34,441
)Interest expense paid to shareholders (Note 10)


-



(17,446
)Other income


19,405



-Exchange gain


3,965



-Total other income (expenses)


26,881



(50,750
)Net income before income taxes


724,497



218,923Income taxes (expense)/benefit


(38,546
)


11,404Net income before non-controlling interest


685,951



230,327Non-controlling interest


(25,157
)


-Net income attributable to the Company


660,794



230,327Other comprehensive incomeForeign currency translation


21,035



98,423Comprehensive income attributable to the non-controlling interest


(13,552
)


-Comprehensive income attributable to the Company

$
668,277


$
328,750Earnings per share

$
0.23


$
0.11Weighted average shares outstanding


2,884,129



2,069,863





See accompanying notes to unaudited condensed consolidated financial statements.




5


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)


For The Three Months EndedMarch 31,2009


2008(Restated)Cash flows from operating activitiesNet income


$
660,794


$
230,327Income attributable to non-controlling interest



25,157



-Adjustments to reconcile net income to net cash used in operating activities:Depreciation



73,176



27,830Allowance for bad debts



226,718



(20,000
)Stock issued for services



32,120



110,000Gain on warrant re-valuation



(18,502
)


-Changes in operating assets and liabilities:Accounts receivable



(4,032,814
)


(2,543,985
)Inventories



(908,147
)


240,934Income tax receivable



(239,967
)


(10,974
)Loan receivable-affiliate



119,892



-Notes receivable



(645,560
)


(987,203
)Prepaid and other current assets



39,200



98,312Accounts payable



4,363,837



1,826,234Accrued expense



(565,987
)


(12,028
)Income tax payable



(26,444
)


(19,344
)Customer deposits



(831,558
)


-Net cash used in operating activities



(1,728,085
)


(1,059,897
)Cash flows from investing activitiesLoan to related parties



-



(25,987
)Purchase of property and equipment



(760,013
)


(26,570
)Deposit paid for investment in subsidiaries



285,714



(40,680
)Net cash used in investing activities



(1,045,727
)


(93,237
)Cash flows from financing activitiesProceeds from  shareholders loan



-



1,606,954Repayment of shareholders loan



(60,024
)


-Principal payments on loan term debt



-



(884
)Proceeds from line of credit



1,300,000



-Repayment  of bank loans



(43,749
)


(116,962
)Loan from related parties



6,133Net cash flows provided by financing activities:



1,202,360



1,489,108Effect of exchange rate changes in cash



(625
)


55,331Net (decrease)/ increase in cash



(1,572,077
)


391,305Cash- beginning of period



5,092,476



2,111,825Cash- end of period


$
3,520,399


$
2,503,130Supplemental disclosure of non cash investing and financing activities:Interest paid in cash
$

-


$
51,887Income taxed paid in cash
$

39,564


$
-


See accompanying notes to unaudited condensed consolidated financial statements.




6


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





1.           MANAGEMENT'S REPRESENTATION OF INTERIM FINANCIAL INFORMATION





The accompanying unaudited financial statements have been prepared by Worldwide Energy and Manufacturing USA, Inc. without audit pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading.  These financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations.  All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These financial statements should be read in conjunction with the audited financial statements at December 31, 2008, as amended, as filed in the Company Form 10-K filed with the Commission on April 15, 2010.





2.           SIGNIFICANT ACCOUNTING POLICIES





This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements.  The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements and the restated December 31, 2008 financials included in the 10-K/A filed on September 1, 2009 and August 19, 2009.





Description of Business





Worldwide Energy and Manufacturing USA, Inc. (“Worldwide” or “the Company”) is a manufacturing engineering firm and international contract manufacturer, using factories in China, primarily servicing customers in Europe, South Korea for our solar modules and United States-based companies that outsource their smaller scale production orders for offshore production in China. From our inception in 1993 until 2005, we were strictly an intermediary or “middle man,” working with our customers and our subcontractors to assure that our customers received high quality components on a timely basis that fulfilled their specific needs. While we still subcontract a significant portion of our business, since 2005, we have begun the transition to becoming a direct contract manufacturer, operating several of our own factories.  Recently, we announced two additional factories allowing us to become a direct manufacturer for solar modules and for power supply units as described below:





In February of 2008, Worldwide established a solar division that focuses on photovoltaic module technology under the brand name of “AmeriSolar.”  On February 25, 2008, the Company changed its name from Worldwide Manufacturing USA, Inc. to Worldwide Energy and Manufacturing USA, Inc. in order to reflect its expansion into the solar energy industry. The Company issued 300,000 restricted shares for the AmeriSolar brand name. Worldwide leased a 129,167 square foot facility in Ningbo, China. The lease term is from July 18, 2008 to July 17, 2013.This facility houses the production operations and R&D center for the Company’s solar division. This factory has the capability of producing 80MW which translates into approximately $224 million in revenues at full capacity based on current prices. By opening this factory we hope to increase gross margins and net margins in our solar division.





7


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





2.           SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





On October 14, 2008, Worldwide completed the acquisition of 55% of Shanghai De Hong Electric and Electronic Company Limited (“De Hong”) through acquiring 55% of the outstanding capital stock of De Hong, a China corporation, through Worldwide’s wholly owned subsidiary Intech Electro- Mechanical Products Co., Ltd., a Chinese corporation (“Intech”). The Company funded the acquisition with the sale of 1,055,103 shares of its common stock, or $4,747,970. The sale of stock took place on June 23, 2008.  Shanghai De Hong Electric and Electronic Company is the holding company for the operating subsidiary Shanghai Intech -Detron Electronic Co. (“Detron”). Therefore, Worldwide received 55% control of the operating subsidiary Shanghai Intech-Detron Electric and Electronic Company Limited (“Detron”). Detron is a power supply factory in Shanghai, China with designing and R & D. The terms of Agreement dated February 3, 2008 was that Worldwide USA paid cash consideration of approximately 1 million dollars for 55% interest in DeHong. Intech paid the first installment of $714,286 on behalf of Worldwide in September, 2008. During the three months ended March 31, 2009, Worldwide paid back $714,286 to Intech and further paid $308,414 for the second installment and the total consideration of the investment is $1,022,700.





On August 15, 2008, the Company formed a new company called Nantong Ningbo Solar factory (“Ningbo Solar”), which is the solar energy research and development manufacturer. The Company established a factory to provide installation services to different solar project. The Company also acts as agent to import or export the products and services overseas.





On November 14, 2005, we established a die-casting and machining factory through leasing an existing facility from a former supplier, and initially investing approximately $500,000 to upgrade the equipment and manufacturing buildings. In these transactions we acquired assets, the expertise of the employees, the managers of the factories, and a portion of the existing customers of those factories. In the third quarter of 2005, we also established an electronics manufacturing factory. As a result, of these two continued factory operations and the recently announced new factories described above, as of December 31, 2008 we own and operate four factories that we now use for the manufacture of certain product lines that we historically had to subcontract, and we are using the services of approximately 40 subcontractors to manufacture those product lines for which we do not have our own manufacturing capabilities.





Principles of Consolidation





The accompanying financial statements include Worldwide Energy and Manufacturing USA, Inc., a Colorado corporation and a public company, its operating subsidiary, Worldwide USA, a California corporation, and six subsidiary companies, Shanghai Intech Electro-Mechanical Products Co., Ltd., Shanghai Intech Precision Mechanical Products Ltd., Shanghai Intech-Detron Electric and Electronic Company Limited, Ningbo Solar Factory, and Shanghai De Hong Electric and Electronic Company Limited, owned by Worldwide USA.  Intercompany transactions have been eliminated in consolidation.





Property and equipment





Property and equipment are stated at historical cost and are depreciated over the useful lives of the assets. Depreciation is computed primarily using the straight-line method based on estimated useful lives, which range from 3 to 25 years.





8


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





2.           SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Impairment of Long-lived Assets





Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent from other groups of assets. The evaluation of long-lived assets requires the Company to use estimates of future cash flows. However, actual cash flows may differ from the estimated future cash flows used in these impairment tests.





Inventories





Inventories consist of finished goods of manufactured products.  Cost is stated at the lower of cost or market on a first-in, first-out (FIFO) basis.  The Company has not recorded an allowance for slow-moving or obsolete inventory.  Obsolete inventory at March 31, 2009 and December 31, 2008 was minimal.





Revenue Recognition





The Company recognizes revenues in accordance with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104 “Revenue Recognition”.  The Company recognizes revenue from product sales when the orders are completed and shipped, provided that collection of the resulting receivable is reasonably assured.  Amounts billed to customers are recorded as sales while the shipping costs are included in cost of sales. Returns on defective custom parts may only be exchanged for replacement parts within 30 days of the invoice date.  Returns on defective catalogue parts, which can be resold, may be exchanged for replacement parts or for a refund.  Revenue from non-refundable customer tooling deposits is recognized when the materials are shipped or when the deposit is forfeited, whichever is earlier.





Repairs and Maintenance





Repairs and maintenance of a routine nature are charged as incurred to operations, while those that extend or improve the life of existing assets are capitalized.





Cash and Cash Equivalents





For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.





Income Taxes





The Company uses the liability approach to financial accounting and reporting for income taxes.  The differences between the financial statement and tax bases of assets and liabilities are determined annually.  Deferred income tax assets and liabilities are computed for those differences that have future




9


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





2.           SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





tax consequences using the currently enacted tax laws and rates that apply to the period in which they are


expected to affect taxable income.  Valuation allowances are established, if necessary, to reduce deferred tax asset accounts to the amounts that will more likely than not be realized.  Income tax expense is the current tax payable or refundable for the period, plus or minus the net change in the deferred tax asset and liability accounts.





Intangibles





Brand name has an indefinite useful life and it is carried at cost and is not being amortized. The Company reviews its intangible assets annually for impairment, or sooner, if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.





Research and Development





The Company expenses the cost of research and development as incurred.  No research and development costs were charged to operations during 2009 or 2008.





Goodwill





Goodwill represents the excess of the purchase price over the net of the fair value of the identifiable tangible and intangible assets acquired and the fair value of liabilities assumed in business acquisitions. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, management of the Company evaluates the carrying value of goodwill annually or when a possible impairment is indicated. The Company performs its impairment annually during the fourth quarter of the fiscal year.





Non-Cash Equity Transactions





Shares of other equity instruments issued for non-cash consideration are recorded at the fair value of the consideration received, or at the value of the stock given, considered in reference to contemporaneous cash sale of stock.





Accounting for Derivatives





The Company evaluates stock options, stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of Financial Accounting Standards Board (“FASB”) Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities’ (“FAS 133”).  The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability.  In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense.  Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.  Financial instruments that are initially classified as equity that become subject to reclassification under FAS 133 are reclassified to a liability account at the fair value of the instrument on the reclassification date.





10





WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





2.           SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





In addition, the Company evaluated EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”, which sets forth conditions that must be met to determine whether the derivative instrument should be classified as equity or classified as a liability.





Estimates





The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities, as well as footnote disclosures included in the financial statements and accompanying notes.  Actual results may differ from those estimates and such differences may be material to the financial statements.  The more significant estimates include:  useful lives and residual values of fixed assets, fair market values of inventory, goodwill and intangible impairment tests, reserves for warranty, returns, and product liability losses, and credits losses.





Accounting Method





The Company’s financial statements are prepared using the accrual method of accounting.





Foreign Currency Transactions and Translation





Transaction gains and losses result from a change in exchange rates between the functional currencies in which a foreign currency transaction is denominated.  They represent an increase or decrease in (a) the actual functional current cash flows realized upon settlement of foreign currency transactions and (b) the expected functional currency cash flows on unsettled foreign currency transactions.  All transaction gains and losses are included in other income or expense.  For all years presented, sales to customers were primarily denominated in U.S. dollars.





Assets and liabilities of Intech are translated into U.S. dollars at the prevailing exchange rate in effect at each period end.  Revenue and expenses are translated into U.S. dollars at the average exchange rate during the reporting period.  Contributed capital is translated into U.S. dollars at the historical exchange rate when capital was injected.  Any difference resulting from using the current rate, historical rate, and average rate in determination of retained earnings is accounted for as a translation adjustment and reported as part of comprehensive income or loss in the equity section.  Exchange differences are recognized in the income statement in the period in which they occur.





Fair Value of Financial Instruments





Unless otherwise indicated, the fair value of all reported assets and liabilities, which represent financial instruments (none of which are held for trading purposes), approximate the carrying values of such instruments.  At March 31, 2009 and December 31, 2008, accounts receivable in the amounts of $8,600,995 and $4,790,506 respectively, were pledged as collateral in connection with bank loans.








11








WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





2.           SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Fair Value Measurements





In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 establishes a framework for measuring fair value in generally accepted accounting principles, clarifies the definition of fair value within that framework, and expands disclosures about the use of fair value measurements. SFAS No. 157 applies to fair value measurements required by existing accounting pronouncements and does not require any new fair value measurements.  The Company adopted FAS 157 on January 1, 2008.





On January 1, 2009 the Company adopted FASB Staff Position No. FAS 157-2 for non-financial assets and non-financial  liabilities that are recognized or disclosed at fair value in the consolidated financial statements on anonrecurring basis as permitted by, which provided a deferral of such provisions until 2009. The adoption of FAS157-2 did not have a material impact on the Company’s consolidated financial statements.





Various inputs are considered when determining the fair value of the Company’s investments and long-term debt.  The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities.  These inputs are summarized in the three broad levels listed below.





·
Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets.





·
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.).





·
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).





The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company’s had a warrant derivative liability carried at fair value on a recurring basis at March 31, 2009.




12





WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





2.           SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





The following are the major categories of assets and liabilities measured at fair value on a recurring basis during the period ended March 31, 2009, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).





Description

Level 1:

Quoted Prices in Active Markets for Identical Assets


Level 2:

Significant Other Observable Inputs


Level 3:

Significant Unobservable Inputs


Total at

March 31, 2009Warrant Derivative Liability

$
-


$
467,854


$
-


$
467,854Total

$
-


$
467,854


$
-


$
467,854





The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.





Compensated Absences





Employees of the Company are entitled to be compensated for absences depending on job classification, length of service, and other factors.  At March 31, 2009 and 2008, the minimal amounts unused by employees could not be estimated, and accordingly, no provision is recorded.





13


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





2.           SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Concentrations, Risks, and Uncertainties





The Company did not have concentration of business with suppliers constituting greater than 10% of the Company’s gross sales during 2009 and 2008.





In the first quarter of 2009 and 2008, 62% and 0% of the company's business was in the renewable energy industry.





As part of the production process, the Company may be required by its suppliers to advance funds under short-term agreements for tooling and other pre-production costs.  The loans are generally unsecured and may carry interest at the prevailing market rate for short-term instruments.  Such tooling is in most cases owned by the suppliers, and is a value primarily for the specific needs of the Company’s customers.  The Company in turn requires its customers to provide a non-refundable down payment to cover such startup costs.  In the event that a supplier is unable to fulfill its production agreements with the Company, management believes that other suppliers can be found for the Company’s products.  However, a change in suppliers would cause a delay in the production process, and could result in loss of tooling deposits and other supplier advances, which could negatively affect the Company’s operating results.  At March 31, 2009, the balance of advances owed to the Company is $745,603.





The Company sells its goods and services internationally, although the majority of its revenue is derived from customers in the United States and Europe.  As such, the Company is susceptible to credit risk on accounts and notes receivable from customers in that region.  Additionally, a significant portion of the Company’s U.S. customers consists of entities in the solar industry, which has proven to be sensitive to swings in the economic cycle.  Generally, the Company does not obtain security from its customers in support of accounts receivable.





Stock Based Compensation





The Company will account for employee stock option plans under the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and has adopted the disclosure only provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”(“SFAS 123”).  The Company accounts for equity instruments issued to non-employees in accordance with the provisions of SFAS No. 123 and Emerging Issues Task Force No. 96-18, “Accountingfor Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services”.





Earnings Per Share





The Company adopted Statement of Financial Accounting Standard No. 128, “Earnings per Share” (“SFAS No. 128"), which is effective for annual periods ending after December 15, 1997.  Earnings per share (EPS) are computed based on the weighted average number of shares actually outstanding.





For the Three months Ended

March 31, 2009


March 31, 2008Weighted average number of common shares used


2,884,129



2,069,863





14


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





2.           SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Recent Accounting Pronouncements





In March 2008, the FASB issued SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities amendment of FASB Statement No. 133” (“SFAS 161”).  This statement changes the disclosure requirements for derivative instruments and hedging activities.  Entities are required to provide enhanced disclosures stating how and why an entity uses derivative instruments; how derivatives and related hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) and its related interpretations; and how derivative instruments and related hedge items affect an entity’s financial position, financial performance and cash flows.  SFAS 161 is effective in fiscal years beginning after November 15, 2008 and is required to be adopted by the Company in the first quarter of fiscal year 2009.  The Company does not expect the adoption of SFAS 161 will have a material impact on the Company’s disclosures.





In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, The Hierarchyof Generally Accepted Accounting Principles(“FAS 162"). This Standard 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. FAS 162 directs thehierarchy to the entity, rather than the independent auditors, as the entity is responsible for selecting accounting principles for financial statements that are presented in conformity with generally accepted accounting principles. The Standard is effective 60 days following SEC approval of the Public Company Accounting Oversight Board amendments to remove the hierarchy of generally accepted accounting principles from the auditing standards. FAS 162 is not expected to have an impact on the financial statements.





In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts, an interpretation of FASB Statement No. 60 (SFAS 163).  This statement clarifies accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises.  SFAS 163 is effective beginning this interim period ended March 31, 2009. Because the Company does not issue financial guarantee insurance contracts, the adoption of this standard did not have an effect on its financial position or results of operations.





On January 1, 2009, the Company adopted FASB Staff Position (FSP) FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets. Application of this FSP is not expected to have a significant impact on the financial statements





On January 1, 2009, the Company adopted FSP EITF 03-6-1, Determining Whether Instruments Granted Share-Based Payment Transactions are Participating Securities. This FSP provides 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.





All prior-period EPS data presented shall be adjusted retrospectively (including interim financial statements, summaries of earnings, and selected financial data) to conform with the provisions of this FSP.  The adoption of EITP 03-6-1 did not have an impact on the Company as the Company does not currently have any share-based awards that would qualify as participating securities. Therefore, application of this FSP is not expected to have an effect on the Company's financial reporting.





15


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





In April 2008, the FASB issued EITF 07-05, Determining whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock, (EITF 07-05).  EITF 07-05 provides guidance on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in paragraph 11(a) of FAS 133. The Company adopted EITF 07-05 on January 1, 2009, the adoption of EITF 070-05 is not expected to have an effect on the Company’s financial reporting.





3.           COMMITMENTS AND CONTINGENCIES





The Company leases its office spaces and certain vehicles under non-cancelable operating leases.  The Worldwide office lease requires increasing annual payments plus a share of operating costs.  Minimum future rental payments under non-cancelable operating leases with remaining terms in excess of one year as of March 31, 2009, in the aggregate and for each of the five succeeding fiscal years are as follows:





Year ended December 312009

$
201,0962010


188,8512011


152,5122012


152,5122013


150,120Total minimum future rental payment

$
845,091








Total rent and lease expense was $103,874 and $42,274 for the three months ended March 31, 2009 and 2008, respectively.





The Company has a contingency associated with our capital raises done in 2008 requiring certain milestones to be met. The contingency states:  “If (a) the Company fails to report at least $2,500,000 in EBITDA less noncash expenditures for the fiscal year ending December 31, 2009, as disclosed in the Company’s Form 10-K for the fiscal year ending December 31, 2009 (“2009 Milestone”), the date of disclosure of such 2009 Milestone (“2009 Milestone Date”) and such 10-K, and (b) if the average of the ten closing prices for each of the ten trading days immediately following the 2009 Milestone Date is less than the lesser of the Per Share Purchase Price and the 2008 Milestone Price, which is $4.50 (“2009 Milestone Price”), then, within 13 Trading Days of the 2009 Milestone Date, the Company shall issue to each Purchaser a number of shares of Common Stock equal to the difference between (i) the number of shares of Common Stock issued to such Purchaser on the Closing Date along with any 2008 Milestone Shares issued pursuant to the 2008 Milestone Date and (ii) the number of shares of Common Stock that would otherwise have been issuable to such Purchaser on the closing date if the Per Share Purchase Price was equal to the 2009 Milestone Price (“2009 Milestone Shares”).”  In addition, Jimmy and Mindy Wang have deposited 1,620,954 shares of common stock into an escrow account.  Should a contingency arise, the contingency would be first satisfied by shares issued from the Company and should the Company not have sufficient shares available, the Wang shares would be forfeited to help satisfy the contingency.  The Wang shares are considered to be secondary and not primary consideration in satisfying any potential contingency.  As of March 31, 2009, there are no indications that the milestones have not been met.





16





WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





4.           ACCOUNTS RECEIVABLE





Accounts receivable by major categories are summarized as follows:





March 31, 2009Accounts Receivable – pledged to banks

$
3,424,576Accounts Receivable – others


5,448,8498,873,425Less: allowances for doubtful accounts


272,430Total

$
8,600,995





Under the terms of a revolving line of credit agreement with Bank of the West indicated in note 11, the revolving line of credit is secured by 70% of accounts receivable and all business assets of the company and guaranteed by its officers.





Concentrations in Accounts Receivable - At March 31, 2009, three customers accounted for more than 10% of the company's accounts receivables with total amounts of $4,909,491 representing 45.5% of the total accounts receivables in aggregate. At March 31, 2008, one customer accounted for more than 10% of the Company’s accounts receivable, with a total amount of $2,497,855, representing 52% of total accounts receivable in the aggregate.





5.
INVENTORIES





Inventories by major categories are summarized as follows:





March 31, 2009Raw materials

$
922,888Work in progress


490,492Finished goods


2,336,054Finished goods – Pledge to the bank (refer to note 11)


916,0474,665,481Less: allowances for slowing moving items


-Total

$
4,665,481





WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





6.
PROPERTY AND EQUIPMENT




Property and equipment, which is located in the USA and PRC, consisted of the following at March 31, 2009:




March 31, 2009Vehicles

$
381,404Furniture & fixtures


196,152Equipment


1,701,081Software


37,252Others


38,429Leasehold improvements


229,126Less: accumulated depreciation


(985,546
)Construction in progress


431,980Total

$
2,029,878





7.
INTANGIBLE ASSET


The  1,101,000 or $3.67 per share. The “AMERISOLAR” modules are backed by ISO 9001:2000 and ISO 14000 environmental quality


The intangible asset of $1,101,000 represents the brand name of “Amerisolar” and the Company acquired this brand name by the issuance of 300,000 restricted shares at $3.67 per share. The "AMERISOLAR" modules are backed by ISO 9001:2000 and ISO 14000 environmental quality certifications.





The brand name is carried at cost and is not being amortized. If an intangible asset has an indefinite useful life it is not amortized. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company. If no legal, regulatory, contractual, competitive, economic or other factors limit the useful life of the asset it shall be considered to be indefinite.  In recording of the brand name is was determined that the expected useful life is indefinite and cash flows from the brand name are expected to contribute to the Company over an indefinite period of time.





8.           DEPOSITS PAID FOR INVESTMENT





On June 24, 2008, the Company paid $51,876 for an investment in Tomii International. The $51,876 gave Worldwide a 21% interest in Tomii International, which is developing a pocket translation device for Chinese and English.





On February 1, 2009, the Company paid $1,500,000 as deposits for the incorporation of the subsidiaries of Nantong Ningbo Solar factory located in China for the purpose of registered capital and working capital.  The money will be used to purchase the land and to build a new facility.





9.           INVESTMENT





On March 20, 2009 the Company exchanged 8,000 shares at $2.00 for one investment unit in JK Advisors Fund, LLC (“JK”) which is a partnership with approximately $1,250,000 in assets. Management of the Company has reviewed the investment in JK for impairment and determined there is no indication that the carrying amount of JK may not be recoverable.




17


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





10.           GOODWILL





On October 14, 2008, Worldwide completed the acquisition of 55% of Shanghai De Hong Electric and Electronic Company Limited (“De Hong”) through acquiring 55% of the outstanding capital stock of De Hong, a China corporation, through Worldwide’s wholly owned subsidiary Intech Electro- Mechanical Products Co., Ltd., a Chinese corporation (“Intech”). The Company funded the acquisition with the sale of 1,055,103 shares of its common stock, or $4,747,970. The sale of stock took place on June 23, 2008.  Shanghai De Hong Electric and Electronic Company is the holding company for the operating subsidiary Shanghai Intech -Detron Electronic Co. (“Detron”). Therefore, Worldwide received 55% control of the operating subsidiary Shanghai Intech-Detron Electric and Electronic Company Limited (“Detron”). Detron is a power supply factory in Shanghai, China with designing and R & D. The terms of Agreement dated February 3, 2008 was that Worldwide USA paid cash consideration of approximately 1 million dollars for 55% interest in DeHong. Intech paid the first installment of $714,286 on behalf of Worldwide in September, 2008. During the three months ended March 31, 2009, Worldwide paid back $714,286 to Intech and further paid $270,579 for the second installment and the total consideration of the investment is $1,022,700.





The Company recorded the difference between the net tangible assets of Detron less the purchase price as goodwill.





Cash

$
411,316Accounts Receivable


1,929,314Note receivable


226,877Inventories


774,295Advances to suppliers


21,703Prepaid and other current assets


231,967Property, plant and equipment, net


158,520Other assets


3,494Goodwill


285,714Trade payables


(962,839
)Accrued expenses


(422,943
)Income taxes payable


(29,717
)Related parties payable


(1,015,773
)Comprehensive income


7,56545% Minority Interest


(596,793
)55% Net assets acquired

$
1,022,700





18


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





11.           BANK LOANS





As of March 31, 2009, the Company has the following lines of credit:





B  Banker




Amount of the credit line

Loan period
Interest rate
Secured by

Balance as of

March 31, 2009B  Bank of the West

$



$
1,300,000

5/20/2009-

5/20/2010
WallStreet Journal prime + 0.5%
70% Accounts receivable + 50% inventory

$
1,300,000B Bank of the West

$



$
1,025,000

5/20/2008

-6/1/2011
WallStreet Journal prime + 0.5%
70% Accounts receivable + 50% inventory

$
877,869T  Total loans












$
2,177,868Less : long term portion






(877,869
)$
1,300,000





For maturities of long-term loans are as follows as of March 31, 2009:


June 1, 2011


877,869$
877,869





On May 20, 2008 the Company paid off its line of credit with Well Fargo in the amount of $960,000 and established a new credit facility with Bank of the West. Under the terms of the revolving line of credit agreement with Bank of the West dated May 20, 2008, the Company could borrow up to $3,025,000 at a rate of 5%. This rate is subject to change based on the prime rate for both credit lines. The revolving line of credit is secured by the assets of the Company and guaranteed by its officers.





The Company can borrow up to $2,000,000 and $1,025,000 under the two credit lines. The maturity dates of these two credit lines are May 20, 2010 and June 1, 2011, respectively. The balance outstanding on the first line as of March 31, 2009 is $1,300,000 and $700,000 is still available for used on the line of credit. The second line of credit has a balance of $877,869 as of March 31, 2009 resulting in $147,131 available for use of equipment and facility purchases.  The Company was in compliance with its bank covenants at March 31, 2009.





12.           STOCK TRANSACTIONS





On March 6, 2009, the Company issued 120,000 shares of its common stock to consultants, valued at $187,200, as part of their compensation for the consulting services. The Company amortized the consultancy fee of $187,200 over the 12-month term of the agreement from January 1, 2009 to December 31, 2009. The expense is $15,600 for each month and total stock-based compensation expense would have been $46,800 for the quarter ended March 31, 2009. However, on January 2, 2009, one of the consultants returned 4,000 shares to the Company for the work that he did not perform, valued at $14,680 or $3.67 per share, so the total for the quarter was $32,120.





On March 20, 2009, the Company issued 8,000 shares of its common stock in exchange for one unit investment of JK Advisors Fund LLC, of which 1,000 shares were paid to the broker arranging the sale and the remainder was distributed to the members of the fund.





The total number of shares of common stock outstanding as of March 31, 2009 was 3,617,512.




19


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





13.           WARRANTS





Accounting for the Warrants





In connection with the Company’s 2008 equity financing (completed on June 23, 2008 and July 24, 2008 (“2008 Financing”), the Company issued 1,111,109 restricted common shares along with warrants to purchase an additional 1,111,109 shares with 722,221 warrants having an exercise price of $7.00 and 388,888 of those warrants having an excise price of $9.00 (“Warrants”).  The Company originally analyzed the Warrants in accordance with FAS 133 to determine whether the Warrants meet the definition of a derivative under FAS 133 and, if so, whether the Warrants meet the scope exception of FAS 133, which is that contracts issued or held by the reporting entity that are both (1) indexed to its own stock and (2) classified in stockholders’ equity shall not be considered to be derivative instruments for purposes of FAS 133.  The provisions of EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” apply to any freestanding financial instruments or embedded features that have the characteristics of a derivative, as defined by FAS 133 and to any freestanding financial instruments that are potentially settled in an entity’s own common stock.  Originally the Company concluded that the warrants should be classified as equity.  However, upon subsequent analysis, the Company concluded that the Warrants issued in the 2008 Financing should have been treated as a derivative liability (see Note 17) as the 2008 Financing includes certain milestone provisions which the Company must be in compliance with for each of the years ended December 31, 2009 and 2008 (see Note 3).  If the Company fails to meet these milestones, the Company will be required to issue additional shares of common stock to each purchaser in the 2008 Financing equal to the difference between the purchase price of $4.50 and the average of the ten closing prices for each of the ten trading days immediately following the milestone date (as defined in the agreement).  In addition, the warrant agreement provides fora price adjustment provision to allow the Conversion Price to be reduced and the number of warrants shares increased in the event the Company fails to meet certain contingencies associated with the 2008 Financing. As these provisions provide for the possible issuance of additional shares which are indeterminable, the Company has subsequently determined that the proper accounting for the Warrants should have been as a derivative liability under EITF 00-19 (see Note 17).  As a result, the warrant derivatives will be measured at fair value and re-measured at fair value at each reporting date with changes in fair value recorded in earnings under other income/expense in the Condensed Consolidated Statement of Operations.  During the three periods ending March 31, 2009 and 2008, the Company recorded a gain on warrant re-valuation of $18,502 and none, respectively (see Note 17).





Fair Value of the Warrants





Fair value is generally based on independent sources such as quoted market prices or dealer price quotations. To the extent certain financial instruments trade infrequently or are non-marketable securities, they may not have readily determinable fair values. The Company estimated the fair value of the Warrants using a Black Scholes pricing model and available information that management deems most relevant. Among the factors considered in determining the fair value of financial instruments; The stock price is the closing price of the Company’s stock on the valuation date; the risk free interest rate is based on the U.S. Government Securities average rate for 1 and 2 year maturities on the date of issuance; the volatility is a statistical measure (standard deviation) of the tendency of the Company’s stock price to change over time; the exercise price is the price at which the warrant can be purchased by exercising prior to its expiration; the dividend yield is not applicable due to the Company not intending to declare dividends; the contractual life is based on the average exercise period of the warrant; and the fair market value is value of the warrants based on the Black Scholes model on the valuation date. The following table provides the valuation inputs used to value the Warrants issued in connection with the 2008 Financing.




20


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





13.           WARRANTS (CONTINUED)





2008 Financing Warrants - Valuation InputsAttribute
March 31, 2009Stock Price

$
3.20Risk Free Interest Rate


2.26 – 2.69
%Volatility


81.5 – 87.0
%Exercise Price

$
7.00 - 9.00Dividend Yield


0
%Contractual Life (Years)


1.0 - 1.5Fair Market Value

$
467,854





13.           PENSION PLAN AND STOCK OPTION PLAN





The Company established a SEP plan for the benefit of all full-time employees.  Contributions to the plan are limited to a statutory amount per employee.  No contributions were made for 2005 or 2006.  The Company also established a stock option plan for its employees on April 1, 2004.  The Company approved the plan to issue up to 300,000 shares of common stock.  The stock option plan provides employees, consultants and directors the opportunity to purchase shares.  The exercise price of an incentive stock option granted under this plan must be equal to or greater than the fair market value of the shares of the Company’s common stock on the date the option is granted.  The exercise price of a non-qualified option granted under this plan must be equal to or greater than 85% of the fair market value of the shares of the common stock on the date the option is granted.  An incentive stock option granted to an optionee owning more than 10% of the voting stock must have an exercise price equal to or greater than 110% of the fair market value of our common stock on the date the option is granted. On April 1, 2004, the Board granted options to purchase 109,213 shares at an exercise price of $6.00 per share.





14.           RELATED PARTY TRANSACTIONS





The Company paid wages in the amount of $90,000 and $80,320 to certain stockholders, who are also members of the Board of Directors, as of March 31, 2009 and 2008 respectively.





As of March 31, 2009 the Company has no outstanding loan balance or accrued interest between Jimmy and Mindy Wang, who are principal stockholders, executive officers and members of the Board of Directors of the Company.  At March 31, 2008, the Company owed Jimmy and Mindy Wang $ 1,195,766 which consisted of funds provided for working capital for the Company.  The advances are interest bearing at 8% per annum, with a default interest rate of 10%.  The Company paid cash in the amount of $17,446 for interest expense to Mr. and Mrs. Wang for the three months ended March 31, 2008 and no cash to such persons in the quarter ending March 31, 2009.




21


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








15.           OPERATING RISK





Interest rate risk





The interest rates and terms of repayment to the bank are disclosed in Note 11. Other financial assets and liabilities do not have material interest rate risk.





Credit risk





The Company is exposed to credit risk from its cash in bank and bills and accounts receivable.  The credit risk on cash in bank is limited because the counterparties are recognized financial institutions.  Bills and accounts receivable are subjected to credit evaluations.  An allowance has been made for estimated irrecoverable amounts which have been determined by reference to past default experience and the current economic environment.





Foreign currency risk





Most of the transactions of the Company were settled in Euros, Renminbi, and U.S. dollars.  Thus, the company has significant foreign currency risk exposure.





Substantially all of the Company’s products are manufactured in China. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in China. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations





16.           SEGMENT INFORMATION





The Company’s operations are classified into seven principal reportable segments that provide different products or services.  Worldwide USA purchases and sells manufactured goods from China procured by its subsidiary, Shanghai Intech Electro-Mechanical Products Co., Ltd. (“Intech Electro”).  Intech Electro provides technical advisory, design, delivery, material procurement, and manufacturing quality control services.  Separate management of each segment is required because each business unit is subject to different marketing, production, and technology strategies, and because of the geographic location of each entity. Shutai Precision sells die cast parts. Intech Detron is a power supply factory in Shanghai, China with designing and R & D capabilities.  Worldwide's Ningbo (“WM Ningbo”) manufactures and sells solar modules.




22


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





16.           SEGMENT INFORMATION (CONTINUED)





Segmental Data – 2009


Reportable Segments


(Amounts in thousands)


WWMUSA

Manufacturing


WWMUSA

Solar


Intech

Electro


Intech

Precision


Shutai

Precision


Intech

Detron


WM

Ningbo


TotalExternal revenue


1,781



6,412



47



260



218



1,087



477



10,282Intersegment revenue


-



-



1,215



-



170



-







1,385Interest income


8



-



-



-



-



-



3



11Interest expense


-



-



-



-



-



-



-



-Depreciation


(2
)


-



(21
)


(8
)


(1
)


(13
)


(28
)


(73
)Net (loss) profit after tax


563



-



166



(35
)


(33
)


31



(24
)


668



(1
)Expenditures for long-lived assets


-



-



12



2



1



11



733



760





(1) No inter-company profit was eliminated in consolidation.





Segmental Data – 2008


Reportable Segments


(Amounts in thousands)


WWMUSA


Intech

Electro


Intech

Precision


Shutai

Precision


Discontinued Operations


TotalExternal revenue


4,391



114



872



14



13



5,404Intersegment revenue


-



1,152



-



-



-



1,152Interest income


1



-



-



-



-



1Interest expense


(30
)


-



-



(5
)


-



(35
)Depreciation


(4
)


-



-



-



-



(4
)Net profit after tax


175



34



19



(7
)


9



230



(1
)Expenditures for long-lived assets


6



12



-



9



-



27





(1) $(16,555) in inter-company profit was eliminated in consolidation.





23


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





17.           RESTATEMENT





Subsequent to September 1, 2009 and after the Company had filed its Quarterly Report on Form 10-Q/A for the three month period ended March 31, 2009, management determined that its original equity classification of certain warrants granted in connection with the Company’s 2008 equity financing (completed on June 23, 2008 and July 24, 2008), and included in the Company’s previously issued consolidated financial statements was incorrect.  Management has subsequently determined that the warrants granted in connection with the 2008 equity financing should have been recorded as a warrant derivative liability and not as equity.  As a result, the consolidated financial statements for the year ended December 31, 2008, which are included in its Form 10-K for the year ended December 31,  2008, the interim quarters ended June 30, 2008, September 30, 2008, March 31, 2009, June 30, 2009, and September 30, 2009; are being amended to restate the warrant derivative liability classification.





In addition, management has determined that certain bonuses earned during 2008, were incorrectly recorded in the first quarter ended March 31, 2009 and not accrued as of December 31, 2008.  As a result, management is amending its previously issued consolidated financial statements as of December 31, 2008, which will be included in the amended Form 10-K for the year ended December 31, 2008, and the interim consolidated financial statements for the quarter ended March 31, 2009, June 30, 2009 and September 30, 2009, on Form 10-Q, to properly include the accrued bonus and related bonus expense for the year ended December 31, 2008.





Lastly, management has determined that we had failed to properly classify direct labor and overhead as cost of goods sold for the year ended December 31, 2008. We previously classified the direct labor and overhead as a component of selling, general and administrative expenses, a line item in the consolidated statements of operations of our previously issued consolidated financial statements.  As a result of identifying the error, we concluded that accounting adjustments were necessary to correct the previously issued financial statements for the year ended December 31, 2008, which are included in its Form 10-K for the year ended December 31, 2008, and the interim quarters ended March 31, 2008, June 30, 2008, September 30, 2008, March 31, 2009, June 30, 2009, and September 30, 2009.





As a result of the above, the Company has restated its previously issued consolidated financial statements for the year ended 2008 and the interim quarter ended March 31, 2009 to correct the errors noted above and file an amendment to the Company’s Form 10-K for the year ended December 31, 2008 and the Form 10Q for the interim quarter ended March 31, 2009 with the Securities and Exchange Commission.  Accordingly, the accompanying consolidated balance sheet and statements of operations for the period described in the preceding sentence have been retroactively adjusted as summarized below:




24


WORLDWIDE ENERGY AND MANUFACTURING USA, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Effect of Correction of Derivative Liability and Performance Bonus

As Previously

Reported


As Restated


Retroactive

AdjustmentAt March 31, 2009LIABILITIES-  Warrant derivative liability

$
-


$
467,854


$
(467,854
)


(1
)-  Total current liabilities

$
11,101,432


$
11,569,286


$
(467,854
)


(1
)-  Total liabilities

$
11,979,301


$
12,447,155


$
(467,854
)


(1
)RETAINED EARNINGS/EQUITY-  Common stock

$
6,296,899


$
2,724,172


$
3,572,727



(2
)-  Retained earnings

$
4,237,510


$
7,342,383


$
(3,104,873
)


(3
)-  Total WEMU stockholders’ equity

$
11,119,570


$
10,434,668


$
684,902



(1
)-  Total equity

$
11,743,814


$
11,058,912


$
684,902



(1
)-  Total liabilities/stockholders’ equity

$
23,506,067


$
23,506,067


$
-STATEMENT OF INCOMEThree Months Ended March 31, 2009-  Cost of goods sold

$
8,382,275


$
8,562,800


$
180,525



(7
)-  Gross profit

$
1,899,592


$
1,719,067


$
(180,525
)


(7
)-  G/A expenses

$
1,212,968


$
825,740


$
(387,228
)


(5
)-  Total operating expenses

$
1,408,679


$
1,021,451


$
(387,228
)


(5
)-  Operating income

$
490,913


$
697,616


$
(206,703
)


(5
)-  Other income

$
903


$
19,405


$
18,502



(4
)-  Total other expense

$
8,379


$
26,881


$
18,502



(4
)-  Net income before tax

$
499,292


$
724,497


$
225,205



(6
)-  Net income before non-controlling interest

$
460,746


$
685,951


$
225,205



(6
)-  Net income

$
435,589


$
660,794


$
225,205



(6
)-  Comprehensive income

$
443,072


$
668,277


$
225,205



(6
)-  Earnings per share

$
0.16


$
0.23


$
0.07



(6
)STATEMENT OF CASH FLOWSThree Months Ended March 31, 2009-  Net income

$
435,589


$
660,794


$
225,205



(6
)-  Accrued expense

$
(359,284
)

$
(565,987
)

$
(206,703
)


(5
)-  Warrant derivative liability

$
-


$
(18,502
)

$
(18,502
)


(4
)-  Cash used in operating activities

$
(1,728,085
)

$
(1,728,085
)

$
-STATEMENT OF INCOMEThree Months Ended March 31, 2008-  Cost of goods sold

$
4,239,033


$
4,394,429


$
155,396-  Gross profit

$
1,165,050


$
1,009,654


$
(155,396
)-  G/A expenses

$
701,085


$
545,689


$
(155,396
)-  Total operating expenses

$
895,377


$
739,981


$
(155,396
)





(1)  Cumulative effect of change in warrant derivative liability as of the period ended


(2)  Cumulative effect of reclassifying the derivative from equity to warrant derivative liability


(3)           Cumulative effect on results of operations for change in warrant derivative liability


(4)           Period effect on results of operations for change in warrant derivative liability


(5)
Effect of certain bonuses earned in 2008 that were incorrectly recorded in the first quarter ended March 31, 2009 and not accrued as of December 31, 2008 and change in labor and overhead


(6)
Total period effect on results of operations for change in warrant derivative liability and adjustment for certain bonuses


(7)
Period effect on results of operations for change in labor and overhead





25


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





DISCLAIMER REGARDING FORWARD LOOKING STATEMENTS





Certain statements in this Form 10-Q, which are not statements of historical fact, are what are known as "forward-looking statements," which are basically statements about the future. For that reason, these statements involve risk and uncertainty since no one can accurately predict the future. Words such as "plans," "intends," "hopes," "seeks," "anticipates," "expects," and the like, often identify such forward looking statements, but are not the only indication that a statement is a forward-looking statement. Such forward-looking statements include statements concerning our plans and objectives with respect to our present and future operations, and statements which express or imply that such present and future operations will or may produce revenues, income or profits. These and other factors may cause our actual results to differ materially from any forward-looking statement.  We caution you not to place undue reliance on these forward-looking statements.  Although we base these forward-looking statements on our expectations, assumptions, and projections about future events, actual events and results may differ materially, and our expectations, assumptions, and projections may prove to be inaccurate. The forward-looking statements speak only as of the date hereof, and we expressly disclaim any obligation to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances after the date of this filing.





Overview





Worldwide Energy and Manufacturing USA, Inc. (“Worldwide” or “the Company”) is a manufacturing engineering firm and international contract manufacturer, using factories in China, primarily supplying customers in Europe and South Korea with respect to our solar modules and United States-based companies that outsource their smaller scale production orders for offshore production in China. From our inception in 1993 until 2005, we were strictly an intermediary or “middle man,” working with our customers and our subcontractors to assure that our customers received high quality components on a timely basis that fulfilled their specific needs. While we still subcontract a significant portion of our business, since 2005, we have begun the transition to becoming a direct contract manufacturer, operating several of our own factories.  Recently, we announced two additional factories allowing us to become a direct manufacturer for solar modules and for power supply units as described below:




On October 14, 2008, Worldwide completed the acquisition of 55% of Shanghai De Hong Electric and Electronic Company Limited (“De Hong”) through acquiring 55% of the outstanding capital stock of De Hong, a China corporation, through Worldwide’s wholly owned subsidiary Intech Electro- Mechanical Products Co., Ltd., a Chinese corporation (“Intech”). The Company funded the acquisition with the sale of 1,055,103 shares of its common stock, or $4,747,970. The sale of stock took place on June 23, 2008.  Shanghai De Hong Electric and Electronic Company is the holding company for the operating subsidiary Shanghai Intech -Detron Electronic Co. (“Detron”). Therefore, Worldwide received 55% control of the operating subsidiary Shanghai Intech-Detron Electric and Electronic Company Limited (“Detron”). Detron is a power supply factory in Shanghai, China with designing and R & D. The terms of Agreement dated February 3, 2008 was that Worldwide USA paid cash consideration of approximately 1 million dollars for 55% interest in DeHong. Intech paid the first installment of $714,286 on behalf of Worldwide in September, 2008. During the three months ended March 31, 2009, Worldwide paid back $714,286 to Intech and further paid $270,579 for the second installment and the total consideration of the investment is $1,022,700.





On August 15, 2008, the Company formed a new company called Nantong Ningbo Solar factory (“Ningbo Solar”), which is the solar energy research and development manufacturer. The Company established a factory to provide installation services to different solar projects. The Company also acts as agent to import or export the products and services overseas.




26





On November 10, 2008 the Company announced the establishment of a new solar module production and R&D facility. We leased a 128,000-square-foot facility in Ningbo, China. This facility will house the Company’s research center and part of its photovoltaic (PV) manufacturing operations.




The city of Ningbo is about two hours and 15 minutes away from downtown Shanghai. The capacity of the factory is 60 to 80 megawatts per year. Based on current market prices for solar modules 60 to 80 megawatts equates to approximately US$225 million to $300 million in potential revenues per year.





Despite these additions and enlarging our capability as a direct manufacturer for several products lines we are still constrained in our growth for a number of reasons. Many Fortune 500 and other large companies either cannot, or choose not, to work with contract manufacturers preferring to go directly to the source that can manufacture the product and thereby avoid the additional expense of the middleman. This is particularly true for very large orders, where the added cost of the middleman can have a material impact on the customers’ bottom line. As a result, our revenues have for the most part, but not entirely, been limited to smaller scale production orders primarily (but not entirely) placed by companies that are not among the largest companies in the United States or elsewhere. Additionally, as a middleman we must share any potential gross profit with the subcontracting factory. Therefore, our customers are generally smaller, the orders they place are generally smaller and the income and profit we can generate from those orders is of necessity limited because we are not directly manufacturing the products. On the other hand, when we subcontract the actual manufacturing of our customers’ products and components, we do not need to hire factory employees, purchase materials, purchase and maintain manufacturing equipment or incur the costs of the manufacturing facilities. To some extent, these costs are built into the price charged by our subcontractors, but if we do not place orders, we do not incur those costs.





Our management has carefully considered these factors and during 2004 made the strategic decision to move our company away from our historical complete reliance on subcontractors. At the beginning of 2005 we did not own any of our own factories and used as our suppliers of materials and labor approximately 100 factories in China, mostly in Shanghai or the surrounding area. Since 2005 we have acquired an electronics factory, a die-casting and machining factory through leasing an existing facility from a former vendor and initially invested approximately $500,000 to upgrade the equipment and manufacturing buildings, a recently announced power supply company with designing and R & D capabilities and a solar module factory on November 10, 2008.  In these transactions we acquired assets, the expertise of the employees, the managers of the factories, and a portion of the existing customers of those factories with the exception of the solar module factory which we established on our own. As a result, as of November 10, 2008, we own and operate four factories that we now use for the manufacture of certain product lines that we historically had to subcontract, and we are using the services of approximately 40 subcontractors to manufacture those product lines for which we do not have our own manufacturing capabilities.





The establishment of these factories, including asset purchases and factory upgrades, was funded by three separate sources. The earlier acquisitions of the die cast and electronic factory primarily was financed by loans from Jimmy and Mindy Wang, our principal stockholders and executive officers, as well as increased lines of credit. Our credit line increased to $3,025,000 with Bank of the West from a $2,250,000 line with Wells Fargo.  The power supply company and the establishment of the new solar module factory were funded by two equity transactions dated June 23 and July 24, 2008 where the company raised approximately $5,000,000 dollars and netted approximately $4,600,000 after fees and costs. In the future, we expect to continue to acquire or newly-establish factories that will give us the capability to manufacture those product lines our management believes are the most profitable.





27


With the continuing transition into direct manufacturing and the renewable energy field, we expect to continue to increase sales outside the United States, and in particular, increase the number of customers in PRC, other Asian markets and Europe. Our costs to establish and improve these factories will increase along with sales and profits.





Through the development of our product mix, which consists of solar modules, foundry, machining and stamping, electronics and fiber optics products lines, our business has become more diverse. In the past, foundry and machining and stamping accounted for more than 90% of our business. This percentage has decreased since forming our own factories along with our new energy division which now represents approximately 62% of our business and we expect this percentage to continue to increase in the foreseeable future.





Generally, our operating results have been, and will continue to be, affected by a number of factors, including the following:





•
our customers may cancel or delay orders or change production quantities;•
our operating results vary significantly from period to period due to the mix of the manufacturing services we are providing, the number and size of new manufacturing programs, the degree to which we utilize our manufacturing capacity, seasonal demand, shortages of components and other factors;•
integration of acquired businesses and facilities; and•
managing growth and changes in our operations.


We also are subject to other risks, including risks associated with operating in foreign countries, changes in our tax rates, and fluctuations in currency exchange rates.





Restatements





In March 2010, we became aware that we:





A)
had failed to recognize a bonus accrual that was earned in 2008. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over stating income and understating liabilities by $206,000.





B)
had failed to recognize a Warrant Derivative Liability we granted in 2008 in connection with our equity raise in May 2008 and June 2008 and the subsequent re-measurement of fair value of the warrants derivative, as required by FASB ASC Topic 815 (codification of Financial Accounting Standards Board (SFAS) 133 and Emerging Issues Task Force 00-19).  The error had the a significant effect on our previously issued consolidated financial statements for the year ended December 31, 2008, and for each of the quarters for the year ended December 31, 2009.





C)
had failed to properly classify direct labor and overhead as cost of goods sold for the year ended December 31, 2008. We previously classified the direct labor and overhead as a component of selling, general and administrative expenses, a line item in the consolidated statements of operations of our previously issued consolidated financial statements, in the amount of $621,584.





28


As a result of identifying these errors, we concluded that accounting adjustments were necessary to correct the previously issued financial statements for the year ended December 31, 2008 and for each of the quarters for the year ended December 31, 2009.and that the reports we filed with the SEC that included the financial statements that reported the erroneous information for that periods should no longer be relied upon.  Accordingly, we have restated our financial statements for the year ended December 31, 2008 included with our Annual Report on Form 10-K filed with the SEC on April 15, 2010 .





In July 2009, we became aware that we:





A)
had failed to record a Goodwill related to our acquisition of Detron in October 2008. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over understating assets and liabilities by $285,000.





B)
had incorrectly recorded a gain on sale of subsidiary in accordance with FASB ASC Topic 205 “Presentation of Financial Statements”(codification of SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets). The error had an effect on our previously issued consolidated financial statements for the year ended December 31, 2008 by overstating our gain on disposal of subsidiary by $245,000.





C)
had failed to record an income tax liability. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over overstating our net income and understating our income tax liability by $217,000.





As a result of identifying these errors, we concluded that accounting adjustments were necessary to correct the previously issued financial statements for the December 31, 2008 and that the reports we filed with the SEC that included the financial statements that reported the erroneous information for that period should no longer be relied upon.  We have restated our financial statements for the year ended December 31, 2008 in our filing of our amended Form 10-K filed on August 10, 2009.





Results of Operations





Net sales for the three months ending March 31, 2009 were $10,281,867 compared to net sales of $5,404,083 for the same period in 2008. This increase of $4,877,784 or approximately 90.3% was the result of an increase in orders in our energy division and the recent acquisition of Detron. Solar orders for quarter ending March 31, 2009 were $6,412,210 compared to $2,505,977 in the same period in 2008. This represents an increase of $3,906,233 or approximately 155.9%. Additionally, the recent acquisition of Detron resulted in an increase in revenues of approximately $1,087,000. The Company will continue to focus on the expansion of its energy division by the continued development of its newly established solar factory in Ningbo, China as well as the continued quality enhancements of its solar module brand, "Amerisolar".




Gross profit increased by $709,413, or approximately 70.3% from $1,009,654 in the quarter ending March 31, 2008 to $1,719,067 for the three months ending March 31, 2009,  primarily reflecting  solar module sales in the energy division





Cost of goods sold for the three months ended March 31, 2009 was $8,562,800 compared to $4,394,429 for the same period in 2008.  The increase of $4,168,371 or approximately 94.9% was the result of greater revenues in the energy division.





29


The gross margin was 16.7% for the three months ending March 31, 2009 compared to 18.7% in the same period in 2008. The decline of 2.0% in gross margin was the result of the Company utilizing more sub-contractors for production of our solar modules along with softness in the price of solar modules.   It is expected that gross margins will improve as the Company continues its transition of becoming a direct manufacturer for its solar module products as the newly established factory becomes operational. Further, the outlook for solar modules margins look to improve as raw material necessary for production of modules are expected to decline and margins to increase.




In the period ending March 31, 2009 there was stock based compensation of $32,120 compared to the non-cash deduction of $110,000 for stock based compensation in 2008. Further the Company had depreciation expense of $73,176 in the period ending March 31, 2009 compared to $3,972 in the same period of 2008, due to the greater amount of depreciable assets owned by the Company.




Net income before taxes for the three months ending March 31, 2009 was $724,497 compared to a net income before taxes of $218,923 in the same quarter of 2008. The increase of $505,574 or approximately 230.9% was largely the result of the increased sales of our solar modules. Net income after tax was $660,794 for the three months ending March 31, 2009 compared to a net income after tax of $230,327 in the same quarter of 2008. The increase of $430,467 or approximately 186.9% was also due to the increased sales of our solar modules.





General and administration expenses for the three months ended March 31, 2009, totaled $825,740 compared to $545,689 in the same quarter in 2008. The increase of $280,051 or approximately 51.3% was due to the establishment of our solar module factory and recent expenses associated with the acquisition of Detron.




LIQUIDITY




The following is a summary of Worldwide’s cash flows from operating, investing, and financing activities during the periods indicated:





Three months ended March 31,2009


2008Cash at Beginning of Period

$
5,092,476


$
2,111,825Operating activities (used)

$
(1,728,085
)


(1,059,897
)Investing activities(Used)

$
(1,045,727
)

$
(93,237
)Financing activities

$
1,202,360


$
1,489,108Net effect on cash

$
(625
)

$
55,331Cash at End of Period

$
3,520,399


$
2,503,130




The Company funded its growth largely from its proceeds of $4,747,970 from the sale on June 23, 2008 of 1,055,103 shares of its common stock, and from additional sale of $252,027 or 56,007 shares of common stock later in 2008.  This was used to help fund these new acquisitions and to provide additional working capital for the Company. The Company netted $4,608,036 from the sales of these securities.





In 2008 our credit line was increased by approximately $775,000 from a line of credit in the amount of $2.25 million with Golden Gate Bank to $3.025 million, as a result of securing two new credit lines with Bank of the West, one for $1,025,000 and the other for $2,000,000. The credit line with Golden Gate Bank was subsequently closed. These revolving lines of credit are secured by the assets of the Company and guaranteed by its officers. The maturity date of these two credit lines is May 20, 2010 and June 1, 2011, respectively. The balance outstanding as of March 31, 2009 is $1,300,000, and $700,000 is still available for use on the line of credit. Additionally, the second line of credit has a balance of $877,869 as of March 31, 2009, with $147,131 still available for use of equipment and facility purchases.





30


In addition the increase in net profits of $205,262 or 89.1% over the quarter ending March 31, 2009 provided the Company with greater liquidity and financial resources. The Company feels that it has sufficient capital to continue to fund its operations.





For the quarter ending March 31, 2009, net cash used in operations was $1,728,085 compared to net cash used in March of 2008 of $1,059,897. The major factors for this increase in net cash used in operations were the increase in accounts receivables and inventory due to the Company's growth in sales. Net cash used in investing was $1,045,727 in the March 31, 2009 quarter, compared to net cash used of $93,237 in the same period of 2008. This increase was the result of our acquisition of Detron and the establishment of our new solar module factory. The Company anticipates further expansion in 2009 and will finance this growth through Company profitability as well as outside sources of funding if required. Net cash flows provided by financing activities in the March 31, 2009 quarter was $1,202,360 compared to $1,489,108 in 2008.





The Company raised approximately, $4,747,970 on June 23, 2008 and an additional $252,027 on July 24, 2008 for gross proceeds of approximately $5 million, or net proceeds of $4,608,036 after offering expenses. The Company issued 1,111,109 restricted common shares along with warrants to purchase an additional 1,111,109 shares with 722,221 warrants having an exercise price of $7.00 and 388,888 of those warrants having an excise price of $9.00. These funds were used to expand our energy division through the establishment of a new solar module factory announced on November 10, 2008 along the acquisition of a power supply company with designing and R&D capabilities.  Additionally, these funds will be used to provide additional working capital for the solar module factory to purchase raw materials and to expand the solar module business segment.  However, certain contingencies are associated with this sale:





“If (a) the Company fails to report at least $2,500,000 in EBITDA less noncash expenditures for the fiscal year ending December 31, 2009, as disclosed in the Company’s Form 10-K for the fiscal year ending December 31, 2009 (“2009 Milestone”), the date of disclosure of such 2009 Milestone (“2009 Milestone Date”) and such 10-K, and (b) if the average of the ten closing prices for each of the ten trading days immediately following the 2009 Milestone Date is less than the lesser of the Per Share Purchase Price and the 2008 Milestone Price, which is$4.50 (“2009 Milestone Price”), then, within 13 Trading Days of the 2009 Milestone Date, the Company shall issue to each Purchaser a number of shares of Common Stock equal to the difference between (i) the number of shares of Common Stock issued to such Purchaser on the Closing Date along with any 2008 Milestone Shares issued pursuant to the 2008 Milestone Date, which are none,  and (ii) the number of shares of Common Stock that would otherwise have been issuable to such Purchaser on the closing date if the Per Share Purchase Price was equal to the 2009 Milestone Price (“2009 Milestone Shares”).”  In addition, Jimmy and Mindy Wang have deposited 1,620,954 shares of common stock into an escrow account.  Should a contingency arise, the contingency would be first satisfied by shares issued from the Company and should the Company not have sufficient shares available, the Wang shares would be forfeited to help satisfy the contingency.  The Wang shares are considered to be secondary and not primary consideration in satisfying any potential contingency.





PLAN OF OPERATION





We plan to continue our expansion efforts in the solar module industry through expansion of our solar module factory in Ningbo, China. We will attempt to increase our customer base in this industry by achieving greater product enhancements and sales efforts. Further, we feel that our recent acquisition of Detron will bring more revenues and profits as we continue to streamline our present electronic factory into the new acquisition as well as improve the operation of Detron and our other factories in China. Additionally, we intend to begin expansion of our marketing into the U.S. solar module market in the third quarter of 2009.





31


Off-Balance Sheet Arrangements





We do not have any off-balance sheet arrangements that are currently material or reasonably likely to be material to our financial position or results of operations.





Critical Accounting Policies, Estimates and Judgments





This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. On an on-going basis, we evaluate our estimates, including those related to property, plant and equipment, inventories, revenue recognition, inventories, accounts receivable and foreign currency transactions and translation. We base our estimates on historical experience and on various other market-specific assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results, however, may differ significantly from these estimates.





We believe the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements:





Property, plant and equipment





Property, plant and equipment are stated at historical cost and are depreciated over the useful lives of the assets. Leasehold improvements and capitalized leased equipment are amortized over the life of the lease. Repair and maintenance expenditures that do not significantly add to the value of the equipment or prolong its life are charged to expense as incurred. Gains and losses on dispositions of property, plant and equipment are included in the related period’s statement of operations. Depreciation is computed primarily using the straight-line method based on estimated useful lives, which range from 3 to 25 years.





Inventories





Inventories consist of finished goods of manufactured products. Our inventory is based on customer orders and the duration of those orders. Cost is stated at the lower of cost or market on a first-in, first-out (FIFO) basis. We have not recorded an allowance for slow-moving or obsolete inventory. Obsolete inventory at March 31, 2009 was minimal.





Revenue Recognition





We recognize revenues in accordance with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104 “Revenue Recognition”. We recognize revenue from product sales when the orders are completed and shipped, provided that collection of the resulting receivable is reasonably assured. Amounts billed to customers are recorded as sales while the shipping costs are included in cost of sales. Returns on defective custom parts may only be exchanged for replacement parts within 30 days of the invoice date. Returns on defective parts, which can be resold, may be exchanged for replacement parts or for a refund.  Revenue from non-refundable customer tooling deposits is recognized when the materials are shipped or when the deposit is forfeited, whichever is earlier.





Foreign Currency Transactions and Translation





Transaction gains and losses result from a change in exchange rates between the functional currencies in which a foreign currency transaction is denominated and the reporting currency. They represent an increase or decrease in (i) the actual functional current cash flows realized upon settlement of foreign currency transactions and (ii) the expected functional currency cash flows on unsettled foreign currency transactions. All transaction gains and losses are included in other income or expense. For all periods presented, sales to customers were primarily denominated in U.S. dollars.





Assets and liabilities of Intech are translated into U.S. dollars at the prevailing exchange rate in effect at each period end. Revenue and expenses are translated into U.S. dollars at the average exchange rate during the reporting period. Contributed capital is translated into U.S. dollars at the historical exchange rate when capital was injected. Any difference resulting from using the current rate, historical rate and average rate in determination of retained earnings is accounted for as a translation adjustment and reported as part of comprehensive income or loss in the equity section. Exchange differences are recognized in the income statement in the period in which they occur.





Management has discussed the development and selection of these critical accounting policies with the Board of Directors and the Board has reviewed the disclosures presented above relating to them.





32


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Interest rate risk





The interest rates and terms of repayment of bank and other borrowings from stockholders are disclosed in Note 5 and Note 8. Other financial assets and liabilities do not have material interest rate risk.





Credit risk





The Company is exposed to credit risk from its cash in bank and bills and accounts receivable.  The credit risk on cash in bank is limited because the counterparties are recognized financial institutions.  Bills and accounts receivable are subjected to credit evaluations.  An allowance has been made for estimated irrecoverable amounts which have been determined by reference to past default experience and the current economic environment.





Foreign currency risk





We transact business in foreign currencies and may be exposed to risk resulting from fluctuations in foreign currency exchange rates, particularly the Renminbi, ("RMB"), and the Euro ("EUR"), which may result in gains or losses reported in our earnings. The volatilities in RMB and EUR are monitored by us throughout the year. We face two risks related to foreign currency exchange rates: translation risk and transaction risk. Amounts invested in our foreign operations are translated into U.S. Dollars using period-end exchange rates. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in stockholders' equity. Revenues and expenses in foreign currencies translate into higher or lower revenues and expenses in U.S. Dollars as the U.S. Dollar weakens or strengthens against other currencies. Substantially all of the revenues of our foreign subsidiaries are received, and substantially all expenses are incurred, in currencies other than the U.S. Dollar, which increases or decreases the related U.S. Dollar reported revenues and expenses depending on the trend in currencies. Therefore, changes in foreign currency exchange rates may negatively affect our consolidated revenues and expenses. Net foreign currency transaction gains or losses arising from transactions in our foreign operations denominated in currencies other than the local functional currency are included in other income (expense), net in the consolidated statements of operations. While we have not engaged in foreign currency hedging to date, we may in the future use hedging programs, including currency forward contracts, currency options and/or other derivative financial instruments commonly utilized if it is determined that such hedging activities are appropriate to reduce risk. In addition substantially all of the Company’s products are manufactured in China. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in China. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.





Inflation





Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net revenues if the selling prices of our products do not increase with these increased costs








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ITEM 4.                      CONTROLS AND PROCEDURES





We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (also our principal executive officer) and our chief financial officer (also our principal financial and accounting officer) to allow for timely decisions regarding required disclosure.





Under the PCAOB standards, a significant deficiency is a control deficiency, or combination of control deficiencies, that, in Windes’ and management’s judgment, would adversely affect the ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the annual or interim financial statements that is more than inconsequential will not be prevented or detected. A material weakness is a significant deficiency, or combination of significant deficiencies, that, in our judgment, results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.





The material weaknesses identified were as follows:





Identification of Material Weaknesses in Controls and Procedures





In view of the restatements and the reclassification of our financial statements for the year ended December 31, 2008, as described under the heading Management's Discussion and Analysis of Financial Condition and Results of Operations - Restatements, and in connection with the evaluation of our controls and procedures for the year ended December 31, 2009 we have determined that we have numerous material weaknesses in our controls and procedures, as more fully described below.





A material weakness in internal control over financial reporting is defined in Section 210.1-02(4) of Regulation S-X as 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 annual or interim financial statements will not be prevented or detected on a timely.  A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the Company'sfinancial reporting.





In March 2010, we became aware that we:





A)
had failed to recognize a bonus accrual that was earned in 2008. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over stating income and understating liabilities by $206,000.





B)
had failed to recognize a Warrant Derivative Liability we granted in 2008 in connection with our equity raise in May 2008 and June 2008 and the subsequent re-measurement of fair value of the warrants derivative, as required by FASB ASC Topic 815 (codification of Financial Accounting Standards Board (SFAS) 133 and Emerging Issues Task Force 00-19).  The error had the a significant effect on our previously issued consolidated financial statements for the year ended December 31, 2008, and for each of the quarters for the year ended December 31, 2009.





C)
had failed to properly classify direct labor and overhead as cost of goods sold for the year ended December 31, 2008. We previously classified the direct labor and overhead as a component of selling, general and administrative expenses, a line item in the consolidated statements of operations of our previously issued consolidated financial statements, in the amount of $621,584.





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As a result of identifying these errors, we concluded that accounting adjustments were necessary to correct the previously issued financial statements for the year ended December 31, 2008 and for each of the quarters for the year ended December 31, 2009.and that the reports we filed with the SEC that included the financial statements that reported the erroneous information for that periods should no longer be relied upon.  Accordingly, we have restated our financial statements for the year ended December 31, 2008 included with our Annual Report on Form 10-K filed with the SEC on April 15, 2010 .





In July 2009, we became aware that we:





A)
had failed to record a Goodwill related to our acquisition of Detron in October 2008. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over understating assets and liabilities by $285,000.





B)
had incorrectly recorded a gain on sale of subsidiary in accordance with FASB ASC Topic 205 “Presentation of Financial Statements”(codification of SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets). The error had an effect on our previously issued consolidated financial statements for the year ended December 31, 2008 by overstating our gain on disposal of subsidiary by $245,000.





C)
had failed to record an income tax liability. The error had an effect of on our previously issued consolidated financial statements for the year ended December 31, 2008 by over overstating our net income and understating our income tax liability by $217,000.





As a result of identifying these errors, we concluded that accounting adjustments were necessary to correct the previously issued financial statements for the December 31, 2008 and that the reports we filed with the SEC that included the financial statements that reported the erroneous information for that period should no longer be relied upon.  We have restated our financial statements for the year ended December 31, 2008 in our filing of our amended Form 10-K filed on August 10, 2009.





We determined that these failures and related re-statements demonstrated the following weaknesses in our internal control over financial reporting:





·
Accounting and Finance Personnel Weaknesses — The Company lacks appropriate resources within the accounting function.  Our accounting staff comprises of few people and the department lacks the required skill set, competence, infrastructure and expertise to meet the higher demands of being a public company.  This lack of resources has led to a lack of segregation of duties and insufficient attention to the internal control process over financial reporting.·
Reliance on Third-Party Professionals: We retained an individual to provide support and accounting advice to the Company for the year ended December 31, 2008.  We may not have adequately assessed this individual’s qualifications to ascertain his level of experience to render the services for which we retained the individual.  Moreover, we did not adequately monitor the individual’s work and placed undue reliance on its expertise without confirming the accuracy of the finished product.





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Remediation Plan for Material Weakness in Internal Control over Financial Reporting





In light of the foregoing, we have introduced and plan to implement a number of remediation measures to address the material weaknesses described above.  Many of these measures are entity level in nature and we believe that the organizational and process changes we intend to adopt will improve our internal controls and governance environment.  Management recognizes that many of these enhancements require continual monitoring and evaluation for effectiveness.  The development of these actions is an iterative process and will evolve as the Company continues to evaluate and improve our internal controls over financial reporting.  Initially, we may be foreclosed from implementing some of the more obvious measures, such as retaining additional accounting personnel who have particular areas of expertise, given our resource constraints.  However, as we grow, we expect to adopt and implement those measures and to retain additional qualified personnel as management deems necessary to satisfy our control and governance requirements.





Specifically, we have:





·
In mid-February 2010, we hired a new Big 4 CFO with over 25 years experience working in publicly traded companies (see Biographical Information in Item 10).·
In June 2009, we established an audit committee of the Board of Directors.  Our audit committee members both qualify as "audit committee financial expert," as such term is defined in Item 407(d)(5) of Regulation S-K.·
In September 2009, we hired an Accounting Manager in our Corporate office to add to the Company’s accounting expertise.·
We are in the process of documenting our processes and procedures in accordance with the requirements of Section 404 (a) of Sarbanes-Oxley.  Upon completion, we will implement the necessary changes.





Over the balance of the 2010 year, we will undertake an entity-level review of and test our control procedures and analyze the application of our controls and our control environment generally.  In addition, we plan to hire additional accounting personnel in China with knowledge of proper accounting rules.  We also expect that the audit committee will set a tone for effective entity-wide corporate governance; inspire rigorous, uniform application of our internal controls and provide ongoing oversight of the preparation and review of our financial statements.  In addition, we expect that the audit committee will review and propose improvements to our entity level controls and procedures and other process level controls.  We believe that the audit committee and our new financial professionals will substantially decrease the possibility of the occurrence of errors in our financial statements.





Management has discussed these material weaknesses with our board of directors and will continue to review progress on these activities on a consistent and ongoing basis at the senior management level in conjunction with our Board of Directors.  We also plan to take additional steps to elevate Company awareness about, and communication of, these important issues through formal channels such as Company meetings and training.





Management has discussed these material weaknesses with our board of directors and will continue to review progress on these activities on a consistent and ongoing basis at the senior management level in conjunction with our Board of Directors.  We also plan to take additional steps to elevate Company awareness about, and communication of, these important issues through formal channels such as Company meetings and training.





We cannot assure you at this time that the actions and remediation efforts we have taken or ultimately will implement will effectively remediate the material weakness described above or prevent the incidence of other significant deficiencies or material weaknesses in our internal control over financial reporting in the future.





These remediation efforts are designed to address the material weaknesses identified and to improve and strengthen our overall control environment. We believe these actions will prevent the significant deficiencies from reoccurring. Our management, including our principal executive officer and principal financial officer, does not expect that disclosure controls or internal controls over financial reporting will prevent all errors, even as the aforementioned remediation measures are implemented and further improved to address all deficiencies. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.





The implementation of our remediation plan will require substantial expenditures, could take a significant period of time to complete, and could distract our officers and employees from the operation of our business. However, our management believes that these remediation efforts will be complete by the end of the 2010 fiscal year.





Our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the date of this report, under the supervision and with the participation of our president (also our principal executive officer) and chief financial officer (also our principal financial and accounting officer), in order to conclude if our disclosure controls and procedures are effective. Based on the information set forth above, our management has determined that, as of the date of this report, we do not have effective disclosure controls and procedures.





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PART II.  OTHER INFORMATION





Item 1A.                      Risk Factors (herein incorporated by reference from Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2009).





Item 2.                          Unregistered Sales of Equity Securities and Use of Proceeds





On March 6, 2009, the Company issued 120,000 shares of its common stock to consultants, valued at $187,200, as part of their compensation for the consulting services. The Company amortized the consultancy fee of $187,200 over the 12-month term of the agreement from January 1, 2009 to December 31, 2009. The expense is $15,600 for each month and total stock-based compensation expense would have been $46,800 for the quarter ended March 31, 2009. However, on January 2, 2009, one of the consultants returned 4,000 shares to the Company for the work that he did not perform, valued at $14,680 or $3.67 per share, so the total for the quarter was $32,120.





On March 20, 2009, the Company issued 8,000 shares of its common stock in exchange for one unit investment of JK Advisors Fund LLC, of which 1,000 shares were paid to the broker arranging the sale and the remainder was distributed to the members of the fund.





Item 3.                          Defaults upon Senior Securities




None





Item 4.                          Submission of Matters to a Vote of Security Holders




None





Item 5.                           Other Information




None





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Item 6.                            Exhibits





The following exhibits are filed herewith:





3.1
Articles of Incorporation (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 11, 2000).





3.2
Bylaws (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 11, 2000).





3.3
Amendment to the Articles of Incorporation to change the name of the Company from Tabatha III, Inc. to Worldwide Manufacturing USA, Inc., filed with the Colorado Secretary of State on November 4, 2003 (herein incorporated by reference from Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2009).





3.4
Amendment to the Articles of Incorporation to change the name of the Company from Worldwide Manufacturing USA, Inc. to Worldwide Energy and Manufacturing USA, Inc., filed with the Colorado Secretary of State on February 4, 2008 (herein incorporated by reference from Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2009).





4.1
Specimen Common Stock Certificate (incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on October 11, 2000).





4.2
Specimen Class A Convertible Preferred Stock Certificate (incorporated by reference from Registration Statement on Form 10-SB/A filed with the Securities and Exchange Commission on October 11, 2000).





10.1
Common Stock Purchase Warrant (incorporated by reference from Form 10-KSB filed with the Securities and Exchange Commission on September 27, 2001).





14.1
Code of Ethics (incorporated by reference from Form 10-KSB filed with the Securities and Exchange Commission on March 31, 2005).





21.1
Subsidiaries of Worldwide Energy and Manufacturing USA, Inc. (herein incorporated by reference from Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2009).





31.1
Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.





31.2
Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.





32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





32.2
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





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SIGNATURES


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








WORLDWIDE ENERGY AND MANUFACTURING USA, INC.


By:
/s/ JIMMY WANGJimmy Wang, CEO and Director (duly authorized officer)Date:   April 15, 2010
 By:
/s/ GERALD DECICCIOGerald DeCiccio, Chief Financial Officer (principal financial and accounting officer)Date:   April 15, 2010









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